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, 2000
                                         ------------------

                                       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, 2000,  the issuer had 1,852,209  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,
                                                                   2000
                                                               -------------

ASSETS
------

Current assets:
   Cash and cash equivalents                                      $  7,045
   Short-term investments                                            6,498
   Prepaid expenses and other                                          152
                                                                  --------
         Total assets                                             $ 13,695
                                                                  ========


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accrued liabilities                                            $    171
                                                                  --------
         Total liabilities                                             171
                                                                  --------

Stockholders' equity:
   Preferred stock, $.002 par value,
     2,000,000 shares authorized,
     none issued                                                         -
   Common stock, $.002 par value, 5,000,000
     shares authorized, 1,852,209 shares
     issued and outstanding                                              4
   Additional paid-in capital                                       99,830
   Accumulated deficit                                           (  86,310)
                                                                  --------

         Total stockholders' equity                                 13,524
                                                                  --------
         Total liabilities and
           stockholders' equity                                   $ 13,695
                                                                  ========





                 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,
                                                           -------------------
                                                            2000         1999
                                                           ------       ------

Revenues:
  Interest income                                         $   200      $   157
  Gain on disposition
    of property and equipment                                   -          125
  Other income                                                  -           92
                                                          -------      -------
     Total revenues                                           200          374
                                                          -------      -------

Expenses:
  General and administrative                                   98          101
                                                          -------      -------

Income before income taxes                                    102          273
Provision for income taxes                                      2           10
                                                          -------      -------
Net income                                                $   100      $   263
                                                          =======      =======

Basic and fully diluted net
  income per share                                        $   .05      $   .14
                                                          =======      =======




                 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,
                                                            ------------------
                                                             2000        1999
                                                            -----       ------

Revenues:
  Interest income                                         $   575      $   408
  Gain on disposition
    of property and equipment                                   -          435
  License income (Note 2)                                       -        2,000
  Other income (Note 3)                                        96          152
                                                          -------      -------
     Total revenues                                           671        2,995
                                                          -------      -------

Expenses:
  General and administrative                                  326          462
                                                          -------      -------

Income before income taxes                                    345        2,533
Provision for income taxes                                     13          228
                                                          -------      -------
Net income                                                $   332      $ 2,305
                                                          =======      =======

Basic and fully diluted net
  income per share                                        $   .18      $  1.24
                                                          =======      =======



                 See accompanying notes to financial statements.



                                       4

<PAGE>

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

                                                            Nine Months Ended
                                                              September 30,
                                                            ------------------
                                                             2000        1999
                                                            ------      ------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                              $   332    $  2,305
   Adjustments:
     Licensing income                                            -   (   2,000)
     Gain on disposition of equipment                            -   (     435)
     Change in prepaid expenses and other                        3          69
     Change in accounts payable                           (     17)  (     133)
     Change in accrued liabilities and other                     9   (     392)
                                                           -------    --------
       Net cash provided by (used in)
        operating activities                                   327   (     586)
                                                           -------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sales of property and equipment                 -         435
   Licensing income                                              -       2,000
   Purchases of short-term investments                    (  6,498)          -
   Maturities of short-term investments                      6,568           -
                                                           -------    --------
       Net cash provided by investing activities                70       2,435
                                                           -------    --------

Net increase in cash and cash equivalents                      397       1,849
Cash and cash equivalents, beginning of period               6,648      11,597
                                                           -------    --------
Cash and cash equivalents, end of period                   $ 7,045    $ 13,446
                                                           =======    ========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

      Cash paid for taxes                                  $    12    $    200
                                                           =======    ========



                 See accompanying notes to financial statements.



                                       5
<PAGE>


                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2000 AND 1999
                                   (UNAUDITED)

1. General
   -------

     The accompanying unaudited financial statements of Cortech, Inc. ("Cortech"
or the  "Company")  as of  September  30,  2000 and for the three and nine month
periods  ended  September  30, 2000 and 1999  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 generally
accepted  accounting  principles have been condensed or omitted  pursuant to the
rules and regulations of the U.S. 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, 1999 as
filed with the U.S. Securities and Exchange Commission.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  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.

     The results of operations for the three and nine months ended September 30,
2000 and 1999 are not  necessarily  indicative of the results to be expected for
the entire year or for any other period.

2. License Income
   --------------

     In June  1999,  the  Company  finalized  an  Agreement  to  license  to Ono
Pharmaceutical Co., Ltd. of Osaka Japan ("Ono") the worldwide rights to the oral
elastase  inhibitor program on which the two companies have been  collaborating.
Prior to this  Agreement,  Ono's rights to this  technology  were limited to the
territories of Korea,  Japan, China and Taiwan. In connection with the expansion
of Ono's rights to the technology,  Cortech  received a $2,000,000  payment less
applicable taxes both in the United States and Japan. Ono withheld at the source
$200,000 of  withholding  taxes  which they  remitted  directly to the  Japanese
taxing authorities.

     If Ono's  studies  of the  technology  are  favorable,  Cortech  could also
receive milestone payments of up to $9.5 million. Ono also agreed to pay Cortech
a royalty on sales generated outside the original  territories on products using
Cortech's technology. Milestone payments or royalties are not assured and in any
event could be expected only after several more years of continued evaluation of
the technology by Ono.




