U.S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549-1004
                                   FORM 10-QSB
(Mark one)

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

                 For the quarterly period ended August 31, 1998

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT.

For the transition period from __________ to _________.

Commission File Number: 0-71735

                              ROYAL PRECISION, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

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

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

                                 (602) 627-0200
                (Issuer's Telephone Number, Including Area Code)

    (Former Name, Former Address and Former Fiscal Year if Changed Since Last
                                    Report)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___


State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:

  Title of each class                          Outstanding at October 9, 1998
----------------------                         -------------------------------
Common Stock, par value $.001                            5,656,269 Shares


Transitional Small Business Disclosure Format (Check One): Yes [ ]  No [X]
<PAGE>
ITEM 1.
                     ROYAL PRECISION, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

                                                         August 31,     May 31,
                                                           1998          1998
                                                         --------      --------
                                                       (unaudited)
                                     ASSETS
CURRENT ASSETS:
  Cash                                                   $     --      $     28
  Accounts receivable, net of allowance
    for doubtful accounts of $602
    at August 31, 1998 and May 31, 1998                     2,661         4,042
  Inventories                                               3,900         4,049
  Current portion of net investment in capital lease          244           240
  Other current assets                                         43            74
  Deferred income taxes                                       265           265
                                                         --------      --------
              Total current assets                          7,113         8,698
                                                         --------      --------
PROPERTY, PLANT AND EQUIPMENT:
  Land                                                        123           123
  Furniture, fixtures and office equipment                    741           544
  Buildings and improvements                                  767           689
  Machinery and equipment                                   3,953         3,894
                                                         --------      --------
                                                            5,584         5,250
  Less - Accumulated depreciation                            (928)         (754)
                                                         --------      --------
                                                            4,656         4,496
                                                         --------      --------
GOODWILL, net                                               9,898        10,028
                                                         --------      --------
NET INVESTMENT IN CAPITAL LEASE, less current portion       2,511         2,593
                                                         --------      --------
OTHER ASSETS                                                   51            71
                                                         --------      --------
              Total assets                               $ 24,229      $ 25,886
                                                         ========      ========
                 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Lines-of-credit                                        $  2,678      $  3,462
  Current portion of long-term debt
    and capital lease obligations                           1,048         1,047
  Accounts payable                                          1,237         1,769
  Accrued salaries and benefits                               592           760
  Other accrued expenses                                    1,375         1,259
                                                         --------      --------
              Total current liabilities                     6,930         8,297
                                                         --------      --------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
  less current portion                                      2,908         3,171
                                                         --------      --------
DEFERRED INCOME TAXES                                          46            46
                                                         --------      --------
OTHER LIABILITIES                                               2            45
                                                         --------      --------
              Total liabilities                             9,886        11,559
                                                         --------      --------
STOCKHOLDERS' EQUITY:
  Preferred stock, $.001 par value; 5,000,000
    shares authorized; no shares issued                        --            --
  Common stock, $.001 par value; 50,000,000
    shares authorized; 5,656,269 and 5,601,697
    shares issued and outstanding at August 31,
    1998 and May 31, 1998, respectively                         6             6
  Additional paid-in capital                               13,834        13,821
  Retained earnings                                           503           500
                                                         --------      --------
              Total stockholders' equity                   14,343        14,327
                                                         --------      --------
              Total liabilities and stockholders'
                equity                                   $ 24,229      $ 25,886
                                                         ========      ========

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

                                       -2-
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                             (dollars in thousands)

                                                           Three Months Ended
                                                      --------------------------
                                                      August 31,      August 30,
                                                         1998            1997
                                                     -----------     -----------
NET SALES:
   Golf shafts                                      $     5,001     $     4,922
   Golf grips                                             1,037              --
   Headwear                                                 794              --
                                                    -----------     -----------
                                                          6,832           4,922
                                                    -----------     -----------
COST OF SALES:
   Golf shafts                                            3,274           3,727
   Golf grips                                               551              --
   Headwear                                                 709              --
                                                    -----------     -----------
                                                          4,534           3,727
                                                    -----------     -----------
     Gross profit                                         2,298           1,195

