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, 2004

[ ]   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                             (I.R.S. Employer
of incorporation or organization)                       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 (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   X     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 issuer'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. [X]

     Issuer's  revenues  for the  fiscal  year  ended  December  31,  2004  were
approximately $140,000.

     As of  February  28,  2005,  there were  3,595,780  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 Nasdaq
SmallCap Market on February 28, 2005, was approximately $5.6 million.

     Transitional Small Business Disclosure Format Yes       No  X
                                                      -----    -----

     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  Proxy Statement for the Registrants Annual
     Meeting of Stockholders to be held on May 17, 2005.
<PAGE>
                                     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
and  produced a  technology  portfolio  which 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 work
force reductions  which resulted in the Company having no compensated  employees
since 1999, and 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.

Business Plan
-------------

     The Company intends to use its available  working  capital,  capital stock,
debt or a combination of these 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.  The

                                      I-1

<PAGE>

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 business  objectives is extremely  general and is
not meant to restrict the  discretion of management to search for 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,  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, 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.

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,  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.  While the Company
does not presently  anticipate  engaging the services of professional firms that
specialize  in business  acquisitions  on any formal  basis,  it may engage such
firms  in the  future,  in  which  event,  it may pay a  finder's  fee or  other
compensation for such introductions if they result in a consummated transaction.


                                      I-2

<PAGE>

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:

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

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

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

     o    the capital requirements of the target;

     o    the  competitive  position of the target;

     o    the stage of  development  that  the  target's  products, processes or
          services are at;

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

     o    proprietary features and the degree of intellectual  property or other
          protection of the target's products, processes or services;

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

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

     o    the costs associated with effecting the business combination.

     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 authority 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

                                      I-3

<PAGE>

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.  Further,  the  Company's  ability to conduct  such  evaluation  may be
limited by its lack of any  compensated  employees.  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 unlikely that any 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.

     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.

                                      I-4

<PAGE>

     If the Company  effects a business  combination,  it will become subject to
competition from 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  has.  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, Cortech has no compensated employees.

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

<PAGE>

                                     PART II
                                     -------

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

     At February 28, 2005, the Company had  approximately  422  stockholders  of
record.  The  Company's  common stock  currently  trades on the Nasdaq  SmallCap
Market under the symbol  "CRTQ".  On February 28, 2005, the closing price of the
common stock was $3.14.

     The table below  lists the high and low bid prices for the common  stock as
reported by Nasdaq for the periods indicated.  These prices represent quotations
between dealers and do not include retail markups, markdowns or commissions, and
may not represent actual transactions.


                                              High             Low
                                              ----             ---

     Calendar Quarter Ended:


     2003       March 31                    $ 2.65           $ 2.41
                June 30                       2.85             2.60
                September 30                  2.90             2.56
                December 31                   2.80             2.53

     2004       March 31                    $ 3.16           $ 2.75
                June 30                       3.25             2.98
                September 30                  3.14             2.68
                December 31                   3.13             2.73




     The Company has not paid any cash  dividends  on its Common Stock since its
inception  and does not  intend  to pay any cash  dividends  in the  foreseeable
future.













                                      II-1

<PAGE>

Purchase of Equity Securities
-----------------------------

            SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES (1)
                                 (COMMON STOCK)

                                                     (c) Total
                                                      Number of
                                                      Shares (or    (d) Maximum
                                                        Units)        Number of
                                                     Purchased as    Shares that
                                                       Part of       May Yet Be
                       (a) Total                      Publicly       Purchased
                       Number of          (b)         Announced      Under the
                        Shares       Average Price     Plans or      Plans or
    Period             Purchased    Paid per Share     Programs      Programs



October 1, 2004-          -             $    -               -         161,360
October 31, 2004

November 1, 2004-         -                  -               -         161,360
November 30, 2004

December 1, 2004-
December 31, 2004         -                  -               -         161,360

Total                     -                  -               -         161,360


(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
<PAGE>

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  since  1999,  and
effectively  discontinued all internal research and development  activities.  In
addition,  in  1998  Cortech  decommissioned  its  laboratories,  and  sold  all
scientific,  technical  and  office  equipment.  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.

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

Revenues
--------

     Revenues,  consisting of interest income were $140,000 and $119,000 for the
years ended December 31, 2004 and 2003, respectively.  Higher yields on invested
balances was the reason for this increase.

