<PAGE>

                                  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 December 29, 2001
         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, 9,849,938 shares as of February 1, 2002


                                     -------
                                        1
<PAGE>

<TABLE>
<CAPTION>

                                      INDEX



<S>                   <C>                                                                               <C>
     PART 1.             FINANCIAL INFORMATION   (Unaudited)                                                Page
                         ---------------------                                                              ----

     Item 1.           Financial Statements

                              Condensed Consolidated Balance Sheets -- December 29, 2001
                                (unaudited) and September 29, 2001                                           3

                              Condensed Consolidated Statements of Operations -- Three Months
                                Ended December 29, 2001 (unaudited) and December 30, 2000
                                (unaudited)                                                                  5

                              Condensed Consolidated Statements of Cash Flows -- Three Months
                                Ended December 29, 2001 (unaudited) and December 30, 2000
                                (unaudited)                                                                  6

                              Notes to Condensed Consolidated Financial Statements --
                                December 29, 2001                                                            7

     Item 2.           Management's Discussion and Analysis of Financial Condition and Results of            8
                         Operations

     PART II.            OTHER INFORMATION
                         -----------------

     Item 5.           Other Information                                                                     12

     Item 6.           Exhibits and Reports on Form 8-K                                                      23

                           (a)        Exhibits

                           (b)        Reports on Form 8-K

                    SIGNATURES                                                                               24

</TABLE>


                                     -------
                                       2
<PAGE>

<TABLE>
<CAPTION>

                              FINANCIAL INFORMATION


Item 1.  Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS
BEI Medical Systems Company, Inc. and Subsidiaries

(dollars in thousands)                                                   December 29,             September 29,
                                                                             2001                     2001
                                                                          (Unaudited)           (See note below)
----------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                      <C>
 ASSETS
 Current assets
   Cash and cash equivalents                                                $   7,703                $   9,846
   Restricted cash                                                                159                      159
   Marketable securities                                                          474                      452
   Trade receivables, net                                                         314                      284
   Inventories                                                                    829                      720
   Income taxes                                                                    --                      284
   Other current assets                                                           268                      158
----------------------------------------------------------------------------------------------------------------
 Total current assets                                                           9,747                   11,903
   Plant and equipment, net                                                       546                      446
   Patents, net                                                                   160                      164
   Other assets                                                                    68                       68
----------------------------------------------------------------------------------------------------------------
 Total assets                                                               $  10,521                $  12,581
================================================================================================================

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
   Trade accounts payable                                                   $     902                $     626
   Accrued expenses and other liabilities                                       1,288                    1,313
   Current portion of lease obligation                                             27                       26
----------------------------------------------------------------------------------------------------------------
 Total current liabilities                                                      2,217                    1,965
   Long term lease obligation, less current portion                               116                      123
   Stockholders' equity                                                         8,188                   10,493
----------------------------------------------------------------------------------------------------------------
 Total liabilities and stockholders' equity                                 $  10,521                $  12,581
================================================================================================================
See notes to condensed consolidated financial statements.

</TABLE>

                                    -------
                                       3
<PAGE>


Note: The balance sheet at September 29, 2001 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.















                                    -------
                                       4
<PAGE>

<TABLE>
<CAPTION>

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
BEI Medical Systems Company, Inc. and Subsidiaries
(Unaudited)

                                                                                     Three Months Ended
                                                                       -------------------------------------------
(amounts in thousands except per share amounts)                          December 29,             December 30,
                                                                            2001                       2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                      <C>
   Revenues                                                                     $521                     $31
   Cost of revenues                                                              448                     133
------------------------------------------------------------------------------------------------------------------
       Gross profit (loss)                                                        73                    (102)

   Selling, general and administrative expenses                                2,146                     713
   Research, development and related expenses                                    290                     294
------------------------------------------------------------------------------------------------------------------
                                                                               2,436                   1,007
------------------------------------------------------------------------------------------------------------------
       Loss from operations                                                   (2,363)                 (1,109)

   Interest income                                                                48                      57
   Interest expense                                                               (4)                     (1)
------------------------------------------------------------------------------------------------------------------
       Loss before income taxes                                               (2,319)                 (1,053)

   Income taxes                                                                   --                      --

------------------------------------------------------------------------------------------------------------------
       Net loss                                                              ($2,319)                ($1,053)
==================================================================================================================


Loss per Common Share
       Net loss per common share                                              ($0.24)                 ($0.14)
==================================================================================================================

   Weighted average shares outstanding                                         9,742                   7,636
==================================================================================================================
See notes to condensed consolidated financial statements.

