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                                                                    EXHIBIT 99.1



FOR IMMEDIATE RELEASE:                                                     NEWS
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January 31, 2001                                                     NASDAQ-CMED

                        COLORADO MEDTECH, INC. ANNOUNCES
                              RECEIPT OF FDA LETTER

BOULDER, Colorado -- Colorado MEDtech, Inc. (NASDAQ -- CMED), a Boulder,
Colorado-based medical products and outsourcing services company, today
announced that it has received a warning letter from the United States Food and
Drug Administration (FDA). The FDA's letter states that there are certain areas
in which the company's Longmont, Colorado contract medical device manufacturing
facility is not in compliance with the FDA's Quality System Regulation (QSR).

The company has been working aggressively to improve its QSR compliance and is
working with the FDA to address and resolve all issues that have been raised.
The company has already taken several significant steps to improve its quality
system. In particular, the company

o   presented to the FDA a comprehensive corrective action plan and a detailed
    response,

o   retained highly-respected industry consultants to ensure that its quality
    system meets or exceeds all requirements,

o   has begun to implement new procedures and training, and

o   is working with its vendors to ensure that their components meet the
    company's elevated quality system.

"Our new management team recognized that actions were needed prior to this
letter and had already begun to strengthen our quality systems," said Stephen K.
Onody, President and Chief Executive Officer of the company. "We pledged to the
FDA that we would be proactive in doing independent external audits, and the
first independent external audit is complete. Its results indicate that we are
on track with the plan we presented to the FDA to resolve the deficiencies. By
this spring we expect to have addressed all of the deficiencies and to have made
improvements to our entire quality system to meet customer and business needs
for the future."

Colorado MEDtech, Inc., through its wholly-owned subsidiaries and operating
divisions, is a leading full-service provider of advanced medical products,
critical components, and comprehensive outsourcing services.

FORWARD-LOOKING STATEMENTS

The statements in this news release and in the conference call that are not
historical facts are forward-looking statements that represent management's
beliefs and assumptions based on currently available information.
Forward-looking statements can be identified by the use of words such as
"believes," "intends," "may," "will," "should," "anticipated," "expected" or
comparable terminology or by discussions of strategy. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot assure that these expectations will prove to be correct.
Such statements involve risks and uncertainties including, but not limited to,
the risk that the Company's existing level of orders may not be indicative of
the level or trend of future orders, the risk that the

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Company may not successfully complete the work encompassed by current or future
orders, the risk that unforeseen technical or production difficulties may
adversely impact project timing and financial performance, the risk that the
management changes will not produce the desired results, the risk of potential
litigation, the risks associated with regulation by the Federal Food and Drug
Administration including compliance with the Quality System Regulation, the risk
that acquired companies cannot be successfully integrated with the Company's
existing operations and the risk that a downturn in general economic conditions
or customer budgets may adversely affect research and development and capital
expenditure budgets of potential customers upon which the Company is dependent.
Should one or more of these risks materialize (or the consequences of such a
development worsen), or should the underlying assumptions prove incorrect,
actual results could differ materially from those forecasted or expected. These
factors are more fully described in the Company's documents filed from time to
time with the Securities and Exchange Commission. The Company disclaims any
intention or obligation to update publicly or revise such statements whether as
a result of new information, future events or otherwise.

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                                    CONTACTS:

Colorado MEDtech, Inc.
Stephen K. Onody, President and CEO             Telephone:      303.530.2660
Gregory A. Gould, CFO                           Fax:            303.581.1010
Email: cmedinfo@cmed.com                        Website:        www.cmed.com