SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                    FORM 10-K
(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, 2000

[ ] 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.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

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

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

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

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

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

                    Common Stock, par value $0.001 per share
                    ----------------------------------------
                                (Title of Class)

     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required  to be filed by  Section  13 or 15(d) of the  Securities  Exchange  Act
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [X]

     The aggregate market value of shares of Common Stock held by non-affiliates
of the Registrant on August 7, 2000 was $5,782,000.

     The  number of shares of  Common  Stock  outstanding  on August 7, 2000 was
5,678,956.

                      Documents incorporated by reference:

Portions of the Registrant's Proxy Statement relating to the 2000 Annual Meeting
of Stockholders have been incorporated by reference into Part III, Items 10, 11,
12 and 13.
<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-K
includes forward-looking  statements which reflect the views of the Company with
respect  to future  events  and  financial  performance.  These  forward-looking
statements  are  subject to  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,  and changes in the
financial  markets  relating  to the  Company's  capital  structure  and cost of
capital.  Statements  in this Form  10-K,  including  the Notes to  Consolidated
Financial  Statements  and  Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations,  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  included  in  Exhibit  99.1.  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. ("RP" or the "Company") is a holding  company which
carries on its business  operations through its 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  (formerly  known  as  Roxxi,  Inc.,
"Roxxi").  RP  (formerly  FM  Precision  Golf  Corp.),  FMP and FMP  Sales  were
incorporated  in Delaware on May 3, 1996 by a group of investors  who  acquired,
through such companies,  substantially  all of the assets of the golf club shaft
manufacturing  business  of  Brunswick  Corporation.  RP  acquired  RG, a Nevada
corporation,  on August 29, 1997 and RP simultaneously  changed its name from FM
Precision  Golf Corp.  to Royal  Precision,  Inc. As  discussed in note 3 to the
consolidated financial statements,  the Company disposed of the operating assets
of Royal Grip Headwear Company, a Nevada corporation,  in March 1999. Results of
operations  for Roxxi in all  periods  through  May 31,  1999 are  reflected  as
discontinued operations.

PRINCIPAL PRODUCTS; MARKETS

     The Company designs,  manufactures and distributes  steel golf club shafts,
sales of which  represented 85%, 82% and 85% of total revenues during the fiscal
years ended May 31, 2000, 1999 and 1998, respectively. The Company developed and
patented the "Rifle",  the first  modern  stepless  steel golf club shaft in the
industry.  Management  believes  that  this  shaft is the  premier  steel  shaft
available in the market today due to its patented  internal and external  design
characteristics which result in superior  performance,  consistency and strength
compared to other steel golf club shafts. The Company also pioneered,  patented,
and now licenses the technology of Frequency  Coefficient  Matching ("FCM") golf
club 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.

     The Company also designs and  distributes  golf club grips,  sales of which
represented 15%, 18% and 15% of total revenues during the fiscal years ended May
31, 2000, 1999 and 1998, respectively. 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.  The Company currently offers a wide variety of
standard and custom models, all of which management  believes 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.

     In February 2000,  the Company  introduced  the "Rifle"  Graphite  shaft, a
filament wound product which it co-designed and distributes. Management believes
that this product has superior  consistency  properties based on the proprietary
filament winding and finishing  processes  utilized in its manufacture that give
the shaft uniform wall thickness and  oscillation  characteristics.  Because the
"Rifle"  Graphite was not introduced until the end of fiscal 2000, sales of this
product were  immaterial to the Company's  operations  and financial  condition,
representing less than 1% of total revenues during the fiscal year ended May 31,
2000.

     Sales to original equipment  manufacturers  ("OEMs") accounted for the vast
majority of the Company's  sales in fiscal 2000, with the remainder of the sales
being made to distributors,  custom club assemblers, pro shops and repair shops.
The Company's products are sold by 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.
<PAGE>
     Of the  Company's  top ten  customers  during the fiscal year ended May 31,
2000, two are international. The Company's exclusive Japanese distributor is its
largest  account (see  "Principal  Suppliers and  Customers") and its Australian
distributor  is its eighth largest  account.  The Company also has a presence in
Europe and Canada through other distributor relationships.

BACKLOG

     As of May 31,  2000,  the Company had open orders from  customers  totaling
approximately  $4.2 million for  shipment  during the fiscal year ending May 31,
2001.  Open  orders as of May 31,  1999 for  shipment  during  fiscal  2000 were
approximately $4.1 million.

COMPETITION

     The golf  equipment  industry  is highly  competitive.  There are  numerous
companies  competing in various segments of the golf equipment markets including
those which manufacture and sell the golf club component parts which are shafts,
grips  and  heads.   Some  of  the  Company's   competitors  have  greater  name
recognition,   more   extensive   engineering,   manufacturing   and   marketing
capabilities, and greater financial,  technological and personnel resources than
those available to the Company.  The Company competes  primarily on the basis of
product quality, product specifications and design, on-time deliveries, customer
relationships and price.

     The Company competes  primarily with three companies which  manufacture and
distribute steel golf club shafts to OEMs. FMP is the second largest producer of
steel shafts, after True Temper Sports, Inc. Management believes that its market
share in steel shafts is  approximately  25% while True Temper's market share in
steel  shafts is believed  to be  approximately  60%.  Other  competitors  which
manufacture  steel golf club shafts  include Nippon Shaft Co., Ltd. and Far East
Machinery Co., Ltd., both of which are located in Asia.

     The Company's  principal  competitors  in the golf club grip market include
Eaton/Golf Pride and Lamkin Corp.  Management  believes that its market share in
golf club grips is approximately 3% while Eaton/Golf Pride's and Lamkin's market
shares are believed to be approximately 55% and 15%, respectively.

PRINCIPAL SUPPLIERS AND CUSTOMERS

     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 an
agreement resulting in the transfer of RG's manufacturing  equipment to Acushnet
under a capital lease.  Since January 1997, RG has purchased the majority of its
supply of non-cord,  injected grips from Acushnet.  In May 1999, RG and Acushnet
executed a mutual release agreement  terminating their  manufacturing and supply
agreement and capital lease agreement (the "Termination Agreement"). Pursuant to
the Termination Agreement,  RG received $1.5 million in cash and $1.0 million in
purchase credits from Acushnet in May 1999. Additionally,  Acushnet's obligation
to make  additional  payments to RG under the capital lease was  terminated  but
Acushnet was required to continue producing grips through February 2000 at which
time RG received the  manufacturing  equipment  which was  previously  leased to
Acushnet. The Company believes that its current inventory of grips is sufficient
to satisfy  customer demand through  December 31, 2000. The Company is currently
purchasing  grips from various  suppliers and believes it has an adequate source
of supply to meet its current and anticipated  future  customer needs.  However,
there can be no assurance  that the  transition to new suppliers will not result
in production  delays or the loss of sales and key customers  which would have a
material  adverse  effect on the  Company's  financial  condition and results of
operations.

     FMP  uses  Worthington  Industries,  Inc.  ("Worthington")  as its  primary
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 primary  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 the Company.

                                       2
<PAGE>
     The  Company  has a  ten-year  agreement  with  Precision  FM  Japan,  Ltd.
("Precision  FM") which  grants  exclusive  distribution  rights for sale of the
Company's  golf club  grips in Japan and  certain  other  Asian  countries.  The
Company also has a five-year  agreement with Marubeni  Corporation  ("Marubeni")
and Precision Japan,  Ltd.  ("Precision")  which grants  exclusive  distribution
rights for sale of the  Company's  golf club shafts in Japan and  certain  other
Asian countries. Precision FM and Precision are subsidiaries of Marubeni and are
collectively  referred to as  "Precision  Japan." The grip and shaft  agreements
with Precision Japan expire in July 2001 and July 2002, respectively.  Precision
Japan may renew the grip  agreement for  successive  five-year  terms.  The grip
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
the  Company.  Precision  Japan may renew the  shaft  agreement  for  successive
two-year  terms.  The shaft agreement is terminable by either party for cause or
by the  Company  if  Precision  Japan  fails to meet  certain  minimum  purchase
requirements.  While the Company  currently  enjoys a strong  relationship  with
Precision  Japan,  the loss of Precision Japan as a distributor of the Company's
products would have a significant adverse effect on the Company.

     The Company is  significantly  dependent  on sales to  Precision  Japan and
Taylor Made Golf which,  in the aggregate,  represented  46%, 40% and 35% of the
Company's  total net sales for the fiscal  years  ended May 31,  2000,  1999 and
1998,  respectively.  Precision Japan accounted for 19% of golf club shaft sales
and 73% of golf club grip sales during fiscal 2000. Taylor Made Golf represented
22% of shaft  sales and less  than 1% of grip  sales  during  fiscal  2000.  The
Company  does not have a supply  agreement  with Taylor  Made Golf.  The loss of
sales to either 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 the  Company's
business  and  operating  results.  Sales in the golf  equipment  industry  have
historically  been seasonal in nature with consumer demand for product being the
strongest during the spring and summer months.

PATENTS, TRADEMARKS

     The  Company  has  obtained  a  trademark  and  a  utility  patent  on  the
manufacture and design of its "Rifle" steel shaft products.  Management believes
that its  "Rifle"  products  are  superior  to other  steel golf club  shafts in
performance,  consistency  and strength which provides the Company a competitive
advantage in the golf equipment  industry.  Management believes that some of the
shaft patents material to its future success are its patent 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,  its patent  which
relates to the same frequency  sorting,  but for graphite shafts, and its patent
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.  Other patents held by the Company 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, the Company's  principal  competitors have not adopted,  nor does
management believe that they have plans to copy, the expired patents.

     The Company  also  relies  upon  trademarks  to  establish  and protect its
proprietary  rights in its grip 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,  the Company 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.  The
Company has also  obtained  design  patents on some of its grips and applied for
others that are pending.  The Company  protects its proprietary  rubber compound
and related technologies as trade secrets. Despite 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 the Company's  designs and materials  without  infringing  the Company'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 the
Company  believes that all of its golf club shafts and grips 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 the Company's products.

                                       3
<PAGE>
RESEARCH AND DEVELOPMENT

     The Company's engineering, sales and other staff, together with independent
consultants engaged by the Company,  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 golf club shaft and grip products
are tested  through the  Company's  sales force with  customers and various tour
players.  During the fiscal years ended May 31, 2000, 1999 and 1998, the Company
spent approximately $0.7 million,  $0.6 million and $0.5 million on research and
development, respectively.

ENVIRONMENTAL

     In May 1996, the Company acquired  substantially all the assets of the golf
club shaft  manufacturing  business of  Brunswick  Corporation  (the  "Brunswick
Acquisition").  Included  in  the  acquired  assets  were  land,  buildings  and
equipment at the Company's Torrington,  Connecticut  manufacturing facility (the
"FMP  plant").  In  conjunction  with  the  Brunswick   Acquisition,   Brunswick
Corporation  agreed to indemnify the Company from  potential  liability  arising
from  certain  environmental  matters  and to  remediate  certain  environmental
conditions which existed at the FMP plant on the date of acquisition.  Brunswick
Corporation has engaged an  environmental  consulting firm to perform testing at
the FMP plant and is in the process of developing a plan of remediation. Failure
of Brunswick  Corporation  to fulfill its  obligations  under the asset purchase
contract  could  have a  material  adverse  effect  on the  Company's  financial
condition and results of operations.  The Company has retained legal counsel for
representation  on  various  environmental  matters  related  to  the  Brunswick
Acquisition.  Total  legal fees  incurred  related to these  matters  during the
fiscal year ended May 31, 2000 were approximately $0.1 million.

