<PAGE>

                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549 
                                           

                                     FORM 10-Q/A
                                           
(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the quarterly period ended    June 30, 1997
                              ------------------------------------------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 

For the transition period from                     to                    
                             ---------------------  --------------------

Commission File Number:                1-10285
                      --------------------------------------------------------

                            BIOMAGNETIC TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
                (Exact name of registrant as specified in its charter)

            California                                    95-2647755
--------------------------------------------------------------------------------
(State or other jurisdiction of                        (I.R.S. Employer 
 incorporation or organization)                       Identification No.)

  9727 Pacific Heights Boulevard,
  San Diego, California                                   92121-3719
--------------------------------------------------------------------------------
(Address of principal executive offices)                  (zip code)

                                    (619) 453-6300
                 Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
(Former name, former address and formal fiscal year, if changed since last  
report)
                                           
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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.                                          
                                       [X] Yes       [ ] No

                  APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                     PROCEEDINGS DURING THE PRECEDING FIVE YEARS
                                           
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.                        [ ] Yes       [ ] No

                        APPLICABLE ONLY TO CORPORATE ISSUERS:
                                           
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

    As of July 1, 1997 Registrant had only one class of common stock of
    which there were 47,691,824 shares outstanding.


<PAGE>

    PART I -- FINANCIAL INFORMATION

    ITEM 1.    FINANCIAL STATEMENTS


    BIOMAGNETIC TECHNOLOGIES, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                    JUNE 30, 
                                                                      1997     SEPTEMBER 30,
                                                                  (UNAUDITED)      1996     
                                                                  -----------  -------------

    ASSETS
    <S>                                                           <C>          <C>          
    Cash and cash equivalents                                            $440        $1,752 
    Short-term investments                                                  0           744 
    Restricted cash and short-term investments                          1,456         6,085 
    Accounts receivable                                                   438            17 
    Inventories                                                         4,254         5,627 
    Prepaid expenses and other current assets                             437           338 
                                                                  -----------  -------------
       Total current assets                                             7,025        14,563 
                                                                  -----------  -------------
    Property and equipment                                              7,731         9,478 
     Less accumulated depreciation and  amortization                   (7,201)       (8,570)
                                                                  -----------  -------------
    Net property and equipment                                            530           908 
                                                                  -----------  -------------

    Investment in Magnesensors                                             80             0 
    Note Receivable  (net)                                                300             0 
    Restricted cash                                                       180           500 
    Other assets                                                          348           279 
                                                                  -----------  -------------
       Total assets                                                    $8,463       $16,250 
                                                                  -----------  -------------
                                                                  -----------  -------------

    LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
    Accounts payable                                                   $2,495        $2,633 
    Accrued liabilities                                                   966         1,897 
    Accrued salaries and employee benefits                                607           860 
    Customer deposits                                                   4,922         9,208 
    Note payable-related party                                              0         3,000 
                                                                  -----------  -------------
       Total current liabilities                                        8,990        17,598 


    L/T Deferred Revenue                                                   90
    Other liabilities                                                       0            48 
                                                                  -----------  -------------
       Total liabilities                                                9,080        17,646
                                                                  -----------  -------------
    SHAREHOLDERS' (DEFICIT) EQUITY
    Common stock -- no par value, 100,000,000 shares
     authorized; 47,691,824 and 39,974,222 shares issued and
     outstanding in June and September, respectively                   81,554        78,467
     Accumulated deficit                                              (82,171)      (79,863)
                                                                  -----------  -------------
       Total shareholders' (deficit) equity                              (617)       (1,396)
                                                                  -----------  -------------
       Total liabilities and shareholders' (deficit) equity            $8,463       $16,250 
                                                                  -----------  -------------
                                                                  -----------  -------------

</TABLE>


                   See notes to consolidated financial statements 


                                          2
<PAGE>

                            BIOMAGNETIC TECHNOLOGIES, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                       (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED               NINE MONTHS ENDED
                                                                JUNE 30,                         JUNE 30,
                                                           1997         1996                1997         1996

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

    REVENUES
    <S>                                                 <C>           <C>                 <C>          <C>
    Product sales                                       $  5,198      $    15             $  6,733     $    150
    Contract research                                          0            0                    0           29
    Service revenue                                           91          176                  278          355
    Interest income                                           36          106                  214          391
    Other income (expense)                                   288           11                  302          (96)
    Fx effects                                               (34)          22                  267           36
                                                          ------       ------               ------       ------
       Total revenues                                      5,579          330                7,794          865
                                                          ------       ------               ------       ------

    EXPENSES
    Production costs                                       2,857          326                3,941          876
    Contract research costs                                    0            0                                32
    Service costs                                             47           32                  119           83
    Research and development                                 819        1,570                2,706        5,048
    Marketing and sales                                      477          800                1,717        2,303
    General and administrative                               606          553                1,541        1,635
    Interest expense                                           7            0                   77           10
                                                        --------     --------             --------      -------
       Total expenses                                      4,813        3,281               10,101       10,037
                                                        --------     --------             --------       ------
    NET INCOME (LOSS) BEFORE INCOME TAXES               $    766      $(2,951)             $(2,307)     $(9,172)

    Provision for income taxes                                 0            1                    1            1
                                                        --------     --------             --------      -------
    NET INCOME (LOSS)                                   $    766      $(2,952)             $(2,308)     $(9,173)
                                                        --------     --------             --------      -------
                                                        --------     --------             --------      -------

    NET INCOME (LOSS) PER SHARE                         $   0.02     $  (0.07)            $  (0.05)     $ (0.23)
                                                        --------     --------             --------      -------
                                                        --------     --------             --------      -------