     General and  administrative  expenses were $445,000 in 2004 and $447,000 in
2003. General and administrative  fees consist primarily of management fees (see
Other  Disclosures - Related Party  Transactions in this Item 6) and legal fees.
Legal fees are incurred  primarily in  connection  with the  maintenance  of the
Company's patent portfolio.  The Company anticipates lower legal fees in 2005 as
it has  determined  not to incur any  additional  fees to  maintain  its  patent
portfolio.

                                      II-3

<PAGE>

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

     At December 31, 2004,  the Company had cash and cash  equivalents  of $11.4
million.  Cash  equivalents  consisted  of U.S.  Treasury  Bills  with  original
maturities of three months or less and yields ranging from 2.1% to 2.2%. Working
capital  at  December  31,  2004 was  approximately  $11.2  million.  Management
believes  its  cash  and  cash  equivalents  are  sufficient  for  its  business
activities  for the  next  twelve  months  and  for  the  costs  of  seeking  an
acquisition of an operating business.

     Net  cash of  approximately  $313,000  was used in  operations  in 2004 due
primarily  to the net  loss of  $306,000.  In 2003,  net  cash of  approximately
$364,000 was used in operations, due primarily to the net loss of $330,000.

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.

Other Disclosures - Related Party Transactions
----------------------------------------------

     A  management  fee of $15,000 per month is paid to Asset Value Fund Limited
Partnership   ("AVF")  for  management   services  performed  for  the  Company.
Management  services  include,  among other  things,  SEC filings,  negotiation,
evaluating  merger  and  acquisition   proposals,   licensing,   accounting  and
shareholder  relations.  AVF is the beneficial owner of approximately  50.06% of
the Company's Common Stock at December 31, 2004.

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, 2004,
Cortech  had  approximately  $86  million of net  operating  loss  carryforwards
("NOL") for income tax  purposes.  In  addition,  Cortech has  approximately  $3
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 credit  carryforwards  expire in various
years from 2005 through 2024.  Cortech's use of operating loss carryforwards and
tax  credit  carryforwards  is subject to  limitations  imposed by the  Internal
Revenue Code.

                                      II-4

<PAGE>

     Management  believes the deferred tax assets as of December 31, 2004 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 January 2003, the Financial  Accounting  Standards Board ("FASB") issued
Interpretation  No. 46,  "Consolidation of Variable Interest Entities" (FIN 46),
which  addresses  consolidation  by business  enterprises  of variable  interest
entities  ("VIEs").  FIN 46 is  applicable  immediately  for VIEs created  after
January 31, 2003 and are effective for reporting  periods  ending after December
15, 2003, for VIEs created prior to February 1, 2003. In December 2003, the FASB
published a revision to FIN 46 ("FIN 46R") to clarify some of the  provisions of
the interpretation and to defer the effective date of implementation for certain
entities. Under the guidance of FIN 46R, public companies that have interests in
VIE's that are commonly  referred to as special purpose entities are required to
apply the  provisions of FIN 46R for periods  ending after  December 15, 2003. A
public company that does not have any interests in special purpose  entities but
does have a variable  interest in a VIE created  before  February 1, 2003,  must
apply  the  provisions  of FIN 46R by the end of the  first  interim  or  annual
reporting  period  ending after March 14,  2004.  The adoption of FIN 46 did not
have an effect on the consolidated financial statements.

     In  December  2004,  the 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 June 15, 2005.  We will adopt SFAS 123(R) on July 1, 2005 using
the  modified  prospective  method.  We have  disclosed  the pro forma impact of
adopting SFAS No. 123(R) on net income and earnings per share for the year ended
December 31, 2004 and 2003 in Note 1 of Notes to the Financial Statements, which
includes all  share-based  payment  transactions to date. We do not yet know the
impact  that  any  future  share-based  payment  transactions  will  have on our
financial position or results of operations.




                                      II-5

<PAGE>

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

     The financial statements filed with this item are listed below:

     Reports of Independent Registered Public Accounting Firms

     Financial Statements:

          Balance Sheet as of December 31, 2004

          Statements of Operations for the Years ended December 31, 2004
          and 2003

          Statements of Stockholders' Equity for the Years ended
          December 31, 2004 and 2003

          Statements of Cash Flows for the Years ended December 31, 2004
          and 2003

          Notes to Financial Statements























                                      II-6

<PAGE>

             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, 2004, and the related  statements of operations,  stockholders'  equity, and
cash  flows  for  the  year  then  ended.  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 audit.

We conducted  our audit 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.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  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, 2004, and the results of its operations and its cash flows for the year then
ended, in conformity with U.S. generally accepted accounting principles.


