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 February 28, 2001 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 April 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, except share data)
<TABLE>
<CAPTION>
                                                                                         FEBRUARY 28,        MAY 31,
                                                                                            2001              2000
                                                                                          --------          --------
<S>                                                                                       <C>               <C>
                                           ASSETS
CURRENT ASSETS:
  Cash                                                                                    $    479          $     36
  Accounts receivable, net of allowance for doubtful accounts of $279
    and $274 at February 28, 2001 and May 31, 2000, respectively                             4,164             5,100
  Inventories                                                                                6,590             5,124
  Other current assets                                                                          76               155
  Deferred income taxes                                                                        683               106
                                                                                          --------          --------
      Total current assets                                                                  11,992            10,521
                                                                                          --------          --------
PROPERTY, PLANT AND EQUIPMENT:
  Land                                                                                         123               123
  Furniture, fixtures and office equipment                                                     635               455
  Buildings and improvements                                                                   941               840
  Machinery and equipment                                                                    5,003             4,278
  Equipment held for sale                                                                      120               500
  Construction in progress                                                                     792             1,081
                                                                                          --------          --------
                                                                                             7,614             7,277
  Less - Accumulated depreciation                                                           (1,713)           (1,264)
                                                                                          --------          --------
                                                                                             5,901             6,013
                                                                                          --------          --------

GOODWILL, net                                                                                7,297             7,629
                                                                                          --------          --------

DEFERRED INCOME TAXES                                                                          701               701
                                                                                          --------          --------
OTHER ASSETS                                                                                    77                78
                                                                                          --------          --------
       Total assets                                                                       $ 25,968          $ 24,942
                                                                                          ========          ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current portion of long-term debt                                                       $    768          $    906
  Subordinated debt                                                                          1,000                --
  Accounts payable                                                                           1,878             1,714
  Accrued salaries and benefits                                                                671             1,290
  Accrued pension liability                                                                    162               176
  Other accrued expenses                                                                       598               417
                                                                                          --------          --------
       Total current liabilities                                                             5,077             4,503

LONG-TERM DEBT, net of current portion                                                       7,390             6,027
                                                                                          --------          --------
       Total liabilities                                                                    12,467            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 February 28, 2001 and May 31, 2000                                  6                 6
  Additional paid-in capital                                                                13,975            13,940
  Retained earnings (accumulated deficit)                                                     (480)              466
                                                                                          --------          --------
       Total stockholders' equity                                                           13,501            14,412
                                                                                          --------          --------
       Total liabilities and stockholders' equity                                         $ 25,968          $ 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              NINE MONTHS ENDED
                                                       ---------------------------     -----------------------------
                                                       FEBRUARY 28,    FEBRUARY 29,    FEBRUARY 28,     FEBRUARY 29,
                                                           2001            2000            2001             2000
                                                       -----------     -----------     -----------      -----------
<S>                                                    <C>             <C>             <C>              <C>
NET SALES:
  Golf club shafts                                     $     6,804     $     6,083     $    17,368      $    16,997
  Golf club grips                                              911             958           2,817            3,046
                                                       -----------     -----------     -----------      -----------
                                                             7,715           7,041          20,185           20,043
                                                       -----------     -----------     -----------      -----------
COST OF SALES:
  Golf club shafts                                           4,928           4,354          12,880           11,646
  Golf club grips                                              730             700           2,201            2,139
                                                       -----------     -----------     -----------      -----------
                                                             5,658           5,054          15,081           13,785
                                                       -----------     -----------     -----------      -----------

       Gross profit                                          2,057           1,987           5,104            6,258

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                 1,528           1,640           5,114            4,754

AMORTIZATION OF GOODWILL                                       111             121             332              364

NONRECURRING EXPENSES                                           10              55             642               65
                                                       -----------     -----------     -----------      -----------

       Operating income (loss)                                 408             171            (984)           1,075

INTEREST EXPENSE                                               275             159             638              457

OTHER EXPENSE                                                   --              --              79               --

OTHER INCOME                                                    73              76             238              186
                                                       -----------     -----------     -----------      -----------
       Income (loss) before provision for
         (benefit from) income taxes                           206              88          (1,463)             804

PROVISION FOR (BENEFIT FROM) INCOME TAXES                       55              53            (517)             411
                                                       -----------     -----------     -----------      -----------
       Net income (loss)                               $       151     $        35     $      (946)     $       393
                                                       ===========     ===========     ===========      ===========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
  BASIC                                                $      0.03     $      0.01     $     (0.17)     $      0.07
                                                       ===========     ===========     ===========      ===========
  DILUTED                                              $      0.03     $      0.01     $     (0.17)     $      0.07
                                                       ===========     ===========     ===========      ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED TO
  COMPUTE PER SHARE INFORMATION:
    BASIC                                                5,678,956       5,674,780       5,678,956        5,670,900
                                                       ===========     ===========     ===========      ===========
    DILUTED                                              5,789,378       5,843,157       5,678,956        5,807,007
                                                       ===========     ===========     ===========      ===========
</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>
                                                                     NINE MONTHS ENDED
                                                                ------------------------------
                                                                FEBRUARY 28,      FEBRUARY 29,
                                                                    2001              2000
                                                                  -------           -------
<S>                                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                               $  (946)          $   393
  Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
   Depreciation and amortization                                      797               901
   Deferred income taxes                                             (577)               --
   (Gain) loss on retirement or sale of fixed assets                   (3)               18
   Stock based compensation                                            35                --
   Write-down of equipment and inventories                            954                --
   Increase (decrease) in cash resulting from a change in
    operating assets and liabilities:
     Accounts receivable, net                                         936               811
     Inventories                                                   (1,943)           (1,027)
     Other assets                                                      80               132
     Accounts payable and accrued expenses                           (288)              392
                                                                  -------           -------

