UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

For the Fiscal Year Ended                         Commission File No.  001-12629
   September 28, 2001                                                 ----------


                      OLYMPIC CASCADE FINANCIAL CORPORATION
             (Exact Name of Registrant as specified in its charter)
           DELAWARE                                                  36-4128138
------------------------------------                              --------------
 (State or other jurisdiction of                              (I.R.S.   Employer
  incorporation or organization)                             Identification No.)

875 North Michigan Avenue, Suite 1560, Chicago, IL         60611
----------------------------------------------------   --------------
  (Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code:  (312) 751-8833
                                                     --------------
Securities registered pursuant to Section 12(b) of the Act: None
                                                            ----
Securities registered pursuant to Section 12(g) of the Act:
                                                     Common stock $.02 par value
                                                     ---------------------------
                                                          (Title of class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K of this chapter is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
                                               Yes                No   X
                                                  -------            -------

As of December 18, 2001, 1,622,331 shares of the Company's common stock were
held by non-affiliates, having an aggregate market value of $1,946,797. The
number of common shares outstanding as of December 18, 2001 was 2,236,449.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's Proxy Statement filed with the Securities and Exchange
Commission ("SEC") in connection with the Company's Annual Meeting of
Shareholders to be held on March 12, 2002 (the "Company's 2002 Proxy Statement")
are incorporated by reference into Part III hereof.

                                      -1-
<PAGE>



                                     PART I

Item 1 - BUSINESS
(a) General

Except for historical information contained herein, this Report contains certain
forward-looking  information  that involves risks and  uncertainties  that could
cause results to differ  materially,  including  changing market  conditions and
other  risks  detailed in this  Annual  Report on Form 10-K and other  documents
filed by the Company with the  Securities and Exchange  Commission  from time to
time.

Olympic Cascade Financial Corporation,  a Delaware corporation organized in 1997
("Olympic" or the "Company"),  is a financial  services  organization  operating
through its three wholly-owned subsidiaries,  National Securities Corporation, a
Washington  corporation organized in 1947 ("National"),  WestAmerica  Investment
Group,  a  California   corporation  organized  in  1974  ("WestAmerica"),   and
Canterbury  Securities  Corporation  ("Canterbury"),   an  Illinois  corporation
organized in 1998.  Olympic is committed to establishing a significant  presence
in the financial services industry by providing  financing options for emerging,
small and middle  capitalization  companies both in the United States and abroad
through research,  financial advisory services and sales, and investment banking
services for both public offerings and private placements,  and providing retail
brokerage, institutional trading and trade clearance operations.

In December 2001, the Company executed  definitive  agreements with respect to a
series of  transactions  under which new  investors  have obtained a significant
ownership in Olympic by way of making up to a $1.5 million investment in Olympic
and by  purchasing  a portion  of the  shares  held by Steven A.  Rothstein  and
family,  the largest  shareholder and the Company's Chairman and Chief Executive
Officer (the "Investment  Transaction").  The investors  include an affiliate of
Sands Brothers & Company,  a New York Stock Exchange  ("NYSE")  member firm, and
Mark Goldwasser,  the current President of Olympic. As part of this transaction,
note holders of the Company's  January 2004 Promissory  Notes exchanged one half
of their notes for equity  securities in the Company.  In  connection  with this
transaction,  Steven A.  Rothstein and Robert H. Daskal have agreed to terminate
their  employment  agreements  in exchange for  consulting  agreements  with the
Company.  Messrs. Steven B. Sands and Martin S. Sands will assume the offices of
Co-Chairman,  and Mr.  Goldwasser will become Chief  Executive  Officer upon Mr.
Rothstein's resignation.

In August  2001,  the Company  entered  into an  agreement  with First  Clearing
Corporation  ("First Clearing"),  an affiliate of First Union Securities,  Inc.,
under which First  Clearing  will  provide  clearing  and related  services  for
National (the  "Clearing  Agreement").  The Clearing  Agreement  will expand the
products and  services  capabilities  for  National's  retail and  institutional
business,  enable National to consolidate its existing  clearing  operations and
reduce fixed overhead associated with its self-clearing activities.

The conversion to First Clearing began in December 2001. In connection  with the
Clearing  Agreement,  the Company  entered into a ten-year  promissory note with
First  Clearing under which the Company  immediately  borrowed  $1,000,000.  The
funds  were  contributed  by the  Company to  National,  and are being used as a
deposit to secure  National's  performance  under the  Clearing  Agreement.  The
Clearing  Agreement also provides for another  $1,000,000 loan to be extended to


                                      -2-
<PAGE>

(a) General (Continued)

the Company at completion of the conversion,  subject to certain conditions that
are expected to be satisfied upon closing of the Investment Transaction.

Additional  borrowings  are  available  to the Company  upon the  attainment  by
National of certain volume and profitability  goals, none of which have been met
as of the date of filing  of this Form  10-K.  Borrowings  under the  promissory
notes are forgivable based on certain  business  performance and trading volumes
of the Company over the life of the loan.

National  conducts a national  securities  brokerage  business  through its main
office and second  largest sales office in Seattle,  Washington  and in 57 other
offices  located in 19 states.  National also operates in several  international
cities.   Its  business  includes   securities   brokerage  for  individual  and
institutional  clients,  market-making trading activities,  asset management and
corporate finance services. Additionally,  National has a significant retail and
trading  presence  in  New  York  City  with  corporate   finance   transactions
originating in Chicago,  Illinois. The majority of National's  transactions with
the public involve solicited trades.

In December 2001, WestAmerica  voluntarily withdrew its membership with the NASD
and ceased conducting  business as a broker-dealer.  WestAmerica intends to file
for Chapter 7 Bankruptcy protection in accordance with the U.S. Bankruptcy Code.
WestAmerica,   based  in  Scottsdale,   Arizona,  was  a  registered  securities
broker-dealer  providing primarily retail brokerage operations.  The majority of
WestAmerica's transactions with the public involved solicited trades.

In June 2000, the Company acquired all of the outstanding stock of Canterbury, a
Chicago,  Illinois based  broker-dealer  formerly  engaging in private placement
transactions.  Canterbury has no retail customer  accounts and since acquisition
has  had  no  activity.  In  the  event  that  the  Investment   Transaction  is
consummated, the Company has agreed to sell Canterbury for its book value to Mr.
Rothstein.

As of September 28, 2001, the Company and its subsidiaries had approximately 175
employees and 335 independent  contractors.  Of these totals,  approximately 410
were  registered  representatives.  As a result of the slowdown in the financial
markets and the  Company's  recent  change from  self-clearing  to clearing with
First  Clearing,  the Company has scaled back its employee staff. As of December
2001, the Company had approximately 130 employees. Persons who have entered into
independent  contractor  agreements are not considered employees for purposes of
determining  the  Company's  obligations  for  federal  and  state  withholding,
unemployment  and social security taxes.  The Company's  independent  contractor
arrangements conform with accepted industry practice, and therefore, the Company
does not believe there is a material risk of an adverse  determination  from the
tax authorities  which would have a significant  effect on the Company's ability
to  recruit  and  retain  investment  executives,  or on the  Company's  current
operations  and  financial  results of  operations.  No employees are covered by
collective  bargaining  agreements,  and the Company  believes its relations are
good with both its employees and independent contractors.





                                      -3-
<PAGE>
(a)      General  (Continued)

The Company is engaged in a highly competitive business.  With respect to one or
more aspects of its business,  its competitors  include member  organizations of
the New York Stock Exchange,  Inc. and other registered  securities exchanges in
the United  States  and  Canada,  and  members of the  National  Association  of
Securities   Dealers,   Inc.   ("NASD").   Many  of  these   organizations  have
substantially  greater personnel and financial  resources and more sales offices
than the Company.  Discount  brokerage firms  affiliated  with commercial  banks
provide  additional  competition,  as well as companies that provide  electronic
on-line trading.  In many instances,  the Company is also competing directly for
customer funds with investment opportunities offered by real estate,  insurance,
banking,  and savings and loans  industries.  For a further  discussion of risks
facing the Company please see the section below entitled, "Risk Factors."

The Company's  business plan includes the growth of its retail and institutional
brokerage business.  Due to a slowdown in the financial markets, the Company has
scaled  back  certain  business  activities,   including:  proprietary  trading,
market-making  trading, and online investing services.  Management believes that
consolidation  within the industry is inevitable.  Concerns  attributable to the
weakened market and increased  competition help explain the increasing number of
acquisition opportunities continuously introduced to the Company. The Company is
focused on maximizing the  profitability  of its existing  operations,  while it
continues to seek additional selective strategic acquisitions.

In October 2000, the Company  opened a significant  branch office of National in
New  York  City.  This  office  specializes  in  broker-to-broker  fixed  income
transactions  and equity market making  activities.  In February 2001,  National
expanded  these  market-making  trade  activities.  By July 2001,  National made
markets in approximately  2,000 securities,  comprised mainly of equities traded
on the NASDAQ and OTC Bulletin Board. As a result of the losses  attributable to
a slow-down in the broader market,  National has curtailed  these  market-making
trading activities. As of December 2001, National makes markets in approximately
300 securities.


(b) Financial Information about Industry Segments

For a more detailed  analysis of our results by segment see Item 7,  "Management
Discussion and Analysis of Financial Condition and Results of Operation."

(c) Brokerage Services

Brokerage  services to retail clients are provided  through the Company's  sales
force of  investment  executives  at  National  and,  until  December  2001,  at
WestAmerica.

National Securities Corporation
National is  registered  as a  broker-dealer  with the  Securities  and Exchange
Commission  ("SEC") and  licensed  in 50 states,  the  District of Columbia  and
Puerto Rico.  National is also a member of the NASD,  the  Municipal  Securities
Rulemaking  Board ("MSRB") and the Securities  Investor  Protection  Corporation
("SIPC").



                                      -4-
<PAGE>

(c)  Brokerage Services (Continued)

National's  goal is to meet the  needs of its  investment  executives  and their
clients. To foster individual service, flexibility and efficiency, and to reduce
fixed costs,  investment  executives at National act as independent  contractors
responsible  for  providing  their  own  office  facilities,  sales  assistants,
telephone and quote  service,  supplies and other items of overhead.  Investment
executives  are given broad  discretion to structure  their own practices and to
specialize in different  areas of the  securities  market subject to supervisory
procedures.  In addition,  investment  executives have direct access to research
materials, management, traders, and all levels of support personnel.

It is not  National's  policy to recommend  particular  securities to customers.
Recommendations to customers are determined by individual  investment executives
based upon their own  research  and  analysis,  and subject to  applicable  NASD
customer suitability  standards.  Most investment executives perform fundamental
(as opposed to technical) analysis.  Solicitations may be by telephone, seminars
or  newsletters.  Investment  executives  may  request  trading  to  acquire  an
inventory  position to facilitate sales to customers  (subject to the investment
executive's  own risk).  Supervisory  personnel  review  trading  activity  from
inventory positions to ensure compliance with applicable standards of conduct.

Salespersons  in the brokerage  industry are  traditionally  compensated  on the
basis of set  percentages  of total  commissions  and mark-ups  generated.  Most
brokerage firms bear  substantially  all of the costs of maintaining their sales
forces,  including  providing office space, sales assistants,  telephone service
and supplies.  The average  commission paid to the salespersons in the brokerage
industry generally ranges from 30% to 50% of total commissions generated.

Since National  requires most of its  investment  executives to absorb their own
overhead  and  expenses,  it is able to pay an average of  approximately  75% of
commissions and mark-ups generated by the investment executive. This arrangement
also  reduces  fixed  costs  and  lowers  the  risk of  operational  losses  for
non-production.

National's  operations include execution of orders,  processing of transactions,
receipt,  identification  and  delivery  of funds  and  securities,  custody  of
customer securities,  internal financial controls and compliance with regulatory
and legal requirements.

National's  data   processing  is  supplied  by  an  independent   vendor  on  a
time-sharing basis to process orders,  reports,  confirmations and statements as
well as to maintain the general  ledger,  files of  customers,  and other market
data.  National utilizes other computer  software,  which is used for investment
executive  payroll and telephone cost allocation,  including word processing and
other office applications.

In the  fiscal  year  2001,  National  cleared  approximately  60%  of  its  own
securities  transactions  and  posted  its books  and  records  daily,  with the
remaining  40% of the  transactions  clearing  through Bear  Stearns  Securities
Corporation,  US Clearing Corporation and Pershing.  In August 2001, the Company
entered  into an  agreement  with First  Clearing,  an  affiliate of First Union
Securities,  Inc.,  under which First Clearing will provide clearing and related
services  for  National.  The  Clearing  Agreement  will expand the products and
services capabilities for National's retail and institutional  business,  enable
National to





                                      -5-
<PAGE>
(c)  Brokerage Services (Continued)

consolidate  its  existing   clearing   operations  and  reduce  fixed  overhead
associated with its self-clearing  activities.  The conversion to First Clearing
began in December 2001.

Periodic reviews of controls are conducted,  and  administrative  and operations
personnel  meet  frequently  with  management  to review  operating  conditions.
Operations   personnel  monitor  compliance  with  applicable  laws,  rules  and
regulations.

WestAmerica Investment Group
In December 2001, WestAmerica  voluntarily withdrew its membership with the NASD
and ceased conducting  business as a broker-dealer.  WestAmerica intends to file
for Chapter 7 Bankruptcy protection in accordance with the U.S. Bankruptcy Code.
Until December 2001,  WestAmerica was registered as a broker-dealer with the SEC
and licensed in 44 states, Puerto Rico and the District of Columbia. WestAmerica
was also a member  of the  NASD,  the MSRB  and the  SIPC.  WestAmerica  offered
traditional  securities  brokerage and financial planning business and fee-based
investment management business to its retail clients.