     The  Company  received  a notice  of  violation  ("NOV")  from the State of
Connecticut Department of Environmental Protection ("DEP") alleging violation of
certain provisions of a permit related to the discharge of treated wastewater at
the FMP plant.  This permit was issued to the Company in February  1997 based on
an application  prepared by Brunswick  Corporation in April 1996. In April 2000,
the Company reached a settlement agreement with DEP discharging the Company from
any civil  liability  with  respect to the  allegations  in the NOV,  subject to
completion  and  approval of certain  remedial  measures  at the FMP plant.  The
Company incurred approximately $0.2 million in capital expense to complete these
remedial  measures  during the fiscal year ended May 31, 2000 and, in June 2000,
obtained a certification  from DEP that the work was  satisfactorily  completed.
The Company is seeking  reimbursement from Brunswick Corporation for the cost of
remediation and legal fees incurred in conjunction with this matter.

     In April 2000, the Company received a request for information from the U.S.
Environmental  Protection  Agency  ("EPA")  related to disposal and treatment of
waste materials from the FMP plant during a period from 1982 to 1997. The EPA is
currently  conducting  an  investigation   regarding  the  former  National  Oil
Services, Inc. Superfund site in West Haven, Connecticut. National Oil Services,
Inc.  was,  prior  to its  bankruptcy,  a  contractor  used by the  Company  and
Brunswick Corporation to treat and dispose non-hazardous waste oils from the FMP
plant.  EPA has not issued any demands for  reimbursement or performance of work
from the Company relating to this matter and there is not sufficient information
at this time to determine  what, if any, action EPA may pursue and what, if any,
effect  it  may  have  on the  Company's  financial  condition  and  results  of
operations.

     During  the  fiscal  year  ended  May  31,  2000,   the  Company   incurred
approximately  $1.0  million  in  capital  expense  to  upgrade  the  wastewater
treatment  facilities  at the FMP plant to comply with new EPA mandates on water
quality adopted by DEP. Upgrade of these systems is complete and was approved by
DEP in February  2000. The Company does not  anticipate  significant  additional
cost related to the upgrade of these systems.

     During  the  fiscal  year  ended  May  31,  2000,   the  Company   expended
approximately $74,000 on the treatment,  storage and disposal of hazardous waste
at the FMP plant.  Regulatory fees for various  environmental  permits and costs
during the year were approximately $11,000.

EMPLOYEES

     As of May 31, 2000, the Company had 328 employees. Approximately 70% of the
Company's  work force is  covered by a  collective  bargaining  agreement  which
expires in  November  2002.  The  Company  believes  its  relationship  with its
employees is good.

                                       4
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY.

     The  Company's  golf club shaft  manufacturing  facility  is located at 535
Migeon  Avenue,  Torrington,  Connecticut  and comprises  approximately  230,000
square feet. The  manufacturing  facility is owned by the Company  subject to an
open-end  mortgage  granted to Wells Fargo Business  Credit,  Inc. See note 7 of
Notes to Consolidated Financial Statements.

     The Company's principal executive and administrative offices are located in
approximately 8,000 square feet of a leased facility at 15170 North Hayden Road,
Suite  1,  Scottsdale,   Arizona.   The  monthly  payment  under  the  lease  is
approximately $16,000 and the term of the lease expires in May 2001.

     In November 1999, the Company entered into a lease of  approximately  9,000
square feet of warehouse  space located at 7861 East Gray Road,  Suites 107-111,
Scottsdale,  Arizona.  This facility  serves as a distribution  point from which
product is shipped to the Company's West Coast  customers.  The monthly  payment
under the lease is  approximately  $7,600  and the term of the lease  expires in
November 2001.

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

ITEM 3. LEGAL PROCEEDINGS.

     The  Company  is  from  time  to  time a party  to  various  routine  legal
proceedings, incidental to the Company's business. Management believes that none
of the current routine  proceedings  will have a material  adverse effect on the
Company's financial condition or future operating results.

     On November 2, 1999, R. R. Donnelley & Sons Company,  Plaintiff,  vs. Royal
Precision,  Inc.,  Defendant,  was filed in  Superior  Court,  Maricopa  County,
Arizona.  In the matter,  R. R. Donnelley & Sons Company  ("Donnelley")  alleged
that the Company is liable under breach of contract for  approximately  $280,000
in   printing   costs   arising   from  the   preparation   of  a  Joint   Proxy
Statement/Prospectus  related to a proposed merger agreement between the Company
and Coyote Sports,  Inc. which was terminated prior to the effective date of the
merger.  On April 17, 2000,  the court granted the  Company's  motion to dismiss
this  suit.  However,  the court has not yet signed a final  judgment  and it is
uncertain  whether  or not  Donnelley  will  appeal  the  dismissal.  Management
believes  that the  action is  without  merit and  intends  to defend any appeal
vigorously.

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

     None.

                                       5
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Common Stock is traded on The Nasdaq  National Market under the trading
symbol  "RIFL".  The prices set forth below reflect the high and low sale prices
for shares of Common Stock for each quarter  during the past two fiscal years as
reported by The Nasdaq National Market.

                                                   HIGH      LOW
                                                   ----      ---
             FISCAL YEAR 1999
             First Quarter                        $ 5.28    $3.88
             Second Quarter                         4.88     3.00
             Third Quarter                          3.50     1.28
             Fourth Quarter                         3.88     2.13

             FISCAL YEAR 2000
             First Quarter                          4.00     1.75
             Second Quarter                         2.88     2.00
             Third Quarter                          3.50     2.31
             Fourth Quarter                         3.50     2.50

     As of August 7, 2000,  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 Company's two credit  facilities  each limit the
Company's ability to pay dividends on its Common Stock.

ITEM 6.  SELECTED FINANCIAL DATA.

     The selected  consolidated  financial data presented  below for, and as of,
each of the three years since the  Company has been  publicly  traded is derived
from the Company's  consolidated  financial  statements as of May 31, 2000, 1999
and  1998.  This  data  should  be read in  conjunction  with  the  consolidated
financial statements and notes thereto included in Item 8 of this Form 10-K.

                     ROYAL PRECISION, INC. AND SUBSIDIARIES
                      SELECTED CONSOLIDATED FINANCIAL DATA
                     YEARS ENDED MAY 31, 2000, 1999 AND 1998
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                     2000      1999      1998
                                                    -------   -------   -------

     Net sales                                      $29,925   $23,219   $24,722
     Income from continuing operations                  870       276       268
     Income from continuing operations per share       0.15      0.05      0.05
     Total assets                                    24,942    24,610    25,886
     Long-term debt and capital lease obligations     6,027     6,191     3,171
     Total liabilities                               10,530    11,158    11,559

                                       6
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

OVERVIEW--

     Royal  Precision,  Inc. ("RP" or the "Company") is a holding  company which
carries on its business  operations through its 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  (formerly  known  as  Roxxi,  Inc.,
"Roxxi"). 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.  As  discussed  in  note 3 to the  consolidated
financial statements, the Company disposed of the operating assets of Royal Grip
Headwear  Company in March 1999.  Results of operations for Roxxi in all periods
through May 31, 1999 are reflected as discontinued operations.

     The Company designs,  manufactures  and distributes  steel golf club shafts
and designs and  distributes  golf club grips and graphite  golf club shafts for
sale to  original  equipment  manufacturers  ("OEMs")  and to  distributors  and
retailers for use in the  replacement  market.  The Company's  products are sold
throughout  the United  States as well as  internationally,  primarily in Japan,
Australia, the United Kingdom and Canada.

     The Company  principally  operates in the golf equipment industry which has
historically  been seasonal in nature with consumer demand for product being the
strongest during the spring and summer months.

FISCAL YEAR ENDED MAY 31, 2000 COMPARED TO THE FISCAL YEAR ENDED MAY 31, 1999--

     NET SALES. Net sales from continuing  operations for the year ended May 31,
2000 were $29.9 million,  an increase of $6.7 million or 29% over net sales from
continuing  operations of $23.2  million in 1999.  Net sales of golf club shafts
increased by $6.4  million or 33% and net sales of golf club grips  increased by
$0.3 million or 8%. The increased golf club shaft sales reflect continued strong
demand for the Company's  proprietary "Rifle" shafts. Net sales of the Company's
higher  priced,  pro grade golf club shafts  including the "Rifle"  increased by
$6.7 million or 43%. Sales of the Company's lower priced,  commercial grade golf
club shafts decreased by $0.3 million or 10%. The increased golf club grip sales
reflect the success of a new buffed product introduced to the Japanese market in
November  1998.  Sales of this product for the year ended May 31, 2000 were $1.7
million compared to $0.6 million in 1999.

     COST OF SALES.  Cost of goods sold from continuing  operations for the year
ended May 31, 2000 was $20.5  million,  an increase of $5.5  million or 37% over
cost of goods sold from  continuing  operations of $15.0  million in 1999.  Golf
club shafts cost of goods sold  increased  by $4.7 million or 37% as a result of
higher  total net sales.  Golf club grips cost of goods sold  increased  by $0.8
million or 33% due to higher  total net sales and  additional  costs  associated
with the  opening  of a new West Coast  distribution  center in  December  1999.
Acushnet Rubber Company  ("Acushnet") had previously  warehoused and distributed
RG's grips under a manufacturing and supply agreement. RG assumed responsibility
for these functions  following the termination of the Acushnet  contracts.  (See
note 5 to the consolidated financial statements.)  Approximately $0.1 million in
additional costs was incurred  related to the new  distribution  facility during
the year ended May 31,  2000.  Also,  depreciation  expense of $0.2  million was
recorded on the grip manufacturing equipment while in use by Acushnet during the
year ended May 31, 2000  whereas no  depreciation  expense was  recorded in 1999
when the Acushnet capital lease contract was in effect.

     GROSS PROFIT.  Gross profit from  continuing  operations for the year ended
May 31, 2000 was $9.4  million,  an  increase of $1.2  million or 15% over gross
profit from  continuing  operations  of $8.2 million in 1999.  Gross profit from
sales of golf club shafts  increased  by $1.6 million or 26% to $8.0 million due
to higher total net sales.  As a percentage of sales,  the gross profit on sales
of  golf  club  shafts  decreased  from  33% to  31%  due  to  several  factors,
principally  the mix of  products  sold  during  the  two  periods.  Sales  of a
particular  pro grade  shaft  which is not  subject to the  Company's  Frequency
Coefficient Matching ("FCM") technology and is sold at a lower price and a lower
profit margin than the Company's other pro grade products totaled  approximately
$4.3  million,  or 17% of total shaft sales during  fiscal  2000.  Sales of this
product during fiscal 1999 were approximately $1.8 million, or 9% of total shaft
sales.  Additionally,  inventory  write-downs  of $0.3 million were  recorded to
reduce the book value of certain  graphite shafts  purchased for resale prior to
the  introduction of the "Rifle"  Graphite,  to estimated net realizable  value.
Overtime  pay  and  workers'  compensation  insurance  premiums  also  increased
significantly  during fiscal 2000 as production was increased to meet the higher
sales demand.

