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

                                    FORM 10-Q

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended March 28, 1998 or

[ ]  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 0-17885
                        BEI MEDICAL SYSTEMS COMPANY, INC.
             (Exact name of Registrant as specified in its charter)

              Delaware                                   71-0455756
------------------------------------        ------------------------------------
      (State of incorporation)              (I.R.S. Employer Identification No.)


                               100 Hollister Road
                           Teterboro, New Jersey 07608
                           ---------------------------
                    (Address of principal executive offices)
            (Formerly 83 Hobart Street, Hackensack, New Jersey 07601)

                                 (201) 727-4900
                                 --------------
                         (Registrant's telephone number)


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.

                                    Yes  X   No
                                        ---     ---
Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

      Common Stock: $.001 Par Value, 7,728,296 shares as of April 30, 1998

                                                                    Page 1 of 14

<PAGE>


BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

INDEX


PART 1.        FINANCIAL INFORMATION   (Unaudited)                          PAGE
               ---------------------                                        ----

Item 1.        Financial Statements

                 Condensed Consolidated Balance Sheets--March 28,
                 1998 and September 27, 1997                                  3

                 Condensed Consolidated Statements of Operations-Three
                 Month and Six Month Periods ended March 28, 1998 and 
                 March 29, 1997                                               4

                 Condensed Consolidated Statements of Cash Flows-
                 Six Month Periods ended March 28, 1998

                 Notes to Condensed Consolidated Financial Statements--
                 March 28, 1998                                               6

Item 2.        Management's Discussion and Analysis of Financial 
               Condition and Results of Operations                            9

PART II.       OTHER INFORMATION

Item 1.        Legal Proceedings                                             12

Item 4.        Submission of Matters to Vote of Security Holders             12

Item 5.        Other Information                                             13

Item 6.        Exhibits and Reports on Form 8-K                              13

                     (a)      Exhibits

                              10.28   Building Lease
                              27.1    Financial Data Schedule

                     (b)      Reports on Form 8-K

               SIGNATURES                                                    14

                                                                    Page 2 of 14

<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.           Financial Statements

<TABLE>
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                                               March 28,               September 27,
                                                                                                 1998                       1997
                                                                                              (Unaudited)           (See note below)
                                                                                                       (dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                        <C>    
ASSETS
Cash and cash equivalents                                                                       $ 6,795                    $ 9,271
Trade receivables, net                                                                            2,376                      1,958
Inventories, net -- Note 2                                                                        2,958                      2,939
Other current assets                                                                              1,239                        296
                                                                                                -------                    -------
      Total current assets                                                                       13,368                     14,464

Property, plant and equipment, net                                                                  732                        811
Tradenames, patents and other                                                                     3,265                      3,708
Goodwill                                                                                          3,476                      3,595
Other assets, net                                                                                   137                          6
                                                                                                -------                    -------
                                                                                                $20,978                    $22,584
                                                                                                =======                    =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable                                                                          $   916                    $   346
Accrued expenses and other liabilities                                                            3,140                      2,843
Current portion of long-term debt                                                                    87                        190
                                                                                                -------                    -------
      Total current liabilities                                                                   4,143                      3,379

Long-term debt, less current portion                                                               --                           22
Minority interest                                                                                  --                        1,523
Stockholders' equity                                                                             16,835                     17,660
                                                                                                -------                    -------
                                                                                                $20,978                    $22,584
                                                                                                =======                    =======

<FN>
See notes to condensed consolidated financial statements.
</FN>

                                                                                                                        Page 3 of 14

</TABLE>


Note:  The balance sheet at September 27, 1997 has been derived from the audited
consolidated balance sheet at that date but does not include all the information
and footnotes required by generally accepted accounting  principles for complete
financial statements.