       Net cash provided by (used in) operating activities           (955)            1,620
                                                                  -------           -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of machinery and equipment                               (877)           (1,564)
  Proceeds from sale of fixed assets                                   50                --
                                                                  -------           -------

       Net cash used in investing activities                         (827)           (1,564)
                                                                  -------           -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of subordinated debt                       1,000                --
  Proceeds from issuance of long-term debt                            282                --
  Proceeds from exercise of common stock options                       --                 9
  Borrowings under lines-of-credit, net                             1,660               749
  Repayments of long-term debt                                       (717)             (977)
                                                                  -------           -------

       Net cash provided by (used in) financing activities          2,225              (219)
                                                                  -------           -------

INCREASE (DECREASE) IN CASH                                           443              (163)

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

CASH, end of period                                               $   479           $    21
                                                                  =======           =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest                                                      $   577           $   473
                                                                  =======           =======
    Income taxes                                                  $     5           $    41
                                                                  =======           =======
</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 nine-month
     period  ended  February  28, 2001 was not  affected  by 1.3 million  shares
     subject  to   outstanding   stock   options   because   their   effect  was
     anti-dilutive.  The number of shares used in computing  earnings (loss) per
     share for the three and  nine-month  periods  ended  February  28, 2001 and
     February 29, 2000 were as follows:

                                      -5-
<PAGE>
<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED                NINE MONTHS ENDED
                                               -----------------------------     ----------------------------
                                               FEBRUARY 28,     FEBRUARY 29,     FEBRUARY 28,    FEBRUARY 29,
                                                  2001              2000            2001             2000
                                                ---------        ---------        ---------        ---------
<S>                                             <C>              <C>              <C>              <C>
Basic:
  Average common shares outstanding             5,678,956        5,674,780        5,678,956        5,670,900

Diluted:
  Dilutive effect of stock options                110,422          168,377               --          136,107
                                                ---------        ---------        ---------        ---------
  Average common shares outstanding             5,789,378        5,843,157        5,678,956        5,807,007
                                                =========        =========        =========        =========
</TABLE>

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
     February  28,  2001,  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 nine-month
     periods ended February 28, 2001 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  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  nine-month  periods ended  February 29, 2000
     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
     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 February 28, 2001 and
     May 31, 2000 consisted of the following (in thousands):

                                           FEBRUARY 28, 2001      MAY 31, 2000
                                           -----------------      ------------
     Raw materials                             $     563            $     525
     Work-in-process                               1,578                1,655
     Finished goods                                4,449                2,944
                                               ---------            ---------
                                               $   6,590            $   5,124
                                               =========            =========

                                      -6-
<PAGE>
     During the three months  ended  November  30,  2000,  the Company  recorded
     write-downs  totaling  $477,000 to reduce the  carrying  value of golf club
     shafts and grips  finished  goods  inventories  to estimated net realizable
     value.  These  write-downs are reflected as a component of cost of sales in
     the statement of operations  for the  nine-month  period ended February 28,
     2001.

5.   EQUIPMENT WRITE-DOWN:

     During the three months ended  November 30, 2000,  the Company  recorded an
     impairment  write-down  of  $360,000  on  equipment  held  for  sale  which
     represents the rubber injection presses previously used to manufacture golf
     club grips.  This  write-down  is reflected as a component of  nonrecurring
     expenses in the statement of  operations  for the  nine-month  period ended
     February 28, 2001.

     During the three months ended  November 30, 2000,  the Company  recorded an
     expense of $117,000 to write-off the accumulated  cost of various  projects
     under  development to design and construct  tooling for the  manufacture of
     golf club  grips.  This item is included  as a  component  of  nonrecurring
     expenses in the statement of  operations  for the  nine-month  period ended
     February 28, 2001.

6.   BORROWING ARRANGEMENTS:

     In March 2001,  the Company  amended  its bank credit  facilities  with its
     lender. In conjunction with this amendment, the Company received waivers of
     all violations of financial loan covenants which had existed since November
     2000. An additional  borrowing of $0.8 million was funded under an existing
     term loan and the maximum borrowing under the lines-of-credit was increased
     from  $6.5  million  to $8.0  million.  The  maturity  date  of all  credit
     facilities was extended to September 30, 2004. The annual  interest rate on
     all  borrowings  was  increased  by 1%  retroactive  to November  2000.  An
     additional  1%  annual  interest  charge  was  assessed  on all  borrowings
     retroactive to November 2000 but will be payable only in the event that the
     Company's  consolidated  net loss for the fiscal  year  ending May 31, 2001
     exceeds $0.2 million. The Company is accruing this additional interest on a
     monthly basis until such time as it becomes evident that the minimum income
     requirement for fiscal 2001 is assured.

