SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                   FORM 10-KSB
(Mark One)
[X]  Annual report under Section 13 or 15(d) of the  Securities  Exchange Act of
     1934

     For the fiscal year ended: May 31, 1999

[ ]  Transition Report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934

     For the transition period from _________ to __________

                         Commission file number: 0-22889


                              ROYAL PRECISION, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


                   Delaware                                      06-1453896
        -------------------------------                      -------------------
        (State or Other Jurisdiction of                       (I.R.S. Employer
         Incorporation or Organization)                      Identification No.)


15170 North Hayden Road, Suite 1, Scottsdale, AZ                   85260
------------------------------------------------                 ----------
   (Address of Principal Executive Offices)                      (Zip Code)


                                 (480) 627-0200
                 Issuer's Telephone Number, Including Area Code:


Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:


                     Common Stock, par value $.001 per share
                     ---------------------------------------
                                (Title of Class)

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 [ ]

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     The issuer's revenues for its most recent fiscal year were $23,219,000

     The aggregate market value of shares of Common Stock held by non-affiliates
of the Registrant on August 23, 1999 was $5,181,000.

     The number of shares of Common  Stock  outstanding  on August 23,  1999 was
5,667,375.

Transitional Small Business Disclosure Format (check one):

Yes [ ] No [X]

     The following  documents have been incorporated by reference into this Form
10-KSB:

                    Document                                 Part of Form 10-KSB
                    --------                                 -------------------
     Registrant's Proxy Statement for its 1999
     Annual Meeting of Stockholders                               Part III
<PAGE>
                                     PART I

     THE  PRIVATE  SECURITIES  LITIGATION  REFORM  ACT OF 1995  PROVIDES A "SAFE
HARBOR"  FOR  FORWARD-LOOKING  STATEMENTS.  MANAGEMENT  BELIEVES  THAT THIS FORM
10-KSB INCLUDES  FORWARD-LOOKING  STATEMENTS  WHICH REFLECT THE CURRENT VIEWS OF
THE COMPANY  WITH  RESPECT TO FUTURE  EVENTS AND  FINANCIAL  PERFORMANCE.  THESE
FORWARD-LOOKING  STATEMENTS  ARE  SUBJECT  TO  CERTAIN  UNCERTAINTIES  AND OTHER
FACTORS  THAT  COULD  CAUSE  ACTUAL  RESULTS  TO  DIFFER  MATERIALLY  FROM  SUCH
STATEMENTS.  THESE UNCERTAINTIES AND OTHER FACTORS INCLUDE,  BUT ARE NOT LIMITED
TO,  UNCERTAINTIES   RELATING  TO  ECONOMIC   CONDITIONS,   CUSTOMER  PLANS  AND
COMMITMENTS, THE COST OF RAW MATERIALS, THE COMPETITIVE ENVIRONMENT IN WHICH THE
COMPANY OPERATES,  YEAR 2000  NONCOMPLIANCE AND CHANGES IN THE FINANCIAL MARKETS
RELATING TO THE COMPANY'S CAPITAL  STRUCTURE AND COST OF CAPITAL.  STATEMENTS IN
THIS FORM 10-KSB,  INCLUDING THE NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS
AND  "MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR PLAN OF  OPERATION",  DESCRIBE
FACTORS  AMONG  OTHERS,  THAT COULD  CONTRIBUTE  TO OR CAUSE  SUCH  DIFFERENCES.
ADDITIONAL  FACTORS THAT COULD CAUSE ACTUAL  RESULTS TO DIFFER  MATERIALLY  FROM
THOSE EXPRESSED IN SUCH FORWARD LOOKING STATEMENTS ARE DETAILED BELOW. THE WORDS
"BELIEVE," "EXPECT,"  "ANTICIPATE,"  "PROJECT," AND SIMILAR EXPRESSIONS IDENTIFY
FORWARD  LOOKING  STATEMENTS,  WHICH SPEAK ONLY AS OF THE DATE THE STATEMENT WAS
MADE.

ITEM 1. DESCRIPTION OF BUSINESS.

     Royal  Precision,  Inc.,  a Delaware  corporation  ("RP" or the  "Company")
(formerly  FM Precision  Golf  Corp.),  and its  subsidiary,  FM Precision  Golf
Manufacturing Corp., a Delaware corporation ("FMP"), were incorporated on May 3,
1996 by a group of investors who acquired, through such companies, substantially
all  of the  assets  of the  golf  shaft  manufacturing  business  of  Brunswick
Corporation.  In 1997, RP acquired, through a merger, Royal Grip, Inc. ("RG"), a
Nevada  corporation,  and RP  simultaneously  changed its name from FM Precision
Golf Corp. to Royal Precision, Inc. RP is a holding company which carries on its
business through FMP and RG.

PRINCIPAL PRODUCTS; MARKETS

     FMP is a manufacturer  and  distributor of golf club shafts.  FMP developed
and  patented the "Rifle",  the first  modern  stepless  steel golf shaft in the
industry.  Management  believes  that this shaft  combines the accuracy of steel
with the feel and vibration-damping effect of graphite. FMP pioneered, patented,
and now licenses the technology of Frequency  Coefficient  Matching ("FCM") golf
shafts by means of an electronic analyzer.  Management believes that FCM is more
accurate than any other sorting method,  in that it ensures identical shaft flex
from  club-to-club   throughout  a  set,  allowing  the  golfer  to  maintain  a
consistent, natural swing tempo regardless of the club chosen.

     Sales of golf club  shafts to  original  equipment  manufacturers  ("OEMs")
accounted  for the  vast  majority  of  FMP's  sales in  fiscal  1999,  with the
remainder of the sales being made to distributors,  custom club assemblers,  pro
shops,  and  repair  shops.  Each of  FMP's  products  is sold by the  OEMs as a
component  of the  complete  golf club  through a variety of channels  including
sporting goods stores, discount stores, mail order catalogs, pro shops, and mass
merchandisers.

                                      -2-
<PAGE>
     Of FMP's top 10 accounts,  two are international.  Precision Japan is FMP's
second largest account (see "Principal Suppliers and Customers"). Executive Golf
is the tenth largest  account and distributes  FMP's products in Australia.  FMP
also  has  a  presence   in  Europe  and  Canada   through   other   distributor
relationships.

     RG designs and distributes golf club grips. In 1989, RG introduced a rubber
wrap  golf grip that  gained  widespread  acceptance  in the golf  industry  and
enabled RG to achieve brand name recognition. RG currently offers a wide variety
of  standard  and  custom  models,  all  of  which  feature  durability,  and  a
distinctive  feel and  appearance.  These  grips are sold  principally  into the
replacement  market,  which serves those  golfers  seeking to replace grips that
have become worn and slick due to prolonged use.  Management  believes that RG's
market share in golf grips is approximately 3%.

     Many golf grip manufacturers sell their products to wholesale  distributors
who in turn sell to dealers and other representatives.  In the United States, RG
uses  a  single-tier  distribution  strategy  in  which  its  independent  sales
representatives  deal directly  with  thousands of golf club  professionals  and
off-course   specialty  store  operators.   Although  RG's   independent   sales
representatives  are  permitted  to sell other golf  products,  they do not sell
competing golf club grips. RG distributes a substantial  portion of its grips in
Japan through Precision Japan.

     During  March  1999,  RP  disposed  of the  operating  assets of Royal Grip
Headwear Company,  formerly known as Roxxi, Inc. ("Roxxi"),  a subsidiary of RG,
through two transactions with unrelated parties.  In one transaction,  its trade
name,  customer list, design database and related computer software and hardware
were sold. In return,  RP will receive a royalty of 16% of the buyer's net sales
of Roxxi-licensed products for the two-year period beginning May 1, 1999. In the
second transaction,  Roxxi sold its headwear manufacturing  equipment,  headwear
inventory  and raw  materials.  Roxxi  received  $300,000 at closing and RP will
receive a royalty  of 2% of the  buyer's  net sales  until the buyer has paid an
additional  $200,000.  If the buyers generate net headwear sales of $3.0 million
per year,  as Roxxi did during the twelve  months ended  February  28, 1999,  RP
would record royalty revenue of  approximately  $0.5 million in each of the next
two fiscal years under these contracts.  However, there can be no assurance that
the two buyers will be able to achieve  these sales amounts or any sales amounts
in the future.  Royalties  to be received by RP are  contingent  on the business
operations of the two buyers over which RP has no influence or control.

COMPETITION

     The sporting goods industry is highly  competitive.  FMP competes primarily
on the basis of quality,  product  specifications and design, on-time deliveries
and customer  relationships.  There are numerous companies  competing in various
segments of the golf equipment  markets including those  manufacturing  graphite
golf  shafts,  which are an  alternative  to steel  golf  shafts.  Some of FMP's
competitors  have  greater  name   recognition,   more  extensive   engineering,
manufacturing and marketing capabilities,  and greater financial,  technological
and personnel resources than those available to FMP. FMP competes primarily with
one domestic and two  international  companies which  manufacture and distribute
steel golf  shafts to OEMs.  FMP is the second  largest  producer  of steel golf

                                      -3-
<PAGE>
shafts, after True Temper Sports. RP's management believes that its market share
in steel golf shafts is approximately 22% while True Temper Sports' market share
in steel golf  shafts is  believed to be 48%.  Other  competitors  in steel golf
shafts include Apollo Golf and Nippon Shaft Co., Ltd.

     RG's principal competitors in the golf grip market include Eaton/Golf Pride
and Lamkin  Corp.,  with Eaton's Golf Pride  division  currently  maintaining  a
majority  of the total golf grip  market.  These  companies,  as well as several
other  grip  manufacturers  with  which RG  competes,  have  greater  financial,
marketing  and other  resources  than RG. In addition,  several OEMs that do not
currently manufacture premium quality grips could, in light of their substantial
resources, enter into this market segment.

PRINCIPAL SUPPLIERS AND CUSTOMERS

     FMP uses Worthington  Industries  ("Worthington")  as its sole supplier for
strip steel but has no supply contract with Worthington. Should Worthington fail
to  deliver  steel,  there may be a  disruption  of  operations  at FMP until an
alternate  supplier is procured.  Worthington  provides  steel from two separate
plant locations.  If one Worthington  plant becomes unable to fill the necessary
requirements,  orders could be filled from the alternate location.  Although FMP
has elected to use  Worthington as its sole supplier of strip steel,  management
believes that there are other acceptable supply sources at comparable prices and
that the loss of Worthington as a supplier would not have a significant  adverse
impact on RP.

     FMP and RG  have  entered  into  five-year  and  ten-year  agreements  with
Precision Japan expiring in 2002 and 2001,  respectively,  under which Precision
Japan was granted exclusive distribution rights for FMP and RG products in Japan
and certain other Far Eastern countries. Precision Japan may renew its agreement
with FMP for successive  two-year terms and its agreement with RG for successive
five-year terms. The FMP agreement is terminable by either party for cause or by
FMP if Precision Japan fails to meet certain minimum purchase requirements.  The
RG  agreement is  terminable  by either party for cause or if they fail to agree
upon  pricing  terms,  or by  Precision  Japan at any time upon six months prior
notice  to RG.  While  FMP and RG  currently  enjoy a strong  relationship  with
Precision  Japan, the loss of Precision Japan as a distributor of FMP's and RG's
products would have a significant adverse effect on RP.

     In December  1996, RG outsourced all of its production of non-cord grips to
Acushnet Rubber Company  ("Acushnet").  Acushnet experienced start-up delays and
quality control  problems in the production of grips,  which adversely  affected
RG. In May 1999, RG and Acushnet executed a mutual release agreement terminating
the  manufacturing  and supply agreement and the capital lease  agreement.  As a
result in May 1999,  RG received a cash payment of $1.5 million and a $1 million
purchase  credit,  of which  $500,000 has been used to offset RG's  purchases of
grips through July 1999. The remaining  $500,000 of the purchase  credit will be
paid to RG in cash less any outstanding balance owed by RG to Acushnet as of the
termination. The agreement requires Acushnet to continue manufacturing grips for
RG  through  January  9,  2000  and to  pay  up to  $100,000  to  relocate  RG's
manufacturing  equipment.  The agreement  relieves Acushnet of its capital lease
obligations  as of February  21,  1999,  which  amounted to  approximately  $2.6
million.  See Part II, Item 6  "Management's  Discussion and Analysis or Plan of
Operation - Business  Environment and Future Results;  Reliance Upon Third Party
Suppliers."

                                      -4-
<PAGE>
     RG currently purchases the majority of its non-cord grips from Acushnet and
has  no  immediate  replacement  supply  source.  However,  RP is  currently  in
discussions with a number of grip  manufacturers  which RP believes can maintain
RG's  standard  of product  quality  and will  facilitate  a smooth  transition.
Previously,  during the  transition to Acushnet,  RG  experienced  manufacturing
delays and quality control  problems.  There can be no assurance that RP will be
able to  secure a source  for  grips on as  favorable  terms or with the same or
better quality as Acushnet,  or at all. In addition,  there can be no assurances
that a transition to a new supplier will not result in productions  delays,  the
loss of sales and key customers,  which would  materially  affect RG's financial
condition and results of operations.

     The Company is significantly  dependent on sales to Taylor Made,  Precision
Japan  and  Callaway.   These  three  customers  represented  in  the  aggregate
approximately 49% of the Company's sales from continuing operations for the year
ended May 31, 1999.  Precision  Japan  represented 61% of RG sales and revenues,
and 17% of FMP sales and revenues.  Taylor Made  represented  less than 1% of RG
sales and revenues, and 18% of FMP sales and revenues. Callaway represented less
than 1% of RG sales and revenues, and 11% of FMP sales and revenues. The Company
does not have supply agreements with Taylor Made or Callaway.  The loss of sales
to any of  these  companies  could  have a  significant  adverse  impact  on the
Company's business.

     Sales of golf equipment  historically  have been dependent on discretionary
spending by  consumers,  which may be  adversely  affected  by general  economic
conditions  and the  popularity  of golf in  general.  A  decrease  in  consumer
spending on golf  equipment  could have an adverse  effect on RP's  business and
operating results.

PATENTS, TRADEMARKS

     RP has obtained a trademark  and a utility  patent on its "Rifle"  product.
RP's  management  believes that the only patents  material to its future success
are its patent  #4,736,093,  which enables a club maker to take frequency sorted
steel shafts and  calculate  what new  frequency  shafts are needed to produce a
Frequency Matched product, patent #5,040,270 which relates to the same frequency
sorting,  but for graphite  shafts,  and patent  #5,857,921 which relates to the
manipulation of flex distribution within a shaft or set of shafts. These patents
expire on May 9, 2006,  October 19, 2008,  and January 12,  2016,  respectively.
Patents  held by RP on  frequency  matching  and the  manufacture  of steel golf
shafts and clubs have expired.  While there can be no assurance that competitors
will not use the technology of the expired patents in the future, RP's principal
competitors have not adopted,  nor does management  believe that they have plans
to copy, the expired patents.

     RP relies upon trademarks to establish and protect RP's proprietary  rights
in its  products  and  technologies.  The RG logo and the name "Royal Grip" have
been registered as trademarks in the United States,  Japan, and in other foreign
countries.  In addition,  RP has filed  trademark  applications  relating to the
names and  configurations  of several of its grip  products in the United States
and in foreign  countries,  including Japan. RP has also obtained design patents
on some of its grips and applied for others that are  pending.  RP protects  its
proprietary rubber compound and related technologies as trade secrets. Despite

                                      -5-
<PAGE>
such  safeguards,  there can be no  assurance  that its  proprietary  rights are
adequately  protected or that  competitors will not be able to produce golf club
grips that successfully  imitate RP's designs and materials  without  infringing
RP's proprietary rights.

