--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004
                       __________________________________   

                                    FORM 10-Q
(Mark One)

[ X ]        QUARTERLY REPORT PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1996

                                       or

[   ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934

                        Commission File Number 0 - 22230

                                ROYAL GRIP, INC.
                                ----------------

          Nevada                                         86-0615648
-------------------------------             ------------------------------------
(State or other jurisdiction of             (IRS employer identification number)
       incorporation)

                              444 West Geneva Drive
                              Tempe, Arizona 85282
                                 (602) 829-9000
                           -------------------------

               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                          principal executive offices)

           Indicate  by check  mark  whether  the  registrant  (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934  during the  preceding  12 months (or for  shorter  period  that the
registrant was required to file such  reports),  and (2) has been subject to the
filing requirements for at least the past 90 days.

                                Yes  x       No
                                   -----       -----

           Indicate  the number of shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date (November 8, 1996).

                    Common stock, $.001 par value: 2,734,678

--------------------------------------------------------------------------------
<PAGE>
                         ROYAL GRIP, INC. AND SUBSIDIARY

                                      INDEX

                                                                            Page
                                                                            ----

PART I.   FINANCIAL INFORMATION

          Item 1. Financial Statements

                    Condensed Consolidated Balance Sheets-                     3
                         September 30, 1996 and December 31, 1995


                    Condensed Consolidated Statements of Operations-           4
                         Three Months and Nine Months Ended
                         September 30, 1996 and September 30, 1995

                    Condensed Consolidated Statements of Cash Flows-           5
                         Nine Months Ended
                         September 30, 1996 and September 30, 1995

                    Notes to Condensed Consolidated  Financial Statements      6

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


PART II. OTHER INFORMATION

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

SIGNATURE                                                                     15

EXHIBITS

          11      Computation of Net Income (Loss) Per Share                  16
<PAGE>
Part I                    ROYAL GRIP, INC. AND SUBSIDIARY
Item 1 
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                 September 30,         December 31,
                                                                     1996                  1995
                                                                  ------------         ------------
                         ASSETS
<S>                                                               <C>                  <C>         
Current assets:
     Cash and cash equivalents                                    $     47,686         $    413,345
     Trade accounts receivable (net of allowance for
           doubtful accounts of  $335,637 and $227,070
           as of September 30, 1996 and December 31, 1995,
           respectively)                                             2,409,018            1,864,012
     Income tax refund receivable                                            -              101,139
     Inventories                                                     1,576,541            1,720,296
     Prepaid expenses and other current assets                          38,880              144,828
                                                                  ------------         ------------
           Total current assets                                      4,072,125            4,243,620
                                                                  ------------         ------------

Property and equipment, net                                          5,215,123            6,258,292
Intangible assets, net                                                 982,169            1,083,240
Other assets                                                            50,813               58,675
                                                                  ------------         ------------
                                                                  $ 10,320,230         $ 11,643,827
                                                                  ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Revolving line of credit                                     $    310,000         $          -
     Current portion of long-term debt and capital leases               87,124              136,643
     Accounts payable and accrued expenses                           1,266,120            1,671,626
                                                                  ------------         ------------
           Total current liabilities                                 1,663,244            1,808,269
                                                                  ------------         ------------

Long-term debt and capital leases, less current portion                 97,253              161,422

Stockholders' equity:
     Preferred stock, par value $.001 per share 
        Authorized 5,000,000 shares; none issued
     Common stock, par value $.001 per share 
        Authorized 15,000,000 shares; issued and
        outstanding 2,734,678 shares at September 30, 1996
        and at December 31, 1995                                         2,735                2,735
     Additional paid-in capital                                     12,223,049           12,199,288
     Retained earnings (deficit)                                    (3,666,051)          (2,527,887)
                                                                  ------------         ------------
           Total stockholders' equity                                8,559,733            9,674,136
                                                                  ------------         ------------
                                                                  $ 10,320,230         $ 11,643,827
                                                                  ============         ============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
                                        3
<PAGE>
                         ROYAL GRIP, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                           Three Months Ended                         Nine Months Ended
                                                              September 30,                              September 30,
                                                           ------------------                         -----------------
                                                        1996                 1995                 1996                 1995
                                                    ------------         ------------         ------------         ------------
<S>                                                 <C>                  <C>                  <C>                  <C>         
Net sales                                           $  4,000,321         $  4,482,760         $ 13,452,432         $ 13,945,742
Cost of goods sold                                     2,705,802            2,891,001            9,898,502            9,598,526
                                                    ------------         ------------         ------------         ------------