                                       7
<PAGE>
     Gross profit from sales of golf club grips decreased by $0.4 million or 23%
to $1.4 million despite an increase in net sales. As a percentage of sales,  the
gross  profit  on sales  of golf  club  grips  decreased  from 44% to 31%.  This
decreased  margin  reflects  the  additional  warehouse  costs and  depreciation
discussed  above as well as a  different  mix of  products  sold  during the two
periods.  Beginning  in November  1998,  the Company  introduced  the new buffed
product for the Japanese market which is being manufactured at a higher cost and
is being sold at a lower  profit  margin than other RG  products.  Sales of this
product  represented 38% of sales during the year ended May 31, 2000 compared to
only 14% in 1999.

     SELLING,  GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  expenses for the year ended May 31, 2000 were $7.1  million,  an
increase  of 19% over  selling,  general  and  administrative  expenses  of $5.9
million  during the  corresponding  period in 1999.  The $1.1  million  increase
primarily  consists of additional  marketing and  advertising  costs including a
television  commercial campaign which first aired in January 2000 and management
bonuses earned under an incentive  compensation  plan based on the profitability
of the Company.  As a percentage of sales,  selling,  general and administrative
expenses  declined  from 26% during  year  ended May 31,  1999 to 24% during the
corresponding period in 2000.

     AMORTIZATION  OF GOODWILL.  Goodwill  was reduced in the fourth  quarter of
fiscal 1999 as a result of the  utilization of net operating loss  carryforwards
established prior to the FMP-RG Merger  ("Pre-Merger NOLs") and partial reversal
of the  valuation  allowance  on  pre-merger  deferred  tax  assets.  Therefore,
amortization  expense was reduced  from  $521,000  during the year ended May 31,
1999, to $486,000 in 2000.

     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 a one-time  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.  In October 1998, FMP entered into a new credit facility
with RG's lender and paid off all existing  loans to FMP's  previous  lender.  A
prepayment  penalty of $75,000 was incurred  related to this transaction and was
reflected as a component of the $0.8 million  interest  expense  during the year
ended May 31, 1999. Interest expense in 2000 was $0.6 million.

     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 of $267,000 for the year ended May 31, 2000 is
principally comprised of royalties earned on sales of Roxxi headwear products as
well as  royalty  fees  from  other  contracts  which  license  certain  Company
technology  and  products.  Other  income of $243,000 for the year ended May 31,
1999  primarily  represents  interest  income  on  the  Acushnet  capital  lease
receivable.

     PROVISION FOR INCOME  TAXES.  Provisions of $616,000 and $804,000 for taxes
on income from  continuing  operations  were recorded during the years ended May
31, 2000 and 1999,  respectively.  During  fiscal  2000,  the  Company  utilized
approximately   $0.5  million  of  Pre-Merger  NOLs  and  also  determined  that
approximately  $1.9 million of Pre-Merger  NOLs were  realizable.  As such,  the
Company  reduced the  valuation  allowance on its deferred  income tax assets by
approximately  $0.7  million (see notes 2 and 10 to the  consolidated  financial
statements).  During  fiscal  2000,  the  Company  also  reduced  the  valuation
allowance on other deferred income tax assets, not related to the FMP-RG Merger,
by   approximately   $162,000.   During  fiscal  1999,   the  Company   utilized
approximately   $0.9  million  of  Pre-Merger  NOLs  and  also  determined  that
approximately  $1.0 million of Pre-Merger NOLs were  realizable and,  therefore,
reduced  the  valuation  allowance  on its  deferred  income  tax  assets  by an
aggregate of $0.7 million.  Taxes are provided based on the estimated  effective
tax rate for the year  which  considers  the  effect of  nondeductible  goodwill
amortization.

     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
year ended May 31,  1999 were $0.4  million net of an income tax benefit of $0.2
million.

                                       8
<PAGE>
FISCAL YEAR ENDED MAY 31, 1999 COMPARED TO THE FISCAL YEAR ENDED MAY 31, 1998--

     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 in 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 $5.5 million or
61%. 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  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,  pro grade golf club shafts  increased by
$3.5 million or 29%. 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 in 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 both of the years
ended May 31, 1999 and 1998 was $8.2  million.  Gross  profit from sales of 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  grade  shafts to higher  margin,  pro  grade  shafts.  As a
percentage of sales,  the gross profit on shaft sales increased from 30% to 33%.
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 $5.9  million,  a
decrease of 5% from selling, general and administrative expenses of $6.3 million
in 1998.  This net reduction of $0.4 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  resulted in reductions of
corporate overhead costs.

     AMORTIZATION OF GOODWILL. Amortization expense of $0.5 million was recorded
for the year ended May 31, 1999  compared to an expense of $0.4  million in 1998
which included only nine months of amortization  following the effective date of
the FMP-RG Merger.

     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 a one-time  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.

     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.

     INTEREST  EXPENSE.  In October 1998, FMP entered into a new credit facility
with RG's lender and paid off all existing  loans to FMP's  previous  lender.  A
prepayment  penalty of $75,000 was incurred  related to this transaction and was
reflected as a component of the $0.8 million  interest  expense  during the year
ended May 31, 1999. Interest expense in 1998 was $0.6 million.

                                       9
<PAGE>
     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 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 in 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 $804,000 and $28,000 for taxes on
income from  continuing  operations were recorded during the years ended May 31,
1999  and  1998,   respectively.   During  fiscal  1999,  the  Company  utilized
approximately   $0.9  million  of  Pre-Merger  NOLs  and  also  determined  that
approximately  $1.0 million of Pre-Merger  NOLs 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).  Taxes are provided  based on the estimated  effective tax rate for
the year which considers the effect of nondeductible goodwill amortization.

     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 NOLs.

LIQUIDITY AND CAPITAL RESOURCES--

     At May 31,  2000,  the Company had  working  capital of $6.0  million and a
current  ratio of 2.3 to 1 as compared to working  capital of $5.8 million and a
current ratio of 2.2 to 1 at May 31, 1999.

     FMP  has a  credit  facility  consisting  of a term  loan  and a  revolving
line-of-credit.  The FMP term  loan of $2.7  million  at May 31,  2000 is due in
monthly principal  installments of $65,000 until its maturity in September 2002.
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 a maximum borrowing of $5.0 million. As of May 31, 2000, FMP had $3.7
million  outstanding  under  its  revolving   line-of-credit  and  $1.1  million
available for additional borrowings. The FMP line-of-credit expires in September
2002.

     RG  has a  credit  facility  consisting  of a  term  loan  and a  revolving
line-of-credit.  The RG  term  loan of $0.4  million  at May 31,  2000 is due in
monthly principal  installments of $10,500 until its maturity in September 2002.
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 a maximum borrowing of $1.5 million.  As of May 31, 2000, RG had $0.1
million  outstanding  under  its  revolving   line-of-credit  and  $0.8  million
available for additional borrowings.  The RG line-of-credit expires in September
2002.

     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
(9.5% at May 31,  2000) plus 0.75% and 0.25%,  respectively,  and are secured by
substantially all of the Company's assets.

     The FMP and RG  credit  facilities  contain  certain  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.  The Company was in compliance with all financial
loan covenants at May 31, 2000.

     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,  2000,  net  cash  provided  by  operating
activities  was $2.5 million  which  primarily  resulted from net income of $0.9
million, depreciation and amortization of $1.2 million and deferred income taxes
of $0.6  million.  Net cash provided by operating  activities  was reduced by an
increase in accounts receivable of $0.3 million.

                                       10
<PAGE>
     Net cash used in investing  activities  for the year ended May 31, 2000 was
$2.2  million for the  purchase of property,  plant and  equipment.  The Company
estimates that capital expenditures for the fiscal year ending May 31, 2001 will
be  approximately  $1.6  million.  The Company is assessing  its steel golf club
shaft  manufacturing  capacities  compared to the current and anticipated future
volume of customer  orders.  Based on this assessment and the success of ongoing
projects to increase production volumes, significant future capital expenditures
may be  required  at the  FMP  manufacturing  facility  to  increase  production
capacity for pro grade steel golf club shafts.

     Net cash used in financing  activities for the year ended May 31, 2000, was
$0.5  million  resulting  from  repayments  of long term debt and capital  lease
obligations of $1.2 million and net  borrowings  under  lines-of-credit  of $0.7
million.  The  Company is  investigating  certain  potential  acquisitions.  Any
potential  acquisitions  may  require  the use of  existing  capital  resources,
assumption  of debt or  issuance  of new debt  instruments,  any of which  could
impact the Company's liquidity and capital resources.

YEAR 2000 ASSESSMENT --

     During the two year period ended  December 31, 1999,  the Company  expended
approximately  $100,000  to  purchase  and install  new  computer  hardware  and
software  resulting  in all  Company  hardware  and  software  being  Year  2000
compliant and approximately  $20,000 to evaluate the Company's  internal systems
for Year 2000 problems.

     The Company did not  experience  any  disruptions in its ability to conduct
business due to Year 2000 problems. Also, no customers,  suppliers, or financial
institutions  have  informed  the  Company  of any Year 2000  issues  that would
materially affect the Company.

BUSINESS ENVIRONMENT AND FUTURE RESULTS --

     RELIANCE  ON THIRD  PARTY  SUPPLIERS.  In December  1996,  RG and  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 an  agreement  resulting  in the  transfer  of RG's  manufacturing
equipment  to  Acushnet  under a  capital  lease.  Since  January  1997,  RG has
purchased the majority of its supply of non-cord,  injected grips from Acushnet.
In May 1999, RG and Acushnet  executed a mutual  release  agreement  terminating
their  manufacturing  and supply  agreement  and capital  lease  agreement  (the
"Termination  Agreement").  Pursuant to the Termination  Agreement,  RG received
$1.5 million in cash and $1.0 million in purchase  credits from  Acushnet in May
1999.  Additionally,  Acushnet's  obligation to make  additional  payments to RG
under the capital  lease was  terminated  but  Acushnet was required to continue
producing   grips   through   February  2000  at  which  time  RG  received  the
manufacturing  equipment which was previously leased to Acushnet.  RG recognized
an  aggregate  gain of  $865,000  during the fiscal year ended May 31, 1999 as a
result  of  the  Termination  Agreement.  At May  31,  2000,  the  manufacturing
equipment returned to RG is classified as equipment held for sale.