     FMP's bank  credit  facility  consists  of two term  loans and a  revolving
     line-of-credit.  The  outstanding  principal  balance  of one FMP term loan
     ("FMP Term 1") was $2.1 million at February  28, 2001 and was  increased by
     $0.8 million on March 9, 2001.  This term loan is due in monthly  principal
     installments   of  $46,850  until  its  maturity  in  September  2004.  The
     outstanding  principal  balance  of the second FMP term loan ("FMP Term 2")
     was $0.3 million at February 28, 2001. This balance  represents the partial
     funding on December 1, 2000 of a term loan facility  which can be increased
     to a  maximum  of $0.4  million  upon the  completion  of  certain  capital
     projects currently under development.  It is anticipated that an additional
     funding of $0.1 million will occur prior to May 31, 2001. This term loan is
     due in  monthly  principal  installments  beginning  June 2001 in an amount
     calculated  using a 60-month  amortization  until its maturity in September
     2004.

     The amount available for borrowings under the FMP revolving  line-of-credit
     is  based  upon  the  levels  of  eligible  FMP  accounts   receivable  and
     inventories, as defined, subject to a maximum borrowing which was increased
     from $5.0  million to $6.5  million on March 9, 2001.  As of  February  28,
     2001, FMP had $4.8 million  outstanding under its revolving  line-of-credit
     and  $0.1  million  available  for  additional  borrowings.  Following  the
     amendment to the credit facility on March 9, 2001, the amount available for
     borrowings  under the FMP  revolving  line-of-credit  was increased by $1.3
     million. The FMP line-of-credit expires in September 2004.

     RG's  bank  credit  facility  consists  of a  term  loan  and  a  revolving
     line-of-credit.  The RG term loan of $0.3  million at February  28, 2001 is
     due in monthly  principal  installments  of $10,500  until its  maturity in
     September 2004. The amount  available for borrowings under the RG 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 February 28, 2001, 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 2004.

     The effective annual interest rate on the FMP and RG bank credit facilities
     was  increased  by 1% on March 9, 2001,  retroactive  to  November 1, 2000.
     Borrowings  under both  lines-of-credit  and FMP Term 2 bear  interest at a
     rate per annum  equal to the prime rate (8.5% at  February  28,  2001) plus
     1.25%.  Borrowings under the RG term loan and FMP Term 1 bear interest at a

                                      -7-
<PAGE>
     rate per annum equal to the prime rate plus 1.75%.  An additional 1% annual
     interest  charge accrues on all borrowings  effective  November 1, 2000 but
     will be payable only in the event that the Company's  consolidated net loss
     for the fiscal year ending May 31, 2001 exceeds $0.2  million.  The Company
     is accruing this additional  interest on a monthly basis until such time as
     it becomes  evident that the minimum income  requirement for fiscal 2001 is
     assured.  As of February  28,  2001,  $26,000 of  additional  interest  was
     accrued.

     Borrowings  under the FMP and RG bank  credit  facilities  are  secured  by
     substantially all of the Company's assets and contain certain financial and
     other   covenants   which,   among  other  things,   limit  annual  capital
     expenditures   and   dividends,   limit  the   repayment  of   subordinated
     indebtedness,  and require the maintenance of minimum monthly and quarterly
     earnings and minimum  quarterly debt service coverage  ratios,  as defined.
     The Company  believes it is in compliance with all financial loan covenants
     as amended on March 9, 2001.

     On December  7, 2000,  the Company  entered  into a revolving  subordinated
     promissory note  ("Subordinated  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 a  Trustee.  In
     December 2000, RP borrowed $1.0 million under the  Subordinated  Note which
     represents the maximum  available  funding amount.  The  Subordinated  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 with respect to any  outstanding  principal and accrued  interest
     that is not repaid in full on or before May 31,  2001.  On March 16,  2001,
     the  Company  and the  Johnston  Trust  amended  the  Subordinated  Note to
     increase  the  annual  interest  rate  to  17%  on  any  unpaid   principal
     outstanding  after  May  31,  2001  and  to  restrict  the  Johnston  Trust
     conversion  rights  prior  to  stockholder   approval.   Until  stockholder
     approval, the Johnston Trust may only exercise the conversion option for an
     amount  not to exceed  $25,000.  A meeting of the  stockholders  to vote on
     approval of the  conversion  right must occur on or prior to September  30,
     2001.  Subsequent to February 28, 2001,  the Company repaid $0.3 million of
     the Subordinated  Note and the Company  anticipates that the remaining $0.7
     million outstanding balance will be repaid on or before May 31, 2001.

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                  NINE MONTHS ENDED
                                                    FEBRUARY 28, 2001                  FEBRUARY 28, 2001
                                            --------------------------------   --------------------------------
                                            GOLF CLUB   GOLF CLUB              GOLF CLUB  GOLF CLUB
                                             SHAFTS       GRIPS      TOTAL      SHAFTS      GRIPS       TOTAL
                                            --------    --------    --------   --------    --------    --------
<S>                                         <C>         <C>         <C>        <C>         <C>         <C>
Net sales                                   $  6,804    $    911    $  7,715   $ 17,368    $  2,817    $ 20,185
Operating income (loss)                          560        (152)        408        (85)       (899)       (984)
Nonrecurring expenses                             10          --          10        165         477         642
Depreciation and amortization                    141         143         284        406         391         797

Total assets for reportable segments                                           $ 15,452    $ 16,475    $ 31,927
Elimination of investment in subsidiaries                                                                (5,959)
                                                                                                       --------
Consolidated total assets                                                                              $ 25,968
                                                                                                       ========

