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 April 3, 1999 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)


                                 (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, 7,687,596 shares as of May 1, 1999


                                       1
<PAGE>

               BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                               <C>
PART 1.   FINANCIAL INFORMATION   (Unaudited)
          ---------------------
Item 1.   Financial Statements
                 Condensed Consolidated Balance Sheets -- April 3, 1999 (unaudited) and
                 October 3, 1998                                                                   3

                 Condensed Consolidated Statements of Operations -- Three Months and Six
                 Months Ended April 3, 1999 (unaudited) and March 28, 1998 (unaudited)             4

                 Condensed Consolidated Statements of Cash Flows -- Six Months Ended
                 April 3, 1999 (unaudited) and March 28, 1998 (unaudited)                          5

                 Notes to Condensed Consolidated Financial Statements -- April 3, 1999
                                                                                                   6
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of
          Operations                                                                               8

PART II.  OTHER INFORMATION                                                                        13
          -----------------
Item 4.   Submission of Matters to Vote of Security Holders

Item 5.   Other Information

Item 6.   Exhibits and Reports on Form 8-K                                                         14

                 (a)   Exhibits

                       10.32   Transamerica Business Credit Corporation Loan and Security
                       Agreement

                       10.33   Richard W. Turner Employment Letter

                       27.1    Financial Data Schedule

                 (b)   Reports on Form 8-K

          SIGNATURES                                                                               15
          ----------
</TABLE>



                                       2
<PAGE>

                                     PART I.

                              FINANCIAL INFORMATION


Item 1. Financial Statements


BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
                                                    April 3,        October 3,
                                                     1999             1998
 (dollars in thousands)                           (Unaudited)   (See note below)
-------------------------------------------------------------------------------
 ASSETS
 Current assets
 Cash and cash equivalents                          $ 2,780          $ 3,504
 Trade receivables, net                               1,403            1,897
 Inventories -- Note 2                                3,029            3,087
 Refundable income taxes                                357            2,384
 Other current assets                                   255              360
--------------------------------------------------------------------------------
 Total current assets                                 7,824           11,232
 Property, plant and equipment, net                     691              820
 Tradenames, patents and other, net                   1,713            1,846
 Goodwill, net                                        3,233            3,353
 Other assets                                           137              137
--------------------------------------------------------------------------------
 Total assets                                       $13,598          $17,388
================================================================================
                                                                    
 LIABILITIES AND STOCKHOLDERS' EQUITY                               
 Current liabilities                                                
 Trade accounts payable                             $   851          $ 1,551
 Accrued expenses and other liabilities               1,413            1,376
 Current portion of long-term debt                       --               21
--------------------------------------------------------------------------------
 Total current liabilities                            2,264            2,948
 Stockholders' equity                                11,334           14,440
--------------------------------------------------------------------------------
 Total liabilities and stockholders' equity         $13,598          $17,388
================================================================================

See notes to condensed consolidated financial statements       

Note:  The balance  sheet at October 3, 1998 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.


                                       3
<PAGE>


BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
                                                           Quarter Ended              Six Months Ended
                                                      ----------------------------------------------------
                                                      April 3,       March 28,      April 3,     March 28,
(amounts in thousands except per share amounts)         1999          1998           1999          1998
----------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>            <C>            <C>    
  Revenues                                            $ 2,001        $ 2,535        $ 4,165        $ 4,953
  Cost of sales                                         1,181          1,394          2,489          2,889
----------------------------------------------------------------------------------------------------------
  Gross Profit                                            820          1,141          1,676          2,064

  Selling, general and administrative expenses          1,728          2,232          3,545          4,496
  Research, development and related expenses              857            516          1,583            994
----------------------------------------------------------------------------------------------------------
                                                        2,585          2,748          5,128          5,490
----------------------------------------------------------------------------------------------------------
  Loss from operations                                 (1,765)        (1,607)        (3,452)        (3,426)
  Interest income                                          37             98             63            218
  Interest expense                                         --             (8)            --            (19)
----------------------------------------------------------------------------------------------------------
  Loss before income taxes                             (1,728)        (1,517)        (3,389)        (3,227)