     The Company  believes that its current  inventory of grips is sufficient to
satisfy  customer  demand  through  December 31, 2000.  The Company is currently
purchasing  grips from various  suppliers and believes it has an adequate source
of supply to meet its current and anticipated  future  customer needs.  However,
there can be no assurance  that the  transition to new suppliers will not result
in production  delays or the loss of sales and key customers  which would have a
material  adverse  effect on the  Company's  financial  condition and results of
operations.

     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  manufacturing
equipment,  finished  goods  inventory and raw materials to another  company for
$0.3  million  and a royalty of 2% of the  buyer's net sales until the buyer has
paid an additional $0.2 million. Subsequently, Roxxi's name was changed to Royal
Grip Headwear Company.

     In fiscal 1999, the Company  recorded a loss on disposal of assets of Roxxi
of $0.8 million, net of a tax benefit of $0.4 million. This expense represents a
$1.1 million  write-down  of the excess of the carrying  value of inventory  and
fixed assets over the cash received and $0.1 million for  estimated  transaction
costs and  estimated  operating  expenses  to be incurred  during the  phase-out
period of this  business  segment.  The Company is  accounting  for royalties as
income is earned during the two year period beginning May 1, 1999. For the years
ended May 31, 2000 and 1999,  royalties of $151,000  and $20,000 were  recorded,
respectively, and are reflected as other income in the accompanying consolidated
statements of operations.

     ENVIRONMENTAL  MATTERS. In May 1996, the Company acquired substantially all
the  assets  of  the  golf  club  shaft  manufacturing   business  of  Brunswick
Corporation (the "Brunswick Acquisition").  Included in the acquired assets were
land,  buildings  and  equipment  at  the  Company's   Torrington,   Connecticut
manufacturing  facility (the "FMP  plant").  In  conjunction  with the Brunswick
Acquisition,   Brunswick  Corporation  agreed  to  indemnify  the  Company  from

                                       11
<PAGE>
potential liability arising from certain  environmental matters and to remediate
certain  environmental  conditions which existed at the FMP plant on the date of
acquisition.  Brunswick Corporation has engaged an environmental consulting firm
to perform  testing at the FMP plant and is in the process of  developing a plan
of  remediation.  Failure of Brunswick  Corporation  to fulfill its  obligations
under the asset purchase  contract  could have a material  adverse effect on the
Company's  financial  condition  and  results of  operations.  The  Company  has
retained  legal  counsel for  representation  on various  environmental  matters
related to the Brunswick Acquisition. Total legal fees incurred related to these
matters  during  the  fiscal  year ended May 31,  2000 were  approximately  $0.1
million.

     The  Company  received  a notice  of  violation  ("NOV")  from the State of
Connecticut Department of Environmental Protection ("DEP") alleging violation of
certain provisions of a permit related to the discharge of treated wastewater at
the FMP plant.  This permit was issued to the Company in February  1997 based on
an application  prepared by Brunswick  Corporation in April 1996. In April 2000,
the Company reached a settlement agreement with DEP discharging the Company from
any civil  liability  with  respect to the  allegations  in the NOV,  subject to
completion  and  approval of certain  remedial  measures  at the FMP plant.  The
Company incurred approximately $0.2 million in capital expense to complete these
remedial  measures  during the fiscal year ended May 31, 2000 and, in June 2000,
obtained a certification  from DEP that the work was  satisfactorily  completed.
The Company is seeking  reimbursement from Brunswick Corporation for the cost of
remediation and legal fees incurred in conjunction with this matter.

     In April 2000, the Company received a request for information from the U.S.
Environmental  Protection  Agency  ("EPA")  related to disposal and treatment of
waste materials from the FMP plant during a period from 1982 to 1997. The EPA is
currently  conducting  an  investigation   regarding  the  former  National  Oil
Services, Inc. Superfund site in West Haven, Connecticut. National Oil Services,
Inc.  was,  prior  to its  bankruptcy,  a  contractor  used by the  Company  and
Brunswick Corporation to treat and dispose non-hazardous waste oils from the FMP
plant.  EPA has not issued any demands for  reimbursement or performance of work
from the Company relating to this matter and there is not sufficient information
at this time to determine  what, if any, action EPA may pursue and what, if any,
effect  it  may  have  on  the  Company's  financial  condition  or  results  of
operations.

     During  the  fiscal  year  ended  May  31,  2000,   the  Company   incurred
approximately  $1.0  million  in  capital  expense  to  upgrade  the  wastewater
treatment  facilities  at the FMP plant to comply with new EPA mandates on water
quality adopted by DEP. Upgrade of these systems is complete and was approved by
DEP in February  2000. The Company does not  anticipate  significant  additional
cost related to the upgrade of these systems.

     During  the  fiscal  year  ended  May  31,  2000,   the  Company   expended
approximately $74,000 on the treatment,  storage and disposal of hazardous waste
at the FMP plant.  Regulatory fees for various  environmental  permits and costs
during the year were approximately $11,000.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

DERIVATIVE FINANCIAL INSTRUMENTS, OTHER FINANCIAL INSTRUMENTS, AND DERIVATIVE
COMMODITY INSTRUMENTS--

     At May  31,  2000,  the  Company  did  not  participate  in any  derivative
financial  instruments or other  financial and commodity  instruments  for which
fair value disclosure would be required under Statement of Financial  Accounting
Standards No. 107. The Company holds no investment securities that would require
disclosure of market risk.

PRIMARY MARKET RISK EXPOSURE --

     The Company's  primary  market risk  exposure  relates to its variable rate
debt  obligations  which are  described  in note 7 of the Notes to  Consolidated
Financial Statements.  A one percent change in the prime lending rate would have
an effect of $69,500 and $78,500 on interest expense for the years ended May 31,
2000 and 1999, respectively.

     The Company has entered  into a contract of  approximately  $0.4 million to
purchase certain manufacturing equipment. This contract is denominated in German
Deutsche Marks.  The Company expects to take delivery of this equipment and make
final  payment  under the contract in October  2000.  The Company has not hedged
this  transaction as of May 31, 2000 and,  accordingly,  will be impacted by any
change  in the  exchange  rate  prior  to the  ultimate  settlement  date of the
contract.

                                       12
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Royal Precision, Inc.:

We have audited the accompanying consolidated balance sheets of Royal Precision,
Inc. (a Delaware  corporation)  and subsidiaries as of May 31, 2000 and 1999 and
the related consolidated statements of operations, stockholders' equity and cash
flows for the three  years in the period  ended May 31,  2000.  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 auditing standards generally accepted
in the United  States.  Those  standards  require  that we plan and  perform the
audits 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,  2000 and 1999,  and the results of their
operations  and their cash flows for the three years in the period ended May 31,
2000 in conformity with accounting  principles  generally accepted in the United
States.


                                                /s/ ARTHUR ANDERSEN LLP


Phoenix, Arizona
July 21, 2000

                                       13
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           AS OF MAY 31, 2000 AND 1999
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               2000             1999
                                                                             --------         --------
                                     ASSETS
<S>                                                                          <C>              <C>
CURRENT ASSETS:
   Cash                                                                      $     36         $    184
   Accounts receivable, net of allowance for doubtful accounts of $274
    and $433 at May 31, 2000 and 1999, respectively                             5,100            4,617
   Inventories                                                                  5,124            4,514
   Other current assets                                                           155              783
   Deferred income taxes                                                          106              647
                                                                             --------         --------
        Total current assets                                                   10,521           10,745
                                                                             --------         --------
PROPERTY, PLANT AND EQUIPMENT:
   Land                                                                           123              123
   Furniture, fixtures and office equipment                                       455              499
   Buildings and improvements                                                     840              670
   Machinery and equipment                                                      4,278            4,144
   Equipment held for sale                                                        500               --
   Construction in progress                                                     1,081              402
                                                                             --------         --------
                                                                                7,277            5,838
   Less - Accumulated depreciation                                             (1,264)            (929)
                                                                             --------         --------
                                                                                6,013            4,909
                                                                             --------         --------

GOODWILL, net                                                                   7,629            8,857
                                                                             --------         --------

DEFERRED INCOME TAXES                                                             701               70
                                                                             --------         --------

OTHER ASSETS                                                                       78               29
                                                                             --------         --------
        Total assets                                                         $ 24,942         $ 24,610
                                                                             ========         ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of long-term debt and capital
     lease obligations                                                        $    906        $  1,203
   Accounts payable                                                              1,714           1,839
   Accrued salaries and benefits                                                 1,290             595
   Accrued pension liability                                                       176             251
   Other accrued expenses                                                          417           1,079
                                                                              --------        --------
        Total current liabilities                                                4,503           4,967

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
   net of current portion                                                        6,027           6,191
                                                                              --------        --------
        Total liabilities                                                       10,530          11,158
                                                                              --------        --------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, $0.001 par value; 1,000,000 shares authorized
    (reduced from 5,000,000 shares on October 19, 1999); no shares issued           --              --
   Common stock, $0.001 par value; 10,000,000 shares authorized (reduced
    from 50,000,000 shares on October 19, 1999); 5,678,956 and 5,667,375
    shares issued and outstanding at May 31, 2000 and 1999, respectively             6               6
   Additional paid-in capital                                                   13,940          13,897
   Retained earnings (accumulated deficit)                                         466            (404)
   Accumulated other comprehensive loss                                             --             (47)
                                                                              --------        --------
        Total stockholders' equity                                              14,412          13,452
                                                                              --------        --------
        Total liabilities and stockholders' equity                            $ 24,942        $ 24,610
                                                                              ========        ========
</TABLE>
              The accompanying notes are an integral part of these
                          consolidated balance sheets.