                                                   THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                   FEBRUARY 29, 2000                   FEBRUARY 29, 2000
                                            --------------------------------   --------------------------------
                                            GOLF CLUB   GOLF CLUB              GOLF CLUB  GOLF CLUB
                                             SHAFTS       GRIPS      TOTAL      SHAFTS      GRIPS       TOTAL
                                            --------    --------    --------   --------    --------    --------
Net sales                                   $  6,083    $    958    $  7,041   $ 16,997    $  3,046    $ 20,043
Operating income (loss)                          263         (92)        171      1,260        (185)      1,075
Nonrecurring expenses                             55          --          55         65          --          65
Depreciation and amortization                     87         211         298        260         641         901

Total assets for reportable segments                                           $ 13,390    $ 17,708    $ 31,098
Elimination of investment in subsidiaries                                                                (6,092)
                                                                                                       --------
Consolidated total assets                                                                              $ 25,006
                                                                                                       ========
</TABLE>

                                      -8-
<PAGE>
8.   ENVIRONMENTAL MATTERS:

     In May 1996, the Company acquired  substantially all the assets of the golf
     club shaft manufacturing  business of Brunswick Corporation (NYSE: BC) (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.   The  Company  has  engaged  an
     environmental  consulting  firm to assist in the development of the plan of
     remediation.  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.

     Prior to the  Brunswick  Acquisition,  the FMP plant was listed on the U.S.
     Environmental  Protection  Agency's  ("EPA")  Comprehensive   Environmental
     Response,  Compensation and Liability  Information  System  ("CERCLIS").  A
     contractor for the EPA performed a preliminary  assessment of the FMP plant
     in January 1992 and, in June 1992,  the site was deferred  from the CERCLIS
     inventory  to the EPA's  Resource  Conservation  and  Recovery Act ("RCRA")
     program. During calendar 2000, the EPA reviewed the status of the property,
     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  assessment of the FMP plant. The
     Company  has been  informed  that the  contractor  will  return to  perform
     sampling  of the  property in April 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.

     In April 2000, the Company  received a request for information from the EPA
     related to disposal  and  treatment of waste  materials  from the FMP plant
     during the period from 1982 to 1997. The EPA is 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 Brunswick, and to a limited degree by the
     Company,  to treat and  dispose  of  non-hazardous  waste oils from the FMP
     plant.  The EPA has not  issued  any  demands  for  reimbursement  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.  Based on
     discussions  with legal  counsel,  the Company  does not believe  that this
     matter  will have a  material  adverse  effect on the  Company's  financial
     condition or results of operations.

     In October 2000,  the Company  received a notice of violation  ("NOV") from
     the State of Connecticut  Department of  Environmental  Protection  ("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 February  2001,  the Company  received a  reimbursement  from  Brunswick
     totaling  $180,000  for costs  incurred to resolve a prior NOV from the DEP
     which the Company settled in June 2000. Of the funds received,  $75,000 was
     recorded  as a  reimbursement  of  environmental  related  expenses  and is
     reflected  as a reduction of  nonrecurring  expenses in the  statements  of
     operations  for the three and  nine-month  periods ended February 28, 2001.

                                      -9-
<PAGE>
     The remaining  balance received was recorded as a partial  reimbursement of
     the capital expenditures incurred at the FMP plant to complete the remedial
     measures specified in the NOV settlement.

     Expenses  related to the  various  environmental  matters  discussed  above
     totaled  $10,000,  net, and $165,000,  net, during the three and nine-month
     periods ended February 28, 2001, respectively. These expenses 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
     statement of operations for the nine-month period ended February 28, 2001.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

FORWARD-LOOKING STATEMENTS --

This Report on Form 10-Q contains forward-looking  statements within the meaning
of the Private Securities  Litigation Reform Act of 1995. These  forward-looking
statements are often  characterized by the terms "may," "believes,"  "projects,"
"expects,"  or  "anticipates,"   and  do  not  reflect  historical  facts.  Such
statements include, but are not limited to, statements  concerning the Company's
future results from operations;  the adequacy of existing capital  resources and
credit lines;  anticipated  future customer orders;  anticipated  future capital
expenditures;  anticipated  costs of environmental  matters at our manufacturing
facilities and expectations  regarding  future  environmental  reports;  and our
ability to generate  sufficient cash flow from operations to repay  indebtedness
and fund operations.  The Company undertakes no obligation to publicly update or
revise any forward-looking  statements,  whether as a result of new information,
future events, or otherwise.

Forward-looking  statements are based on the current beliefs and expectations of
the Company's management and are subject to significant risks, uncertainties and
other factors, which may cause actual results,  performance,  or achievements of
the Company to be materially  different from those  expressed or implied by such
forward-looking statements.  Factors that could affect the Company's results and
cause  them  to  be   materially   different   from  those   contained   in  the
forward-looking  statements include:  uncertainties relating to general economic
conditions;  the Company's  dependence on discretionary  consumer spending;  the
Company's  dependence  on demand  from  original  equipment  manufacturers;  the
Company's  dependence on  international  sales; the cost and availability of raw
materials;  the  timeliness  and market  acceptance of the Company's new product
introductions;  the  competitive  environment  in which  the  Company  operates;
seasonality of sales,  which results in fluctuations in operating  results;  the
Company's  ability to protect its intellectual  property  rights;  the Company's
reliance on third party suppliers;  changes in the financial markets relating to
the Company's capital structure and cost of capital;  increased costs related to
environmental  regulations  and/or the failure of third parties to fulfill their
indemnification and remediation  obligations to us; work stoppages or slowdowns;
the Company's limited operating  history;  the Company's ability to successfully
launch new products;  and other factors that  management is currently  unable to
identify or quantify,  but may arise or become known in the future. A discussion
of these and other  factors  that could  cause the  Company's  results to differ
materially from those described in the  forward-looking  statements can be found
in Exhibit 99.1 of Royal  Precision's  Annual Report on Form 10-K for the period
ended May 31, 2000.