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES              2,156           1,025
                                                    -----------     -----------
     Operating income                                       142             170

INTEREST EXPENSE, net of interest income
   of $61 and $0, for 1998 and 1997, respectively           134             123
                                                    -----------     -----------
     Income before provision for income taxes                 8              47

PROVISION FOR INCOME TAXES                                    5              21
                                                    -----------     -----------
     Net income                                     $         3     $        26
                                                    ===========     ===========

BASIC AND DILUTED NET INCOME PER COMMON SHARE       $      0.00     $      0.01
                                                    ===========     ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING USED IN COMPUTING BASIC NET
   INCOME PER COMMON SHARE                            5,602,290       4,175,394
                                                    ===========     ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING USED IN COMPUTING DILUTED NET
   INCOME PER COMMON SHARE                            5,711,547       4,334,055
                                                    ===========     ===========
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       -3-
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (in thousands)

                                                       Three Months Ended
                                                    -----------------------
                                                   August 31,       August 30,
                                                      1998             1997
                                                    --------         --------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                        $      3         $   26
  Adjustments to reconcile net income
    to net cash provided by
    operating activities -
      Depreciation and amortization                      304             95
      Changes in operating assets and liabilities,
        net of effect of business acquired -
          Accounts receivable                          1,381            909
          Inventories                                    149            296
          Other assets                                    51            (31)
          Accounts payable and accrued
            expenses                                    (584)          (590)
          Other liabilities                              (43)            --
                                                    --------       --------
                  Net cash provided by
                    operating activities               1,261            705
                                                    --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Cash acquired from Royal Grip, Inc.                     --             18
  Purchases of equipment, net                           (334)          (230)
  Payments from net investment in capital lease           78             --
  Merger costs                                            --           (386)
                                                    --------       --------
                  Net cash used in investing
                    activities                          (256)          (598)
                                                    --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from exercise of common stock
    options                                               13             --
  (Repayments) borrowings under
    lines-of-credit, net                                (784)           125
  Repayments of long-term debt and
    capital lease obligations                           (262)          (225)
                                                    --------       --------
                  Net cash used in financing
                    activities                        (1,033)          (100)
                                                    --------       --------
(DECREASE) INCREASE IN CASH                              (28)             7

CASH, beginning of period                                 28             28
                                                    --------       --------
CASH, end of period                                 $     --       $     35
                                                    ========       ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
    Cash paid during the period for -
      Interest                                      $    205       $    134
                                                    ========       ========
      Income taxes                                  $     17       $     60
                                                    ========       ========
    Non-cash transactions -
      Accrued Merger and registration
        costs                                       $     --       $    521
                                                    ========       ========
    Issuance of common stock and options
      and warrants to purchase common
      stock for acquisition of Royal Grip, Inc.     $     --       $ 12,995
                                                    ========       ========

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

                                       -4-
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

1.     Operations and Significant Accounting Policies:

       Basis of presentation -

       The condensed consolidated financial statements of Royal Precision,  Inc.
       and subsidiaries (collectively, RPI or the Company) presented herein have
       been  prepared  pursuant  to the  rules of the  Securities  and  Exchange
       Commission for quarterly reports on Form 10-QSB and do not include all of
       the  information  and note  disclosures  required by  generally  accepted
       accounting principles.  These condensed consolidated financial statements
       should be read in conjunction with the Company's  consolidated  financial
       statements  and notes thereto for the year ended May 31, 1998 included in
       the Company's Form 10-KSB. In the opinion of management, the accompanying
       unaudited  condensed   consolidated   financial  statements  include  all
       adjustments,  consisting of only normal recurring adjustments,  necessary
       to  present  fairly  the  consolidated  financial  position,  results  of
       operations and cash flows of the Company. Quarterly operating results are
       not necessarily  indicative of the results that would be expected for the
       full year.

