U.S. 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 November 30, 2000 or

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

For the transition period from __________ to _________.

                         Commission File Number: 0-22889

                              ROYAL PRECISION, INC.
             (Exact Name of Registrant as Specified in Its Charter)

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

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

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


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

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

      Title of each class                      Outstanding at January 11, 2001
      -------------------                      --------------------------------

Common Stock, par value $0.001                         5,678,956 Shares
<PAGE>
                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                     ROYAL PRECISION, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                      NOVEMBER 30,     MAY 31,
                                                                                         2000           2000
                                                                                       --------       --------
<S>                                                                         <C>           <C>
                                     ASSETS

CURRENT ASSETS:
   Cash                                                                                $     94       $     36
   Accounts receivable, net of allowance for doubtful accounts of $299
    and $274 at November 30, 2000 and May 31, 2000, respectively                          3,133          5,100
   Inventories                                                                            6,495          5,124
   Other current assets                                                                      85            155
   Deferred income taxes                                                                    676            106
                                                                                       --------       --------
       Total current assets                                                              10,483         10,521
                                                                                       --------       --------
PROPERTY, PLANT AND EQUIPMENT:
   Land                                                                                     123            123
   Furniture, fixtures and office equipment                                                 622            455
   Buildings and improvements                                                               920            840
   Machinery and equipment                                                                4,685          4,278
   Equipment held for sale                                                                  140            500
   Construction in progress                                                                 852          1,081
                                                                                       --------       --------
                                                                                          7,342          7,277
   Less - Accumulated depreciation                                                       (1,540)        (1,264)
                                                                                       --------       --------
                                                                                          5,802          6,013
                                                                                       --------       --------

GOODWILL, net                                                                             7,408          7,629
                                                                                       --------       --------

DEFERRED INCOME TAXES                                                                       701            701
                                                                                       --------       --------
OTHER ASSETS                                                                                 80             78
                                                                                       --------       --------
       Total assets                                                                    $ 24,474       $ 24,942
                                                                                       ========       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current portion of long-term debt and capital lease obligations                     $  7,861       $    906
   Accounts payable                                                                       1,951          1,714
   Accrued salaries and benefits                                                            595          1,290
   Accrued pension liability                                                                122            176
   Other accrued expenses                                                                   595            417
                                                                                       --------       --------
       Total current liabilities                                                         11,124          4,503

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of current portion                         --          6,027
                                                                                       --------       --------
       Total liabilities                                                                 11,124         10,530
                                                                                       --------       --------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, $0.001 par value; 1,000,000 shares
     authorized; no shares issued                                                            --             --
   Common stock, $0.001 par value; 10,000,000 shares authorized;
    5,678,956 shares issued and outstanding at November 30, 2000 and May 31, 2000             6              6
   Additional paid-in capital                                                            13,975         13,940
   Retained earnings (accumulated deficit)                                                 (631)           466
                                                                                       --------       --------
       Total stockholders' equity                                                        13,350         14,412
                                                                                       --------       --------
       Total liabilities and stockholders' equity                                      $ 24,474       $ 24,942
                                                                                       ========       ========
</TABLE>
              The accompanying notes are an integral part of these
                     condensed consolidated balance sheets.

                                       2
<PAGE>
                     ROYAL PRECISION, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED              SIX MONTHS ENDED
                                                     ---------------------------     ---------------------------
                                                     NOVEMBER 30,    NOVEMBER 30,    NOVEMBER 30,    NOVEMBER 30,
                                                        2000             1999           2000             1999
                                                     -----------      ----------     -----------      ----------
<S>                                                  <C>              <C>            <C>              <C>
NET SALES:
  Golf club shafts                                   $     4,757      $    5,601     $    10,564      $   10,914
  Golf club grips                                            735             842           1,906           2,088
                                                     -----------      ----------     -----------      ----------
                                                           5,492           6,443          12,470          13,002
                                                     -----------      ----------     -----------      ----------
COST OF SALES:
  Golf club shafts                                         4,203           4,046           7,952           7,292
  Golf club grips                                            649             573           1,471           1,439
                                                     -----------      ----------     -----------      ----------
                                                           4,852           4,619           9,423           8,731
                                                     -----------      ----------     -----------      ----------

      Gross profit                                           640           1,824           3,047           4,271

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES               1,604           1,475           3,586           3,114

AMORTIZATION OF GOODWILL                                     111             121             221             243

NONRECURRING EXPENSES                                        617              10             632              10
                                                     -----------      ----------     -----------      ----------

      Operating income (loss)                             (1,692)            218          (1,392)            904

INTEREST EXPENSE                                             185             147             363             298

OTHER EXPENSE                                                 79              --              79              --

OTHER INCOME                                                  78              55             165             110
                                                     -----------      ----------     -----------      ----------
      Income (loss) before provision for
        (benefit from) income taxes                       (1,878)            126          (1,669)            716

PROVISION FOR (BENEFIT FROM) INCOME TAXES                   (676)             62            (572)            358
                                                     -----------      ----------     -----------      ----------
      Net income (loss)                              $    (1,202)     $       64     $    (1,097)     $      358
                                                     ===========      ==========     ===========      ==========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
  BASIC                                              $     (0.21)     $     0.01     $     (0.19)     $     0.06
                                                     ===========      ==========     ===========      ==========
  DILUTED                                            $     (0.21)     $     0.01     $     (0.19)     $     0.06
                                                     ===========      ==========     ===========      ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED TO
 COMPUTE PER SHARE INFORMATION:
  BASIC                                                5,678,956       5,670,953       5,678,956       5,669,001
                                                     ===========      ==========     ===========      ==========
  DILUTED                                              5,678,956       5,795,719       5,678,956       5,798,600
                                                     ===========      ==========     ===========      ==========
</TABLE>
              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
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED
                                                                 ----------------------------
                                                                 NOVEMBER 30,     NOVEMBER 30,
                                                                    2000             1999
                                                                   -------         -------
<S>                                                                <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                $(1,097)        $   358
  Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
   Depreciation and amortization                                       513             603
   Deferred income taxes                                              (570)             --
   (Gain) loss on retirement or sale of fixed assets                    (3)              7
   Stock based compensation                                             35              --
   Write-down of equipment and inventories                             954              --
  Changes in operating assets and liabilities--
   Accounts receivable, net                                          1,967           1,104
   Inventories                                                      (1,848)         (1,019)
   Other assets                                                         68             201
   Accounts payable and accrued expenses                              (334)           (252)
                                                                   -------         -------