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

March 16, 2005
Edison, New Jersey



                                      F-1

<PAGE>

                                                      PricewaterhouseCoopers LLP
                                                                400 Campus Drive
                                                                    P.O. Box 988
                                                          Florham Park, NJ 07932
                                                        Telephone (973) 236-4000
                                                        Facsimile (973) 236-5000


             Report of Independent Registered Public Accounting Firm

To Shareholders and Directors of
Cortech, Inc.:

In our opinion, the statement of operations, stockholders' equity and cash flows
for the year ended December 31, 2003  (appearing on pages F-4 through F-6 of the
Cortech, Inc. 2004 Annual Report to Shareholders, which has been incorporated by
reference in this Form 10-KSB) present  fairly,  in all material  respects,  the
results  of  operations  and cash  flows of  Cortech,  Inc.  for the year  ended
December 31, 2003, in conformity with accounting  principles  generally accepted
in  the  United  States  of  America.   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 audit. We conducted our audit
of these  statements  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.  An audit 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, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.



/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
February 6, 2004, except for the last
paragraph of Note 5, for which the
date is March 19, 2004



                                      F-2

<PAGE>

                                  CORTECH, INC.
                                  BALANCE SHEET
                                DECEMBER 31, 2004
                                   (in 000's)



ASSETS
------

Current assets:
  Cash and cash equivalents                                          $  11,382
  Other assets                                                               2
                                                                     ---------
    Total assets                                                     $  11,384
                                                                     =========


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

Current liabilities:
  Accrued liabilities                                                $     143
                                                                     ---------

Commitments and contingencies (Note 5)


Stockholders' 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;
    3,595,780 shares issued and outstanding                                  7
  Additional paid-in capital                                            99,445
  Accumulated deficit                                               (   88,211)
                                                                     ---------
    Total stockholders' equity                                          11,241
                                                                     ---------
    Total liabilities and stockholders' equity                       $  11,384
                                                                     =========







                 See accompanying notes to financial statements.


                                      F-3

<PAGE>

                                  CORTECH, INC.
                            STATEMENTS OF OPERATIONS
                      (in 000's, except per share amounts)



                                                   Year Ended December 31,
                                                -----------------------------
                                                   2004               2003
                                                ---------           ---------

Revenues:
  Interest income                                $    140            $    119
Expenses:
  General and administrative                          445                 447
                                                 --------            --------

Loss before income taxes                        (     305)          (     328)
Provision for income taxes                              1                   2
                                                 --------            --------
Net loss                                        ($    306)          ($    330)
                                                 ========            ========

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

Basic and diluted weighted average
 common shares outstanding                          3,596               3,596
                                                 ========            ========




















                 See accompanying notes to financial statements.


                                      F-4

<PAGE>

                                  CORTECH, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (in 000's)

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

                                   Common Stock         Additional
                                   ------------           Paid-In      Accumulated
                                Shares       Amount       Capital        Deficit         Total
                                ------       ------       -------        -------         -----

Balance, December 31, 2002       3,596       $    7       $ 99,446      ($ 87,575)      $ 11,878

Net loss                             -            -              -      (     330)     (     330)
                                 -----       ------       --------       --------       --------

Balance, December 31, 2003       3,596            7         99,446      (  87,905)        11,548

Repurchase of common stock           -            -      (       1)             -      (       1)

Net loss                             -            -              -      (     306)     (     306)
                                 -----       ------       --------       --------       --------

Balance, December 31, 2004       3,596       $    7       $ 99,445      ($ 88,211)      $ 11,241
                                 =====       ======       ========       ========       ========

</TABLE>





















                 See accompanying notes to financial statements.


                                      F-5

<PAGE>

                                  CORTECH, INC.
                            STATEMENTS OF CASH FLOWS
                                   (in 000's)


                                                     Year Ended December 31,
                                                     -----------------------
                                                       2004           2003
                                                     --------       --------
Cash flows from operating activities:
  Net loss                                          ($    306)      ($    330)
    Adjustments:
      Change in other assets                                6       (       1)
      Change in accrued liabilities                 (      13)      (      33)
                                                     --------        --------
      Net cash used in operating activities         (     313)      (     364)
                                                     --------        --------

Cash flows from financing activities-
  Repurchase of common stock                        (       1)              -
                                                     --------        --------

Net decrease in cash and cash equivalents           (     314)      (     364)
Cash and cash equivalents at beginning of year         11,696          12,060
                                                     --------        --------
Cash and cash equivalents at end of year             $ 11,382        $ 11,696
                                                     ========        ========

Supplemental disclosure cash flow information:
  Cash paid for taxes                                $      1        $      2
                                                     ========        ========

















                 See accompanying notes to financial statements.