</TABLE>


                                    -------
                                       5

<PAGE>

<TABLE>
<CAPTION>

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
BEI Medical Systems Company, Inc. and Subsidiaries
 (Unaudited)

                                                                                      Three Months Ended
                                                                         -----------------------------------------
(dollars in thousands)                                                    December 29,             December 30,
                                                                              2001                     2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                       <C>
Net cash used in operating activities                                          ($1,980)                  ($683)

Cash flows from investing activities:
  Capital expenditures                                                            (144)                     (7)
  Purchase of marketable securities                                                (14)                    (39)
------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                             (158)                    (46)

Cash flows from financing activities:
  Proceeds from stock option exercises                                               2                      --
  Repayment of long-term lease obligation                                           (7)                     --
------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities                                               (5)                     --

------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents                                       (2,143)                   (729)

Cash and cash equivalents at beginning of period                                 9,846                   4,228
------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                      $7,703                  $3,499
==================================================================================================================
See notes to condensed consolidated financial statements.

</TABLE>

                                    -------
                                       6

<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
BEI Medical Systems Company, Inc. and Subsidiaries
(Unaudited)

December 29, 2001


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
September 28, 2002. 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 29, 2001.

Note 2
Inventories
                                        December 29,         September 29,
      (dollars in thousands)                2001                  2001
------------------------------------------------------------------------------
     Finished products                        $688                  $602
     Work in process                           141                   118
------------------------------------------------------------------------------
     Inventories                              $829                  $720
==============================================================================

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
approximately 73,000 and 31,000 shares for the periods ended December 29, 2001,
and December 30, 2000, respectively. Common stock equivalents are excluded from
the loss per share for all periods presented because the effect would be
anti-dilutive.

                                    -------
                                       7

<PAGE>

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

     The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve risks
and uncertainties. Such forward-looking statements may be deemed to include
information that is not historical, including without limitation, statements
based on our current expectations, assumptions, estimates and projections about
our company and our industry, including statements with respect to the timely
development, acceptance, commercialization and pricing of our Hydro
ThermAblater(R) or HTA(R), the impact of competitive products and pricing, our
ability to satisfy the conditions of the Food and Drug Administration "FDA"
approval and on-going regulatory requirements, the adequacy of anticipated
sources of cash to fund our future capital requirements, our ability to raise
additional capital on terms favorable to us, or at all, the availability or
realization of strategic alternatives, general economic conditions as they
affect our customers and the timing and scale of anticipate cost reduction
programs. Words such as "believes," "anticipates," "expects," "intends" and
similar expressions are intended to identify forward-looking statements, but are
not the exclusive means of identifying such statements. Readers are cautioned
that the forward-looking statements reflect management's analysis only as of the
date hereof, and we assume no obligation to update these statements. Actual
events or results may differ materially from the results discussed in or implied
by the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those risks and uncertainties discussed below
under the caption "Risk Factors" and elsewhere in this Quarterly Report on Form
10-Q and in our Annual Report on Form 10-K for the period ended September 29,
2001. The following discussion should be read in conjunction with the Financial
Statements and the Notes thereto included in Item 1 of this Quarterly Report on
Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended
September 29, 2001.

     On April 20, 2001, the FDA issued its approval to market in the United
States the HTA endometrial ablation system to ablate the endometrial lining of
the uterus in pre-menopausal women with menorrhagia (dysfunctional uterine
bleeding) due to benign causes for whom child bearing is complete. The approval
is subject to standard FDA conditions, including labeling and advertising
requirements, expiration dating of the procedure sets, use by physicians having
received training in diagnostic hysteroscopy, and three-year follow-up of
pivotal trial study patients.


Three Months Ended December 29, 2001 and December 30, 2000

     Revenues for the three months ended December 29, 2001, were $521,000, an
increase of $490,000 from the comparable three-month period of fiscal 2001. The
higher revenue reflects the impact of the FDA approval to market the HTA in the
United States in April 2001. Prior to the FDA approval, the Company had no HTA
related domestic revenue. Domestic revenue from the HTA was $489,000 in the
first quarter of fiscal 2002 due primarily to shipments of the HTA single-use
procedure sets. International revenue for the HTA was $32,000 in the first
quarter of fiscal 2002 compared to $30,000 in 2001.


                                    -------
                                       8
<PAGE>

     The gross profit was $73,000 for the first quarter of fiscal 2002 compared
to the negative gross profit of $102,000 in the first quarter of fiscal 2001.
Overhead expenses for the first quarter of fiscal 2002 were approximately
$148,000, compared to $100,000 in the same period of fiscal 2001, reflecting
higher spending for personnel, materials and outside services as a result of the
increased volume of activity. However, the higher revenue resulted in a
favorable absorption of fixed overhead expenditures and the improved gross
profit. The Company received FDA approval in the first quarter of fiscal 2002
for a Premarket Approval Application (PMA) supplement permitting modifications
to the assembly of the sheath used in the HTA procedure set. This approval
allows BEI to incorporate more cost-effective manufacturing practices in the
manufacture of the HTA procedure set. The Company anticipates that the
adaptations to the sheath assembly will be implemented during the second half of
fiscal year 2002, once sterilization validation and the transition to
manufacturing of the modified design are completed.

