**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**


**MARK
      ONE:**





x
            Annual
                Report Under Section 13 or 15(d) of the Securities Exchange Act of
                1934.


For
      the
      Fiscal year ended December 31, 2005





o
            Transition
                Report Under Section 13 or 15 (d) of the Securities Exchange Act
                of
                1934


For
      the
      transition period from __________ to _____________.





Commission
      file number 0-20726





CORTECH,
      INC.


(Name
      of
      small business issuer in its charter)


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





376
                Main Street, P.O. Box 74, Bedminster, New Jersey
            07921(Address
                of principal executive offices)
            (Zip
                Code)





Issuer’s
      telephone number (908)
      234-1881





Securities
      registered under Section 12(b) of the Exchange Act:





NONE





Securities
      registered under Section 12(g) of the Exchange Act:





Common
      Stock, par value $.002 per share


(Title
      of
      Class)





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. *





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 registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.  Yes  T   No  *





Check
      if
      there is no disclosure of delinquent filers in response to item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. T





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes  T  No  *





The
      issuer’s revenues for the fiscal year ended December 31, 2005 were approximately
      $337,000.





As
      of
      February 28, 2006, there were 3,594,940 shares of common stock outstanding.
      The
      aggregate market value of the common stock held by non-affiliates of the issuer,
      based upon the closing sale price on The Pink Sheets on February 28, 2006,
      was
      approximately $4.8 million.





Transitional
      Small Business Disclosure Format   Yes * No T





Portions
      of the following documents are incorporated by reference in this Report on
      Form
      10-KSB:





1.
            Information
                required under Part III of this report is incorporated by reference
                from
                the Registrant’s Information Statement for the Registrants Annual Meeting
                of Stockholders to be held on May 22,
                2006.










**PART
      I**


**Item
                  1.**
              -
              **DESCRIPTION
                  OF BUSINESS**




General





Except
      for the historical information contained herein, the matters discussed in this
      Annual Report on Form 10-KSB are forward-looking statements that involve risks
      and uncertainties. For a discussion of certain factors which may affect the
      outcome projected in such statements, see Item 6 (“Management’s Discussion and
      Analysis of Financial Condition and Results of Operations”) of this Annual
      Report, as well as factors noted in the balance of this Item 1 (“Description of
      Business”). Actual results may differ materially from those projected. These
      forward-looking statements represent the Company’s judgement as of the date of
      the filing of this Annual Report. The Company disclaims, however, any intent
      or
      obligation to update these forward-looking statements.





Background





Cortech,
      Inc. ("Cortech" or the "Company") was incorporated in 1982 in Colorado and
      reincorporated in Delaware in 1991.





Cortech
      was a biopharmaceutical company whose research and development efforts were
      focused primarily on protease inhibitors and bradykinin antagonists which
      produced a technology portfolio that may have therapeutic application across
      a
      broad range of medical conditions.





Cortech’s
      strategy was to use collaborative partners to conduct and fund research and
      development on those components of its portfolio that had not been licensed
      to
      third parties. Cortech does not currently have any collaborative partners.
      In
      response to disappointing test results and its loss of collaborative partner
      funding for research, Cortech implemented a series of workforce reductions
      which
      resulted in the Company having no compensated employees from 1999 until November
      2005, and effectively discontinued all internal research and development
      activities. In addition, in 1998 Cortech decommissioned its laboratories and
      sold all of its remaining scientific, technical and office equipment. Currently
      Cortech is not incurring any additional expenses to maintain its patent
      portfolio and over time will see the erosion of its patent base.





Business
      Plan





In
      November 2005, the Company hired Dr. Qun Yi Zheng as its President. Under Dr.
      Zheng’s leadership, Cortech intends to pursue business opportunities in China,
      Eastern Europe and the United States. The Company may consider potential
      opportunities in a number of areas including outsourcing for U.S. companies,
      consulting for U.S. and non U.S. companies interested in cross-border business
      relationships, surveys of small businesses for sale in China and Eastern Europe
      and import/export distribution contracts.


I-1


The
      Company does not expect that these activities will generate any revenues for
      an
      indefinite period as these new efforts are in their early stages. As a result,
      this new program may produce a significant loss until such time as meaningful
      revenues are achieved.





Additionally,
      the Company may use its available working capital, capital stock, debt or a
      combination of these to start a business or to effect a business combination
      with a company seeking to establish a public trading market for its securities
      while avoiding the time delays, significant expense, loss of voting control
      and
      other burdens including significant professional fees of an initial public
      offering. A business combination may be with a financially stable, mature
      company or a company that is in its early stages of development or growth,
      which
      could include companies seeking to obtain capital and to improve their financial
      stability.





The
      Company will not restrict its search to any particular industry; rather, it
      may
      investigate businesses of essentially any kind or nature and participate in
      any
      type of business that may, in management's opinion, meet the business objectives
      as described in this report. The Company emphasizes that the description in
      this
      report of the business objective of seeking an operating business is extremely
      general and is not meant to restrict management discretion to seek and enter
      into potential business opportunities.





The
      Company has not identified the particular business in which it will seek to
      engage, nor has it conducted any market studies with respect to any business
      or
      industry to evaluate the possible merits or risks of the target business or
      industry in which the Company ultimately may operate. To the extent the Company
      enters into a business combination with a financially unstable company or an
      entity in its early stage of development or growth, including entities without
      established records of revenues or earnings, or start its own new business
      the
      Company will become subject to numerous risks inherent in the business and
      operations of financially unstable and early stage or developing companies.
      In
      addition, to the extent that the Company effects a business combination with
      an
      entity in an industry characterized by a high level of risk or starts its own
      new business in such an industry, the Company will become subject to the
      currently unascertainable risks of that industry. An extremely high level of
      risk frequently characterizes certain industries that experience rapid growth.
      In addition, although the Company will endeavor to evaluate the risks inherent
      in a particular industry or target
      business, the Company cannot assure you that it will properly ascertain or
      assess all significant risk factors.


I-2


Sources
      of target businesses





Cortech
      anticipates that target business candidates may be brought to the Company’s
      attention from various unaffiliated sources, including securities
      broker-dealers, investment bankers, private equity groups, venture capitalists,
      bankers and other members of the financial community, who may present solicited
      or unsolicited proposals. The Company’s officers and directors and their
      affiliates may also bring to the Company’s attention target business candidates.
      The Company has entered into non-exclusive agreements with several finders
      and
      investment bankers specializing in Asian Enterprises and may engage such firms
      in the future for which the Company may pay a finder's fee or other compensation
      if a transaction is completed.