  Income tax benefit                                      (74)          (366)          (208)          (880)
----------------------------------------------------------------------------------------------------------
  Net loss                                            ($1,654)       ($1,151)       ($3,181)       ($2,347)
==========================================================================================================


Loss per Common Share -- Note 3
Loss per common share, basic and diluted              ($ 0.22)       ($ 0.16)       ($ 0.42)       ($ 0.32)
==========================================================================================================

Weighted average shares outstanding                     7,503          7,387          7,491          7,300
==========================================================================================================
</TABLE>

See notes to condensed consolidated financial statements


                                       4
<PAGE>


BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

                                                            Six Months Ended
                                                         ----------------------
                                                         April 3,      March 28,
   (dollars in thousands)                                 1999           1998
-------------------------------------------------------------------------------

Net cash used in operating activities                      ($681)       ($2,122)

Cash flows from investing activities:
Purchases of plant and equipment                             (22)           (73)
Purchases of patents and licenses                             --           (153)
-------------------------------------------------------------------------------
Net cash used in investing activities                        (22)          (226)

Cash flows from financing activities:
Payments on long-term debt                                   (21)          (128)
-------------------------------------------------------------------------------
Net cash used in financing activities                        (21)          (128)
-------------------------------------------------------------------------------
Net decrease in cash and cash equivalents                   (724)        (2,476)

Cash and cash equivalents at beginning of period           3,504          9,271
-------------------------------------------------------------------------------
Cash and cash equivalents at end of period               $ 2,780        $ 6,795
===============================================================================

See notes to condensed consolidated financial statements.


                                       5
<PAGE>

BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

April 3, 1999


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 2, 1999. 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 October 3, 1998.

     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. and
Defense Systems Company, Inc. business segments. After the Distribution, the
sole asset of Electronics was its investment in its subsidiary, BEI Medical
Systems Company, Inc. ("Medical"). On November 4, 1997, Electronics merged with
Medical and became one company with Electronics as the surviving corporation
(the "Merger"). After the Merger, Electronics changed its name to BEI Medical
Systems Company, Inc. (the "Company").


NOTE 2--INVENTORIES
                                                      April 3,        October 3,
                                                       1999             1998
 (dollars in thousands)
--------------------------------------------------------------------------------
Finished products                                      $2,149           $2,128
Work in process                                           137              196
Materials                                                 743              763
--------------------------------------------------------------------------------
Inventories                                            $3,029           $3,087
================================================================================


NOTE 3--LOSS PER SHARE

     As a result of the net loss for all periods presented, weighted average
shares used in the calculation of basic and diluted loss per share are the same.
Weighted average shares exclude unvested restricted stock, which amounted to
184,000 and 170,000 shares at April 3, 1999 and March 28, 1998 respectively.
Common stock equivalents are excluded from the loss per share for all periods
presented because the effect would be anti-dilutive.


                                       6
<PAGE>


NOTE 4--SUBSEQUENT EVENT

     As of May 7, 1999, the Company signed an agreement with Transamerica
Business Credit Corporation ("TBCC") to provide up to $2,500,000 in senior
secured financing. Key components of the agreement are as follows:

     TBCC will provide the Company with a Revolving Credit Facility under which
the Company may from time to time borrow an aggregate amount not to exceed the
lesser of $1,000,000 or an amount equal to 85% of the amount of the Company's
eligible accounts receivable as defined in the agreement (the "Revolving Loan").
In addition to the Revolving Loan, TBCC will provide the Company with a Senior
Term Loan not to exceed $1,500,000 (the "Term Loan"). The Term Loan shall be
made (i) in an initial disbursement in the amount of $1,000,000; and (ii)
thereafter in an additional disbursement of $500,000 upon the closing of an
equity issuance by the Company generating net proceeds of not less than
$2,000,000. Both loans are collaterized by all of the assets of the Company.