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

                                      -10-
<PAGE>
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 FEBRUARY 28, 2001 COMPARED TO THE THREE MONTHS ENDED FEBRUARY
29, 2000--

NET SALES.  Net sales for the three  months  ended  February  28, 2001 were $7.7
million,  an  increase  of $0.7  million  or 10% over net sales of $7.0  million
during the corresponding period in 2000. Net sales of golf club shafts increased
by $0.7 million or 12% and net sales of golf club grips were  consistent at $0.9
million.  Net sales of the Company's  higher priced,  pro-grade golf club shafts
increased by $0.6 million  reflecting  continued strong demand for the Company's
proprietary "Rifle" shafts.

COST OF SALES.  Cost of goods sold for the three months ended  February 28, 2001
was $5.7 million,  an increase of $0.6 million or 12% over cost of goods sold of
$5.1  million  during the  corresponding  period in 2000.  The cost of golf club
shaft sales  increased  by $0.6  million or 13% as a result of higher  total net
sales. The cost of golf club grip sales was consistent at $0.7 million.

GROSS PROFIT. Gross profit for the three months ended February 28, 2001 was $2.1
million,  an increase of $0.1  million or 4% over gross  profit of $2.0  million
during the  corresponding  period in 2000.  Gross profit from sales of golf club
shafts  increased  by $0.1  million or 9% to $1.9  million  due to higher  total
sales.  As a percentage of sales,  the gross profit on sales of golf club shafts
was consistent at 28%. Gross profit from sales of golf club grips was consistent
at $0.2 million.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses for the three months ended  February 28, 2001 were $1.5
million, a decrease of 7% from selling,  general and administrative  expenses of
$1.6 million during the corresponding  period in 2000. The decrease is primarily
attributable to reduced spending on advertising in the current year.

AMORTIZATION  OF  GOODWILL.  Amortization  of goodwill  was  consistent  at $0.1
million  during both of the  three-month  periods  ended  February  28, 2001 and
February 29, 2000.

NONRECURRING  EXPENSES.  As  discussed  in Note 8, net  expenses of $10,000 were
incurred  during the three  months  ended  February  28, 2001 related to various
environmental issues. These expenses are net of a $75,000 reimbursement received
from  Brunswick.  Similar  environmental  related  expenses  incurred during the
corresponding period in 2000 were $55,000.

INTEREST EXPENSE.  Interest expense increased from $0.2 million during the three
months ended  February  29, 2000 to $0.3  million  during the three months ended
February 28, 2001.  As discussed in Note 6, this is primarily the result of a 1%
increase in the Company's  annual  interest  rate on its bank credit  facilities
effective  November 1, 2000 and an additional 1% interest charge accruing on all
bank  borrowings  subsequent to November 1, 2000.  During the three months ended
February 28,  2001,  additional  interest of $26,000 was accrued.  Additionally,
interest  recorded  on the  Johnston  Trust  Subordinated  Note during the three
months ended February 28, 2001 was $28,000.

OTHER INCOME.  Other income of $0.1 million for both of the three-month  periods
ended  February  28, 2001 and  February  29, 2000 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 INCOME  TAXES.  Tax  provisions  of $0.1 million were recorded on
income  during  both of the  three-month  periods  ended  February  28, 2001 and
February 29, 2000. Taxes are provided based on the estimated  effective tax rate
for the year which considers the effect of nondeductible goodwill amortization.

NINE MONTHS ENDED  FEBRUARY 28, 2001 COMPARED TO THE NINE MONTHS ENDED  FEBRUARY
29, 2000--

NET SALES.  Net sales for the nine  months  ended  February  28, 2001 were $20.2
million,  an  increase  of $0.2  million  or 1% over net sales of $20.0  million
during the corresponding period in 2000. Net sales of golf club shafts increased

                                      -11-
<PAGE>
by $0.4 million or 2% and net sales of golf club grips decreased by $0.2 million
or 8%. 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 nine months  ended  February 28, 2001
was $15.1 million,  an increase of $1.3 million or 9% over cost of goods sold of
$13.8 million during the  corresponding  period in 2000. As discussed in Note 4,
the Company recorded  write-downs totaling $477,000 to reduce the carrying value
of golf club  shafts and grips  finished  goods  inventories  to  estimated  net
realizable  value during the nine months ended February 28, 2001.  Excluding the
inventory write-down of $410,000, the cost of golf club shaft sales increased by
$0.8  million  or 7% as a result of higher net sales.  Excluding  the  inventory
write-down of $67,000 during the nine-month  period ended February 28, 2001, the
cost of golf club grip sales was consistent at $2.1 million.