*Selection
      of a target business and structuring of a business
      combination*





The
      Company’s management will have significant flexibility in identifying and
      selecting a prospective target business. In evaluating a prospective target
      business, management may consider, among other factors, the
      following:





·
            the
                financial condition and results of operation of the
                target;


·
            the
                growth potential of the target and that of the industry in which
                the
                target operates;


·
            the
                experience and skill of the target's management and availability
                of
                additional personnel;


·
            the
                capital requirements of the target;


·
            the
                competitive position of the target;


·
            the
                stage of development of the target's products, processes or
                services;


·
            the
                degree of current or potential market acceptance of the target's
                products,
                processes or services;


·
            proprietary
                features and the extent and quality of the intellectual property
                or other
                protection of the target's products, processes or
                services;


·
            the
                regulatory environment of the industry in which the target
                operates;


·
            the
                prospective equity interest in, and opportunity for control of, the
                target; and


·
            the
                costs associated with effecting a business
                combination.


I-3


These
      criteria are not intended to be exhaustive. Any evaluation relating to the
      merits of a particular business combination will be based, to the extent
      relevant, on the above factors as well as other considerations deemed relevant
      by the Company’s management in connection with effecting a business combination
      consistent with the Company’s business objective. In connection with the
      evaluation of a prospective target business, the Company anticipates that it
      will conduct an extensive due diligence review that will encompass, among other
      things, meetings with incumbent management and inspection of facilities, as
      well
      as a review of financial or other information that will be made available to
      us.





The
      Company will endeavor to structure a business combination so as to achieve
      the
      most favorable tax treatment to it and to the target business and the
      stockholders of both companies. Cortech cannot assure you, however, that the
      Internal Revenue Service or appropriate state tax authorities will agree with
      the Company’s tax treatment of the business combination.





Until
      presented with a specific opportunity for a business combination, the Company
      is
      unable to ascertain with any degree of certainty the time and costs required
      to
      select and evaluate a target business and to structure and complete the business
      combination. Any costs incurred in connection with the identification and
      evaluation of a prospective target business with which a business combination
      is
      not ultimately completed will result in a loss to the Company and reduce the
      amount of capital otherwise available to complete a business combination and
      thereafter operate the acquired business. Cortech cannot assure you that it
      will
      be successful in identifying a target business and completing a business
      combination on terms favorable to its stockholders, if at all.





*Limited
      ability to evaluate the target business' management*





Although
      the Company intends to carefully scrutinize the management of a prospective
      target business before effecting a business combination, it cannot assure you
      that its assessment of the target's management will prove to be correct. In
      addition, the Company cannot assure you that the target's future management
      will
      have the necessary skills, qualifications or abilities to manage a public
      company. Furthermore, the future role of the Company’s officers and directors,
      if any, in the target business cannot presently be stated with any certainty.
      While it is possible that one or more of the Company’s officers and directors
      will remain associated in some capacity following a business combination, it
      is
      uncertain whether all of them will devote their full efforts to the Company’s
      affairs after a business combination. Moreover, the Company cannot assure you
      that its officers and directors will have significant experience or knowledge
      relating to the operations of the particular target business.


I-4


The
      Company may seek to recruit additional management personnel to supplement the
      incumbent management of the target business. The Company cannot assure you,
      however, that it will be able to recruit additional managers who have the
      requisite skills, knowledge or experience necessary to enhance the incumbent
      management and successfully operate the target business.





Competition





The
      Company may encounter intense competition from other entities seeking to acquire
      a privately held operating company. Many of these entities, including financial
      consulting companies and venture capital firms, have longer operating histories
      and have extensive experience in identifying and effecting business
      combinations. Many of these competitors also possess significantly greater
      financial, technical and other resources than does the Company. Cortech cannot
      assure you that it will be able to effectively compete with these entities.
      Consequently, Cortech may acquire a company with less favorable prospects then
      it would otherwise prefer, thus making its long-term prospects for success
      less
      likely.





If
      the
      Company effects a business combination, it will become subject to competition
      from the competitors of the acquired business. In particular, industries that
      experience rapid growth frequently attract larger numbers of competitors,
      including competitors with greater financial, marketing, technical and other
      resources than the Company. The Company cannot ascertain the level of
      competition it will face if it effects a business combination, and it cannot
      assure you that it will be able to compete successfully with these
      competitors.





Employees





Currently,
      Dr. Qun Yi Zheng, Cortech’s President, is its only compensated
      employee.




**ITEM
                    2.**
                -
                **DESCRIPTION
                    OF PROPERTY**


None


**ITEM
                      3.**
                  -
                  **LEGAL
                        PROCEEDINGS**


None


**ITEM
                      4.**
                  -
                  **SUBMISSION
                        OF MATTERS TO A VOTE OF SECURITY
                        HOLDERS**


None


I-5


**PART
      II**


**ITEM
                      5.**
                  -
                  **MARKET
                      FOR COMMON EQUITY AND RELATED STOCKHOLDER
                      MATTERS**


At
      February 28, 2006, the Company had approximately 400 stockholders of
      record.





On
      July
      22, 2005, the Company received notice from The Nasdaq Stock Market, Listing
      Qualification Department, that the staff had determined that the Company’s
      securities would be delisted from The Nasdaq SmallCap Market. The Company’s
      securities were delisted at the opening of business on August 2, 2005. The
      Company did not appeal the staff’s determination. Since August 2, 2005, the
      Company’s common stock has been quoted on The Pink Sheets, under the symbol
“CRTQ”.





The
      table
      below lists the high and low bid prices for the common stock as reported by
      Nasdaq and in The Pink Sheets for the periods indicated. These prices represent
      inter-dealer quotations without retail markups, markdowns or commissions, and
      may not represent actual transactions.





High
            
            LowCalendar
                Quarter Ended:2004March
                31
            
            $
            3.16
            
            $
            2.75June
                30
            
            
            3.25
            
            
            2.98September
                30
            
            
            3.14
            
            
            2.68December
                31
            
            
            3.13
            
            
            2.732005March
                31
            
            $
            3.25
            
            $
            2.95June
                30
            
            
            3.31
            
            
            2.95September
                30
            
            
            3.55
            
            
            2.00December
                31
            
            
            2.83
            
            
            1.50





The
      Company has not paid any cash dividends on its common stock since its inception
      and does not anticipate paying any cash dividends in the foreseeable
      future.