     The term of the Revolving Loan is one year from the date of the agreement
and may be renewed upon the agreement of both parties. The interest rate on the
Revolving Loan will be the Base Rate (defined below) plus 3.0% per annum,
provided that the interest rate in effect in each month will not be less than
9.0% per annum, and provided that the interest charged for each month in respect
of the Revolving Credit Facility shall be a minimum of $3,000, regardless of the
amount of the obligations outstanding. Base Rate means the highest prime, base
or equivalent rate of interest announced from time to time by Citibank, N.A.
(which may not be the lowest rate of interest charged by such bank).

     The term of each disbursement of the Term Loan is for 30 months after the
date of such disbursement and the interest on the Term Loan accrues at a rate
not less than 13.5% per annum.

     Concurrent with the above transaction, the Company provided TBCC with a
seven-year warrant to purchase 92,308 shares of common stock at an initial
exercise price of $1.625 per share, subject to adjustment. The warrants are
exercisable as of the date of the agreement and are non-refundable.



                                       7
<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 October 3, 1998.

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

<TABLE>
<CAPTION>
                                                       Quarter Ended                 Six Months Ended
                                                   -----------------------------------------------------
                                                    April 3,      March 28,       April 3,     March 28,
                                                     1999           1998           1999           1998
--------------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>            <C>            <C>   
  Revenues                                          100.0%         100.0%         100.0%         100.0%
  Cost of sales                                      59.0           55.0           59.8           58.3
--------------------------------------------------------------------------------------------------------
  Gross profit                                       41.0           45.0           40.2           41.7

  Selling, general and administrative expenses       86.4           88.0           85.1           90.8
  Research, development and related expenses         42.8           20.4           38.0           20.1
--------------------------------------------------------------------------------------------------------
  Loss from operations                              (88.2)         (63.4)         (82.9)         (69.2)

  Interest income                                     1.8            3.9            1.5            4.4
  Interest expense                                     --           (0.3)            --           (0.4)
--------------------------------------------------------------------------------------------------------
  Loss before income taxes                          (86.4)         (59.8)         (81.4)         (65.2)

   Income tax benefit                                (3.7)         (14.4)          (5.0)         (17.8)
--------------------------------------------------------------------------------------------------------
   Net loss                                         (82.7%)        (45.4%)        (76.4%)        (47.4%)
========================================================================================================
</TABLE>


Quarters Ended April 3, 1999 and March 28, 1998

     Revenues for the second quarter ended April 3, 1999, were $2,001,000 a
decrease of $534,000 or 21.1% from the quarter ended March 28, 1998. The lower
revenue principally reflects the impact of reduced shipments of reusable and
disposable instruments to both domestic and international customers in the
gynecology market. Revenues from these products declined $463,000 or 28.9% in
the second fiscal quarter of 1999 compared to the second fiscal quarter of 1998
principally due to the market impact resulting from a temporary supply short
fall from one outside vendor; generally soft market conditions and increased
competition. Sales of the gastrointestinal products also declined in the second
quarter of fiscal 1999 by $91,000 to $171,000 compared to the second quarter of
fiscal 1998 reflecting reduced volume of electrosurgery generators. Partially
offsetting these decreases were revenues from international shipments of the
Company's Hydro ThermAblator(R) ("HTA(R)") system for endometrial ablation which
increased for the quarter ended April 3, 1999 in the comparable period of fiscal
1998.


                                       8
<PAGE>

     Gross profit as a percentage of revenues decreased to 41.0% in the second
quarter of fiscal 1999 compared to 45.0% for the comparable quarter in fiscal
1998. The decrease was principally due to a change in the product mix, with a
larger portion of lower margin products shipped during the second quarter of
fiscal 1999 compared to the second quarter of fiscal 1998, plus higher overhead
absorption costs resulting from the reduced volume. Partially offsetting the
reduction in gross margin were decreases in overhead costs of $173,000 for the
quarter ended April 3, 1999 compared to the same period in fiscal 1998. This
decrease resulted primarily from the consolidation of the Company's
manufacturing and distribution facilities that occurred in the fourth quarter of
fiscal 1998.