<PAGE>


<TABLE>
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<CAPTION>
                                                                                             Quarter Ended       Six Months Ended
                                                                                           ------------------    ------------------
                                                                                         March 28,   March 29,  March 28,  March 29,
                                                                                            1998       1997       1998       1997
                                                                                           -------    -------    -------    -------
                                                                                     (dollars in thousands except per share amounts)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>        <C>        <C>        <C>    
Net sales                                                                                  $ 2,535    $ 2,550    $ 4,953    $ 5,134
Cost of sales                                                                                1,394      1,460      2,889      2,892
                                                                                           -------    -------    -------    -------
                                                                                             1,141      1,090      2,064      2,242

Selling, general and administrative expenses                                                 2,232      1,887      4,496      3,796
Research, development and related expenses                                                     516        468        994        901
                                                                                           -------    -------    -------    -------

Loss from operations                                                                        (1,607)    (1,265)    (3,426)    (2,455)

Interest expense                                                                                (8)       (20)       (19)       (40)
Other income                                                                                    98         23        218        112
                                                                                           -------    -------    -------    -------

Loss from continuing operations
    before income taxes                                                                     (1,517)    (1,262)    (3,227)    (2,383)
Provision (benefit) for income taxes                                                          (366)      (429)      (880)      (805)
                                                                                           -------    -------    -------    -------

Loss from continuing operations                                                             (1,151)      (833)    (2,347)    (1,578)
Income from discontinued operations,
    net of income taxes                                                                       --        1,452       --        1,487
                                                                                           -------    -------    -------    -------
Net income (loss)                                                                          $(1,151)   $   619    $(2,347)   $   (91)
                                                                                           =======    =======    =======    =======


                                             Earnings (loss) per Common Share -- Note 4

       Basic and Diluted Earnings (loss) per Common Share
Income (loss) from continuing operations                                                   $ (0.16)   $ (0.12)   $ (0.32)   $ (0.23)
Income from discontinued operations, net of
    income taxes                                                                              0.00       0.21       0.00       0.22
                                                                                           -------    -------    -------    -------
Net income per common share                                                                $ (0.16)   $  0.09    $ (0.32)   $ (0.01)
                                                                                           =======    =======    =======    =======

Dividends per common share                                                                 $  0.00    $  0.02    $  0.00    $  0.04
                                                                                           =======    =======    =======    =======

<FN>
See notes to condensed consolidated financial statements.
</FN>

                                                                                                                        Page 4 of 14
</TABLE>


<PAGE>


<TABLE>
BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<CAPTION>
                                                                                                        Six Months Ended
                                                                                                   --------------------------------
                                                                                                   March 28,               March 29,
                                                                                                     1998                    1997
                                                                                                         (dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                <C>                     <C>      
Net cash used by operating activities                                                              $ (2,122)               $ (3,934)

Cash flows from investing activities:
         Purchases of property, plant and equipment                                                     (73)                   (118)
         Increase in other assets                                                                      (153)                   (135)
                                                                                                   --------                --------

                 Net cash used in investing activities                                                 (226)                   (253)

Cash flows from financing activities:
         Payments on long-term debt                                                                    (128)                 (6,223)
         Proceeds from issuance of common stock                                                        --                       316
         Purchase of treasury stock                                                                    --                      (748)
         Payment of cash dividends                                                                     --                      (140)
                                                                                                   --------                --------

                 Net cash used in financing activities                                                 (128)                 (6,795)
                                                                                                   --------                --------

Net decrease in cash and cash equivalents                                                            (2,476)                (10,982)

Cash and cash equivalents at beginning of period                                                      9,271                  17,329
                                                                                                   --------                --------

Cash and cash equivalents at end of period                                                         $  6,795                $  6,347
                                                                                                   ========                ========

<FN>
See notes to condensed consolidated financial statements.
</FN>

                                                                                                                        Page 5 of 14
</TABLE>

<PAGE>


BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

March 28, 1998

NOTE 1 -- BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been  included.  Operating  results for the interim  periods  presented  are not
necessarily  indicative  of the results that may be expected for the year ending
October 3, 1998. For further  information,  refer to the consolidated  financial
statements and footnotes thereto in the Company's annual report on Form 10-K for
the year ended September 27, 1997.