Unlike  National,  the  majority of  WestAmerica's  investment  executives  were
employees. As such, the average commission payout was approximately 20-30% lower
than National's  commission  payout of  approximately  75%. Since the commission
payout was much lower,  WestAmerica provided office space,  equipment,  supplies
and  other  resources  for  its  investment  executives.  Recently,  WestAmerica
experienced  operating  losses.  In addition to these  losses,  WestAmerica  had
arbitration losses that exceeded its net capital.

Canterbury Securities Corporation
Canterbury  is a registered as a  broker-dealer  with the SEC and is licensed in
Illinois.  Canterbury is a member of the NASD, the MSRB and the SIPC. Canterbury
formerly  engaged in private  placement  transactions.  Canterbury has no retail
customer accounts and, therefore,  operates pursuant to the exemptive provisions
of SEC Rule 15c3-3(k)(2)(i).  Since acquisition in June 2000, Canterbury has had
no activity.  Upon  consummation  of the Investment  Transaction the Company has
agreed to sell  Canterbury for its book value to Mr.  Rothstein.  Canterbury was
acquired for cash of $30,000 and the  issuance of five-year  warrants to acquire
5,000  unregistered  shares of common  stock of the Company at a price of $6.375
per share.

(d) Investment Banking

National provides corporate finance and investment  banking services,  including
underwriting  the sale of securities to the public and arranging for the private
placement of securities with investors.  National's corporate finance operations
provide a broad range of financial and corporate  advisory  services,  including
mergers and  acquisitions,  project  financing,  capital  structure and specific
financing  opportunities.  In the past,  National has  underwritten  both equity
securities  and  convertible  corporate  bonds as  initial or  secondary  public
offerings.




                                      -6-
<PAGE>
(d) Investment Banking (Continued)

National's  corporate finance department is headquartered in Chicago,  Illinois.
This office includes  investment  executives,  investment bankers and employees.
The office and the corporate  finance  department are under the direction of the
Company's Chairman, Steven A. Rothstein.


(e) Principal and Agency Transactions

The  Company  buys  and  maintains   inventories  in  equity   securities  as  a
"market-maker"  for sale of those  securities  to other dealers and to customers
through  National.  The Company also  maintains  inventories  in  corporate  and
municipal debt securities for sale to customers.

At National,  a staff of four  traders in its New York  office,  six traders and
assistants in its Seattle headquarters,  and three traders and assistants in its
Spokane,  Washington  office,  manage an  inventory  of  securities  and conduct
market-making  activities.  As of September 28, 2001,  National made a market in
more than 1,500  equity  securities,  the  majority  of which were quoted on the
NASDAQ stock market and the OTC Bulletin  Board.  This  includes  companies  for
which National managed or co-managed a public  offering.  During the fiscal year
ended  2001,   through  its  recently  opened  New  York  branch,   the  Company
substantially  increased the number of  securities  for which it makes a market.
However,  due to the slow-down in the financial  markets these  activities  were
substantially   reduced.   As  of  December  2001,  National  makes  markets  in
approximately 300 securities.

The  Company's  trading  departments  require  a  commitment  of  capital.  Most
principal  transactions  place the Company's capital at risk. Profits and losses
are dependent upon the skill of the traders,  price movements,  trading activity
and the size of inventories.

Because the Company's trading  activities  occasionally may involve  speculative
and thinly capitalized stocks,  including  stabilizing the market for securities
which it has  underwritten,  the Company  imposes  position limits to reduce its
potential for loss.

In  executing  customer  orders to buy or sell a security  in which the  Company
makes a market,  the Company may sell to or purchase  from  customers at a price
that is  substantially  equal to the current  inter-dealer  market price plus or
minus a mark-up or  mark-down.  The  Company may also act as agent and execute a
customer's purchase or sale order with another broker-dealer market-maker at the
best  inter-dealer  market price available and charge a commission.  The Company
believes its mark-ups,  mark-downs and commissions are competitive  based on the
services it provides to its customers.

In  executing  customer  orders  to  buy or  sell  listed  and  over-the-counter
securities  in which it does not make a market,  the Company  generally  acts as
agent and charges commissions which the Company believes are competitive,  based
on the services the Company  provides to its customers.  The Company may receive
rebates  for the  order  flow of the  securities  for  which  it does not make a
market.


                                      -7-
<PAGE>



(f) Online trading

In May 2001,  the Company  closed the  operations  of  NSCdirect  (a division of
National), which provided online investing services for its customers. NSCdirect
began  trading in April 2000 and was  serviced out of Seattle,  Washington.  The
heavily  competitive  online  trading  marketplace  coupled with the expenses of
running such division proved to be an unprofitable  business for the Company. By
discontinuing  its operation the Company was better able to direct its resources
to other ventures.

(g) Supervision

The  Securities  Exchange Act of 1934,  as amended,  and the NASD Conduct  Rules
require the Company's subsidiaries to supervise the activities of its investment
executives. As part of providing such supervision,  the subsidiaries maintain an
Operations and Procedures Manual.  Compliance  personnel conduct  inspections of
branch offices no less  frequently  than annually to review  compliance with the
Company's procedures.  A registered principal provides continuous supervision at
each  of  the  Company's  larger  offices.  The  other  offices  (averaging  two
investment  executives  per  office)  are not  required  by NASD rules to have a
registered  principal  on  site  and  are  therefore  supervised  by  registered
principals of the subsidiaries. Compliance reviews each customer trade to ensure
compliance with the NASD Conduct Rules including mark-up guidelines.

In May 2001,  without  admitting  or denying  the alleged  violations,  National
accepted  and  consented  to  the  entry  of  the  following  findings  by  NASD
Regulation:  At various  times in 1999 and 2000,  the firm violated NASD Conduct
Rules  2860(b)(5);  Rule  3360;  Rule  3370;  Rule 2110 and  3010;  and SEC Rule
11Ac1-4.  The firm was censured and fined $35,000 in a settlement  dated May 21,
2001.

(h) Venture Capital

In March 2001, the Company had its initial  closing of Robotic  Ventures Fund I,
L.P., a venture capital fund dedicated to investing in companies  engaged in the
business of robotics and artificial intelligence. As of September 2001, the fund
raised a total of $5.2 million,  $265,000 of which was capital directly invested
by the Company  into the fund.  The  Company  serves as the  managing  member of
Robotic  Ventures  Group LLC, the general  partner of the fund.  As the managing
member  of the  fund's  general  partner,  the  Company  is  entitled  to the 2%
management  fee paid by the fund.  Additionally,  the Company  owns 24.5% of the
fund's general partner, which is entitled to 20% of the profits generated by the
fund after the investors receive the return of their invested capital.


                                      -8-
<PAGE>



RISK FACTORS

The risks described below are not the only ones facing us.  Additional risks not
presently  known to us or that we  currently  believe  are  immaterial  may also
impair our business operations. Our business,  financial condition or results of
operation could be materially adversely affected by any of these risks.

The Private Securities  Litigation Reform Act of 1995 provides a safe harbor for
forward-looking  statements.  This Report may contain  certain  statements  of a
forward-looking nature relating to future events or future business performance.
Any such statements that refer to the Company's  estimated or anticipated future
results  or other  non-historical  facts are  forward-looking  and  reflect  the
Company's  current  perspective  of  existing  trends  and  information.   These
statements   involve  risks  and  uncertainties  that  cannot  be  predicted  or
quantified and,  consequently,  actual results may differ  materially from those
expressed  or  implied  by  such  forward-looking  statements.  Such  risks  and
uncertainties   include  the  risks  and   uncertainties   detailed  below.  Any
forward-looking  statements  contained in or incorporated into this Report speak
only as of the date of this Report.  The Company  undertakes  no  obligation  to
update  publicly  any  forward-looking  statement,  whether  as a result  of new
information, future events or otherwise

Operating results have resulted in reporting losses.
We have  reported  losses  of  approximately  $7.9  million  over the past  four
quarters, and there is no assurance that we will be profitable in the near term.
Our  losses  are  primarily  attributable  to the recent  market  slow-down  and
volatility.  We  anticipate  that  with  increased  revenues  we will  return to
profitability;  however,  there can be no assurance  that revenues will increase
and profitability will return.

In order  for the  Company  to have  the  opportunity  for  future  success  and
profitability,  we must successfully obtain additional financing, either through
borrowings,  additional  public  offerings or some type of business  combination
(e.g., merger,  buyout, etc.). The Company actively pursued a variety of funding
sources,  and entered into the  Investment  Transaction  in order to address the
capital  requirements  of the Company.  If the Company  continues to  experience
operating losses,  additional  financing will be necessary,  and there can be no
assurance that we will be successful in such pursuits. In addition, any issuance
of new  securities  to raise  capital  may cause the  dilution of shares held by
current shareholders.

Changing  economic,  political  and market  conditions  may result in  decreased
revenues and may increase our cost of doing business. The securities industry is
subject to a variety of  uncertainties,  including:  declines in price level and
volume of  transactions;  losses  resulting from the trading or  underwriting of
securities;  volatility of domestic and international financial,  bond and stock
markets,  as  demonstrated  by  recent  disruptions  in the  financial  markets;
extensive  government  regulation;  litigation;  intense  competition;  and  the
failure  of  third  parties  to meet  commitments.  Other  items  affecting  the
securities   industry  include   increased   consolidation,   increased  use  of
technology,  increased use of discount and online electronic brokerage services,
and increased  regulation.  These items in particular could result in our facing
increased  competition  from  larger   broker-dealers,   a  need  for  increased
investment  in  technology,  or  potential  loss of  customers  or  reduction in
commission income. There can be no assurance that these trends or future changes
will not have a material  adverse effect on our business,  financial  condition,
results of operations or cash flows.


                                      -9-
<PAGE>
Risk Factors

(Continued)


Market  fluctuations may reduce our revenues and profitability.  Our revenue and
profitability may be adversely  affected by declines in the volume of securities
transactions and in market  liquidity.  Additionally,  our  profitability may be
adversely  affected by losses from the trading or  underwriting of securities or
failure of third parties to meet commitments. National acts as a market maker in
publicly traded common stocks. In market making  transactions,  we undertake the
risk of price  changes or being  unable to resell  the  common  stock we hold or
being  unable  to  purchase  the  common  stock we have  sold.  These  risks are
heightened by the  illiquidity of many of the common stocks we trade and/or make
a market.  Any losses  from our  trading  activities,  including  as a result of
unauthorized  trading by our employees,  could have a material adverse effect on
our business, financial condition, results of operations or cash flows.

Lower   securities  price  levels  may  also  result  in  a  reduced  volume  of
transactions,  as well as losses  from  declines  in the market  value of common
stocks  held for  trading  purposes.  During  periods  of  declining  volume and
revenue,  our  profitability  would be  adversely  affected.  Declines in market
values of common  stocks and the failure of issuers and third parties to perform
their obligations can result in illiquid markets in which we may incur losses in
our principal trading and market-making activities.

Competition with larger financial firms may have a negative effect on our
business.
We compete directly with national and regional full-service broker-dealers and a
broad range of other  financial  service  firms,  including  banks and insurance
companies.  Competition  has increased as smaller  securities  firms have either
ceased  doing  business or have been  acquired  by or merged  into other  firms.
Mergers and acquisitions  have increased  competition from these firms,  many of
which have  significantly  greater  financial,  technical,  marketing  and other
resources than we have.  Many of these firms offer their customers more products
and research  than  currently  offered by us. These  competitors  may be able to
respond more quickly to new or changing  opportunities,  technologies and client
requirements.  We also face competition from companies  offering discount and/or
electronic  brokerage  services,  including brokerage services provided over the
Internet,  which we are currently not offering and do not intend to offer in the
foreseeable  future.  These  competitors  may have lower  costs or provide  more
services,  and may offer their  customers  more favorable  commissions,  fees or
other terms than those offered by us. To the extent that issuers and  purchasers
of  securities  transact  business  without the  assistance of us, our operating
results could be adversely affected.

We are currently subject to extensive  securities  regulation and the failure to
comply with these  regulations  could subject us to penalties or sanctions.  The
securities  industry and our business is subject to extensive  regulation by the
SEC, state securities regulators and other governmental  regulatory authorities.
We are also regulated by industry self-regulatory  organizations,  including the
National  Association of Securities Dealers,  Inc. and the Municipal  Securities
Rulemaking  Board.  We are a  registered  broker-dealer  with the SEC and member
firms of the NASD.



                                      -10-
<PAGE>
Risk Factors (Continued)

Broker-dealers  are  subject  to  regulation  which  cover  all  aspects  of the
securities business, including: sales methods and supervision, trading practices
among  broker-dealers,  use and safekeeping of customers'  funds and securities,
capital  structure  of  securities  firms,  record  keeping,  and the conduct of
directors, officers and employees. The regulatory environment is also subject to
change.

Compliance  with many of the  regulations  applicable to us involves a number of
risks,  particularly  in areas where  applicable  regulations  may be subject to
varying  interpretation.  These regulations often serve to limit our activities,
including   through  net  capital,   customer   protection  and  market  conduct
requirements.  If we are  found  to  have  violated  an  applicable  regulation,
administrative  or judicial  proceedings  may be  initiated  against us that may
result in a censure, fine, civil penalties, issuance of cease-and-desist orders,
the deregistration or suspension of our broker-dealer activities, the suspension
or disqualification of our officers or employees, or other adverse consequences.
The imposition of any of these or other penalties could have a material  adverse
effect on our operating results and financial condition.