II-1


Purchase
      of Equity Securities





SMALL
      BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES (1)


(COMMON
      STOCK)


Period
            (a)
              TotalNumber
                ofSharesPurchased
            (b)
              Average
                PricePaid
                per Share
            (c)
              Total
                Numberof
                Shares (orUnits)
                Purchasedas
                Part ofPubliclyAnnounced
                Plansor
                Programs
            (d)
              MaximumNumber
                ofShares
                that MayYet
                BePurchased
                Underthe
                Plans orProgramsOctober
                1, 2005-
              October
                31, 2005
            -
            $
                -
            -
            161,360November
                1, 2005-
              November
                30, 2005
            -
            -
            -
            161,360December
                1, 2005-
              December
                31, 2005
            840
            2.84
            840
            160,520Total
            840
            $
                2.84
            840
            160,520





(1)
            In
                October 2000, the Board of Directors approved a stock repurchase
                program
                authorizing the Company to repurchase up to 320,000 shares of its
                common
                stock. This program has no expiration
                date.


II-2




**ITEM
                    6.**
                -
                **MANAGEMENT’S
                      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                      OF
                      OPERATIONS**


The
      following discussion and analysis should be read in conjunction with Cortech’s
      Financial Statements and Notes thereto included elsewhere in this Form 10-KSB.
      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 and include, but are not limited to, the risks discussed
      below, the risks discussed in the section of this Form 10-KSB entitled
“Description of Business” and risks discussed elsewhere in this Form 10-KSB.





General





Cortech
      was a biopharmaceutical company whose primary focus had been the discovery
      and
      development of novel therapeutics for the treatment of inflammatory disorders.
      Specifically, Cortech had directed its research and development efforts
      principally toward protease inhibitors and bradykinin antagonists. These efforts
      produced certain intellectual property rights. (See Item 1. - Description of
      Business).





In
      response to disappointing test results and its loss of collaborative partner
      support, Cortech implemented a series of workforce reductions which resulted
      in
      the Company having no compensated employees from 1999 until November 2005,
      and
      effectively discontinued all internal research and development activities.
      In
      addition, in 1998 Cortech decommissioned its laboratories and sold all of its
      remaining scientific, technical and office equipment. As a result of these
      actions, Cortech no longer has the staff or operative facilities required to
      conduct internal research and development activities.





In
      November 2005, the Company hired Dr. Qun Yi Zheng as its President. From 1995
      to
      2005, Dr. Zheng was associated with Pure World, Inc., a leading manufacturer
      of
      natural products. Dr. Zheng was President of Pure World from January 2004 until
      it was sold in July 2005. Under Dr. Zheng’s leadership, Cortech intends to
      pursue business opportunities in China, Eastern Europe and the United States.
      The Company may consider potential opportunities in a number of areas including
      outsourcing for U.S. companies, consulting for U.S. and non U.S. companies
      interested in cross-border business relationships, surveys of small businesses
      for sale in China and Eastern Europe and import/export distribution
      contracts.





The
      Company does not expect that these activities will generate any revenues for
      an
      indefinite period as these new efforts are in their early stages. As a result,
      this new program may produce a significant loss until such time as meaningful
      revenues are achieved.


II-3


Results
      of Operations





Revenues





Revenues
      were $337,000 and $140,000 for the years ended December 31, 2005 and 2004,
      respectively. Interest income increased to $326,000 in 2005 from $140,000 in
      2004 due to higher yields on invested balances. Other income of $11,000 was
      earned in 2005 in connection with a patent licensing agreement. The Company
      does
      not anticipate significant earnings in the future in connection with this
      agreement.





General
      and administrative expenses were $420,000 in 2005 compared to $445,000 in 2004.
      The decrease in general and administrative expenses was due primarily to a
      decrease in legal fees of $87,000 offset by increases in management fees and
      personnel expenses of $24,000 and $37,000 respectively.





In
      2005,
      legal fees, incurred primarily in connection with the maintenance of the
      Company’s patent portfolio, were $6,000 compared to $93,000 in 2004. This
      anticipated decrease was a result of the Company’s determination not to incur
      additional fees to maintain its patent portfolio.





Management
      fees increased to $204,000 in 2005 from $180,000 in 2004 due to a $6,000
      increase, effective September 2005, in the monthly management fee paid to an
      affiliated entity. (See Other Disclosures - Related Party Transactions in this
      Item 6 for more information about Management Fees.)





Personnel
      expenses in 2005, relating to the Company’s new president, hired in November
      2005, were $37,000. The Company had no personnel expenses in 2004.





In
      2005
      and 2004, respectively, the Company had director’s fees of $43,000 and $36,000;
      corporate governance fees of $40,000 and $38,000; accounting fees of $25,000
      and
      $33,000 and all other fees of $65,000 each year.





Liquidity
      and Capital Resources





At
      December 31, 2005, the Company had cash and cash equivalents of $425,000. Cash
      and cash equivalents consist of cash held in banks and brokerage firms. The
      Company had short-term investments, consisting of U.S. treasury bills with
      original maturities of six months, of $10.9 million at December 31, 2005.
      Working capital at December 31, 2005 was approximately $11.2 million. Management
      believes its cash and cash equivalents are sufficient for its business
      activities for the next 12 months and for the costs of seeking an acquisition
      of
      an operating business.


II-4


Net
      cash
      of approximately $103,000 was used in operations in 2005 due primarily to the
      net loss of $84,000. In 2004, net cash of approximately $313,000 was used in
      operations, due primarily to the net loss of $306,000.





Net
      cash
      of $10.9 million was used by investing activities in 2005 as a result of the
      investment of cash equivalents into U.S. treasury bills with original maturities
      of six months.





Factors
      Which May Affect Future Results





Future
      earnings of the Company are dependent on interest rates earned on the Company’s
      invested balances and expenses incurred. The Company expects to incur
      significant expenses in connection with its objective of redeploying its assets
      into an operating business.