     Selling, general and administrative expenses decreased $504,000 to
$1,728,000 or 86.4% of revenue for the quarter ended April 3, 1999 compared to
$2,232,000 or 88.0% of revenue for the comparable period in fiscal 1998. The
decline in expenses reflects a reduction in legal fees ($267,000) following
settlement of the Company's litigation with CooperSurgical in July 1998 and
reduced amortization of intangible assets ($158,000) following the sale of a
previously acquired product line as well as the impact of a non-compete
agreement that became fully amortized during the second quarter of fiscal 1998.
Variable selling expenses also declined approximately $70,000 for the quarter
ended April 3, 1999 from the same period in fiscal 1998 as a result of lower
sales.

     Research, development and related expenses as a percentage of revenues were
42.8% or $857,000 for the second quarter ended April 3, 1999 compared to 20.4%
or $516,000 for the same period of fiscal 1998. The increased spending reflects
expenses associated with recruiting and treating patients as part of the HTA
Phase III clinical trials in the United States. The Company received approval
from the Food and Drug Administration ("FDA") to proceed to the Phase III
portion of the HTA clinical trials in July 1998 and in September 1998 began to
treat patients under the approved protocol. The Company will treat 276 patients
at nine U.S. clinical sites under the Phase III protocol. As of May 14, 1999,
210 of the 276 patients have been treated, and an additional 39 patients have
been admitted in the program and are awaiting treatment. Data from examinations
one year following treatment is one of the requirements for FDA approval.

     Interest income declined to $37,000 in the quarter ended April 3, 1999
compared to $98,000 in the quarter ended March 28, 1998, as a result of the
lower average cash balances during the quarter.

     Income tax benefit was 4.3% of the pretax loss for the quarter ended April
3, 1999 compared to 24.1% of the pretax loss in the quarter ended March 28,
1998. The income tax benefit reflects the Company's ability to carry back losses
and collect a refund against prior years' taxes paid on the earnings of
previously discontinued operations. The amount of carryback available to the
Company is limited to the taxes paid on earnings of the previous two fiscal
years and the lower effective tax rate in fiscal 1999 results from the reduced
amount of remaining carryback available to the Company compared to fiscal 1998.
The remaining carryback available to the Company is approximately $136,000,
which will be recognized throughout the remainder of fiscal 1999 at the
Company's estimated annual effective tax rate.


Six Months Ended April 3, 1999 and March 28, 1998

     Revenues for the six months ended April 3, 1999, were $4,165,000 a decrease
of $788,000 or 15.9% from the comparable six-month period ended March 28, 1998.
The lower revenue principally reflects the impact of reduced shipments of
reusable instruments and disposable products to both domestic and international
customers in the gynecology market. Revenues from these products declined
$647,000 or 21.5% in the first six months ended April 3, 1999 compared to the
six months ended March 28, 1998 principally due to the market impact resulting
from a temporary supply short fall from one outside vendor; generally soft
market conditions and increased competition. International revenues from
shipments of the Company's Hydro ThermAblator(R) ("HTA(R)") system for
endometrial ablation declined for the six months ended April 3, 1999 from the
comparable period of fiscal 1998. The fiscal 1999 decline reflects a large order
from one of the Company's Latin America distributors that was shipped in the
first quarter of fiscal 1998 but was not repeated in fiscal 1999.



                                       9
<PAGE>

     Gross profit as a percentage of revenues decreased to 40.2% in the first
six months of fiscal 1999 compared to 41.7% for the first six months of fiscal
1998. The decrease was principally due to a change in the product mix, with a
larger portion of lower margin products being sold during the six months ended
April 3, 1999 compared to the comparable period of fiscal 1998 and higher
overhead absorption costs resulting from the reduced volume. Partially
offsetting the reduction in gross margins were decreases in overhead costs of
$332,000 or 12.1% for the six-month period ended April 3, 1999, compared to the
six-month period ended March 28, 1998. This decrease primarily resulted from the
consolidation of the Company's manufacturing and distribution facilities that
occurred in the fourth quarter of fiscal 1998.