       Principles of consolidation -

       The  accompanying   consolidated   financial   statements  include  Royal
       Precision,  Inc.  (RPI)  and  its  three  wholly-owned  subsidiaries,  FM
       Precision Golf  Manufacturing  Corp. (FMP), FM Precision Golf Sales Corp.
       (FM Sales) and Royal Grip,  Inc  (formerly  FMPSUB,  Inc.) and its wholly
       owned  subsidiary,  Roxxi, Inc.  (collectively  RG). On May 14, 1997, RPI
       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 RPI created for such purpose) merged with and
       into RG (the  Merger).  RG was the  surviving  corporation  and  became a
       wholly-owned subsidiary of RPI. Accordingly, the results of operations of
       RG are not  included in the three  months  ended  August 30, 1997 and are
       included in the three  months  ended  August 31,  1998.  All  significant
       intercompany   balances  and   transactions   have  been   eliminated  in
       consolidation.

       Reporting periods -

       The  Company's  first three  fiscal  quarters in fiscal year May 31, 1998
       ended on a Saturday.  The Company's first three fiscal quarters in fiscal
       year May 31,  1999  end on the  last  calendar  day of the  quarter.  The
       Company's year end is May 31.

2.     Net Income Per Share:

       In February 1997, the Financial  Accounting Standards Board adopted a new
       standard (SFAS No. 128) on accounting for earnings per share (EPS).  This
       new standard replaced the presentation of primary EPS with a presentation
       of basic EPS and changed the fully  diluted  terminology  to diluted.  It
       also requires dual  presentation  of basic and diluted EPS on the face of
       the income  statement.  In February 1998, the SEC issued Staff Accounting
       Bulletin (SAB) No. 98, which, among other things, addresses the impact of
       cheap stock in earnings  per share  computations.  All  weighted  average
       share and net income  (loss) per share  amounts for all periods have been
       presented,  and where necessary,  restated to conform to the SFAS No. 128
       and SAB No. 98 requirements.

       Basic earnings per common share are based on the average number of common
       shares  outstanding  during the periods  presented.  Diluted earnings per
       common  share  assumes,  in addition to the above,  a dilutive  effect of
       common  share  equivalents  during the periods  presented.  Common  share
       equivalents  represent  dilutive  stock options using the treasury  stock
       method.
                                       -5-
<PAGE>
3.     New Accounting Standards:

       In June 1997,  the FASB  issued SFAS No.  130,  "Reporting  Comprehensive
       Income",  which  establishes  standards  for  reporting  and  display  of
       comprehensive income (net income together with other non-owner changes in
       equity) and its  components  in a full set of general  purpose  financial
       statements.  RPI's  comprehensive  income is the same as RPI's net income
       for the three month periods ended August 31, 1998 and August 30, 1997.

       In February 1998, the FASB issued SFAS No. 132,  "Employers'  Disclosures
       about  Pensions  and  other  Postretirement   Benefits",   which  revises
       employers'  disclosures  about pension and other  postretirement  benefit
       plans.  It does not change the measurement or recognition of those plans.
       It  standardizes  the  disclosure  requirements  for  pensions  and other
       postretirement benefits to the extent practicable and requires additional
       information on changes in the benefit obligations and fair values of plan
       assets  that will  facilitate  financial  analysis.  Since  SFAS No.  132
       affects  disclosures only and not measurement,  the standard will have no
       financial impact upon adoption at the end of fiscal 1999.

       In June 1998,  the FASB issued SFAS No. 133,  "Accounting  for Derivative
       Instruments  and  Hedging  Activities",  which  requires  that an  entity
       recognize  all  derivatives  as  either  assets  or  liabilities  in  the
       statement of financial  position and measure  those  instruments  at fair
       value.  The Company  will be required to adopt SFAS No. 133 as of June 1,
       2000 and does not  anticipate  any  material  impact  resulting  from the
       adoption of this pronouncement.