REGULATIONS

     The  design  of  new  golf  clubs  is  greatly   influenced  by  rules  and
interpretations  of the United States Golf  Association  ("USGA").  Although the
golf  equipment  standards  established  by the  USGA  generally  apply  only to
competitive events sanctioned by that  organization,  it has become critical for
designers of new products to assure compliance with USGA standards.  Although RP
believes that all of its grips and shafts comply with current USGA standards, no
assurance  can be given that any new products will receive USGA approval or that
existing USGA standards  will not be altered in ways that  adversely  affect the
sales of RP's products.

RESEARCH AND DEVELOPMENT

     RP has two full-time  employees and utilizes one consultant in research and
development.  During  the fiscal  years  ended May 31,  1999 and 1998,  RP spent
approximately $186,000 and $157,000,  respectively, on research and development.
In  addition,  sales and other  personnel  of RP work to  conceive  new  product
opportunities  by creating  prototypes and masters and by working with suppliers
and  customers  to design  and  produce  finished  products.  New shaft and grip
products are tested through RP's PGA Tour representatives and sales force.

ENVIRONMENTAL

     During  the fiscal  year ended May 31,  1999,  RP  expended  $61,000 on the
treatment,  storage  and  disposal  of  hazardous  waste  at  FMP's  Torrington,
Connecticut  manufacturing  facility.  Regulatory fees for various environmental
permits and costs were  $3,300.  RP estimates  that it will incur  approximately
$900,000 in capital expense to upgrade FMP's wastewater treatment facilities due
to Environmental  Protection Agency ("EPA") mandates on water quality adopted by
the State of Connecticut.  Of this balance,  approximately $250,000 was incurred
and expended during the fiscal year ended May 31, 1999.

EMPLOYEES

     As of May 31,  1999,  RP had 281  employees,  four  of whom  are  part-time
employees.  FMP's  hourly  employees  are  subject  to a  collective  bargaining
agreement, which expires on November 10, 2002. RP believes its relationship with
its employees is good.

RISK FACTORS

     NO LONG-TERM SUPPLIER OF GOLF GRIPS. RG currently purchases the majority of
its  supply  of  non-cord  grips  from  Acushnet  pursuant  to a mutual  release
agreement entered into in May 1999 which terminated the manufacturing and supply
agreement   entered  into  between  RG  and  Acushnet  in  December   1996;  see
"--Principal suppliers and customers".

                                      -6-
<PAGE>
     Acushnet has an  obligation  to continue  producing  non-cord  grips for RG
through January 9, 2000 under the mutual release agreement;  see Part II, Item 6
"Management's   Discussion   and  Analysis  or  Plan  of  Operation  -  Business
Environment and Future Results;  Reliance Upon Third Party Suppliers."  However,
due to the short-term nature of Acushnet's relationship with RG, there can be no
assurance  that Acushnet  will  continue to supply RG with  non-cord  grips in a
timely manner or of an acceptable quality.

     RG has  begun  purchasing  small  volumes  of  non-cord  grips  from  other
manufacturers.  Although  RG does  not  currently  have a  supplier  to  replace
Acushnet,  RG believes that it can obtain a sufficient  supply of non-cord grips
from Acushnet and these other  manufacturers  to satisfy  customer demand during
the fiscal year ending May 31, 2000. However,  there can be no assurance that RG
will be able to secure an adequate  supply of  non-cord  grips from these or any
manufacturers.

     RG is  currently in  discussions  with a number of  manufacturers  which RG
believes can replace  Acushnet,  maintain RG's  standard of product  quality and
facilitate a smooth  transition.  There can be no assurance that RG will be able
to secure a source for grips on as  favorable  terms or with the same quality as
Acushnet, or at all. In addition, there can be no assurance that a transition to
a new supplier will not result in production delays or the loss of sales and key
customers.

     The failure of Acushnet  to  continue  to supply RG with  quality  non-cord
grips in a timely manner  through  January 9, 2000,  the failure of RG to obtain
quality non-cord grips from a variety of manufacturers in quantities adequate to
meet customer demand until RG finds a replacement  for Acushnet,  the failure of
RG to find a replacement  for Acushnet  which provides RG with non-cord grips on
as  favorable  terms  and with the same or higher  quality  as  Acushnet  or the
failure  of  RG  to  make  the  transition  to a  replacement  supplier  without
production  delays or the loss of sales and key customers  could have a material
adverse  effect on the  Company's  business,  operating  results  and  financial
condition.

     DEPENDENCE ON "RIFLE" SHAFT SALES. The Company is  substantially  dependent
on sales of "Rifle"  shafts  which  have a higher  margin  than the other  shaft
products of the Company. Sales of the Rifle shaft increased $3.3 million for the
fiscal year ended May 31, 1999 compared to the year ended May 31, 1998. Sales of
the  Rifle  shaft  constituted  56% of the  Company's  revenue  from  continuing
operations  during the fiscal year ended May 31, 1999 compared to 40% during the
fiscal year ended May 31, 1998.

     While the  Company's  management  believes  that demand for the Rifle shaft
should remain high for the next several  years,  there can be no assurance  that
sales of the Rifle shaft will not decline or that the Rifle shaft will  maintain
its profitability.  Decreases in sales or profitability of the Rifle shaft could
have a material adverse effect on the Company's business,  operating results and
financial condition.

                                      -7-
<PAGE>
     DEPENDENCE ON  DISCRETIONARY  CONSUMER  SPENDING.  Sales of golf  equipment
historically have been dependent on discretionary  spending by consumers,  which
may be adversely affected by general economic conditions, changing consumer golf
trends and the  popularity  of golf in general.  See  -"Principal  Suppliers and
Customers." Any period of economic  uncertainty or decline that impacts consumer
spending,  any  decrease in consumer  spending on golf  equipment  for  whatever
reason or  changes  in  consumer  preferences  for golf  products  could  have a
material  adverse  effect on the Company's  business,  results of operations and
financial condition.

     COMPETITION.  The golf  equipment  industry  is highly  competitive  and is
characterized by numerous companies competing in various segments of the market.
Many of the Company's competitors have greater name recognition,  more extensive
engineering,  manufacturing and marketing  capabilities,  and greater financial,
technological and personnel resources than the Company.  See -"Competition".  In
addition,  some  companies in the golf  equipment  industry have expanded  their
product  lines which compete with the products of the Company in recent years as
a result of acquisitions.  Efforts to remain competitive with these rival sports
equipment  manufacturers  may cause the Company to accept lower profit  margins,
which could  adversely  impact the  Company's  business,  operating  results and
financial condition.  There can be no assurance that the Company will be able to
compete successfully in the future with existing or new competitors.

     CUSTOMER CONCENTRATION.  The Company is significantly dependent on sales to
Taylor Made,  Callaway and  Precision  Japan.  See  "--Principal  Suppliers  and
Customers."  Sales  to  these  customers  represented  approximately  49% of the
Company's  sales from  continuing  operations  for the fiscal year ended May 31,
1999. The loss of sales to any of these companies could have a material  adverse
effect on the Company's business, operating results and financial condition.

     Because of the historical  volatility of consumer demand for specific clubs
and grips, as well as continued competition from alternative suppliers, sales to
a given  customer in a prior period may not  necessarily be indicative of future
sales. The loss of a significant  customer or a substantial decrease in sales to
a significant customer could adversely affect the Company's business,  operating
results and financial condition.

     DEPENDENCE  ON  OEMS.  The  Company's  major  customers  are  OEMs who sell
finished  golf  products  primarily  to  sporting  goods  stores  and  specialty
retailers  of  golf  equipment  and  recreational   products.  See  "--Principal
Products;  Markets." A decision by these OEM customers to manufacture  their own
grips and shafts or to  acquire  grips and shafts  from  sources  other than the
Company could have a material adverse effect on the Company's business,  results
of  operations  and  financial  condition  as could  changes  in the  purchasing
patterns, inventory levels and advertising and marketing strategies of these OEM
customers.

     SEASONALITY; FLUCTUATIONS IN OPERATING RESULTS. The Company is dependent on
golf-related  product  sales  and  golf  is  generally  a  warm  weather  sport.
Therefore,   the  Company's   business  is  seasonal.   See  Part  II,  Item  6,
"Management's Discussion and Analysis or Plan of Operation - Overview."

                                      -8-
<PAGE>
     The Company has  historically  enjoyed its strongest sales in the third and
fourth  fiscal  quarters  ending  in  February  and May  because  the  Company's
customers  build up inventory  levels in anticipation of sales in the spring and
summer,  the principal  selling seasons for golf-related  products.  Income from
operations is typically  lower in the first and second fiscal quarters ending in
August and November as fixed  operating  costs are spread over a generally lower
sales volume. As a result, the Company is subject to substantial seasonal swings
in liquidity which results in cash management challenges.

     In order to  minimize  the effect of  seasonality,  the  Company  may build
product  inventories  during  the  first and  second  fiscal  quarters  based on
management's estimated customer demand for the Company products in the third and
fourth fiscal  quarters.  This strategy allows the Company to use its production
resources  more  efficiently  and have  inventory on hand to meet its customers'
demand in the third and fourth  fiscal  quarters but also exposes the Company to
the risk of materially inaccurate estimates.  If the Company  underestimates its
customers' demand for products,  the Company may not be able to deliver products
to  its  customers  in a  timely  fashion.  If  the  Company  overestimates  its
customer's demand for products, the Company may have to sell excess inventory at
severely marked down prices.  Either event may have a material adverse effect on
the Company's business, operating results and financial condition.

     ENVIRONMENTAL  RISKS.  The  Company is subject  to  environmental  laws and
regulations that impose workplace  standards and limitations on the discharge of
pollutants  into the  environment  and establish  standards for the handling and
disposal of waste products. The nature of the Company's Torrington,  Connecticut
golf shaft manufacturing facility could expose the Company to the risk of claims
with regard to environmental matters.

     The Company estimates that it will incur approximately  $900,000 in capital
expense to upgrade FMP's  wastewater  treatment  facilities  at the  Torrington,
Connecticut  plant due to EPA mandates on water quality  adopted by the State of
Connecticut. See "--Environmental."

     There can be no assurance  that  additional  material  costs or liabilities
will not be incurred in connection  with  environmental  laws and regulations in
the future or that  governmental  requirements  will not change in a manner that
imposes material costs or liabilities on the Company.

     FOREIGN   SALES   RISKS.   The  Company  is   significantly   dependent  on
international  sales which represented 29% of the Company's total net sales from
continuing   operations   during  the  fiscal  year  ended  May  31,  1999.  See
"--Principal  Suppliers  and  Customers"  and  "Part  II,  Item 6,  Management's
Discussion  and Analysis or Plan of Operation - Overview."  International  sales
expose the Company to additional risks inherent in doing business abroad.  These
risks  include,  but are not  limited to delays in  shipment;  export  controls,
embargoes,  tariffs and other trade  barriers;  foreign  government  regulation,
political  instability,   and  changes  in  economic  conditions;   and  adverse
fluctuations in foreign exchange rates and exchange controls. Any of these risks
may result in the loss of international  sales or a decline in the profitability
of  international  sales  which  could  have a  material  adverse  effect on the
Company's business, operating results or financial condition. Sales to Precision
Japan, RP's exclusive distributor for Japan, accounted for 85% of the

                                      -9-
<PAGE>
Company's  international  sales during the fiscal year ended May 31,  1999.  The
Japanese economy has been relatively  stagnant and future sales may be adversely
affected.  The failure of the Japanese  economy to recover could have a material
adverse  effect on the  Company's  business,  operating  results  and  financial
condition.

     TRADE UNION. Employees of the Company at its Torrington,  Connecticut plant
are  represented  by a trade  union  for  collective  bargaining  purposes.  See
"--Employees".  Although  the Company  presently  believes  its  relations  with
employees are good,  there is no assurance that work stoppages or slowdowns will
not be  experienced  in the future.  Any work stoppage or slowdown  could have a
material  adverse  effect on the Company's  business,  results of operations and
financial condition.

     THE YEAR 2000  PROBLEM.  The Year 2000 problem  refers to the  inability of
software to process date information later than December 31, 1999. Date codes in
many software  programs are  abbreviated  to allow only two digits for the year.
Software with  date-sensitive  functions that is not Year 2000 compliant may not
be able to distinguish whether "00" means 1900 or 2000. When that happens,  some
software  will  not  work  at  all  and  other  software  will  suffer  critical
calculation  and other  processing  errors.  Hardware  and other  products  with
embedded chips may also experience problems.

     The Company has assessed its internal  year 2000 issues and  completed  the
last phase of its  internal  Year 2000  compliance  plan.  The Company is in the
process of  assessing  its  exposure  from third party Year 2000  noncompliance.
There can be no  assurance  that the  Company's  efforts  to  achieve  Year 2000
compliance  will be  successful  or that third parties with whom the Company has
material relationships will be Year 2000 compliant by January 1, 2000. Year 2000
noncompliance by either the Company or any of these material third parties could
have a material adverse effect on the Company's business,  results of operations
or  financial  condition.  See  Part II,  Item 6, "Management's  Discussion  and
Analysis or Plan of Operations - Year 2000 Assessment."

     LIMITED HISTORY.  The Company's golf club shaft  manufacturing  facility in
Torrington, Connecticut dates back over a century and the facility's manufacture
of shafts dates back to the 1920's.  However,  the facility has been operated by
three different owners.  Most recently,  in 1996 a group of investors joined the
current  management  in  acquiring  substantially  all of the assets and certain
liabilities of the golf shaft manufacturing business from Brunswick Corporation,
resulting in the current  structure and ownership of the Company.  At the end of
August 1997, the Company  acquired RG.  Consequently,  the Company has a limited
operating history.  There can be no assurance that the results of such a limited
history  or  of  the  predecessor   operations  will  be  indicative  of  future
performance.  Also, while the Company's  management has extensive  experience in
the sporting goods and golf equipment  industry,  there can be no assurance that
their experience will assist in the successful  management of the Company in its
current structure or the combined  operations  resulting from the acquisition of
RG.

                                      -10-
<PAGE>
     NEW PRODUCT  INTRODUCTION.  The Company  believes that the  introduction of
new, innovative golf shafts and grips will be crucial to its future success. New
models and basic design changes are frequently introduced into the golf industry
but are often met with  consumer  rejection.  Although  the Company has achieved
certain  successes in the  introduction of products,  no assurances can be given
that it will be able to continue to design and  manufacture  products  that meet
with market  acceptance.  In addition,  prior successful designs may be rendered
obsolete within a relatively short period of time as new products are introduced
into the market.  The design of new golf equipment is also greatly influenced by
rules and  interpretations  of the USGA.  Although the golf equipment  standards
established by the USGA generally apply only to competitive events sanctioned by
that  organization,  it has become  critical  for  designers  of new products to
assure compliance with USGA standards. Although the Company believes that all of
its grips and shafts  comply with current USGA  standards,  no assurance  can be
given that any new products  will receive USGA  approval or that  existing  USGA
standards  will not be  altered  in ways  that  adversely  affect  the  sales of
products.

     PRODUCT PROTECTION AND INTELLECTUAL  PROPERTY. The Company currently relies
upon a combination of patents,  copyrights,  trademarks and trade secret laws to
establish and protect  certain of its  proprietary  rights in its products.  See
-"Patents,  Trademarks."  There can be no assurance  that the steps taken by the
Company  in  this  regard  will  be  adequate  to  prevent  misappropriation  of
proprietary  property rights or that competitors will not independently  develop
proprietary property that is substantially equivalent or superior.

ITEM 2. DESCRIPTION OF PROPERTY.