        Net cash provided by (used in) operating activities           (315)          1,002
                                                                   -------         -------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of machinery and equipment                                 (585)           (861)
 Proceeds from sale of fixed assets                                     30              --
                                                                   -------         -------

        Net cash used in investing activities                         (555)           (861)
                                                                   -------         -------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from exercise of common stock options                         --               1
 Borrowings under lines-of-credit, net                               1,381             482
 Repayments of long-term debt and capital lease obligations           (453)           (746)
                                                                   -------         -------

        Net cash provided by (used in) financing activities            928            (263)
                                                                   -------         -------

INCREASE (DECREASE) IN CASH                                             58            (122)

CASH, beginning of period                                               36             184
                                                                   -------         -------

CASH, end of period                                                $    94         $    62
                                                                   =======         =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Cash paid during the period for--
 Interest                                                          $   352         $   316
                                                                   =======         =======
 Income taxes                                                      $     1         $    31
                                                                   =======         =======
</TABLE>
              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


1.   OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:

     BASIS OF PRESENTATION --

     The condensed  consolidated  financial statements of Royal Precision,  Inc.
     and  subsidiaries  (collectively,  "RP" or the "Company")  presented herein
     have been  prepared  pursuant to the rules of the  Securities  and Exchange
     Commission for quarterly reports on Form 10-Q and do not include all of the
     information  and  note  disclosures   required  by  accounting   principles
     generally  accepted  in the United  States.  These  condensed  consolidated
     financial  statements  should  be read in  conjunction  with the  Company's
     consolidated  financial  statements  and notes  thereto for the fiscal year
     ended May 31, 2000 included in the  Company's  Form 10-K. 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.

     ORGANIZATION --

     The accompanying  condensed consolidated financial statements include Royal
     Precision, Inc. and its three wholly-owned subsidiaries,  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.  All significant  intercompany  balances and transactions
     have been eliminated in consolidation.

     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.

     USE OF ESTIMATES --

     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.

2.   EARNINGS (LOSS) PER SHARE:

     The Company  accounts for earnings  (loss) per share in accordance with the
     Financial  Accounting  Standards  Board  ("FASB")  Statement  of  Financial
     Accounting Standards ("SFAS") No. 128, "Earnings Per Share." Basic earnings
     (loss)  per  share  are  based  on the  average  number  of  common  shares
     outstanding  during the period.  Diluted earnings (loss) per share assumes,
     in addition to the above,  a dilutive  effect of common  share  equivalents
     during the  period.  Common  share  equivalents  represent  dilutive  stock
     options using the treasury  stock method.  Loss per share for the three and
     six month periods ended  November 30, 2000 were not affected by 1.3 million
     outstanding  stock  options  because  their effect was  anti-dilutive.  The
     number of shares used in computing  earnings (loss) per share for the three
     and six months  ended  November  30,  2000 and  November  30,  1999 were as
     follows (in thousands):

                                       5
<PAGE>
                                                         THREE MONTHS ENDED
                                                    ----------------------------
                                                    NOVEMBER 30,    NOVEMBER 30,
                                                       2000            1999
                                                       ----            ----
     Basic:
       Average common shares outstanding              5,679            5,671

     Diluted:
       Dilutive effect of stock options                  --              125
                                                      -----            -----
       Average common shares outstanding              5,679            5,796
                                                      =====            =====

                                                         SIX MONTHS ENDED
                                                    ----------------------------
                                                    NOVEMBER 30,    NOVEMBER 30,
                                                       2000            1999
                                                       ----            ----
     Basic:
       Average common shares outstanding              5,679            5,669

     Diluted:
       Dilutive effect of stock options                  --              130
                                                      -----            -----
       Average common shares outstanding              5,679            5,799
                                                      =====            =====

3.   NEW ACCOUNTING PRONOUNCEMENTS:

     In March 2000, the FASB issued FASB  Interpretation No. 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  adopted FIN 44 during the quarter  ended  August 31,  2000.  As of
     November  30,  2000,  there were  outstanding  options to purchase  170,583
     shares  at an  exercise  price of $3.19  per share  which  are  subject  to
     variable  plan  accounting  until they are  exercised  or expire in January
     2004. No compensation  costs were recognized during the three and six month
     periods ended November 30, 2000 related to these options.

     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 101B. SAB 101
     summarizes  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 does not
     anticipate  any material  impact on its results of operations and financial
     position resulting from the adoption of SAB 101.

     In July 2000,  the  Emerging  Issues  Task Force  ("EITF")  reached a final
     consensus on Issue No.  00-10,  "Accounting  for Shipping and Handling Fees
     and Costs" ("EITF No. 00-10").  When adopted,  EITF No. 00-10 requires that
     all amounts  billed to customers in sale  transactions  related to shipping
     and handling be classified as revenue. In addition, EITF No. 00-10 requires
     that shipping and handling fees and costs in financial statements for prior
     periods presented for comparative purposes be reclassified.  EITF No. 00-10
     must be adopted prior to, or concurrent  with, the adoption of SAB 101. The
     Company has elected to early adopt EITF No. 00-10 during its quarter  ended
     August  31,  2000.  As  such,  the  condensed  consolidated  statements  of
     operations for the three and six month periods ended November 30, 1999 have
     been reclassified to reflect the adoption of EITF No. 00-10.

     In June 1998,  the 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

                                       6
<PAGE>
     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 on June 1, 2001.  The Company does not anticipate any
     material  impact  on its  results  of  operations  and  financial  position
     resulting from the adoption of SFAS No. 133.