                                       6

<PAGE>


3. 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
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  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.

4. 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 October 31, 2000.

5. 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.
On July 18, 2000 a total of 180,000  stock  options  were issued to the officers
and directors of the Company. On August 9, 2000 10,000 stock options were issued
to a newly appointed director.  Of the 190,000 stock options issued, 75,000 were
incentive stock options and 115,000 were non-qualified stock options.

6. Common Stock
   ------------

     On October  30,  2000 the Board of  Directors  approved a stock  repurchase
program authorizing the Company to repurchase up to 160,000 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.




                                       7

<PAGE>


7. Net Income Per Share
   --------------------

     Basic net  income  per share is  computed  by  dividing  net  income by the
weighted-average  number of common  shares  outstanding.  Diluted net income per
share is  computed  by  dividing  net income 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 per share and diluted earnings per share
are reconciled below (in 000's).

                                 Three Months Ended          Nine Months Ended
                                    September 30,              September 30,
                                 -------------------         -----------------
                                  2000         1999           2000       1999
                                 ------       ------         ------     ------


Average shares
   outstanding for
   basic earnings
   per share                      1,852       1,852           1,852     1,852

Dilutive effect of
   stock options                     20           -              21         -
                                  -----       -----           -----     -----

Average shares
   outstanding for
   diluted earnings
   per share                      1,872       1,852           1,873     1,852
                                  =====       =====           =====     =====


                                       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") 1999 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
-------

     Until 1998, 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 net income of $100,000 or $.05 basic and fully diluted earnings
per share and  $332,000 or $.18 basic and fully  diluted  earnings per share for
the three and nine months ended  September 30, 2000,  respectively,  compared to
net income of $263,000 or $.14 basic and fully  diluted  earnings  per share and
$2,305,000  or $1.24  basic and fully  diluted  earnings  per share for the same
periods in 1999, respectively.

     Interest  income was  $200,000  and  $575,000  in the three and nine months
ended  September 30, 2000,  respectively,  compared to $157,000 and $408,000 for
the same  periods in 1999,  an increase of $43,000 and $167,000 in the three and
nine  month  periods,  respectively.  Higher  yields on  investments  and higher
invested balances were the primary reasons for this increase.

     Gains on  disposition  of property and equipment were $125,000 and $435,000
in the three and nine months ended September 30, 1999, respectively.

     Licensing  income of $2,000,000 in the nine months ended September 30, 1999
relates to an agreement  to license to Ono  Pharmaceutical  Co.,  Ltd. of Osaka,
Japan ("Ono") the worldwide rights to an oral elastase inhibitor  program.  (See
Note 2 of Notes to Financial Statements.)

     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 3 of Notes to Financial Statements.

                                       9

<PAGE>

     Other  income of $92,000 and  $152,000  in the three and nine months  ended
September  30, 1999,  respectively,  relate to the  reimbursement  by one of the
Company's  insurance carriers of legal fees previously expensed and the reversal
of previously  accrued  expenses in connection with the closing of the Company's
Denver facilities.

     General and administrative  expenses were $98,000 and $326,000 in the three
and nine months  ended  September  30,  2000,  respectively,  and  $101,000  and
$462,000  in the same  periods in 1999,  respectively,  a decrease of $3,000 and
$136,000.   For  the  nine  months  ended   September  30,  2000,   general  and
administrative expenses consisted of administrative fees of $135,000; legal fees
of $68,000; insurance fees of $48,000 and all other expenses of $75,000. For the
nine months  ended  September  30,  1999,  general and  administrative  expenses
consisted of patent related costs of $75,000; legal fees of $225,000;  insurance
fees of $70,000 and all other expenses of $92,000.

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

     At September 30, 2000,  the Company had cash,  cash  equivalents  and short
term  investments of approximately  $13,543,000.  Cash equivalents of $6,905,000
consisted of U.S.  Treasury Bills with a maturity of three months or less at the
date of  purchase  with  yields  ranging  between  5.29% and  6.18%.  Short term
investments  of $6,498,000  consisted of U.S.  Treasury Bills with a maturity of
greater than three months at the date of purchase  with yields  ranging  between
5.85%  and  6.167%.  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 $327,000  was  provided by  operating  activities  for the nine
months ended  September  30, 2000 compared to a net use of $586,000 for the same
period in 1999. In 2000,  cash flows from net income of $332,000 was the primary
reason for the cash provided by operations.  In 1999, cash flows from net income
of $2,305,000  were offset by the gain on  dispositions of equipment of $435,000
and  license  income of  $2,000,000  (classified  as  investing  activities),  a
decrease in accounts  payable of $133,000 and a decrease in accrued  liabilities
of $392,000.

     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 $2,435,000 was provided by investing activities in the
nine months ended  September 30, 1999, due to the sale of property and equipment
of $435,000 and license income of $2,000,000.

                                       10


<PAGE>


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

      a.  Exhibits

            27.   Financial  Data  Schedule  for the nine months ended September
                  30, 2000

      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 8, 2000                     /s/ Sue Ann Itzel
                                            -----------------
                                            Sue Ann Itzel
                                            Treasurer
                                            (Principal Accounting  and Financial
                                            Officer)


                                       12