                                       14
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED MAY 31, 2000, 1999 AND 1998
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                        2000           1999           1998
                                                                     -----------    -----------    -----------
<S>                                                                  <C>            <C>            <C>
NET SALES:
  Golf club shafts                                                   $    25,433    $    19,075    $    21,023
  Golf club grips                                                          4,492          4,144          3,699
                                                                     -----------    -----------    -----------
                                                                          29,925         23,219         24,722
                                                                     -----------    -----------    -----------
COST OF SALES:
  Golf club shafts                                                        17,436         12,710         14,683
  Golf club grips                                                          3,089          2,318          1,805
                                                                     -----------    -----------    -----------
                                                                          20,525         15,028         16,488
                                                                     -----------    -----------    -----------
      Gross profit                                                         9,400          8,191          8,234

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                               7,051          5,929          6,269
AMORTIZATION OF GOODWILL                                                     486            521            390
GAIN ON TERMINATION OF MANUFACTURING SUPPLY CONTRACT                          --           (865)            --
NONRECURRING MERGER RELATED EXPENSES                                          --             --            842
                                                                     -----------    -----------    -----------
      Operating income                                                     1,863          2,606            733

INTEREST EXPENSE                                                             644            794            605
TERMINATED MERGER EXPENSES                                                    --            975             --
OTHER INCOME                                                                (267)          (243)          (168)
                                                                     -----------    -----------    -----------
      Income from continuing operations before provision
        for income taxes                                                   1,486          1,080            296
PROVISION FOR INCOME TAXES                                                   616            804             28
                                                                     -----------    -----------    -----------
      Income from continuing operations                                      870            276            268
                                                                     -----------    -----------    -----------
DISCONTINUED OPERATIONS:
  Loss from operations of Roxxi, Inc., net of tax benefit of $164
    and $0 for the years ended May 31, 1999 and 1998, respectively            --            352            531
  Loss on disposal of assets of Roxxi, Inc., net of tax benefit of
    $386 for the year ended May 31, 1999                                      --            828             --
                                                                     -----------    -----------    -----------
      Loss from discontinued operations                                       --          1,180            531
                                                                     -----------    -----------    -----------
      Net income (loss)                                              $       870    $      (904)   $      (263)
                                                                     ===========    ===========    ===========

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
  Income from continuing operations                                  $      0.15    $      0.05    $      0.05
  Loss from discontinued operations                                           --          (0.21)         (0.10)
                                                                     -----------    -----------    -----------
      Net income (loss)                                              $      0.15    $     (0.16)   $     (0.05)
                                                                     ===========    ===========    ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED TO
  COMPUTE PER SHARE INFORMATION:
      BASIC                                                            5,672,580      5,649,756      5,246,857
                                                                     ===========    ===========    ===========

      DILUTED                                                          5,814,862      5,649,756      5,246,857
                                                                     ===========    ===========    ===========
</TABLE>

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

                                       15
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED MAY 31, 2000, 1999 AND 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    RETAINED       ACCUMULATED
                                      COMMON STOCK    ADDITIONAL    EARNINGS         OTHER
                                     ---------------   PAID-IN    (ACCUMULATED   COMPREHENSIVE            COMPREHENSIVE
                                     SHARES   AMOUNT   CAPITAL       DEFICIT)    INCOME (LOSS)   TOTAL    INCOME (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                         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

Stock based compensation                 --     --          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

Exercise of common stock options         12     --           4           --             --             4

Tax benefit from exercise of
  common stock options                   --     --          11           --             --            11

Stock based compensation                 --     --          28           --             --            28

Minimum pension liability
  adjustment, net of tax
  expense of $31                         --     --          --           --             47            47          47

Net income                               --     --          --          870             --           870         870
                                                                                                               -----
Comprehensive income                     --     --          --           --             --            --       $ 917
                                      -----    ---     -------        -----           ----      --------       =====

Balance, May 31, 2000                 5,679    $ 6     $13,940        $ 466           $ --      $ 14,412
                                      =====    ===     =======        =====           ====      ========
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      16
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED MAY 31, 2000, 1999 AND 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       2000           1999           1998
                                                                     --------       --------       --------
<S>                                                                <C>             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                 $    870       $   (904)      $   (263)
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities of continuing operations:
     Depreciation and amortization                                      1,158            939            749
     Deferred income taxes                                                603            779              7
     Loss on retirement and sale of fixed assets                           14             --            360
     Stock based compensation                                              28             --             --
     Changes in operating assets and liabilities -
       Accounts receivable, net                                          (293)          (575)           509
       Inventories                                                       (110)          (970)          (130)
       Other assets                                                        79            (19)            57
       Accounts payable and accrued expenses                              110            102           (650)
       Supply agreement credits                                            --             --           (472)
     Loss from discontinued operations                                     --            352            531
     Loss on sale of discontinued operations                               --            828             --
     Gain on termination of manufacturing supply contract                  --           (865)            --
     Terminated merger expenses                                            --            975             --
                                                                     --------       --------       --------
         Net cash provided by operating activities
          of continuing operations                                      2,459            642            698
                                                                     --------       --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of equipment, net                                         (2,165)          (940)        (1,038)
   Merger costs                                                            --           (975)        (1,031)
   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                                      15             --             49
   Cash acquired from Royal Grip, Inc.                                     --             --             18
                                                                     --------       --------       --------
        Net cash (used in) provided by investing activities
         of continuing operations                                      (2,150)            83         (1,854)
                                                                     --------       --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from exercise of common stock options and warrants              4             16             15
   Proceeds from issuance of long-term debt                                --          5,140          1,600
   Borrowings (repayments) under lines-of-credit, net                     742           (359)         1,438
   Repayments of long-term debt and capital lease obligations          (1,203)        (5,067)        (1,607)
                                                                     --------       --------       --------
        Net cash (used in) provided by financing activities of
         continuing operations                                           (457)          (270)         1,446
                                                                     --------       --------       --------
NET CASH USED IN DISCONTINUED OPERATIONS                                   --           (299)          (290)
                                                                     --------       --------       --------
(DECREASE) INCREASE IN CASH                                              (148)           156             --
CASH, beginning of year                                                   184             28             28
                                                                     --------       --------       --------
CASH, end of year                                                    $     36       $    184       $     28
                                                                     ========       ========       ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for:
      Interest                                                       $    633       $    870       $    687
                                                                     ========       ========       ========
      Income taxes                                                   $     48       $     40       $     61
                                                                     ========       ========       ========
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
    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              $    742       $    650       $     --
                                                                     ========       ========       ========
    Issuance of common stock options and warrants in
     connection with FMP-RG Merger                                   $     --       $     --       $ 12,995
                                                                     ========       ========       ========
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       17
<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") 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
(formerly known as Roxxi,  Inc.,  "Roxxi").  As discussed in Note 3, the Company
disposed of the operating assets of Roxxi in March 1999.

Results  of  operations  for  RG are  included  in  the  Company'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.  The Company designs, manufactures and distributes steel golf club
shafts and designs and distributes golf club grips and graphite golf club shafts
for sale to original  equipment  manufacturers  ("OEMs") and to distributors and
retailers for use in the  replacement  market.  The Company'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  491,124  shares of RP common stock in  connection  with the merger) of
$2,232,000,  which amount was determined  using the Black Scholes option pricing
model,   and  (iv)  RP  Merger  expenses  of  $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.

                                       18
<PAGE>
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 $0.02 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  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.

DEPENDENCE ON "RIFLE" SHAFT SALES -

Sales of the "Rifle"  shaft were $18.7  million,  $13.1 million and $9.8 million
for the years ended May 31, 2000, 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 the Company's  introduction
of new profitable products, the Company'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 accounting principles
generally  accepted in the United States  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.

                                       19
<PAGE>
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
are  placed  in  service,  using  the  straight-line  basis  over the  following
estimated useful lives:

                                                           USEFUL LIVES
                                                           ------------
    Buildings and improvements                             27.5-40 years
    Machinery and equipment                                3-12 years
    Furniture, fixtures and office equipment               3-12 years

GOODWILL -

Goodwill,  prior to accumulated  amortization,  of  $9,026,000,  which is net of
$1,392,000 of reductions related to utilization of pre-merger net operating loss
("NOL")  carryforwards  and reversal of related deferred tax assets,  related to
the FMP-RG  Merger (see Note 1), is being  amortized  over 20 years.  At May 31,
2000, accumulated amortization of goodwill was $1,397,000.

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.

The Company  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, 2000, the Company believes no impairment exists.

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 NOL 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 -

The Company expenses costs of research and development as incurred. Research and
development  expense  was  approximately  $0.7  million,  $0.6  million and $0.5
million for the years ended May 31, 2000, 1999 and 1998, respectively.

ADVERTISING -

The  Company  expenses  production  costs  of  advertising  the  first  date the
advertisements  take place.  Advertising and marketing costs were  approximately
$2.3  million,  $1.6  million and $1.7 million for the years ended May 31, 2000,
1999 and 1998, respectively. As of May 31, 2000, deferred production and prepaid
advertising costs totaling $115,000 are included in other current assets related
to television commercials which had not yet aired.

                                       20
<PAGE>
NET EARNINGS (LOSS) PER SHARE -

The Company  accounts for earnings  (loss) per share in accordance with SFAS No.
128,  "Earnings  Per Share."  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 the year. Common share equivalents  represent dilutive
stock options using the treasury stock method.

For  the  years  ended  May  31,  2000,  1999  and  1998,  options  to  purchase
approximately 620,000, 147,000 and 437,000 shares of common stock, respectively,
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
the Company's common stock.  Loss per share for the years ended May 31, 1999 and
1998 were not affected by stock options because their effect was anti-dilutive.

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 PRONOUNCEMENTS -

In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
133 (as amended by SFAS No. 138),  "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, as amended,  during the fiscal year ending May 31,  2001.
The Company does not anticipate any material impact  resulting from the adoption
of SFAS No. 133, as amended.

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting   Bulletin  ("SAB")  No.  101,  "Revenue   Recognition  in  Financial
Statements,"  which was  subsequently  updated by SAB 101A. SAB 101 and SAB 101A
summarize certain of the SEC's views in applying accounting principles generally
accepted in the United States to revenue  recognition  in financial  statements.
The Company is required to adopt SAB 101 no later than the fourth quarter of its
fiscal year ending May 31, 2001. The Company is currently  evaluating the impact
of the adoption of SAB 101 on its results of operations and financial position.

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 manufacturing equipment,  finished goods inventory and
raw  materials  to another  company for $0.3  million and a royalty of 2% of the
buyer's  net  sales  until  the  buyer  has  paid an  additional  $0.2  million.
Subsequently, Roxxi's name was changed to Royal Grip Headwear Company.

In fiscal  1999,  the Company  recorded a loss on disposal of assets of Roxxi of
$0.8 million,  net of a tax benefit of $0.4 million.  This expense  represents a
$1.1 million  write-down  of the excess of the carrying  value of inventory  and
fixed assets over the cash received and $0.1 million for  estimated  transaction
costs and  estimated  operating  expenses  to be incurred  during the  phase-out
period of this  business  segment.  The Company is  accounting  for royalties as
income is earned during the two year period beginning May 1, 1999. For the years
ended May 31, 2000 and 1999,  royalties of $151,000  and $20,000 were  recorded,
respectively, and are reflected as other income in the accompanying consolidated
statements of operations.

                                       21
<PAGE>
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)
                                                      =======      =======
     Cash flow                                        $  (299)     $  (290)
                                                      =======      =======

4. INVENTORIES:

Inventories  as of  May  31,  2000  and  1999  consisted  of the  following  (in
thousands):

                                                    2000              1999
                                                   ------            ------
     Raw materials                                 $  525            $  471
     Work-in-process                                1,655             1,566
     Finished goods                                 2,944             2,477
                                                   ------            ------
                                                   $5,124            $4,514
                                                   ======            ======

5. MANUFACTURING SUPPLY CONTRACTS:

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 an
agreement resulting in the transfer of RG's manufacturing  equipment to Acushnet
under a capital lease.  Since January 1997, RG has purchased the majority of its
supply of non-cord,  injected  grips from  Acushnet.  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. RG 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.