Other
      Disclosures - Related Party Transactions





The
      Company pays a monthly management fee of $21,000 (increased from $15,000 in
      September 2005) to Asset Value Fund Limited Partnership (“AVF”) for management
      services. These services include, among other things, periodic and other filings
      with the Securities and Exchange Commission, evaluating merger and acquisition
      proposals, internal accounting and shareholder relations. The Company believes
      that the management fee is less than the cost for the Company to perform these
      services. This arrangement may be terminated at will by either party. AVF was
      the beneficial owner of approximately 50.91% of the Company’s outstanding common
      stock at December 31, 2005 and 51.74% at February 28, 2006. The sole general
      partner of AVF is Asset Value Management, Inc. (“AVM”), a Delaware Corporation
      and wholly owned subsidiary of Kent Financial Services, Inc. (“Kent”), a
      Delaware Corporation. Paul O. Koether, Chairman of the Company, is also the
      Chairman of Kent and the beneficial owner of approximately 54.92% of Kent’s
      outstanding common stock. Qun Yi Zheng, President of the Company, is also the
      President of Kent, and Sue Ann Merrill, Chief Financial Officer of the Company,
      is also the Chief Financial Officer of Kent.





Off-Balance
      Sheet Arrangements





The
      Company has no off-balance sheet arrangements.





Contractual
      Commitments





The
      Company has no contractual commitments.





Other
      Matters





Net
      Operating Loss Carryforwards and Tax Credits: As of December 31, 2005, Cortech
      had approximately $84 million of net operating loss carryforwards (“NOL”) for
      income tax purposes. In addition, Cortech has approximately $2 million of
      research and development and foreign tax credit carryforwards available to
      offset future federal income tax, subject to limitations for alternative minimum
      tax. The NOL’s and tax credit carryforwards expire in various years from 2006
      through 2025. Cortech’s use of operating loss carryforwards and tax credit
      carryforwards is subject to limitations imposed by the Internal Revenue
      Code.


II-5


Management
      believes that the deferred tax assets as of December 31, 2005 do not satisfy
      the
      realization criteria set forth in SFAS No. 109 and has recorded a valuation
      allowance for the entire net tax asset. By recording a valuation allowance
      for
      the entire amount of future tax benefits, the Company has not recognized a
      deferred tax benefit for income taxes in its statements of
      operations.





New
      Accounting Pronouncements





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 123(R), "Share-Based
      Payment," (“SFAS 123(R)”) which is a revision of SFAS No. 123, "Accounting for
      Stock-Based Compensation.” SFAS 123(R) requires that the compensation cost
      relating to share-based payment transactions be recognized in financial
      statements. The compensation cost will be measured based on the fair value
      of
      the equity or liability instruments issued. The Statement is effective as of
      the
      beginning of the first interim or annual period beginning after December 15,
      2005. The adoption of SFAS 123(R) is not expected to have a material impact
      on
      the Company’s financial position or results of operations.





In
      May
      2005, the FASB issued Statement 154, “Accounting Changes and Error Corrections,
      a replacement of APB Opinion No. 20 and FASB Statement No. 3.”  The
      standard requires retrospective application to prior periods’ financial
      statements of a voluntary change in accounting principle unless it is deemed
      impracticable. The standard states that a change in method of depreciation,
      amortization or depletion for long-lived, non-financial assets be accounted
      for
      as a change in accounting estimate that is affected by a change in accounting
      principle.  The standard is effective for accounting changes and
      corrections of errors made occurring in fiscal years beginning after December
      15, 2005


II-6




**ITEM
                    7.**
                -
                **FINANCIAL
                      STATEMENTS**


The
      financial statements filed with this item are listed below:





Report
      of
      Independent Registered Public Accounting Firm





Financial
      Statements:





Balance
      Sheet as of December 31, 2005





Statements
      of Operations for the Years ended December 31, 2005 and
      2004





Statements
      of Stockholders’ Equity for the Years ended December
      31, 2005 and 2004





Statements
      of Cash Flows for the Years ended December 31, 2005 and
      2004





Notes
      to
      Financial Statements


II-7


**Report
      of Independent Registered Public Accounting Firm**





To
      the
      Stockholders’ and Board of Directors of Cortech, Inc.





We
      have
      audited the accompanying balance sheet of Cortech, Inc. as of December 31,
      2005,
      and the related statements of operations, stockholders’ equity, and cash flows
      for each of the two years in the period ended December 31, 2005. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audits included consideration of internal control
      over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, assessing the accounting principles used and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Cortech, Inc. as of December 31,
      2005, and the results of its operations and its cash flows for each of the
      two
      years in the period ended December 31, 2005, in conformity with U.S. generally
      accepted accounting principles.








/s/
      Amper, Politziner & Mattia, P.C.





March
      9,
      2006


Edison,
      New Jersey


F-1


**CORTECH,
      INC.**


**BALANCE
      SHEET**


**DECEMBER
      31, 2005**


**(in
      $000's, except share and per share amounts)**





ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            425Short-term
                investments
            
            
            10,851Other
                assets
            
            
            7Total
                assets
            
            $
            11,283LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                liabilities:Accrued
                liabilities
            
            $
            129Commitments
                and contingenciesStockholders’
                equity (Note 3):Preferred
                stock, $.002 par value 2,000,000 shares authorized, none
                issued
            
            
            -Common
                stock, par value $.002; 5,000,000 shares authorized; 3,594,940 shares
                issued and outstanding
            
            
            7Additional
                paid-in capital
            
            
            99,442Accumulated
                deficit
            
            
            (88,295
            )Total
                stockholders’ equity
            
            
            11,154Total
                liabilities and stockholders’ equity
            
            $
            11,283





See
      accompanying notes to financial statements.


F-2


**CORTECH,
      INC.**


**STATEMENTS
      OF OPERATIONS**


**(in
      000's, except per share amounts)**




Year
                  Ended December 31,2005
              
              2004Revenues:Interest
                  income
              
              $
              326
              
              $
              140Other
                  income
              
              
              11
              
              
              -Total
                  revenues
              
              
              337
              
              
              140Expenses:General
                  and administrative
              
              
              420
              
              
              445Loss
                  before income taxes
              
              
              (83
              )
              
              (
                  305
              )Provision
                  for income taxes
              
              
              1
              
              
              1Net
                  loss
              
              $
              (84
              )
              $
              (306
              )Basic
                  and diluted net loss per share
              
              $
              (.02
              )
              $
              (.09
              )Basic
                  and diluted weighted average common shares outstanding
              
              
              3,596
              
              
              3,596





See
      accompanying notes to financial statements.