4.     Inventories:

       Inventories  as of August  31,  1998 and May 31,  1998  consisted  of the
       following (in thousands):

                                            August 31, 1998     May 31, 1998
                                                ------              ------
       Raw materials                            $  742              $1,161
       Work-in-process                           1,576               1,206
       Finished goods                            1,582               1,682
                                                ------              ------
                                                $3,900              $4,049
                                                ======              ======
5.     Information on Segments:

       The Company has three reportable  segments:  golf shafts,  golf grips and
       headwear.  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 profit or
       loss after income taxes.  The Company  allocates  certain  administrative
       expenses to segments. The amounts in this illustration are the amounts in
       reports used by the chief operating  decision maker as of August 31, 1998
       (in thousands):
                                            Three Months Ended August 31, 1998
                                           ------------------------------------
                                             Golf     Golf
                                            Shafts    Grips   Headwear   Total
                                            ------    -----   --------   ------
       Revenues from external customers    $5,001   $ 1,037   $  794    $ 6,832
       Intersegment revenues                    -         -        5          5
       Segment profit (loss)                   43        51      (91)         3
       Segment assets                       8,284    11,708    1,805     21,797

       Total assets for reportable segments                             $21,797
       Elimination of investment in
         subsidiaries                                                    (7,466)
       Goodwill not allocated to segments                                 9,898
                                                                        -------
       Consolidated total assets                                        $24,229
                                                                        =======

       For the three month period  ended  August 31, 1997,  the Company had only
       one segment, golf shafts.

                                       -6-
<PAGE>
6.     Subsequent Events

       On October 8, 1998,  the Company made  changes to its existing  borrowing
       arrangements described in Note 6 to the financial statements contained in
       the Company's form 10-KSB and consolidated  all of its credit  facilities
       with one bank.

       In connection  with a new credit  facility for FMP, all loans to FMP were
       paid off and a new credit and security  agreement was entered into with a
       new  lender.  In  connection  with the  repayment  of the old FMP  credit
       facility,  FMP paid a $75,000 prepayment penalty to its bank. The cost of
       the prepayment  penalty will be reflected as a reduction of the Company's
       second  quarter  income.  Terms of FMP's  new  credit  facilities  are as
       follows.  The amount  available for borrowings under the FMP term loan is
       $4.3  million.  Such  amount was  funded on  October 9, 1998.  The amount
       available for  borrowing  under the FMP revolver is based upon the levels
       of eligible accounts receivable and inventories,  as defined,  subject to
       maximum  borrowing  of $4.0  million.  FMP's  term loan is due in monthly
       principal  installments  of $99,000 through and until October 1, 1999 and
       $65,000 monthly, thereafter.

       The borrowing arrangement with RG was amended and restated. The amendment
       resulted  in the funding of a new RG term loan of $840,000 in addition to
       the  existing RG term loan that has  $496,000  outstanding  at October 9,
       1998.  The new RG term loan was funded on  October  9,  1998.  The amount
       available for  borrowings  under the RG revolver is based upon the levels
       of eligible accounts receivable and inventories,  as defined,  subject to
       maximum  borrowing of $1.5 million.  RG's new term loan is due in monthly
       principal  installments  of $40,000 through and until October 1, 1999 and
       $22,500 monthly until maturity.

       Borrowings  under all term loans and both  revolvers  bear  interest at a
       rate per annum  equal to the prime  rate  (8.25% at October 9, 1998) plus
       0.75% and 0.25%,  respectively,  and are secured by substantially  all of
       the  Company's  assets.  The  maturity  date for all term  loans and both
       revolvers is September 30, 2001. On October 9, 1998, the Company had $1.4
       million  available  for  additional  borrowings.  However,  when  the UCC
       filings  in  Connecticut  related  to the loan  have  been  perfected,  a
       $500,000  reserve  will be removed and the Company will have $1.9 million
       available for additional borrowings.