4.   INVENTORIES:

     Inventories  are valued at the lower of cost or market.  Cost is determined
     on the first-in,  first-out method. Inventories as of November 30, 2000 and
     May 31, 2000 consisted of the following (in thousands):

                                           NOVEMBER 30, 2000     MAY 31, 2000
                                           -----------------     ------------
     Raw materials                               $  438              $  525
     Work-in-process                              1,650               1,655
     Finished goods                               4,407               2,944
                                                 ------              ------
                                                 $6,495              $5,124
                                                 ======              ======

     During the three months  ended  November  30,  2000,  the Company  recorded
     write-downs  totaling  $477,000  to reduce the  carrying  value of finished
     goods inventory to estimated net realizable  value.  These  write-downs are
     reflected as a component of cost of sales in the  statements  of operations
     for the three and six month periods  ended  November 30, 2000. A write-down
     of  $280,000  was  recorded  on certain  steel golf club  shafts  including
     $98,000 for proprietary product  manufactured to the unique  specifications
     of an OEM customer  that  recently  developed  financial  difficulties  and
     $72,000 for steel shafts which the Company had  contracted  with an outside
     vendor to bend for  putter  applications.  The  Company  recently  acquired
     manufacturing  equipment to bend steel shafts for putters based on customer
     specifications  and will be undertaking a concerted  sales effort to expand
     this  business in the calendar 2001 golf season.  Therefore,  the potential
     sales value of existing stock inventory of putter shafts has diminished.  A
     write-down  of $130,000 was recorded on certain  graphite  golf club shafts
     manufactured  or  purchased  prior to the  development  of Rifle  Graphite.
     Various  efforts  to  sell  this  inventory  at  higher  prices  have  been
     unsuccessful  and the Company believes that the introduction of new product
     lines  including the Rifle Graphite will continue to diminish the potential
     sales  value of these  items  during  the  calendar  2001  golf  season.  A
     write-down of $67,000 was recorded on golf club grips primarily for product
     lines that the Company and its Japanese distributor will discontinue during
     the calendar 2001 golf season and for proprietary products developed for an
     OEM customer which were recently identified as defective.

5.   EQUIPMENT WRITE-DOWN:

     During the three months ended  November 30, 2000,  the Company took efforts
     to actively market its equipment held for sale which  represents the rubber
     injection presses previously used to manufacture golf club grips. A general
     decline in the market for rubber  molding  equipment has recently  occurred
     due to a slow-down in the automotive manufacturing sector. Responses to the
     marketing  efforts  resulted  in offers  significantly  below  book  value.
     Therefore,  an impairment write-down of $360,000 was recorded to reduce the
     carrying value of the equipment from $500,000 to $140,000.  This write-down
     is reflected as a component of  nonrecurring  expenses in the statements of
     operations for the three and six month periods ended November 30, 2000.

     During the three months ended  November  30, 2000,  the Company  identified
     various projects under  development to design and construct tooling for the
     manufacture  of golf club  grips  which  would not  result in a  productive
     asset.  Several of these  projects had commenced  prior to the  termination
     date  of  the  Company's  exclusive  manufacturing  supply  agreement  with
     Acushnet  Rubber  Company.  Efforts were undertaken to modify the design of
     this tooling so that it could be utilized by the various new  manufacturers
     which are currently producing the Company's grip inventory. However, it was
     recently determined that the equipment utilized by the new manufacturers is
     incompatible with the design of the tooling under  development.  Additional
     projects to develop  prototype  samples  for  potential  customers  did not
     result in a salable product. Therefore, an expense of $117,000 was recorded
     to write-off the accumulated cost related to the various tooling  projects.
     This item is  included  as a  component  of  nonrecurring  expenses  in the
     statements of operations for the three and six month periods ended November
     30, 2000.

                                       7
<PAGE>
6.   BORROWING ARRANGEMENTS:

     FMP  has a  credit  facility  consisting  of a term  loan  and a  revolving
     line-of-credit.  The FMP term loan of $2.3  million at November 30, 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 November 30, 2000, FMP had $4.5 million  outstanding  under
     its revolving  line-of-credit  and $0.5 million  available  for  additional
     borrowings. The FMP line-of-credit expires in September 2002.

     In November 2000, FMP amended its credit facility to provide up to $600,000
     of  additional  borrowing  capacity  under  the  revolving   line-of-credit
     beginning  annually on November 1 and continuing through February 28 of the
     following  year.  This available  over-advance  is reduced to $500,000 each
     March 1 and is reduced each month thereafter until it is extinguished  each
     year  on  June  1.  Because  the  eligible  FMP  accounts   receivable  and
     inventories,  as defined,  were in excess of $5.0  million at November  30,
     2000, none of the $600,000  over-advance  was available for borrowing as of
     that date.

     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 November  30, 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 November 30, 2000, RG had $0.7 million outstanding under its
     revolving   line-of-credit   and  $0.1  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 November  30,  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 and minimum  quarterly debt service coverage  ratios,  as defined.
     Due to the substantial loss incurred during the three months ended November
     30,  2000,  the  Company  is  not  in  compliance  with  several  financial
     covenants.  Therefore,  all  amounts  borrowed  at  November  30,  2000 are
     classified as current  liabilities in the consolidated  balance sheet as of
     that date. The Company is currently  negotiating  with its lender to modify
     the FMP and RG credit  facilities,  to  obtain  waivers  of these  covenant
     violations  and to fund an  additional  term  loan  in the  amount  of $1.0
     million.  The  Company  believes  that  this  financing  agreement  will be
     completed during the fiscal quarter ending February 28, 2001.

     In December 2000, RP entered into a revolving subordinated  promissory note
     with the  Johnston  Family  Charitable  Remainder  Unitrust  #3  ("Johnston
     Trust"), of which Richard P. Johnston, a director and Chairman of the Board
     of the Company,  is Trustee.  In December  2000,  RP borrowed  $1.0 million
     under this revolving note which  represents the maximum  available  funding
     amount.  The  note  bears  interest  at a fixed  annual  rate of 13% and is
     subordinate  to both the FMP and RG bank credit  facilities.  The  Johnston
     Trust has an option to convert the indebtedness  into RP common stock at an
     exchange ratio of $1.00 per share if all outstanding  principal and accrued
     interest  is not  repaid in full on or before  May 31,  2001,  which  would
     constitute  an  event  of  default  by RP.  The  Company  anticipates  that
     additional  bank financing will be utilized to retire the  indebtedness  to
     the Johnston Trust prior to May 31, 2001. If the Company is unsuccessful in
     obtaining  additional bank financing,  the Company believes that sufficient
     cash flow from operations  will be generated to retire the  indebtedness to
     the Johnston Trust prior to May 31, 2001.