On September 27, 1997,  BEI  Electronics,  Inc.  ("Electronics")  distributed to
holders  of  Electronics   common  stock  one  share  of  common  stock  of  BEI
Technologies,  Inc. ("Technologies"),  a newly formed subsidiary, for each share
of Electronics  common stock held (the  "Distribution").  In connection with the
Distribution,  Electronics  transferred  to  Technologies  all  of  the  assets,
liabilities  and  operations  of  its  BEI  Sensors  &  Systems  Company,   Inc.
("Sensors") and Defense Systems Company, Inc. ("Defense") business segments. See
Note 3 --  Discontinued  Operations  for a description of the  Distribution.  On
November  4,  1997,  Electronics  merged its  subsidiary,  BEI  Medical  Systems
Company,  Inc.  ("Medical") into  Electronics (the "Merger").  After the Merger,
Electronics  changed  its  name  to  BEI  Medical  Systems  Company,  Inc.  (the
"Company").

NOTE 2--INVENTORIES

                                                   March 28,       September 27,
                                                     1998               1997
                                                     (dollars in thousands)
--------------------------------------------------------------------------------

Finished products                                   $1,832            $1,843
Work in process                                        159               230
Materials                                              967               866
                                                    ------            ------
Net inventories                                     $2,958            $2,939
                                                    ======            ======

NOTE 3 -- DISCONTINUED OPERATIONS

Technologies  was  incorporated on June 30, 1997 in the State of Delaware,  as a
wholly owned  subsidiary  of  Electronics.  On September  27, 1997,  Electronics
distributed to its  shareholders  one share of common stock of Technologies  for
each share of Electronics common stock held on September 24, 1997. In connection
with  the  Distribution,  Electronics  transferred  to  Technologies  all of the
assets, liabilities and operations of its Sensors and Defense business segments.
Accordingly,  the  financial  position and results of  operations of Sensors and
Defense are shown as discontinued operations for all periods presented.

                                                                    Page 6 of 14

<PAGE>


NOTE 4--EARNINGS PER SHARE

<TABLE>
The following table sets forth the computation of basic and diluted earnings per
common share:

<CAPTION>
                                                                               Quarter Ended                   Six Months Ended
                                                                        -----------------------------------------------------------
                                                                        March 28,        March 29,        March 28,        March 29,
                                                                          1998              1997            1998             1997
                                                                        ---------         -------         ---------         -------
                                                                              (dollars in thousands except per share amounts)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>               <C>             <C>               <C>     
                       Numerator
Loss from continuing operations                                         $  (1,151)        $  (833)        $ (2,347)        $(1,578)
Income from discontinued operations,
    net of income taxes                                                      --             1,452              --            1,487
                                                                        ---------         -------         --------          ------ 
Net income (loss) available to common
stockholders                                                            $  (1,151)        $   619         $ (2,347)        $   (91)
                                                                        =========         =======         ========          ====== 

                      Denominator
Denominator for basic  earnings  per share --
   weighted  average  shares, net of nonvested
   shares (FY 1998--170 shares; FY 1997--206
   shares)                                                                  7,387           6,844            7,300           6,842

      Basic and diluted earnings (loss) per share
From continuing operations, net of income
   taxes                                                                $   (0.16)        $ (0.12)        $  (0.32)        $ (0.23)
From discontinued operations, net of income
   taxes                                                                     0.00            0.21             0.00            0.22
                                                                        ---------         -------         --------          ------ 
Net Income (loss)                                                       $   (0.16)        $  0.09         $  (0.32)        $ (0.01)
                                                                        =========         =======         ========          ====== 
</TABLE>


Due to the loss  from  continuing  operations,  earnings  per  share is based on
weighted  average  common  shares only, as any  assumption of the  conversion of
equivalent  shares would be  antidilutive.  Options on 824,228  shares of common
stock were not included in the computation of diluted earnings per share because
of their antidilutive effect.

NOTE 5--CONTINGENCIES AND LITIGATION

CooperSurgical, Inc. vs. BEI Medical Systems Company, Inc. et al.

In October 1993,  CooperSurgical,  Inc., a subsidiary  of The Cooper  Companies,
filed a claim for unspecified damages alleging unfair competition due to actions
by Medical and its president  Richard  Turner,  a former  employee of The Cooper
Companies,  and others.  On January 31,  1996,  the Court  issued a ruling which
affirmed  the legal  basis for  Medical  to assert a  counterclaim  for  damages
against  CooperSurgical   regarding  the  parties'   electrosurgical   generator
contract.