                                      F-6

<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

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 reductions
     in force  which  resulted in the Company  having no  compensated  employees
     since  1999,  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.

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-7

<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003


     Cash and Cash Equivalents
     -------------------------

          Cash and cash equivalents  consist of cash in banks and U.S.  Treasury
     Bills purchased with an original maturity of three months or less.

     Basic and Diluted Net Income (Loss) Per Share
     ---------------------------------------------

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

          The shares used for basic earnings (loss) per common share and diluted
     earnings (loss) per common share are reconciled below.

                                                       (Shares in Thousands)
                                                        2004           2003
                                                        ----           ----
             Average shares outstanding for basic
                loss per share                         3,596           3,596

             Dilutive 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, 2004 and 2003 are 382,735  and  478,036  Common  Stock
     options,  respectively,  which,  if  included,  would have an  antidilutive
     effect.










                                      F-8

<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

     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 January 2003,  the Financial  Accounting  Standards  Board ("FASB")
     issued Interpretation No. 46, "Consolidation of Variable Interest Entities"
     (FIN 46), which addresses consolidation by business enterprises of variable
     interest  entities  ("VIEs").  FIN 46 is  applicable  immediately  for VIEs
     created after  January 31, 2003 and are  effective  for  reporting  periods
     ending after December 15, 2003, for VIEs created prior to February 1, 2003.
     In December  2003,  the FASB  published a revision to FIN 46 ("FIN 46R") to
     clarify  some of the  provisions  of the  interpretation  and to defer  the
     effective date of implementation  for certain entities.  Under the guidance
     of FIN 46R, public companies that have interests in VIE's that are commonly
     referred  to  as  special  purpose  entities  are  required  to  apply  the
     provisions of FIN 46R for periods  ending after December 15, 2003. A public
     company that does not have any  interests in special  purpose  entities but
     does have a variable  interest  in a VIE created  before  February 1, 2003,
     must  apply the  provisions  of FIN 46R by the end of the first  interim or
     annual reporting period ending after March 14, 2004. The adoption of FIN 46
     did not have an effect on the consolidated financial statements.

          In December  2004, the 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 June 15,
     2005.  We will  adopt  SFAS  123(R)  on July 1,  2005  using  the  modified
     prospective method. We have disclosed the pro forma impact of adopting SFAS

                                      F-9

<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

     No. 123(R) on net income and earnings per share for the year ended December
     31,  2004 and 2003 in Note 3 of Notes to the  Financial  Statements,  which
     includes all share-based  payment  transactions to date. We do not yet know
     the impact that any future  share-based  payment  transactions will have on
     our financial position or results of operations.

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.

     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, 2004,  158,640 shares of Common Stock were  repurchased for
     approximately  $557,000. 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 new 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

                                      F-10

<PAGE>

                                 CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

     option grants and stock purchase plans where the exercise price is equal to
     the market price at the date of grant.

          The  Company  applies  APB  No.  25  and  related  Interpretations  in
     accounting for its plans.  In accordance  with SFAS No. 148 "Accounting for
     Stock-Based  Compensation  - Transition and  Disclosure"  the effect on net
     income and  earnings  per share if the  Company  had applied the fair value
     recognition provisions of SFAS 123 is as follows:

                                                   2004                 2003
                                                   ----                 ----
     Net loss
       As reported (in $000's)                   ($   306)            ($   330)
       Pro forma (in $000's)                     ($   432)            ($   456)

     Basic net loss per share:
       As reported                               ($   .09)            ($   .09)
       Pro forma                                 ($   .12)            ($   .13)

     Diluted net loss per share:
       As reported                               ($   .09)            ($   .09)
       Pro forma                                 ($   .12)            ($   .13)

          All options granted to date have an exercise price equal to the market
     price of the Company's stock on the grant date. For purposes of calculating
     the compensation cost consistent with FASB Statement 123, the fair value of
     each option grant was  estimated on the grant date using the  Black-Scholes
     option-pricing  model with the  following  assumptions  used:  no  dividend
     yield;  expected volatility of 113.85 percent;  risk free interest rates of
     5.00 percent;  and weighted  average expected lives of 10 years. No options
     were granted in 2004 or 2003.