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

       Forward Looking Statements -

       The Private  Securities  Litigation  Reform Act of 1995  provides a "safe
       harbor" for forward-looking  statements. This Form 10-QSB, any other Form
       10-QSB, Form 10-KSB, or Form 8-K, or any other written or oral statements
       made by or on behalf of RPI may include forward looking  statements which
       reflect  RPI'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, RPI's cost of raw materials,
       the  competitive  environment  in which RPI operates,  and changes in the
       financial  markets  relating  to  RPI's  capital  structure  and  cost of
       capital.  Statements  in this  Form  10-QSB,  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
       RPI's Form 10-KSB.  Please  refer to "Risk  Factors"  therein.  The words
       "believe,"  "expect,"  "anticipate,"  "project," and similar  expressions
       identify forward looking statements,  which speak only as of the date the
       statement was made.  RPI  undertakes no obligation to publicly  update or
       revise  any  forward  looking  statements,  whether  as a  result  of new
       information, future events, or otherwise.

       Overview -

       Royal  Precision,  Inc.  (RPI  or the  Company)  has  three  wholly-owned
       subsidiaries  which are FM Precision Golf  Manufacturing  Corp. (FMP), FM
       Precision Golf Sales Corp.,  Royal Grip, Inc.  (formerly known as FMPSUB,
       Inc.) and its wholly owned subsidiary, Roxxi, Inc. (collectively RG). RPI
       acquired RG on August 29, 1997 by means of a merger whereby FMPSUB,  Inc.
       merged with and into RG with RG being the surviving corporation.

       The effective date of the merger was August 29, 1997.  Accordingly,  RG's
       results of  operations  are included in the three months ended August 31,
       1998, but are not included in the three months ended August 30, 1997.

                                       -7-
<PAGE>

       FMP is a  manufacturer  and  distributor  of golf shafts that are sold to
       original equipment manufacturers (OEMs) and to distributors and retailers
       for use in the  replacement  market.  The  majority of FMP's sales are to
       OEM's.  FMP also sells golf shafts in foreign  markets  including  Japan,
       Canada, Australia and the United Kingdom.

       RG  designs  and  distributes   golf  club  grips  and  manufactures  and
       distributes   athletic   headwear.   RG's  products  are  sold  primarily
       throughout the United States,  Japan and the United Kingdom. The majority
       of RG's grip sales are to its Japanese distributor.  In December 1996, RG
       outsourced the  manufacturing  of its non-cord  grips to Acushnet  Rubber
       Company.


       Three  Months  Ended  August 31, 1998  Compared to the Three Months Ended
       August 30, 1997 -

       Net Sales. Net sales for the three months ended August 31, 1998 were $6.8
       million,  an  increase  of 38.8% over net sales of $4.9  million  for the
       corresponding  period in 1997.  The increase in net sales of $1.9 million
       is primarily  attributable  to the inclusion of $1.8 million of net sales
       of golf club grips and headwear by RG. Net golf shaft sales for the three
       months ended August 31, 1998 increased by $0.1 million or 1.6%.  Sales of
       the higher  priced  Rifle  shafts  increased  by $1.1 million or 45.9% as
       compared to the same period last year.  The increase in Rifle shaft sales
       was offset by a reduction in lower priced commercial grade shaft sales of
       $0.8 million or 40.8%

       Cost of Goods Sold.  Cost of goods sold for the three months ended August
       31, 1998 was $4.5  million,  an increase of 21.7% over cost of goods sold
       of $3.7  million  for the same  period in 1997.  The  increase in cost of
       goods sold of $0.8 million is primarily  attributable to the inclusion of
       $1.3  million of cost of goods  sold for RG golf club grips and  headwear
       offset by a decrease  of $0.5  million  in golf shaft cost of sales.  The
       decrease in cost of goods sold for the golf shaft  business is  primarily
       the result of a planned reduction in the total unit volume of shaft sales
       offset by a change in mix to higher  cost  Rifle  shafts  from lower cost
       commercial grade shafts.