GROSS PROFIT.  Gross profit for the nine months ended February 28, 2001 was $5.1
million,  a decrease of $1.2  million or 18% from gross  profit of $6.3  million
during the  corresponding  period in 2000.  Gross profit from sales of golf club
shafts decreased by $0.9 million or 16% and gross profit from sales of golf club
grips  decreased by $0.3 million or 32%.  Excluding the inventory  write-down of
$410,000,  gross profit from sales of golf club shafts decreased by $0.5 million
to 28% of sales from 32% of sales last year. This decline in margin is partially
attributable  to a $0.3 million  increase in the cost of natural gas fuel at the
Company's  FMP  plant due to  increased  usage and  significantly  higher  rates
charged by our  utility  provider.  Additionally,  production  rates  during the
fiscal  quarter  ended  November 30, 2000 were  negatively  impacted by start-up
costs incurred on the initial manufacture of several new pro-grade product lines
for which  manufacturing  efficiencies had not yet been achieved.  Excluding the
inventory  write-down  of  $67,000,  gross  profit from sales of golf club grips
decreased  by $0.2  million to 24% of sales  from 30% of sales  last year.  This
decline in margin is  attributable  to fixed costs being  spread over lower unit
sales volume and operating costs of the Company's West Coast distribution center
which opened in December 1999.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses for the nine months  ended  February 28, 2001 were $5.1
million, an increase of 8% over selling,  general and administrative expenses of
$4.8 million during the corresponding  period in 2000. The $0.3 million increase
is primarily due to costs  associated with a television  commercial  advertising
campaign which  commenced in January 2000 and continued  through  December 2000.
Costs of purchased airtime and development of commercials totaled  approximately
$0.3  million  during the nine months ended  February 28, 2001  compared to $0.1
million during the corresponding period in 2000.

AMORTIZATION  OF  GOODWILL.  Amortization  of goodwill  was  consistent  at $0.3
million  during  both of the  nine-month  periods  ended  February  28, 2001 and
February 29, 2000.

NONRECURRING  EXPENSES.  As discussed  in Note 5, an  impairment  write-down  of
$360,000 was recorded  during the nine months ended  February 28, 2001 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 nine
months ended  February 28, 2001 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, net expenses of $165,000
were incurred  during the nine months ended February 28, 2001 related to various
environmental issues. These expenses are net of a $75,000 reimbursement received
from  Brunswick.  Similar  environmental  related  expenses  incurred during the
corresponding period in 2000 were $65,000.

INTEREST  EXPENSE.  Interest expense increased from $0.5 million during the nine
months  ended  February  29, 2000 to $0.6  million  during the nine months ended
February 28, 2001.  As discussed in Note 6, this is primarily the result of a 1%
increase in the Company's  annual  interest  rate on its bank credit  facilities
effective  November 1, 2000 and an additional 1% interest charge accruing on all
bank  borrowings  subsequent  to November 1, 2000.  During the nine months ended
February 28,  2001,  additional  interest of $26,000 was accrued.  Additionally,
interest recorded on the Johnston Trust Subordinated Note during the nine months
ended February 28, 2001 was $28,000.

OTHER EXPENSE.  As discussed in Note 9, legal and  professional  fees associated
with the proposed PH Group Inc. ("PHG")  acquisition  totaled $79,000 during the
nine months ended February 28, 2001.

OTHER INCOME.  Other income of $0.2 million for both of the  nine-month  periods
ended  February  28, 2001 and  February  29, 2000 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.

                                      -12-
<PAGE>
PROVISION  FOR (BENEFIT  FROM) INCOME  TAXES.  A tax benefit of $0.5 million was
recorded on the loss during the nine months  ended  February  28, 2001 and a tax
provision  of $0.4  million was  recorded  on the income  during the nine months
ended February 29, 2000. 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 February  28,  2001,  the Company had working  capital of $6.9  million and a
current  ratio of 2.4 to 1 as compared to working  capital of $6.0 million and a
current ratio of 2.3 to 1 at May 31, 2000.

In March 2001, the Company  amended its bank credit  facilities with its lender.
In  conjunction  with  this  amendment,  the  Company  received  waivers  of all
violations of financial loan covenants which had existed since November 2000. An
additional  borrowing of $0.8 million was funded under an existing term loan and
the maximum borrowing under the  lines-of-credit was increased from $6.5 million
to $8.0  million.  The maturity  date of all credit  facilities  was extended to
September 30, 2004. The annual  interest rate on all borrowings was increased by
1%  retroactive to November  2000. An additional 1% annual  interest  charge was
assessed on all borrowings retroactive to November 2000 but will be payable only
in the event that the Company's consolidated net loss for the fiscal year ending
May 31, 2001  exceeds  $0.2  million.  The Company is accruing  this  additional
interest  on a monthly  basis  until  such time as it becomes  evident  that the
minimum income requirement for fiscal 2001 is assured.

FMP's  bank  credit  facility  consists  of  two  term  loans  and  a  revolving
line-of-credit.  The  outstanding  principal  balance of one FMP term loan ("FMP
Term 1") was $2.1 million at February 28, 2001 and was increased by $0.8 million
on March 9, 2001.  This term loan is due in monthly  principal  installments  of
$46,850 until its maturity in September 2004. The outstanding  principal balance
of the  second FMP term loan ("FMP  Term 2") was $0.3  million at  February  28,
2001. This balance  represents the partial funding on December 1, 2000 of a term
loan  facility  which can be  increased  to a maximum of $0.4  million  upon the
completion  of certain  capital  projects  currently  under  development.  It is
anticipated  that an additional  funding of $0.1 million will occur prior to May
31, 2001. This term loan is due in monthly principal installments beginning June
2001 in an amount calculated using a 60-month amortization until its maturity in
September 2004.