    WEIGHTED AVERAGE NUMBER OF
       SHARES OUTSTANDING                                 47,692       39,944               45,119       39,963
                                                        --------     --------             --------      -------
                                                        --------     --------             --------      -------

</TABLE>


                   See notes to consolidated financial statements 


                                          3
<PAGE>

                            BIOMAGNETIC TECHNOLOGIES, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)
                                    (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                             NINE  MONTHS ENDED 
                                                                   JUNE 30,     
                                                             1997           1996 
                                                            ------         ------
    <S>                                                    <C>            <C>
    OPERATING ACTIVITIES
    Net income (loss)                                      $(2,308)       $(9,173)
    Adjustments to reconcile net loss to net
    cash used for operating activities:
       Depreciation and amortization                           342            733
       (Gain) loss on  sale /retirement  of assets            (226)           229
       Interest expense                                          0           (381)
    Changes in operating assets & liabilities:
    Restricted cash                                           4,948              0
    Accounts receivable                                        (420)           761
    Inventories                                               1,373         (2,230)
    Prepaid and other current assets                            (99)           110
    Other assets                                               (449)            23
    Accounts payable                                           (138)           620
    Accrued liabilities                                      (1,206)          (397)
    Accrued salaries and employee benefits                     (253)             0
    Customer deposits                                        (4,286)         3,321
    Other liabilities                                            42             43
                                                             ------         ------
       Net cash provided by (used for) operating activities  (2,680)        (6,341)
                                                             ------         ------

    INVESTING ACTIVITIES
    Change in short-term investments                           744          6,400
    Capital expenditures                                       (65)          (520)
    Proceeds from sale of assets                               326              0
                                                            ------         ------
       Net cash (used for) provided by investing activities  1,005          5,880
                                                            ------         ------

    FINANCING ACTIVITIES
    Proceeds from sale of common stock                       3,088             34
    Proceeds from bank loan                                    275              0
    Repayment of Notes Payable                              (3,000)
                                                            ------         ------
        Net cash provided by financing activities              363             34
                                                            ------         ------

    NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS    (1,312)          (427)
                                                            ------         ------
    CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD         1,752          2,314
                                                            ------         ------
    CASH AND CASH EQUIVALENTS AT END OF PERIOD                 440          1,887
                                                            ------         ------
                                                            ------         ------

</TABLE>
                   See notes to consolidated financial statements.


                                          4
<PAGE>

                                           
                                           
                            BIOMAGNETIC TECHNOLOGIES, INC.
           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                           

1.  BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements included herein
include the accounts of Biomagnetic Technologies, Inc. and its subsidiary (the
"Company") and have been prepared in accordance with the rules and regulations
of the Securities and Exchange Commission.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.  Although the Company believes that the
disclosures made in this report are adequate to make the information not
misleading, it is suggested that these financial statements be read in
connection with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended September 30,
1996.

In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments,  consisting only of normal recurring accruals,
necessary to present fairly its financial position at June 30, 1997 and the
results of operations and its cash flows for the periods presented.

The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. 
Actual results could  differ from these estimates.

2.  NET PROFIT (LOSS) PER SHARE

Shares used in computing net profit (loss) per share include the weighted
average of common stock outstanding.  Common stock equivalents are antidilutive
and are excluded from the computation of net profit (loss) per share.

3.  INVENTORIES

The composition of inventories is as follows:
                                                       June 30,  September 30,
                                                          1997       1996 
                                                         ------     ------
    Raw materials                                       $   310       $546
    Work-in process                                       2,610      3,356
    Finished goods                                        1,334      1,725
                                                         ------     ------
                                                         $4,254     $5,627
                                                         ------     ------
                                                         ------     ------

4.  MAGNES-Registered Trademark- WHOLE HEAD SYSTEM PRODUCTION AND DELIVERY RISK

The Company's backlog at June 30, 1997 amounted to $7,736,000 and is composed of
orders for the new Magnes 2500 Whole Head Magnetic Source Imaging System
("Magnes 2500 WH"), service contracts and government contracts. The Company has
shipped eight (8) of its  Magnes 2500 WH systems to customers and one (1) system
to the Company's application development site at Scripps Clinic and Research
Foundation, which is company owned. As of June 30, 1997 there have been  five
(5) final acceptances received on the eight (8) shipped systems. The delay in
receipt of customer acceptances has been primarily due to a hardware upgrade,
the need for which was not identified prior to installing the systems at
customer sites, and additional software development required to meet unique
customer contractual agreements. The required hardware upgrades were shipped to
customer sites during the second quarter, and were either installed, or in the
process of installation at the customer sites during the second and third
quarters, thus facilitating the receipt of five (5) acceptances in the third
quarter.  The Company anticipates that the additional system hardware upgrades
and specific customer software tools will be completed for the remaining three
(3) already shipped and installed systems during the fourth quarter of fiscal
year 1997. However,  there can be no assurances that this will be accomplished. 
In the event that the hardware upgrade and software tools are not completed as
anticipated for the three (3) systems, the remaining three customers final 


                                          5
<PAGE>

acceptances could be further delayed, which could have a material adverse effect
on the cash flow and cash resources of the Company.


                                          6
<PAGE>


                                      SIGNATURES
                                           

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


BIOMAGNETIC TECHNOLOGIES, INC.



Date      August 4, 1997                          /s/ D. Scott Buchanan
                                                 ------------------------
                                                 D. Scott Buchanan
                                                 President and Chief Executive
                                                 Officer

Date      August 4, 1997                          /s/ Herman Bergman
                                                 ------------------------
                                                 Herman Bergman
                                                 Vice President of Finance,
                                                 Chief Financial Officer
                                                 Secretary


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