U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]      QUARTERLY REPORT UNDER  SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE
         ACT OF 1934

         For the quarterly period ended: June 30, 2001
                                         -------------

                                       OR

[ ]      TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                          Commission File No.: 0-20726
                                               -------


                                  Cortech, Inc.
                                  -------------
        (Exact name of small business issuer as specified in its charter)

          Delaware                                        84-0894091
-------------------------------                      --------------------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)


                376 Main Street, PO Box 74, Bedminster, NJ 07921
                ------------------------------------------------
                    (Address of principal executive offices)

                                 (908) 234-1881
                                 --------------
                           (Issuer's telephone number)

                                       N/A
                                       ---
              (Former name, former address and former fiscal year,
                          if changed since last report)

     Check  whether  the issuer (1) 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 issuer was required to file such  reports),  and (2) has
been subject to such filing  requirements  for the past 90 days.
                                    Yes X  No
                                       ---   ---

     State the number of shares  outstanding of each of the issuer's  classes of
common  equity:  As of July 31,  2001,  the issuer had  3,695,618  shares of its
common stock, par value $.002 per share, outstanding.

     Transitional Small Business  Disclosure Format (check one):
                                    Yes   No X
                                       ---  ---



<PAGE>

PART I.  FINANCIAL INFORMATION
------   ---------------------
ITEM 1.  Financial Statements
------   --------------------



                                  CORTECH, INC.
                                  BALANCE SHEET
                                 ($000 Omitted)
                                   (UNAUDITED)

                                                                     June 30,
                                                                       2001
                                                                     --------

Assets
------

Current assets:
   Cash and cash equivalents                                         $ 13,648
   Prepaid expenses and other                                              87
                                                                     --------
       Total current assets                                          $ 13,735
                                                                     ========

Liabilities and stockholders' equity
------------------------------------

Current liabilities:
   Accrued liabilities                                               $    191
                                                                     --------
      Total current liabilities                                           191
                                                                     --------

Stockholders' equity:
   Preferred stock, $.002 par value,
     2,000,000 shares authorized,
     none issued                                                            -
   Common stock, $.002 par value, 5,000,000
     shares authorized, 3,695,618 shares
     issued and outstanding                                                 7
   Additional paid-in capital                                          99,779
   Accumulated deficit                                              (  86,242)
                                                                     --------
      Total stockholders' equity                                       13,544
                                                                     --------

      Total liabilities and
        stockholders' equity                                         $ 13,735
                                                                     ========











                 See accompanying notes to financial statements.

                                       2



<PAGE>

                                  CORTECH, INC.
                            STATEMENTS OF OPERATIONS
                      ($000 Omitted, except per share data)
                                   (UNAUDITED)


                                                         Three Months Ended
                                                               June 30 ,
                                                       ------------------------
                                                        2001              2000
                                                       ------            ------

Revenues:
   Interest income                                    $   165          $    170
   Other income (Note 2)                                    -                96
                                                      -------           -------
       Total revenues                                     165               266
                                                      -------           -------

Expenses:
   General and administrative                             225                95
                                                      -------           -------

Income (loss) before income taxes                    (     60)              171
Provision for income taxes                                  4                 8
                                                      -------           -------
Net income (loss)                                    ($    64)          $   163
                                                      =======           =======

Basic and fully diluted net
   income (loss) per share                           ($   .02)          $   .05
                                                      =======           =======

Basic weighted average common shares
   outstanding (in 000's)                               3,696             3,704
                                                      =======           =======

Diluted weighted average common shares
   outstanding (in 000's)                               3,696             3,704
                                                      =======           =======










                 See accompanying notes to financial statements.

                                       3



<PAGE>

                                  CORTECH, INC.
                            STATEMENTS OF OPERATIONS
                      ($000 Omitted, except per share data)
                                   (UNAUDITED)


                                                           Six Months Ended
                                                               June 30,
                                                        -----------------------
                                                         2001             2000
                                                        ------           ------

Revenues:
   Interest income                                      $   357         $   375
   Other income (Note 2)                                      -              96
                                                        -------         -------
       Total revenues                                       357             471
                                                        -------         -------

Expenses:
   General and administrative                               349             228
                                                        -------         -------

Income before income taxes                                    8             243
Provision for income taxes                                    8              11
                                                        -------         -------
Net income                                              $     -         $   232
                                                        =======         =======

Basic and fully diluted net
   income per share                                     $     -         $   .07
                                                        =======         =======

Basic weighted average common shares
   outstanding (in 000's)                                 3,705           3,704
                                                        =======         =======

Diluted weighted average common shares
   outstanding (in 000's)                                 3,726           3,704
                                                        =======         =======











                 See accompanying notes to financial statements.