     The Company's  golf shaft  manufacturing  facility is located at 535 Migeon
Avenue, Torrington, Connecticut and comprises approximately 229,400 square feet.
The  manufacturing  facility  is owned by the  Company  subject  to an  open-end
mortgage  granted to Norwest  Business  Credit,  Inc.  (now known as Wells Fargo
Business Credit, Inc.) on October 8, 1998 under a Credit and Security Agreement.
The original principal amount outstanding under the term loan provisions of this
Agreement is $4.3 million and requires monthly principal installments of $99,000
through and until  October 1, 1999 and  $65,000  monthly  thereafter,  until the
maturity of the loan in September  2001.  The amount  available  for  borrowings
under  the  revolving  line-of-credit  provisions  is based  upon the  levels of
eligible FMP accounts receivable and inventories,  subject to maximum borrowings
of $4.0 million.  See Note 7 to Notes to the Consolidated  Financial  Statements
for specific information  concerning the amount outstanding under the Credit and
Security Agreement.

     The Company's principal executive and administrative offices are located in
an 8,000  square foot  leased  facility at 15170  North  Hayden  Road,  Suite 1,
Scottsdale, Arizona. The monthly payment under the lease is $17,000 and the term
of the lease expires May 31, 2001.

     In the opinion of  management,  these  facilities are suitable and adequate
for the Company's intended use and are adequately covered by insurance.

                                      -11-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.

     The  Company  is a party to  various  legal  proceedings,  each of which is
routine  litigation  incidental to the Company's  business and which  management
believes,  after  consultation with legal counsel on all such matters,  will not
have a material  adverse effect on the Company's  financial  condition or future
operating results.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Common  Stock began  trading on The Nasdaq  National  Market  under the
trading  symbol "RIFL" during the second  quarter of fiscal 1998. The prices set
forth below  reflect the high and low sale prices for shares of Common Stock for
each quarter thereafter as reported by The Nasdaq National Market.

                                                               HIGH        LOW
                                                              ------      ------
     FISCAL YEAR 1998
     Second Quarter                                           $10.25      $ 8.00
     Third Quarter                                              8.75        5.75
     Fourth Quarter                                             7.00        4.50

     FISCAL YEAR 1999
     First Quarter                                              5.44        4.25
     Second Quarter                                             4.94        2.53
     Third Quarter                                              5.00        1.00
     Fourth Quarter                                             3.94        2.06

     As of August 23, 1999, the Company had  approximately  90 holders of Common
Stock of record.

     The Company  has not paid any  dividends  on its Common  Stock and does not
anticipate  paying  cash  dividends  in  the  foreseeable  future.  The  Company
currently  intends to retain any earnings to finance the growth of its business.
Any  determination  as to the payment of  dividends  will depend upon the future
results of  operations,  capital  requirements  and  financial  condition of the
Company  and such  other  facts as the Board of  Directors  of the  Company  may
consider,  including any contractual or statutory  restrictions on the Company's
ability to pay  dividends.  The credit  facilities  of RG and FMP each limit the
Company's ability to pay dividends on its Common Stock.

                                      -12-
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

OVERVIEW --

Royal  Precision,  Inc. ("RP" or the "Company") is a holding  company with three
wholly-owned  subsidiaries  which  are FM  Precision  Golf  Manufacturing  Corp.
("FMP"),  FM Precision  Golf Sales Corp.  ("FMP  Sales"),  and Royal Grip,  Inc.
("RG") which has a  wholly-owned  subsidiary,  Royal Grip Headwear  Company.  RP
acquired  RG on August 29,  1997 by means of a merger  whereby  FMPSUB,  Inc. (a
wholly-owned  subsidiary of RP created for such purpose) merged with and into RG
(the  "FMP-RG  Merger").   RG  was  the  surviving   corporation  and  became  a
wholly-owned  subsidiary  of RP. The results of operations of RP for all periods
presented  exclude the results of operations of RG prior to August 29, 1997, the
effective date of the FMP-RG Merger.  As discussed in note 3 to the consolidated
financial statements, the Company disposed of the operating assets of Royal Grip
Headwear  Company,  formerly  known as Roxxi,  Inc.  ("Roxxi"),  in March  1999.
Results of operations for Roxxi are reflected as discontinued operations for all
periods presented.

FMP is a  manufacturer  and  distributor  of golf club  shafts  that are sold to
original equipment  manufacturers ("OEMs") and to distributors and retailers for
use in the replacement market. The majority of FMP's sales are to OEMs. FMP also
sells golf club shafts in foreign markets including Japan, Australia, the United
Kingdom,  and Canada.  RG designs and distributes golf club grips. RG's products
are sold primarily throughout the United States,  Japan, and the United Kingdom.
The  majority of RG's grip sales are to its  Japanese  distributor.  In December
1996, RG outsourced the  manufacturing  of its non-cord grips to Acushnet Rubber
Company  ("Acushnet").  In May 1999, RG and Acushnet  executed a mutual  release
agreement  terminating the  manufacturing  and supply  agreement and the capital
lease  agreement.  See  note  5 to the  consolidated  financial  statements  and
Reliance on Third Party Suppliers under Business  Environment and Future Results
below.

The Company's  business is seasonal with stronger demand for products during the
fiscal quarters ending in February and May.

NET SALES. Net sales from continuing  operations for the year ended May 31, 1999
were  $23.2  million,  a  decrease  of $1.5  million  or 6% from net sales  from
continuing  operations  of $24.7 million  during fiscal 1998.  Net sales of golf
club shafts  decreased  by $1.9  million or 9%  primarily  due to a reduction in
sales of the Company's lower priced,  commercial  grade golf club shafts of $5.3
million or 60%.  Sales of this product were  significantly  reduced  following a
price increase instituted by the Company in the first fiscal quarter of 1999. In
response to these unfavorable results, the Company has subsequently modified its
pricing  structure  in an effort to  increase  sales of this  product  in future
periods.  Net sales of the  Company's  higher  priced,  premium  grade golf club
shafts  increased  by $3.4  million or 27%.  This  increase  reflects the strong
demand for the  Company's  proprietary  "Rifle"  shafts.  Net sales of golf club
grips increased by $0.4 million or 12% primarily due to the inclusion of RG golf
club grip sales of $1.0 million during the first quarter of fiscal 1999 compared
to $0 during the comparable period of 1998 which was prior to the effective date
of the FMP-RG  Merger.  RG's  business  with two  significant  OEM customers has
decreased  significantly  from sales of $440,000  during fiscal 1998 compared to
$40,000 during fiscal 1999.

COST OF SALES. Cost of goods sold from continuing  operations for the year ended
May 31,  1999 was $15.0  million,  a decrease of 9% from cost of goods sold from
continuing  operations of $16.5 million during fiscal 1998. The decrease in cost
of goods sold of $1.5 million is primarily  attributable to the decline in sales
of commercial  grade golf club shafts  discussed  above.  Total golf club shafts
cost of goods sold decreased by $2.0 million. Golf club grips cost of goods sold
increased by $0.5 million  primarily  due to the inclusion of RG golf club grips
cost of goods  sold of $0.5  million  during the first  quarter  of fiscal  1999
compared  to $0 during  the  comparable  period  of 1998  which was prior to the
effective date of the FMP-RG Merger.

GROSS PROFIT.  Gross profit from  continuing  operations for the years ended May
31,  1999 and 1998 was $8.2  million.  Gross  profit  from golf club  shafts was
unchanged at $6.3 million despite the $1.9 million reduction in net sales due to
a favorable  change in the mix of product  sales from lower  margin,  commercial

                                      -13-
<PAGE>
grade shafts to higher margin  "Rifle"  shafts.  As a percentage  of sales,  the
gross  profit on shaft sales  increased  from 30.2% to 33.4%.  Gross profit from
sales of golf club grips was  unchanged at $1.9  million  despite an increase in
net sales of $0.4  million.  Fiscal 1998 gross  profit  reflects a $0.5  million
credit  received  from  Acushnet  as  compensation  for  production  delays  and
shortfalls which was recorded as a one-time reduction in golf club grips cost of
sales during the second  quarter of fiscal 1998 (see note 5 to the  consolidated
financial statements). Gross profit on sales of golf club grips during the first
quarter of fiscal 1999 was $0.5  million  compared  to $0 during the  comparable
period of 1998 which was prior to the effective date of the FMP-RG Merger.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses  for the year ended May 31, 1999 were $6.5  million,  a
decrease of 3% from selling, general and administrative expenses of $6.7 million
during fiscal 1998. This net reduction of $0.2 million was achieved  despite the
inclusion of selling,  general and administrative  expenses of $0.2 million from
RG operations and goodwill  amortization of $0.1 million during the first fiscal
quarter of 1999  compared to $0 during the  comparable  period of 1998 which was
prior to the  effective  date of the FMP-RG  Merger.  The  Company  began a cost
cutting program  following the FMP-RG Merger which has resulted in reductions of
corporate overhead costs.

NONRECURRING  MERGER RELATED  EXPENSES.  In conjunction  with the FMP-RG Merger,
expenses  of $0.8  million  were  incurred  during the year ended May 31,  1998.
Significant components of this expense are costs related to terminate a computer
software conversion, relocation of certain employees, and severance pay.

GAIN ON TERMINATION OF MANUFACTURING SUPPLY CONTRACT.  As discussed in note 5 to
the consolidated financial statements, RG and Acushnet executed a mutual release
agreement  terminating the  manufacturing and supply agreement and capital lease
agreement in May 1999. RG recognized  an aggregate  gain of $0.9 million  during
fiscal 1999 as a result of this  Termination  Agreement.  See  Reliance on Third
Party Suppliers under Business Environment and Future Results below.

INTEREST  EXPENSE.  Interest  expense  for the year ended May 31,  1999 was $0.8
million  compared to $0.6  million  for fiscal  1998.  The  increase in interest
expense is primarily  attributable to higher average  outstanding  debt balances
subsequent  to the funding of new  borrowing  facilities  in October  1998 and a
$75,000 loan  prepayment  fee incurred to extinguish  the previous loan facility
(see note 7 to the consolidated financial statements).

TERMINATED MERGER EXPENSES. As discussed in note 6 to the consolidated financial
statements,  the Company incurred  professional  fees of $1.0 million during the
year ended May 31, 1999 related to a  terminated  merger  agreement  with Coyote
Sports, Inc. (the "RP-Coyote  Merger").  These expenses represent costs incurred
for due diligence,  negotiation of agreements, and preparation of a registration
statement for the contemplated merger.

OTHER  INCOME.  Other  income  for the year  ended  May 31,  1999 was  $243,000,
compared to $168,000 during fiscal 1998.  These amounts include  interest income
of $154,000  and  $168,000  from the RG equipment  capital  lease with  Acushnet
during  fiscal 1999 and 1998,  respectively.  The  equipment  capital lease with
Acushnet was  terminated in May 1999 and,  therefore,  RG will not recognize any
related interest income in future periods.  Additional income during fiscal 1999
primarily  represents FMP royalty fees from new contracts  which license certain
technology and products.

PROVISION FOR INCOME TAXES. Provisions of $0.8 million and $28,000 were recorded
for taxes on income from  continuing  operations  during the years ended May 31,
1999  and  1998,   respectively.   During  fiscal  1999,  the  Company  utilized
approximately  $0.9  million of NOL's  established  prior to the  FMP-RG  Merger
("Pre-Merger  NOL's") and also  determined  that  approximately  $1.0 million of
Pre-Merger  NOL's were  realizable.  As such, the Company  reduced the valuation
allowance on its deferred income tax assets by an aggregate of $0.7 million (see
notes 2 and 10 to the consolidated financial statements). The effective tax rate
for the year is a result of the effect of  nondeductible  goodwill  amortization
and an increase in the valuation  allowance due to the inability to carryback RG
losses to periods prior to the FMP-RG Merger.

                                      -14-
<PAGE>
DISCONTINUED  OPERATIONS.  As discussed in note 3 to the consolidated  financial
statements, the Company disposed of the operating assets of Roxxi in March 1999.
A loss of $0.8 million was  recorded on this sale,  net of a tax benefit of $0.4
million,  reflecting a  write-down  of the excess book value of assets sold over
the cash  received.  Losses from the operations of Roxxi for the years ended May
31, 1999 and 1998 were $0.4 million and $0.5 million, respectively.  Fiscal 1999
Roxxi operating  losses are net of an income tax benefit of $0.2 million whereas
no income tax benefit was provided for the fiscal 1998  operating  losses due to
the inability to utilize NOL's.

LIQUIDITY AND CAPITAL RESOURCES. At May 31, 1999, RP had working capital of $5.8
million and a current  ratio of 2.2 to 1 as compared to working  capital of $0.4
million  and a  current  ratio of 1.05 to 1 at May 31,  1998.  The  increase  in
working  capital is a result of the cash  received in May 1999 from the Acushnet
contract  termination and  presentation of FMP's  line-of-credit  as a long term
liability at May 31, 1999 due to the October 1998 refinancing described below.

In October 1998, RG amended and restated its existing credit facility consisting
of a term loan and a revolving  line-of-credit.  The  amendment  resulted in the
funding  of a new  term  loan of  $840,000  which  is due in  monthly  principal
installments  of $28,000  through and until October 1, 1999 and $10,500  monthly
thereafter,  until its  maturity in September  2001.  The amount  available  for
borrowings  under  the  revolving  line-of-credit  is based  upon the  levels of
eligible RG accounts receivable and inventories,  as defined, subject to maximum
borrowing of $1.5 million.  As of May 31, 1999,  RG had no advances  outstanding
under  its  revolving  line-of-credit  and  $309,000  available  for  additional
borrowings. The line-of-credit expires in September 2001.

In October  1998,  FMP  entered  into a new  credit  facility  with RG's  lender
consisting  of a term  loan  and a  revolving  line-of-credit  and  paid off all
existing loans to FMP's previous lender. In connection with the repayment of the
amounts  outstanding  under the old FMP credit facility,  FMP incurred a $75,000
prepayment  penalty  which is reflected  as a component  of interest  expense in
fiscal  1999.  The  term  loan  of  $4.3  million  is due in  monthly  principal
installments  of $99,000  through and until October 1, 1999 and $65,000  monthly
thereafter,  until  the  maturity  of the loan in  September  2001.  The  amount
available for borrowings  under the revolving  line-of-credit  is based upon the
levels of eligible FMP accounts receivable and inventories,  as defined, subject
to maximum  borrowing of $4.0 million.  As of May 31, 1999,  FMP had  $3,103,000
outstanding  under its  revolving  line-of-credit  and  $732,000  available  for
additional borrowings. The line-of-credit expires in September 2001.

Effective  January  1,  1999,  borrowings  under the term  loans  and  revolving
lines-of-credit  of both  credit  facilities  bear  interest at a rate per annum
equal  to the  prime  rate  (7.75%  at May  31,  1999)  plus  1.75%  and  1.25%,
respectively, and are secured by substantially all of the Company's assets.

The FMP and RG credit  facilities  contain  financial and other covenants which,
among other things,  limit annual capital expenditures and dividends and require
the maintenance of minimum monthly and quarterly earnings or maximum monthly and
quarterly  losses,  and minimum  quarterly  debt  service  coverage  ratios,  as
defined. Primarily as a result of RP-Coyote merger costs and a provision for the
loss on the sale of Roxxi,  the Company  violated  certain  covenants during the
quarter  ended  February 28, 1999.  The lender has waived the violation of these
covenants.  In  connection  with  granting the  waivers,  the  Company's  lender
increased the Company's borrowing rate by 1% per annum effective January 1, 1999
and modified its  covenants  for the remainder of the fiscal year ending May 31,
1999. The Company was in compliance with its loan covenants,  as amended, at May
31, 1999.