F-3


**CORTECH,
      INC.**


**STATEMENTS
      OF STOCKHOLDERS’ EQUITY**


**(in
      000's)**




Common
                  Stock
              
              Additional
                Paid-In
              
              AccumulatedShares
              
              Amount
              
              Capital
              
              Deficit
              
              TotalBalance,
                  December 31, 2003
              
              
              3,596
              
              $
              7
              
              $
              99,446
              
              $
              (
                  87,905
              )
              $
              11,548Repurchase
                  of common stock
              
              
              -
              
              
              -
              
              
              (
                  1
              )
              
              -
              
              
              (
                  1
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (306
              )
              
              (306
              )Balance,
                  December 31, 2004
              
              
              3,596
              
              
              7
              
              
              99,445
              
              
              (
                  88,211
              )
              
              11,241Repurchase
                  of common stock
              
              
              (
                  1
              )
              
              -
              
              
              (
                  3
              )
              
              -
              
              
              (
                  3
              )Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (84
              )
              
              (84
              )Balance,
                  December 31, 2005
              
              
              3,595
              
              $
              7
              
              $
              99,442
              
              $
              (88,295
              )
              $
              11,154





See
      accompanying notes to financial statements.


F-4


**CORTECH,
      INC.**


**STATEMENTS
      OF CASH FLOWS**


**(in
      000's)**




Year
                  Ended December 31,2005
              
              2004Cash
                  flows from operating activities:Net
                  loss
              
              $
              (
                  84
              )
              $
              (
                  306
              )Adjustments:Change
                  in other assets
              
              
              (
                  5
              )
              
              6Change
                  in accrued liabilities
              
              
              (14
              )
              
              (13
              )Net
                  cash used in operating activities
              
              
              (103
              )
              
              (313
              )Cash
                  flows from investing activities -Purchase
                  of short-term investments
              
              
              (10,851
              )
              
              -Cash
                  flows from financing activities -Repurchase
                  of common stock
              
              
              (3
              )
              
              (1
              )Net
                  decrease in cash and cash equivalents
              
              
              (
                  10,957
              )
              
              (
                  314
              )Cash
                  and cash equivalents at beginning of year
              
              
              11,382
              
              
              11,696Cash
                  and cash equivalents at end of year
              
              $
              425
              
              $
              11,382Supplemental
                  disclosure cash flow information:Cash
                  paid for taxes
              
              $
              1
              
              $
              1





See
      accompanying notes to financial statements.


F-5


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**





1.
            Organization








Cortech,
      Inc. (“Cortech” or the “Company”), a subsidiary of Kent Financial Services,
      Inc., was a biopharmaceutical company whose primary focus was the discovery
      and
      development of novel therapeutics for the treatment of inflammatory disorders.
      Specifically, Cortech directed its research and development efforts principally
      toward protease inhibitors and bradykinin antagonists. These efforts produced
      certain intellectual property rights.





In
      response to disappointing test results and its loss of collaborative partner
      support, Cortech implemented a series of workforce reductions in force which
      resulted in the Company having no compensated employees from 1999 until November
      2005, and effectively discontinued all internal research and development
      activities. In addition, Cortech decommissioned its laboratories, and sold
      its
      scientific, technical office equipment and leasehold improvements. As a result
      of these actions, Cortech no longer has the staff or operative facilities
      required to recommence internal research and development activities. The Company
      is seeking to redeploy its assets into an operating business.





In
      November 2005, the Company hired Dr. Qun Yi Zheng as President. Under Dr.
      Zheng’s leadership, Cortech intends to pursue business opportunities in China,
      Eastern Europe and the United States.





2.
            Significant
                Accounting Policies





Use
      of
      Estimates





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 revenue and expenses during
      the reporting period. Actual results could differ from those estimates.


F-6


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**





Cash
      and Cash Equivalents




Cash
      and
      cash equivalents consist of cash in banks and brokerage firms.





Short-term
      Investments





Short-term
      investments consist of U.S. Treasury Bills with original maturities of six
      months and are valued at cost plus accrued interest, which approximates fair
      value.





Basic
      and Diluted Net Loss Per Share





Basic
      loss per common share is computed by dividing the net loss by the
      weighted-average number of common shares outstanding. Diluted loss per share
      is
      computed by dividing the net 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 loss per common share and diluted loss per common share
      are reconciled below.





(Shares
                in Thousands)2005
            
            2004Average
                shares outstanding for basic loss per share
            
            
            3,596
            
            
            3,596Dilutive
                effect of stock options
            
            
            -
            
            
            -Average
                shares outstanding for diluted loss per share
            
            
            3,596
            
            
            3,596





Excluded
      from the calculation of diluted loss per share for the years ended December
      31,
      2005 and 2004 are 357,130 and 382,735 Common Stock options, respectively, which,
      if included, would have an antidilutive effect.


F-7


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**





Income
      Taxes





The
      Company recognizes deferred tax assets and liabilities related to the expected
      future tax consequences of events that have been recognized in the Company’s
      financial statements and tax returns. However, if it is more likely than not
      that some portion or all of the net deferred tax assets will not be realized,
      a
      valuation allowance is established and the tax benefit is not recognized in
      the
      statements of operations.





New
      Accounting Pronouncements





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 123(R), "Share-Based
      Payment," (“SFAS 123(R)”) which is a revision of SFAS No. 123, "Accounting for
      Stock-Based Compensation.” SFAS 123(R) requires that the compensation cost
      relating to share-based payment transactions be recognized in financial
      statements. The compensation cost will be measured based on the fair value
      of
      the equity or liability instruments issued. The Statement is effective as of
      the
      beginning of the first interim or annual period beginning after December 15,
      2005. The adoption of SFAS 123(R) is not expected to have a material impact
      on
      the Company’s financial position or results of operations.





In
      May
      2005, the FASB issued Statement 154, “Accounting Changes and Error Corrections,
      a replacement of APB Opinion No. 20 and FASB Statement No. 3.”  The
      standard requires retrospective application to prior periods’ financial
      statements of a voluntary change in accounting principle unless it is deemed
      impracticable. The standard states that a change in method of depreciation,
      amortization or depletion for long-lived, non-financial assets be accounted
      for
      as a change in accounting estimate that is affected by a change in accounting
      principle.  The standard is effective for accounting changes and
      corrections of errors made occurring in fiscal years beginning after December
      15, 2005.


F-8


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**





3.
            Stockholders’
                Equity





Preferred
      Stock





The
      Company is authorized to issue 2,000,000 shares of $.002 par value preferred
      stock, which may be issued with various terms in one or more series, as the
      Board of Directors may determine. No preferred stock has been issued as of
      December 31, 2005.





Common
      Stock





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 December 31, 2005, 159,480 shares
      of
      Common Stock had been repurchased for approximately $559,000. All shares
      repurchased were returned to the status of authorized but unissued
      shares.