          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 2004 or 2003.

                                      F-11

<PAGE>

                                 CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

          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, 2004 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 2004 or 2003.

          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.

          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.  The
     ISOs outstanding as of December 31, 2004,  generally become  exercisable in
     varying amounts over a two-to-five year period from the date of grant. NSOs
     also generally become exercisable over a two-to-five year period.

          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, 2004.

                                      F-12

<PAGE>

                                 CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

          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 2004 or 2003.  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 2004 or 2003.

          A summary of the  status of the  Company's  1986  Plan,  1993 Plan and
     non-employee directors' stock option plans as of December 31, 2004 and 2003
     and changes during the years ended on those dates is presented below:

                                   2004                           2003
                        -------------------------     -------------------------
                                 Weighted-Average              Weighted-Average
                       Shares     Exercise Price     Shares     Exercise Price
                       ------     --------------     ------     --------------

Options outstanding
 at beginning of year  465,202        $  5.62        465,202         $ 5.62
Forfeited/canceled      88,717           9.10              -              -
                       -------                       -------
Outstanding at
 year end              376,485           4.80        465,202           5.62
                       =======                       =======
Options exercisable
 at year end           376,485           4.80        465,202           5.62
                       =======                       =======

                                      F-13
<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

     The Company granted other options to certain directors and consultants:

                                   2004                            2003
                          ------------------------      ------------------------
                                  Weighted-Average              Weighted-Average
                         Shares    Exercise Price      Shares     Exercise Price
                         ------    --------------      ------     --------------

Options outstanding
 at beginning of year    12,834       $ 7.50           12,834         $ 7.50
Forfeited/canceled        6,584         9.00                -              -
                         ------                        ------
Outstanding at
 year end                 6,250         5.92           12,834           7.50
                         ======                        ======
Options exercisable
 at year end              6,250         5.92           12,834           7.50
                         ======                        ======

          For options  outstanding  and  exercisable  at December 31, 2004,  the
     exercise price ranges are:

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

                                    Options Outstanding                                   Options Exercisable
                   --------------------------------------------------      ---------------------------------------------------

                        Number        Weighted-Average   Weighted-             Number         Weighted-Average    Weighted-
    Range of        Outstanding at    Remaining Life      Average          Outstanding at      Remaining Life      Average
 Exercise Prices   December 31, 2004    (in years)     Exercise Price     December 31, 2004      (in years)     Exercise Price
 ---------------   -----------------    ----------     --------------     -----------------      ----------     --------------

  $ 3.50-$10.00         342,900            5.17            $ 3.93             342,900               5.17           $ 3.93
   10.01- 20.00          39,835             .94             12.46              39,835                .94            12.46
                        -------                                               -------
                        382,735                                               382,735
                        =======                                               =======

</TABLE>















                                      F-14

<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

4.   Income Taxes
     ------------

          As of December 31, 2004, the Company has  approximately $86 million of
     net  operating  loss  carryforwards  ("NOL")  for income tax  purposes  and
     approximately $3 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 credit carryforwards
     are subject to  examination  by the tax  authorities  and expire in various
     years from 2005 through 2024.

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

                                                   2004        2003
                                                   ----        ----

                         Federal-current           $  -        $  -
                         State-current                1           2
                                                   ----        ----
                                                   $  1        $  2
                                                   ====        ====

          The income tax expense for the year ended  December  31, 2004 and 2003
     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):

                                                       2004        2003
                                                       ----        ----

     Loss before income taxes                       ($   305)    ($   328)
     Statutory federal income tax rate                    34%          34%
                                                     -------      -------
     Expected income tax benefit                    (    104)    (    112)
     Increase in valuation allowance                     104          112
     Other, net                                            1            2
                                                     -------      -------
     Provision for income tax                        $     1      $     2
                                                     =======      =======

     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-15

<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

          The tax effect of  significant  items  comprising  the  Company's  net
     deferred tax asset as of December 31, 2004 are as follows (in 000's):

          Net operating loss carryforwards                         $ 29,357
          Research and development and other credits                  2,957
                                                                   --------
                                                                     32,314
          Valuation allowance                                     (  32,314)
                                                                   --------
          Net deferred tax asset                                   $      -
                                                                   ========

          Management believes the deferred tax assets as of December 31, 2004 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.   Legal Proceedings
     -----------------

     Arbitrations
     ------------

          Subsequent to March 31, 2001,  disagreements arose between Cortech and
     Ono  Pharmaceutical  Co.,  Ltd.  ("Ono") as to the status of Ono's  license
     rights  under an  agreement  executed  in 1999 (the "1999  Agreement").  On
     August 7, 2001,  Cortech filed a Demand for  Arbitration  with the American
     Arbitration  Association against Ono seeking resolution of the dispute. The
     arbitration  concluded in August 2002,  purportedly resolving any questions
     concerning  the  ownership  of  Cortech's  intellectual  property and Ono's
     development rights.