                                       8
<PAGE>
7.   INFORMATION ON SEGMENTS:

     The Company  has two  reportable  segments:  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 in Form 10-K
     for the  fiscal  year  ended  May  31,  2000.  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):

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED NOVEMBER 30, 2000
                                                     --------------------------------------------
                                                     GOLF CLUB         GOLF CLUB
                                                       SHAFTS            GRIPS           TOTAL
                                                       ------            -----           -----
<S>                                                   <C>              <C>              <C>
     Net sales                                        $  4,757         $    735         $  5,492
     Operating loss                                       (973)            (719)          (1,692)
     Depreciation and amortization                         136              126              262

     Total assets for reportable segments             $ 13,700         $ 16,754         $ 30,454
     Elimination of investment in subsidiaries                                            (5,980)
                                                                                        --------
     Consolidated total assets                                                          $ 24,474
                                                                                        ========

                                                         THREE MONTHS ENDED NOVEMBER 30, 1999
                                                     --------------------------------------------
                                                     GOLF CLUB         GOLF CLUB
                                                       SHAFTS            GRIPS           TOTAL
                                                       ------            -----           -----
     Net sales                                        $  5,601         $    842         $  6,443
     Operating income (loss)                               263              (45)             218
     Depreciation and amortization                          87              213              300

     Total assets for reportable segments             $ 12,311         $ 18,262         $ 30,573
     Elimination of investment in subsidiaries                                            (6,120)
                                                                                        --------
     Consolidated total assets                                                          $ 24,453
                                                                                        ========

                                                          SIX MONTHS ENDED NOVEMBER 30, 2000
                                                     --------------------------------------------
                                                     GOLF CLUB         GOLF CLUB
                                                       SHAFTS            GRIPS           TOTAL
                                                       ------            -----           -----
     Net sales                                        $ 10,564         $  1,906         $ 12,470
     Operating loss                                       (645)            (747)          (1,392)
     Depreciation and amortization                         265              248              513

                                                          SIX MONTHS ENDED NOVEMBER 30, 1999
                                                     --------------------------------------------
                                                     GOLF CLUB         GOLF CLUB
                                                       SHAFTS            GRIPS           TOTAL
                                                       ------            -----           -----
     Net sales                                        $ 10,914         $  2,088         $ 13,002
     Operating income (loss)                               996              (92)             904
     Depreciation and amortization                         174              429              603
</TABLE>

                                       9
<PAGE>
8.   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  ("Brunswick")  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 has engaged an environmental  consulting firm to
     perform testing at the FMP plant and is in the process of developing a plan
     of  remediation.  In October  2000,  the Company  engaged an  environmental
     consulting firm to assist in the development of a plan of remediation at an
     estimated  cost of $75,000.  This  expense is  reflected  as a component of
     nonrecurring expenses in the statements of operations for the three and six
     month periods ended November 30, 2000.  Failure of Brunswick 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  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 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  expenditures 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 for the cost of remediation
     and legal fees incurred in conjunction with this matter.

     In October  2000,  the Company  received  another NOV from the DEP alleging
     that various effluent discharge samples during the period from January 2000
     to September 2000 were in violation of authorized  limits under an existing
     permit  for the  discharge  of  treated  wastewater  at the FMP  plant.  In
     December 2000, the Company  submitted its response to the NOV. There is not
     sufficient  information at this time to determine what action,  if any, the
     DEP may  pursue  and what  effect,  if any,  it may  have on the  Company's
     financial condition and results of operations.

     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 to treat and dispose of  non-hazardous  waste
     oils  from  the  FMP  plant.  The  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 action,  if any,  the EPA may pursue and what  effect,  if any, it may
     have on the Company's financial condition and results of operations.

     Prior to the Brunswick  Acquisition,  the FMP plant was listed on the EPA's
     Comprehensive  Environmental  Response  and  Liability  Information  System
     ("CERCLIS"). A contractor for the EPA performed a preliminary assessment of
     the FMP plant in January 1992. In June 1992, the site was deferred from the

                                       10
<PAGE>
     CERCLIS  inventory  to the EPA's  Resource  Conservation  and  Recovery Act
     ("RCRA") program.  The EPA recently reviewed the status of the property and
     concluded that the FMP plant is not subject to corrective action under RCRA
     and returned the site to its active CERCLIS inventory.  In November 2000, a
     contractor for the EPA performed  another site assessment of the FMP plant.
     The Company has been  informed that the  contractor  will return to perform
     sampling  of the  property in early 2001.  The Company  anticipates  that a
     report from the EPA will be received  approximately  one year following the
     completion  of the sampling.  The Company  believes  that,  pursuant to the
     Brunswick  Acquisition  agreement,  Brunswick has an  obligation  under the
     Connecticut  Transfer Act ("the Act") to remediate any environmental issues
     that fall within the scope of the Act.  The Company  expects  that,  if any
     environmental  issues are  identified  by the EPA,  they would be ones that
     fall within the scope of the Act.  There is not  sufficient  information at
     this time to  determine  what  action,  if any, the EPA may pursue and what
     effect,  if any,  it may  have on the  Company's  financial  condition  and
     results of operations.

     Legal and professional  fees related to the various  environmental  matters
     discussed  above totaled $65,000 and $80,000 during the three and six month
     periods  ended  November 30,  2000,  respectively,  and are  reflected as a
     component of nonrecurring expenses in the statements of operations.

9.   TERMINATION OF ACQUISITION LETTER OF INTENT:

     On September 18, 2000,  the Company signed a letter of intent to acquire PH
     Group Inc.  ("PHG"),  a  manufacturer  of hydraulic  presses and  injection
     molding  machines.  The Company  terminated the letter of intent and ceased
     negotiations  to acquire PHG effective  November 27, 2000.  Legal and other
     professional fees associated with the due diligence efforts of the proposed
     acquisition  totaled  $79,000  and are  reflected  as other  expense in the
     statements of operations for the three and six month periods ended November
     30, 2000.