       Gross Profit. Gross profit for the three months ended August 31, 1998 was
       $2.3 million,  an increase of 92.3% over gross profit of $1.2 million for
       the  corresponding  period in 1997.  The increase in gross profit of $1.1
       million is  primarily  attributable  to the  inclusion of $0.6 million of
       gross profit on sales of golf club grips and headwear by RG. Gross profit
       on sales of golf  shafts  for the three  months  ended  August  31,  1998
       increased  by $0.5  million or 44.5% as  compared to the same period last
       year. As a percentage of sales, the gross profit on shaft sales increased
       from  24.3% to 34.5% for the three  months  ended  August  31,  1998,  as
       compared to gross profit  during the same period in 1997 due to a greater
       percentage  of shaft sales  being  attributed  to sales of higher  margin
       Rifle shafts.

       Selling,  General  and  Administrative  Expenses.  Selling,  general  and
       administrative  expenses  for the three months ended August 31, 1998 were
       $2.2  million,   an  increase  of  110.3%  over   selling,   general  and
       administrative  expenses of $1.0 million for the same period in 1997. The
       increase in selling,  general and administrative expenses of $1.2 million
       is primarily  attributable  to the  inclusion of $0.5 million of selling,
       general and administrative  expenses from RG for the period reported.  In
       addition,  the Company  amortized  $130,000 of goodwill  during the three
       months  ended  August 31,  1998 as a result of the Merger.  In  addition,
       advertising  expenses  for FMP  increased  $140,000  for the three months
       ended August 31, 1998 as compared to the same period last year.

       Interest  Expense,  net. Net interest  expense for the three months ended
       August 31, 1998 was  $134,000  compared  to $123,000  for the same period
       last year. The increase in net interest expense is primarily attributable
       to the inclusion of RG interest  expense  totaling  $42,000 for the three
       month  period  ended  August  31,  1998 and  higher  average  outstanding
       balances on the FMP  lines-of-credit  during the three month period ended
       August 31, 1998  compared to the same period last year.  Interest  income
       for the three months  ended  August 31, 1998 was $61,000,  compared to $0
       for the same period last year.  This  increase is due to the inclusion of
       interest income from RG's capital lease receivable in the 1998 period.

       Income  Taxes.  Income tax expense for the three  months ended August 31,
       1998 and 1997 was $5,000 and  $21,000,  respectively.  Taxes are provided
       based on the estimated  effective  tax rate for the year which  considers
       the effect of nondeductible goodwill amortization.

                                       -8-
<PAGE>
       Liquidity  and Capital  Resources.  At August 31,  1998,  RPI had working
       capital  of  $183,000  and a  current  ratio of 1.0 to 1 as  compared  to
       working  capital of $401,000  and a current  ratio of 1.0 to 1 at May 31,
       1998.

       FMP and RG were in compliance with all debt covenants at August 31, 1998.
       Based on eligible  receivables  and inventory as of August 31, 1998,  FMP
       and RG had  $0.3  million  and  $0.2  million  available  for  additional
       borrowings under revolving lines of credit, respectively.

       On October 8, 1998,  the Company made  changes to its existing  borrowing
       arrangements described in Note 6 to the financial statements contained in
       the Company's form 10-KSB and consolidated  all of its credit  facilities
       with one bank.

       In connection  with a new credit  facility for FMP, all loans to FMP were
       paid off and a new credit and security  agreement was entered into with a
       new  lender.  In  connection  with the  repayment  of the old FMP  credit
       facility,  FMP paid a $75,000 prepayment penalty to its bank. The cost of
       the prepayment  penalty will be reflected as a reduction of the Company's
       second  quarter  income.  Terms of FMP's  new  credit  facilities  are as
       follows.  The amount  available for borrowings under the FPM term loan is
       $4.3  million.  Such  amount was  funded on  October 9, 1998.  The amount
       available for  borrowing  under the FMP revolver is based upon the levels
       of eligible accounts receivable and inventories,  as defined,  subject to
       maximum  borrowing  of $4.0  million.  FMP's  term loan is due in monthly
       principal  installments  of $99,000 through and until October 1, 1999 and
       $65,000 monthly, thereafter.