     Selling, general and administrative expenses decreased $951,000 to
$3,545,000 or 85.1% of revenues for the six months ended April 3, 1999 compared
to $4,496,000 or 90.8% of revenues for the six month period in fiscal 1998. The
decline in expenses reflects a reduction in legal fees ($590,000) following
settlement of the Company's litigation with CooperSurgical in July 1998 and
reduced amortization of intangible assets ($331,000) following the sale of a
previously acquired product line as well as the impact of a non-compete
agreement that became fully amortized during the second quarter of fiscal 1998.
Variable selling expenses also declined approximately $79,000 for the six months
ended April 3, 1999 compared to the same period in fiscal 1998 as a result of
lower sales.

     Research, development and related expenses as a percentage of revenues were
38.0% or $1,583,000 for the first six months ended April 3, 1999 compared to
20.1% or $994,000 for the same period of fiscal 1998. The increased spending
reflects expenses associated with recruiting and treating patients as part of
the HTA Phase III clinical trials in the United States discussed under "Quarters
Ended April 3, 1999 and March 28, 1998" above.

     Interest income declined to $63,000 in the six month period ended April 3,
1999 compared to $218,000 in the six month period ended March 28, 1998, as a
result of the lower average cash balances during the period.

     Income tax benefit was 6.1% of the pretax loss in the six-month period
ended April 3, 1999 compared to 27.3% of the pretax loss in the comparable
period ended March 28, 1998. The income tax benefit reflects the Company's
ability to carry back losses and collect a refund against prior years' taxes
paid on the earnings of previously discontinued operations. The amount of
carryback available to the Company is limited to the taxes paid on earnings of
the previous two fiscal years and the lower effective tax rate in fiscal 1999
results from the reduced amount of remaining carryback available to the Company
compared to fiscal 1998. The remaining carryback available to the Company is
approximately $136,000, which will be recognized throughout the remainder of
fiscal 1999 at the Company's estimated annual effective tax rate.


Liquidity and Capital Resources

     The Company's capital requirements depend on numerous factors, including
the progress of the Company's clinical research and product development
programs, the timing and receipt of regulatory clearances and approvals, and the
resources the Company devotes to developing, manufacturing and marketing its
products. The Company's capital requirements also depend on the resources
required to expand and develop a direct sales force in the United States and to
expand the Company's manufacturing capacity, and the extent to which the
Company's products gain market acceptance and sales. The timing and amount of
such capital requirements cannot be predicted accurately. The Company is
currently seeking additional financing. Consequently, although the Company
believes its existing cash balances together with operating revenues, additional
tax refunds and funds available as a result of a financing arrangement concluded
with Transamerica Business Credit Corporation on May 7, 1999, (see below) will
provide adequate funding to meet the Company's liquidity requirements for the
remainder of the current fiscal year, there can be no assurance that additional
financing will be available on terms favorable to the Company, or at all. In the
event the Company is unable to generate sufficient cash flows from revenues or
to secure additional sources of capital, its ability to continue as a going
concern may be impaired. Any additional equity financing may be dilutive to
stockholders and debt financing, if available, may involve restrictive covenants
and may also be dilutive to stockholders.

     During the first six months of fiscal 1999, cash used by operations was
$681,000 principally due to the $3,181,000 net loss for the period, which was
partially offset by changes in operating assets and liabilities of


                                       10
<PAGE>

$2,500,000. Cash used in investing activities during the first six months of
fiscal 1999 of $22,000 consisted of purchases of equipment. Cash flows used in
financing activities consisted of $21,000 in scheduled payments made on
long-term debt.

     The Company had no material capital or other commitments as of April 3,
1999.