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. The Company has made forward-looking statements
within the meaning of the Litigation  Reform Act in this Form 10-Q which reflect
the  Company's  current  views  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  international,  national,  and local  economic
conditions,   the  Company's  dependence  on  discretionary  consumer  spending,
customer  concentration and their plans and commitments,  the Company's cost and
available  supply of raw  materials,  the  competitive  environment in which the
Company  operates,  the  timeliness  and market  acceptance of the Company's new
product  introductions,  the Company's limited operating history,  the Company's
ability to protect  its  intellectual  property  rights,  seasonality  of sales,
fluctuations in operating results, 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
("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 Form 10-K for the fiscal year ended May
31,  2000  (refer to  Exhibit  99.1  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.  Specific
forward-looking  statements  made in this Form 10-Q include,  among others,  the
anticipated  completion of an additional  financing  agreement,  the anticipated
generation of sufficient  cash flow from operations to repay  indebtedness,  the
anticipated  future capital  expenditures and anticipated  costs of enviromental
matters at the FMP manufacturing facility and the Company's belief regarding the
sufficiency of its capital resources to fund its operations.

                                       11
<PAGE>
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.

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.

THREE MONTHS ENDED NOVEMBER 30, 2000 COMPARED TO THE THREE MONTHS ENDED
NOVEMBER 30, 1999--

NET SALES.  Net sales for the three  months  ended  November  30, 2000 were $5.5
million, a decrease of $0.9 million or 15% from net sales of $6.4 million during
the  corresponding  period in 1999.  Net sales of golf club shafts  decreased by
$0.8  million or 15% and net sales of golf club grips  decreased by $0.1 million
or 13%.  The decrease in shaft sales is  primarily  attributable  to declines in
orders  from two of the  Company's  significant  customers.  Sales to a domestic
distributor  declined $0.4 million or 68% and sales to the  Company's  exclusive
Japanese  distributor declined $0.3 million or 23%. The domestic distributor has
experienced a decline in its business which it attributes to difficulties during
an internal computer  conversion that caused delays in processing and fulfilling
customer  orders.  The Japanese  distributor  has  experienced  a decline in its
business which it attributes to the slow general economic conditions in Asia and
declines in orders from certain of its Japanese OEM customers.

COST OF SALES.  Cost of goods sold for the three months ended  November 30, 2000
was $4.9  million,  an increase of $0.3 million or 5% over cost of goods sold of
$4.6 million  during the  corresponding  period in 1999. As discussed in Note 4,
the Company recorded  write-downs totaling $477,000 to reduce the carrying value
of finished goods  inventory to estimated net realizable  value during the three
months  ended  November 30, 2000.  Excluding  an  inventory  write-down  of $0.4
million,  the cost of golf club shaft sales decreased by $0.3 million or 6% as a
result of lower  total net sales.  Excluding  an  inventory  write-down  of $0.1
million, the cost of golf club grip sales was consistent at $0.6 million.

GROSS PROFIT. Gross profit for the three months ended November 30, 2000 was $0.6
million,  a decrease of $1.2  million or 65% from gross  profit of $1.8  million
during the  corresponding  period in 1999.  Gross profit from sales of golf club
shafts decreased by $1.0 million or 64% and gross profit from sales of golf club
grips  decreased by $0.2 million or 68%.  Excluding an inventory  write-down  of
$0.4  million,  gross  profit from sales of golf club shafts  decreased  by $0.6
million  to  20%  of  sales  from  28% of  sales.  This  decline  in  margin  is
attributable  to fixed costs being spread over lower unit sales volume and lower
production  rates  due to the  initial  manufacture  and  sale  of  several  new
pro-grade  product  lines.  Excluding an inventory  write-down  of $0.1 million,
gross  profit from sales of golf club grips  decreased by $0.1 million to 21% of
sales from 32% of sales.  This decline in margin is  attributable to fixed costs
being spread over lower unit sales volume and operating  costs of the West Coast
distribution center which opened in December 1999.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses for the three months ended  November 30, 2000 were $1.6
million, an increase of 9% over selling,  general and administrative expenses of
$1.5 million during the  corresponding  period in 1999. The $129,000 increase is
primarily  due to costs  associated  with a  television  commercial  advertising
campaign  which  commenced  in January  2000.  Costs of  purchased  airtime  and
development of commercials totaled approximately $74,000 during the three months
ended November 30, 2000 compared to $0 during the corresponding period in 1999.

                                       12
<PAGE>
AMORTIZATION  OF  GOODWILL.  Amortization  of goodwill  was  consistent  at $0.1
million during the three-month periods ended November 30, 2000 and 1999.

NONRECURRING  EXPENSES.  As discussed  in Note 5, an  impairment  write-down  of
$360,000 was recorded  during the three months ended November 30, 2000 to reduce
the carrying value of Equipment Held for Sale to estimated net realizable value.
As discussed  in Note 5, an expense of $117,000  was  recorded  during the three
months ended  November 30, 2000 to write-off  the  accumulated  costs related to
various  projects  under  development  to design and  construct  tooling for the
manufacture  of golf club grips.  As discussed  in Note 8, legal and  consulting
expenses  totaling $140,000 were incurred during the three months ended November
30,  2000  related to  various  environmental  issues.  Similar  legal  expenses
incurred during the corresponding period in 1999 were $10,000.

INTEREST  EXPENSE.  Interest  expense  increased from $147,000  during the three
months  ended  November  30,  1999 to  $185,000  during the three  months  ended
November 30, 2000 primarily due to a 1% increase in the prime lending rate.

OTHER  EXPENSE.  As  discussed  in Note 9,  legal  and other  professional  fees
associated with the proposed PH Group, Inc.  acquisition  totaled $79,000 during
the three months ended November 30, 2000.

OTHER  INCOME.  Other  income of $78,000 and $55,000 for the three  months ended
November 30, 2000 and 1999, respectively,  is principally comprised of royalties
earned  on sales  of  headwear  products  as well as  royalty  fees  from  other
contracts which license certain Company technology and products.

PROVISION  FOR (BENEFIT  FROM) INCOME  TAXES.  A tax benefit of $0.7 million was
recorded  on the loss  during the three  months  ended  November  30, 2000 and a
provision  of $0.1  million  was  recorded  for taxes on the  income  during the
corresponding  period  in  1999.  Taxes  are  provided  based  on the  estimated
effective  tax rate for the year which  considers  the  effect of  nondeductible
goodwill  amortization.  A benefit  has not been  recorded  on the  nonrecurring
inventory  and  equipment  write-downs  discussed in Notes 4 and 5 in accordance
with  the  provisions  of the  Financial  Accounting  Standards  Board  ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 109.

