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, 1999
                                         -------------

                                       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, 1999,  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)

                                                              June 30,
                                                                1999
                                                              --------
ASSETS
------

Current assets:
     Cash and cash equivalents                                 $13,359
     Prepaid expenses and other                                      5
                                                               -------
             Total assets                                      $13,364
                                                               =======


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
     Accounts payable                                          $    19
     Accrued severance and other compensation                      213
     Other accrued liabilities                                     549
                                                               -------
             Total liabilities                                     781
                                                               -------

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                                      ( 87,251)
                                                               -------

             Total stockholders' equity                         12,583
                                                               -------
             Total liabilities and
               stockholders' equity                            $13,364
                                                               =======




                 See accompanying notes to financial statements.

<PAGE>



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


                                                   Three Months Ended
                                                        June 30,
                                                   ------------------
                                                    1999        1998
                                                    ----        ----
Revenues:
   Interest income                                $   127     $   183
   Gain on disposition
     of property and equipment                         64          12
   License income (Note 2)                          2,000           -
   Other income                                        15          22
                                                  -------     -------
       Total revenues                               2,206         217
                                                  -------     -------

Expenses:
   General and administrative                         146       1,498
   Research and development                             -         150
                                                  -------     -------
       Total expenses                                 146       1,648
                                                  -------     -------


Income (loss) before income taxes                   2,060    (  1,431)
Provision for income taxes                            218           -
                                                  -------     -------
Net income (loss)                                 $ 1,842    ($ 1,431)
                                                  =======     =======

Basic and fully diluted net
   income (loss) per share                        $   .99    ($   .77)
                                                  =======     =======

Weighted average common
   shares outstanding (in 000's)                    1,852       1,852
                                                  =======     =======




                 See accompanying notes to financial statements.


<PAGE>



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


                                                       Six Months Ended
                                                           June 30,
                                                       ----------------
                                                       1999        1998
                                                       ----        ----

Revenues:
   Interest income                                   $   251     $   379
   Gain on disposition
     of property and equipment                           310         228
   License income (Note 2)                             2,000           -
   Other income                                           60          22
                                                     -------     -------
       Total revenues                                  2,621         629
                                                     -------     -------

Expenses:
   General and administrative                            361       3,023
   Research and development                                -         436
                                                     -------     -------
       Total expenses                                    361       3,459
                                                     -------     -------


Income (loss) before income taxes                      2,260    (  2,830)
Provision for income taxes                               218           -
                                                     -------     -------
Net income (loss)                                    $ 2,042    ($ 2,830)
                                                     =======     =======

Basic and fully diluted net
   income (loss) per share                           $  1.10    ($  1.53)
                                                     =======     =======

Weighted average common
   shares outstanding (in 000's)                       1,852       1,852
                                                     =======     =======



                 See accompanying notes to financial statements.

<PAGE>



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



                                                            Six Months Ended
                                                                 June 30,
                                                          --------------------
                                                            1999         1998
                                                          -------       ------

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                   $  2,042    ($  2,830)
     Adjustments:
       Depreciation and amortization                            -          429
       License income                                   (   2,000)           -
       Gain on disposition of equipment                 (     310)   (     102)
       Decrease in prepaid expenses and other                  71          140
       Decrease in accounts payable                     (     131)   (     314)
       Decrease in accrued liabilities,
         accrued severance and other                    (     220)   (     275)
                                                         --------     --------
        Net cash used in operating activities           (     548)   (   2,952)
                                                         --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sales of property and equipment            310          184
     License income                                         2,000            -
     Purchases of short-term investments                        -    (       9)
     Sales of short-term investments                            -        3,850
                                                         --------     --------
        Net cash provided by investing activities           2,310        4,025
                                                         --------     --------

Net increase in cash and cash equivalents                   1,762        1,073
Cash and cash equivalents, beginning of period             11,597       11,562
                                                         --------     --------
Cash and cash equivalents, end of period                 $ 13,359     $ 12,635
                                                         ========     ========


SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
   ACTIVITIES:
       Note receivable from sale of equipment            $      -     $    125
                                                         ========     ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:
       Cash paid for taxes                               $    200     $      -
                                                         ========     ========




                 See accompanying notes to financial statements.

<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, 1999 and for the three and six month  periods
ended June 30, 1999 and 1998 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, 1998 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. Prior years'
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, 1999
and 1998 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 made final the Agreement first announced in March
1999 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.  This withholding tax was
expensed in the accompanying financial statements, however, the Company does not
believe it was liable for this  withholding and is appealing the withholding and
seeking  reimbursement  from  the  Japanese  taxing  authorities.  There  is  no
assurance that the Company will be successful with this appeal.

     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


<PAGE>



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.

     Elastase is a  protein-degrading  enzyme  released from  neutrophil  and is
considered  to play a major role in tissue  damage  and organ  failure in severe
inflammatory  conditions.  Development of an orally active elastase inhibitor is
expected to bring a new therapy for patients with chronic inflammatory diseases.
Ono plans to conduct clinical studies  targeting chronic  obstructive  pulmonary
disease and rheumatoid arthritis.


<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") 1998 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 net  income of  $1,842,000  or $.99  basic  and fully  diluted
earnings per share and $2,042,000 or $1.10 basic and fully diluted  earnings per
share for the three and six months ended June 30, 1999,  respectively,  compared
to net losses of  $1,431,000  or $.77 basic and fully diluted loss per share and
$2,830,000  or $1.53 basic and fully diluted loss per share for the same periods
in 1998, respectively.