     Selling, general and administrative expenses increased to $2,146,000 for
the three months ended December 29, 2001, from $713,000 for the three months
ended December 30, 2000. The increase in expenses reflects higher sales and
marketing investment spending of $1,288,000 in fiscal 2002. The Company
increased selling and marketing activities following the April 2001 FDA approval
to market the HTA in the United States. Areas of increased investment spending
include: the addition of a vice president of sales, field zone sales management,
and other administrative, reimbursement and customer service support personnel,
plus related recruitment, travel and training expenses; commission expenses
resulting from the higher domestic revenue; outside marketing and promotional
services for the development of product and promotional materials; and expenses
related to the Company's participation in physician trade shows, the support of
clinical education, the sponsorship of physician training workshops and the
training of field sales representatives. Administrative expenses increased
$145,000 or 28.7%, due primarily to higher personnel costs, plus increased
spending on insurance, audit, legal and other professional services.

     Research, development and related expenses were $290,000 in the first
quarter of fiscal 2002, a decline of $4,000 or 1.4% from the comparable period
of fiscal 2001. A lower rate of spending is currently necessary to support the
clinical trial on a post-approval basis than the levels that were required prior
to approval during the prior year. Mandatory post-approval surveys of patients
treated during the Phase III FDA clinical trial at twenty-four and thirty-six
months following treatment require continued spending through the end of 2002,
at lower levels than those required during the approval phase. However,
offsetting the lower rate of spending related to the clinical trial is increased
spending for engineering services related to the Company's cost reduction
program for the HTA single-use procedure set.

     Interest income declined to $48,000 in the three month period ended
December 29, 2001 compared to $57,000 in the three month period ended December
30, 2000, principally as a result of lower average interest rates earned on cash
balances on hand during the quarter.


                                    -------
                                       9
<PAGE>

     Interest expense increased to $4,000 in the first quarter of fiscal 2002
compared to $1,000 for the comparable quarter of fiscal 2001 reflecting cost
related to the Company's long-term lease obligation.

     The Company recognized no income tax benefit for the three-month periods
ended December 29, 2001 and December 30, 2000. The cumulative net operating loss
carryforwards as of December 29, 2001 were approximately $12.7 million. The
Company projects losses to continue through fiscal year 2002. These losses
remain available to the Company on a carryforward basis to offset any future
earnings, but they have been fully offset by a valuation allowance in the
financial statements, as their future realization is uncertain. There is no
remaining loss carryback available to the Company.


Liquidity and Capital Resources

     BEI has incurred significant operating losses and the Company expects
losses to continue for at least the next one to two years. The Company is
dependent on a single platform of technology, the HTA, to achieve commercial
success and generate sufficient future revenues and profits to fulfill capital
needs. In addition, the Company expects that it will continue to expend
substantial resources in expansion of marketing and sales activities and
research and development. BEI's future revenues will depend upon, among other
factors, its ability to cost effectively commercialize the HTA. The Company's
capital requirements to complete the commercialization of the HTA depend on
numerous factors, including the resources required to successfully commercialize
the HTA in the United States and the extent to which the HTA gains market
acceptance and sales.

     The Company believes that existing cash balances plus anticipated future
revenues will provide adequate funding to meet the Company's minimum capital
requirements for the next twelve to twenty-four months. However, in the event
that the growth or timing of anticipated future revenues does not meet our
expectations or that the resources required to successfully commercialize the
HTA in the United States exceed our expectations, we may need to raise
additional funds through public or private financing or other means. In addition
to the effect of general market conditions on our ability to obtain additional
capital, such factors as the performance of the HTA, competing technologies and
the extent to which physicians accept the HTA may become factors that affect our
ability to obtain additional capital. We may not be able to obtain additional
financing on favorable terms or at all. If we are unable to raise additional
funds when we need them, we may be required to scale back our operations,
research, marketing or sales efforts or obtain funds through arrangements with
collaborative partners or others that may require us to license or relinquish
rights to technologies or products. If we raise additional funds by issuing
equity securities, further dilution to our stockholders may result, and new
investors could have rights superior to existing stockholders.

     There can be no assurance that the Company will successfully commercialize
the HTA or that the Company will achieve significant revenue from either
international or domestic sales of the HTA. In addition, there can be no
assurance that the Company will achieve or sustain profitability in the future.
In the event the Company is unable to achieve profitability or secure

                                    -------
                                       10
<PAGE>

additional sources of capital, its ability to continue as a going concern may be
severely impaired. The accompanying financial statements have been prepared on a
going concern basis and do not include any adjustments relating to
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

     During the first three months of fiscal 2002 cash used in operating
activities was $1,980,000 reflecting the net loss of $2,319,000 which was
partially offset by the receipt of $284,000 from the sale of a portion of the
Company's New Jersey net operating loss carryforwards, as well as increases in
accounts payable and accrued liabilities of $251,000 and adjustments to
reconcile the net loss to net cash used in operations of $71,000. Increases in
working capital for accounts receivable, inventory and other current assets of
$49,000, $109,000 and $110,000, respectively, partially offset the above.

     Cash used in investing activities during the first three months of fiscal
2002 was $158,000 primarily reflecting the purchase of manufacturing molds,
field placement equipment and office equipment plus increases in marketable
securities related to the Company's deferred compensation plan.