The Company  believes  that its  existing  capital  resources  and credit  lines
available are  sufficient to fund its  operations  and capital  requirements  as
presently planned over the next twelve months.

During the year ended May 31, 1999,  net cash  provided by operating  activities
was $0.3  million  which  primarily  resulted  from net income  from  continuing
operations  of $0.3 million  including  depreciation  and  amortization  of $0.9
million and terminated merger expenses of $1.0 million.  Cash used for operating
activities included a cash loss from discontinued operations of $0.3 million and
increases  in  inventories  and  accounts  receivable  of $1.0  million and $0.6
million, respectively.

                                      -15-
<PAGE>
Net cash  provided by investing  activities  for the year ended May 31, 1999 was
$0.1 million.  Payments  received  during the year include $1.5 million from the
termination  of the Acushnet  contract,  $0.2 million from the Acushnet  capital
lease and $0.3  million  from the sale of the  operating  assets  of Roxxi.  The
Company used $0.9 million to purchase property, plant and equipment and incurred
$1.0 million of terminated merger expenses during the year.

The Company  estimates that capital  expenditures  for the fiscal year ended May
31, 2000 will be approximately  $1.4 million including  $650,000 to complete the
upgrade of FMP's  wastewater  treatment  facilities (see note 16 to consolidated
financial  statements).  The Company  incurred and expended  $250,000 during the
fiscal year ended May 31, 1999 related to the wastewater treatment facility.  To
finance a portion of the  estimated  $900,000  total cost of this  project,  the
Company has  received a funding  commitment  of $750,000  which can be disbursed
upon the completion of the facility and approval by the  Connecticut  Department
of Environmental Protection.

Net cash used in financing  activities for the year ended May 31, 1999, was $0.3
million  resulting  from  repayments  of long term debt of $5.1  million and net
repayments  under lines of credit of $0.4 million,  partially offset by proceeds
from issuance of long term debt totaling $5.1 million.

YEAR 2000  ASSESSMENT.  The  following  Year 2000  discussion  contains  various
forward-looking  statements that represent the Company's beliefs or expectations
regarding  future  events.  When  used in the Year  2000  discussion,  the words
"believe," "expects,"  "estimates" and other similar expressions are intended to
identify forward-looking statements. Forward-looking statements include, without
limitation,  the  Company's  expectations  as to  when  it and  its  significant
distributors,  customers and  suppliers  will  complete the  implementation  and
compliance  phases of the Year 2000 Plan,  as well as its Year 2000  contingency
plans; and the Company's belief that its internal systems and equipment are Year
2000 compliant.  All  forward-looking  statements  involve a number of risks and
uncertainties  that could cause the actual results to differ materially from the
projected results. Factors that may cause these differences include, but are not
limited  to, the  availability  of  qualified  personnel  and other  information
technology  resources;  the ability to identify  and rectify all date  sensitive
lines of code or to replace  embedded  chips in affected  systems or  equipment;
unanticipated delays or expenses related to correction of the problems;  and the
actions of independent  third-parties  with respect to Year 2000  problems.  The
statements in the following  section  include "Year 2000  Readiness  Disclosure"
within the meaning of the Year 2000 Information and Readiness  Disclosure Act of
1998.

The Year 2000  problem  refers to the  inability  of  software  to process  date
information  later than December 31, 1999. Date codes in many software  programs
are  abbreviated  to  allow  only  two  digits  for  the  year.   Software  with
date-sensitive  functions  that is not Year  2000  compliant  may not be able to
distinguish  whether "00" means 1900 or 2000.  When that happens,  some software
will not work at all and other  software will suffer  critical  calculation  and
other  processing  errors.  Hardware and other  products with embedded chips may
also experience problems.

The Company believes that its critical  internal systems  including  versions of
Macola, ADP, Oracle, Microsoft Exchange,  Microsoft Office 97, Microsoft Windows
NT,  Microsoft  Windows  9x, and  Microsoft  SQL Server  products  are Year 2000
compliant. In addition, the Company tracks the version and updates available for
these products to ensure Year 2000 compliance.

The Company has completed a comprehensive evaluation of its internal systems and
equipment  that  addresses  both  information  technology  systems  ("IT,"  i.e.
business systems and the software  development  environment) and non-IT systems,
(i.e.  elevators,  building  security  and  HVAC  systems)  including  hardware,
software and  firmware.  In addition,  the Company has  completed the upgrade of
certain  critical  systems to meet Year 2000  requirements.  During the previous
two-year period, the Company has expended approximately $100,000 to purchase and
install new computer hardware and software resulting in all Company hardware and
software being Year 2000 compliant.  Expenses  associated with evaluation of the
Company's  internal  systems  for Year 2000  problems  have  been  approximately
$20,000.  The Company  believes that any future internal Year 2000 costs will be
immaterial.

                                      -16-
<PAGE>
Due to the  Company's  extensive  internal  Year 2000  analysis  and  subsequent
completion of the Year 2000 project, the Company has determined that an internal
contingency  plan is  unnecessary.  The  Company  has  completed a review of its
significant  suppliers  to  determine  that the  suppliers'  operations  and the
products and  services  they provide are Year 2000  compliant.  All  significant
suppliers and utilities  have indicated that their products and company are Year
2000 compliant.  The primary  supplier of the Company's golf club grips recently
completed a conversion of its  accounting  system and has  indicated  that their
operations, products and services they provide are now Year 2000 compliant.

The Company has no practical means to verify the  information  provided by these
independent third parties and is still pursuing those secondary distributors and
vendors who may not yet have  responded.  Based upon this  assessment  and where
practicable,  the Company will attempt to mitigate its risks with respect to any
suppliers  that may not meet the  requirements,  including  seeking  alternative
suppliers.  However,  there  can be no  assurance  that  the  Company  will  not
experience  disruptions in its ability to conduct  business because of Year 2000
problems  experienced by the Company's  distributors  or vendors,  such problems
remain a possibility  and could have an adverse impact on the Company's  results
of operations and financial  condition.  To the extent that its key distributors
or vendors experience  problems relative to achieving Year 2000 compliance,  the
Company could suffer unanticipated revenue losses.

Some  independent  sales   representatives   that  the  Company  uses  may  have
applications that are not Year 2000 compliant. The Company does not believe this
is a material  concern  since  product  orders are either  manually  written and
submitted via fax, or are submitted on a Company  supplied  automated order form
that is Year 2000 compliant.

Some  commentators  have predicted  significant  litigation  regarding Year 2000
compliance issues. Because of the unprecedented nature of such litigation, it is
uncertain whether,  or to what extent, the Company may be affected.  However, at
this time the Company  believes that it is not likely to have a material adverse
effect on the Company or its operations.

BUSINESS ENVIRONMENT AND FUTURE RESULTS.

RELIANCE ON THIRD PARTY  SUPPLIERS.  RG currently  purchases the majority of its
supply  of  non-cord  grips  from  Acushnet  under a  manufacturing  and  supply
agreement and a capital lease  agreement.  At the inception of these  agreements
beginning in December 1996, Acushnet  experienced delays and quality problems in
the production of grips,  which adversely  affected RG's customer  relationships
and results of operations.

In May 1999, RG and Acushnet executed a mutual release agreement terminating the
manufacturing  and  supply  agreement  and  the  capital  lease  agreement  (the
"Termination  Agreement").  As a result in May 1999, RG received $1.5 million in
cash and $1.0 million in purchase  credits from  Acushnet to be applied  against
current and future amounts owed to Acushnet for the  production of grips.  As of
May 31,  1999,  $283,000  of the  purchase  credits  had been  utilized  and the
remaining  $717,000  is  included in other  current  assets in the  accompanying
consolidated balance sheet.

In connection with the Termination Agreement,  RG will receive the manufacturing
equipment  which was  leased  to  Acushnet  and  Acushnet's  obligation  to make
additional  payments  to  RG  under  the  capital  lease  was  terminated.   The
outstanding   balance  of  RG's  capital  lease  receivable  from  Acushnet  was
approximately  $2.6 million at the contract  termination  date.  Pursuant to the
Termination Agreement, Acushnet is obligated to continue producing grips through
January  2000  and  to  pay up to  $100,000  for  shipping  and  installing  the
manufacturing  equipment  at a new  location.  The  Company  estimates  that the
manufacturing  equipment  which will be  returned  to them has a net  realizable
value of  approximately  $1.0 million.  Accordingly,  RG recognized an aggregate
gain of  $865,000  during the fiscal  year ended May 31, 1999 as a result of the
Termination Agreement.

The  Company  believes  that it can  obtain a  sufficient  supply of grips  from
Acushnet and other existing vendors to satisfy customer demand during the fiscal
year ended May 31, 2000.  Included in finished goods inventories at May 31, 1999

                                      -17-
<PAGE>
are  grips of  approximately  $603,000  located  at  Acushnet.  The  Company  is
currently  in  discussions  with certain  grip  manufacturers  which the Company
believes can maintain  RG's  standard of product  quality and will  facilitate a
smooth transition.  However, there can be no assurances that the Company will be
able to  secure a source  for  grips on as  favorable  terms or with the same or
better quality as Acushnet,  or at all. In addition,  there can be no assurances
that a transition to a new supplier will not result in production delays, or the
loss of sales and key customers  which would  materially  affect RG's  financial
condition and results of operations.

DISCONTINUED  OPERATIONS.  During March 1999, the operating assets of Roxxi were
disposed  of through  two  separate  transactions.  Roxxi  sold its trade  name,
customer list,  design database and related computer software and hardware for a
royalty  of 16% of the  buyer's  net sales of  Roxxi-licensed  products  for the
two-year   period   beginning  May  1,  1999.   Roxxi  also  sold  its  headwear
manufacturing equipment, headwear inventory and raw materials to another company
for  $300,000  and a royalty of 2% of the  buyer's net sales until the buyer has
paid an  additional  $200,000.  Subsequently,  Roxxi's name was changed to Royal
Grip Headwear Company.

The Company recorded a loss on disposal of assets of Roxxi of $828,000, net of a
tax benefit of $386,000.  This expense represents a $1,059,000 write-down of the
excess  of the  carrying  value of  inventory  and  fixed  assets  over the cash
received and $155,000 for estimated  transaction  costs and estimated  operating
expenses to be incurred  during the phase-out  period of this business  segment.
The Company will account for royalty fees as income is earned in future periods.

If the buyers generate net headwear sales of $3.0 million per year, as Roxxi did
during the twelve months ended  February 28, 1999, the Company would be entitled
to receive royalty revenue of approximately $0.5 million in each of the next two
fiscal years under these contracts.  However, there can be no assurance that the
two buyers will be able to achieve  these sales  amounts or any sales amounts in
the future.  Royalties  to be received  by the  Company  are  contingent  on the
business operations of the two buyers over which the Company has no influence or
control.

                                      -18-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS.

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders of

     Royal Precision, Inc.:

We have audited the accompanying  consolidated balance sheet of Royal Precision,
Inc.  (a  Delaware  corporation)  and  subsidiaries  as of May 31,  1999 and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for the years ended May 31, 1999 and 1998. These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Royal Precision,
Inc. and  subsidiaries  as of May 31, 1999, and the results of their  operations
and their cash  flows for the years  ended May 31,  1999 and 1998 in  conformity
with generally accepted accounting principles.


Hartford, Connecticut
August 16, 1999

                                      -19-
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                               AS OF MAY 31, 1999

                             (dollars in thousands)


                                     ASSETS

CURRENT ASSETS:
  Cash                                                                 $    184
  Accounts receivable, net of allowance
    for doubtful accounts of $433                                         4,617
  Inventories                                                             4,514
  Other current assets                                                      783
  Deferred income taxes                                                     647
                                                                       --------
        Total current assets                                             10,745
                                                                       --------
PROPERTY, PLANT AND EQUIPMENT:
  Land                                                                      123
  Furniture, fixtures and office equipment                                  499
  Buildings and improvements                                                670
  Machinery and equipment                                                 4,144
  Construction in progress                                                  402
                                                                       --------
                                                                          5,838
  Less - Accumulated depreciation                                          (929)
                                                                       --------
                                                                          4,909
                                                                       --------
GOODWILL, net                                                             8,857
                                                                       --------
DEFERRED INCOME TAXES                                                        70
                                                                       --------
OTHER ASSETS                                                                 29
                                                                       --------
        Total assets                                                   $ 24,610
                                                                       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt and capital
    lease obligations                                                  $  1,203
  Accounts payable                                                        1,839
  Accrued salaries and benefits                                             595
  Accrued pension liability                                                 251
  Other accrued expenses                                                  1,079
                                                                       --------
        Total current liabilities                                         4,967

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
  less current portion included above                                     6,191
                                                                       --------
        Total liabilities                                                11,158
                                                                       --------
COMMITMENTS AND CONTINGENCIES (Notes 5, 7, 8 and 16)

STOCKHOLDERS' EQUITY:
  Preferred stock, $.001 par value; 5,000,000
    shares authorized; no shares issued                                      --
  Common stock, $.001 par value; 50,000,000
    shares authorized; 5,667,375 shares issued
    and outstanding                                                           6
  Additional paid-in capital                                             13,897
  Accumulated deficit                                                      (404)
  Accumulated other comprehensive loss                                      (47)
                                                                       --------
        Total stockholders' equity                                       13,452
                                                                       --------
        Total liabilities and stockholders'
          equity                                                       $ 24,610
                                                                       ========

                     The accompanying notes are an integral
                 part of this consolidated financial statement.