In May 1999, RG and Acushnet  executed a mutual  release  agreement  terminating
their  manufacturing  and supply  agreement  and capital  lease  agreement  (the
"Termination  Agreement").  Pursuant to the Termination  Agreement,  RG received
$1.5  million  in cash and $1.0  million  in  purchase  credits  from  Acushnet.
Additionally,  Acushnet's obligation to make additional payments to RG under the
capital  lease was  terminated  but Acushnet was required to continue  producing
grips  through  February  2000 at  which  time  RG  received  the  manufacturing
equipment  which was previously  leased to Acushnet.  RG recognized an aggregate
gain of  $865,000  during the fiscal  year ended May 31, 1999 as a result of the
Termination Agreement.  At May 31, 2000, the manufacturing equipment returned to
RG is classified as equipment held for sale.

The  Company  believes  that its current  inventory  of grips is  sufficient  to
satisfy  customer  demand  through  December 31, 2000.  The Company is currently
purchasing  grips from various  suppliers and believes it has an adequate source
of supply to meet its current and anticipated  future  customer needs.  However,
there can be no assurance  that the  transition to new suppliers will not result
in production  delays or the loss of sales and key customers  which would have a
material  adverse  effect on the  Company's  financial  condition and results of
operations.

FMP uses one vendor to supply  primarily all of the strip steel  utilized in the
manufacture  of steel  golf club  shafts,  but has no supply  contract  with the
vendor.  Should the vendor fail to deliver  steel,  there may be a disruption of
operations at FMP until an alternate  supplier is procured.  The vendor provides
steel from two separate plant locations. If one plant becomes unable to fill the
necessary  requirements,  orders  could be filled from the  alternate  location.
Although  FMP has elected to use this  vendor as its  primary  supplier of strip
steel,  management  believes that there are other  acceptable  supply sources at
comparable prices and that the loss of the supplier would not have a significant
adverse impact on the Company.

                                       22
<PAGE>
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 $1.0 million 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:

FMP  has  a  credit  facility   consisting  of  a  term  loan  and  a  revolving
line-of-credit.  The FMP term  loan of $2.7  million  at May 31,  2000 is due in
monthly principal  installments of $65,000 until its maturity in September 2002.
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 a maximum borrowing of $5.0 million. As of May 31, 2000, FMP had $3.7
million  outstanding  under  its  revolving   line-of-credit  and  $1.1  million
available for additional borrowings. The FMP line-of-credit expires in September
2002.

RG  has  a  credit   facility   consisting  of  a  term  loan  and  a  revolving
line-of-credit.  The RG  term  loan of $0.4  million  at May 31,  2000 is due in
monthly principal  installments of $10,500 until its maturity in September 2002.
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 a maximum borrowing of $1.5 million.  As of May 31, 2000, RG had $0.1
million  outstanding  under  its  revolving   line-of-credit  and  $0.8  million
available for additional borrowings.  The RG line-of-credit expires in September
2002.

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 (9.5% at
May  31,  2000)  plus  0.75%  and  0.25%,  respectively,   and  are  secured  by
substantially all of the Company's assets.

The FMP and RG credit  facilities  contain certain 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.  The  Company was in  compliance  with all  financial  loan
covenants at May 31, 2000.

Total  indebtedness  of the Company as of May 31, 2000 and 1999 consisted of the
following (in thousands):

                                                             2000         1999
                                                           -------      -------
     FMP:
     ----
     Line-of-credit                                        $ 3,740      $ 3,103
     Term loan                                               2,657        3,607

     RG:
     ---
     Line-of-credit                                            105           --
     Term loan                                                 431          644

     Capital lease obligations                                  --           40
                                                           -------      -------
                                                             6,933        7,394
     Less - Current portion                                   (906)      (1,203)
                                                           -------      -------
     Total long-term debt and capital lease obligations    $ 6,027      $ 6,191
                                                           =======      =======

                                       23
<PAGE>
Scheduled  maturities  of the  Company's  indebtedness  at May 31,  2000  are as
follows (in thousands):

               YEARS ENDING
                  MAY 31,
                  -------
                   2001                      $  906
                   2002                         906
                   2003                       5,121
                                             ------
                                             $6,933
                                             ======

As of May 31, 2000 and 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. OPERATING LEASES:

The Company leases its corporate offices, its West Coast distribution center and
various office equipment under operating lease agreements. Minimum annual rental
commitments under noncancellable leases are as follows (in thousands):

               YEARS ENDING
                  MAY 31,
                  -------
                   2001                      $  294
                   2002                          53
                                             ------
                                             $  347
                                             ======

Rental expense under operating leases totaled approximately  $230,000,  $256,000
and $204,000 for the years ended May 31, 2000, 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, 2000,  90,308  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  491,124  shares of RP common
stock.  As of May 31,  2000,  269,874  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 purchase
up to  750,000  shares  of the  Company's  common  stock to  certain  employees,
consultants  and directors.  As of May 31, 2000,  695,173 shares of common stock
are reserved for issuance upon the exercise of options  outstanding under the RP
Plan.  As of May 31,  2000,  an  additional  54,266  shares of common  stock are
reserved for options not yet granted under the RP Plan.

In December  1999,  warrants to purchase  25,000  shares were  granted to a firm
which  provides  consulting  services to the Company.  These  warrants  were not
issued under the RP plan,  however,  they are included in the detail below. None
of the warrants had been exercised as of May 31, 2000.

                                       24
<PAGE>
Stock option and warrant  activity  for the years ended May 31,  1998,  1999 and
2000 is as follows:

<TABLE>
<CAPTION>
                              FM PRECISION                                                WEIGHTED-
                               GOLF CORP.      RG                                          AVERAGE
                               CONVERTED    CONVERTED   RP PLAN     OTHER       TOTAL     EXERCISE
                                 SHARES      SHARES      SHARES     SHARES      SHARES      PRICE
                                 ------      ------      ------     ------      ------      -----
<S>                              <C>        <C>         <C>        <C>       <C>            <C>
Outstanding at June 1, 1997      69,761          --          --        --      169,761    $ 0.24
   Converted from RG options
    and warrants
    in connection with
    FMP-RG merger                    --     491,124          --        --      491,124      7.53
   Granted                           --          --     250,000        --      250,000      6.75
   Exercised                     (2,755)    (52,500)         --        --      (55,255)     0.28
   Cancelled                         --          --    (250,000)       --     (250,000)     6.75
   Expired                           --      (1,875)         --        --       (1,875)    13.00
                                -------    ---------   --------    ------     ---------
Outstanding at May 31, 1998     167,006     436,749          --        --      603,755      6.13
   Granted                           --     178,083     104,980        --      283,063      3.25
   Exercised                    (65,678)         --          --        --      (65,678)     0.24
   Cancelled                         --    (323,833)     (1,000)       --     (324,833)     7.47
   Expired                           --     (21,125)         --        --      (21,125)    19.15
                                -------    ---------   --------    ------    ---------
Outstanding at May 31, 1999     101,328     269,874     103,980        --      475,182      3.73
   Granted                           --          --     615,933    25,000      640,933      2.53
   Exercised                    (11,020)         --        (561)       --      (11,581)     0.32
   Cancelled                         --          --     (24,179)       --      (24,179)     2.03
                                -------    ---------    -------    ------    ---------
Outstanding at May 31, 2000      90,308     269,874     695,173    25,000    1,080,355      3.10
                                =======    =========   ========    ======    =========
</TABLE>

A summary of information  about stock options  outstanding at May 31, 2000 is as
follows:

                           OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                  -----------------------------------   ------------------------
                                WEIGHTED-
                     NUMBER      AVERAGE    WEIGHTED-     NUMBER       WEIGHTED-
    RANGE OF      OUTSTANDING   REMAINING    AVERAGE    EXERCISABLE     AVERAGE
    EXERCISE       AT MAY 31,  CONTRACTUAL  EXERCISE     AT MAY 31,    EXERCISE
     PRICES           2000        LIFE        PRICE        2000         PRICE
-------------      ---------    ---------    ------       -------      ------
$        0.24         90,308    6.8 years    $ 0.24        90,308      $ 0.24
         1.81         42,740    8.6 years      1.81        14,104        1.81
         1.88         25,000    4.2 years      1.88        25,000        1.88
         2.06        148,600    9.1 years      2.06           --         2.06
         2.13          1,000    9.4 years      2.13           --         2.13
         2.38         27,500    7.0 years      2.38        25,000        2.38
         2.63        125,000    7.7 years      2.63        20,000        2.63
 2.75 -  6.75        587,707    8.0 years      3.41       258,457        3.88
 8.00 - 24.50         32,500    1.3 years     15.09        32,500       15.09
                   ---------                              -------
                   1,080,355                              465,369
                   =========                              =======

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 years ended May 31, 2000 and 1999:

                                                  2000            1999
                                                  ----            ----
      Risk free interest rate                       6.6%            5.8%
      Expected dividend yield                       None            None
      Expected life                             10 years         7 years
      Expected volatility                            55%             83%

                                       25
<PAGE>
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 and  cancellation had 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 income (loss)
and basic and diluted net income  (loss) per share would have been the following
pro forma  amounts  for the years  ended  May 31,  2000 and 1999 (in  thousands,
except per share data):

                                                        2000      1999
                                                        -----    -------
     Net income (loss):
        As reported                                     $ 870    $  (904)
        Pro forma                                       $ 555    $(1,384)

     Basic and diluted net income (loss) per share:
        As reported                                     $0.15    $ (0.16)
        Pro forma                                       $0.10    $ (0.24)

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.

During March 2000, the FASB issued  Interpretation  44,  "Accounting for Certain
Transactions Involving Stock Compensation--an  Interpretation of APB Opinion No.
25"  ("FIN  44"),  which  among  other  issues,  addresses  repricing  and other
modifications  made to  previously  issued  stock  options.  The Company will be
required to adopt FIN 44 in the first  quarter of its fiscal year ending May 31,
2001.  As of May 31, 2000,  there are  outstanding  options to purchase  170,583
shares at an exercise price of $3.19 per share which will be subject to variable
plan accounting until they are exercised or expire in January 2004.

10. INCOME TAXES:

The components of the provision for income taxes from continuing  operations are
as follows for the years ended May 31, 2000, 1999 and 1998 (in thousands):

                                                 2000      1999      1998
                                                 ----      ----       ---
     Current                                     $ 13      $ 25       $21
     Deferred                                     603       779         7
                                                 ----      ----       ---
                                                 $616      $804       $28
                                                 ====      ====       ===

The Company'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, 2000, 1999 and 1998:

                                                 2000      1999      1998
                                                  ---       ---       ---
     Statutory federal income tax rate             34%       34%       34%
     State taxes, net of federal benefit            6        --         7
     Nondeductible goodwill amortization           11        16        53
     Change in valuation allowance                (11)       28       (85)
     Other                                          1        (4)       --
                                                  ---       ---       ---
     Effective income tax rate                     41%       74%        9%
                                                  ===       ===       ===

                                       26
<PAGE>
The components of deferred  income tax assets  (liabilities)  as of May 31, 2000
and 1999 are as follows (in thousands):

                                                            2000         1999
                                                          -------      -------
     Current asset (liability) -
        Financial reserves and accruals not
          currently deductible                            $   582      $ 1,518
        Other                                                 (72)        (210)
        Valuation allowance                                  (404)        (661)
                                                          -------      -------
                                                              106          647
                                                          -------      -------
     Long-term asset (liability) -
        Tax effect of net operating loss carryforwards      2,230        1,900
        Book basis in excess of tax for property, plant
          and equipment                                      (441)        (472)
        Compensation expense related to grant of
          stock options                                        94          262
        Other                                                 159          368
        Valuation allowance                                (1,341)      (1,988)
                                                          -------      -------
                                                              701           70
                                                          -------      -------
                                                          $   807      $   717
                                                          =======      =======

As of May 31,  2000,  the Company has  federal  and state 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  NOLs").  The use of such  Pre-Merger NOLs is
limited to $764,000 per annum under Section 382 of the Internal Revenue Code. As
of May 31, 2000, approximately $1.1 million of Pre-Merger NOLs are available for
usage under Section 382. The NOLs, 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 NOLs and also determined that approximately
$970,000 of Pre-Merger  NOLs 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  NOLs,  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.