     Net cash used in financing activities of $5,000 principally reflects
payment of long-term lease obligations.

     As of December 29, 2001, in anticipation of future revenue growth, the
Company has placed non-cancelable purchase orders for HTA control units, HTA
procedure sets and related inventory totaling nearly $1,100,000 with projected
delivery dates scheduled over the next six months. In addition, to support the
Company's cost reduction program and the Company's domestic marketing launch of
the HTA, the Company has made non-cancelable commitments for the purchase of
sales and marketing materials and services, manufacturing molds and engineering
support totaling over $400,000. The Company had no other material capital or
other commitments as of December 29, 2001. As discussed above, the Company's
capital requirements to complete the commercialization of the HTA depend on
numerous factors including the resources required to successfully commercialize
the HTA in the United States and the extent to which the HTA gains market
acceptance and sales.

Effects of Inflation

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

                                    -------
                                       11
<PAGE>

                                    PART II.
                                OTHER INFORMATION


Item 5.  Other Information
                                  RISK FACTORS


     The risks and uncertainties described below are not the only ones facing
our company. Additional risks and uncertainties not presently known to us or
those we currently deem immaterial may impair our business operations. If any of
the following risks actually occur, our business could be harmed.

We have a history of operating losses and anticipate future losses and we may
never be profitable.

     Historically, we have incurred significant losses in our medical device
business and we expect to incur increasing and significant losses in the future
for at least the next one to two years as we expend substantial resources:

     o    for expansion of marketing and sales activities;

     o    for research and development;

     o    start-up manufacturing costs; and

     o    in support of regulatory and reimbursement approvals.

     If we are able to commercialize the HTA, we cannot guarantee we will
achieve significant revenues from either international or domestic sales of the
HTA. In addition, we cannot assure you that we will achieve or sustain
profitability in the future. In the event we are unable to achieve profitability
or secure additional sources of capital, our ability to continue as a going
concern may be severely impaired.

We have a limited operating history on which you can base an evaluation of our
business and prospects.

     We have only a limited medical device operating history on which you can
base an evaluation of our business and prospects. As an early stage medical
device company, you must consider our prospects in light of the risks, expenses
and difficulties frequently encountered by entrants into the medical device
industry, which is characterized by an increasing number of participants,
intense competition and a high failure rate. We cannot be certain that we will
be able to overcome the risks and difficulties that we face and successfully
compete with other medical device companies that have competing products or
treatments.

We may not be able to commercialize the HTA profitably.

     Our ability to successfully commercialize the HTA will depend upon, among
other factors, acceptance by the medical community of the HTA. We believe that
physicians will not use the HTA unless they determine, based on clinical data
and other factors, that the HTA:

                                    -------
                                       12
<PAGE>

     o    is an attractive safe treatment alternative for dysfunctional uterine
          bleeding;

     o    offers clinical utility in a cost-effective manner; and

     o    does not require extensive physician training prior to use.

     Even though we have received approval from the FDA to market the HTA in the
United States, we cannot guarantee that the HTA will be competitive with respect
to these factors or that it will gain any significant degree of market
acceptance among physicians, patients and healthcare payors. We believe that
recommendations and endorsements by physicians will be essential for market
acceptance of the HTA and we cannot be certain that any such recommendations or
endorsements will be obtained. If we fail to achieve significant market
acceptance of the HTA, our business, financial condition and results of
operations will suffer.

Our business is regulated by the government. We cannot guarantee that we will
obtain regulatory approvals to commercialize the HTA or other products that we
may develop.

     Our products are medical devices subject to extensive regulation by the
U.S. Food and Drug Administration, or FDA, under the Federal Food, Drug, and
Cosmetic Act. Each medical device that we wish to commercially distribute in the
U.S. will likely require FDA to grant either 510(k) clearance or premarket
application approval, or PMA approval, prior to marketing. The FDA's 510(k)
clearance pathway usually takes from 4 to 12 months, but it can last longer. The
PMA approval pathway is much more costly, lengthy and uncertain. It generally
takes from one to three years or even longer. In April 2001, we received PMA
approval of the HTA for treatment of menorrhagia or dysfunctional uterine
bleeding; in July 31, 2001, we received approval from the FDA to market a
lighter weight, smaller, and more portable version of the HTA Control Unit and
on December 7, 2001, we received approval from the FDA for a PMA supplement
permitting modifications to the assembly of the sheath used in the HTA procedure
set. A new PMA or PMA supplement will be required in the event of a modification
to the HTA, its labeling or its manufacturing process that affects safety or
effectiveness. We cannot guarantee that such approvals will be granted in a
timely fashion or at all.

     After a device such as the HTA is placed on the market, numerous regulatory
requirements apply. These include: the Quality System Regulation, or QSR, which
requires manufacturers to follow elaborate design, testing, control,
documentation and other quality assurance procedures during the manufacturing
process; labeling regulations; the FDA's general prohibition against promoting
products for unapproved or "off-label" uses; and the Medical Device Reporting
regulation, which requires that manufacturers report to the FDA if their device
may have caused or contributed to a death or serious injury or malfunctioned in
a way that would likely cause or contribute to a death or serious injury if it
were to recur.