We rely on  clearing  brokers  and  termination  of the  agreements  with  these
clearing  brokers  could  disrupt  our  business.  We  recently  changed  from a
self-clearing  system  to using  clearing  brokers  to  process  our  securities
transactions and maintain  customer accounts on a fee basis for us. The clearing
brokers also provide billing services, extend credit and provide for control and
receipt,  custody and delivery of securities.  Our broker-dealers  depend on the
operational  capacity  and  ability  of the  clearing  brokers  for the  orderly
processing of transactions.  In addition, by engaging the processing services of
a clearing firm, we are exempt from some capital reserve  requirements and other
regulatory  requirements  imposed by federal and state  securities  laws. If the
clearing  agreements are  terminated for any reason,  we would be forced to find
alternative  clearing  firms. We cannot assure you that we would be able to find
an alternative clearing firm on acceptable terms to them or at all.

We  permit  our  clients  to  purchase  securities  on a  margin  basis  or sell
securities  short,  which means that the  clearing  firm  extends  credit to the
client secured by cash and securities in the client's account. During periods of
volatile markets, the value of the collateral held by the clearing brokers could
fall below the amount  borrowed by the client.  If margin  requirements  are not
sufficient  to cover  losses,  the clearing  brokers sell or buy  securities  at
prevailing market prices, and may incur losses to satisfy client obligations. We
have  agreed to  indemnify  the  clearing  brokers  for losses  they incur while
extending credit to our clients.

Credit  risk  exposes  us to  losses  caused  by  financial  or  other  problems
experienced by third parties. We are exposed to the risk that third parties that
owe us money,  securities  or other assets will not perform  their  obligations.
These  parties  include:  trading  counterparts,   customers,  clearing  agents,
exchanges,  clearing  houses,  and  other  financial  intermediaries  as well as
issuers whose securities we hold. These parties may default on their obligations
owed to us due to bankruptcy,  lack of liquidity,  operational  failure or other
reasons.  This risk may arise, for example,  from:  holding  securities of third
parties,  executing  securities  trades that fail to settle at the required time




                                      -11-
<PAGE>
Risk Factors (Continued)

due to non-delivery by the  counterparty or systems failure by clearing  agents,
exchanges,  clearing  houses or other  financial  intermediaries,  and extending
credit  to  clients  through  bridge  or  margin  loans or  other  arrangements.
Significant  failures by third parties to perform their  obligations  owed to us
could  adversely  affect our  revenues  and perhaps our ability to borrow in the
credit markets.

Adverse  results of current  litigation  and potential  securities law liability
would result in financial losses and divert management's  attention to business.
Many aspects of our business involve  substantial risks of liability.  There has
been an increase in litigation and arbitration within the securities industry in
recent years,  including class action suits seeking substantial  damages. We are
subject to potential claims by dissatisfied customers, including claims alleging
they were damaged by improper sales practices such as unauthorized trading, sale
of unsuitable  securities,  use of false or misleading statements in the sale of
securities,  mismanagement and breach of fiduciary duty.  National may be liable
for the  unauthorized  acts of its  retail  brokers  if it fails  to  adequately
supervise  their conduct.  As an  underwriter,  we may be subject to substantial
potential  liability under federal and state law and court decisions,  including
liability for material  misstatements and omissions in securities offerings.  We
may be required to contribute to a settlement, defense costs or a final judgment
in legal  proceedings  or  arbitrations  involving  a past  underwriting  and in
actions that may arise in the future. We carry "Errors and Omissions"  insurance
to protect  against  arbitrations,  however,  the policy is limited in items and
amounts  covered and there can be no  assurance  that it will cover a complaint.
The  adverse  resolution  of any legal  proceedings  involving  us could  have a
material  adverse  effect  on our  business,  financial  condition,  results  of
operations or cash flows.


Item 2 - PROPERTIES

The Company owns no real property.  Its corporate  headquarters  are shared with
National  in  leased  space  in  Chicago,  Illinois  and  Seattle,   Washington.
Additionally,  the  Company  leases  office  space in Boca Raton,  Florida,  and
through its subsidiaries  the Company leases office space in Marietta,  Georgia,
Scottsdale,  Arizona,  New York, New York, and Spokane,  Washington.  The branch
offices,  which  are  run  by  independent  contractors,  are  leased  by  those
contractors.

Leases expire at various times through May 2008.  The Company  believes the rent
at each of its  locations  is at current  market  rates.  At current  production
levels, the Company believes its leased space is suitable and adequate, however,
increased activity could require additional space to be leased.



                                      -12-
<PAGE>



Item 3 - LEGAL PROCEEDINGS

1.       The Maxal Trust, et al. v. National Securities  Corporation et al.,
         ------------------------------------------------------------------
         United States District Court, Central District of California,  Case No.
         CV-97-4392 ABC (Shx). See disclosure in the Company's Form 10-Q for the
         quarter ended December 31, 1998 and Form 10-K for the fiscal year ended
         September 24, 1999.

         On February 16, 1999, the District Court dismissed the plaintiffs'
         remaining claims against National in their entirety and granted
         National's motion for summary judgment. A final judgment was issued by
         the court on April 26, 1999. The plaintiffs filed a notice of appeal on
         May 4, 1999. The United States Court of Appeals for the Ninth Circuit
         affirmed the District Court's dismissal on December 20, 2000.

2.       Complete  Management, Inc.- National was named,  together  with others,
         as a defendant in several class action lawsuits filed against  Complete
         Management,  Inc. in the United States  District Court for the Southern
         District of New York,  Case No. 99 Civ. 1454 (NRB).  These actions were
         initially  commenced  on  February 25, 1999  and  are the  subject of a
         consolidated  amended  complaint  dated March 15, 2000. As to National,
         the consolidated  complaint  alleges  violations  of  Section 11 of the
         Securities Act of 1933, 15 U.S.C.ss.77k, in connection with  National's
         role as underwriter in a June 1996  securities  offering for   Complete
         Management, and in connection with National's role as a  co-underwriter
         in  a  December 1996  securities  offering  for  Complete  Management.
         Plaintiffs  allege that the  registration  statements  and prospectuses
         filed in connection with the securities  offerings in June and December
         1996  contained  false  and  misleading  statements  or  omitted  facts
         necessary to make statements not misleading.

         On or about June 2, 2000, National, along with the other defendants,
         moved to dismiss the action on the grounds that plaintiffs' complaint
         is defective, that plaintiffs are barred by the statute of limitations,
         and plaintiffs are unable to establish their claims as a matter of law.
         On March 30, 2001, the court denied defendants' various motions to
         dismiss. On May 17, 2001, National submitted its answer to the
         complaint in which it set forth its defenses, including, among others,
         that much of the class cannot trace their stock to offerings in which
         National was involved and that National conducted appropriate due
         diligence.

         After an initial round of document disclosure, on or about November 28,
         2001, plaintiffs filed a motion to certify the class. National will
         contest class certification and diligently pursue its defenses.

The Company is a defendant  in various  other  arbitrations  and  administrative
proceedings,  lawsuits  and  claims,  which in the  aggregate  seek  general and
punitive damages approximating $9,500,000. These matters arise out of the normal
course of business.



                                      -13-
<PAGE>



Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There  were no matters  submitted  to a vote of  security  holders in the fourth
quarter of fiscal year ended September 28, 2001.


Item 4(A)- EXECUTIVE OFFICERS OF REGISTRANT

The following sets forth the names, ages and positions of all executive officers
of the Company as of December 1, 2001 (see also discussion of executive officers
in Item 1(a)):

Steven A. Rothstein    51       Chairman and Chief Executive Officer
                                Chairman and Chief Executive Officer of National
                                Director of Canterbury

Mark A. Goldwasser     43       President
                                Vice Chairman of National

Robert H. Daskal       60       Senior Vice President, Chief Financial  Officer,
                                Treasurer  and Secretary
                                Secretary of National
                                Director of WestAmerica
                                Director of Canterbury

Michael A. Bresner     57       President of National

Craig M. Gould         31       Vice-Chairman of Technology
                                Managing Director of National


                                     PART II

Item 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
           STOCKHOLDER MATTERS

The Company's common stock trades on the American Stock Exchange and the Chicago
Stock  Exchange.  The Company's  common stock trades using the symbol OLY. As of
September 28, 2001, the Company had approximately 1,000 shareholders,  including
those shareholders holding stock in street name and trust accounts.

Delaware law authorizes the Board of Directors to declare and pay dividends with
respect to the  Company's  common stock either out of its surplus (as defined in
the Delaware  Corporation Law) or, in case there is no such surplus,  out of its
net  profits for the fiscal  year in which the  dividend is declared  and/or the
preceding fiscal year;  provided,  however,  that no dividend may be paid out of
net  profits  unless  the  Company's   capital  exceeds  the  aggregate   amount
represented  by the  issued  and  outstanding  stock  of all  classes  having  a

                                      -14-
<PAGE>

preference in the distribution of assets. Prior to the issuance of the preferred
stock in the Investment Transaction,  no shareholder held preferential rights in
liquidation.  The  Company  has  never  declared  a cash  dividend  and does not
presently foresee declaring one in the coming fiscal year.

High and low closing bid  quotations  from  September  25, 1999 to September 28,
2001 have been obtained from the American  Stock  Exchange.  The range of market
prices for each quarter of fiscal years ended  September  29, 2000 and September
28, 2001 are as follows:

Period                                                High               Low

September 25, 1999/December 31, 1999                 $8.50             $3.13
January 1, 2000/March 31, 2000                      $13.56             $5.63
April 1, 2000/June 30, 2000                          $8.50             $5.75
July 1, 2000/September 29, 2000                      $8.06             $5.13

September 30, 2000/December 31, 2000                 $5.875            $2.6875
January 1, 2001/March 31, 2001                       $4.875            $3.0625
April 1, 2001/June 30, 2001                          $3.38             $2.50
July 1, 2001/September 28, 2001                      $5.20             $2.00


The closing bid price of the  Company's  common stock on December  18, 2001,  as
reported on The American Stock Exchange, was $1.20 per share.

Item 6 - SELECTED FINANCIAL DATA

Set forth below is the historical financial data with respect to the Company for
the fiscal years ended 2001,  2000,  1999, 1998 and 1997.  This  information has
been derived from, and should be read in conjunction with, the audited financial
statements,  which appear  elsewhere in this report.  The financial data for the
fiscal years ended 2001, 2000, 1999, 1998 and 1997 have been restated to reflect
the  discontinued  operations  of the  Company's  subsidiary,  WestAmerica.  All
information is expressed in thousands of dollars except per share information.
<TABLE>
<CAPTION>

                                                                 Fiscal Year
                                     ----------------------------------------------------------------------
                                         2001          2000           1999          1998         1997
                                     ----------------------------------------------------------------------
<S>                                       <C>            <C>           <C>          <C>            <C>
Net revenues                              $ 50,224       $56,213       $ 39,477     $ 44,782       $38,978
Net income (loss) from continuing
 operations before extraordinary items      (7,338)        1,356              8       (4,686)           75
Net income (loss) per common share           (3.33)         0.64           0.01        (3.13)         0.05
Total assets                                77,599        92,696         86,113       72,566        63,260
Long-term obligations                        3,000           608          2,150        2,770             -
Stockholders' equity                           622         8,039          4,039        2,948         7,604
Cash dividends                                   -             -              -            -             -
</TABLE>

                                      -15-
<PAGE>

Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The Private Securities  Litigation Reform Act of 1995 provides a safe harbor for
forward-looking  statements.  This Report may contain  certain  statements  of a
forward-looking nature relating to future events or future business performance.
Any such statements that refer to the Company's  estimated or anticipated future
results  or other  non-historical  facts are  forward-looking  and  reflect  the
Company's  current  perspective  of  existing  trends  and  information.   These
statements   involve  risks  and  uncertainties  that  cannot  be  predicted  or
quantified and,  consequently,  actual results may differ  materially from those
expressed  or  implied  by  such  forward-looking  statements.  Such  risks  and
uncertainties  include, among others, risks and uncertainties detailed in Item 1
above. Any  forward-looking  statements  contained in or incorporated  into this
Report  speak only as of the date of this  Report.  The  Company  undertakes  no
obligation to update publicly any forward-looking statement, whether as a result
of new information, future events or otherwise.

Results of Operations
The results discussed below have been restated to reflect a  discontinuation  of
operations for the Company's subsidiary, WestAmerica.

Fiscal Year 2001 Compared with Fiscal Year 2000

The Company's fiscal year 2001 resulted in a decrease in revenues and an overall
net loss  compared  with net  income  in the same  period of  fiscal  2000.  The
decrease in revenues is due to the continued slumping securities markets,  which
significantly  affected commission revenues. As a result, the Company reported a
net loss from  continuing  operations  before  extraordinary  item of $7,338,000
compared with net income from continuing operations of $1,356,000 for the fiscal
year 2000.

Revenues from continuing operations decreased $5,989,000,  or 11%, in the fiscal
year 2001 to $50,224,000 from $56,213,000 in the fiscal year 2000. This decrease
is due  mainly  to the  weaker  overall  securities  market  compared  with  the
securities  market during the fiscal year 2000. The percentage mix of commission
revenue and net dealer  inventory  gains  changed,  mainly due to National's New
York office,  which  focuses on principal  mark-ups  and  mark-downs  as well as
agency  trading of fixed  income  products,  OTC and listed  equities to various
institutional clients, proprietary trading and market-making activities.