                                      F-16

<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003

          On November 1, 2002, the Company  announced that Ono had advised it of
     Ono's  intention to  discontinue  the  development  of ONO-6818  because of
     potential liver toxicity.  In a series of subsequent letters, Ono sought to
     renegotiate its rights to make compounds using Cortech's  technology.  When
     Cortech  declined,  on  February  7,  2003  Ono  admitted  that it had been
     developing what it called "Improved Compounds" since April of 2002 and that
     it had not disclosed this  development  as required by the 1999  Agreement,
     assuming  that  these  new  compounds  met the  Agreement's  definition  of
     "Improved Compounds".  In further breach of the 1999 Agreement, Ono refused
     to reveal the chemical  structure of these so-called  "Improved  Compounds"
     and announced  that Ono had filed a patent in Japan.  Within days,  Cortech
     received a notice of  Arbitration  in which Ono claimed  that its rights to
     develop and designate  compounds  for  development  as commercial  products
     extended  beyond  the  termination  of the  period  provided  in  the  1999
     Agreement  for  designating   Developed  Compounds,   as  defined  in  such
     agreement.

     Settlement and Termination
     --------------------------

          On March 19,  2004  Cortech  signed  an  Assignment,  Termination  and
     Settlement Agreement with Ono. Under the Agreement, Ono assigned to Cortech
     all  pharmaceutical  compounds and  intellectual  property  rights that Ono
     acquired  under the 1999  Agreement,  including  all technical and clinical
     information related to the pharmaceutical  compounds.  Moreover, Ono agreed
     to pay, and did pay, outstanding patent prosecution  expenses.  Cortech and
     Ono  settled  the  pending  arbitration  in  its  entirety.   Both  parties
     terminated  the 1999  Agreement,  with all of Ono's  rights  under the 1999
     Agreement reverting to Cortech. Ono's confidentiality  obligations survived
     the termination of the 1999 Agreement.













                                      F-17

<PAGE>

                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 2004 and 2003


6.   Related Party Transactions
     --------------------------

          A  management  fee of  $15,000  per month is paid to Asset  Value Fund
     Limited  Partnership  ("AVF") for  management  services  performed  for the
     Company.  Management  services  include,  among other things,  SEC filings,
     negotiation,   evaluating  merger  and  acquisition  proposals,  licensing,
     accounting  and  shareholder  relations.  The  Company  believes  that  the
     management  fee is less  than the cost for the  Company  to  perform  these
     services.  AVF is the  beneficial  owner  of  approximately  50.06%  of the
     Company's Common Stock at December 31, 2004.






























                                      F-18

<PAGE>

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

(a)  Previous independent registered public accounting firm

     (i)  On January  20,  2005,  Cortech,  Inc.  (the  "Registrant")  dismissed
          PricewaterhouseCoopers   LLP  as  its  independent  registered  public
          accounting   firm.   The  Audit   Committee  and  Board  of  Directors
          participated  in and  approved  the  decision  to  change  independent
          registered public accounting firms.

     (ii) The reports of PricewaterhouseCoopers  LLP on the financial statements
          for each of the two  years  in the  period  ended  December  31,  2003
          contained  no adverse  opinion or  disclaimer  of opinion and were not
          qualified  or modified as to  uncertainty,  audit scope or  accounting
          principle.

     (iii)During  each of the two years in the period  ended  December  31, 2003
          and through January 20, 2005,  there have been no  disagreements  with
          PricewaterhouseCoopers  LLP on any matter of accounting  principles or
          practices,  financial  statement  disclosure,  or  auditing  scope  or
          procedure,  which disagreements if not resolved to the satisfaction of
          PricewaterhouseCoopers  LLP would have caused  them to make  reference
          thereto in their reports on the financial statements for such years.

     (iv) During each of the two years in the period ended December 31, 2003 and
          through  January 20, 2005,  there have been no  reportable  events (as
          defined in Regulation S-B 304 (a) (1) (iv)).