Stock
      Option Plans




In
      October 1995, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based
      Compensation”. This standard encouraged, but did not require, companies to
      recognize compensation expense for grants of stock, stock options and other
      equity instruments based on a fair-value method of accounting.





Companies
      that do not adopt the new expense recognition rules of SFAS No. 123 will
      continue to apply the existing rules contained in Accounting Principles Board
      (“APB”) Opinion No. 25. APB No. 25 requires no recognition of compensation
      expense for most of the stock-based employee compensation arrangements provided
      by the Company, namely broad-based employee stock option grants and stock
      purchase plans where the exercise price is equal to the market price at the
      date
      of grant.


F-9


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**








The
      Company applies APB No. 25 and related Interpretations in accounting for its
      plans. All options granted to date are fully vested and had an exercise price
      equal to the market price of the Company’s stock on the grant date.





The
      Company’s 1986 Stock Option Plan (“1986 Plan”) authorizes the grant of stock
      options to officers and employees of the Company to purchase an aggregate of
      300,000 shares of common stock. Although 81,420 shares were available under
      the
      1986 Plan as of December 19, 1997, on such date the Board of Directors
      effectively suspended future grants of options under the 1986 Plan to the extent
      that any such grant would increase the shares subject to outstanding grants
      above the amount as of such date. On June 19, 2000, the Board of Directors
      restored the 1986 Plan. In 2000, 230,000 stock options were issued under the
      1986 Plan at prices ranging from $3.50 to $3.6875, the approximate fair market
      values at the time of grant. No options were granted in 2005 or 2004.





The
      Company’s 1993 Equity Incentive Plan (“1993 Plan”), approved by the stockholders
      on May 10, 1994, authorizes the issuance of 340,000 shares through the grant
      of
      options to purchase common stock, stock bonuses, and rights to purchase
      restricted stock. The options outstanding as of December 31, 2005 generally
      become exercisable in varying amounts over a five-year period from the date
      of
      grant. Although 74,170 shares were available under the 1993 Plan as of December
      19, 1997, on such date the Board of Directors effectively suspended further
      grants of options under the 1993 Plan to the extent that any such grant would
      increase the shares subject to outstanding grants above the figures as of such
      date. On June 19, 2000, the Board of Directors restored the 1993 Plan. In 2000,
      150,000 stock options were issued under this plan at $3.50 per share, the
      approximate fair market value at the time of grant. No options were granted
      in
      2005 or 2004.





The
      stock
      options granted under either plan may be incentive stock options (“ISO”) or
      nonstatutory stock options (“NSO”). The Board of Directors may set the rate at
      which the options expire, subject to limitations discussed below. However,
      no
      options shall be exercisable after the tenth anniversary of the date of grant
      or, in the case of ISOs, three months following termination of employment,
      except in cases of death or disability, for which the time or exercisability
      is
      extended. In the event of a dissolution, liquidation or other corporate
      reorganization, all stock options outstanding under the 1986 Plan and the 1993
      Plan would become exercisable in full.


F-10


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**




ISOs
      may
      not be granted at an exercise price of less than the fair market value of the
      common stock at the date of grant. If an ISO is granted to an employee who
      owns
      more than 10% of the Company’s total voting stock, such exercise price shall be
      at least 110% of fair market value of the common stock, and the ISO shall not
      be
      exercisable until after five years from the date of grant. The exercise price
      of
      each NSO may not be less than 85% of the fair market value of the common stock
      at the date of grant.





Each
      of
      these plans also provides for stock appreciation rights, which may be granted
      with respect to any stock option. No stock appreciation rights have been granted
      through December 31, 2005.





During
      1991, a Non-employee Directors’ Stock Option Plan was approved which authorized
      the grant of stock options to purchase up to 30,000 shares of common stock
      to
      the non-employee directors of the Company. The exercise price of the options
      is
      equal to the fair market value of the shares on the date of grant, which is
      generally the later of initiation of the plan or the date of election to the
      Board of Directors. In March 1993, the Board of Directors suspended further
      grants under this plan. Vesting of the options occurred upon the participation
      by a director in a Board meeting. No options were granted in 2005 or 2004.
      The
      Company recorded the difference between the fair market value of the underlying
      common stock and the exercise price as compensation expense over the vesting
      period.





The
      Company’s 1992 Non-employee Directors’ Stock Option Plan authorizes the granting
      of options to purchase up to 80,000 shares of common stock to the non-employee
      directors of the Company. The plan was originally approved by the stockholders
      on May 17, 1993, and an amendment to the plan was approved **** by
      the
      stockholders on May 10, 1994. No options were granted during 2005 or 2004.


F-11


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**





A
      summary
      of the status of the Company’s 1986 Plan, 1993 Plan and non-employee directors’
stock option plans as of December 31, 2005 and 2004 and changes during the
      years
      ended on those dates is presented below:





2005
            
            2004Shares
            
            Weighted-
              Average
              Exercise
                Price
            
            Range
              of
              Exercise
                Price
            
            Shares
            
            Weighted-
              Average
              Exercise
                Price
            
            Range
              of
              Exercise
                PriceOptions
                outstanding at beginning of year
            
            
            376,485
            
            $
            4.80
            
            $
            3.50
                - $13.59
            
            
            465,202
            
            $
            5.62
            
            $
            3.50
                - $13.59Expired
            
            
            (25,605
            )
            $
            11.96
            
            $
            9.69
                - $13.59
            
            
            (88,717
            )
            $
            9.10
            
            $
            8.75
                - $12.19Options
                outstanding at end of year
            
            
            350,880
            
            $
            4.27
            
            $
            3.50
                - $12.80
            
            
            376,485
            
            $
            4.80
            
            $
            3.50
                - $13.59Options
                exercisable at end of year
            
            
            350,880
            
            $
            4.27
            
            $
            3.50
                - $12.80
            
            
            376,485
            
            $
            4.80
            
            $
            3.50
                - $13.59





The
      Company granted other options to certain directors and consultants:





2005
            
            2004Shares
            
            Weighted-
              Average
              Exercise
                Price
            
            Range
              of
              Exercise
                Price
            
            Shares
            
            Weighted-
              Average
              Exercise
                Price
            
            Range
              of
              Exercise
                PriceOptions
                outstanding at beginning of year
            