During fiscal 2000, the Company  utilized  approximately  $437,000 of Pre-Merger
NOLs and also determined that approximately $1.9 million of Pre-Merger NOLs were
realizable.  The Company accordingly reduced the valuation allowance by $742,000
and  recorded a  corresponding  reduction of goodwill  (see Note 2).  Subsequent
recognition  of additional  amounts of  Pre-Merger  NOLs would result in further
reductions  of goodwill of up to $1.4 million.  During fiscal 2000,  the Company
also reduced the valuation  allowance on other deferred  income tax assets,  not
related to the FMP-RG Merger, by approximately $162,000.

11. RELATED PARTY TRANSACTIONS:

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

Professional  and  advisory  fees and expense  reimbursements  of  approximately
$291,000,  $316,000  and  $416,000  were paid to certain  shareholders  or their
affiliates during the years ended May 31, 2000, 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 33%,
29% and 20% of the Company's  sales for the years ended  May 31, 2000,  1999 and
1998, respectively.  The following table summarizes the Company's sales by major
worldwide  regions  for the  years  ended  May  31,  2000,  1999  and  1998  (in
thousands):

                               2000        1999        1998
                             -------     -------     -------
     United States           $20,160     $16,431     $19,777
     Japan                     8,210       5,797       3,950
     Other                     1,555         991         995
                             -------     -------     -------
     Total                   $29,925     $23,219     $24,722
                             =======     =======     =======

                                       27
<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 -

Approximately  70% of the  Company's  work  force  is  covered  by a  collective
bargaining  agreement.  FMP maintains the FM Precision Golf Manufacturing  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 years ended May 31, 2000 and 1999, the  reconciliation  of the projected
benefit obligation was (in thousands):

                                                             2000      1999
                                                            -----      ----
     Beginning of year projected benefit obligation         $ 382      $181
     Service cost                                              98        88
     Interest cost                                             22        13
     Actuarial (gain) loss                                    (61)      100
                                                            -----      ----
     End of year projected benefit obligation               $ 441      $382
                                                            =====      ====

The reconciliation of the funded status of the Union Plan as of May 31, 2000 and
1999 was (in thousands):

                                                             2000      1999
                                                             ----      ----
     Projected benefit obligation                           $(441)     $(382)
     Plan assets at fair value                                265        131
                                                            -----      -----
     Funded status (accrued benefit cost)                    (176)      (251)
     Minimum pension liability adjustment                      --         78
                                                            -----      -----
     Net amount recognized                                  $(176)     $(173)
                                                            =====      =====

The  reconciliation of fair value of assets of the Union Plan as of May 31, 2000
and 1999 was (in thousands):

                                                             2000       1999
                                                             ----       ----
     Beginning of year fair value of assets                  $131       $120
     Employer contributions                                   119         --
     Actual return on plan assets                              15         11
                                                             ----       ----
     End of year fair value of assets                        $265       $131
                                                             ====       ====

The  components  of net pension cost for the years ended May 31, 2000,  1999 and
1998 were (in thousands):

                                                 2000        1999        1998
                                                -----        ----        ----
     Service cost                               $  98        $ 88        $ 85
     Interest cost                                 22          13           7
     Expected return on assets                     (4)         (3)         10
                                                -----        ----        ----
     Net periodic pension cost                  $ 116        $ 98        $102
                                                =====        ====        ====

                                       28
<PAGE>
A summary of the Company's  key actuarial as sumptions as of May 31, 2000,  1999
and 1998 were as follows:

                                                       2000     1999     1998
                                                       ----     ----     ----
     Discount rate                                     7.75%    6.75%    7.50%
     Expected long-term rate of return on assets       9.00%    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 and cash flows.  The  Company  allocates  certain  administrative
expenses  to  segments.  The  amounts in this  illustration  are the  amounts in
reports used by the chief operating officer (in thousands):

                                                     YEAR ENDED MAY 31, 2000
                                               ---------------------------------
                                               GOLF CLUB   GOLF CLUB
                                                 SHAFTS      GRIPS      TOTAL
                                                 ------      -----      -----
     Net sales                                  $ 25,433    $  4,492   $ 29,925
     Interest expense                                575          69        644
     Depreciation and amortization                   384         774      1,158
     Operating income (loss)                       2,004        (141)     1,863
     Assets                                       13,488      17,475     30,963
     Capital expenditures                          1,838         327      2,165

     Total assets for reportable segments                              $ 30,963
     Assets of discontinued operations                                       43
     Elimination of investment in subsidiary                             (6,064)
                                                                       --------
     Consolidated total assets                                         $ 24,942
                                                                       ========

                                                     YEAR ENDED MAY 31, 1999
                                               ---------------------------------
                                               GOLF CLUB   GOLF CLUB
                                                 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      18,927     30,742
     Capital expenditures                            789         151        940

     Total assets for reportable segments                              $ 30,742
     Assets of discontinued operations                                      162
     Elimination of investment in subsidiary                             (6,294)
                                                                       --------
     Consolidated total assets                                         $ 24,610
                                                                       ========

                                                     YEAR ENDED MAY 31, 1998
                                               ---------------------------------
                                               GOLF CLUB   GOLF CLUB
                                                 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      22,277     31,553
     Capital expenditures                            828         210      1,038

     Total assets for reportable segments                              $ 31,553
     Assets of discontinued operations                                    1,956
     Elimination of investment in subsidiary                             (7,623)
                                                                       --------
     Consolidated total assets                                         $ 25,886
                                                                       ========

                                       29
<PAGE>
15. CONCENTRATION OF CREDIT RISK:

The Company 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  46%,  40% and 35% of the
Company's  net  sales  for  the  years  ended  May  31,  2000,  1999  and  1998,
respectively.  The Japanese distributor purchases both golf club shafts and golf
club grips and  accounted  for 19%,  17% and 11% of shaft sales and 73%, 61% and
73% of  grip  sales  during  the  years  ended  May 31,  2000,  1999  and  1998,
respectively.  The  outstanding  receivable  balances  for  this  customer  were
approximately  $0.6  million  and  $0.7  million  at  May  31,  2000  and  1999,
respectively. The OEM customer purchases only golf club shafts and accounted for
22%, 18% and 18% of shaft sales  during the years ended May 31,  2000,  1999 and
1998,  respectively.  The outstanding receivable balances for this customer were
approximately  $0.8  million  and  $0.3  million  at  May  31,  2000  and  1999,
respectively.  To reduce its credit risk, the Company  requires letter of credit
agreements from its Japanese distributor.

16. COMMITMENTS AND CONTINGENCIES:

The Company is from time to time a party to various  routine  legal  proceedings
which are incidental to the Company's  business.  Management consults with legal
counsel  on all such  matters  and  believes  that none of the  current  routing
proceedings  will have a  material  adverse  effect on the  Company's  financial
condition or future operating results.

On November  2, 1999,  R. R.  Donnelley & Sons  Company,  Plaintiff,  vs.  Royal
Precision,  Inc.,  Defendant,  was filed in  Superior  Court,  Maricopa  County,
Arizona.  In the matter,  R. R. Donnelley & Sons Company  ("Donnelley")  alleged
that the Company is liable under breach of contract for  approximately  $280,000
in   printing   costs   arising   from  the   preparation   of  a  Joint   Proxy
Statement/Prospectus  related to a proposed merger agreement between the Company
and Coyote Sports,  Inc. which was terminated prior to the effective date of the
merger.  On April 17, 2000,  the court granted the  Company's  motion to dismiss
this  suit.  However,  the court has not yet signed a final  judgment  and it is
uncertain  whether  or not  Donnelley  will  appeal  the  dismissal.  Management
believes  that the  action is  without  merit and  intends  to defend any appeal
vigorously.

In May 1996, the Company acquired  substantially all the assets of the golf club
shaft   manufacturing   business  of  Brunswick   Corporation   (the  "Brunswick
Acquisition").  Included  in  the  acquired  assets  were  land,  buildings  and
equipment at the Company's Torrington,  Connecticut  manufacturing facility (the
"FMP  plant").  In  conjunction  with  the  Brunswick   Acquisition,   Brunswick
Corporation  agreed to indemnify the Company from  potential  liability  arising
from  certain  environmental  matters  and to  remediate  certain  environmental
conditions which existed at the FMP plant on the date of acquisition.  Brunswick
Corporation has engaged an  environmental  consulting firm to perform testing at
the FMP plant and is in the process of developing a plan of remediation. Failure
of Brunswick  Corporation  to fulfill its  obligations  under the asset purchase
contract  could  have a  material  adverse  effect  on the  Company's  financial
condition and results of operations.  The Company has retained legal counsel for
representation  on  various  environmental  matters  related  to  the  Brunswick
Acquisition.  Total  legal fees  incurred  related to these  matters  during the
fiscal year ended May 31, 2000 were approximately $0.1 million.

The Company received a notice of violation ("NOV") from the State of Connecticut
Department of Environmental  Protection  ("DEP")  alleging  violation of certain
provisions of a permit related to the discharge of treated wastewater at the FMP
plant.  This  permit was  issued to the  Company  in  February  1997 based on an
application prepared by Brunswick  Corporation in April 1996. In April 2000, the
Company reached a settlement agreement with DEP discharging the Company from any
civil  liability  with  respect  to the  allegations  in  the  NOV,  subject  to
completion  and  approval of certain  remedial  measures  at the FMP plant.  The
Company incurred approximately $0.2 million in capital expense to complete these
remedial  measures  during the fiscal year ended May 31, 2000 and, in June 2000,
obtained a certification  from DEP that the work was  satisfactorily  completed.
The Company is seeking  reimbursement from Brunswick Corporation for the cost of
remediation and legal fees incurred in conjunction with this matter.

                                       30
<PAGE>
In April 2000,  the Company  received a request  for  information  from the U.S.
Environmental  Protection  Agency  ("EPA")  related to disposal and treatment of
waste materials from the FMP plant during a period from 1982 to 1997. The EPA is
currently  conducting  an  investigation   regarding  the  former  National  Oil
Services, Inc. Superfund site in West Haven, Connecticut. National Oil Services,
Inc.  was,  prior  to its  bankruptcy,  a  contractor  used by the  Company  and
Brunswick Corporation to treat and dispose non-hazardous waste oils from the FMP
plant.  EPA has not issued any demands for  reimbursement or performance of work
from the Company relating to this matter and there is not sufficient information
at this time to determine  what, if any, action EPA may pursue and what, if any,
effect  it  may  have  on the  Company's  financial  condition  and  results  of
operations.