The amount  available for borrowings under the FMP revolving  line-of-credit  is
based upon the levels of eligible FMP accounts  receivable and  inventories,  as
defined, subject to a maximum borrowing which was increased from $5.0 million to
$6.5 million on March 9, 2001.  As of February  28,  2001,  FMP had $4.8 million
outstanding  under its revolving  line-of-credit  and $0.1 million available for
additional  borrowings.  Following the amendment to the credit facility on March
9,  2001,  the  amount   available  for  borrowings   under  the  FMP  revolving
line-of-credit was increased by $1.3 million. The FMP line-of-credit  expires in
September 2004.

RG's  bank   credit   facility   consists   of  a  term  loan  and  a  revolving
line-of-credit.  The RG term loan of $0.3 million at February 28, 2001 is due in
monthly principal  installments of $10,500 until its maturity in September 2004.
The amount  available for borrowings  under the RG 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 February 28,
2001, 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 2004.

The effective annual interest rate on the FMP and RG bank credit  facilities was
increased by 1% on March 9, 2001,  retroactive  to November 1, 2000.  Borrowings
under  both  lines-of-credit  and FMP Term 2 bear  interest  at a rate per annum
equal to the prime rate (8.5% at February 28, 2001) plus 1.25%. Borrowings under
the RG term loan and FMP Term 1 bear  interest  at a rate per annum equal to the
prime rate plus 1.75%.  An additional 1% annual  interest  charge accrues on all
borrowings effective November 1, 2000 but will be payable only in the event that
the  Company's  consolidated  net loss for the fiscal  year  ending May 31, 2001
exceeds $0.2  million.  The Company is accruing  this  additional  interest on a
monthly  basis until such time as it becomes  evident  that the  minimum  income
requirement  for fiscal 2001 is assured.  As of February  28,  2001,  $26,000 of
additional interest was accrued.

Borrowings  under  the  FMP  and  RG  bank  credit  facilities  are  secured  by
substantially  all of the  Company's  assets and contain  certain  financial and
other covenants which, among other things, limit annual capital expenditures and

                                      -13-
<PAGE>
dividends,  limit the repayment of  subordinated  indebtedness,  and require the
maintenance of minimum monthly and quarterly earnings and minimum quarterly debt
service  coverage ratios,  as defined.  The Company believes it is in compliance
with all financial loan covenants as amended on March 9, 2001.

On  December  7,  2000,  the  Company  entered  into  a  revolving  subordinated
promissory  note  ("Subordinated  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 a Trustee.  In December
2000, RP borrowed $1.0 million under the Subordinated  Note which represents the
maximum  available  funding amount.  The  Subordinated  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  with  respect  to any
outstanding  principal  and  accrued  interest  that is not repaid in full on or
before May 31,  2001.  On March 16,  2001,  the Company and the  Johnston  Trust
amended the Subordinated Note to increase the annual interest rate to 17% on any
unpaid  principal  outstanding  after May 31, 2001 and to restrict  the Johnston
Trust  conversion  rights  prior  to  stockholder  approval.  Until  stockholder
approval,  the Johnston  Trust may only  exercise the  conversion  option for an
amount not to exceed $25,000.  A meeting of the stockholders to vote on approval
of the conversion right must occur on or prior to September 30, 2001. Subsequent
to February 28, 2001, the Company repaid $0.3 million of the  Subordinated  Note
and the Company  anticipates that the remaining $0.7 million outstanding balance
will be repaid on or before May 31, 2001.

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

During the nine months  ended  February  28,  2001,  net cash used in  operating
activities  was $1.0 million  which  primarily  resulted from a net loss of $0.9
million,  an increase in  inventories  of $1.9 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 $0.8  million and $1.0  million  for  inventory  and  equipment
write-downs as described in Notes 4 and 5. Net cash used in operating activities
was partially offset by a net collection of accounts receivable of $0.9 million.

Net cash used in investing  activities  for the nine months  ended  February 28,
2001 was $0.8 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 $1.3 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 nine months ended February 28,
2001, was $2.2 million  resulting from net borrowings under  lines-of-credit  of
$1.7 million,  proceeds from issuance of subordinated debt and long-term debt of
$1.0 million and $0.3 million,  respectively,  partially offset by repayments of
long-term debt of $0.7 million.  The Company is investigating  certain potential
acquisitions. Any potential acquisitions may require the use of existing capital
resources,  assumption of debt or issuance of new debt instruments, any of which
could impact the Company's liquidity and capital resources.

ENVIRONMENTAL MATTERS --

In May 1996, the Company acquired  substantially all the assets of the golf club
shaft manufacturing business of Brunswick Corporation (NYSE: BC) (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.  The Company has engaged an environmental consulting firm to assist
in the development of the plan of  remediation.  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.