Commission revenue decreased $3,847,000, or 16%, to $19,761,000 from $23,608,000
during the fiscal year 2001 compared with the fiscal year 2000. The decrease in
revenues is due to the continued slumping securities markets.

Net dealer  inventory  gains,  which includes  profits on  proprietary  trading,
market  making  activities  and  customer  mark-ups  and mark  downs,  decreased
$818,000,  or 4%, to $19,132,000  from  $19,950,000  during the fiscal year 2001
compared with the fiscal year 2000.


                                      -16-
<PAGE>



Results of Operations (Continued)
Fiscal Year 2001 Compared with Fiscal Year 2000 (continued)

Investment  banking  revenue  decreased  $1,318,000,  or 56%, to $1,020,000 from
$2,338,000  in the fiscal  year 2001  compared  with the fiscal  year 2000.  The
Company did not manage a public  underwriting  in fiscal years 2001 or 2000. The
decrease in revenues is attributed to a general slow-down in the broader capital
markets.  During the fiscal years 2001 and 2000,  investment banking revenue was
generated  primarily from the completion of private  placement  transactions and
advisory fees.

Other revenue, consisting of asset management fees and miscellaneous transaction
fees and  trading  fees,  increased  $1,854,000,  or 115%,  to  $3,469,000  from
$1,615,000  during the fiscal year 2001  compared  to the fiscal year 2000.  The
increase in other revenue was due mainly to an increase in fee based accounts at
National.

Although total revenues  decreased 11%, total expenses  increased by $3,120,000,
or 6%, to  $57,644,000  in the fiscal year 2001 from  $54,524,000  in the fiscal
year 2000.

Commission  expense decreased  $4,841,000,  or 15%, to $28,448,000 in the fiscal
year 2001 from $33,289,000 in fiscal year 2000 due to the decrease in commission
revenue from which commission  expense is paid.  Employee  compensation  expense
increased $2,379,000,  or 37%, to $8,726,000 in fiscal year 2001 from $6,347,000
in the fiscal year 2000.  The increase in employee  compensation  is a result of
the expansion  into  principal and agency  transactions  at National's  New York
office.  In April 2001,  management  took a 10%  reduction in salaries.  In July
2001,  management  further  reduced  salaries  by  10%.  In  October  2001,  all
management  salaries  were  temporarily  reduced to $75,000.  Overall,  combined
commissions  and  employee  compensation  as a percentage  of revenue  increased
slightly to 74% from 71% in the fiscal year 2001 and 2000, respectively.

As expected, based on the expansion in New York, expenses relating to occupancy,
communications, and other all increased. Occupancy expense, consisting mainly of
rent,  office  supplies  and  depreciation  increased  $1,148,000,  or  35%,  to
$4,415,000  from  $3,267,000.  Communications  expense  increased  $2,230,000 to
$3,340,000 or 201% from $1,110,000.  Other expenses  increased $151,000 or 7% to
$2,344,000 in 2001 from $2,193,000 in 2000.

Taxes,  licenses and  registration  decreased  $35,000,  or 4%, to $763,000 from
$798,000.  Professional  fees  increased  $569,000,  or 41%, to $1,945,000  from
$1,376,000.

Interest expense decreased $1,359,000,  or 29%, to $3,361,000 from $4,720,000. A
decrease in customer deposits on which the Company pays interest, coupled with a
decrease in interest  rates  during  fiscal  2001,  account for the  decrease in
interest expense.  The 29% decrease in interest expense  correlates  directly to
the interest income from customer margin debt,  which decreased  $1,688,000,  or
23%,  during the same period from  $7,438,000  in fiscal 2000 to  $5,750,000  in
fiscal 2001.

Overall, diluted losses from continuing operations were $3.33 per share as
compared to diluted earnings from continuing operations of $.64 per share for
the fiscal years 2001 and 2000, respectively.


                                      -17-
<PAGE>

Results of Discontinued Operations
Fiscal Year 2001 Compared with Fiscal Year 2000

In December 2001, WestAmerica  voluntarily withdrew its membership with the NASD
and  ceased  conducting  business  as  a  broker-dealer.  Until  December  2001,
WestAmerica  was registered as a  broker-dealer  with the SEC and licensed in 44
states,  Puerto  Rico  and  the  District  of  Columbia.  WestAmerica,   offered
traditional  securities  brokerage and financial planning business and fee-based
investment  management  business  to its retail  clients.  Recently  WestAmerica
experienced  operating  losses.  In addition to these  losses,  WestAmerica  had
arbitration losses that exceeded its net capital.

WestAmerica's fiscal year 2001 resulted in a decrease in revenues and an overall
net loss  compared  with net  income in the same  period of fiscal  2000.  Total
revenues decreased $2,441,000,  or 53%, to $2,155,000 in 2001 from $4,596,000 in
2000.  The  decrease  in revenues is due to the  continued  slumping  securities
markets,  which significantly  affected commission revenues.  As a result of the
operating losses and losses from arbitrations,  WestAmerica  reported a net loss
of  $1,002,000  in fiscal year 2001 compared with net income of $200,000 for the
fiscal year 2000.

Results of Operations
Fiscal Year 2000 Compared with Fiscal Year 1999

The Company's fiscal year 2000 resulted in significant  increase in revenues and
net income as compared  with the fiscal year 1999.  The increase in revenues was
due to growth in the retail brokerage and dealer operations combined with strong
markets in the first half of fiscal  2000.  Overall,  the Company  reported  net
income of  $1,356,000 in the fiscal year 2000 compared with net income of $8,000
in the fiscal year 1999.

Revenues increased  $16,736,000,  or 42%, in the fiscal year 2000 to $56,213,000
from $39,477,000 in the fiscal year 1999 and expenses increased $15,051,000,  or
38%, to $54,524,000 in the fiscal year 2000 from  $39,473,000 in the fiscal year
1999.  Revenues  increased  primarily due to the increase in commissions and net
dealer  inventory gains based on the strength of the market in the first half of
the fiscal year.

Commission revenue increased $2,883,000, or 14%, to $23,608,000 from $20,725,000
during the fiscal year 2000  compared  with the fiscal year 1999.  This increase
was due to the  strength  of the  markets in the first  half of the fiscal  year
2000.

Net dealer  inventory  gains,  which includes  profits on  proprietary  trading,
market  making  activities  and  customer  mark-ups  and mark  downs,  increased
$10,893,000, or 120%, to $19,950,000 from $9,057,000 during the fiscal year 2000
compared with the fiscal year 1999.  This  increase is due to National's  London
office  dramatically  increasing  its  business  and the strength of the markets
during the first half of the fiscal year.

Investment  banking  revenue  decreased  $121,000,  or 5%,  to  $2,338,000  from
$2,459,000  in the  fiscal  year  1999.  The  Company  did not  manage  a public
underwriting  in fiscal years 2000 or 1999.  During the fiscal year 2000 and the
fiscal year 1999,  investment  banking revenue was generated  primarily from the
completion of private placement transactions and advisory fees.


                                      -18-
<PAGE>

Results of Operations (Continued)
Fiscal Year 2000 Compared with Fiscal Year 1999 (Continued)

Other  revenue,  consisting  of asset  management  fees and revenue  from market
making trade order flow, increased $795,000, or 97%, to $1,615,000 from $820,000
during the fiscal year 2000  compared to the fiscal year 1999.  The  increase in
other  revenue was due mainly to an increase in asset  management  fees received
through National Asset Management, a subsidiary of National.

Concurrent  with the overall  increase in  revenues,  total  expenses  increased
$15,051,000,  or 38%, to $54,524,000  from  $39,473,000 in the fiscal year 1999.
This  increase in expenses was  anticipated  due to  increases in revenues,  and
thereby an increase in commission expense and employee compensation.

Commission expense increased $9,487,000, or 40%, to $33,289,000 from $23,802,000
due to the increase in commission  revenue,  and net dealer inventory gains from
which  commission  expense  is paid.  Employee  compensation  expense  increased
$1,872,000,  or 42%, to $6,347,000  from  $4,475,000 in the fiscal year 1999. In
September 1998,  certain members of management of the Company received temporary
reductions  in  compensation,  ranging from 10% to 62%.  These  reductions  were
reinstated in full prior to the first quarter of fiscal 2000. Overall,  combined
commissions  and  employee  compensation  as a percentage  of revenue  decreased
slightly to 71% from 72% in the fiscal year 2000 and 1999, respectively.

As  anticipated,  with  the  overall  increase  in  revenue  expenses  regarding
occupancy,  taxes,  licenses and  registration and other have increased from the
fiscal year 1999 to the fiscal year 2000.  Occupancy expense,  consisting mainly
of rent,  office  supplies and  depreciation  increased  $1,093,000,  or 50%, to
$3,267,000  from  $2,174,000.  This increase  relates mainly to increased  rent,
depreciation and computer  services.  Rent increased  approximately  $320,000 at
National  due to a new  office  lease  signed in July 1999 at a higher  rate per
square foot, as well as office space added for NSCdirect. Additionally, with the
addition  of   NSCdirect,   computer   services   and   depreciation   increased
approximately  $665,000,  due to costs for  additional  equipment  and  computer
services  such as web  hosting,  off-site  server  maintenance  and other  costs
associated with online trade execution and online account access.  Additionally,
included  in  the  increase  in  computer  services  are  increased  costs  from
National's third party data processing company.  These charges are calculated on
a cost per trade basis and as overall  trade volume  increased in the first half
of the fiscal year 2000, computer services increased.

Taxes,  licenses and registration  increased $722,000, or 950%, to $798,000 from
$76,000. This increase was due primarily to National receiving a refund of prior
years'  business  operating  taxes  totaling  $330,000  in the fiscal year 1999.
Additionally,  with the  increased  revenue in fiscal  2000  business  operating
taxes, which are a revenue based tax, increased.

Other  expenses  increased  $1,047,000,  or 91%, to $2,193,000  from  $1,146,000
during the fiscal year 2000 and 1999, respectively. In the fiscal year 2000, the
Company incurred travel and moving expenses  totaling  $818,000,  an increase of
approximately  $263,000  from the prior  fiscal  year 1999.  Also,  the  Company
incurred additional employment agency fees totaling $83,000 as the Company hired
more people to accommodate growth. Professional fees decreased $518,000, or 27%,
to $1,376,000  from  $1,894,000.  This decrease is due to the Company  resolving
several of its lawsuits during the previous

                                      -19-
<PAGE>

Results of Operations  (Continued)
Fiscal Year 2000 Compared with Fiscal Year 1999 (continued)

fiscal  year.  Finally,  customer  write-offs  and bad  debt  expense  increased
approximately $492,000 from the fiscal year 1999.

Interest expense increased $958,000, or 25%, to $4,720,000 from $3,762,000.  The
main reason for this increase is the increase in customer deposits, on which the
Company  pays  interest  and the  accelerated  accretion of interest on original
issue  discount  notes,  which were repaid  during the second  quarter of fiscal
2000. Original issue discount interest for the nine months totaled $232,000. The
remaining interest expense increase was due to the increase in customer deposits
of $7.0 million during the fiscal year 2000.  This increase was more than offset
by increased interest income from customer margin debt, which increased by $16.2
million during the fiscal year 2000.  Interest income increased  $1,891,000,  or
34%, to $7,438,000 from $5,547,000  during the fiscal year 2000 as compared with
the fiscal year 1999.

Overall,  diluted earnings were $0.64 per share as compared with $0.01 per share
for the fiscal years 2000 and 1999, respectively.

Results of Discontinued Operations
Fiscal Year 2000 Compared with Fiscal Year 1999

WestAmerica's  fiscal year 2000  resulted  in an  increase  in revenues  and net
income  compared with the same period of fiscal 1999.  Total revenues  increased
$731,000, or 19%, to $4,596,000 in 2000 from $3,865,000 in 2000. The increase in
revenues was due to a growth in retail  brokerage  business and stronger markets
during the first half of the year.  WestAmerica's net income increased  $90,000,
or 82%, to $200,000 in fiscal year 2000 compared with net income of $110,000 for
the fiscal year 2000.

Liquidity and Capital Resources

As with most financial  services  firms,  substantial  portions of the Company's
assets are liquid,  consisting mainly of cash or assets readily convertible into
cash.  These assets are financed  primarily by National's  interest  bearing and
non-interest  bearing  customer  credit  balances,  other  payables  and  equity
capital. Occasionally, National utilizes short-term bank financing to supplement
its ability to meet day-to-day  operating cash requirements.  Such financing has
been used to maximize  cash flow and is regularly  repaid.  Until  January 2001,
National  had a  $3,000,000  revolving  secured  credit  facility  with  Bank of
America.  In January 2001,  National  entered into a $5,000,000  secured line of
credit  with  American  National  Bank and Trust  Company  of  Chicago,  that is
guaranteed by the Company.  As of September 28, 2001  $3,500,000 was outstanding
on the  line  of  credit,  and  as of  December  28,  2001  $1,500,000  remained
outstanding.  The line of credit that was  utilized to support  National's  self
clearing activity will expire on December 31, 2001 and will not be renewed.