     We are subject to inspection and marketing surveillance by the FDA to
determine our compliance with regulatory requirements. Noncompliance can result
in enforcement action which may include warning letters, recalling products,
ceasing product marketing, paying significant fines and penalties,


                                    -------
                                       13
<PAGE>

and similar FDA actions which could limit product sales, delay or halt product
shipment, delay new product clearance or approvals, and adversely affect our
profitability. Unanticipated changes in existing regulatory requirements or
adoption of new requirements could hurt our business, financial condition, and
results of operations.

We have limited capital resources to fund our operations and we may be unable to
complete the commercialization of the HTA.

     Our capital requirements to complete the commercialization of the HTA
depend on numerous factors including:

     o    the resources required to manufacture and successfully commercialize
          the HTA in the United States; and

     o    the extent to which the HTA gains market acceptance and sales.

     We believe that our existing cash balances plus anticipated future revenues
will provide adequate funding to meet our minimum capital requirements for at
least the next twelve to twenty-four months. However, in the event that the
growth or timing of anticipated future revenues does not meet our expectations
or that the resources required to commercialize the HTA in the United States
exceed our expectations, we may need to raise additional funds through public or
private financing or other means. In addition to the effect of general market
conditions on our ability to obtain additional capital, such factors as the
performance of the HTA, competing technologies and the extent to which
physicians accept the HTA may become factors that affect our ability to obtain
additional capital. We may not be able to obtain additional financing on
favorable terms or at all. If we are unable to raise additional funds when we
need them, we may be required to scale back our operations, research, marketing
or sales efforts or obtain funds through arrangements with collaborative
partners or others that may require us to license or relinquish rights to
technologies or products. If we raise additional funds by issuing equity
securities, further dilution to our stockholders may result, and new investors
could have rights superior to existing stockholders.

Our revenues are dependent upon a single platform of technology, the HTA. If we
are unable to commercialize the HTA profitably, we may not have any other source
of revenue and our business will fail.

     We are dependent on a single platform of technology, the HTA, to achieve
commercial success and generate sufficient future revenues and profits to
fulfill capital needs. We cannot guarantee you that the HTA will achieve
commercial acceptance. We do not have an alternative source of revenue or
profits to meet capital needs in the event the HTA does not achieve commercial
acceptance. If we are unable to commercialize the HTA profitably, and we do not
have any other sources of revenue, our business will fail.

We have no manufacturing experience and rely on contract manufacturers. If we
are unable to successfully manufacture our HTA in commercial quantities, we may
not be able to generate revenue and become profitable.

     We have no experience in managing the manufacture and assembly of the HTA
in commercial quantities and we rely on third party contract manufacturers to
manufacture the HTA and its disposable components. In order to commercialize

                                    -------
                                       14
<PAGE>

the HTA successfully, we must manufacture or assemble the HTA through third
parties in accordance with FDA requirements in commercial quantities, at high
quality levels and at commercially reasonable costs. In addition, the third
party manufacturers are responsible for registering and maintaining their own
facility regulatory and compliance approvals. Any regulatory or compliance
actions against a third party vendor by either the FDA or any other regulatory
body could affect the third party vendor's ability to supply us, which in turn
could harm our business. The HTA has not yet been manufactured in commercial
quantities at commercially reasonable costs, and we cannot guarantee you that it
will be. As a result, we cannot be certain that we will not encounter
difficulties in scaling up manufacturing, including problems involving:

     o    production yields;

     o    quality control;

     o    component supply; and

     o    shortages of qualified manufacturing personnel.

     In addition, we cannot be certain that we will be able to enter into
satisfactory agreements with third party manufacturers to manufacture the HTA.
If we fail to enter into agreements with third-party manufacturers on reasonable
terms, if at all, or if we are unable to produce the HTA in commercial
quantities at high quality levels and at commercially reasonable prices our
business, financial condition and results of operations will suffer.

We rely on single-source suppliers for a number of the HTA's components, and if
we are unable to obtain components, our business would be harmed and our
operating results would suffer.

     We currently depend on single-source vendors for a number of the HTA's
significant components. Because the HTA has not yet been manufactured in
commercial quantities, we cannot be certain that our current vendors of these
components will be able or willing to meet our future demands. Establishing
additional sources of supply for these components could take a substantial
amount of time and expense. If we need to switch to a replacement vendor, the
manufacture and delivery of our HTA could be interrupted for an extended period.
Although we will try to maintain sufficient quantities of inventory of such
components to minimize production delays or interruptions, we cannot guarantee
you that we will find suitable alternatives at reasonable prices, if at all, or
that any such alternatives will remain available to us. If we are not able to
obtain acceptable suppliers of components in a timely manner or to find and
maintain suitable replacement suppliers of components, our business, financial
condition and results of operations will suffer.

We have limited sales experience. If we fail to establish marketing and direct
sales capabilities sufficient to support commercial sales of the HTA, our
business will suffer.