                                      -20-
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                    FOR THE YEARS ENDED MAY 31, 1999 AND 1998

                      (in thousands, except per share data)


                                                           1999          1998
                                                         --------      --------
NET SALES:
  Golf club shafts                                       $ 19,075      $ 21,023
  Golf club grips                                           4,144         3,699
                                                         --------      --------
                                                           23,219        24,722
                                                         --------      --------
COST OF SALES:
  Golf club shafts                                         12,710        14,683
  Golf club grips                                           2,318         1,805
                                                         --------      --------
                                                           15,028        16,488
                                                         --------      --------
        Gross profit                                        8,191         8,234

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                6,450         6,659

NONRECURRING MERGER RELATED EXPENSES                           --           842

GAIN ON TERMINATION OF MANUFACTURING
  SUPPLY CONTRACT                                            (865)           --
                                                         --------      --------
        Operating income                                    2,606           733

INTEREST EXPENSE                                              794           605

TERMINATED MERGER EXPENSES                                    975            --

OTHER INCOME                                                 (243)         (168)
                                                         --------      --------
        Income from continuing operations
          before provision for income taxes                 1,080           296

PROVISION FOR INCOME TAXES                                    804            28
                                                         --------      --------
        Income from continuing operations                     276           268
                                                         --------      --------
DISCONTINUED OPERATIONS:
  Loss from operations of Roxxi, Inc., net of
    tax benefit of $164 and $0, respectively                  352           531
  Loss on disposal of assets of Roxxi, Inc.,
    net of tax benefit of $386                                828            --
                                                         --------      --------
        Loss from discontinued operations                   1,180           531
                                                         --------      --------
        Net loss                                         $   (904)     $   (263)
                                                         ========      ========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
  Income from continuing operations                      $   0.05      $   0.05
                                                         --------      --------
  Loss from operations of Roxxi, Inc.                       (0.06)        (0.10)
  Loss on disposal of assets of Roxxi, Inc.                 (0.15)           --
                                                         --------      --------
  Loss from discontinued operations                         (0.21)        (0.10)
                                                         --------      --------
  Net loss                                               $  (0.16)     $  (0.05)
                                                         ========      ========

                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                      -21-
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                    FOR THE YEARS ENDED MAY 31, 1999 AND 1998

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                          Retained     Accumulated
                                           Common Stock      Additional   Earnings       Other
                                        -------------------   Paid-In   (Accumulated  Comprehensive           Comprehensive
                                         Shares     Amount    Capital      Deficit)       Loss       Total        Loss
                                        --------   --------   --------    --------      --------    --------    --------
<S>                                     <C>        <C>        <C>         <C>           <C>         <C>         <C>
Balance, June 1, 1997                      4,175   $      4   $  1,421    $    763      $     --    $  2,188

Issuance of common stock and stock
  options in connection with merger,
  net (Note 1)                             1,371          2     12,385          --            --      12,387

Exercise of common stock options and
  warrants                                    56         --         15          --            --          15

Net loss                                      --         --         --        (263)           --        (263)   $   (263)
                                                                                                                --------
Comprehensive loss                            --         --         --          --            --          --    $   (263)
                                        --------   --------   --------    --------      --------    --------    ========
Balance, May 31, 1998                      5,602          6     13,821         500            --      14,327

Exercise of common stock options              65         --         16          --            --          16

Tax benefit from exercise of common
  stock options                               --         --         45          --            --          45

Compensation expense related to grant
  of stock options                            --         --         15          --            --          15

Minimum pension liability adjustment,
  net of tax benefit of $31                   --         --         --          --           (47)        (47)   $    (47)

Net loss                                      --         --         --        (904)           --        (904)       (904)
                                                                                                                --------
Comprehensive loss                            --         --         --          --            --          --    $   (951)
                                        --------   --------   --------    --------      --------    --------    ========
Balance, May 31, 1999                      5,667   $      6   $ 13,897    $   (404)     $    (47)   $ 13,452
                                        ========   ========   ========    ========      ========    ========
</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                      -22-
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                    FOR THE YEARS ENDED MAY 31, 1999 AND 1998

                                 (in thousands)


                                                              1999       1998
                                                            --------   --------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Income from continuing operations                         $    276   $    268
  Adjustments to reconcile income from continuing
    operations to net cash provided by operating
    activities:
      Cash loss from discontinued operations                    (299)      (290)
      Gain on termination of manufacturing supply contract      (865)        --
      Depreciation and amortization                              939        749
      Terminated merger expenses                                 975         --
      Loss on writeoff of fixed assets                            --        360
      Deferred income taxes                                      779          7
      Changes in operating assets and liabilities -
        Accounts receivable, net                                (575)       509
        Inventories                                             (970)      (130)
        Other assets                                             (19)        57
        Accounts payable and accrued expenses                    102       (650)
        Supply agreement credits                                  --       (472)
                                                            --------   --------
          Net cash provided by operating activities              343        408
                                                            --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Payments from net investment in capital lease                  198        148
  Payments from termination of manufacturing
    supply contract                                            1,500         --
  Proceeds from sale of assets of discontinued operations        300         --
  Proceeds from sale of fixed assets                              --         49
  Cash acquired from Royal Grip, Inc.                             --         18
  Purchases of equipment, net                                   (940)    (1,038)
  Merger expenses                                               (975)    (1,031)
                                                            --------   --------
          Net cash provided by (used in)
            investing activities                                  83     (1,854)
                                                            --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from exercise of common stock
    options and warrants                                          16         15
  Proceeds from issuance of long-term debt                     5,140      1,600
 (Repayments) borrowings under lines-of-credit, net             (359)     1,438
  Repayments of long-term debt and
    capital lease obligations                                 (5,067)    (1,607)
                                                            --------   --------
          Net cash (used in) provided by
            financing activities                                (270)     1,446
                                                            --------   --------
INCREASE IN CASH                                                 156         --

CASH, beginning of year                                           28         28
                                                            --------   --------
CASH, end of year                                           $    184   $     28
                                                            ========   ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest                                                $    870   $    687
                                                            ========   ========
    Income taxes                                            $     40   $     61
                                                            ========   ========
  Non-cash transactions:
    Loss on disposal of assets of discontinued operations   $    828   $     --
                                                            ========   ========
    Reduction in goodwill due to utilization of
      pre-merger net operating loss carryforwards
      and reversal of valuation allowance on
      pre-merger deferred income tax assets                 $    650   $     --
                                                            ========   ========
    Issuance of common stock options and warrants
      in connection with FMP-RG Merger                      $     --   $ 12,995
                                                            ========   ========

                     The accompanying notes are an integral
                part of these consolidated financial statements.

                                      -23-
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   ORGANIZATION AND BUSINESS:

     ORGANIZATION -

     The accompanying consolidated financial statements include Royal Precision,
     Inc.  (formerly  FM  Precision  Golf  Corp.)  and  its  three  wholly-owned
     subsidiaries  (collectively,  "RP" or the  "Company"),  FM  Precision  Golf
     Manufacturing  Corp.  ("FMP"),  FM Precision Golf Sales Corp. ("FMP Sales")
     and Royal Grip, Inc. ("RG") which has a wholly-owned subsidiary, Royal Grip
     Headwear  Company.  As  discussed  in Note 3, the  Company  disposed of the
     operating assets of Royal Grip Headwear  Company  (formerly known as Roxxi,
     Inc., "Roxxi") in March 1999.

     Results of operations for RG are included in RP's  consolidated  statements
     of operations  since August 29, 1997,  the  effective  date of the business
     combination  described below. Results of operations for Roxxi are reflected
     as discontinued operations for all periods presented.

     BUSINESS -

     RP is a holding  company which carries on its business  operations  through
     its subsidiaries. FMP is a manufacturer and distributor of golf club shafts
     which are sold to original equipment  manufacturers and to distributors and
     retailers for use in the  replacement  market.  RG designs and  distributes
     golf club grips.  RP's  products are sold  throughout  the United States as
     well as internationally,  primarily in Japan, Australia, the United Kingdom
     and Canada (See Note 12).

     ACQUISITION -

     On May 14, 1997,  RP entered into an Agreement  and Plan of Merger with RG.
     Under the terms of the Merger agreement, effective August 29, 1997, FMPSUB,
     Inc. (a wholly-owned subsidiary of RP created for such purpose) merged with
     and into RG (the "FMP-RG  Merger").  RG was the surviving  corporation  and
     became a wholly-owned subsidiary of RP.

     In the  FMP-RG  Merger,  each  outstanding  share of RG  common  stock  was
     converted into one-half share of RP common stock. As a result of the FMP-RG
     Merger,  the pre-merger  stockholders  and option and warrant holders of RG
     owned or had the right to acquire an  aggregate of 30% of RP's common stock
     on a fully diluted basis.

     The aggregate  purchase price of $13,883,122  represents the sum of (i) the
     fair value of the  1,371,058  shares of RP common  stock issued in exchange
     for 2,742,116 of the shares of RG common stock outstanding as of the merger
     date at $3.925 per share (the average  closing bid price of RG common stock
     (pre-conversion)  for the period  from two days  before  until the two days
     after the  announcement of the merger terms) of  $10,763,000,  (ii) cash of
     $122 paid to RG  stockholders  in lieu of 31 fractional  shares,  (iii) the
     fair value of the options and  warrants  to purchase  982,250  shares of RG
     common stock  outstanding  as of the merger date (which were converted into
     options  and  warrants  to purchase  491,125  shares of RP common  stock in
     connection  with the merger) of  $2,232,000,  which  amount was  determined
     using the Black Scholes  Valuation  Model,  and (iv) RP Merger  expenses of

                                      -24-
<PAGE>
     $888,000  (RG's merger costs of  approximately  $637,000  were expensed and
     RG's registration statement costs of approximately $143,000 were charged to
     stockholders'  equity  by RG prior to the  acquisition).  RP also  incurred
     expenses of $608,000 associated with the registration  statement which were
     charged to stockholders' equity.

     The FMP-RG Merger was  accounted  for as a purchase and the purchase  price
     was  allocated  based  on  the  fair  value  of  the  assets  acquired  and
     liabilities assumed as follows (in thousands):

          Cash                                                          $    18
          Accounts receivable                                             1,293
          Inventories                                                       710
          Net investment in capital lease                                 2,981
          Prepaid expenses and other current assets                          68
          Property and equipment                                          1,670
          Goodwill                                                       10,418
          Accounts payable and accrued expenses                          (1,501)
          Supply agreement credits                                         (472)
          Debt and capital lease obligations                             (1,166)
          Other, net                                                       (136)
                                                                        -------
                                                                        $13,883
                                                                        =======

     In connection with the FMP-RG Merger, RG issued warrants to purchase 50,000
     shares  of RG common  stock to an  investment  banker.  Such  warrants  are
     included  in the  982,250 RG options  and  warrants  outstanding  as of the
     Merger date referred to above.  The warrants were exercisable at a price of
     $.02 per share. Such warrants were exercised in September 1997 for $1,000.

     RP  recorded a charge of  $842,000  during the year ended May 31,  1998 for
     nonrecurring  merger related  expenses  related to the FMP-RG  Merger.  The
     components  of this  expense are  $348,000  related to a computer  software
     installation that was abandoned as a result of the FMP-RG Merger,  $100,000
     related to certain  headwear  related  contracts,  $150,000  of  relocation
     expenses and $244,000 of severance as a result of organizational changes in
     connection with the FMP-RG Merger.

     The unaudited pro forma consolidated statement of continuing operations for
     the  year  ended  May  31,  1998 as  though  the  FMP-RG  Merger  had  been
     consummated  at the  beginning  of the period is as follows (in  thousands,
     except per share data):

     Net sales                                                          $26,707
     Income from continuing operations                                  $   898
     Basic and diluted income per share                                 $  0.16
     Weighted average shares outstanding                                  5,589

     The pro  forma  amounts  above  reflect  annual  goodwill  amortization  of
     $521,000,  the  elimination  of  nonrecurring  merger  related  expenses of
     $842,000   (included  in  the   accompanying   consolidated   statement  of
     operations)  and  $637,000  (which  amount was  expensed by RG prior to the
     FMP-RG  Merger) and the  issuance of  1,371,058  shares of common  stock in
     connection with the FMP-RG Merger.

                                      -25-
<PAGE>
     DEPENDENCE ON "RIFLE" SHAFT SALES -

     Sales of the  "Rifle"  shaft  which has a higher  margin  than other  shaft
     products  were $13.1  million and $9.8  million for the years ended May 31,
     1999 and 1998, respectively.  While management believes that demand for the
     "Rifle" shaft should remain high for the next several  years,  there can be
     no assurance  that sales of the "Rifle" shaft will continue to grow or that
     the product will retain its profitability. If sales or profitability of the
     "Rifle"  shaft  decrease  without  RP's   introduction  of  new  profitable
     products,  RP's overall financial performance would be materially adversely
     affected.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     PRINCIPLES OF CONSOLIDATION -

     All significant intercompany balances and transactions have been eliminated
     in consolidation.

     USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  such as the estimate for  impairment  of  long-lived
     assets  and the  reported  amounts  of  revenues  and  expenses  during the
     reporting period. Actual results could differ from those estimates.

     INVENTORIES -

     Inventories  are valued at the lower of cost or market.  Cost is determined
     on the first-in, first-out method.

     PROPERTY, PLANT AND EQUIPMENT -

     Property, plant and equipment are carried at acquired cost. Major additions
     and  betterments  are  capitalized,  while  replacements,  maintenance  and
     repairs  which do not extend the useful  lives of the assets are charged to
     operations  as  incurred.  Upon the  disposition  of  property,  plant  and
     equipment, any resulting gain or loss is recognized in income.

     Depreciation  of plant and equipment is provided for,  commencing when such
     assets become operational, using the straight-line basis over the following
     estimated useful lives:

                                                                    Useful Lives
                                                                    ------------
          Buildings and improvements                                 27.5 years
          Machinery and equipment                                    3-12 years
          Furniture, fixtures and office equipment                   3-10 years

     GOODWILL -

     Goodwill of  $10,418,000,  which  resulted from the FMP-RG merger (see Note
     1),  is  being  amortized  over  20  years.  At May 31,  1999,  accumulated
     amortization  of goodwill was  $911,000.  As of May 31,  1999,  the Company
     reduced the carrying  value of goodwill by $320,000 due to the  utilization
     of pre-merger NOL  carryforwards  to offset fiscal 1999 taxable income.  In
     addition,  the Company reduced its goodwill by an additional $330,000 as of
     May 31, 1999 due to the reversal of a portion of the valuation allowance on
     RG pre-merger deferred tax assets (see Note 10).

                                      -26-
<PAGE>
     RP evaluates the goodwill  asset for  impairment by reviewing the estimated
     future cash flows of the acquired  operations on a quarterly  basis.  As of
     May 31, 1999, the Company believes no impairment exists.

     LONG-LIVED ASSETS -

     The Company reviews long-lived assets and certain  identifiable  intangible
     assets to be held and used or disposed of for impairment whenever events or
     changes in circumstances  indicate that the carrying amount of an asset may
     not be recoverable.  Impairment losses are recognized when the undiscounted
     future cash flows,  excluding interest costs,  exceed the carrying value of
     the related assets.

     INCOME TAXES -

     The Company  accounts  for income  taxes in  accordance  with  Statement of
     Financial  Accounting  Standards  ("SFAS") No. 109,  "Accounting for Income
     Taxes."  This  statement  requires  the Company to  recognize  deferred tax
     assets and liabilities  for the expected future tax  consequences of events
     that have been  recognized  in the  Company's  financial  statements or tax
     returns.  Under  this  method,  deferred  tax assets  and  liabilities  are
     determined based on the difference between the financial statement carrying
     amounts and tax bases of assets and  liabilities and tax net operating loss
     carryforwards  available for tax reporting  purposes,  using applicable tax
     rates for the years in which the  differences  are  expected to reverse.  A
     valuation  allowance is recorded on deferred tax assets unless  realization
     is more likely than not.

     STOCK-BASED COMPENSATION -

     The Company  accounts for  stock-based  compensation  for  employees  under
     Accounting   Principles   Board   Opinion   No.  25  and  has  elected  the
     disclosure-only alternative under SFAS No. 123, "Accounting for Stock Based
     Compensation".

     REVENUE RECOGNITION -

     Revenue  is  recorded  upon the  passage  of title to the  customers  which
     generally occurs upon shipment.

     RESEARCH AND DEVELOPMENT -

     RP expenses  costs of research and  development  as incurred.  Research and
     development  expense was approximately  $186,000 and $157,000 for the years
     ended May 31, 1999 and 1998, respectively.

     ADVERTISING -

     RP expenses advertising costs as incurred.

     NET EARNINGS (LOSS) PER SHARE -

     The Company  accounts for earnings (loss) per share in accordance with SFAS
     No. 128, "Earnings Per Share," and Staff Accounting  Bulletin No. 98. Basic
     earnings  (loss) per share are based on the average number of common shares
     outstanding during the year. Diluted earnings (loss) per share assumes,  in
     addition to the above, a dilutive effect of common share equivalents during

                                      -27-
<PAGE>
     the year. Common share equivalents  represent  dilutive stock options using
     the treasury  stock method.  The number of shares used in computing  income
     from  continuing  operations  per  share for  fiscal  1999 and 1998 were as
     follows (in thousands):

                                                                1999      1998
                                                               ------    ------
          Basic:
            Average common shares outstanding                   5,650     5,246

          Diluted:
            Dilutive effect of stock options                      139       162
                                                               ------    ------
            Average common shares outstanding                   5,789     5,408
                                                               ======    ======

     For the years ended May 31, 1999 and 1998,  options to purchase 147,000 and
     437,000  shares of common  stock  were  excluded  from the  computation  of
     diluted  earnings per share  because the exercise  prices of those  options
     were greater than the average market price of RP's common stock.  As of May
     31, 1999 and 1998, basic and diluted average common shares  outstanding for
     discontinued operations were 5,650,000 and 5,246,000, respectively.