SIX MONTHS ENDED NOVEMBER 30, 2000 COMPARED TO THE SIX MONTHS ENDED NOVEMBER 30,
1999--

NET  SALES.  Net sales for the six months  ended  November  30,  2000 were $12.5
million, a decrease of $0.5 million or 4% from net sales of $13.0 million during
the  corresponding  period in 1999.  Net sales of golf club shafts  decreased by
$0.4 million or 3% and net sales of golf club grips decreased by $0.2 million or
9%. The decrease in shaft sales is primarily  attributable to declines in orders
from two of the Company's significant customers. Sales to a domestic distributor
declined  $0.4  million  or 44% and sales to the  Company's  exclusive  Japanese
distributor   declined  $0.7  million  or  28%.  The  domestic  distributor  has
experienced a decline in its business which it attributes to difficulties during
an internal computer  conversion that caused delays in processing and fulfilling
customer  orders.  The Japanese  distributor  has  experienced  a decline in its
business which it attributes to the slow general economic conditions in Asia and
declines in orders from certain of its Japanese OEM  customers.  The decrease in
grip sales is primarily  attributable  to declines in orders from the  Company's
exclusive Japanese distributor due to slow general economic conditions in Asia.

COST OF SALES. Cost of goods sold for the six months ended November 30, 2000 was
$9.4 million,  an increase of $0.7 million or 8% over cost of goods sold of $8.7
million  during the  corresponding  period in 1999.  As discussed in Note 4, the
Company recorded  write-downs  totaling $477,000 to reduce the carrying value of
finished goods inventory to estimated net realizable value during the six months
ended November 30, 2000.  Excluding an inventory write-down of $0.4 million, the
cost of golf club shaft sales  increased  by $0.3  million or 3%.  Excluding  an
inventory  write-down  of $0.1  million,  the cost of golf club  grip  sales was
consistent at $1.4 million.

GROSS PROFIT.  Gross profit for the six months ended  November 30, 2000 was $3.1
million,  a decrease of $1.2  million or 29% from gross  profit of $4.3  million
during the  corresponding  period in 1999.  Gross profit from sales of golf club
shafts decreased by $1.0 million or 28% and gross profit from sales of golf club

                                       13
<PAGE>
grips  decreased by $0.2 million or 33%.  Excluding an inventory  write-down  of
$0.4  million,  gross  profit from sales of golf club shafts  decreased  by $0.6
million  to  29%  of  sales  from  33% of  sales.  This  decline  in  margin  is
attributable  to fixed costs being spread over lower unit sales volume and lower
production  rates  due to the  initial  manufacture  and  sale  of  several  new
pro-grade  product  lines.  Excluding an inventory  write-down  of $0.1 million,
gross  profit from sales of golf club grips  decreased by $0.1 million to 26% of
sales from 31% of sales.  This decline in margin is  attributable to fixed costs
being spread over lower unit sales volume and operating  costs of the West Coast
distribution center which opened in December 1999.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses  for the six months  ended  November 30, 2000 were $3.6
million, an increase of 15% over selling, general and administrative expenses of
$3.1 million during the corresponding  period in 1999. The $0.5 million increase
is primarily due to costs  associated with a television  commercial  advertising
campaign  which  commenced  in January  2000.  Costs of  purchased  airtime  and
development of  commercials  totaled  approximately  $0.3 million during the six
months ended November 30, 2000 compared to $0 during the corresponding period in
1999.

AMORTIZATION  OF  GOODWILL.  Amortization  of goodwill  was  consistent  at $0.2
million during the six-month periods ended November 30, 2000 and 1999.

NONRECURRING  EXPENSES.  As discussed  in Note 5, an  impairment  write-down  of
$360,000  was recorded  during the six months ended  November 30, 2000 to reduce
the carrying value of Equipment Held for Sale to estimated net realizable value.
As  discussed  in Note 5, an expense of  $117,000  was  recorded  during the six
months ended  November 30, 2000 to write-off  the  accumulated  costs related to
various  projects  under  development  to design and  construct  tooling for the
manufacture  of golf club grips.  As discussed  in Note 8, legal and  consulting
expenses  totaling  $155,000 were incurred  during the six months ended November
30,  2000  related to  various  environmental  issues.  Similar  legal  expenses
incurred during the corresponding period in 1999 were $10,000.

INTEREST EXPENSE. Interest expense increased from $298,000 during the six months
ended  November 30, 1999 to $363,000  during the six months  ended  November 30,
2000 primarily due to a 1% increase in the prime lending rate.

OTHER  EXPENSE.  As  discussed  in Note 9,  legal  and other  professional  fees
associated with the proposed PH Group, Inc.  acquisition  totaled $79,000 during
the six months ended November 30, 2000.

OTHER  INCOME.  Other  income of $165,000  and $110,000 for the six months ended
November 30, 2000 and 1999, respectively,  is principally comprised of royalties
earned  on sales  of  headwear  products  as well as  royalty  fees  from  other
contracts which license certain Company technology and products.

PROVISION  FOR (BENEFIT  FROM) INCOME  TAXES.  A tax benefit of $0.6 million was
recorded  on the loss  during  the six  months  ended  November  30,  2000 and a
provision  of $0.4  million  was  recorded  for taxes on the  income  during the
corresponding  period  in  1999.  Taxes  are  provided  based  on the  estimated
effective  tax rate for the year which  considers  the  effect of  nondeductible
goodwill  amortization.  A benefit  has not been  recorded  on the  nonrecurring
inventory  and  equipment  write-downs  discussed in Notes 4 and 5 in accordance
with the provisions of SFAS No. 109.

LIQUIDITY AND CAPITAL RESOURCES--

At November 30,  2000,  RP had  negative  working  capital of $0.6 million and a
current  ratio of 0.9 to 1 as compared to working  capital of $6.0 million and a
current  ratio of 2.3 to 1 at May 31, 2000.  This decline in working  capital is
primarily the result of a  reclassification  of $7.0 million  long-term  debt to
current liabilities due to various loan covenant violations discussed below.