     We have no direct international or domestic field sales force, and have
only a limited number of relationships with international distributors and
domestic manufacturing sales representatives to market the HTA. We have been
limited to marketing of the HTA internationally with a group of specialty

                                    -------
                                       15
<PAGE>

distributors in selected international markets and we have recently entered into
marketing and sales representative agreements with a number of marketing
specialty organizations to promote the HTA in the United States. We cannot
guarantee you that these relationships or agreements will result in sales of the
HTA or that we will be successful in establishing additional partnership
relationships on commercially reasonable terms, if at all. Achieving market
acceptance for the HTA may require us to establish additional marketing and
direct sales capability sufficient to support sales in commercial quantities.
Establishing such capability will require significant financial and human
resources. We cannot be certain that we will be able to recruit and retain
additional qualified marketing or sales personnel or that our future sales
efforts will be successful. If we fail to establish and maintain an effective
distribution channel for the HTA or to establish and retain qualified and
effective sales personnel to support commercial sales of the HTA, our business,
financial condition and results of operations will suffer.

We may be unable to adequately protect or enforce our intellectual property
rights or secure rights to third-party patents.

     Our ability to compete effectively will depend substantially on our ability
to develop and maintain the proprietary aspects of our technology. We cannot be
certain that any of our issued patents, or any future patents that may be
issued, will offer any degree of protection to the HTA against competitive
products. Further, we cannot be certain that any patents that may be issued or
licensed to us or any of our patent applications will not be challenged,
invalidated or circumvented in the future. In addition, we cannot assure you
that competitors, many of whom have substantial resources and have made
substantial investments in competing technologies, will not seek to apply for
and obtain patents that will prevent, limit or interfere with our ability to
make, use or sell the HTA either in the United States or in international
markets.

     The medical device industry has been characterized by extensive litigation
regarding patents and other intellectual property disputes, and some companies
in the industry have employed intellectual property litigation to gain a
competitive advantage. We cannot assure you that we will not in the future
become subject to patent infringement claims and litigation or interference or
other proceedings in the United States Patent Office or USPTO. The defense and
prosecution of intellectual property suits, USPTO proceedings and related legal
and administrative proceedings are both costly and time consuming. Litigation
may be necessary to enforce patents issued or licensed to us, to protect our
trade secrets or know-how or to determine the enforceability, scope and validity
of the proprietary rights of others.

     Any litigation or USPTO proceedings involving us will result in substantial
expense to us and significant diversion of effort by our technical and
management personnel. An adverse determination in litigation or USPTO
proceedings to which we may become a party could subject us to significant
liabilities to third parties or require us to seek licenses from third parties.
Although some patent and intellectual property disputes in the medical device
area have been settled through licensing or similar arrangements, costs
associated with such arrangements may be substantial and could include
substantial ongoing royalties. Furthermore, we cannot be certain

                                    -------
                                       16
<PAGE>

that necessary licenses would be available to us on satisfactory terms, if at
all. If we are subjected to an adverse determination in a judicial or
administrative proceeding or if we fail to obtain necessary licenses, we could
be prevented from manufacturing and selling the HTA, which would harm our
business, financial condition and results of operations.

     In addition to patents, we rely on trade secrets and proprietary know-how,
which we seek to protect, in part, through appropriate confidentiality and
proprietary information agreements. These agreements generally provide that all
confidential information developed or made known to an individual by us during
the course of the individual's relationship with us is to be kept confidential
and not disclosed to third parties or utilized by the individual, except in
specific circumstances. The agreements also generally provide that all
inventions conceived by the individual in the course of rendering services to us
shall be the exclusive property of BEI. We cannot guarantee you that our
proprietary information will not be misused or confidentiality agreements with
employees, consultants and others will not be breached, that we will become
aware of such breach or will have adequate remedies for any breach, or that our
trade secrets will not otherwise become known to or independently developed by
competitors.

We are subject to uncertainties regarding healthcare reimbursement and reform.
If patients are not reimbursed by third parties for the cost of the therapeutic
procedure in which the HTA is used or there are adverse changes in government
and private third party payors' policies toward reimbursement for such
procedures, our business will be harmed.

     Our ability to successfully commercialize the HTA in the United States
depends in part on the extent to which patients are reimbursed by governmental
agencies, private health insurers and other organizations, such as health
maintenance organizations, for the cost of such treatments. Although
reimbursement for diagnostic and therapeutic procedures to treat uterine
disorders such as menorrhagia, or dysfunctional uterine bleeding and fibroid
treatment have generally been available in the United States, we cannot
guarantee you that it will continue to be the case or that the fees currently
allowed for these procedures will not be reduced. Our business could also be
harmed by changes in reimbursement policies of government or private healthcare
payors, particularly to the extent that any such changes affect reimbursement
for diagnostic or therapeutic procedures in which the HTA is used. Failure by
physicians, hospitals and other users of our products to obtain sufficient
reimbursement from healthcare payors for procedures in which the HTA is used, or
adverse changes in government and private third-party payors' policies toward
reimbursement for such procedures, could harm our business, financial condition
and results of operations.