            
            6,250
            
            $
            5.92
            
            $
            5.00
                - $7.58
            
            
            12,834
            
            $
            7.50
            
            $
            5.00
                - $17.50Expired
            
            
            -
            
            
            -
            
            
            -
            
            
            (6,584
            )
            $
            9.00
            
            $
            8.75
                - $17.50Options
                outstanding at end of year
            
            
            6,250
            
            $
            5.92
            
            $
            5.00
                - $7.58
            
            
            6,250
            
            $
            5.92
            
            $
            5.00
                - $ 7.58Options
                exercisable at end of year
            
            
            6,250
            
            $
            5.92
            
            $
            5.00
                - $7.58
            
            
            6,250
            
            $
            5.92
            
            $
            5.00
                - $ 7.58




For
      options outstanding and exercisable at December 31, 2005, the exercise price
      ranges are:





Options
                Outstanding
            
            Options
                ExercisableRange
                of
              Exercise
              Prices
            
            Number
              Outstanding
              at
              December
              31,
                2005
            
            Weighted-
              Average
              Remaining
              Life
              (in
                years)
            
            Weighted-
              Average
              Exercise
              Price
            
            Number
              Outstanding
              at
              December
              31,
                2005
            
            Weighted-
              Average
              Remaining
              Life
              (in
                years)
            
            Weighted-
              Average
              Exercise
              Price$3.50
                - $7.58
            
            
            334,149
            
            
            4.28
            
            $
            3.77
            
            
            334,149
            
            
            4.28
            
            $
            3.7711.56
                - 12.80
            
            
            22,981
            
            
            .59
            
            
            11.97
            
            
            22,981
            
            
            .59
            
            
            11.97357,130
            
            
            
            
            
            
            
            
            357,130


F-12


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**





4.
            Income
                Taxes





As
      of
      December 31, 2005, the Company had approximately $84 million of net operating
      loss carryforwards (“NOL”) for income tax purposes and approximately $2 million
      of research and development and foreign tax credit carryforwards available
      to
      offset future federal income tax, subject to limitations for alternative minimum
      tax. The NOL’s and tax credit carryforwards are subject to examination by the
      tax authorities and expire in various years from 2006 through 2025.





The
      components of income tax expense are as follows (in 000's):





2005
            
            2004Federal-current
            
            $
            -
            
            $
            -State-current
            
            
            1
            
            
            1$
            1
            
            $
            1





The
      income tax expense for the year ended December 31, 2005 and 2004 is different
      from the amount computed by multiplying total earnings before income taxes
      by
      the statutory Federal income tax rate of 34%. The reasons for this difference
      and the related tax effect are as follows (in 000's):





2005
            
            2004Loss
                before income taxes
            
            $
            (83
            )
            $
            (
                305
            )Statutory
                federal income tax rate
            
            
            34
            %
            
            34
            %Expected
                income tax benefit
            
            
            (28
            )
            
            (104
            )Increase
                in valuation allowance
            
            
            28
            
            
            104Other,
                net
            
            
            1
            
            
            1Provision
                for income tax
            
            $
            1
            
            $
            1





Deferred
      income taxes reflect the net effects of (a) temporary differences between the
      carrying amounts of assets and liabilities for financial statement purposes
      and
      the amounts used for income tax purposes, and (b) operating loss and tax credit
      carryforwards.


F-13


**CORTECH,
      INC.**


**NOTES
      TO FINANCIAL STATEMENTS**





**Years
      Ended December 31, 2005 and 2004**





The
      tax
      effect of significant items comprising the Company’s net deferred tax asset as
      of December 31, 2005 are as follows (in 000's):





Net
                operating loss carryforwards
            
            $
            28,650Research
                and development and other credits
            
            
            2,44431,094Valuation
                allowance
            
            
            (31,094
            )Net
                deferred tax asset
            
            $
            -





Management
      believes the deferred tax assets as of December 31, 2005 do not satisfy the
      realization criteria set forth in SFAS No. 109 and has recorded a valuation
      allowance for the entire net tax asset. By recording a valuation allowance
      for
      the entire amount of future tax benefits, the Company has not recognized a
      deferred tax benefit for income taxes in its statements of
      operations.





Included
      in the net operating loss carryforward is approximately $1.7 million related
      to
      income tax deductions for the Company’s stock option plans. The tax benefit of
      such deductions will be recorded as an increase in additional paid-in capital
      when realized.





The
      Tax
      Reform Act of 1986 contains provisions that may limit the NOL and credit
      carryforwards available to be used in any given year upon the occurrence of
      certain events, including significant changes in ownership of a company of
      greater than 50% within a three-year period which results in an annual
      limitation on the Company’s ability to utilize its NOLs and tax credit
      carryforwards from tax periods prior to the ownership change.





5.
            Related
                Party Transactions





The
      Company pays a monthly management fee of $21,000 (increased from $15,000 in
      September 2005) to Asset Value Fund Limited Partnership (“AVF”) for management
      services. These services include, among other things, periodic and other filings
      with the Securities and Exchange Commission, evaluating merger and acquisition
      proposals, internal accounting and shareholder relations. The Company believes
      that the management fee is less than the cost for the Company to perform these
      services. This arrangement may be terminated at will by either party. AVF was
      the beneficial owner of approximately 50.91% of the Company’s outstanding common
      stock at December 31, 2005 and 51.74% at February 28, 2006. The sole general
      partner of AVF is Asset Value Management, Inc. (“AVM”), a Delaware Corporation
      and wholly owned subsidiary of Kent Financial Services, Inc. (“Kent”), a
      Delaware Corporation. Paul O. Koether, Chairman of the Company, is also the
      Chairman of Kent and the beneficial owner of approximately 54.92% of Kent’s
      outstanding common stock. Qun Yi Zheng, President of the Company, is also the
      President of Kent, and Sue Ann Merrill, Chief Financial Officer of the Company,
      is also the Chief Financial Officer of Kent.


F-14




**Item
                    8.**
                -
                **CHANGES
                        IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                        DISCLOSURE**


None.


**Item
                      8A.**
                  -
                  **CONTROLS
                          AND
                          PROCEDURES**


As
      of the
      end of the period covered by this report, the Company carried out, under the
      supervision and with the participation of the Company’s management, including
      its Chief Executive Officer and Chief Financial Officer, an evaluation of the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer
      and Chief Financial Officer concluded that the design and operation of these
      disclosure controls and procedures are effective. There was no change in the
      Company’s internal control over financial reporting (as defined in Rule
      13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the
      quarter ended December 31, 2005, that has materially affected or is reasonably
      likely to materially affect the Company’s internal control over financial
      reporting.