                                                                    Page 7 of 14

<PAGE>


CooperSurgical's original damage claims were for $11 million. In June 1996, more
than one year  after  expert  discovery  closed  in May  1995,  CooperSurgical's
counsel  sent  to  Medical's   counsel  a  letter   purporting   to   supplement
CooperSurgical's  previous  responses to  interrogatories.  The June 1996 letter
indicated that  CooperSurgical's  damages for one particular aspect of the claim
were   between  $24  and  $50  million   with  respect  to  a  claim  for  which
CooperSurgical's  experts had previously  estimated damages of $3.4 million. The
Company  has  vigorously  opposed  any  CooperSurgical   attempt  whatsoever  to
introduce  at trial any  evidence  of a damage  claim  based  upon its June 1996
purported supplement.

Management has  vigorously  defended its rights in this action and believes that
the  CooperSurgical  claims are exaggerated.  In 1995,  expert witnesses for the
Company  prepared a formal  response to the damage  computations  CooperSurgical
previously  submitted.  The Company's experts stated that if CooperSurgical were
entitled to damages,  those damages would total less than $100,000, and would be
more than offset by Medical Systems'  counterclaims against  CooperSurgical,  if
Medical Systems were successful in its counterclaims.

The trial started in October 1997 in the Superior Court of New Jersey for Bergen
County,  Chancery  Division,  was  adjourned in January 1998 and is scheduled to
resume again on May 26, 1998.  The parties are  currently  engaged in settlement
discussions, but the outcome of those discussions is uncertain at this time.

While the outcome of this matter cannot be  determined at this time,  management
believes, taking known factors into account, that this matter will not result in
a material adverse impact on the financial position of the Company. However, any
settlement  of this case on a basis that results in an  unfavorable  outcome for
the Company could have a material adverse effect on the results of operations of
any quarterly or annual reporting period.

Other

The Company has pending  various legal  actions  arising in the normal course of
business.  None of these legal actions is expected to have a material  effect on
the Company's operating results or financial condition.

                                                                    Page 8 of 14

<PAGE>


Item 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

Except for the historical information contained herein, the following discussion
contains  forward-looking  statements that involve risks and uncertainties.  The
Company's  actual results could differ  materially  from those  discussed  here.
Factors that could cause or contribute to such differences  include, but are not
limited  to,  those  discussed  in this  section,  and  those  discussed  in the
Company's Form 10-K for the year ended September 27, 1997.

<TABLE>
The following table sets forth, for the fiscal periods indicated, the percentage
of  net  sales   represented  by  certain  items  in  the  Company's   Condensed
Consolidated Statements of Operations.

<CAPTION>
                                                             Quarter Ended                   Six Months Ended
                                                     ------------------------------   ---------------------------
                                                         March 28,       March 29       March 28,       March 29,
                                                           1998           1997            1998            1997
-----------------------------------------------------------------------------------   ----------      ----------
<S>                                                         <C>             <C>              <C>             <C>   
Net sales                                                   100.0%          100.0%         100.0%          100.0%
Cost of sales                                                55.0            57.3           58.3            56.3
                                                       ----------      ----------     ----------      ----------  
Gross profit                                                 45.0            42.7           41.7            43.7
Operating expenses
   Selling, general and administrative expenses              88.0            74.0           90.8            73.9
   Research, development and related expenses                20.4            18.4           20.1            17.5
                                                       ----------      ----------     ----------      ----------  
Loss from operations                                        (63.4)          (49.7)         (69.2)          (47.7)
Interest expense                                             (0.3)           (0.8)          (0.4)           (0.8)
Other income                                                  3.9             0.9            4.4             2.2
                                                       ----------      ----------     ----------      ----------  
Loss from continuing operations before income
    taxes                                                   (59.8)          (49.6)         (65.2)          (46.3)
Provision (benefit) for income taxes                        (14.4)          (16.9)         (17.8)          (15.7)
                                                       ----------      ----------     ----------      ----------  
Loss from continuing operations                             (45.4)          (32.7)         (47.4)          (30.6)
Income from discontinued operations                            --            57.0             --            28.8
                                                       ----------      ----------     ----------      ----------  
Net income (loss)                                           (45.4)%          24.3%         (47.4)%          (1.8)%
                                                       ==========      ==========     ==========      ==========  
</TABLE>