                                       4



<PAGE>

                                  CORTECH, INC.
                            STATEMENTS OF CASH FLOWS
                                 ($000 Omitted)
                                   (UNAUDITED)



                                                            Six Months Ended
                                                                June 30,
                                                           -------------------
                                                            2001         2000
                                                           ------       ------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                              $     -      $   232
  Adjustments:
    Change in prepaid expenses and other assets          (      6)          20
    Change in accounts payable and accrued
      liabilities                                        (     16)    (      3)
                                                          -------      -------
      Net cash provided by (used in)
        operating activities                             (     22)         249
                                                          -------      -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of short-term investments                           -     (  6,498)
  Maturities of short-term investments                      6,611        6,568
                                                          -------      -------
      Net cash provided by investing activities             6,611           70
                                                          -------      -------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Issuance of common stock                                   175            -
   Repurchase of common stock                            (    223)           -
                                                          -------      -------
      Net cash used in financing activities              (     48)           -
                                                          -------      -------

Net increase in cash and cash equivalents                   6,541          319
Cash and cash equivalents, beginning of period              7,107        6,648
                                                          -------      -------
Cash and cash equivalents, end of period                  $13,648      $ 6,967
                                                          =======      =======


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:
    Cash paid for taxes                                   $     -      $     5
                                                          =======      =======











                 See accompanying notes to financial statements.

                                       5



<PAGE>
                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       General
         -------

              The  accompanying unaudited  financial statements of Cortech, Inc.
         ("Cortech"  or  the  "Company")  as  of June 30, 2001 and for the three
         and six months ended June  30,  2001  and  2000  reflect  all  material
         adjustments consisting  of only normal recurring adjustments, which, in
         the opinion of management,  are  necessary  for  a fair presentation of
         results for the  interim  periods.  Certain  information  and  footnote
         disclosures required  under accounting principles generally accepted in
         the United States of America have been condensed or omitted pursuant to
         the rules and regulations  of  the  Securities and Exchange Commission,
         although the Company believes that the disclosures are adequate to make
         the information presented not misleading.  These  financial  statements
         should be read in conjunction with the financial statements  and  notes
         thereto included in the Company's Annual Report on Form 10-KSB for  the
         year ended December 31, 2000 as filed with the Securities and  Exchange
         Commission.

              The  preparation  of  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
         contingent  assets  and  liabilities  at  the  date  of  the  financial
         statements and the reported amounts of revenues and expenses during the
         reporting period. Actual results could differ from those estimates.

              Prior  year's  financial  statements  have  been  reclassified  to
         conform to the current year's presentation.

              The  results  of  operations  for  the  three and six months ended
         June 30, 2001 and 2000 are not necessarily indicative of the results to
         be expected for the entire year or for any other period.

2.       Legal Proceedings
         -----------------

              On  February  27,  1998,  a  complaint  was  filed in the Court of
         Chancery of the State of Delaware, naming the  Company,  the  Company's
         then current directors and BioStar, Inc. as defendants. The  complaint,
         filed by a stockholder of the Company, claimed to be  on  behalf  of  a
         class of all the Company's stockholders and  contended  that  the  then
         current directors of the Company breached their fiduciary duties to the
         Company's stockholders  when they  unanimously  approved  the  proposed
         combination with BioStar. The complaint originally sought to enjoin the
         proposed  combination  with  BioStar  as  well  as the operation of the
         Company's stockholder rights plan and sought an  order  rescinding  the
         proposed combination with BioStar  upon  its  consummation  as  well as
         compensatory damages and costs.  The  complaint  was  amended following

                                       6


<PAGE>

         termination of the proposed BioStar merger to seek to  force an auction
         of the Company's assets  and  other  relief.  Thereafter,  the  parties
         negotiated a settlement  of  the  claims.  Pursuant to the terms of the
         settlement a payment in the amount of  $235,000  was made to Cortech on
         behalf of Defendants by  Cortech's  directors  and  officers  insurance
         carrier. On April 6, 2000,  the  Court  held a hearing and approved the
         settlement and ordered Cortech to pay  $129,261.88  in  attorney's fees
         and expenses from the insurance proceeds.  There  were no  objectors to
         the settlement and on May 11,  2000  Cortech  received  the  settlement
         payment and paid the attorney's fees and expenses.

