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: September 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 October 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)

                                                              September 30,
                                                                  2001
                                                              -------------

Assets
------

Current assets:
   Cash and cash equivalents                                     $ 13,619
   Prepaid expenses and other                                          30
                                                                 --------
        Total current assets                                     $ 13,649
                                                                 ========


Liabilities and stockholders' equity

Current liabilities:
   Accrued liabilities                                           $    187
                                                                 --------
        Total current liabilities                                     187
                                                                 --------

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                                      99,778
   Accumulated deficit                                          (  86,323)
                                                                 --------
        Total stockholders' equity                                 13,462
                                                                 --------
        Total liabilities and
          stockholders' equity                                   $ 13,649
                                                                 ========









                 See accompanying notes to financial statements.

                                       2




<PAGE>

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


                                                         Three Months Ended
                                                            September 30,
                                                         -------------------

                                                           2001       2000
                                                           ----       ----

Revenues:
  Interest income                                         $  115    $  200

Expenses:
  General and administrative                                 213        98
                                                          ------    ------


Income (loss) before income taxes                        (    98)      102
Provision (benefit) for income taxes                     (    16)        2
                                                          ------    ------
Net income (loss)                                        ($   82)   $  100
                                                          ======    ======


Basic and fully diluted net
  income (loss) per share                                ($  .02)   $  .03
                                                          ======    ======

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

Diluted weighted average common
  shares outstanding (in 000's)                            3,696     3,744
                                                          ======    ======

















                 See accompanying notes to financial statements.


                                       3


<PAGE>

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


                                                         Nine Months Ended
                                                           September 30,
                                                         ------------------

                                                          2001        2000
                                                          ----        ----

Revenues:
  Interest income                                       $  472       $  575
  Other income (Note 2)                                      -           96
                                                        ------       ------
    Total revenues                                         472          671
                                                        ------       ------

Expenses:
  General and administrative                               562          326
                                                        ------       ------

Income (loss) before income taxes                      (    90)         345
Provision (benefit) for income taxes                   (     8)          13
                                                        ------       ------
Net income (loss)                                      ($   82)      $  332
                                                        ======       ======

Basic and fully diluted net
 income (loss) per share                               ($  .02)      $  .09
                                                        ======       ======

Basic weighted average common
 shares outstanding (in 000's)                           3,702        3,704
                                                        ======       ======

Diluted weighted average common
 shares outstanding (in 000's)                           3,702        3,746
                                                        ======       ======















                 See accompanying notes to financial statements.

                                       4







<PAGE>

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



                                                            Nine Months Ended
                                                              September 30,
                                                            -----------------
                                                             2001       2000
                                                             ----       ----

Cash flows from operating activities:
   Net income (loss)                                     ($     82)   $    332
   Adjustments:
     Change in prepaid expenses and other assets                51           3
     Change in accounts payable and accrued
       liabilities                                       (      20)  (       8)
                                                          --------    --------
      Net cash provided by (used in)
       operating activities                              (      51)        327
                                                          --------    --------

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                    6,512         397
Cash and cash equivalents, beginning of period               7,107       6,648
                                                          --------    --------
Cash and cash equivalents, end of period                  $ 13,619    $  7,045
                                                          ========    ========


Supplemental disclosure of cash flow
   information:
       Cash paid for taxes                                $      -    $     12
                                                          ========    ========











                 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  September  30, 2001 and for the three and nine months
ended September 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 nine months ended September 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 the Company and  contended  that the then  current  directors of the Company
breached  their  fiduciary  duties  to  the  Company's   stockholder  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.

     On August 7, 2001, Cortech 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  Cortech to incur  significant  legal
costs,  impact  Cortech's  ability to conduct  business or take advantage of new
business opportunities,  lower the stock price, or divert management's attention
from Cortech's primary business activities in general.


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  40% of the Company's
Common Stock at September 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. In the first quarter 2001,
25,000 non-qualified stock options were exercised for proceeds of $175,000.




                                       7


<PAGE>

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 September 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.