       The borrowing arrangement with RG was amended and restated. The amendment
       resulted in the funding of a new term loan of $840,000 in addition to the
       existing term loan that has $496,000  outstanding at October 9, 1998. The
       new RG term loan was funded on October 9, 1998. The amount  available for
       borrowings  under the RG  revolver  is based upon the levels of  eligible
       accounts  receivable  and  inventories,  as  defined,  subject to maximum
       borrowing of $1.5 million. RG's new term loan is due in monthly principal
       installments  of $40,000  through  and until  October 1, 1999 and $22,500
       monthly until maturity.

       Borrowings  under all term loans and both  revolvers  bear  interest at a
       rate per annum  equal to the prime  rate  (8.25% at October 9, 1998) plus
       0.75% and 0.25%,  respectively,  and are secured by substantially  all of
       the  Company's  assets.  The  maturity  date for all term  loans and both
       revolvers is September 30, 2001. On October 9, 1998, the Company had $1.4
       million  available  for  additional  borrowings.  However,  when  the UCC
       filings  in  Connecticut  related  to the loan  have  been  perfected,  a
       $500,000  reserve  will be removed and the Company will have $1.9 million
       available for additional borrowings.

       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 three  months  ended  August 31,  1998,  net cash  provided by
       operating  activities was $1.3 million which  primarily  resulted from an
       aggregate  decrease in accounts  receivable and inventory of $1.5 million
       and $0.3 million of depreciation and  amortization  partially offset by a
       decrease in accounts  payable and accrued  expenses of $0.6 million.  RPI
       used $0.3 million in investing  activities  during the three months ended
       August 31, 1998,  primarily  due to the purchase of  additional  property
       plant and equipment. RPI estimates that capital expenditures for the year
       ended May 31, 1999 will be approximately $1.7 million.

       Net cash used in financing  activities  for the three months ended August
       31, 1998, was $1.0 million primarily due to the repayment of $0.8 million
       and $0.3  million  on the  Company's  lines  of  credit  and term  loans,
       respectively.

       Year 2000  Assessment.  The Company has assessed  all internal  year 2000
       issues including but not limited to computer hardware and software, alarm
       systems,  manufacturing  equipment and software, and all other mechanical
       equipment. Based on this assessment, a plan was developed and implemented
       to resolve all of the internal  year 2000 issues.  The Company  completed
       the last phase of the year 2000 internal  compliance plan on June 1, 1998
       by converting to a client  server based  accounting  system which is year
       2000 compliant.

       The Company is currently assessing external year 2000 exposure and risks.
       A plan will be developed and implemented to contact  external  suppliers,
       assess  risk  factors  and  find  alternative   suppliers,   and  develop
       contingency plans, as necessary.

                                       -9-
<PAGE>
       There can be no assurance that the Company's efforts to achieve year 2000
       compliance will be successful or that third parties with whom the Company
       has  material  relationships  will be year 2000  compliant  by January 1,
       2000.  Year 2000  noncompliance  by either  the  Company  or any of these
       material  third  parties  could  have a  material  adverse  effect on the
       Company's business, results of operations, or financial condition.

       Business Environment and Future Results.

       Reliance on Third Party  Suppliers.  RG currently  purchases,  and for an
       indefinite  period of time  intends  to  purchase,  100% of its supply of
       non-cord grips from Acushnet. During the transition to Acushnet beginning
       in December 1996, Acushnet experienced delays and quality problems in the
       production of grips, which adversely affected RG's customer relationships
       and results of operations.

       Under the amended Manufacturing and Supply Agreement,  either Acushnet or
       RG may  voluntarily  terminate the agreement  upon payment of a specified
       termination  fee,  among  other  things.  During  calendar  year 1999 and
       beyond, RG is required to purchase a minimum number of grips.  Failure by
       RG to purchase  the  minimum,  during any calendar  year,  constitutes  a
       material  breach of the  Agreement  pursuant  to which  Acushnet,  at its
       option,  may terminate the Agreement  without paying the termination fee.
       Although the minimum  requirements are not yet in effect, RG is currently
       ordering  fewer  grips than will be  required  during  calendar  1999 and
       beyond.