     (v)  The Registrant has requested that  PricewaterhouseCoopers  LLP furnish
          it with a letter addressed to the SEC stating whether or not it agrees
          with the above  statements.  A copy of such letter,  dated January 26,
          2005, was filed as Exhibit 16 to Form 8-K filed on January 26, 2005.

(b)  New independent registered public accounting firm

     (i)  The  Registrant  engaged Amper,  Politziner & Mattia,  P.C. as its new
          independent  registered  public  accounting  firm on January 20, 2005.
          During the two most recent fiscal years and through  January 20, 2005,
          the Registrant has not consulted with Amper,  Politziner & Mattia P.C.
          concerning any matter  referred to under paragraph (i) or (ii) of Item
          304 (a)(2) of Regulation S-B.



                                      II-7

<PAGE>

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
were no significant  changes in the Company's  internal  controls 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, 2004 that have
materially  affected or are 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,  2006,  the  Company  expects to begin,  in
fiscal  2005,  the system and process  documentation  and  evaluation  needed to
comply with  Section  404. The Company  believes  this process for  documenting,
evaluating  and  monitoring  its internal  control over  financial  reporting is
consistent with the objectives of Section 404 of the Act.






















                                      II-8

<PAGE>

                                    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 Proxy Statement for its Annual Meeting of Stockholders to be held
on May 17, 2005 (the "2005 Proxy Statement).

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

     The information  required under this item is incorporated by reference from
Cortech's 2005 Proxy 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 2005 Proxy Statement.

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

     The information  required under this item is incorporated by reference from
Cortech's 2005 Proxy Statement.

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

     The information  required under this item is incorporated by reference from
Cortech's 2005 Proxy Statement.
















                                     III-1

<PAGE>

                                    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 Document
------            -----------------------


3.1   (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)

10.39             Amended and Restated 1986 Incentive Stock Option
                  Plan 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)**

10.47             Executive Officers' Severance Benefit Plan.(7)**

10.55             Amendment No. 1 To Executive Officers' Severance
                  Benefit Plan.(7)**

10.97             Form of Option Agreement for Directors' Non-Plan
                  Options.(10)**



                                     III-2

<PAGE>

Exhibit
Number            Description of Document
------            -----------------------

23    (a)         Consent of Amper, Politziner & Mattia, P.C.

      (b)         Consent of PricewaterhouseCoopers LLP

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***



Reports on Form 8-K
-------------------

     None




























                                     III-3

<PAGE>

--------------------------

(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.

*    Subject to Confidential Treatment Order.
**   Compensatory Plan.
***  Filed herewith.









                                     III-4

<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.

        March 31, 2005                              By: /s/ Paul O. Koether
                                                        -----------------------
                                                        Paul O. Koether
                                                        Chairman, President and
                                                        Chief Executive Officer


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed by the  following  persons in the  capacities  and on the
dates indicated.

     Signature                           Capacity                      Date
------------------------       ----------------------------      ---------------


/s/ Paul O. Koether            Chairman, President                March 31, 2005
------------------------       and Chief Executive Officer
Paul O. Koether                (Principal Executive Officer)


/s/ Sue Ann Merrill            Chief Financial Officer,           March 31, 2005
------------------------       Treasurer and Secretary
Sue Ann Merrill                (Principal Financial and
                               Accounting Officer)


/s/ Diarmuid Boran             Director                           March 31, 2005
------------------------
Diarmuid Boran


/s/ James L. Bicksler          Director                           March 31, 2005
------------------------
James L. Bicksler


/s/ Sheri Perge Stettner       Director                           March 31, 2005
------------------------
Sheri Perge Stettner


/s/ Qun Yi Zheng               Director                           March 31, 2005
------------------------
Qun Yi Zheng





                                     III-5

<PAGE>

                                                                  EXHIBIT 23 (a)



            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the  incorporation  by reference in  Registration  Statements  No.
33-60242,  33-87656, 33-95226, and 333-04317 on Form S-8 of Cortech, Inc. of our
report dated March 16, 2005 relating to the financial statements which appear in
this Form 10-KSB of Cortech, Inc.





/s/ Amper, Politziner & Mattia P.C.
Edison, New Jersey
March 30, 2005


<PAGE>


                                                                  EXHIBIT 23 (b)


                                                      PricewaterhouseCoopers LLP
                                                                400 Campus Drive
                                                                    P.O. Box 988
                                                          Florham Park, NJ 07932
                                                        Telephone (973) 236-4000
                                                        Facsimile (973) 236-5000



            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            --------------------------------------------------------

We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statement  on Form S-8 (Nos.  33-60242,  33-87656,  33-95226  and  333-04317) of
Cortech,  Inc.  of our  report  dated  February  6,  2004,  except  for the last
paragraphs  of Note 5, for  which the date is March 19,  2004,  relating  to the
financial  statements and financial statement  schedules,  which appears in this
Form 10-KSB.