     Basic and  diluted  earnings  (loss)  per share were the same for the years
     ended May 31, 1999 and 1998.

     COMPREHENSIVE INCOME -

     Under  SFAS No.  130,  "Reporting  Comprehensive  Income,"  the  Company is
     required to report  comprehensive  income (loss) and its  components in its
     consolidated  financial  statements  in  addition  to  net  income  (loss).
     Comprehensive loss is included in the accompanying  consolidated statements
     of stockholders' equity.

     RECLASSIFICATIONS -

     Certain  prior year  balances  have been  reclassified  to conform with the
     current year presentation.

     NEW ACCOUNTING PRONOUNCEMENT -

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities,"
     which requires that an entity recognize all derivatives as either assets or
     liabilities  in the  statement  of  financial  position  and measure  those
     instruments at fair value. In June 1999, the FASB issued SFAS No. 137 which
     deferred the  effective  date of SFAS No. 133. The Company will be required
     to adopt SFAS No. 133 during the year ended May 31, 2001.  The Company does
     not anticipate any material impact  resulting from the adoption of SFAS No.
     133.

3.   DISCONTINUED OPERATIONS:

     In March 1999,  the operating  assets of Roxxi were disposed of through two
     separate  transactions.  Roxxi sold its trade name,  customer list,  design
     database and related computer software and hardware for a royalty of 16% of
     the buyer's net sales of  Roxxi-licensed  products for the two-year  period
     beginning  May  1,  1999.  Roxxi  also  sold  its  headwear   manufacturing
     equipment,  headwear  inventory  and raw  materials to another  company for

                                      -28-
<PAGE>
     $300,000  and a royalty of 2% of the  buyer's net sales until the buyer has
     paid an  additional  $200,000.  Subsequently,  Roxxi's  name was changed to
     Royal Grip Headwear Company.

     The Company recorded a loss on disposal of assets of Roxxi of $828,000, net
     of  a  tax  benefit  of  $386,000.  The  expense  represents  a  $1,059,000
     write-down  of the  excess of the  carrying  value of  inventory  and fixed
     assets over the cash received and $155,000 for estimated  transaction costs
     and estimated operating expenses to be incurred during the phase-out period
     of this  business  segment.  The Company  will  account for royalty fees as
     income is earned in future periods.

     Selected  financial data for the discontinued  operations is as follows for
     the years ended May 31, 1999 and 1998 (in thousands):

                                                              1999        1998
                                                             ------      ------
          Net sales                                          $2,381      $2,899
                                                             ======      ======
          Loss from operations before income taxes           $ (516)     $ (531)
          Income tax benefit                                    164          --
                                                             ------      ------
          Loss from operations                               $ (352)     $ (531)
                                                             ======      ======
          Depreciation                                       $  217      $  241
                                                             ======      ======

     As of May 31, 1999, the remaining  assets and  liabilities of Roxxi include
     net  accounts  receivable  of  $162,000  and  accounts  payable and accrued
     expenses totaling $152,000, which are reflected as such in the accompanying
     consolidated balance sheet.

4.   INVENTORIES:

     Inventories as of May 31, 1999 consisted of the following (in thousands):

          Raw materials                                                  $  471
          Work-in-process                                                 1,566
          Finished goods                                                  2,477
                                                                         ------
                                                                         $4,514
                                                                         ======

5.   TERMINATION OF MANUFACTURING SUPPLY CONTRACT:

     In December 1996, RG and Acushnet Rubber Company  ("Acushnet") entered into
     a   manufacturing   and  supply   agreement   whereby  RG  outsourced   the
     manufacturing  of its golf club grips to  Acushnet.  Additionally,  the two
     parties entered into a capital lease agreement resulting in the transfer of
     RG's manufacturing equipment to Acushnet under a capital lease.

     During the first calendar  quarter of 1997,  Acushnet  experienced  startup
     delays in the  production of grips and was unable to satisfy its obligation
     under  the  contracts.  In  light of these  difficulties,  RG and  Acushnet
     renegotiated  their  manufacturing  and  supply  agreement,   and  Acushnet
     provided RG with purchase credits  totaling  $472,000 to be applied against
     current and future amounts owed to Acushnet for the production of grips. RP
     recorded $472,000 during the year ended May 31, 1998 as a reduction in golf
     club  grips  cost of sales  when  these  credits  were not  earned  back by
     Acushnet under certain provisions of the amended contract.

                                      -29-
<PAGE>
     In  May  1999,  RG  and  Acushnet   executed  a  mutual  release  agreement
     terminating the  manufacturing  and supply  agreement and the capital lease
     agreement  (the  "Termination  Agreement").  As a result  in May  1999,  RG
     received  $1.5  million in cash and $1.0  million in purchase  credits from
     Acushnet to be applied  against current and future amounts owed to Acushnet
     for the production of grips.  As of May 31, 1999,  $283,000 of the purchase
     credits had been utilized and the  remaining  $717,000 is included in other
     current assets in the accompanying consolidated balance sheet.

     In  connection  with  the  Termination  Agreement,   RG  will  receive  the
     manufacturing  equipment  which  was  leased  to  Acushnet  and  Acushnet's
     obligation  to make  additional  payments to RG under the capital lease was
     terminated.  The outstanding  balance of RG's capital lease receivable from
     Acushnet was approximately  $2.6 million at the contract  termination date.
     Pursuant to the  Termination  Agreement,  Acushnet is obligated to continue
     producing grips through January 2000 and to pay up to $100,000 for shipping
     and installing the manufacturing  equipment at a new location.  The Company
     estimates that the  manufacturing  equipment which will be returned to them
     has a net realizable value of approximately $1.0 million.  Accordingly,  RG
     recognized an aggregate  gain of $865,000  during the fiscal year ended May
     31, 1999 as a result of the Termination Agreement.

     RG currently  purchases  the majority of its supply of non-cord  grips from
     Acushnet  and has no  immediate  replacement  supply  source.  The  Company
     believes that it can obtain a sufficient  supply of grips from Acushnet and
     other existing  vendors to satisfy  customer  demand during the fiscal year
     ended May 31, 2000.  Included in finished goods inventories at May 31, 1999
     are grips of  approximately  $603,000  located at Acushnet.  The Company is
     currently in discussions with certain grip manufacturers  which the Company
     believes can maintain RG's standard of product  quality and will facilitate
     a smooth  transition.  There can be no assurances  that the Company will be
     able to secure a source for grips on as favorable terms or with the same or
     better quality as Acushnet. In addition,  there can be no assurances that a
     transition to a new supplier will not result in production delays, the loss
     of sales and key customers  which would  materially  affect RG's  financial
     condition and results of operations.

6.   TERMINATED MERGER AGREEMENT:

     In February 1999, the Company and Coyote Sports,  Inc.  ("Coyote")  entered
     into a merger  agreement  pursuant to which RP would become a  wholly-owned
     subsidiary of Coyote (the "RP-Coyote Merger").  In June 1999, the RP-Coyote
     Merger  agreement  was  terminated  at the  request of the Company due to a
     material  change in the  business of Coyote  resulting  in an  inability to
     obtain suitable long-term financing. The Company incurred professional fees
     of $975,000  related to the RP-Coyote  Merger which have been  reflected as
     terminated  merger expenses in the accompanying  consolidated  statement of
     operations for the year ended May 31, 1999.

7.   LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS:

     In October  1998,  RG amended and  restated its  existing  credit  facility
     consisting  of a term loan and a revolving  line-of-credit.  The  amendment
     resulted  in the  funding  of a new term loan of  $840,000  which is due in

                                      -30-
<PAGE>
     monthly principal installments of $28,000 through and until October 1, 1999
     and $10,500 monthly  thereafter,  until its maturity in September 2001. The
     amount available for borrowings under the revolving line-of-credit is based
     upon the levels of eligible  RG accounts  receivable  and  inventories,  as
     defined,  subject to maximum borrowing of $1.5 million. As of May 31, 1999,
     RG had no  advances  outstanding  under its  revolving  line-of-credit  and
     $309,000 available for additional borrowings. The line-of-credit expires in
     September 2001.

     In October  1998,  FMP entered into a new credit  facility with RG's lender
     consisting of a term loan and a revolving  line-of-credit  and paid off all
     existing loans to FMP's previous  lender.  In connection with the repayment
     of the amounts outstanding under the old FMP credit facility,  FMP incurred
     a $75,000  prepayment penalty which is reflected as a component of interest
     expense  in fiscal  1999.  The term loan of $4.3  million is due in monthly
     principal  installments  of $99,000  through and until  October 1, 1999 and
     $65,000  monthly  thereafter,  until the  maturity of the loan in September
     2001.   The  amount   available   for   borrowings   under  the   revolving
     line-of-credit is based upon the levels of eligible FMP accounts receivable
     and inventories,  as defined, subject to maximum borrowing of $4.0 million.
     As of May 31, 1999,  FMP had  $3,103,000  outstanding  under its  revolving
     line-of-credit  and  $732,000  available  for  additional  borrowings.  The
     line-of-credit expires in September 2001.

     Effective  January 1, 1999,  borrowings  under the term loans and revolving
     lines-of-credit of both credit facilities bear interest at a rate per annum
     equal to the prime  rate  (7.75% at May 31,  1999)  plus  1.75% and  1.25%,
     respectively, and are secured by substantially all of the Company's assets.

     The FMP and RG credit  facilities  contain  financial  and other  covenants
     which, among other things,  limit annual capital expenditures and dividends
     and require the  maintenance of minimum  monthly and quarterly  earnings or
     maximum monthly and quarterly  losses,  and minimum  quarterly debt service
     coverage  ratios,  as defined.  Primarily as a result of  RP-Coyote  merger
     costs  and a  provision  for the loss on the  sale of  Roxxi,  the  Company
     violated certain  covenants during the quarter ended February 28, 1999. The
     lender has waived the  violation of these  covenants.  In  connection  with
     granting  the  waivers,   the  Company's  lender  increased  the  Company's
     borrowing rate by 1% per annum  effective  January 1, 1999 and modified its
     covenants  for the  remainder of the fiscal year ending May 31,  1999.  The
     Company was in compliance with its loan covenants,  as amended,  at May 31,
     1999.

     Total  indebtedness  of the  Company as of May 31,  1999  consisted  of the
     following (in thousands):

          FMP:
            Line-of-credit                                               $3,103
            Term loan                                                     3,607

          RG term loan                                                      644

          Capital lease obligations                                          40
                                                                         ------
                                                                          7,394
          Less - Current portion                                         (1,203)
                                                                         ------
              Total long-term debt and capital lease obligations         $6,191
                                                                         ======

                                      -31-
<PAGE>
     Scheduled  maturities of the Company's  indebtedness at May 31, 1999 are as
     follows (in thousands):

          Years Ending
             May 31,
          ------------
              2000                                                       $1,203
              2001                                                          906
              2002                                                        5,285
                                                                         ------
                                                                         $7,394
                                                                         ======

     As of May 31, 1999, the carrying value of the line-of-credit and term loans
     approximated their fair market value since the obligations bear interest at
     a variable rate of interest.

8.   LEASES:

     RP  leases  its  corporate  offices  and  various  office  equipment  under
     operating  lease  agreements.   Minimum  annual  rental  commitments  under
     noncancelable leases are as follows (in thousands):

          Years Ending
             May 31,
          ------------
              2000                                                       $  206
              2001                                                          201
                                                                         ------
                                                                         $  407
                                                                         ======

     Rental expense under operating  leases totaled  approximately  $256,000 and
     $204,000 for the years ended May 31, 1999 and 1998, respectively.

9.   STOCK OPTION PLANS:

     In connection  with the FMP-RG Merger,  options to purchase 41 shares of FM
     Precision Golf Corp.  common stock outstanding as of the FMP-RG Merger date
     were converted into options to purchase  169,761 shares of RP common stock.
     As of May 31,  1999,  101,328  shares of  common  stock  are  reserved  for
     issuance upon the exercise of the remaining options outstanding.

     In  connection  with the FMP-RG  Merger,  options and  warrants to purchase
     982,250 shares of RG common stock  outstanding as of the FMP-RG Merger date
     were converted  into options and warrants to purchase  491,125 shares of RP
     common  stock.  As of May 31,  1999,  269,876  shares of  common  stock are
     reserved  for  issuance  upon  the  exercise  of  the   remaining   options
     outstanding.

     In October 1997, the Company adopted the Royal Precision, Inc. Stock Option
     Plan (the "RP Plan"). The RP Plan is administered by the Board of Directors
     and provides for the granting of nonqualified or incentive stock options to
     certain employees,  consultants and directors.  As of May 31, 1999, 103,230
     shares of common  stock are  reserved  for  issuance  upon the  exercise of
     options  outstanding  under the RP Plan.  As of May 31, 1999, an additional
     646,770  shares of common  stock are  reserved  for options not yet granted
     under the RP Plan.

     Stock option and warrant activity is as follows:

                                      -32-
<PAGE>
                                                                    Weighted-
                                                                     Average
                                                       Shares     Exercise Price
                                                       ------     --------------
     Outstanding at May 31, 1997                       169,761       $   0.24
       Converted from RG options and warrants
         in connection with FMP-RG merger              491,125           7.53
       Granted                                         250,000           6.75
       Exercised                                       (55,255)          0.28
       Cancelled                                      (250,000)          6.75
       Expired                                          (1,875)         13.00
                                                      --------
     Outstanding at May 31, 1998                       603,756           6.13
       Granted                                         282,313           3.25
       Exercised                                       (65,678)          0.24
       Cancelled                                      (324,832)          7.31
       Expired                                         (21,125)         19.15
                                                      --------
     Outstanding at May 31, 1999                       474,434       $   3.73
                                                      ========       ========

     A summary of information about stock options outstanding at May 31, 1999 is
     as follows:

<TABLE>
<CAPTION>
                              Options Outstanding                Options Exercisable
                     --------------------------------------   -------------------------
                                       Weighted-
                                        Average    Weighted-                   Weighted-
        Range of         Number        Remaining    Average       Number        Average
        Exercise       Outstanding    Contractual  Exercise     Exercisable    Exercise
         Prices      at May 31, 1999     Life        Price    at May 31, 1999    Price
     --------------  ---------------  -----------  --------   ---------------  --------
<S>                  <C>              <C>          <C>        <C>              <C>
          $0.24          101,328       7.9 years    $ 0.24        101,328       $ 0.24
          $1.81           48,230       9.6 years    $ 1.81             --           --
      $3.19 - $6.00      292,376       5.8 years    $ 4.00        237,326       $ 3.83
     $8.00 - $24.50       32,500       3.9 years    $15.09         32,125       $15.16
                        --------                                 --------
                         474,434                                  370,779
                        ========                                 ========
</TABLE>

     The Company has computed the pro forma disclosures  required under SFAS No.
     123 for all of the options it has using the  Black-Scholes  option  pricing
     model as prescribed by SFAS No. 123. The weighted average  assumptions used
     are as follows for the year ended May 31, 1999:

          Risk free interest rate                                       5.8%
          Expected dividend yield                                       None
          Expected life                                                 7 years
          Expected volatility                                           83%

     The only  options  granted  during  the year  ended May 31,  1998 were also
     cancelled.  Since the Company accounts for cancellations on an actual basis
     for SFAS No. 123 disclosure  purposes,  the grant has no effect on net loss
     for the year ended May 31, 1998.  Had  compensation  cost for the Company's
     stock plan been determined  consistent with SFAS No. 123, the Company's net
     loss and basic and diluted net loss per share would have been the following
     pro forma amounts for the year ended May 31, 1999 (in thousands, except per
     share data):

                                                                          1999
                                                                         ------
          Net loss:
            As reported                                                  $  904
            Pro forma                                                    $1,384

          Basic and diluted net loss per share:
            As reported                                                  $ 0.16
            Pro forma                                                    $ 0.24

                                      -33-
<PAGE>
     The resulting pro forma compensation cost may not be representative of that
     to be  expected  in  future  years  because  the pro forma  amounts  do not
     consider options granted prior to fiscal 1997 or in future years.