3.       Related Party Transactions
         --------------------------

              An  administrative  fee  of  $15,000  per  month  is paid to Asset
         Value  Fund  Limited  Partnership  ("AVF")   for   management  services
         performed for the Company. These services include corporate governance,
         financial management and accounting services.  AVF  is  the  beneficial
         owner of approximately 39% of the Company's  Common  Stock at  June 30,
         2001.

4.       Stock Options
         -------------

              On  June  19,  2000,  the  Board  of  Directors  restored the 1986
         stock option plan and the 1993 equity incentive plan.  Both  plans  had
         been suspended in 1997. In 2000, 190,000 stock options were  issued  to
         the officers and directors of the Company. Of the 190,000 stock options
         issued,  75,000  were  incentive   stock  options   and   115,000  were
         non-qualified stock options. On  February 22, 2001 25,000 non-qualified
         stock options were exercised for proceeds of $175,000.

5.       Common Stock
         ------------

              On  May  14,  2001,  the  Company announced a 100% stock dividend.
         The  record  date  for  the  stock  dividend  was  May 22, 2001 and the
         distribution  date  was  June  1,  2001. Accordingly, all  common share
         information has been restated to reflect this stock dividend.

              On  October  30,  2000  the  Board  of Directors  approved a stock
         repurchase program authorizing the Company to repurchase  up to 320,000
         shares of its Common Stock at prices deemed favorable from time to time
         in the open market or in privately negotiated transactions  subject  to
         market   conditions,  the   Company's  financial  position   and  other
         considerations. As of June 30, 2001, 58,800 shares of Common Stock were
         repurchased  for  approximately  $223,000.  All shares repurchased were
         returned to the status of authorized but unissued shares.

                                       7

<PAGE>





6.       Net Income (Loss) Per Share
         ---------------------------

              Basic  net  income  (loss)  per  share is computed by dividing net
         income  (loss)   by   the  weighted-average  number  of  common  shares
         outstanding. Diluted  net  income  (loss)  per  share  is  computed  by
         dividing net income (loss) by the sum of the weighted-average number of
         common shares outstanding plus the dilutive effect  of shares  issuable
         through the exercise of stock options.

              The  shares  used  for basic earnings (loss) per share and diluted
         earnings (loss) per share are reconciled below (in 000's).

<TABLE>
         <S>                                          <C>           <C>             <C>          <C>


                                                      Three Months Ended            Six Months Ended
                                                            June 30,                      June 30,
                                                      -------------------          -------------------
                                                      2001          2000            2001         2000
                                                      -----         -----           -----        -----
         Average shares outstanding
            for basic earnings(loss) per share        3,696         3,704           3,705        3,704

         Dilutive effect of stock options                 -             -              21            -
                                                      -----         -----           -----        -----

         Average shares outstanding
            for dilutive earnings (loss) per share    3,696         3,704           3,726        3,704
                                                      =====         =====           =====        =====

</TABLE>



              Excluded  from  the  calculation  of  diluted  loss  per share for
         the three months ended June 30, 2001 are 23,482  common  stock  options
         which, if included, would have an antidilutive effect.

7.       Subsequent Event
         ----------------

              On August 7, 2001,  the  Company  filed  a Demand for  Arbitration
         with the American Arbitration Association against Ono  Pharmaceuticals,
         Inc. ("Ono")  seeking   resolution   of   a   dispute   regarding   the
         interpretation of a June 28, 1999 Research,   Development  and  License
         Agreement  ("Agreement")  with  Ono.  The  Agreement  provides  for the
         development and commercialization of a pharmaceutical product.  Cortech
         and Ono disagree with respect  to  Article IV  of the  Agreement, which
         concerns  the  scope of the license  granted to Ono thereunder. Cortech
         seeks an  order  interpreting Article  IV  of the Agreement and related
         provisions, and the rights and  obligations of the parties  thereunder,
         including a determination of  the  payments  to Cortech  under  Article
         VII of the  Agreement.  Cortech  has  no  assurance  that  it  will  be
         successful  in   the   arbitration,  and,  even  if   successful,   the
         arbitration may require the Company to incur  significant legal  costs,
         impact  the Company's ability to conduct  business or take advantage of
         new business  opportunities,  lower   the   stock  prices,   or  divert
         management's attention  from the Company's  primary business activities
         in general.