    Gross profit                                       1,294,519            1,591,759            3,553,930            4,347,216

Selling, general and administrative expenses           1,223,158            1,618,344            4,598,523            5,513,253
                                                    ------------         ------------         ------------         ------------
    Income (loss) from operations                         71,361              (26,585)          (1,044,593)          (1,166,037)
Other expenses, net                                      (64,995)             (12,910)             (93,571)             (40,197)
                                                    ------------         ------------         ------------         ------------
    Income (loss) before income tax benefit                6,366              (39,495)          (1,138,164)          (1,206,234)
Income tax benefit                                             -                    -                    -             (300,000)
                                                                                                                   ------------
    Net Income  (loss)                              $      6,366         $    (39,495)        $ (1,138,164)        $   (906,234)
                                                    ============         ============         ============         ============


Net Income (loss) per share                         $       0.00         $      (0.01)        $      (0.42)        $      (0.33)
                                                    ============         ============         ============         ============
Shares used in net income (loss) per share             2,734,678            2,734,678            2,734,678            2,734,678
                                                    ============         ============         ============         ============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
                                       4
<PAGE>
                         ROYAL GRIP, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                              Nine Months Ended
                                                                                                 September 30,
                                                                                       -------------------------------
                                                                                           1996                1995
                                                                                           ----                ----
<S>                                                                                    <C>                 <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                                          $(1,138,164)        $  (906,234)
     Adjustments to reconcile net loss to net cash
        used by operating activities:
         Depreciation and amortization                                                   1,249,165           1,461,018
         Compensatory stock option grant                                                    23,761                   -
         Writedown or loss on disposition of property and equipment                         73,074               8,284
         Decrease in deferred income taxes                                                       -            (272,000)
         Increase in trade accounts receivable                                            (545,006)           (783,063)
         Decrease in income tax refund receivable                                          101,139                   -
         Decrease in inventories                                                           143,755             512,897
         Decrease in prepaid expenses and other current assets                             105,948              38,497
         Increase in other assets and intangibles                                          (22,503)            (60,976)
         Increase (Decrease) in trade accounts payable plus accrued liabilities           (405,506)            320,895
                                                                                       -----------         -----------
              Net cash provided by (used in) operating activities                         (414,337)            319,318

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                                  (944,557)           (658,033)
     Proceeds from sale of property and equipment                                          796,923                 500
                                                                                       -----------         -----------
              Net cash used in investing activities                                       (147,634)           (657,533)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments under capital lease obligations                                              (50,010)            (20,844)
     Deposit on subleased property                                                           7,918                   -
     Proceeds from issuance of notes payable                                                26,309              36,154
     Principal payments on notes payable                                                   (97,905)            (94,610)
     Increase (Decrease) in revolving line of credit                                       310,000            (200,000)
                                                                                       -----------         -----------
              Net cash provided by (used in) financing activities                          196,312            (279,300)
     Net decrease in cash                                                                 (365,659)           (617,515)
     Cash at beginning of period                                                           413,345           1,193,909
                                                                                       -----------         -----------
     Cash at end of period                                                             $    47,686         $   576,394
                                                                                       ===========         ===========
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
                                        5
<PAGE>
                         ROYAL GRIP, INC. AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1)      Basis of Presentation
         ---------------------