/s/ PricewaterhouseCoopers LLP

Florham Park, NJ
March 30, 2005

<PAGE>
                                                                    EXHIBIT 31.1
                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I,   Paul O. Koether, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Cortech, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the small  business  issuer as of, and for,  the periods  presented in this
     report;

4.   The small business issuer's other certifying  officer and I are responsible
     for  establishing  and maintaining  disclosure  controls and procedures (as
     defined  in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the small
     business issuer and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision, to ensure that material information relating to the small
          business  issuer,  including its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly  during the
          period in which this report is being prepared;

     b)   evaluated the effectiveness of the small business issuer's  disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

     c)   disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and

5.   The small business issuer's other certifying  officer and I have disclosed,
     based on our most recent  evaluation  of internal  control  over  financial
     reporting,  to the small business issuer's auditors and the audit committee
     of small business  issuer's  board of directors (or persons  performing the
     equivalent functions):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.


March 31, 2005                                      /s/ PAUL O. KOETHER
                                                    ----------------------------
                                                    Paul O. Koether
                                                    Chairman, President and
                                                    Chief Executive Officer

<PAGE>

                                                                    EXHIBIT 31.2
                      CERTIFICATION PURSUANT TO SECTION 302
                        OF THE SARBANES-OXLEY ACT OF 2002

I,   Sue Ann Merrill, certify that:

1.   I have reviewed this annual report on Form 10-KSB of Cortech, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the small  business  issuer as of, and for,  the periods  presented in this
     report;

4.   The small business issuer's other certifying  officer and I are responsible
     for  establishing  and maintaining  disclosure  controls and procedures (as
     defined  in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the small
     business issuer and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision, to ensure that material information relating to the small
          business  issuer,  including its  consolidated  subsidiaries,  is made
          known to us by others within those entities,  particularly  during the
          period in which this report is being prepared;

     b)   evaluated the effectiveness of the small business issuer's  disclosure
          controls and procedures  and presented in this report our  conclusions
          about the effectiveness of the disclosure controls and procedures,  as
          of the  end of the  period  covered  by  this  report  based  on  such
          evaluation; and

     c)   disclosed  in this  report any change in the small  business  issuer's
          internal  control over financial  reporting  that occurred  during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's  fourth fiscal  quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and

5.   The small business issuer's other certifying  officer and I have disclosed,
     based on our most recent  evaluation  of internal  control  over  financial
     reporting,  to the small business issuer's auditors and the audit committee
     of small business  issuer's  board of directors (or persons  performing the
     equivalent functions):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the small  business  issuer's
          ability   to  record,   process,   summarize   and  report   financial
          information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a significant  role in the small business  issuer's
          internal control over financial reporting.


March 31, 2005                                         /s/ Sue Ann Merrill
                                                       -------------------------
                                                       Sue Ann Merrill
                                                       Chief Financial Officer





<PAGE>

                                                                      Exhibit 32

     CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


Pursuant to Section 906 of the Public  Company  Accounting  Reform and  Investor
Protection  Act of 2002 (18 U.S.C.  1350,  as  adopted),  Paul O.  Koether,  the
Chairman,   President  and  Chief  Executive  Officer  of  Cortech,  Inc.,  (the
"Company"),  and Sue Ann Merrill,  the Chief  Financial  Officer,  Treasurer and
Secretary of the Company each hereby  certifies  that, to the best of his or her
knowledge:

     1.   The  Company's  Annual  Report on Form  10-KSB  for the  period  ended
          December 31, 2004, to which this  Certification is attached as Exhibit
          32 (the "Annual  Report"),  fully  complies  with the  requirements of
          Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934,
          as amended;

          and

     2.   The information  contained in the Annual  Report  fairly presents,  in
          all  material  respects,   the  financial  condition  and  results  of
          operations of the Company.


Dated:   March 31, 2005


/s/ Paul O. Koether
--------------------------------
Paul O. Koether
Chairman, President and
  Chief Executive Officer



/s/ Sue Ann Merrill
--------------------------------
Sue Ann Merrill
Chief Financial Officer,
  Treasurer and Secretary