     We expect that there will be continued pressure on cost-containment
throughout the United States healthcare system. Reforms may include mandated
basic healthcare benefits, controls on healthcare spending through limitations
on the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups and fundamental
changes to the healthcare delivery system. We anticipate that Congress and state
legislatures will continue to review and assess alternative healthcare delivery
systems and payment methodologies and public debate of these issues

                                    -------
                                       17
<PAGE>

will likely continue in the future. Due to uncertainties regarding the ultimate
features of reform initiatives and their enactment and implementation, we cannot
predict which, if any, of such reform proposals will be adopted, when they may
be adopted or what impact they may have on us.

     Market acceptance of the HTA in international markets may be dependent in
part upon the availability of reimbursement within prevailing healthcare payment
systems. Reimbursement and healthcare payment systems in international markets
vary significantly by country, and include both government sponsored and private
healthcare insurance. Although we will seek international reimbursement
approvals, obtaining such approvals can require 12 to 18 months or longer and we
cannot be certain that any such approvals will be obtained in a timely manner,
that we will obtain sufficient reimbursement, or that we will obtain any
reimbursement at all. The failure to receive additional international
reimbursement approvals would have a significant effect on the market acceptance
of the HTA in the international markets in which we are seeking approvals and
could harm our business, financial condition and results of operations.

We face intense competition in our industry, and if our competitors develop new
technologies or products that are more effective than ours, our opportunity to
commercialize the HTA will be reduced or eliminated.

     Competition in the treatment of dysfunctional uterine bleeding is intense
and is accentuated by the rapid pace of technological development. Research and
development of products or treatments by others may result in breakthroughs,
which render the HTA obsolete even before we generate revenue. There are other
products that have received regulatory approvals that will compete with the HTA
and many of our competitors have significantly greater resources than we do. The
principal competitive products for our HTA that have received regulatory
approvals include:

     o    ThermaChoice balloon, a product of Gynecare, a subsidiary of Ethicon,
          Inc./Johnson & Johnson, a device for endometrial ablation, was cleared
          to be marketed in the United States by the FDA in December 1997;

     o    Her Option, a product of CryoGen, which is a cryogenic probe that
          creates an iceball within the uterus, was approved by the FDA in April
          2001; and

     o    NovaSure, a product of Novacept, which utilizes a bipolar
          electrosurgical probe that incorporates an expandable conductive mesh
          that is brought into contact with the lining of the uterus through the
          application of suction, was approved by the FDA in October 2001.

     Other products of principal competitors that we believe are currently
undergoing clinical trials in the United States include:

     o    MEA, a product of Microsulis PLC, which employs a hand-held applicator
          to apply low power microwaves to the uterine cavity; and

     o    Gynelase, a product of Sharplan, which is a diode laser thermal
          therapy device.

                                    -------
                                       18
<PAGE>

     Another competitive technology that is being sold internationally but not
domestically is Cavaterm, a product of Wallsten Medical SA, which is a hand held
balloon similar to that of the ThermaChoice balloon.

     Other large healthcare companies may enter the market in the future.
Competing companies may succeed in developing technologies and products that are
efficacious or more cost effective than the HTA. We cannot guarantee you that
these companies will not succeed in developing technologies and products that
are more effective than the HTA or that would render our technologies or the HTA
obsolete or not competitive. We expect competition for devices and services to
treat dysfunctional menstrual bleeding to increase. Such competition could harm
our business, financial condition and results of operations.

If product liability lawsuits are successfully brought against us, we may incur
substantial liabilities and may be required to limit commercialization of the
HTA or other products that we may develop.

     We face an inherent business risk of financial exposure to product
liability claims in the event that the use of the HTA or other products we may
develop result in personal injury. The HTA is complex and will be used in
medical procedures and in situations where there is a potential risk of serious
injury, adverse side effects or death. If we cannot successfully defend
ourselves against such claims, we may incur substantial liabilities or be
required to limit the commercialization of the HTA or other products we may
develop. We currently maintain product liability insurance with coverage limits
of $10,000,000 per occurrence and in the aggregate. We cannot predict, however,
whether such insurance is sufficient, or if not, whether we will be able to
obtain such insurance as is sufficient, to cover the risks associated with our
business or whether such insurance will be available at premiums that are
commercially reasonable. A successful claim against or settlement by BEI in
excess of its insurance coverage or our inability to maintain insurance in the
future could harm our business, financial condition and results of operations.

Risks associated with international sales may harm our business.