       RG  currently  has no  back-up  source of supply  should  the  Company or
       Acushnet elect to utilize its termination  rights,  and any transition to
       alternative  suppliers  or  the  resumption  of  in-house   manufacturing
       operations by RG may result in production  delays,  the loss of sales and
       key customers which would materially affect RG's financial  condition and
       results of operations.  The contract requires Acushnet to provide RG with
       10 months notice to terminate the contract.  Although RG believes that it
       has certain  remedies  available to it under its agreement  with Acushnet
       arising out of a voluntary  termination  of the  agreement  by  Acushnet,
       including the payment of termination  fees and expenses,  there can be no
       assurance that RG would be able to  successfully  pursue such remedies or
       that such remedies would adequately compensate RG for any losses incurred
       by it.

                                      -10-
<PAGE>
                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.

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

         (a) The annual meeting of stockholders was held on October 1, 1998.

         (b) Lawrence  Bain,  Ronald L. Chalmers and Leslie Reesing were elected
as directors,  each to serve a term of three years.  Other directors whose terms
of office  continued after the annual meeting are David E. Johnston,  Kenneth J.
Warren, Robert G. J. Burg, II, Danny Edwards, Richard P. Johnston and Raymond J.
Minella.

         (c) The only matters  voted on at the annual  meeting were the election
of  directors  and  approval of the Royal  Precision,  Inc.  Stock  Option Plan.
Results of the voting were as follows:

         Total number of shares  entitled to vote present or  represented at the
annual meeting: 5,341,858

         Election of Directors:
                                           FOR               AUTHORITY WITHHELD
                                           ---               ------------------

                  Lawrence Bain            5,337,858                  4,000
                  Ronald L. Chalmers       5,338,008                  3,850
                  Leslie Reesing           5,336,508                  5,350

         Approval of Stock Option Plan:  FOR     AGAINST   ABSTAIN    NOT VOTED
                                         ---     -------   -------    ---------

                                      4,915,770  17,440     1,347      407,301

         (d) Not applicable.

ITEM 5.  OTHER INFORMATION.

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)  Exhibits.

         (3)  Certificate of Incorporation and Bylaws

                                      -11-
<PAGE>

         Exhibit 3.1.  Amended and Restated  Certificate of  Incorporation of FM
Precision  Golf Corp.  (incorporated  by reference to Annex IV to the  Company's
Form S-4; No. 333-28841 (the "Form S-4")).

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

         (4) Instruments Defining the Rights of Security Holders

         Exhibit 4. 1. See  Articles  FOUR,  FIVE and SEVEN of the  Amended  and
Restated  Certificate of Incorporation of FM Precision Golf Corp.  (incorporated
by reference to Exhibit 3.1 to the Form S-4).

         Exhibit  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

         Exhibit 10.1. 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.

         Exhibit 10.2.  Amended and Restated Credit and Security Agreement dated
as of October 8, 1998 among Royal Grip, Inc.,  Roxxi,  Inc. and Norwest Business
Credit, Inc.

         Exhibit 27.
         Financial Data Schedule  (submitted  electronically for SEC information
only)

         (b) Reports on Form 8-K.

         No reports on Form 8-K were filed by the Registrant  during the quarter
ended August 31, 1998.

                                      -12-
<PAGE>
                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            ROYAL PRECISION, INC.

Date October 14, 1998                    By /s/ Thomas Schneider
    --------------------                    ------------------------------------
                                            Thomas Schneider, President and
                                            Treasurer (duly authorized officer
                                            and principal financial officer)


                                      -13-

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

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

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

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

10.1  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.                              15

10.2  Amended and Restated  Credit and Security  Agreement dated as of
      October 8, 1998 among Royal Grip, Inc.,  Roxxi, Inc. and Norwest
      Business Credit, Inc.                                               74

27.   Financial  Data  Schedule  (submitted   electronically  for  SEC
      information only)

--------
*     Incorporated by reference

                                      -14-