                                       14
<PAGE>
FMP  has  a  credit  facility   consisting  of  a  term  loan  and  a  revolving
line-of-credit. The FMP term loan of $2.3 million at November 30, 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 November 30, 2000, FMP had
$4.5 million  outstanding  under its revolving  line-of-credit  and $0.5 million
available for additional borrowings. The FMP line-of-credit expires in September
2002.

In November 2000,  FMP amended its credit  facility to provide up to $600,000 of
additional  borrowing  capacity  under the  revolving  line-of-credit  beginning
annually on November 1 and continuing through February 28 of the following year.
This available  over-advance  is reduced to $500,000 each March 1 and is reduced
each month thereafter until it is extinguished  each year on June 1. Because the
eligible FMP accounts receivable and inventories,  as defined, were in excess of
$5.0  million at  November  30,  2000,  none of the  $600,000  over-advance  was
available for borrowing as of that date.

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 November 30, 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 November 30, 2000, RG had
$0.7 million  outstanding  under its revolving  line-of-credit  and $0.1 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
November  30,  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 and minimum
quarterly debt service coverage ratios, as defined.  Due to the substantial loss
incurred  during the three months ended November 30, 2000, the Company is not in
compliance with several financial covenants.  Therefore, all amounts borrowed at
November 30, 2000 are  classified  as current  liabilities  in the  consolidated
balance  sheet as of that date.  The Company is currently  negotiating  with its
lender to modify the FMP and RG credit  facilities,  to obtain  waivers of these
covenant  violations  and to fund an additional  term loan in the amount of $1.0
million.  The Company  believes that this financing  agreement will be completed
during the fiscal quarter ending February 28, 2001.

In December 2000, RP entered into a revolving subordinated  promissory note with
the Johnston Family  Charitable  Remainder  Unitrust #3 ("Johnston  Trust"),  of
which Richard P. Johnston,  a director and Chairman of the Board of the Company,
is Trustee. In December 2000, RP borrowed $1.0 million under this revolving note
which represents the maximum available  funding amount.  The note bears interest
at a fixed  annual  rate of 13% and is  subordinate  to both the FMP and RG bank
credit facilities.  The Johnston Trust has an option to convert the indebtedness
into RP common stock at an exchange ratio of $1.00 per share if all  outstanding
principal and accrued  interest is not repaid in full on or before May 31, 2001,
which would  constitute an event of default by RP. The Company  anticipates that
additional  bank  financing will be utilized to retire the  indebtedness  to the
Johnston  Trust  prior  to May 31,  2001.  If the  Company  is  unsuccessful  in
obtaining  additional bank financing,  the Company believes that sufficient cash
flow from  operations  will be  generated  to  retire  the  indebtedness  to the
Johnston Trust prior to May 31, 2001.

                                       15
<PAGE>
The Company  believes  that its  existing  capital  resources  and credit  lines
available,  together with the  anticipated  funding of additional  term loans of
$1.0 million,  are sufficient to fund its operations and capital requirements of
current business segments as presently planned over the next twelve months.

During  the six months  ended  November  30,  2000,  net cash used in  operating
activities  was $0.3 million  which  primarily  resulted from a net loss of $1.1
million,  an increase in  inventories  of $1.8 million,  an increase in deferred
taxes of $0.6 million,  and a decrease in accounts  payable and accrued expenses
of $0.3 million.  Non-cash  expenses during the period include  depreciation and
amortization  of $0.5  million and $1.0  million  for  inventory  and  equipment
write-downs as described in Notes 4 and 5. Cash used in operating activities was
reduced by a net collection of accounts receivable of $2.0 million.

Net cash used in investing activities for the six months ended November 30, 2000
was $0.6 million  primarily  for the purchase of machinery  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,  the Company  believes  that
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 provided by financing  activities for the six months ended November 30,
2000, was $0.9 million  resulting from net borrowings under  lines-of-credit  of
$1.4  million  offset  by  repayments  of  long  term  debt  and  capital  lease
obligations  of $0.5 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.

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  ("Brunswick")  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 has engaged an environmental  consulting firm to perform
testing  at the  FMP  plant  and is in  the  process  of  developing  a plan  of
remediation.  In October 2000, the Company engaged an  environmental  consulting
firm to assist in the  development of a plan of remediation at an estimated cost
of $75,000. This expense is reflected as a component of nonrecurring expenses in
the  statements of operations for the three and six month periods ended November
30,  2000.  Failure of  Brunswick  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 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  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  expenditures  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 for the cost of remediation  and legal
fees incurred in conjunction with this matter.

                                       16
<PAGE>
In October  2000,  the Company  received  another NOV from the DEP alleging that
various  effluent  discharge  samples  during the period  from  January  2000 to
September 2000 were in violation of authorized  limits under an existing  permit
for the discharge of treated  wastewater at the FMP plant. In December 2000, the
Company  submitted its response to the NOV. There is not sufficient  information
at this time to  determine  what  action,  if any,  the DEP may  pursue and what
effect, if any, it may have on the Company's  financial condition and results of
operations.

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 to treat and dispose of  non-hazardous  waste oils from the FMP plant.
The 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 action,  if any, the EPA may pursue and what effect,
if  any,  it may  have  on the  Company's  financial  condition  or  results  of
operations.

Prior to the  Brunswick  Acquisition,  the FMP  plant  was  listed  on the EPA's
Comprehensive   Environmental   Response  and   Liability   Information   System
("CERCLIS").  A contractor for the EPA performed a preliminary assessment of the
FMP plant in January 1992. In June 1992,  the site was deferred from the CERCLIS
inventory to the EPA's Resource  Conservation and Recovery Act ("RCRA") program.
The EPA recently  reviewed the status of the property and concluded that the FMP
plant is not subject to  corrective  action  under RCRA and returned the site to
its active  CERCLIS  inventory.  In  November  2000,  a  contractor  for the EPA
performed  another  site  assessment  of the FMP  plant.  The  Company  has been
informed that the contractor will return to perform  sampling of the property in
early 2001. The Company  anticipates that a report from the EPA will be received
approximately  one year  following the  completion of the sampling.  The Company
believes that, pursuant to the Brunswick Acquisition agreement, Brunswick has an
obligation  under the  Connecticut  Transfer  Act ("the Act") to  remediate  any
environmental  issues that fall within the scope of the Act. The Company expects
that, if any environmental  issues are identified by the EPA, they would be ones
that fall within the scope of the Act.  There is not  sufficient  information at
this time to determine what action,  if any, the EPA may pursue and what effect,
if  any,  it may  have on the  Company's  financial  condition  and  results  of
operations.