17. QUARTERLY FINANCIAL DATA (UNAUDITED):

Provided  below is selected  unaudited  quarterly  financial data for the fiscal
years ended May 31, 2000, 1999 and 1998 (in thousands except per share data):

<TABLE>
<CAPTION>
                                                                        2000
                                              --------------------------------------------------------
                                               FIRST      SECOND       THIRD       FOURTH     TOTAL
                                               -----      ------       -----       ------     -----
<S>                                           <C>         <C>         <C>         <C>        <C>
Net sales                                     $ 6,516     $ 6,420     $ 7,015     $ 9,974    $ 29,925

Net income                                    $   294     $    64     $    35     $   477    $    870
                                              =======     =======     =======     =======    ========
Per share information:
    Basic and diluted -
      Net income                              $  0.05     $  0.01     $  0.01     $  0.08    $   0.15
                                              =======     =======     =======     =======    ========

                                                                        1999
                                              --------------------------------------------------------
                                               FIRST      SECOND       THIRD       FOURTH     TOTAL
                                               -----      ------       -----       ------     -----
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>

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

                                       31
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information  regarding  the Company's  directors  and executive  officers is set
forth under the heading "ELECTION OF DIRECTORS" in the Company's Proxy Statement
for its 2000 Annual Meeting of Stockholders  (the "2000 Proxy  Statement") which
information is incorporated herein by reference.

Information relating to compliance with Section 16(a) of the Exchange Act is set
forth  under  the  heading   "SECTION  16(a)  BENEFICIAL   OWNERSHIP   REPORTING
COMPLIANCE" in the 2000 Proxy Statement which information is incorporated herein
by reference.

ITEM 11. EXECUTIVE COMPENSATION.

Information  regarding  executive  compensation  is set forth under the headings
"COMPENSATION OF MANAGEMENT" and "COMPENSATION  COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION"  in the 2000 Proxy  Statement  which  information is incorporated
herein by reference; provided, however, that the information set forth under the
headings  "STOCK  PERFORMANCE  GRAPH" and "REPORT OF PERSONNEL AND  COMPENSATION
COMMITTEE"  contained  in  the  2000  Proxy  Statement  is not  incorporated  by
reference herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information  regarding security ownership of beneficial owners and management is
set forth under the  heading  "SECURITY  OWNERSHIP  OF  PRINCIPAL  STOCKHOLDERS,
DIRECTORS,  NOMINEES AND EXECUTIVE  OFFICERS" in the 2000 Proxy  Statement which
information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information  regarding  certain  transactions and relationships of management is
set forth under the heading  "CERTAIN  TRANSACTIONS" in the 2000 Proxy Statement
which information is incorporated herein by reference.

                                       32
<PAGE>
                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a) Financial Statements

         Report of Independent Public Accountants ........................... 13
         Consolidated Balance Sheets ........................................ 14
         Consolidated Statements of Operations .............................. 15
         Consolidated Statements of Stockholders' Equity .................... 16
         Consolidated Statements of Cash Flows .............................. 17
         Notes to Consolidated Financial Statements ......................... 18

     (b) Reports on Form 8-K.

         No current  reports on Form 8-K were filed  during the last quarter of
         the period covered by this report.

     (c) Exhibits.

         The Index to Exhibits and required Exhibits are included following the
         Financial Statement Schedule beginning on page 37 of this report.

     (d) Financial Statement Schedules.

         Report of Independent Public Accountants .......................... S-1
         Schedule II -- Valuation and Qualifying Accounts
          and Reserves ..................................................... S-2

                                       33
<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  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 11, 2000                    ROYAL PRECISION, INC.
                                          (the "Registrant")

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

     Pursuant to the  requirements  of 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 11th day of August, 2000.

             NAME                                TITLE (CAPACITY)
             ----                                ----------------

/s/ Thomas A. Schneider               President and  Chief Operating Officer
-----------------------------         (principal executive officer)
Thomas A. Schneider


/s/ Kevin L. Neill*                   Vice President-Finance, Chief Financial
-----------------------------         Officer (principal financial and
Kevin L. Neill                        accounting officer)


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


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


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


/s/ Charles S. Mechem, Jr. *          Director
-----------------------------
Charles S. Mechem, Jr.


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

*    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

                                       34
<PAGE>
ITEM 14D. FINANCIAL STATEMENT SCHEDULES.


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Royal Precision, Inc.:

We have audited in accordance with auditing standards  generally accepted in the
United States, the financial  statements  included in Royal Precision,  Inc. and
subsidiaries'  (the Company) Form 10-K, and have issued our report thereon dated
July 21,  2000.  Our audits  were made for the  purpose of forming an opinion on
those  statements  taken  as a  whole.  The  schedule  shown  on page S-2 is the
responsibility  of the  Company's  management  and is presented  for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  fairly states in all material  respects the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.


                                             /s/ ARTHUR ANDERSEN LLP


Phoenix, Arizona
July 21, 2000

                                      S-1
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES

                                   SCHEDULE II
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                 FOR THE YEARS ENDED MAY 31, 1998, 1999 AND 2000

<TABLE>
<CAPTION>
                                                   Charged to
                                    Balance at     (Deducted                                Balance at
                                   Beginning of   from) Costs      Other          Other       End of
                                      Period      and Expenses   Additions     Deductions     Period
                                      ------      ------------   ---------     ----------     ------
                                                               (in thousands)
<S>                                   <C>            <C>         <C>              <C>         <C>
Allowance for doubtful accounts:
     Year ended May 31, 1998          $  541         $ 124       $    --          $ (63)      $  602
     Year ended May 31, 1999             602            24            --           (193)         433
     Year ended May 31, 2000             433            40            --           (199)         274

                                                   Charged to
                                    Balance at     (Deducted                                Balance at
                                   Beginning of   from) Costs      Other          Other       End of
                                      Period      and Expenses   Additions     Deductions     Period
                                      ------      ------------   ---------     ----------     ------
                                                               (in thousands)
Deferred tax asset valuation
  allowance:
     Year ended May 31, 1998          $   --         $  --       $ 2,821(a)       $  --       $2,821
     Year ended May 31, 1999           2,821           478            --           (650)(b)    2,649
     Year ended May 31, 2000           2,649          (162)           --           (742)(b)    1,745
</TABLE>

(a)  Created as part of acquisition accounting related to the FMP-RG Merger.
(b)  Reduction  in  goodwill  related  to  preacquisition   net  operating  loss
     carryforwards.

                                      S-2
<PAGE>
                                  EXHIBIT INDEX
<TABLE>
<CAPTION>


EXHIBIT
-------
<S>       <C>                                                                      <C>
(3)       Certificate of Incorporation and Bylaws                                        *

3.1       Amended and Restated Certificate of Incorporation of registrant
          (incorporated by reference to Exhibit 3.1 to the registrant's Form
          10-QSB for the quarter ended November 30, 1999; the "November 1999
          10-QSB").                                                                      *

3.2       Bylaws of Royal Precision, Inc. (incorporated by reference to Exhibit
          3.2 to Form S-4, No. 333-28841; the "Form S-4").                               *

(4)       Instruments defining the rights of holders                                     *

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 November 1999 10-QSB).                         *

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                                                             *

10.1      Asset Purchase Agreement dated May 31, 1996 with Brunswick
          Corporation. (incorporated by reference to Exhibit 10.1.1 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).**                                          *

10.2      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      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
          "August 1998 10-QSB")).                                                        *

10.6      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 August
          1998 10-QSB).                                                                  *

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

10.8      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).                               *

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


EXHIBIT
-------
<S>       <C>                                                                      <C>
10.10     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).**                                                    *

10.11     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.)                                                       *

10.12     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).                                         *

10.13     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).                                                     *

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

10.15     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 (incorporated by reference to Exhibit
          10.16 of the registrant's Form 10-KSB for the year ended May 31, 1999;
          the "1999 Form 10-KSB").                                                       *

10.16     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 (incorporated by reference to Exhibit
          10.17 of the 1999 Form 10-KSB).                                                *

10.17     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 (incorporated by
          reference to Exhibit 10.18 of the 1999 Form 10-KSB).                           *

10.18     Personal Services Agreement entered into as of August 31, 1999 between
          Danny Edwards and Royal Precision, Inc. (incorporated by reference to
          Exhibit 10.1 of the registrant's Form 10-Q for the quarter ended
          August 31, 1999).**                                                            *

10.19     Royal Precision Stock Option Plan (restated to reflect amendments
          adopted by the Board of Directors on November 30, 1999) (incorporated
          by reference to Exhibit 10.1 of the November 1999 10-QSB).**                   *

10.20     Second Amendment to Credit and Security Agreement between FM Precision
          Golf Manufacturing Corp., FM Precision Golf Sales Corp and Wells Fargo
          Business Credit, Inc. dated November 10, 1999 (incorporated by
          reference to Exhibit 10.2 of the November 1999 10-QSB).                        *

10.21     Third Amendment to Amended and Restated Credit and Security Agreement
          between Royal Grip, Inc., Royal Grip Headwear Company and Wells Fargo
          Business Credit, Inc. dated November 10, 1999 (incorporated by
          reference to Exhibit 10.3 of the November 1999 10-QSB).                        *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


EXHIBIT
-------
<S>       <C>                                                                      <C>
10.22     Third Amendment to Credit and Security Agreement between FM Precision
          Golf Manufacturing Corp., FM Precision Golf Sales Corp. and Wells
          Fargo Business Credit, Inc., dated March 24, 2000 (incorporated by
          reference to Exhibit 10.1 of registrant's Form 10-QSB for the quarter
          ended February 29, 2000; the "February 2000 10-QSB").                          *

10.23     Fourth Amendment to Amended and Restated Credit and Security Agreement
          between Royal Grip, Inc., Royal Grip Headwear Company and Wells Fargo
          Business Credit, Inc. dated March 24, 2000 (incorporated by reference
          to Exhibit 10.3 of the February 2000 10-QSB).                                  *

10.24     Fourth Amendment to Credit and Security Agreement between FM Precision
          Golf Manufacturing Corp., FM Precision Golf Sales Corp. and Wells
          Fargo Business Credit, Inc. dated August 3, 2000.

10.25     Fifth Amendment to Amended and Restated Credit and Security Agreement
          between Royal Grip, Inc., Royal Grip Headwear Company and Wells Fargo
          Business Credit, Inc. dated August 3, 2000.

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.

27        Financial Data Schedule (submitted for SEC purposes only)

99.1      Private Securities Litigation Reform Act of 1995 safe harbor
          compliance statement for forward-looking statements
</TABLE>

*    Incorporated by reference.

**   Compensatory plan for executive officers and directors.

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 ($0.50) per page.