Borrowings  bear interest at the "call money rate" plus 1%.  Interest is payable
monthly.  These  borrowings  are short-term and generally do not extend beyond a
few days.  Additionally,  National  may borrow up to 70% of the market  value of
eligible securities pledged through an unrelated broker-dealer.


                                      -20-
<PAGE>

Liquidity and Capital Resources (Continued)

Subsequent  to the fiscal year end 2001,  National  entered  into a  Forbearance
Agreement with American  National Bank based on an event of default according to
the original credit  agreement.  The Forbearance  Agreement  amended the line of
credit to $4,000,000. Additionally, Steven A. Rothstein and Mark Goldwasser each
signed a  Guaranty  unconditionally  guaranteeing  certain  indebtedness  of the
Company to American  National Bank. These guarantees  effectively  terminated in
December 2001.

National,  as a registered  broker-dealer,  is subject to the SEC's  Uniform Net
Capital Rule 15c3-1,  which  requires  the  maintenance  of minimum net capital.
National has elected to use the  alternative  standard  method  permitted by the
rule.  This  requires that  National  maintain  minimum net capital equal to the
greater of $250,000 or 2% of  aggregate  debit  items.  At  September  28, 2001,
National's net capital exceeded the requirement by $1,604,000.

WestAmerica,  as a formerly  registered  broker-dealer,  was also subject to the
SEC's Net Capital Rule 15c3-1,  which, under the standard method,  required that
WestAmerica  maintain  minimum net capital equal to the greater of $100,000 or 6
2/3% of aggregate  indebtedness.  At September 28, 2001,  WestAmerica's  did not
satisfy the net  capital  requirement.  In October  2001,  WestAmerica  became a
$5,000  broker-dealer.  In December 2001,  WestAmerica  voluntarily withdrew its
membership  with the NASD and ceased to  conduct  business  as a  broker-dealer.
WestAmerica  intends to file for Chapter 7 Bankruptcy  protection  in accordance
with the U.S. Bankruptcy Code. WestAmerica has been operated as a separate legal
entity,  and  although  the  Company  does not  believe it will have any ongoing
liability for any unpaid obligations of WestAmerica,  there can be no assurances
that  creditors of  WestAmerica  will not seek recovery of their claims from the
Company.

Canterbury,  as a  registered  broker-dealer,  is also  subject to the SEC's Net
Capital Rule 15c3-1, which, under the standard method,  requires that Canterbury
maintain   minimum  net  capital  equal  to  $5,000.   At  September  28,  2001,
Canterbury's net capital exceeded the requirement by $2,800.

Advances,  dividend payments and other equity  withdrawals from its subsidiaries
are  restricted by the  regulations  of the SEC and other  regulatory  agencies.
These regulatory  restrictions may limit the amounts that these subsidiaries may
dividend or advance to Olympic.

The  objective of liquidity  management  is to ensure that the Company has ready
access to sufficient  funds to meet  commitments,  fund deposit  withdrawals and
efficiently provide for the credit needs of customers.

As a result of the losses  throughout  fiscal  year 2001,  notably  those of the
fourth quarter,  attributable in part to the  unprecedented  events in September
2001,  the Company  concluded  that existing  capital would not be sufficient to
satisfy existing  operations.  The Company has explored various  transactions to
finance the Company's operations.


                                      -21-


<PAGE>



Liquidity and Capital Resources (Continued)

In December 2001, the Company  executed  definitive  agreements  with investors,
including Mark Goldwasser,  the Company's  President,  and an affiliate of Sands
Brothers & Company,  an NYSE member firm, to invest  $1,072,500 into the Company
and  place  another  $500,000  in escrow  to be drawn  upon over the next  seven
months,  if necessary.  The Company  issued to the investors  Series A Preferred
Stock that  converts  into  shares of the  Company's  common  stock at $1.50 per
share.

To  further  strengthen  the  capital  position  of the  Company  as part of the
Investment  Transaction,  two  unrelated  individual  noteholders  holding  $2.0
million of the company's  debt will convert  one-half of that debt into the same
class of Series A preferred  stock.  The  noteholders  will also have 100,000 of
their  existing  warrants  to  acquire  up to 200,000  shares  repriced  from an
exercise price of $5.00 per share to $1.75 per share.

In August 2001, the Company  entered into an agreement with First  Clearing,  an
affiliate  of First Union  Securities,  Inc.,  under which First  Clearing  will
provide clearing and related services for National.  The Clearing Agreement will
expand  the  products  and  services  capabilities  for  National's  retail  and
institutional  business,  enable National to consolidate  its existing  clearing
operations  and  reduce  fixed  overhead   associated  with  its   self-clearing
activities.

The conversion to First Clearing began in December 2001. In connection  with the
Clearing Agreement,  the Company entered into a ten-year  $6,000,000  promissory
note  with  First  Clearing  under  which  the  Company   immediately   borrowed
$1,000,000. The funds were contributed by the Company to National, and are being
used as a deposit to secure National's performance under the Clearing Agreement.
The  amount  of the  note  that is  repayable  on each  anniversary  date is the
principal and interest  then  outstanding  divided by the remaining  life of the
note.  The Clearing  Agreement also provides for another  $1,000,000  loan to be
extended  to the Company at  completion  of the  conversion,  subject to certain
conditions  that are  expected to be satisfied  upon  closing of the  Investment
Transaction.

In connection with the Clearing Agreement,  National will terminate its clearing
relationship with US Clearing. Upon termination of the agreement and transfer of
all customer and proprietary accounts, National is entitled to the return of its
$1,000,000 clearing deposit.

Additional  borrowings  are  available  to the Company  upon the  attainment  by
National of certain volume and profitability  goals, none of which have been met
as of the date of filing  of this Form  10-K.  Borrowings  under the  promissory
notes are forgivable based on certain  business  performance and trading volumes
of the Company over the life of the loan.

As of the fiscal year ended  September 28, 2001,  total assets were  $77,599,000
compared to total  assets of  $92,696,000  as of the fiscal year  September  29,
2000,  which  represents a 16% decrease in total assets for the 12-month period.
There will be a material  decrease in the  Company's  assets in fiscal year 2002
due to the change in the Company's clearing  arrangements.  Customer assets that
are  included in the current  fiscal year 2001  balance  sheet will no longer be
accounted  for on the  Company's  books.  These  assets  will be  held at  First
Clearing as part of the clearing arrangement.


                                      -22-
<PAGE>

Inflation

The Company  believes that the effect of inflation on its assets,  consisting of
cash, securities, office equipment, leasehold improvements and computers has not
been significant.


New Accounting Standards

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards ("SFAS") No. 141 "Business Combinations" and SFAS
No. 142 "Goodwill and Intangible Assets" ("SFAS No. 142"). SFAS No. 141 requires
that all business  combinations  initiated  after June 30, 2001 be accounted for
using  the  purchase   method  of  accounting  and  prohibits  the  use  of  the
pooling-of-interest  method for such  transactions.  SFAS No. 142 applies to all
goodwill and intangible assets acquired in a business combination. Under the new
standard,  all goodwill,  including  acquired before initial  application of the
standard,  should not be amortized but should be tested for  impairment at least
annually at the reporting level, as defined in the standard.  Intangible  assets
other than goodwill should be amortized over their useful lives and reviewed for
impairment  in  accordance  with SFAS No. 121. The new standard is effective for
fiscal years  beginning  after  December 15, 2001. As of September 28, 2001, the
Company had no unamortized goodwill.

In August 2001,  the FASB issued  Statements  of Financial No. 144 ("SFAS 144"),
"accounting  of the  Impairment  of  Long-lived  Assets".  SFAS  144  superceded
Statement  of  Financial  Accounting  Standards  No.  121,  "accounting  for the
Impairment of Long-lived Assets and Assets to be Disposed of" and the accounting
and  reporting  provisions  of  Accounting  Principles  Board  Opinion  No.  30,
"reporting  the  Results of  Operation-Reporting  the  Effects of  Disposal of a
Segment of a Business,  and  Extraordinary,  Unusual and Infrequently  Occurring
Events and Transactions".  SFAS 144 also amends Accounting Research Bulletin No.
51,  "Consolidated   Financial  Statements",   to  eliminate  the  exception  to
consolidation for a subsidiary for which control is likely to be temporary.  The
provision  of SFAS  144 will be  effective  for  fiscal  years  beginning  after
December 15, 2001.  The Company has not yet determined the effect SFAS will have
on its financial position or results of operations in future periods.




                                      -23-
<PAGE>



ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company's  primary  market  risk  arises  from the fact that it  engages in
proprietary trading and makes dealer markets in equity securities.  Accordingly,
the Company may be required to maintain  certain amounts of inventories in order
to facilitate  customer  order flow. The Company may incur losses as a result of
price movements in these  inventories due to changes in interest rates,  foreign
exchange rates,  equity prices and other political  factors.  The Company is not
subject to direct market risk due to changes in foreign exchange rates. However,
the Company is subject to market  risk as a result of changes in interest  rates
and equity prices, which are affected by global economic conditions. The Company
manages its exposure to market risk by limiting its net long or short positions.
Trading and inventory accounts are monitored daily by management and the Company
has instituted position limits.

Credit risk  represents the amount of accounting loss the Company could incur if
counterparties to its proprietary  transactions fail to perform and the value of
any  collateral  proves  inadequate.  Although  credit risk  relating to various
financing  activities  is reduced by the  industry  practice  of  obtaining  and
maintaining  collateral,  the Company  maintains more stringent  requirements to
further reduce its exposure.  The Company  monitors its exposure to counterparty
risk on a daily  basis by  using  credit  exposure  information  and  monitoring
collateral  values.  The Company  maintains a credit  committee,  which  reviews
margin  requirements  for  large  or  concentrated   accounts  and  sets  higher
requirements  or  requires a  reduction  of either  the level of margin  debt or
investment in high-risk securities or, in some cases,  requiring the transfer of
the account to another broker-dealer.

The Company  monitors its market and credit risks daily through internal control
procedures  designed to identify  and  evaluate  the various  risks to which the
Company is exposed. There can be no assurance,  however, that the Company's risk
management  procedures and internal  controls will prevent losses from occurring
as a result of such risks.

The following  table shows the quoted market values of the Company's  securities
owned  ("long"),  securities  sold  but  not  yet  purchased  ("short")  and net
positions as of September 28, 2001:

                             Long                  Short             Net
                         -----------            -----------       -------------
Equity Positions           $977,000              $689,000        $288,000 (long)
Municipal Bonds            $154,000              $103,000        $ 51,000 (long)


Item 8 - FINANCIAL STATEMENTS

See Part IV, Item 14(a)(1) for a list of financial statements filed as part of
this Report.



                                      -24-
<PAGE>



Item 9 -  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

There  were no matters  submitted  to a vote of  security  holders in the fourth
quarter of fiscal year ended September 28, 2001.

                                    PART III

Item  10  -  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS,
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The  information  required by this Item will be included in the  Company's  2002
Proxy Statement and is incorporated herein by reference.

Item 11 - EXECUTIVE COMPENSATION

The  information  required by this Item will be included in the  Company's  2002
Proxy Statement and is incorporated herein by reference.

Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required by this Item will be included in the  Company's  2002
Proxy Statement and is incorporated herein by reference.

Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required by this Item will be included in the  Company's  2002
Proxy Statement and is incorporated herein by reference.

 Item 14 - EXHIBITS AND REPORTS ON FORM 8-K
(a)      The following financial statements are included in Part II, Item 8:

         1.     Financial Statements
                    Independent Auditors' Report                             F-1
                    Consolidated Financial Statements
                         Statements of Financial Condition, September 28, 2001
                         and September 29, 2000                              F-2
                         Statements of Operations, Years
                         ended September 28, 2001, September 29, 2000 and
                           September 24, 1999                                F-3
                         Statements of Changes in Stockholders' Equity, Years
                           ended September 28, 2001, September 29, 2000 and
                           September 24, 1999                                F-4
                         Statements of Cash Flows, Years ended September 28,
                           2001, September 29, 2000 and September 24, 1999   F-5
                         Notes to Consolidated Financial Statements          F-6

                                      -25-
<PAGE>

         2.    Financial Statement Schedules

               Schedules not listed above have been omitted because they are not
               applicable or have been included in footnotes to the consolidated
               financial statements.

(b)       Reports on Form 8-K

          No  Reports on Form 8-K were filed  during  the fourth  quarter  ended
          September 28, 2001.

(c)       Exhibits

          See Exhibit Index.

