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

                                  FORM 10-Q/A(1)

(Mark One)

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

For the quarterly period ended     December 31, 1996
                               _______________________________________________

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

For the transition period
from____________________________________to____________________________________

                              1-10285
Commission File Number:_______________________________________________________

                        BIOMAGNETIC TECHNOLOGIES, INC.
______________________________________________________________________________
            (Exact name of registrant as specified in its charter)
                                 California
______________________________________________________________________________
         (State or other jurisdiction of incorporation or organization)

                                 95-2647755
______________________________________________________________________________
                   (I.R.S. Employer 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 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 February 1, 1997 Registrant had only one class of common stock
     of which there were 47,691,824 shares outstanding.

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                           PART II--OTHER INFORMATION



ITEM 2.  CHANGES IN SECURITIES

In August 1996, the Company entered into a loan agreement with Dassesta 
International S.A. ("Dassesta"), providing for loans to the Company of up to 
$3,000,000 bearing interest at 9% per annum maturing in February 1997.  The 
note plus accrued interest was convertible into common shares at the option 
of the Company at $.40 per share at any time and under certain conditions at 
the option of Dassesta.  As of September 30, 1996 the Company had borrowed 
the entire $3,000,000.

On December 31, 1996 the Company exercised its option to convert the 
$3,000,000 short term loan from Dassesta, plus $87,040 of accrued interest 
thereon, into common stock of the Company.  A total of 7,717,602 shares were 
issued to Dassesta in reliance upon Securities Act Section 3 (a) (9). The 
derivative security (the note) had been issued in reliance upon Regulation S 
under the Securities Act.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

No reports on Form 8-K have been filed during the quarter ended December 31,
1996. The exhibits filed as part of this report are listed below.



     EXHIBIT NO.                             DESCRIPTION
     -----------                             -----------
         27                             Financial Data Schedule