         The accompanying  unaudited condensed consolidated financial statements
of Royal Grip,  Inc.  (the  "Company")  have been  prepared in  accordance  with
generally  accepted  accounting  principles for interim  financial  information,
pursuant to rules and  regulations of the  Securities  and Exchange  Commission.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of management the  accompanying  condensed  financial  statements
include all adjustments (of a normal recurring nature) which are necessary for a
fair presentation of the Company's  financial position and results of operations
for  the  interim  periods  presented.  It is  suggested  that  these  condensed
consolidated  financial  statements  be read in  conjunction  with the financial
statements  included in the  Company's  annual  report on Form 10-K for the year
ended December 31, 1995, as filed with the  Securities and Exchange  Commission.
Results of  operations  in interim  periods are not  necessarily  indicative  of
results to be expected for a full year.

(2)      Inventories
         -----------

                  Inventories consist of the following:

                                           September 30,         December 31,
                                                1996                 1995
                                           ------------          -----------
                  Finished goods              $968,228           $1,144,516
                  Work in process               66,467              188,677
                  Raw materials                561,846              575,306
                                            ----------           ----------
                                             1,596,541            1,908,499
                  Less reserves                (20,000)            (188,203)
                                            ----------           ----------
                                            $1,576,541           $1,720,296
                                            ==========           ==========

                                        6
<PAGE>
(3)      Revolving line of credit
         ------------------------

         The  Company  has a  $1.2  million  revolving  line  of  credit  with a
commercial bank in Phoenix,  Arizona.  Amounts  outstanding bear interest at the
bank's prime rate plus 1/2% which was 8.75% on September  30, 1996.  Interest is
payable monthly and principal  balances are due when the line expires on May 30,
1997. At September 30, 1996, $310,000 was outstanding on the line. The revolving
line of credit  agreement  contains debt  covenants for which the Company was in
compliance at September 30,1996.

(4)      Deferred Income Taxes
         ---------------------

         The Company  accounts  for income  taxes under the asset and  liability
method  of  Statement  of  Financial   Accounting   Standards  (SFAS)  No.  109,
"Accounting for Income Taxes."

         No tax benefit is recognized in the third quarter of 1996 due to a 100%
valuation allowance related to the net operating loss carry-forward deferred tax
asset.  This will have the  effect of  reducing  income  tax  expense  in future
periods in which the net operating loss carry forwards are realized.
                                        7
<PAGE>
Part I
Item 2                 MANAGEMENT'S DISCUSSION AND ANALYSIS
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Forward Looking Statements

         The Private  Securities  Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. The Company's Form 10-K, this Form 10-Q,
any other Form 10-Q, any Form 8-K, or any other written or oral  statements made
by or on behalf of the Company  may include  forward  looking  statements  which
reflect the Company's  current views with respect to future events and financial
performance.   These  forward   looking   statements   are  subject  to  certain
uncertainties  and other  factors  that  could  cause  actual  results to differ
materially from such statements.  These uncertainties and other factors include,
but are not limited to, uncertainties relating to economic conditions,  customer
plans and  commitments,  the Company's  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-Q,  including  the Notes to the  Condensed  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
detailed in the Company's  Securities and Exchange Commission filings. The words
"believe," "expect,"  "anticipate,"  "project," and similar expressions identify
forward  looking  statements,  which speak only as of the date the statement was
made.  The Company  undertakes no  obligation  to publicly  update or revise any
forward  looking  statements,  whether  as a result of new  information,  future
events, or otherwise.

Introduction

         During the quarter,  the Company realized positive financial results as
a result of  certain  actions  the  Company  initiated  in the  second  quarter,
including  the  consolidation  of headwear  manufacturing  at its Oklahoma  City
facility,  the  conversion  of  its  UK  operations  to a  distributorship,  the
subleasing of 10,700 square feet at the Company's Tempe,  Arizona  manufacturing
facility  and  the  elimination  of  approximately  30  positions.  The  Company
continued to find efficiencies in its grip and headwear  production  facilities.
These  efficiencies  enabled  the Company to  eliminate  the third shift of grip
production resulting in the reduction of 26 full time employees and 14 temporary
employees  effective  September  26, 1996. In headwear  production,  the Company
eliminated
                                        8
<PAGE>
the  third  shift  in  embroidery  resulting  in a  reduction  of ten  employees
effective  late August 1996.  Also,  the results of the quarter  were  favorably
impacted by Danny Edwards,  the Company's  Chairman and Chief Executive Officer,
voluntarily  reducing his salary from $250,000 to $0. Mr. Edwards will receive a
salary of $75,000  (annualized)  for November and December 1996 and $150,000 for
the 1997 fiscal year.
                                        9
<PAGE>
Results of Operations