Compliance
      with Section 404 of Sarbanes-Oxley Act





In
      order
      to achieve compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (the
      “Act”) by December 31, 2007, the Company expects to begin, in fiscal 2006, the
      system and process documentation and evaluation needed to comply with Section
      404.


**Item
                      8B**
                  -
                  **OTHER
                          INFORMATION**


None.


II-8


**PART
      III**


**ITEM
                      9.**
                  -
                  **DIRECTORS,
                          EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
                          WITH SECTION
                          16(a) OF THE EXCHANGE
                          ACT**


The
      information required under this item is incorporated by reference from Cortech’s
      2005 Information Statement for its Annual Meeting of Stockholders to be held
      on
      May 22, 2006 (the “2006 Information Statement”).


**ITEM
                      10.**
                  -
                  **EXECUTIVE
                          COMPENSATION**


The
      information required under this item is incorporated by reference from Cortech’s
      2006 Information Statement.


**ITEM
                      11.**
                  -
                  **SECURITY
                          OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
                          RELATED
                          STOCKHOLDER
                          MATTERS**


The
      information required under this item is incorporated by reference from Cortech’s
      2006 Information Statement.


**ITEM
                      12.**
                  -
                  **CERTAIN
                          RELATIONSHIPS AND RELATED
                          TRANSACTIONS**


The
      information required under this item is incorporated by reference from Cortech’s
      2006 Information Statement.


**Item
                      14.**
                  -
                  **PRINCIPAL
                          ACCOUNTANT FEES AND
                          SERVICES**





The
      information required under this item is incorporated by reference from Cortech’s
      2006 Information Statement.


III-1


**PART
      III**


**ITEM
                      13.**
                  -
                  **EXHIBITS
                          AND REPORTS ON FORM
                          8-K**


The
      following exhibits are filed as part of this report:





Exhibit
              Number
            
            
            Description
                of Document3.1
            (a)
            
            Certificate
                of Incorporation of Cortech, Inc. as amended.(1)(b)
            
            Certificate
                of Amendment of Certificate of Incorporated of Cortech, Inc.(11)3.3
            
            
            Certificate
                of Designation for Series A Junior Participating Preferred
                Stock.(6)3.4
            
            
            Amended
                and Restated ByLaws of Cortech, Inc.(9)4.2
            
            
            Specimen
                certificate for the Common Stock of Cortech, Inc.(1)10.1
            
            
            Employment
                Agreement dated November 25, 2005 between Cortech, Inc. and Dr. Qun
                Yi
                Zheng.(12)10.39
            
            
            Amended
                and Restated 1986 Incentive Stock OptionPlan of the Company.(1)**10.40
            
            
            1991
                Non-employee Directors’ Stock Option Plan of the Company.(2)**10.41
            
            
            Amended
                and Restated 1992 Non-employee Directors’ Stock Option Plan of the
                Company.(4)**10.42
            
            
            1993
                Employee Stock Purchase Plan of the Company, as amended.(3)**10.43
            
            
            1993
                Equity Incentive Plan of the Company, as amended.(10)**10.97
            
            
            Form
                of Option Agreement for Directors’ Non-Plan Options.(10)**




III-2




Exhibit
              Number
            Description
                of Document23
            Consent
                of Amper, Politziner & Mattia, P.C.***31.1
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002***31.2
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002***32
            Certification
                pursuant to Section 906 of the Sarbanes Oxley Act of
                2002***


III-3


__________________________





(1)
            Filed
                as an exhibit to the Company’s Registration Statement of Form S-1, filed
                October 13, 1992, file number 33-53244, or amendments thereto and
                incorporated herein by reference.





(2)
            Filed
                as an exhibit to the Company’s annual report on Form 10-K for the year
                ended December 31, 1992, and incorporated herein by
                reference.





(3)
            Filed
                as an exhibit to the Company’s Registration Statement on Form S-8, filed
                March 29, 1993, file number 33-60242, or amendments thereto and
                incorporated herein by reference.





(4)
            Filed
                as an exhibit to the Company’s annual report on Form 10-K for the year
                ended December 31, 1993, and incorporated herein by
                reference.





(5)
            Intentionally
                left blank.





(6)
            Filed
                as an exhibit to Cortech Inc.’s annual report on Form 10-K for the year
                ended December 31, 1995, and incorporated herein by
                reference.





(7)
            Filed
                as an exhibit to Cortech, Inc.’s annual report on Form 10-K for the year
                ended December 31, 1996, and incorporated herein by
                reference.





(8)
            Intentionally
                left blank.





(9)
            Filed
                as an exhibit to the Company’s Registration Statement on Form S-4, filed
                February 17, 1998, file number 33-46445 and incorporated herein by
                reference.





(10)
            Filed
                as an exhibit to Cortech, Inc.’s annual report on Form 10-K for the year
                ended December 31, 1997, and incorporated herein by
                reference.





(11)
            Filed
                as an exhibit to Cortech, Inc.’s annual report on Form 10-KSB for the year
                ended December 31, 1998, and incorporated herein by
                reference.





(12)
            Filed
                as an exhibit to Cortech, Inc.’s Form 8-K filed on December 1,
                2005.





**
            Compensatory
                Plan.


***
            Filed
                herewith.


III-4


**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




CORTECH,
                INC.March
                28, 2006
            By:
            /s/ Paul O. KoetherPaul
                O. KoetherChairman
                and Chief Executive Officer








In
      accordance with the Exchange Act, this report has been signed by the following
      persons on behalf of the registrant and in the capacities and on the dates
      indicated.





Signature
            
            Capacity
            
            Date/s/
                Paul O. Koether
            
            Chairman
                and Chief
            
            March
                28, 2006Paul
                O. Koether
            
            Executive
                Officer(Principal
                Executive Officer)/s/
                Sue Ann Merrill
            
            Chief
                Financial Officer,
            
            March
                28, 2006Sue
                Ann Merrill
            
            Treasurer
                and Secretary(Principal
                Financial andAccounting
                Officer)/s/
                Qun Yi Zheng
            
            President
                and Director
            
            March
                28, 2006Qun
                Yi Zheng/s/
                Diarmuid Boran
            
            Director
            
            March
                28, 2006Diarmuid
                Boran/s/
                James L. Bicksler
            
            Director
            
            March
                28, 2006James
                L. Bicksler/s/
                Rocco Mastrodomenico
            
            Director
            
            March
                28, 2006


Rocco
      Mastrodomenico




III-5