     As of May 7, 1999, the Company signed an agreement with Transamerica
Business Credit Corporation ("TBCC") to provide up to $2,500,000 in senior
secured financing. Key components of the agreement are as follows:

     TBCC will provide the Company with a Revolving Credit Facility under which
the Company may from time to time borrow an aggregate amount not to exceed the
lesser of $1,000,000 or an amount equal to 85% of the amount of the Company's
eligible accounts receivable as defined in the agreement (the "Revolving Loan").
In addition to the Revolving Loan, TBCC will provide the Company with a Senior
Term Loan not to exceed $1,500,000 (the "Term Loan"). The Term Loan shall be
made (i) in an initial disbursement in the amount of $1,000,000; and (ii)
thereafter in an additional disbursement of $500,000 upon the closing of an
equity issuance by the Company generating net proceeds of not less than
$2,000,000. Both loans are collaterized by all of the assets of the Company.

     The term of the Revolving Loan is one year from the date of the agreement
and may be renewed upon the agreement of both parties. The interest rate on the
Revolving Loan will be the Base Rate (defined below) plus 3.0% per annum,
provided that the interest rate in effect in each month will not be less than
9.0% per annum, and provided that the interest charged for each month in respect
of the Revolving Credit Facility shall be a minimum of $3,000, regardless of the
amount of the obligations outstanding. Base Rate means the highest prime, base
or equivalent rate of interest announced from time to time by Citibank, N.A.
(which may not be the lowest rate of interest charged by such bank).

     The term of each disbursement of the Term Loan is for 30 months after the
date of such disbursement and the interest on the Term Loan accrues at a
rate not less than 13.5% per annum.

     Concurrent with the above transaction, the Company provided TBCC with a
seven-year warrant to purchase 92,308 shares of common stock at an initial
exercise price of $1.625 per share, subject to adjustment. The warrants are
exercisable as of the date of the agreement and are non-refundable.


Year 2000 Compliance: Modification of Management Information Systems

     Currently, many computer systems and software products are coded to accept
only two digit entries in the date code field. These date code fields will need
to accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, many companies' software and computer systems may need to be
upgraded or replaced in order to comply with such Year 2000 requirements,
especially those with internally developed systems.

     The Company and third parties, with which the Company does business, rely
on numerous computer programs in their day-to-day operations. The Company's Year
2000 project is divided into the following major sections: infrastructure and
applications software commonly referred to as "IT Systems", third party
suppliers and customers commonly referred to as "External Agents", process
control and instrumentation and company products.

     IT Systems. The Company has completed a preliminary assessment of Year 2000
issues as they relate to the Company's IT systems. This analysis includes such
activities as order taking, billing, purchasing/accounts payable, general
ledger/financial, and inventory. Systems critical to the Company's business are
commercial packages available from third party vendors and currently in use with
little modification. As a result of this assessment, the Company converted
during the second quarter of fiscal 1999 one of its two primary internal IT
systems to an upgraded version of the software that is, according to information
provided by the supplier, believed to be fully Y2K compliant. The Company is
also evaluating a second internal IT system which is believed to be compliant in
all storage and calculation functions but has some screens that display a
two-digit. According to information provided by the vendor a Year 2000 compliant
version of the software is available. The Company plans to use both internal and
external resources to test the version of the software believed to be Year 2000
compliant and to complete such testing by mid-calendar year 1999 and plans to
implement this version if necessary before the end of fiscal year


                                       11
<PAGE>

1999. The Year 2000 analysis and upgrading of existing systems are being
performed as a part of the Company's routine maintenance of computer systems and
are not anticipated to be material to the Company's financial results.

     External Agents. The Company is currently assessing the impact of Year 2000
readiness of External Agents with which the Company relies for critical products
and services. The Company has sent questionnaires and letters of inquiry to the
External Agents to assist the Company in assessing the Year 2000 readiness of
its External Agents and evaluate the scope of the Company's exposure. Each
letter is tailored to the significance of the contribution each makes to the
Company's business. The Company anticipates that the assessment phase of this
part of the project will be completed by mid-calendar year 1999. To date, the
Company is not aware of any External Agent with a Year 2000 issue that would
materially impact the Company's results of operations, liquidity or capital
resources. However, the Company has no means of ensuring that External Agents
will be Year 2000 ready. The inability of External Agents to complete their Year
2000 resolution process in a timely fashion could materially impact the Company.
The effect of non-compliance by External Agents is not determinable.