                                      -14-
<PAGE>
Prior  to the  Brunswick  Acquisition,  the FMP  plant  was  listed  on the U.S.
Environmental Protection Agency's ("EPA") Comprehensive  Environmental Response,
Compensation and Liability Information System ("CERCLIS").  A contractor for the
EPA performed a preliminary  assessment of the FMP plant in January 1992 and, in
June  1992,  the site was  deferred  from the  CERCLIS  inventory  to the  EPA's
Resource  Conservation and Recovery Act ("RCRA") program.  During calendar 2000,
the EPA reviewed the status of the property, 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
assessment of the FMP plant.  The Company has been informed that the  contractor
will  return to perform  sampling of the  property  in April  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.

In April 2000,  the  Company  received a request  for  information  from the EPA
related to disposal and treatment of waste  materials  from the FMP plant during
the period from 1982 to 1997. The EPA is 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 Brunswick,  and to a limited degree by the Company,  to treat
and  dispose of  non-hazardous  waste  oils from the FMP plant.  The EPA has not
issued any demands for  reimbursement  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. Based on discussions with legal counsel, the Company
does not believe  that this matter  will have a material  adverse  effect on the
Company's financial condition or results of operations.

In October  2000,  the Company  received a notice of violation  ("NOV") from the
State of Connecticut  Department of  Environmental  Protection  ("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.

                                      -15-
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE INFORMATION REGARDING MARKET RISK.

At  February  28,  2001,  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.

QUALITATIVE INFORMATION REGARDING MARKET RISK.

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  $23,000  and  $57,000 on  interest  expense for the three and
nine-month periods ended February 28, 2001, respectively.

                                      -16-
<PAGE>
                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

     On December  7, 2000,  the Company  entered  into a revolving  subordinated
promissory  note  ("Subordinated  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 a Trustee.  In December
2000,  RP borrowed  $1.0 million  under the  Subordinated  Note and utilized the
funds for working capital to support the ongoing operations of the Company.  The
Subordinated  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 with respect to any outstanding  principal and accrued  interest
that is not repaid in full on or before May 31,  2001.  On March 16,  2001,  the
Company and the Johnston  Trust  amended the  Subordinated  Note to increase the
annual interest rate to 17% on any unpaid  principal  outstanding  after May 31,
2001 and to restrict the Johnston Trust  conversion  rights prior to stockholder
approval.  Until stockholder approval,  the Johnston Trust may only exercise the
conversion  option  for an  amount  not to  exceed  $25,000.  A  meeting  of the
stockholders must occur on or prior to September 30, 2001 to vote on approval of
the conversion  right.  On March 9, 2001, the Company  obtained  additional bank
financing  which  the  Company  anticipates  will  be  utilized  to  retire  the
indebtedness to the Johnston Trust on or before May 31, 2001. The transaction is
exempt under Section 4(2) of the Securities Exchange Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     Due to the substantial loss incurred during the three months ended November
30,  2000,  the  Company  was not in  compliance  with  several  financial  loan
covenants of its bank credit facilities. These covenant violations impact all of
the  Company's  outstanding  term  loans  and  lines-of-credit   which,  in  the
aggregate,  totaled $8.2 million at February  28,  2001.  On March 9, 2001,  the
Company and its lender  modified the credit  facilities  and an additional  term
loan was  funded  in the  amount  of $0.8  million.  Additionally,  the  Company
obtained  waivers of all existing  financial loan covenant  violations  from its
lender.

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
Exhibit 3.2 to the Company's Form S-4; No. 333-28841 (the "Form S-4")).

     (4)  Instruments Defining the Rights of Security Holders

                                      -17-
<PAGE>
     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).

     (10) Material Contracts

     Exhibit 10.1. Sixth Amendment to Credit and Security  Agreement  between FM
Precision  Golf  Manufacturing  Corp.,  FM Precision  Golf Sales Corp. and Wells
Fargo Business Credit, Inc. dated March 9, 2001.

     Exhibit 10.2. Seventh Amendment to Amended and Restated Credit and Security
Agreement  between Royal Grip, Inc., Royal Grip Headwear Company and Wells Fargo
Business Credit, Inc. dated March 9, 2001.

     Exhibit 10.3.  Amendment No. 1 to Revolving  Subordinated  Promissory  Note
from Royal Precision,  Inc. to the Johnston Family Charitable Remainder Unitrust
#3 dated March 16, 2001.

     (b)  Reports on Form 8-K.

     The Company did not file any current reports on Form 8-K during the quarter
ended February 28, 2001.

                                      -18-
<PAGE>
                                   SIGNATURES

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

                                        ROYAL PRECISION, INC.


Date: April 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)

                                      -19-
<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) (incorporated by reference to Exhibit
          3.1 of the  Company's  Form 10-Q for the  period  ended
          November 30, 1999).                                           *

3.2       Bylaws  of  Royal  Precision,   Inc.  (incorporated  by
          reference to Exhibit 3.2 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      Sixth  Amendment  to  Credit  and  Security   Agreement
          between  FM  Precision  Golf  Manufacturing  Corp.,  FM
          Precision  Golf Sales Corp.  and Wells  Fargo  Business
          Credit, Inc. dated March 9, 2001.                            21

10.2      Seventh  Amendment to Amended and  Restated  Credit and
          Security Agreement between Royal Grip, Inc., Royal Grip
          Headwear Company and Wells Fargo Business Credit,  Inc.
          dated March 9, 2001.                                         40

10.3      Amendment  No. 1 to Revolving  Subordinated  Promissory
          Note from Royal Precision,  Inc. to the Johnston Family
          Charitable  Remainder Unitrust #3 dated March 16, 2001.      53

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