         The following table sets forth for the periods indicated the percentage
of net  sales  represented  by each  line item in the  Company's  statements  of
operations:

<TABLE>
<CAPTION>
                                                      Three Months Ended               Nine Months Ended
                                                         September 30,                   September 30,
                                                    ----------------------          ----------------------
                                                     1996            1995            1996            1995
                                                    ------          ------          ------          ------
<S>                                                  <C>             <C>             <C>             <C>   
Net sales                                            100.0%          100.0%          100.0%          100.0%
Cost of goods sold                                    67.6            64.5            73.6            68.8
                                                    ------          ------          ------          ------
        Gross profit                                  32.4            35.5            26.4            31.2
Selling, general and administrative expenses          30.6            36.1            34.2            39.5
                                                    ------          ------          ------          ------
   Income (loss) from operations                       1.8            (0.6)           (7.8)           (8.3)
Other expense net                                     (1.6)           (0.3)           (0.7)           (0.3)
                                                    ------          ------          ------          ------
   Income (loss) before income tax benefit             0.2            (0.9)           (8.5)           (8.6)
Income tax benefit                                     -               -               -              (2.1)
                                                    ------          ------          ------          ------
   Net Income / (loss)                                 0.2%           (0.9%)          (8.5%)          (6.5%)
                                                    ======          ======          ======          ======
</TABLE>

         Net Sales. Net sales for the three months ended September 30, 1996 were
$4.0  million,  a  decrease  of 11.1%  over net  sales of $4.5  million  for the
corresponding  period in the prior year.  For the first nine months of 1996, net
sales were $13.5 million, a decrease of 2.9% over net sales of $13.9 million for
the same period last year.  The  decrease in net sales for the third  quarter of
1996 from the same  period  of the  prior  year is  directly  attributable  to a
decrease in grip sales of $468,000  primarily  due to a decrease in sales to the
Company's  Japanese  distributor of $316,000.  Net sales of headwear  during the
quarter increased by $13,000,  compared to the same quarter last year. Net sales
for the first nine  months of 1996  decreased  by  $493,000.  This  decrease  is
primarily  a result  of  lower  grip  sales of $1.2  million  due  primarily  to
decreased sales to the Company's Japanese  distributor of 697,000.  The decrease
in grip sales was partially offset by increased headwear sales of $798,000. This
reduction in grip sales for the nine months ended September 30, 1996 is due to a
reduced  average  unit  selling  price  and  to a  decrease  in  unit  sales  of
approximately 500,000.
                                       10
<PAGE>
         Gross  Profit.  Gross  profit  decreased  to $1.3  million in the third
quarter  of 1996,  down from $1.6  million in the third  quarter  of 1995.  As a
percentage of net sales, gross profit decreased to 32.4% from 35.5%. The decline
in gross profit and the gross profit  percentage  primarily was  attributable to
decreased higher margin grip sales as a percentage of total sales and the effect
of an adjustment in the third quarter of 1995 related to inventory  subject to a
trade credit arrangement which reduced cost of sales in 1995 by $69,000.  During
the third  quarter,  the margin on headwear sales  increased by 10.2  percentage
points  compared to the same  quarter  last year due to  efficiencies  gained in
production. The margin on grip sales decreased by 7.4 percentage points compared
to the same  quarter  last year  primarily  due to fixed costs being spread over
fewer units and the  introduction of our $.99 Perf Wrap grip. For the nine month
period ended September 30, 1996,  gross profit was $3.6 million compared to $4.3
million for the  corresponding  period in 1995.  As a  percentage  of net sales,
gross profit declined to 26.4% from 31.2%. The decline in gross profit and gross
profit percentage  primarily was attributable to increased lower margin headwear
sales and decreased  higher margin grip sales as a percentage of total sales and
the effect of an  adjustment  during the nine month period ended  September  30,
1995 related to inventory subject to a trade credit  arrangement which increased
cost of sales for 1995 by $331,000.