     Process Control and Instrumentation. All other items with potential Year
2000 issues are currently being inventoried and evaluated. These include such
items as telephone systems, security systems, HVAC, copiers, FAX machines,
production equipment, tools and other process systems. The Company anticipates
that the assessment phase of this part of the project will be completed by
mid-calendar year 1999 and anticipates it will utilize both internal and
external resources to reprogram, replace and test noncompliant equipment.
Although the Company is in the early phases of this portion of the Year 2000
project, based upon a preliminary review the Company does not anticipate costs
related to this portion of the project to be material to the financial results
of the Company.

     Company Products. In addition, BEI Medical has reviewed the Year 2000 issue
as it relates to the electronic products manufactured for sale by the Company.
The Company believes that none of its products are date sensitive or will
require modification to become Year 2000 compliant. Accordingly, the Company
does not believe the Year 2000 issue presents a material exposure as it relates
to the Company's products.

     While the Company currently believes that it has an effective program in
place to resolve the Year 2000 issues in a timely manner, as noted above, the
Company has not yet completed all necessary phases of the Year 2000 project. In
the event that the Company does not complete any additional phases, the Company
would be unable to efficiently take customer orders, manufacture and ship
products, invoice customers or collect payments. In addition, disruptions in the
economy generally resulting from Year 2000 issues could also materially
adversely affect the Company.

     The Company currently has no contingency plan in place in the event it does
not successfully complete all phases of its Year 2000 project. The Company plans
to finish evaluation of the status of its Year 2000 plan by June 30, 1999 and
then determine whether such a plan is necessary.


Effects of Inflation

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


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<PAGE>


               BEI MEDICAL SYSTEMS COMPANY, INC. AND SUBSIDIARIES

                                    PART II.

                                OTHER INFORMATION


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 25, 1999. At the meeting, Charles Crocker and Ralph M.
          Richart were elected as directors of the Company for a three-year term
          expiring at the Company's 2002 Annual Meeting. They were elected by a
          vote of 6,438,333 votes in favor and 518,982 votes withheld for
          Charles Crocker and 6,429,559 votes in favor and 527,756 votes
          withheld for Ralph M. Richart.

          In addition, the following directors continued in office: Richard W.
          Turner and Gary D. Wrench (until the Company's 2000 Annual Meeting);
          Lawrence A. Wan (until the Company's 2001 Annual Meeting).

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

          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 500,000 shares from 1,600,000 to 2,100,000 shares,
          with 4,497,666 votes in favor, 866,703 against, 6,782 abstentions and
          1,586,164 broker non-votes.

          The Company's 1992 Restricted Stock Plan was amended to increase the
          aggregate number of shares of Common Stock authorized for issuance
          under such plan by 200,000 shares from 700,000 to 900,000 shares, with
          4,461,978 votes in favor, 880,903 against, 28,270 abstentions and
          1,586,164 broker non-votes.

          The selection of Ernst & Young LLP as the Company's independent public
          accountants for the fiscal year ending October 2, 1999 was ratified
          with 6,931,578 votes in favor, 8,231 against and 17,506 abstentions.


Item 5. Other Information

          Effective February 1, 1999, Herbert H. Spoon resigned as President and
          Chief Executive Officer of the Company and Richard W. Turner returned
          as President and Chief Executive Officer. Mr. Spoon will continue as
          an employee of the Company in the position of Senior Advisor to the
          Chairman and the President through October 31,1999, at which time his
          employment will terminate.


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<PAGE>

Item 6. Exhibits and Reports on Form 8-K

     Index to Exhibits

     (a) Exhibits

         10.32      Transamerica Business Credit Corporation Loan and Security
                    Agreement

         10.33      Richard W. Turner Employment Letter

         27.1       Financial Data Schedule

     (b) Reports on Form 8-K

     No reports on Form 8-K were filed by the Company during the second quarter
ended April 3, 1999.



                                       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 18, 1999.



                             BEI Medical Systems Company, Inc.


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



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