     Our international sales are dependent upon the marketing efforts of, and
sales by, international distributors. We may also rely on these distributors to
assist us in obtaining reimbursement approvals from both government and private
insurers in certain international markets. In general, we have chosen to operate
through small distribution firms because of the belief that these firms will
devote greater attention to the HTA. However, the use of small distributors
increases the risks associated with financial instability of distributors, which
includes the risk that distributors will cease operations or will be unable to
satisfy financial obligations to us. If a distributor were to fail to invest
adequate capital promoting the HTA or were to cease operation, we would likely
be unable to achieve significant revenues in the territory. In addition, because
we have limited resources directed at supporting international sales, we have
only limited sell-through with many of our distributors. We also do not
currently have distributors in a number of significant international markets
that we have targeted and will need to establish additional international
distribution relationships. We cannot be

                                    -------
                                       19
<PAGE>

certain that we will engage qualified distributors on commercially reasonable
terms in a timely manner. If we fail to engage distributors or if the
distributors fail to achieve significant revenues from sales of the HTA, our
business, financial condition and results of operations would be harmed. In
addition, our international revenues and operations may be limited or disrupted
by:

     o    government and regulatory controls;

     o    export license requirements;

     o    political instability;

     o    trade restrictions;

     o    changes in tariffs and other local taxes;

     o    difficulties in managing international operations;

     o    fluctuations in foreign currency exchange rates; and

     o    freight and transportation costs.

     We cannot guarantee you that we will be able to successfully commercialize
the HTA in any international market.

Our operating results may fluctuate, and failure to meet financial expectations
may disappoint securities analysts or investors and result in a decline in our
stock price.

     We expect that our operating results will fluctuate significantly from
quarter to quarter in the future and will depend on a number of factors, many of
which are outside our control. Some of these factors include:

     o    actions relating to reimbursement and regulatory matters;

     o    the extent to which the HTA gains market acceptance; and

     o    timing of regulatory approval of competitive products and the rate of
          market penetration of competing products.

We rely on the expertise of key personnel. If any of these individuals leave,
our operations could suffer.

     We are dependent upon a number of key management and technical personnel.
The loss of the services of one or more key employees would harm our business,
financial condition and results of operations. Our ability to manage our
transition to commercial-scale operations, and hence our success, will depend on
the efforts of these individuals. Our success will also depend on our ability to
attract and retain additional highly qualified management and technical
personnel. We face intense competition for qualified personnel, and we cannot
guarantee that we will be able to attract and retain such personnel. We do not
currently have key person insurance on the life of any employee.

                                    -------
                                       20
<PAGE>

We are subject to significant amount of control by our existing stockholders and
management and thus investors will have less influence on our stockholder
decisions.

     Our directors, officers and their affiliates beneficially own approximately
28.5% of the outstanding common stock (assuming exercise of vested stock
options) as of February 1, 2002. As a result of such common stock ownership, our
directors, officers and their affiliates, if they voted together, would be able
to exercise significant influence over the election of members of our Board of
Directors and other corporate actions requiring stockholder approval.

We have adopted several antitakeover measures that may deter, delay or prevent
change of control or other transactions that could be beneficial to our
stockholders.

     We have taken a number of actions that could have the effect of
discouraging a takeover attempt that might be beneficial to our stockholders who
wish to receive a premium for their shares from a potential bidder. For example,
we are subject to the anti-takeover provisions of Section 203 of the Delaware
General Corporation Law, or the Delaware Law, and our Certificate of
Incorporation contains a fair price provision, the combined effect of which
prohibits us from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. The application of Section 203
and the fair price provision could have the effect of delaying or discouraging a
change of control of BEI. We have also adopted a Stockholder Rights Plan that
would cause substantial dilution to a person who attempts to acquire us on terms
not approved by our Board of Directors. In addition, our Board of Directors has
the authority to issue up to approximately 3,700,000 shares of preferred stock
and to determine the price, rights, preferences and privileges of those shares
without any further vote or action by our stockholders. Any such preferred stock
could contain dividend rights, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences or other rights superior
to the rights of holders of common stock. The Board of Directors has no present
intention of issuing any additional shares of preferred stock (1,114,485 shares
of Series A convertible preferred stock were outstanding as of February 1,
2002), but reserves the right to do so in the future. Further, our Certificate
of Incorporation provides for staggered terms for the members of the Board of
Directors. The staggered Board of Directors and certain other provisions of our
Certificate of Incorporation and Bylaws may have the effect of delaying or
discouraging changes in control or management of BEI, which could adversely
affect the market price of our common stock.

Our stockholders will suffer dilution upon the conversion of our outstanding
preferred stock.

     The 1,114,485 shares of Series A convertible preferred stock issued on
February 14, 2001 are convertible at any time into an aggregate of 2,228,970
shares of our common stock at an initial conversion price of $1.88 per share.
The initial conversion price will be adjusted for stock splits, combinations,
certain dividends and distributions and other similar events and could also be

                                    -------
                                       21
<PAGE>

adjusted on a weighted average basis in the event we issue additional securities
at a per share price below $1.88. Accordingly, if all of the shares of Series A
convertible preferred stock were converted into common stock, there would be
dilution of at least 2,228,970 shares of common stock, or approximately 18.5% of
the 9,849,938 million shares of common stock outstanding on February 1, 2002.







                                    -------
                                       22

<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

          (a)  Index to Exhibits

               None

          (b)  Reports on Form 8-K

               (i)  The Company filed no reports on Form 8-K during the quarter
                    ended December 29, 2001.












                                    -------
                                       23
<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 February 12, 2002.







                                   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)







                                    -------
                                       24