         Selling,    General   and   Administrative.    Selling,   general   and
administrative  expenses  decreased to $1.2 million in the third quarter of 1996
from $1.6  million  in the  comparable  period  of 1995.  Selling,  general  and
administrative  expenses  decreased  primarily due to a reduction in advertising
and  promotion  expenses of  $242,000,  the  elimination  of two Vice  President
positions and the suspension of the salary payable to the Company's Chairman and
Chief Executive Officer.
                                       11
<PAGE>
         For the nine month  period ended  September  30,  selling,  general and
administrative  expenses  decreased to $4.6 million in 1996 from $5.5 million in
1995. The decrease in selling,  general and administrative expenses is primarily
due to a reduction in advertising and promotion expenses of $711,000.

         Other Income (Expense).  Other expense was $65,000 in the third quarter
of 1996 compared to other  expense of $13,000 in the same period of 1995.  Other
expense in the third quarter of 1996 resulted primarily from recording a loss of
$34,000 related to the purchase of two assets which were previously financed via
a capital lease  arrangement and interest  expense.  Other expense for the third
quarter 1995 was primarily  attributable to interest expense.  Other expense was
$94,000 in the first nine months of 1996  compared to $40,000 in the same period
of 1995.  This expense  resulted  primarily  from interest  expense on long term
obligations and a revolving line of credit, and the purchase of assets mentioned
above.

Liquidity and Capital Resources

         During the nine months  ended  September  30,  1996,  the Company  used
$414,337 to fund  operating  activities,  reflecting a  significant  build up in
trade receivables and a reduction in trade payables. The Company attributes this
increase  to the  seasonality  of its sales of golf  grips.  For the  comparable
period of 1995,  operations  generated positive cash flow of $319,318.  Cash and
cash  equivalents  decreased  from  $576,394 at December  31, 1995 to $47,686 at
September 30, 1996.

         The Company  funded its  shortfall  in cash from  operations  primarily
through the sale of property and equipment which generated $797,000 in proceeds,
and from  borrowings  under the  Company's  line of credit.  Borrowings  totaled
$310,000 at September 30, 1996, as compared to $0 at December 31, 1995.
                                       12
<PAGE>
         The  Company's  line of credit was renewed  during the second  quarter,
with the expiration  date extended  through May 1997.  Under this facility,  the
Company may borrow up to $1.2 million.  Borrowings  under the line of credit are
subject to a number of conditions,  including compliance with covenants relating
to the Company's current ratio, tangible net worth, working capital and ratio of
total  liabilities  to tangible net worth.  The Company was in  compliance  with
these ratios as of September 30, 1996.

         The Company  believes its available  borrowings and expected cash flows
from  operations  will  satisfy its working  capital  needs for the  foreseeable
future.  However, if operations were to deteriorate,  or the Company were unable
to borrow under its line of credit,  the Company would need to seek  alternative
sources of financing  for its  operations.  There can be no assurance  that such
sources would be available.
                                       13
<PAGE>
Part II
Other Information



Item 6.         (a)    Exhibit 11 - Computation of Net Income (Loss)
                       Per Share (attached).

                (b)    No  reports on Form 8-K have been filed during the
                       quarter for which this report is filed.
                                       14
<PAGE>
                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                ROYAL GRIP, INC.




Date:    November 5, 1996   By: /s/ Thomas A. Schneider
                                ------------------------------------------------
                                Thomas A. Schneider
                                Vice President - Finance
                                (Principal Financial and
                                Accounting Officer)
                                       15