Quarters ended March 28, 1998 and March 29, 1997

Net revenues for the second quarter of fiscal 1998 were  $2,535,000,  a decrease
of $15,000 or 0.6% from the  comparable  period in fiscal  1997.  The decline in
revenues  reflects  the  impact  of lower  OEM and,  to a lesser  extent,  lower
gastro-intestinal  product sales because of reduced  marketing  efforts in these
areas. Partially offsetting the above declines,  sales of gynecological products
increased by 8% due to the Company's  transition in the first fiscal  quarter of
1998 from a  telemarketing  sales force to a field  sales  force of  independent
sales  representatives   supported  by  telemarketing  activities  in  order  to
strengthen  its sales and  distribution  presence in the  gynecological  market.
Stainless steel reusable instruments, disposable catheter products and endoscopy
hardware  systems  were  primarily   responsible  for  the  increased  sales  of
gynecological products.

                                                                    Page 9 of 14

<PAGE>


Cost of sales as a percentage of net sales in the second  quarter of fiscal 1998
decreased  to 55.0%  from 57.3% in the  comparable  period of fiscal  1997.  The
decrease  was due mainly to a  favorable  product  mix with a higher  portion of
higher margin products sold during the second quarter of fiscal 1998 compared to
the same period in fiscal 1997.

Selling,  general  and  administrative  expenses  as a  percentage  of net sales
increased  in the  second  quarter  of fiscal  1998 to 88.0%  from  74.0% in the
comparable  period in fiscal  1997.  This  increase  was  mainly  due to ongoing
litigation (see Note 5 to the Condensed  Consolidated Financial Statements) plus
expenses  associated  with the  change  in  corporate  structure  following  the
distribution  of Technologies  common stock to the  Electronics  stockholders on
September 27, 1997; as well as to a lesser extent,  additional costs incurred in
the search for a new president (see Item 5. Other Information).

Research,  development  and related  expenses as a percentage  of net sales were
20.4% in the second quarter of fiscal 1998 compared to 18.4% for the same period
of fiscal 1997.  The  increased  spending  reflects  costs  associated  with the
development and clinical trials of the new HydraThermAblator(R) ("HTA"(R) System
for endometrial  ablation) in both the United States and international  markets.
Spending  related  to the  HTA is  expected  to  continue  to  increase  for the
remainder of the calendar year.

Discontinued  Operations:  See Note 1 to the  Condensed  Consolidated  Financial
Statements.

Six Months ended March 28, 1998 and March 29, 1997

Net revenues for the six months ended March 28, 1998 were $4,953,000, a decrease
of $181,000 or 4.0% from the comparable  six-month  period ended March 29, 1997.
The  decline  in  revenues  reflects  the  impact of lower OEM and,  to a lesser
extent, lower  gastro-intestinal  product sales resulting from reduced marketing
efforts in these areas due to the Company's transition in the first quarter from
a  telemarketing  sales  force  to a field  sales  force  of  independent  sales
representatives  supported by telemarketing  activities.  Increased sales of the
Company's new HTA System in  international  markets  partially  offset the above
declines,  while sales of gynecological  products were virtually  unchanged from
the prior period.

Cost of sales as a  percentage  of net sales in the six months  ended  March 28,
1998  increased  to 58.3% from 56.3% for the  comparable  period ended March 29,
1997.  The increase was due mainly to an  unfavorable  product mix with a higher
portion of lower margin  products  sold during  fiscal 1998 compared to the same
period in fiscal 1997.