10.  INCOME TAXES:

     The components of the provision for income taxes from continuing operations
     are as follows for the years ended May 31, 1999 and 1998 (in thousands):

                                                              1999        1998
                                                              -----       -----
          Current                                             $  25       $  21
          Deferred                                              779           7
                                                              -----       -----
                                                              $ 804       $  28
                                                              =====       =====

     RP's  effective  income  tax rate,  as a  percent  of  pretax  income  from
     continuing  operations,  differs from the statutory federal rate as follows
     for the years ended May 31, 1999 and 1998:

                                                              1999         1998
                                                              ----         ----
          Statutory federal income tax rate                     34%          34%
          State taxes, net of federal benefit                    -            7
          Nondeductible goodwill amortization                   16           53
          Change in valuation allowance                         28          (85)
          Other                                                 (4)           -
                                                              ----         ----
          Effective income tax rate                             74%           9%
                                                              ====         ====

     The components of deferred  income tax assets  (liabilities)  as of May 31,
     1999 are as follows (in thousands):

          Current asset (liability) -
            Financial reserves not currently
              deductible                                                 $1,518
            Other                                                          (210)
            Valuation allowance                                            (661)
                                                                         ------
                                                                            647
                                                                         ------
          Long-term asset (liability) -
            Tax effect of net operating loss
              carryforwards                                               1,900
            Book basis in excess of tax for
              property, plant and equipment                                (472)
            Compensation expense related to grant
              of stock options                                              262
            Other                                                           368
            Valuation allowance                                          (1,988)
                                                                         ------
                                                                             70
                                                                         ------
                                                                         $  717
                                                                         ======

                                      -34-
<PAGE>
     As of May 31,  1999,  RP has federal and state net  operating  loss ("NOL")
     carryforwards of approximately $5.6 million of which $4.9 million relate to
     RG for  periods  prior to the  FMP-RG  Merger  ("Pre-Merger  NOL's").  Such
     Pre-Merger  NOL's are  available  only to offset RG income after the FMP-RG
     Merger.  Additionally,  the use of such  Pre-Merger  NOL's  is  limited  to
     $764,000 per annum under  Section 382 of the Internal  Revenue  Code. As of
     May 31, 1999,  $396,000 of  Pre-Merger  NOL's are available for usage under
     Section 382. The NOL's, if unused, expire in 2009 through 2019.

     As of May 31, 1998, a valuation  allowance  of  $2,821,000  was recorded to
     fully offset NOL carryforwards and other net deferred tax assets as of such
     date,  due to  uncertainty  of their  realization.  During fiscal 1999, the
     Company  utilized  approximately  $942,000  of  Pre-Merger  NOL's  and also
     determined that approximately $970,000 of Pre-Merger NOL's were realizable.
     As such,  the Company  reduced the  valuation  allowance by an aggregate of
     $650,000  (see Note 2). The effect of this  benefit,  as well as any future
     reductions in the valuation  allowance related to the Pre-Merger NOL's, was
     recorded as a reduction  of  goodwill.  During the year ended May 31, 1999,
     the  Company  also  increased  the  valuation  allowance  on certain  other
     deferred  tax assets by  approximately  $478,000,  resulting in a valuation
     allowance of $2,649,000 as of May 31, 1999.

11.  RELATED PARTY TRANSACTIONS:

     In connection with the RP-Coyote  Merger (see Note 6) and the FMP-RG Merger
     (see Note 1),  fees of  approximately  $85,000  and  $607,000  were paid to
     related parties during the years ended May 31, 1999 and 1998, respectively.

     Professional and advisory fees and expense  reimbursements of approximately
     $316,000 and $416,000 were paid to certain shareholders or their affiliates
     during the years ended May 31, 1999 and 1998, respectively.

12.  FOREIGN SALES:

     The Company has export  sales to  customers  located  primarily  throughout
     Japan,  Australia,  the  United  Kingdom  and  Canada.  Foreign  sales were
     approximately  29% and 20% of the  Company's  sales for the years ended May
     31,  1999 and  1998,  respectively.  The  following  table  summarizes  the
     Company's sales by major worldwide regions for the years ended May 31, 1999
     and 1998 (in thousands):

                                                            1999         1998
                                                           -------      -------
          United States                                    $16,431      $19,777
          Japan                                              5,797        3,950
          Other                                                991          995
                                                           -------      -------
          Total                                            $23,219      $24,722
                                                           =======      =======

                                      -35-
<PAGE>
13.  BENEFIT PLANS:

     401(K) PLAN -

     The Company  maintains a defined  contribution  benefit plan under  Section
     401(k) of the Internal Revenue Code. Each year,  eligible  participants may
     elect  to make  salary  reduction  contributions  on their  behalf  up to a
     maximum  of the  lesser  of  15% of  compensation  or  the  annual  maximum
     contribution established by the Internal Revenue Service.  Participants may
     also make voluntary  after-tax  contributions  to the defined  contribution
     benefit plan.  Employer  contributions are discretionary  and, to date, the
     Company has not contributed to the defined contribution benefit plan.

     PENSION PLAN -

     FMP  maintains  the FM Precision  Golf Corp.  Pension Plan for  Represented
     Hourly Wage  Employees  (the  "Union  Plan") for the benefit of FMP's union
     employees.  The Company  contributes  such  amounts as are  necessary on an
     actuarial  basis to provide the Union Plan with assets  sufficient  to meet
     the  benefits to be paid to  participants.  Contributions  are  intended to
     provide not only for  benefits  attributed  to service to date but also for
     those expected to be earned in the future.

     For the year  ended  May 31,  1999,  the  reconciliation  of the  projected
     benefit obligation was (in thousands):

     Beginning of year projected benefit obligation                       $ 181
     Service cost                                                            88
     Interest cost                                                           13
     Actuarial loss                                                         100
                                                                          -----
     End of year projected benefit obligation                             $ 382
                                                                          =====

     The  reconciliation  of the funded status of the Union Plan as of May 31,
     1999 included the following components (in thousands):

     Projected benefit obligation                                         $ 382
     Plan assets at fair value                                              131
                                                                          -----
     Funded status (accrued benefit cost)                                  (251)
     Minimum pension liability adjustment                                    78
                                                                          -----
     Net amount recognized                                                 (173)
                                                                          =====

     The  reconciliation of fair value of assets of the Union Plan as of May 31,
     1999 was (in thousands):

     Beginning of year fair value of assets                               $ 120
     Actual return on plan assets                                            11
                                                                          -----
     End of year fair value of assets                                     $ 131
                                                                          =====

     The  components  of net  pension  cost for the years ended May 31, 1999 and
     1998 were (in thousands):

                                                               1999       1998
                                                               -----      -----
     Service cost                                              $  88      $  85
     Interest cost                                                13          7
     Expected return on assets                                    (3)        10
                                                               -----      -----
     Net periodic pension cost                                 $  98      $ 102
                                                               =====      =====

                                      -36-
<PAGE>
     A summary of the Company's key actuarial assumptions as of May 31, 1999 and
     1998 were as follows:

                                                               1999       1998
                                                               -----      -----
     Discount rate                                              6.75%      7.50%
     Expected long-term rate of return
       on assets                                                9.00%      9.00%

14.  INFORMATION ON SEGMENTS:

     The Company has two reportable segments in continuing operations: golf club
     shafts and golf club grips. The accounting policies of the segments are the
     same as those described in the summary of significant  accounting policies.
     The Company  evaluates the  performance  of these segments based on segment
     operating  income or loss.  The Company  allocates  certain  administrative
     expenses to segments.  The amounts in this  illustration are the amounts in
     reports  used  by the  chief  operating  officer  as of May  31,  1999  (in
     thousands):

                                                     Year Ended May 31, 1999
                                                  -----------------------------
                                                    Golf      Golf
                                                   Shafts     Grips      Total
                                                  -------    -------    -------
     Net sales                                    $19,075    $ 4,144    $23,219
     Interest expense                                 708         86        794
     Depreciation and amortization                    288        651        939
     Operating income                               1,494      1,112      2,606
     Assets                                        11,815     10,070     21,885
     Capital expenditures                             789        151        940

     Total assets for reportable segments                               $21,885
     Assets of discontinued operations                                      162
     Elimination of investment in subsidiary                             (6,294)
     Goodwill not allocated to segments                                   8,857
                                                                        -------
     Consolidated total assets                                          $24,610
                                                                        =======

                                                     Year Ended May 31, 1998
                                                  -----------------------------
                                                    Golf      Golf
                                                   Shafts     Grips      Total
                                                  -------    -------    -------
     Net sales                                    $21,023    $ 3,699    $24,722
     Interest expense                                 573         32        605
     Depreciation and amortization                    215        534        749
     Operating income                                 294        439        733
     Assets                                         9,276     12,249     21,525
     Capital expenditures                             828        210      1,038

     Total assets for reportable segments                               $21,525
     Assets of discontinued operations                                    1,956
     Elimination of investment in subsidiary                             (7,623)
     Goodwill not allocated to segments                                  10,028
                                                                        -------
     Consolidated total assets                                          $25,886
                                                                        =======

                                      -37-
<PAGE>
15.  CONCENTRATION OF CREDIT RISK:

     RP is subject to a concentration of credit risk as a result of sales to its
     significant  customers including its exclusive Japanese  distributor and an
     original equipment manufacturer. These two largest customers each accounted
     for more  than 10% and in the  aggregate  accounted  for 40% and 31% of the
     Company's   net  sales  for  the  years   ended  May  31,  1999  and  1998,
     respectively.  To reduce  its credit  risk,  RP  requires  letter of credit
     agreements from its Japanese distributor.

16.  COMMITMENTS AND CONTINGENCIES:

     The  Company  may be a party to various  legal  proceedings  arising in the
     ordinary course of business.  Management consults with legal counsel on all
     such matters and believes that none will have a material  adverse effect on
     RP's financial condition or future operating results.

     The Company estimates that it will incur approximately  $900,000 in capital
     expense  to  upgrade  FMP's   wastewater   treatment   facilities   due  to
     Environmental  Protection  Agency  mandates on water quality adopted by the
     State of Connecticut.  Of this amount,  approximately $250,000 was incurred
     and  expended  during the fiscal year ended May 31,  1999.  The Company has
     received  a funding  commitment  of  $750,000  to finance a portion of this
     project.  These funds can be disbursed  upon the completion of the facility
     and approval by the Connecticut Department of Environmental Protection.

17.  QUARTERLY FINANCIAL DATA (UNAUDITED):

     Provided  below is  selected  unaudited  quarterly  financial  data for the
     fiscal  years  ended May 31, 1999 and 1998 (in  thousands  except per share
     data):

<TABLE>
<CAPTION>
                                                               1999
                                     ----------------------------------------------------------
                                      First       Second      Third       Fourth        Total
                                     --------    --------    --------    --------      --------
<S>                                  <C>         <C>         <C>         <C>           <C>
     Net sales                       $  6,038    $  3,851    $  5,118    $  8,212      $ 23,219
                                     --------    --------    --------    --------      --------
     Income (loss) from continuing
       operations                         213        (112)       (812)        987           276

     Income (loss) from
       discontinued operations           (210)       (179)       (127)        164 (a)      (352)

     Loss on sale of discontinued
       operations                          --          --      (1,214)        386 (a)      (828)
                                     --------    --------    --------    --------      --------
     Net income (loss)               $      3    $   (291)   $ (2,153)   $  1,537      $   (904)
                                     ========    ========    ========    ========      ========
     Per share information:
       Basic and diluted -
         Income (loss) from
           continuing operations     $   0.04    $  (0.02)   $  (0.14)   $   0.17      $   0.05
                                     ========    ========    ========    ========      ========
         Net income (loss)           $   0.00    $  (0.05)   $  (0.38)   $   0.27      $  (0.16)
                                     ========    ========    ========    ========      ========
</TABLE>

                                      -38-
<PAGE>
<TABLE>
<CAPTION>
                                                               1998
                                     ----------------------------------------------------------
                                      First       Second      Third       Fourth        Total
                                     --------    --------    --------    --------      --------
<S>                                  <C>         <C>         <C>         <C>           <C>
     Net sales                       $  4,922    $  5,840    $  6,419    $  7,541      $ 24,722
                                     --------    --------    --------    --------      --------
     Income (loss) from continuing
       operations                          26          16        (164)        390           268

     Income (loss) from
       discontinued operations             --        (307)       (113)       (111)         (531)
                                     --------    --------    --------    --------      --------
     Net income (loss)               $     26    $   (291)   $   (277)   $    279      $   (263)
                                     ========    ========    ========    ========      ========
     Per share information:
       Basic and diluted -
         Income (loss) from
           continuing operations     $   0.01    $   0.00    $  (0.03)   $   0.07      $   0.05
                                     ========    ========    ========    ========      ========
         Net income (loss)           $   0.01    $  (0.05)   $  (0.05)   $   0.04      $  (0.05)
                                     ========    ========    ========    ========      ========
</TABLE>

     (a)  Represents tax benefits  realized from  discontinued  operations which
          were not available prior to the fourth quarter of fiscal 1999.

                                      -39-
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT.

     Information  regarding the Company's directors is set forth at "ELECTION OF
DIRECTORS;  Business  Experience," in the Company's Proxy Statement for its 1999
Annual Meeting of Stockholders (the "1999 Proxy Statement") which information is
incorporated herein by reference.

     The  executive  officers of the Company and their ages and positions are as
follows:

           Name                    Age                   Position
----------------------------       ---       -----------------------------------
Thomas A. Schneider                39        President, Chief Operating Officer,
                                               Chief Financial Officer
Anthony Montgomery                 36        Executive Vice President,
                                               Sales and Marketing
Ronald L. Chalmers                 54        Executive Vice President,
                                               Administration/Manufacturing
Kevin Neill                        30        Vice President, Finance

     Thomas A. Schneider is a certified public accountant and was Vice President
- Finance and Secretary of Royal Grip,  Inc. from January 1996 to October,  1997
and  served as Vice  President,  Chief  Financial  Officer of the  Company  from
October 1997 to August 1998,  when he was elected to serve as  President,  Chief
Operating  Officer and Chief  Financial  Officer.  Prior to 1996, Mr.  Schneider
served for five years as the  controller  of Karsten  Manufacturing  Corp.,  the
maker of Ping golf equipment.

     Anthony  Montgomery was President of Montgomery & Assoc.  from 1993 to 1995
and Vice President of Unique Impressions from 1995 to 1996, companies engaged in
manufacturing and marketing of golf products,  served as Director of Sales of FM
Precision  Golf   Manufacturing   Corp.,   the  Company's  shaft   manufacturing
subsidiary, in 1996 and 1997, and served as Vice President, Sales of the Company
from  April 1998 until his  election  as  Executive  Vice  President,  Sales and
Marketing in July 1999.

     Ronald L. Chalmers served as the Director of  Sales/Marketing  of Brunswick
Corporation  from 1992 to May 1996.  From May 1996 until October 1997, he served
as  President  of  FM  Precision  Golf   Manufacturing   Corp.,   the  Company's
manufacturing   subsidiary.   He  has  served  as  Executive  Vice  President  -
Administration/Manufacturing  of the Company  since  October 1997 and has been a
director of the Company since June 1996.