                                      -26-
<PAGE>



                                   SIGNATURES


Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities  and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

OLYMPIC CASCADE FINANCIAL CORPORATION
(Registrant)



Date:    December 28, 2001         By:  /s/Steven A. Rothstein
      ------------------------          ---------------------------------------
                                        Steven A. Rothstein, Chairman and
                                        Chief Executive Officer

Date:    December 28, 2001         By:  /s/Robert H. Daskal
      ------------------------          ---------------------------------------
                                        Robert H. Daskal, Senior Vice President,
                                        Chief Financial Officer, Treasurer
                                        and Secretary


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Date:    December 28, 2001         By:  /s/Steven A. Rothstein
      ------------------------          ----------------------------------------
                                        Steven A. Rothstein, Chairman and
                                        Chief Executive Officer


Date:    December 28, 2001         By:  /s/Gary A. Rosenberg
      ------------------------          ----------------------------------------
                                        Gary A. Rosenberg, Director


Date:    December 28, 2001         By:  /s/James C. Holcomb, Jr.
        ---------------------           ----------------------------------------
                                        James C. Holcomb, Jr., Director


Date:    December 28, 2001         By:  /s/D.S. Patel
        ---------------------           ----------------------------------------
                                         D.S. Patel, Director

                                      -27-
<PAGE>



                                  EXHIBIT INDEX

      3.1     Certificate  of  Incorporation,  as amended,  previously  filed as
              Exhibit 3.4 to  Form 10-Q in May 2001and  hereby  incorporated  by
              reference.
      3.2     The  Company's Bylaws, as amended, previously filed as Exhibit 3.5
              to Form  10-Q in May 2001, and hereby incorporated by reference.
     10.1     Office  lease,  Chicago,   Illinois,  previously  filed as Exhibit
              10.27 to Form 10-K  in December  1996 and hereby  incorporated  by
              reference.
     10.2     Office lease,  Spokane,  Washington,  previously filed as  Exhibit
              10.28 to  Form  10-K  in  December 1996 and hereby incorporated by
              reference.
     10.3     Amended  office  lease, Chicago,  Illinois,  previously  filed  as
              Exhibit 10.29  to  Form  10-K  in  December  1996  and  hereby
              incorporated by reference.
     10.4     Purchase agreement between shareholders of Friend and the
              Company, previously filed as Exhibit 10.30 to Form 10-K in
              December 1997 and hereby incorporated by reference.
     10.5     Purchase agreement between shareholders of WestAmerica and
              the Company, previously filed as Exhibit 10.31 to Form 10-K in
              December 1997 and hereby incorporated by reference.
     10.6     Purchase agreement between shareholders of Travis and the
              Company, previously filed as Exhibit 10.32 to Form 10-K in
              December 1997 and hereby incorporated by reference.
     10.7     Borrowing agreement between Seattle-First National Bank and
              the Company, previously filed as Exhibit 10.33 to Form 10-K in
              December 1998 and hereby incorporated by reference.
     10.8     Note payable  agreement, previously filed as Exhibit 10.34 to Form
              10-K in December 1998 and hereby incorporated by reference.
     10.9     Note payable  agreement, previously filed as Exhibit 10.35 to Form
              10-K in December 1998 and hereby incorporated by reference.
    10.10     Note payable  agreement, previously filed as Exhibit 10.36 to Form
              10-K in December 1998 and hereby incorporated by reference.
    10.11     Sales  agreement  between Friend and the Company, previously filed
              as  Exhibit  10.37  to  Form 10-K  in  December  1998  and  hereby
              incorporated by reference.
    10.12     1996 Stock Option Plan, previously  filed as  Exhibit  4.1 to Form
              S-8 in  February  1999 and  hereby incorporated by reference.
    10.13     1997 Stock Option Plan,  previously filed as Exhibit 4.2  to  Form
              S-8 in  February  1999 and  hereby incorporated by reference.
    10.14     1999  Stock  Option  Plan,  previously  filed as  Exhibit  4.3 to
              Form  S-8 in  February 1999 and  hereby incorporated by reference.
    10.15*    Employment contract dated July 1999,  previously  filed as Exhibit
              10.15  to  Form  10-K  in  December  1999  and hereby incorporated
              by reference.
    10.16*    Employment  contract dated July 1999 previously  filed as Exhibit
              10.16  to  Form  10-K in December 1999  and hereby incorporated by
              reference.
    10.17*    Employment  contract dated July 1999 previously  filed  as Exhibit
              10.17  to  Form 10-K  in December 1999  and hereby incorporated by
              reference.
    10.18*    Employment  contract dated July 1999 previously  filed  as Exhibit
              10.18 to Form 10-K in December 1999   and  hereby  incorporated by
              reference.
    10.19*    Employment  contract dated  July 1999 previously  filed as Exhibit
              10.19  to  Form  10-K in December 1999  and hereby incorporated by
              reference.

                                      -28-
<PAGE>

    10.20     Office lease,  Seattle,  Washington  previously  filed  as Exhibit
              10.20  to  Form  10-K  in December 1999 and hereby incorporated by
              reference.
    10.21     2000 Stock Option Plan, previously filed as Exhibit 4.1  to  Form
              S-8 in June 2000 and hereby  incorporated  by reference.
    10.22*    Employment contract dated June 2000 previously filed  as  Exhibit
              10.21 to  Form 10-Q  in  August  2000  and hereby  incorporated by
              reference.
    10.23     Form of Note payable  agreement  dated  January  2001, previously
              filed as Exhibit 10.23  to  Form  10-Q  in  May 2001  and  hereby
              incorporated by reference.
    10.24     Secured Demand Note dated  February 2001,  previously  filed  as
              Exhibit 10.24 to Form 10-Q in May 2001 and hereby incorporated by
              reference.
    10.25     Loan and security agreement dated January 2001,  previously  filed
              as  Exhibit  10.25  to  Form  10-Q  in  February  2001  and hereby
              incorporated by reference.
    10.26     2001  Stock  Option Plan,  previously  included  in  the  Proxy
              Statement-Schedule   14A  filed  in  January  2001   and  hereby
              incorporated by reference.
    10.27     Audit  committee  charter, previously  filed as  Exhibit  10.22 to
              Form  10-Q in August  2000 and  hereby incorporated by reference.
    10.28     Clearing Agreement.
    10.29     First Amendment to Clearing Agreement.
    11.       Computation of Earnings per Share.
    16.1      Change  in  Certifying  Accountant,   previously  filed   to  Form
              8-K  in  August  1998  and  hereby incorporated by reference.
    21.       Subsidiaries of Registrant.
    23.1      Consent  of Feldman Sherb Erhlich & Co.,  P.C.,  previously  filed
              to Forms S-8 in February 1999  and  June 2000 and Forms S-3 in May
              1999 and June 1999 and hereby incorporated by reference.
    23.2      Consent  of  Moss  Adams LLP,  previously  filed  to  Forms S-8 in
              February 1999  and  June 2000  and  Forms S-3 in May 1999 and June
              1999 and hereby incorporated by reference.
    23.3      Consent of Camhy Karlinsky & Stein LLP,  previously  filed to Form
              S-8 in February  1999 and Forms S-3 in  May 1999 and June 1999 and
              hereby incorporated by reference.
    23.4      Consent of  D'Ancona  & Pflaum  LLC, previously filed to Forms S-8
              in June 2000 and June 2001 and hereby incorporated by reference.
    24.       Power of Attorney, previously filed  to  Forms S-3 in May 1999 and
              June 1999.


    *Compensatory agreements


                                      -29-



<PAGE>
                          INDEPENDENT AUDITORS' REPORT





To the Stockholders and
Board of Directors
Olympic Cascade Financial Corporation

We have audited the accompanying  consolidated statements of financial condition
of Olympic Cascade  Financial  Corporation and  Subsidiaries as of September 28,
2001  and  September  29,  2000  and  the  related  consolidated  statements  of
operations,  changes in stockholders' equity, and cash flows for the years ended
September  28,  2001,   September  29,  2000  and  September  24,  1999.   These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Olympic  Cascade
Financial  Corporation  and  Subsidiaries as of September 28, 2001 and September
29, 2000, and the results of their operations and their cash flows for the years
ended  September  28,  2001,  September  29,  2000  and  September  24,  1999 in
conformity with accounting principles generally accepted in the United States of
America.


                                                 /s/Feldman Sherb & Co., P.C.
                                                    Feldman Sherb & Co., P.C.
                                                    Certified Public Accountants

December 26, 2001
New York, New York


                                       F-1


<PAGE>

             OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                     ASSETS

                                               September 28,      September 29,
                                                    2001               2000
                                              --------------    ----------------

CASH, subject to immediate withdrawal         $    585,000       $   2,694,000
CASH, CASH EQUIVALENTS AND SECURITIES           37,188,000          29,517,000
DEPOSITS                                         4,654,000           1,792,000
RECEIVABLES
  Customers                                     29,755,000          54,243,000
  Brokers and dealers                              669,000           1,702,000
  Other                                            836,000             394,000
SECURITIES HELD FOR RESALE, at market            1,131,000             373,000
FIXED ASSETS, net                                  841,000           1,089,000
GOODWILL, net                                         -                 74,000
OTHER ASSETS                                     1,940,000             301,000
NET ASSETS OF DISCONTINUED OPERATIONS                 -                517,000
                                              --------------    ----------------
                                              $ 77,599,000       $  92,696,000
                                              ==============    ================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

BANK OVERDRAFT                                $  1,556,000       $        -
BANK LINE OF CREDIT                              3,500,000                -
PAYABLES
  Customers                                     54,511,000          74,183,000
  Brokers and dealers                           10,020,000           5,329,000
SECURITIES SOLD, BUT NOT YET
 PURCHASED, at market                              792,000             192,000
ACCOUNTS PAYABLE, ACCRUED
 EXPENSES AND OTHER LIABILITIES                  1,963,000           3,499,000
INCOME TAX PAYABLE                                    -                258,000
CAPITAL LEASE PAYABLE                              300,000             582,000
NOTES PAYABLE                                    4,035,000             614,000
NET LIABILITIES FROM DISCONTINUED OPERATIONS       300,000                -
                                              --------------    ----------------
                                                76,977,000          84,657,000
                                              --------------    ----------------

CONTINGENCIES

STOCKHOLDERS' EQUITY
 Preferred stock, $.01 par value, 100,000
  shares authorized, none issued and
  outstanding                                         -                   -
 Common stock, $.02 par value, 6,000,000
  shares authorized, 2,236,449 and 2,153,846
  issued and outstanding, respectively              45,000              43,000
 Additional paid-in capital                      9,313,000           8,810,000
 Deficit                                        (8,736,000)           (814,000)
                                              --------------    ----------------
                                                   622,000           8,039,000
                                              --------------    ----------------
                                              $ 77,599,000       $  92,696,000
                                              ==============    ================

                See notes to consolidated financial statements.

                                      F-2
<PAGE>
             OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                 Years Ended
                                ------------------------------------------------
                                   September 28,  September 29,   September 24,
                                   -------------  -------------   --------------
                                       2001           2000             1999
                                   -------------  -------------   --------------
REVENUES
 Commissions                       $ 19,761,000   $ 23,608,000     $ 20,725,000
 Net dealer inventory gains          19,132,000     19,950,000        9,057,000
 Investment banking revenue           1,020,000      2,338,000        2,459,000
 Interest and dividends               5,750,000      7,438,000        5,547,000
 Transfer fees and clearance
  services                            1,092,000      1,264,000          869,000
 Other                                3,469,000      1,615,000          820,000
                                   -------------  --------------   -------------
                                     50,224,000     56,213,000       39,477,000
                                   -------------  --------------   -------------
EXPENSES
 Commissions                         28,448,000     33,289,000       23,802,000
 Employee compensation and
  related expenses                    8,726,000      6,347,000        4,475,000
 Occupancy and equipment costs        4,415,000      3,267,000        2,174,000
 Interest                             3,361,000      4,720,000        3,762,000
 Clearance fees                       4,302,000      1,424,000        1,230,000
 Communications                       3,340,000      1,110,000          914,000
 Taxes, licenses, registration          763,000        798,000           76,000
 Professional fees                    1,945,000      1,376,000        1,894,000
 Other                                2,344,000      2,193,000        1,146,000
                                   -------------  -------------    -------------
                                     57,644,000     54,524,000       39,473,000
                                   -------------  -------------    -------------
Income (loss) from continuing
 operations before income taxes
 and extraordinary item              (7,420,000)     1,689,000            4,000
Income tax (expense) benefit             82,000       (333,000)           4,000
                                   -------------  -------------    -------------
Income (loss) from continuing
 operations before
 extraordinary item                  (7,338,000)     1,356,000            8,000

Income (loss) from discontinued
 operations, net of tax              (1,002,000)       200,000          110,000
                                   -------------  -------------    -------------
Income (loss) before
 extraordinary item                  (8,340,000)     1,556,000          118,000
Income from extraordinary
 item - gain from
 extinguishment of debt,
 net of taxes                           418,000           -                -
                                   -------------  -------------    -------------
NET INCOME (LOSS)                  $ (7,922,000)  $  1,556,000     $    118,000
                                   =============  =============    =============
EARNINGS (LOSS) PER COMMON SHARE
Earnings (Loss) Per Share
 from continuing operations
  Basic Earnings (Loss)
   Per Share                       $      (3.33)  $       0.70     $       0.01
                                   =============  =============    =============
  Diluted Earnings (Loss)
   Per Share                       $      (3.33)  $       0.64     $       0.01
                                   =============  =============    =============
Earnings (Loss) Per Share
 from discontinued operations
  Basic Earnings Per Share         $      (0.45)  $       0.10     $       0.07
                                   =============  =============    =============
  Diluted Earnings Per Share       $      (0.45)  $       0.09     $       0.07
                                   =============  =============    =============
Earnings Per Share from
 extraordinary item
  Basic Earnings Per Share         $       0.19   $       -        $       -
                                   =============  =============    =============
  Diluted Earnings Per Share       $       0.19   $       -        $       -
                                   =============  =============    =============
 Earnings (Loss) Per Share
  Basic Earnings (Loss)
   Per Share                       $      (3.59)  $       0.80     $       0.08
                                   =============  =============    =============
  Diluted Earnings (Loss)
   Per Share                       $      (3.59)  $       0.73     $       0.08
                                   =============  =============    =============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING FOR THE PERIOD-BASIC      2,207,101      1,947,572        1,563,499
                                   =============  =============    =============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING FOR THE PERIOD-DILUTED    2,207,101      2,124,751        1,563,499
                                   =============  =============    =============
                See notes to consolidated financial statements.
                                      F-3
<PAGE>