Selling,  general and administrative  expenses as a percentage of net sales were
90.8% for the six months  ended  March 28, 1998 as compared to 73.9% for the six
months ended March 29, 1997.  The  increase was due to ongoing  litigation  (see
Note  5 to  the  Condensed  Consolidated  Financial  Statements)  plus  expenses
associated with the change in corporate  structure following the distribution of
Technologies common stock to the Electronics stockholders on September 27, 1997.

Research,  development  and related  expenses as a percentage  of net sales were
20.1%  compared  to 17.5%  for the same  period of fiscal  1997.  The  increased
spending  primarily  reflects costs associated with the development and clinical
trials of the HTA in both the United States and international markets.

                                                                   Page 10 of 14

<PAGE>


Liquidity and Capital Resources

During the first six months of fiscal  1998,  cash used by  operations  was $2.1
million,  primarily  resulting from the net loss of  $2,347,000,  an increase in
refundable  income taxes of $880,000 and an increase in accounts  receivable  of
$418,000.  Partially offsetting the above were increases in accounts payable and
accrued  liabilities of $867,000,  and non-cash  depreciation  and  amortization
expenses of $736,000.

Cash used in investing  activities during the first six months of fiscal 1998 of
$226,000  consisted  primarily of a payment of a security deposit of $137,000 on
the new  corporate  offices  in  Teterboro,  New Jersey  and  capital  equipment
expenditures of $73,000.

Cash flows used in  financing  activities  consisted  of $128,000  in  scheduled
payments made on long-term debt.

Based on the  financial  condition of the Company at March 28, 1998,  management
believes that the existing cash balances  together with  operating  revenues and
anticipated  tax refunds will  provide  adequate  funding to meet the  Company's
capital  requirements  for the near  term.  In the event  additional  capital is
required,  the Company may seek to raise the capital  through  public or private
equity or debt  financing.  There can be no assurance  that such capital will be
available on favorable terms, if at all.

Year 2000 Compliance: Modification of Management Information Systems

The Company is evaluating the potential  impact of what is commonly  referred to
as the "Year 2000" issue concerning the inability of certain information systems
to properly  recognize and process dates containing the Year 2000 and beyond. If
not  corrected,  these  systems  could  fail or create  erroneous  results.  The
Company's  management   information  systems  primarily  use  software  products
purchased  from   commercial   sources  without   significant   modification  or
customization.  Updates to these products are routinely installed by the Company
to upgrade the systems and correct known faults in the software. There have been
no  significant  incremental  costs  identified  with updates that  specifically
address  Year  2000  compliance.  Notwithstanding  Year 2000  compliance  of the
Company's  systems,  there  can be no  assurance  that the  Company  will not be
adversely affected by the failure of others to become Year 2000 compliant.

Effects of Inflation

Management  believes  that, for the periods  presented,  inflation has not had a
material effect on the Company's operations.

                                                                   Page 11 of 14

<PAGE>


BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

PART II.          OTHER INFORMATION

Item 1.           Legal Proceedings

                  CooperSurgical,  Inc. vs. BEI Medical Systems Company, Inc. et
                  al.

                  In October  1993,  CooperSurgical,  Inc., a subsidiary  of The
                  Cooper  Companies,  filed  a  claim  for  unspecified  damages
                  alleging unfair  competition due to actions by Medical and its
                  president  Richard  Turner,  a former  employee  of The Cooper
                  Companies, and others. On January 31, 1996, the Court issued a
                  ruling which  affirmed the legal basis for Medical to assert a
                  counterclaim for damages against CooperSurgical  regarding the
                  parties' electrosurgical generator contract.

                  CooperSurgical's  original damage claims were for $11 million.
                  In June 1996, more than one year after expert discovery closed
                  in  May  1995,  CooperSurgical's  counsel  sent  to  Medical's
                  counsel a letter  purporting  to  supplement  CooperSurgical's
                  previous  responses to  interrogatories.  The June 1996 letter
                  indicated  that  CooperSurgical's  damages for one  particular
                  aspect of the claim  were  between  $24 and $50  million  with
                  respect  to a claim for  which  CooperSurgical's  experts  had
                  previously  estimated damages of $3.4 million. The Company has
                  vigorously  opposed any  CooperSurgical  attempt whatsoever to
                  introduce  at trial any  evidence of a damage claim based upon
                  its June 1996 purported supplement.