     Interest income was $127,000 and $251,000 in the three and six months ended
June 30,  1999,  respectively,  compared to $183,000  and  $379,000 for the same
periods in 1998,  a decrease of $56,000 and  $128,000 in the three and six month
periods,  respectively.  Lower yields on cash equivalents was the primary reason
for this decrease.

     Gains on disposition of property and equipment were $64,000 and $310,000 in
the three and six months ended June 30, 1999, respectively,  compared to $12,000
and $228,000 for the same periods in 1998.  During 1997,  the Company  commenced
selling  property and equipment  previously used in research and development and
for administrative purposes which has continued into 1999.

     License  income of  $2,000,000  in the three and six months  ended June 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.)



<PAGE>


     Other  income of $15,000 and $60,000 in the three and six months ended June
30, 1999,  respectively,  primarily relate to the collection of a rental deposit
of  $15,000 in June 1999 and  reimbursement  by one of the  Company's  insurance
carriers  of  legal  fees  of  $45,000  previously   expensed  for  the  BioStar
Litigation. (see Part II, Item 1.)

     General and administrative expenses were $146,000 and $361,000 in the three
and six months  ended June 30,  1999,  respectively,  and $1.5  million and $3.0
million in the same  periods in 1998,  respectively,  a decrease of $1.4 million
and $2.6 million.  During 1998,  the Company was still in the process of winding
down its operations.  In 1999,  management  instituted strict cost controls with
the goal of preserving cash. For the six months ended June 30, 1999, general and
administrative expenses consisted principally of patent related costs of $75,000
and legal expenses of $153,000, which are being expensed.

     Expenses  for research and  development  were  $150,000 and $436,000 in the
three and six months ended June 30, 1998, respectively.  Due to the cessation of
research and development  activities by the Company in late 1997,  there were no
research  and  development  expenses in the three and six months  ended June 30,
1999.

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

     At  June  30,  1999,   the  Company  had  cash  and  cash   equivalents  of
approximately  $13,359,000.  Cash  equivalents of $13,204,000  consisted of U.S.
Treasury  Bills with an original  maturity  of three  months or less with yields
ranging  between  4.293%  and  4.889%.  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 $548,000  was used in operating  activities  for the six months
ended June 30, 1999 compared to a net use of  $2,952,000  for the same period in
1998. In 1999,  cash flows from net income of $2,042,000 were offset by the gain
on  disposition  of  equipment  of  $310,000  and license  income of  $2,000,000
(classified  as  investing  activities)  and a decrease in  accounts  payable of
$131,000 and accrued  liabilities,  accrued severance and other of $220,000.  In
1998,  the net loss of  $2,830,000  and the  decrease  in  accounts  payable  of
$314,000 and accrued  liabilities,  accrued  severance and other of $275,000 was
partially  offset by depreciation and amortization of $429,000 and a decrease in
prepaid expenses of $140,000.

     Net cash of  $2,310,000  was  provided by investing  activities  in the six
months  ended  June 30,  1999,  due to the sale of  property  and  equipment  of
$310,000  and license  income of  $2,000,000.  In the six months  ended June 30,
1998,  $4,025,000 was provided by investing  activities with $3,850,000 provided
by the sale of  short-term  investments  and  $184,000  provided  by the sale of
property and equipment.


<PAGE>



Impact of Year 2000
-------------------

     The year 2000 will impact computer programs written using two digits rather
than four to define  the  applicable  year.  Any  programs  with  time-sensitive
software  may  recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failure or miscalculations causing disruptions
of  operation,  including a temporary  inability to process  transactions,  send
invoices or engage in other ordinary  activities.  This problem  largely affects
software  programs  written  years ago,  before  the issue  came to  prominence.
Insofar as Cortech has effectively  discontinued all internal efforts to advance
its research and  development  activities,  Cortech does not believe that it has
significant risk associated with the year 2000 problem.



<PAGE>

PART II - OTHER INFORMATION
-------   -----------------
ITEM 1.   Legal Proceedings
-------   -----------------

     BIOSTAR  LITIGATION.  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.  ("BioStar")  as  defendants.  The
complaint,  filed by a stockholder  of the Company,  claims to be on behalf of a
class of all the  Company's  stockholders  and  contends  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 termination of the proposed BioStar merger to seek to force an
auction  of the  Company's  assets and other  relief.  Prior  management  of the
Company believed that the claims are without merit. The members of the Board who
were elected at the last annual meeting made no independent review of the merits
of the claim or whether  the claim could have a material  adverse  effect on the
Company's financial position or results of operations.

     Recently,  counsel  for the  plaintiff  in the  litigation  has  agreed  in
principal to approach the court to seek dismissal of the case on grounds that it
is  moot.  Notwithstanding  the  foregoing,  however,  no  papers  have yet been
submitted  to the court and there is no  guarantee  that the court,  which would
have to approve such dismissal, will do so.



<PAGE>

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

         a.  Exhibits

              27. Financial Data Schedule for the six months ended June 30, 1999

         b.  Reports on Form 8-K

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



<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: August 13, 1999                        /s/ Sue Ann Itzel
                                             ---------------------------
                                             Sue Ann Itzel
                                             Treasurer
                                             (Principal Accounting and Financial
                                             Officer)