           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

    YEARS ENDED SEPTEMBER 28, 2001, SEPTEMBER 29, 2000 AND SEPTEMBER 24, 1999
<TABLE>
<CAPTION>



                                      Common Stock           Additional
                                 ---------------------         Paid-In
                                  Shares        Amount         Capital        Deficit           Total
                                 ----------   ---------      -----------    ------------     -----------
<S>                <C> <C>       <C>          <C>           <C>            <C>              <C>
BALANCE, September 25, 1998      1,463,007    $ 29,000      $ 5,407,000    $ (2,488,000)    $ 2,948,000

 Exercise of stock options          82,613       2,000          297,000            -            299,000
 Exercise of stock warrants          5,000        -              20,000            -             20,000
 Issuance of common stock
  and warrants in lawsuit
  settlement and payment of
  expenses                         145,000       3,000          618,000            -            621,000
 Options issued to consultants        -           -              38,000            -             38,000
 Treasury stock                     (1,025)       -              (5,000)           -             (5,000)
 Net income                           -           -                -            118,000         118,000
                                 ----------   ---------      -----------    ------------     -----------
BALANCE, September 24, 1999      1,694,595      34,000        6,375,000      (2,370,000)      4,039,000

 Exercise of stock options         144,063       3,000          744,000            -            747,000
 Exercise of stock warrants        315,188       6,000        1,589,000            -          1,595,000
 Options issued to consultants        -           -              82,000            -             82,000
 Warrants issuance in connection
  with acquisition                    -           -              20,000            -             20,000
 Net income                           -           -                -          1,556,000       1,556,000
                                 ----------   ---------      -----------    ------------     -----------
BALANCE,  September 29, 2000     2,153,846      43,000        8,810,000        (814,000)      8,039,000

 Exercise of stock options          73,603       2,000          273,000            -            275,000
 Options issued to consultants        -           -             105,000            -            105,000
 Issuance of restricted stock        9,000        -              25,000            -             25,000
 Original issue discount              -           -             100,000            -            100,000
 Net loss                             -           -                -         (7,922,000)     (7,922,000)
                                 ----------   ---------      -----------    ------------     -----------
BALANCE,  September 28, 2001     2,236,449    $ 45,000      $ 9,313,000    $ (8,736,000)    $   622,000
                                 ==========   =========      ===========    ============     ===========
</TABLE>


                See notes to consolidated financial statements.
                                      F-4
<PAGE>

             OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                  Years Ended
                                ------------------------------------------------
                                   September 28,  September 29,   September 24,
                                   -------------  -------------   --------------
                                       2001           2000             1999
                                   -------------  -------------   --------------
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income (loss)                 $ (7,922,000)  $  1,556,000      $   118,000
 Adjustments to reconcile net
  income (loss) to net
  cash (used in) provided by
  operating activities
  Depreciation and amortization         632,000        498,000          408,000
  Issuance of common stock in
   lawsuit settlement                      -              -             501,000
  Issuance of common stock in
   payment of expenses                     -              -             120,000
  Compensation related to issuance
   of stock options                     105,000         82,000           38,000
  Loss (gain) on sale of subsidiaries      -              -              (5,000)
  Deferred income tax benefit            50,000        (76,000)          (2,000)
  (Gain) on extraordinary item -
   extinguisment of debt               (418,000)          -                -
  Net assets (liabilities) of
   discontinued operations              817,000       (188,000)        (252,000)
 Changes in assets and liabilities
  Cash, cash equivalents and
   securities                        (7,671,000)    11,899,000      (14,068,000)
  Deposits                           (2,862,000)      (113,000)         345,000
  Receivables                        25,079,000    (14,983,000)        (153,000)
  Income taxes receivable (payable)    (258,000)       258,000          654,000
  Securities held for resale           (758,000)       (75,000)         (63,000)
  Other assets                       (1,689,000)       120,000         (211,000)
  Customer and broker payables      (14,981,000)     4,773,000       12,477,000
  Securities sold, but not yet
   purchased                            600,000         53,000           66,000
  Accounts payable, accrued expenses,
   and other liabilities               (982,000)        84,000          876,000
                                   -------------  -------------   --------------
Net cash (used in) provided by
 operating activities               (10,258,000)     3,888,000          849,000
                                   -------------  -------------   --------------
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of fixed assets              (806,000)      (413,000)        (276,000)
 Purchase of goodwill                      -           (30,000)            -
                                   -------------  -------------   --------------
Cash used in investing activities      (806,000)      (443,000)        (276,000)
                                   -------------  -------------   --------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Borrowings (payments) on line of
  credit                              3,500,000     (2,100,000)        (600,000)
 Proceeds from notes payable          4,000,000           -                -
 Repayment of notes payable             (61,000)    (1,034,000)        (300,000)
 Payments on capital lease             (340,000)      (340,000)        (348,000)
 Issuance of restricted stock            25,000           -                -
 Increase in cash overdraft           1,556,000           -                -
 Exercise of stock options              275,000        744,000          319,000
 Exercise of stock warrants                -         1,595,000             -
                                   -------------  -------------   --------------
Net cash provided by (used in)
 financing activities                 8,955,000     (1,135,000)        (929,000)
                                   -------------  -------------   --------------
(DECREASE) INCREASE IN CASH          (2,109,000)     2,310,000         (356,000)
CASH BALANCE
 Beginning of the year                2,694,000        384,000          551,000
                                   -------------  -------------   --------------
 End of the year                   $    585,000   $  2,694,000      $   195,000
                                   =============  =============   ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 Cash paid during the period for
  Interest                         $  3,317,000   $  4,714,000      $ 3,727,000
                                   =============  =============   ==============
  Income taxes                     $    323,000   $       -         $      -
                                   =============  =============   ==============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
 FINANCING ACTIVITIES
  Warrants issued as a discount
   on notes payable                $    100,000   $       -         $      -
                                   =============  =============   ==============
  Redemption and retirement of
   common stock                    $       -      $       -         $     5,000
                                   =============  =============   ==============
  Warrants issued as part of
   acquisition                     $       -      $     20,000      $      -
                                   =============  =============   ==============
               See notes to consolidated financial statements.
                                      F-5


<PAGE>



                      OLYMPIC CASCADE FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          SEPTEMBER 28, 2001, SEPTEMBER 29, 2000 AND SEPTEMBER 24, 1999
          -------------------------------------------------------------

1.      ORGANIZATION:

Olympic  Cascade  Financial  Corporation  ("Olympic"  or  the  "Company")  is  a
diversified financial services organization,  operating through its three wholly
owned subsidiaries,  National Securities Corporation  ("National"),  WestAmerica
Investment  Group   ("WestAmerica")   and  Canterbury   Securities   Corporation
("Canterbury").   The  Company's  business  includes  securities  brokerage  for
individual and institutional clients,  market- making trading activities,  asset
management and corporate finance services.

In June 1997, the Company acquired all of the outstanding  stock of WestAmerica,
a  Scottsdale,  Arizona based  broker-dealer  specializing  in retail  brokerage
services.

In December 2001, WestAmerica  voluntarily withdrew its membership with the NASD
and ceased conducting  business as a broker-dealer.  WestAmerica intends to file
for Chapter 7 Bankruptcy protection in accordance with the U.S. Bankruptcy Code.
Accordingly,  the  accompanying  financial  statements of WestAmerica  have been
reclassified as discontinued operations for all periods presented.

In June 2000, the Company  acquired all of the outstanding  stock of Canterbury,
an Illinois  based  broker-dealer  focusing on private  placement of securities.
Canterbury  was  acquired  for $30,000 in cash plus the  issuance of warrants to
purchase 5,000 shares of the common stock of the Company at an exercise price of
$6.375 per share. Canterbury had no activity since its acquisition.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
         -------------------------------------------

  a.        Principles of Consolidation - The consolidated financial
           statements include the accounts of Olympic and its wholly owned
           subsidiaries. All significant intercompany accounts and transactions
           have been eliminated.

  b.       Estimates - The preparation of the financial statements in
           conformity with generally accepted accounting principles requires
           management to make estimates and assumptions that affect the reported
           amounts of assets and liabilities, disclosure of contingent assets
           and liabilities at the date of the financial statements, and the
           reported amounts of revenues and expenses during the reporting
           period. Actual results could differ from those estimates.

  c.       Accounting Method - Customer security transactions and the
           related commission income and expense are recorded on a settlement
           date basis. The Company's financial condition and results of
           operations using the settlement date basis are not materially
           different from that of the trade date basis. Revenue from consulting
           services and investment banking activities is recognized as the
           services are performed.



                                       F-6

<PAGE>




  d.       Fixed Assets - Fixed assets are stated at cost. Depreciation
           is calculated using the straight line method based on the estimated
           useful lives of the related assets, which range from three to five
           years.

  e.       Fiscal Year - The Company has a fifty-two or  fifty-three week year,
           ending on the last Friday in September.

  f.       Cash and Cash Equivalents - For purposes of the statement of
           cash flows, the Company defines cash as cash subject to immediate
           withdrawal. Cash, cash equivalents and securities as discussed in
           Note 4 are not considered a change in cash for this purpose.

  g.       Income Taxes - The Company recognizes deferred tax assets and
           liabilities based on the difference between the financial statements
           carrying amounts and the tax basis of assets and liabilities, using
           the effective tax rates in the years in which the differences are
           expected to reverse. A valuation allowance related to deferred tax
           assets is also recorded when it is probable that some or all of the
           deferred tax asset will not be realized.

  h.       Fair Value of Financial Instruments - Substantially all of the
           Company's financial statements are carried at fair value. Assets,
           including cash, cash equivalents and securities, deposits, certain
           receivables, securities held for resale and other assets, are
           carried at fair value or contracted amounts which approximate fair
           value. Similarly, liabilities, including certain payables,
           securities sold but not yet purchased and notes payable are carried
           at fair value or contracted amounts approximating fair value.

  i.       Earnings (Loss) per Share - Basic earnings (loss) per
           common share is based upon the net income (loss) for the year
           divided by the weighted average number of common shares outstanding
           during the year. Diluted earnings (loss) per common share assumes
           that all common stock equivalents have been converted to common
           shares using the treasury stock method.

  j.       Impairment of Long-Lived Assets  -   The  Company  reviews long-lived
           assets for impairment whenever    circumstances and situations change
           such that there is an indication that the carrying amounts may not be
           recovered.  At September 28, 2001 the Company believes that there has
           been no impairment of its long-lived assets.

  k       Stock Based Compensation - The Company accounts for stock transactions
          in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
          Employees."   In  accordance with Statement of Financial Standards No.
          123, "Accounting for Stock Based Compensation" the Company has adopted
          the pro forma disclosure requirements of Statement No. 123.





                                       F-7

<PAGE>




  l.      Concentrations  of Credit Risk - The  Company is actively  involved in
          securities brokerage,  distribution,  trading and underwriting.  These
          and other related services are provided on a national basis to a large
          and   diversified   group  of   clients   and   customers,   including
          corporations,   governments,  financial  institutions  and  individual
          investors.  The Company's  exposure to credit risk associated with the
          non-performance  by these customers and  counterparties  in fulfilling
          their contractual  obligations can be directly impacted by volatile or
          illiquid trading markets which may impair the ability of customers and
          counterparties to satisfy their obligations to the Company.

          Substantially  all of the securities held for the exclusive benefit of
          customers,  pursuant to SEC Rule 15c3-3, consist of issues by the U.S.
          Government  or  federal  agencies.   The  Company's  most  significant
          counterparty  concentrations are other brokers and dealers, commercial
          banks,  institutional clients and other financial  institutions.  This
          concentration arises in the normal course of the Company's business.

          Additionally, the Company maintains deposits at financial institutions
          which at times, may exceed the $100,000 federally insured limit.

  m.      Recent  Accounting  Pronouncements  -  In  July  2001,  the  Financial
          Accounting  Standards Board issued  Statement of Financial  Accounting
          Standards  ("SFAS") No. 141 "Business  Combinations"  and SFAS No. 142
          "Goodwill  and  Intangible  Assets"  ("SFAS  No.  142").  SFAS No. 141
          requires that all business combinations  initiated after June 30, 2001
          be accounted for using the purchase method of accounting and prohibits
          the use of the pooling-of-interest method for such transactions.  SFAS
          No. 142 applies to all goodwill and  intangible  assets  acquired in a
          business combination.  Under the new standard, all goodwill, including
          acquired  before initial  application  of the standard,  should not be
          amortized but should be tested for impairment at least annually at the
          reporting level, as defined in the standard.  Intangible  assets other
          than goodwill should be amortized over their useful lives and reviewed
          for  impairment in  accordance  with SFAS No. 121. The new standard is
          effective for fiscal years  beginning  after  December 15, 2001. As of
          September 28, 2001, the Company had no unamortized goodwill.

          In August 2001, the FASB issued Statements of Financial No. 144 ("SFAS
          144"),  "accounting of the Impairment of Long-lived Assets".  SFAS 144
          superceded  Statement  of  Financial  Accounting  Standards  No.  121,
          "accounting  for the Impairment of Long-lived  Assets and Assets to be
          Disposed of" and the accounting and reporting provisions of Accounting
          Principles   Board   Opinion  No.  30,   "reporting   the  Results  of
          Operation-Reporting  the  Effects  of  Disposal  of  a  Segment  of  a
          Business, and Extraordinary, Unusual and Infrequently Occurring Events
          and Transactions".  SFAS 144 also amends Accounting  Research Bulletin
          No.  51,  "Consolidated   Financial  Statements",   to  eliminate  the
          exception  to  consolidation  for a  subsidiary  for which  control is
          likely to be



                                       F-8

<PAGE>


          temporary.  The  provision  of SFAS 144 will be  effective  for fiscal
          years  beginning  after  December  15,  2001.  The Company has not yet
          determined  the effect  SFAS will have on its  financial  position  or
          results of operations in future periods.