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 income (loss) per share and diluted income (loss)
per share are reconciled below (in 000's):


                                      Three Months Ended     Nine Months Ended
                                         September 30,         September 30,
                                      -------------------    -----------------
                                        2001       2000        2001      2000
                                       ------     ------      ------    ------


Average shares outstanding for
   basic income (loss) per share        3,696      3,704      3,702      3,704

Dilutive effect of stock options            -         40          -         42
                                        -----      -----      -----      -----

Average shares outstanding for
   diluted income (loss) per share      3,696      3,744      3,702      3,746
                                        =====      =====      =====      =====


     Excluded from the  calculation  of diluted loss per share for the three and
nine months ended  September 30, 2001 are 165,000 common stock options which, if
included, would have an antidilutive effect.






                                       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 $82,000 or $.02 basic and fully  diluted loss per
share for the three and nine months ended  September  30, 2001,  compared to net
income  of  $100,000  or $.03  basic and fully  diluted  earnings  per share and
$332,000 or $.09 basic and fully diluted earnings per share for the same periods
in 2000, respectively.

     Interest  income was  $115,000  and  $472,000  in the three and nine months
ended  September 30, 2001,  respectively,  compared to $200,000 and $575,000 for
the same  periods in 2000,  a decrease of $85,000 and  $103,000 in the three and
nine month periods,  respectively.  Lower yields on investments  was the primary
reason for this decrease.

     Other  income in the nine months  ended  September  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.


                                       9


<PAGE>

     General and administrative expenses were $213,000 and $562,000 in the three
and nine months ended September 30, 2001, respectively, and $98,000 and $326,000
in the same periods in 2000, respectively, an increase of $115,000 and $236,000.
For the three  months  ended  September  30,  2001  general  and  administrative
expenses  consisted of legal  expenses of $80,000;  consulting  fees of $61,000;
administrative fees of $45,000 and all other expenses of $27,000.  For the three
months ended September 30, 2000, general and  administrative  expenses consisted
of administrative fees of $45,000, insurance expenses of $17,000; legal expenses
of  $10,000  and all  other  expenses  of  $26,000.  The  increase  in legal and
consulting  fees is a result of the  Company's  increased  efforts  in seeking a
collaborative  partner and expenses  incurred in  connection  with the Company's
arbitration  against Ono. For the nine months ended September 30, 2001,  general
and administrative expenses consisted of consulting fees of $163,000; legal fees
of $155,000; administrative fees of $135,000 and all other expenses of $109,000.
For the nine  months  ended  September  30,  2000,  general  and  administrative
expenses consisted of administrative fees of $135,000; legal fees of $68,000 and
all other  expenses of $123,000.  The increase in consulting and legal fees is a
result of the Company's increased efforts in seeking a collaborative partner and
expenses incurred in connection with the Company's arbitration against Ono.

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

     At  September  30,  2001,  the  Company  had cash and cash  equivalents  of
approximately $13.6 million. Cash equivalents of $13.6 million consisted of U.S.
Treasury  Bills with a maturity of three  months or less at the date of purchase
with yields ranging  between 2.46% and 2.58%.  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 $51,000 was used in  operating  activities  for the nine months
ended  September 30, 2001 compared to net cash provided of $327,000 for the same
period in 2000. In 2001, cash consumed by the net loss of $82,000 and the change
in accounts payable and accrued liabilities of $20,000, was offset by the change
in prepaid  expenses and other assets of $51,000.  In 2000,  cash flows from net
income of $332,000 was the primary reason for the cash provided by operations.

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

     Net cash of $48,000  was used in  financing  activities  in the nine months
ended September 30, 2001, due to the issuance and repurchase of common stock.

                                       10

<PAGE>


PART II - OTHER INFORMATION
-------   -----------------
ITEM 1.   LEGAL PROCEEDINGS
------    -----------------

     On August 7, 2001, Cortech 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  Cortech to incur  significant  legal
costs,  impact  Cortech's  ability to conduct  business or take advantage of new
business opportunities,  lower the stock price, or divert management's attention
from Cortech's primary business activities in general.

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












                                       12