                  Management has  vigorously  defended its rights in this action
                  and believes that the  CooperSurgical  claims are exaggerated.
                  In 1995,  expert  witnesses for the Company  prepared a formal
                  response to the damage computations  CooperSurgical previously
                  submitted. The Company's experts stated that if CooperSurgical
                  were entitled to damages,  those damages would total less than
                  $100,000,  and would be more than  offset by Medical  Systems'
                  counterclaims against CooperSurgical,  if Medical Systems were
                  successful in its counterclaims.

                  The trial started in October 1997 in the Superior Court of New
                  Jersey for Bergen County,  Chancery Division, was adjourned in
                  January 1998 and is scheduled to resume again on May 26, 1998.
                  The parties are currently  engaged in settlement  discussions,
                  but the  outcome of those  discussions  is  uncertain  at this
                  time.

                  While the outcome of this matter  cannot be determined at this
                  time, management believes,  taking known factors into account,
                  that this matter will not result in a material  adverse impact
                  on  the  financial  position  of  the  Company.  However,  any
                  settlement  of  this  case  on a  basis  that  results  in  an
                  unfavorable  outcome  for the  Company  could  have a material
                  adverse  effect on the results of  operations of any quarterly
                  or annual reporting period.

Item 4.           Submission of Matters to Vote of Security Holders

                  (a)      The Annual  Meeting of  Stockholders  of the  Company
                           (the  "Meeting")  was held on March 26, 1998.  At the
                           meeting Lawrence A. Wan was elected a director of the

                                                                   Page 12 of 14

<PAGE>


                           Company  for  a  three-year   term  expiring  at  the
                           Company's  2001 Annual Meeting by a vote of 6,722,658
                           votes in favor and 310 votes withheld.

                           In addition,  the  following  directors  continued in
                           office as  directors  of the  Company  following  the
                           Meeting:  Charles Crocker and Ralph M. Richart (until
                           the Company's 1999 Annual Meeting); Richard W. Turner
                           and Gary D. Wrench (until the  Company's  2000 Annual
                           Meeting).

                  (b)      The other  matters  presented  at the Meeting and the
                           votes of the stockholders with respect thereto are as
                           follows:

                                    (i)     The  Company's  Amended  1987  Stock
                                            Option  Plan was amended to increase
                                            the  aggregate  number  of shares of
                                            Common Stock authorized for issuance
                                            under  such plan by  250,000  shares
                                            from  1,350,000 to 1,600,000  shares
                                            and  was  approved  with   6,512,745
                                            votes  in  favor,  123,498  against,
                                            27,821 abstentions and 58,904 broker
                                            non-votes.

                                    (ii)    The  selection  of Ernst & Young LLP
                                            as the Company's  independent public
                                            accountants   for  the  fiscal  year
                                            ending  October 3, 1998 was ratified
                                            with 6,695,566 votes in favor, 4,491
                                            votes     against     and     22,911
                                            abstentions.

Item 5.           Other Information

                           Effective March 31, 1998,  Richard W. Turner resigned
                           as President and Chief Executive  Officer and Herbert
                           H.  Spoon  was   appointed  as  President  and  Chief
                           Executive  Officer.  Mr.  Turner  will  continue as a
                           director of the Company.

                           For  further  information  please  see the  Company's
                           press release dated April 1, 1998.

Item 6.           Exhibits and Reports on Form 8-K

                  (a)      Exhibits

                           10.28    Building Lease
                           27.1     Financial Data Schedule

                  (b)      Reports on Form 8-K

                           No  reports  on Form  8-K were  filed by the  Company
                           during the quarter ended March 28, 1998.

                                                                   Page 13 of 14

<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 on May 11, 1998.


                                              BEI Medical Systems Company, Inc.

                                              By: /s/ Thomas W. Fry
                                                  ------------------------------
                                                  Thomas W. Fry
                                                  Vice President of Finance
                                                  and Administration,
                                                  Secretary and Treasurer
                                                  (Principal Accounting Officer)


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