TERMINATION OF ACQUISITION LETTER OF INTENT --

On September 18, 2000, the Company signed a letter of intent to acquire PH Group
Inc.  ("PHG"),  a  manufacturer  of  hydraulic  presses  and  injection  molding
machines. The Company terminated the letter of intent and ceased negotiations to
acquire PHG  effective  November 27,  2000.  Legal and other  professional  fees
associated with the due diligence  efforts of the proposed  acquisition  totaled
$79,000 and are reflected as other expense in the  statements of operations  for
the three and six month periods ended November 30, 2000.

                                       17
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DERIVATIVE FINANCIAL INSTRUMENTS,  OTHER FINANCIAL  INSTRUMENTS,  AND DERIVATIVE
COMMODITY INSTRUMENTS.

At  November  30,  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 that are described in Note 6 to the condensed consolidated financial
statements. A one- percent change in the prime lending rate would have an effect
of  approximately  $18,000 and $35,000 on interest expense for the three and six
months ended November 30, 2000, respectively.

                                       18
<PAGE>
                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

     In  December  2000,  the  Company  entered  into a  revolving  subordinated
promissory  note with the  Johnston  Family  Charitable  Remainder  Unitrust  #3
("Johnston Trust"), of which Richard P. Johnston, a director and Chairman of the
Board of the Company,  is Trustee.  In December  2000,  RP borrowed $1.0 million
under this revolving note which represents the maximum available funding amount.
These funds were utilized for working capital to support the ongoing  operations
of the  Company.  The note bears  interest at a fixed  annual rate of 13% and is
subordinate to the Company's bank credit  facilities.  The Johnston Trust has an
option to convert the indebtedness  into RP common stock at an exchange ratio of
$1.00 per share if all outstanding  principal and accrued interest is not repaid
in full on or before May 31, 2001, which would constitute an event of default by
RP. The transaction is exempt under 4(2) of the Securities Exchange Act of 1933.
The Company  anticipates  that  additional  bank  financing  will be utilized to
retire the  indebtedness  to the Johnston  Trust prior to May 31,  2001.  If the
Company is  unsuccessful in obtaining  additional  bank  financing,  the Company
believes that  sufficient  cash flow from operations will be generated to retire
the indebtedness to the Johnston Trust prior to May 31, 2001.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     Due to the substantial loss incurred during the three months ended November
30, 2000, the Company is not in compliance with several financial loan covenants
of its bank credit  facilities.  These  covenant  violations  include  covenants
requiring the maintenance of minimum monthly and quarterly  earnings and minimum
quarterly debt service  coverage  ratios,  as defined.  The covenant  violations
impact all of the Company's outstanding term loans and lines-of-credit which, in
the aggregate, totaled $7.9 million at November 30, 2000. Therefore, all amounts
borrowed  at November  30, 2000 are  classified  as current  liabilities  in the
consolidated balance sheet as of that date. The Company is currently negotiating
with its  lender to modify  the credit  facilities,  to obtain  waivers of these
covenant  violations  and to fund an additional  term loan in the amount of $1.0
million.  The Company  believes that this financing  agreement will be completed
during the fiscal quarter ending February 28, 2001.

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

     None.

ITEM 5. OTHER INFORMATION.

     None.

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

     (a) Exhibits.

     (3)  Certificate of Incorporation and Bylaws

     Exhibit 3.1.  Amended and Restated  Certificate of  Incorporation  of Royal
Precision, Inc. (restated to reflect amendment filed with the Secretary of State
of Delaware on October 19,  1999)  (incorporated  by reference to Exhibit 3.1 of
the Company's Form 10-Q for the period ended November 30, 1999).

     Exhibit 3.2. Bylaws of Royal Precision,  Inc. (incorporated by reference to
Annex IV to the Company's Form S-4; No. 333-28841 (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 at Exhibit 3.1.

     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).

                                       19
<PAGE>
     (10) Material Contracts

     Exhibit 10.1. Fifth 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 8, 2000.

     Exhibit 10.2.  Sixth  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 8, 2000.

     Exhibit 10.3. Revolving Subordinated  Promissory Note from Royal Precision,
Inc. to the Johnston Family Charitable  Remainder  Unitrust #3 dated December 7,
2000.

     Exhibit  10.4.  Subordination  Agreement  dated  December  7,  2000  by the
Johnston Family Charitable  Remainder Unitrust #3 for the benefit of Wells Fargo
Business Credit, Inc.

     (b)  Reports on Form 8-K.

     The Company  filed  current  reports on Form 8-K on September  28, 2000 and
November 29, 2000 in response to Item 5, Other Events.

                                       20
<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: January 11, 2001                   By /s/ Thomas A. Schneider
----------------------                      ------------------------------------
                                            Thomas A. Schneider, President
                                            (duly authorized officer)

                                         By /s/ Kevin L. Neill
                                            ------------------------------------
                                            Kevin L. Neill, Vice President -
                                            Finance (chief financial officer)

                                       21
<PAGE>
                                  EXHIBIT INDEX

                                                                       PAGE IN
                                                                    SEQUENTIALLY
                                                                      NUMBERED
EXHIBIT                                                                 COPY
-------                                                                 ----

3.1   Amended and Restated  Certificate of  Incorporation of Royal
      Precision,  Inc.  (restated to reflect  amendment filed with
      the Secretary of State of Delaware on October 19, 1999).            *

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

4.1   See  Articles  FOUR,  FIVE  and  SEVEN  of the  Amended  and
      Restated  Certificate of  Incorporation of the registrant at
      Exhibit 3.1.                                                        *

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  Fifth 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
      8, 2000.                                                           23

10.2  Sixth  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
      8, 2000.                                                           31

10.3  Revolving Subordinated Promissory Note from Royal Precision,
      Inc. to the Johnston Family Charitable Remainder Unitrust #3
      dated December 7, 2000.                                            36

10.4  Subordination  Agreement  dated  December  7,  2000  by  the
      Johnston  Family  Charitable  Remainder  Unitrust #3 for the
      benefit of Wells Fargo Business Credit, Inc.                       48

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