                                       8




<PAGE>

ITEM 2.  Management's  Discussion  and  Analysis  of  Financial   Condition  and
------   -----------------------------------------------------------------------
         Results of Operations
         ---------------------

     The following  discussion and analysis  should be read in conjunction  with
Cortech,  Inc.'s  ("Cortech" or the "Company") 2000 Annual Report on Form 10-KSB
as well  as the  Company's  financial  statements  and  notes  thereto  included
elsewhere in this Quarterly Report on Form 10-QSB. When used in this discussion,
the  word   "expects"   and  similar   expressions   are  intended  to  identify
forward-looking   statements.   Such   statements   are  subject  to  risks  and
uncertainties  that could cause actual results to differ  materially  from those
projected. The forward-looking  statements contained herein speak only as of the
date hereof.  The Company  expressly  disclaims any obligation or undertaking to
release  publicly  any updates or revisions  to any  forward-looking  statements
contained herein to reflect any change in the Company's expectations with regard
thereto or any change in events,  conditions or  circumstances on which any such
statement is based.

General
-------

     Cortech  operated  as  a  biopharmaceutical   company  whose  research  and
development  efforts  focused  primarily on bradykinin  antagonists and protease
inhibitors.  Those  efforts  produced  a  technology  portfolio  which  may have
potential  therapeutic  application across a broad range of medical  conditions.
Cortech's strategy is to seek collaborative  partners to conduct and fund future
research and development on the components of its portfolio,  although there can
be no assurance  that any particular  agreement  will be completed.  At the same
time, the Company is seeking to redeploy its assets into an operating business.

Results of Operations
---------------------

     Cortech had a net loss of $64,000 or $.02 basic and fully  diluted loss per
share for the quarter  ended June 30, 2001 compared to net income of $163,000 or
$.05 basic and fully diluted income per share for the same period in 2000. There
was no net income for the six months ended June 30, 2001, compared to net income
of $232,000 or $.07 basic and fully diluted income per share for the same period
in 2000.

     Interest income was $165,000 and $357,000 in the three and six months ended
June 30,  2001,  respectively,  compared to $170,000  and  $375,000 for the same
periods  in 2000,  a decrease  of $5,000 and  $18,000 in the three and six month
periods,  respectively.  Lower yields on investments  was the primary reason for
this decrease.

                                       9




<PAGE>

     Other income in the three and six months ended June 30, 2000 relates to the
settlement of a derivative  action brought on behalf of the Company in which the
Company recovered $96,000 net of court ordered payments. For more information on
the settlement, see Note 2 of Notes to Financial Statements.

     General and administrative expenses were $225,000 and $349,000 in the three
and six months  ended June 30, 2001,  respectively,  and $95,000 and $228,000 in
the same periods in 2000,  respectively,  an increase of $130,000 and  $121,000.
For the six months  ended June 30,  2001,  general and  administrative  expenses
consisted of consulting fees of $102,000;  administrative fees of $90,000; legal
fees of $76,000 and all other expenses of $81,000. For the six months ended June
30, 2000, general and administrative  expenses consisted of administrative  fees
of  $90,000;  legal  fees of  $59,000  and all other  expense  of  $79,000.  The
increases  in  consulting  and  legal  fees are due to the  Company's  increased
efforts in seeking a collaborative partner.

Liquidity and Capital Resources
-------------------------------

     At  June  30,  2001,   the  Company  had  cash  and  cash   equivalents  of
approximately $13.6 million. Cash equivalents of $13.5 million consisted of U.S.
Treasury  Bills with an original  maturity  of three  months or less with yields
ranging  between  3.33%  and  3.51%.  Management  believes  its  cash  and  cash
equivalents  are  sufficient for its remaining  business  activities and for the
costs of seeking an acquisition of an operating business.