                                      -40-
<PAGE>
     Kevin Neill is a certified  public  accountant and has been Vice President,
Finance of the  Company  since  January  1999 and prior  thereto  was  Corporate
Controller  from June  1998.  From  July 1991 to  October  1995,  Mr.  Neill was
employed by Arthur  Andersen,  an accounting firm, and from October 1995 to June
1998,  he  was  Assistant  Controller  of  SunCor  Development,  a  real  estate
development company.

     Information  relating to compliance  with Section 16(a) of the Exchange Act
is set forth at "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" in the
1999 Proxy Statement which information is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION.

     The  information  required  by this item is set forth at  "COMPENSATION  OF
MANAGEMENT" in the 1999 Proxy Statement which information is incorporated herein
by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information  required by this item is set forth at "SECURITY  OWNERSHIP
OF PRINCIPAL  STOCKHOLDERS,  DIRECTORS,  NOMINEES AND EXECUTIVE OFFICERS" in the
1999 Proxy Statement which information is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The   information   required   by  this  item  is  set  forth  at  "CERTAIN
TRANSACTIONS"  in the 1999 Proxy  Statement  which  information is  incorporated
herein by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits.

          (3) Certificate of Incorporation and Bylaws

          3.1.  Amended and Restated  Certificate of Incorporation of registrant
(incorporated by reference to Annex IV to the Company's Form S-4, No. 333-28841)
(the "Form S-4").

          3.2. Bylaws of Royal  Precision,  Inc.  (incorporated  by reference to
Exhibit 3.2 to the Form S-4).

          (4) Instruments defining the rights of holders

                                      -41-
<PAGE>
          4.1.  See  Articles  FOUR,  FIVE and SEVEN of the Amended and Restated
Certificate of  Incorporation  of the registrant  (incorporated  by reference to
Exhibit 3.1 to the Form S-4).

          4.2. See Article I, Sections 2.1 and 2.2 of Article II and Section 7.3
of Article VII of the Bylaws of Royal Precision, Inc. (incorporated by reference
to Exhibit 3.2 to the Form S-4).

          (10)   Material   Contracts   (*indicates   management   contract   or
compensatory plan or arrangement).

          10.1. Management Stockholders Agreement dated May 29, 1996 with Ronald
L. Chalmers, et al (incorporated by reference to Exhibit 10.2.4 of the Form S-4.

          10.2.  1997 Stock  Option Plan dated March 13, 1997  (incorporated  by
reference to Exhibit 10.2.5 of the Form S-4.*

          10.3.  Form  of  Option  Agreement  with  those  not  parties  to  the
Management  Stockholders Agreement  (incorporated by reference to Exhibit 10.2.6
of the Form S-4).*

          10.4.  Form of Option  Agreement  with  those who are  parties  to the
Management  Stockholders Agreement  (incorporated by reference to Exhibit 10.2.7
of the Form S-4).*

          10.5.   Consulting  Agreement  with  Danny  Edwards  (incorporated  by
reference to Exhibit 2.2 of the Form S-4).*

          10.6. Credit and Security  Agreement dated as of October 8, 1998 among
FM Precision Golf Manufacturing Corp., FM Precision Golf Sales Corp. and Norwest
Business  Credit,  Inc.  (incorporated  by reference to Exhibit 10.1 of the Form
10-QSB for the quarter ended August 31, 1998 (the "8/98 Form 10-QSB")).

          10.7.  Amended and Restated Credit and Security  Agreement dated as of
October 8, 1998 among Royal Grip, Inc., Roxxi, Inc. and Norwest Business Credit,
Inc. (incorporated by reference to Exhibit 10.2 of the 8/98 Form 10-QSB).

          10.8 Agreement  between Royal Grip and Precision Japan Ltd. dated July
12, 1991 (incorporated by reference to Exhibit 10.7 to RG's 1996 Form 10-K).

          10.9. Manufacturers' Representative Agreement dated March 1, 1979 with
Union Tubular Products,  Brunswick  Corporation and M.A. Clark  (incorporated by
reference to Exhibit 10.4.6 of the Form S-4).

          10.10.  Distributor Agreement effective August 20, 1990 with Brunswick
and Infiniti Golf (incorporated by reference to Exhibit 10.4.7 of the Form S-4).

          10.11.  Royal Precision,  Inc. Stock Option Plan dated October 5, 1997
(incorporated  by  reference  to Exhibit  10.32 of the Form  10-KSB for the year
ended May 31, 1998).*

                                      -42-
<PAGE>
          10.12. Amendment No. 1 to the Stockholder  Agreement,  dated as of May
12, 1997,  among Danny Edwards,  Drew M. Brown,  DMB Property  Ventures  Limited
Partnership,  Mark N. Sklar,  Bennett Dorrance,  Trustee of the Bennett Dorrance
Trust dated April 21, 1989,  as amended,  Christopher  A.  Johnston,  Richard P.
Johnston  and  Jayne A.  Johnston  Charitable  Remainder  Trust #3  (Richard  P.
Johnston   Trustee),   as  successor  to  RPJ/JAJ  Partners,   Ltd.,  a  Wyoming
partnership,  David E. Johnston,  Berenson Minella & Company,  L.P.,  Kenneth J.
Warren and Royal Precision,  Inc.  (incorporated by reference to Exhibit 99.4 of
Form 8-K dated February 3, 1999.)

          10.13. Asset Purchase Agreement dated February 26, 1999 between Roxxi,
Inc. and Paramount Headwear,  Inc.  (incorporated by reference to Exhibit 2.1 of
the Form 8-K dated March 22, 1999).

          10.14.  Asset Purchase  Agreement  dated March 11, 1999 between Roxxi,
Inc. and Big Play,  Inc.  (incorporated  by reference to Exhibit 2.2 of the Form
8-K dated March 22, 1999).

          10.15.  Guaranty by the Registrant dated March 11, 1999  (incorporated
by reference to Exhibit 2.3 of the Form 8-K dated March 22, 1999).

          10.16.  First  Amendment to Amended and  Restated  Credit and Security
Agreement  and Waiver of Defaults  between  Royal Grip,  Inc.,  Roxxi,  Inc. and
Norwest  Business  Credit,  Inc. and  Acknowledgment  and Agreement of Guarantor
dated March 16, 1999.

          10.17. Second Amendment to Credit and Security Agreement and Waiver of
Defaults between Royal Grip, Inc.,  Roxxi, Inc. and Wells Fargo Business Credit,
Inc.  (formerly known as Norwest  Business  Credit,  Inc.) dated as of April 13,
1999.

          10.18.  Amendment  to Credit  and  Security  Agreement  and  Waiver of
Defaults between FM Precision Golf Manufacturing  Corp., FM Precision Golf Sales
Corp. and Wells Fargo Business Credit,  Inc. (formerly known as Norwest Business
Credit, Inc.) dated as of April 13, 1999.

          (21) Subsidiaries of the Registrant.

          (23) Consents

          23.1. Consent of Arthur Andersen LLP.

          (24) Power of Attorney

          24.1. Powers of Attorney.

          24.2.  Certified  resolution  of the  Registrant's  Board of Directors
authorizing  officers  and  directors  signing on behalf of the  Company to sign
pursuant to a power of attorney.

                                      -43-
<PAGE>
          27. Financial Data Schedule

     (b) REPORTS ON FORM 8-K.

          A current  report on Form 8-K was filed by the Registrant on March 22,
1999.

                                      -44-
<PAGE>
                                   SIGNATURES

     In accordance  with Section 13 or 15(d) 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.

Dated: August 27, 1999
                                        ROYAL PRECISION, INC.
                                        (the "Registrant")

                                        By /s/ Thomas A. Schneider
                                           -------------------------------------
                                           Thomas A. Schneider,
                                           President, Chief Operating Officer
                                           and Chief Financial Officer


     In  accordance  with the Exchange Act, this report has been signed below by
the  following  persons  on  behalf  of the  registrant  and  in the  capacities
indicated on the 27th day of August, 1999.

         Name                       Title (Capacity)
         ----                       ----------------
/s/ Thomas A. Schneider             President, Chief Operating Officer and Chief
--------------------------------    Financial Officer (principal executive
Thomas A. Schneider                 officer; principal financial officer)


/s/ Richard P. Johnston*            Director
--------------------------------
Richard P. Johnston


/s/ David E. Johnston*              Director
--------------------------------
David E. Johnston


/s/ Lawrence Bain*                  Director
--------------------------------
Lawrence Bain


/s/ Ronald L. Chalmers*             Director
--------------------------------
Ronald L. Chalmers


/s/ Raymond J. Minella*             Director
--------------------------------
Raymond J. Minella


/s/ Kenneth J. Warren*              Director
--------------------------------
Kenneth J. Warren


/s/ Danny Edwards*                  Director
--------------------------------
Danny Edwards

                                      -45-
<PAGE>
/s/ Robert G. J. Burg, II*          Director
--------------------------------
Robert G. J. Burg, II


/s/ Leslie Reesing                  Director
--------------------------------
Leslie Reesing

* Thomas A.  Schneider,  by signing his name hereto,  does sign this document on
behalf of the persons  indicated  above  pursuant  to a Power of  Attorney  duly
executed by such persons.

By: /s/ Thomas A. Schneider
    --------------------------------
    Thomas A. Schneider, Attorney in Fact

                                      -46-
<PAGE>
                                  EXHIBIT INDEX

                                                                      PAGE IN
                                                                    SEQUENTIALLY
                                                                      NUMBERED
EXHIBIT                                                                 COPY
-------                                                             ------------
3.1       Amended and Restated Certificate of Incorporation of
          registrant (incorporated by reference to Annex IV to
          the Company's Form S-4, No. 333-28841) (the "Form S-4")         *

3.2       Bylaws of Royal Precision, Inc. (incorporated by
          reference to Exhibit 3.2 to the Form S-4)                       *

4.1       See Articles FOUR, FIVE and SEVEN of the Amended and
          Restated Certificate of Incorporation of the registrant
          (incorporated by reference to Exhibit 3.1 to the
          Form S-4.)

4.2       See Article I, Sections 2.1 and 2.2 of Article II and
          Section 7.3 of Article VII of the Bylaws of Royal
          Precision, Inc. (incorporated by reference to Exhibit
          3.2 to the Form S-4)

10.1      Management Stockholders Agreement dated May 29, 1996
          with Ronald L. Chalmers, et al (incorporated by
          reference to Exhibit 10.2.4 of the Form S-4).                   *

10.2      1997 Stock Option Plan dated March 13, 1997 (incorporated
          by reference to Exhibit 10.2.5 of the Form S-4).                *

10.3      Form of Option Agreement with those not parties to the
          Management Stockholders Agreement (incorporated by
          reference to Exhibit 10.2.6 of the Form S-4).                   *

10.4.     Form of Option Agreement with those who are parties to
          the Management Stockholders Agreement (incorporated by
          reference to Exhibit 10.2.7 of the Form S-4).                   *

10.5      Consulting Agreement with Danny Edwards (incorporated by
          reference to Exhibit 2.2 of the Form S-4).                      *

10.6.     Credit and Security Agreement dated as of October 8, 1998
          among FM Precision Golf Manufacturing Corp., FM Precision
          Golf Sales Corp. and Norwest Business Credit, Inc.
          (incorporated by reference to Exhibit 10.1 of the Form
          10-QSB for the quarter ended August 31, 1998).                  *

10.7      Amended and Restated Credit and Security Agreement dated
          as of October 8, 1998 among Royal Grip, Inc., Roxxi, Inc.
          and Norwest Business Credit, Inc. (incorporated by
          reference to Exhibit 10.2 of the Form 10-QSB for the
          quarter ended August 31, 1998).                                 *

10.8      Agreement between Royal Grip and Precision Japan Ltd.
          dated July 12, 1991 (incorporated by reference to Exhibit
          10.7 to RG's 1996 Form 10-K).                                   *

10.9      Manufacturers' Representative Agreement dated March 1, 1979
          with Union Tubular Products, Brunswick Corporation and M.A.
          Clark (incorporated by reference to Exhibit 10.4.6 of the
          Form S-4).                                                      *

                                      -47-
<PAGE>
10.10     Distributor Agreement effective August 20, 1990 with
          Brunswick and Infiniti Golf (incorporated by reference to
          Exhibit 10.4.7 of the Form S-4).                                *

10.11     Royal Precision, Inc. Stock Option Plan dated October 5,
          1997 (incorporated by reference to Exhibit 10.32 of the
          Form 10-KSB for the year ended May 31, 1998).                   *

10.12     Amendment No. 1 to the Stockholder Agreement, dated as of
          May 12, 1997, among Danny Edwards, Drew M. Brown, DMB
          Property Ventures Limited Partnership, Mark N. Sklar,
          Bennett Dorrance, Trustee of the Bennett Dorrance Trust
          dated April 21, 1989, as amended, Christopher A. Johnston,
          Richard P. Johnston and Jayne A. Johnston Charitable
          Remainder Trust #3 (Richard P. Johnston Trustee), as
          successor to RPJ/JAJ Partners, Ltd., a Wyoming partnership,
          David E. Johnston, Berenson Minella & Company, L.P.,
          Kenneth J. Warren and Royal Precision, Inc. (incorporated
          by reference to Exhibit 99.4 of Form 8-K dated February 3,
          1999).                                                          *

10.13     Asset Purchase Agreement dated February 26, 1999 between
          Roxxi, Inc. and Paramount Headwear, Inc. (incorporated by
          reference to Exhibit 2.1 of the Form 8-K dated March 22,
          1999).                                                          *

10.14     Asset Purchase Agreement dated March 11, 1999 between
          Roxxi, Inc. and Big Play, Inc. (incorporated by reference
          to Exhibit 2.2 of the Form 8-K dated March 22, 1999).           *

10.15     Guaranty by Registrant dated March 11, 9999 (incorporated
          by reference to Exhibit 2.3 of the Form 8-K dated March 22,
          1999).                                                          *

10.16     First Amendment to Amended and Restated Credit and
          Security Agreement and Waiver of Defaults between Royal
          Grip, Inc., Roxxi, Inc. and Norwest Business Credit, Inc.
          and Acknowledgment and Agreement of Guarantor dated March
          16, 1999.                                                       54

10.17     Second Amendment to Credit and Security Agreement and
          Waiver of Defaults between Royal Grip, Inc., Roxxi, Inc.
          and Wells Fargo Business Credit, Inc. (formerly known as
          Norwest Business Credit, Inc.) dated as of April 13, 1999.      60

10.18     Amendment to Credit and Security Agreement and Waiver of
          Defaults between FM Precision Golf Manufacturing Corp., FM
          Precision Golf Sales Corp. and Wells Fargo Business Credit,
          Inc. (formerly known as Norwest Business Credit, Inc.)
          dated as of April 13, 1999.                                     71

21        Subsidiaries of the Registrant                                  81

23.1      Consent of Arthur Andersen LLP                                  82

                                      -48-
<PAGE>
24.1      Powers of Attorney                                              83

24.2      Certified resolution of Registrant's Board of Directors
          authorizing officers and directors signing on behalf of
          the Company to sign pursuant to a power of attorney.            93

27        Financial Data Schedule (submitted for SEC purposes only)

* Incorporated by reference.

The Registrant  will furnish a copy of any exhibit to a beneficial  owner of its
securities or to any person from whom a proxy was  solicited in connection  with
the Registrant's  most recent Annual Meeting of Stockholders upon the payment of
a fee of fifty cents ($.50) a page.

                                      -49-