     Net cash of $22,000  was used by  operating  activities  for the six months
ended June 30, 2001  compared to net cash  provided by operating  activities  of
$249,000  for the same  period in 2000.  In 2001,  changes in prepaid  expenses,
other  assets and accrued  liabilities  were the  reasons for the cash used.  In
2000, cash flows from net income of $232,000 was the primary reason for the cash
provided by operations.

     Net cash of $6.6 million was provided by  investing  activities  in the six
months ended June 30, 2001, due to the maturities of short-term investments. Net
cash of $70,000 was  provided by  investing  activities  in the six months ended
June 30, 2000, due to the purchases and maturities of short-term investments.

     Net cash of  $48,000  was used in  financing  activities  in the six months
ended  June 30,  2001 due to the  issuance  and  repurchase  of common  stock of
$175,000 and $223,000, respectively.

Subsequent Event
----------------

     On August 7, 2001,  the  Company  filed a Demand for  Arbitration  with the
American  Arbitration  Association  against Ono  Pharmaceuticals,  Inc.  ("Ono")
seeking  resolution of a dispute regarding the interpretation of a June 28, 1999
Research,   Development  and  License  Agreement  ("Agreement")  with  Ono.  The
Agreement provides for the development and commercialization of a pharmaceutical
product.  Cortech and Ono disagree with respect to Article IV of the  Agreement,
which concerns the scope of the license granted to Ono thereunder. Cortech seeks
an order interpreting Article IV of the Agreement and related provisions,and the
rights and obligations of the parties  thereunder,  including a determination of
the  payments  to Cortech  under  Article VII of the  Agreement.  Cortech has no
assurance  that  it  will  be  successful  in  the  arbitration,  and,  even  if
successful,  the arbitration may require the Company to incur  significant legal
costs, impact the Company's ability to conduct business or take advantage of new
business opportunities, lower the stock prices, or divert management's attention
from the Company's primary business activities in general.


                                       10


<PAGE>


PART II - OTHER INFORMATION
-------   -----------------

ITEM I  - LEGAL PROCEEDINGS
------    -----------------

     On August 7, 2001,  the  Company  filed a Demand for  Arbitration  with the
American  Arbitration  Association  against Ono  Pharmaceuticals,  Inc.  ("Ono")
seeking  resolution of a dispute regarding the interpretation of a June 28, 1999
Research,   Development  and  License  Agreement  ("Agreement")  with  Ono.  The
Agreement provides for the development and commercialization of a pharmaceutical
product.  Cortech and Ono disagree with respect to Article IV of the  Agreement,
which concerns the scope of the license granted to Ono thereunder. Cortech seeks
an order interpreting Article IV of the Agreement and related provisions,and the
rights and obligations of the parties  thereunder,  including a determination of
the  payments  to Cortech  under  Article VII of the  Agreement.  Cortech has no
assurance  that  it  will  be  successful  in  the  arbitration,  and,  even  if
successful,  the arbitration may require the Company to incur  significant legal
costs, impact the Company's ability to conduct business or take advantage of new
business opportunities, lower the stock prices, or divert management's attention
from the Company's primary business activities in general.

ITEM 4.   Submissions of Matters to a Vote of Security Holders
-------   ----------------------------------------------------

              The  Company  held  its  Annual  Meeting  of  Stockholders  on May
         21, 2001. Two Class I Directors were elected. The following is  a  vote
         tabulation for the nominees:

                   NOMINEE              FOR          WITHHELD
                   -------              ---          --------

         Paul O. Koether             1,744,925         4,154

         John W. Galuchie, Jr.       1,744,926         4,153

              The  shareholders  also   voted  to   ratify   the   selection  of
         PricewaterhouseCoopers LLP as  Independent  Auditors of the Company for
         the year ended December 31, 2001. The following is  a  vote  tabulation
         for the ratification.

                   FOR                WITHHELD                 AGAINST
                   ---                --------                 -------

                1,747,761               1,068                     250

ITEM 6.  Exhibits and Reports on Form 8-K
------   --------------------------------

a.       Exhibits

         None

b.       Reports on Form 8-K

         No  reports  on  Form 8-K were  filed during the quarter for which this
         report is being filed.

                                       11




<PAGE>
                                   SIGNATURES

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                             CORTECH, INC.



Date:  August 13, 2001                       /s/ Sue Ann Itzel
                                             ------------------------
                                             Sue Ann Itzel
                                             Treasurer
                                             (Principal Accounting
                                             and Financial Officer)






                                       12