3.       SIGNIFICANT AGREEMENTS AND TRANSACTIONS


     a.  CLEARING AGREEMENTS


          In August 2001,  National entered into a ten-year agreement with First
          Clearing  Corporation ("FCC"), an affiliate of First Union Securities,
          Inc., under which FCC will provide clearing and other related services
          for National. The conversion to FCC began in December 2001.

          In  connection  with the clearing  agreement,  Olympic  entered into a
          ten-year  $6,000,000  promissory note agreement whereby FCC shall make
          advances to Olympic in varying  amounts  according to the terms of the
          agreement.   The  amount  of  the  note  that  is  repayable  on  each
          anniversary   date  is  the  principal   and  accrued   interest  then
          outstanding  divided by the remaining life of the note.  However,  the
          note  agreement  provides for the  forgiveness  of the amount  payable
          based on certain  business  performance  and trading  volumes over the
          life of the  loan.  The loan  requires  that the  Company  maintain  a
          shareholders' equity of no less than $2,000,000. Upon the execution of
          the  aforementioned  clearing  agreement,  Olympic received an initial
          advance  of  $1,000,000,  which  was  then  used to make a  refundable
          deposit as required by the clearing agreement. Olympic can request the
          second  advance of $1,000,000  upon the  completion of the  conversion
          from a self-clearing firm to a fully-disclosed firm and the conversion
          of its  clearing  with US  Clearing  ("USC")  and  provided  that  the
          stockholders'   equity  of  Olympic  is  equal  to  or  greater   than
          $2,000,000.  The agreement  also requires the payment of a termination
          fee ranging from $2,000,000 to $400,000 if terminated within years one
          through six of the agreement.  Olympic has pledged its shares of stock
          of National to secure the aforementioned note.

          In connection with the above agreement,  in November 2001, the Company
          notified USC of its intention to terminate its clearing  relationship.
          Upon  termination  of the  agreement  and transfer of all customer and
          proprietary  accounts,  National  is  entitled  to  a  return  of  its
          $1,000,000 clearing deposit.

    b.    EQUITY TRANSACTIONS

         (i)   On December 14, 2001,  Olympic,  an unaffiliated  company and the
               President of Olympic (collectively, the "Purchaser") entered into
               a securities  purchase  agreement  for 10,725  shares of Series A
               convertible  preferred  stock  ("Preferred  Stock") of Olympic at
               $100 per share, convertible into common stock at a price of $1.50
               per share. In addition, the Purchaser will maintain on deposit in
               an escrow account for seven months an additional $500,000,  which
               can be drawn upon under  certain  circumstances.  If such amounts
               are  utilized,  the  Company  will  issue  additional  shares  of
               Preferred Stock as payment.

                                      F-9
<PAGE>


         (ii)  Concurrent with the closing of the above transaction, the current
               Chief Executive  Officer and Chief  Financial  Officer of Olympic
               will terminate their  employment  agreements with the Company and
               simultaneously  enter into consulting  agreements of eighteen and
               twenty-seven months, respectively,  at a monthly consideration of
               $10,000 for each  consultant.  In addition,  the Chief  Executive
               Officer  has also been  given the option to  purchase  all of the
               shares of stock of Canterbury  for  approximately  $11,000.  Such
               officer  has also  agreed  to sell  285,000  shares  owned by the
               officer  and  his  family  to  the  aforementioned   unaffiliated
               company.


         (iii) Also,  on  December  14,  2001,  Olympic  executed  a  securities
               exchange  agreement  with the  holders  of  Olympic's  $2,000,000
               promissory note holders, whereby $1,000,000 of such notes will be
               exchanged as payment for the issuance of 10,000  shares of Series
               A  convertible  preferred  stock at $100 per share.  In addition,
               100,000 of the  warrants  issued  pursuant to the  original  loan
               transaction  will be repriced from an exercise price of $5.00 per
               share to $1.75 per share.  agreement with the holders of Olympic'
               $2,000,000  promissory note holders,  whereby  $1,000,000 of such
               notes will be  exchanged  as payment  for the  issuance of 10,000
               shares of Series A convertible preferred stock at $100 per share.
               In  addition,  100,000  of the  warrants  issued  pursuan  to the
               original loan transaction will be repriced from an exercise price
               of $5.00 per share to $1.75 per share.

         The aforementioned transactions in Note 3b are scheduled to close
         simultaneously with each other and the filing of Olympic's Form 10-K
         for the fiscal year ended September 28, 2001.

4.      DISCONTINUED OPERATIONS

        The following is a summary of the Company's discontinued operations:

Net (liabilities) assets of discontinued operations:
                                   September 28, 2001         September 29, 2000
                                --------------------------    ------------------
Assets:
     Cash                           $           145,000      $          326,000
     Marketable securities                            -                   3,000

     Accounts receivable, net                    92,000                 292,000
Fixed assets, net                                     -                  23,000
Other assets                                          -                  92,000

Liabilities:
     Payable to brokers                          37,000                 105,000
     Accounts payable and
          accrued expenses                      452,000                 114,000
     Bank line of credit                         48,000                       -
                               ------------------------        -----------------
Net (liabilities) assets of
discontinue operations                 $      (300,000)       $         517,000
                               =======================         =================


                                      F-10

<PAGE>


<TABLE>
<CAPTION>


Results of Operations:
                                                                Years Ended
                              -------------------------------------------------------------------------------
                                September 28, 2001           September 29, 2000          September 24, 1999
                              ----------------------      ----------------------       ----------------------
<S>                      <C>                             <C>                         <C>
Revenues                 $                  2,134,000    $              4,596,000    $              3,884,000
                              -----------------------      ----------------------      ----------------------

   Income (loss) from
       operations                           (915,000)                     200,000                     110,000
Loss on disposal                             (87,000)                           -                           -
                              -----------------------      ----------------------      ----------------------
Total income (loss)
  from discontinued
        operations       $                (1,002,000)    $                200,000    $                110,000
                              =======================      ======================      ======================
</TABLE>

5.       CASH, CASH EQUIVALENTS AND SECURITIES

Cash, cash equivalents, and securities have been segregated in special reserve
bank accounts for the exclusive benefit of customers under Rule 15c3-3 of the
Securities and Exchange Commission and consist of:
<TABLE>
<CAPTION>

                                                         September 28,                  September 29,
                                                             2001                           2000
                                                     ---------------------          ---------------------
<S>                                             <C>                              <C>
United States Government
obligations and reverse repurchase
agreements                                      $               37,103,000       $             29,512,000
Cash                                                                85,000                          5,000
                                                     ---------------------          ---------------------
                                                $               37,188,000       $             29,517,000
                                                     =====================          =====================
</TABLE>

The United States Government obligations mature at various dates through January
2029 and are stated at current market values. The reverse repurchase  agreements
are carried at cost,  which  approximates  market value.  The Company  purchases
these obligations at fixed,  variable and adjustable  interest rates in order to
reduce exposure to interest rate changes.

6.      CUSTOMER RECEIVABLES AND PAYABLES

The Company  seeks to protect  itself from the risks  associated  with  customer
activities by requiring  customers to maintain  margin  collateral in compliance
with regulatory and its own internal  guidelines,  which are more stringent than
regulatory margin requirements. Margin levels are monitored daily and additional
collateral must be deposited as required. Where customers cannot meet collateral
requirements,  the  Company  will  liquidate  underlying  financial  instruments
sufficient to bring the accounts in compliance.

Exposure to credit risk is  affected by the markets for  financial  instruments,
which can be  volatile  and may impair the  ability of clients to satisfy  their
obligations to the Company.  Credit limits are established and closely monitored
for  customers  and  broker-dealers   engaged  in  transactions   deemed  to  be
credit-sensitive.


                                      F-11

<PAGE>


Included in amounts payable to customers are balances in accounts of officers
and directors totaling $111,000 at September 28, 2001 and $204,000 at September
29, 2000.

  7.      BROKER-DEALER RECEIVABLES AND PAYABLES

 Amounts receivable from and payable to brokers and dealers include:
<TABLE>
<CAPTION>

                                                         September 28,                    September 29,
                                                              2001                             2000
                                                     ----------------------           ----------------------
<S>                                            <C>                                 <C>
Due from clearing organization                 $                     46,000        $                 461,000
Deposits paid for securities borrowed                                16,000                          179,000
Securities failed to deliver                                        607,000                        1,062,000
                                                     ----------------------           ----------------------
          Total receivable                     $                    669,000        $               1,702,000
                                                     ======================           ======================

Due to clearing organization                   $                  8,680,000        $               4,499,000
Securities failed to receive                                      1,340,000                          830,000
                                                     ----------------------           ----------------------
           Total payable                       $                 10,020,000        $               5,329,000
                                                     ======================           ======================
</TABLE>

Securities borrowed are recorded at the amount of cash collateral advanced or
received. The Company monitors the market value of securities borrowed and
loaned on a daily basis and obtains additional collateral from counterparties as
necessary.

The Company has receivables and payables for financial instruments sold to and
purchased from broker-dealers. The Company is exposed to risk of loss from the
inability of broker- dealers to pay for purchases or to deliver financial
instruments sold, in which case the Company would have to sell or purchase the
financial instruments at prevailing market prices.

8.      SECURITIES HELD FOR RESALE

Securities held for resale and securities sold, but not yet purchased consist of
the following:
<TABLE>
<CAPTION>


                                   September 28, 2001                             September 29, 2000
                       -------------------------------------        ----------------------------------------

                          Securities            Sold , But                Securities                Sold, But
                           Held For               Not Yet                  Held For                  Not Yet
                            Resale               Purchased                  Resale                  Purchased
                       ----------------      -----------------         -----------------       -------------------
<S>               <C>                     <C>                        <C>                    <C>
Corporate
stocks            $             977,000   $            689,000       $           367,000    $              192,000
U.S.
Government
obligations                     154,000                103,000                     6,000                         -
                       ----------------      -----------------         -----------------       -------------------
                  $           1,131,000   $            792,000       $           373,000    $              192,000
                       ================      =================         =================       ===================
</TABLE>


                                      F-12

<PAGE>

Securities held for resale and securities sold, but not yet purchased are
recorded at fair value. Fair value is generally based upon quoted market prices.
If quoted market prices are not available, or if liquidating the Company's
position is reasonably expected to impact market prices, fair value is
determined based upon other relevant factors, including dealer price quotations,
price activity of similar instruments and pricing models. Pricing models
consider the time value and volatility factors underlying the financial
instruments and other economic measurements.

Securities sold, but not yet purchased commit the Company to deliver specified
securities at predetermined prices. The transactions may result in market risk
since, to satisfy the obligation, the Company must acquire the securities at
market prices, which may exceed the values reflected on the Consolidated
Statement of Financial Condition.

        9.      FIXED ASSETS

Fixed assets consist of the following:
<TABLE>
<CAPTION>


                                                    September 28,                  September 29,
                                                         2001                           2000
                                                 --------------------          ----------------------
<S>                                         <C>                              <C>
Office machines                             $                 336,000        $                446,000
Furniture and fixtures                                        631,000                         588,000
Interactive fixed assets                                       56,000                          56,000
Phone system                                                  151,000                         151,000
Electronic equipment                                        1,389,000                       1,045,000
Leasehold improvements                                        169,000                         151,000
Assets under capital leases                                 1,180,000                       1,180,000
                                                 --------------------          ----------------------
                                                            3,912,000                       3,617,000
Less accumulated depreciation and
amortization                                                3,071,000                       2,528,000
                                                 --------------------          ----------------------
                                            $                 841,000        $              1,089,000
                                                 ====================          ======================
</TABLE>

In April 1998 and June 1998, the Company entered into sale and leaseback
agreements with an outside funding company. As part of the agreement the Company
sold certain fixed assets to the funding company for $930,000 and $250,000 in
April and June, respectively, and agreed to lease these assets back over a
forty-eight month period.  The Company recorded no gain or loss and has
recorded this transaction as a capital lease.







                                      F-13

<PAGE>




    The following is a schedule of assets under capital leases:


Office machines                                        $                180,000
Furniture and fixtures                                                  512,000
Electronic equipment                                                    352,000
Leasehold improvements                                                  136,000
                                                             -------------------
                                                                      1,180,000
Less accumulated depreciation and amortization                          899,000
                                                             -------------------
                                                       $                281,000
                                                             ===================

The future minimum lease payments under these capital leases together with the
present value of the net minimum lease payments as of September 28, 2001 are as
follows:


Total minimum lease payments (due in fiscal year                        281,000
ended September 27, 2002)
 Less: Amount representing taxes                                         14,000
                                                                ----------------
Net minimum lease payments                                              267,000
 Less: Amount representing interest                                      11,000
                                                                ----------------
Present value of net minimum lease payments               $             256,000
                                                                ================

10.     LINE OF CREDIT
        --------------

In January 2001, National consummated a new secured revolving line of credit of
$5,000,000 with American National Bank. As a result of a default of certain
financial covenants, on November 8, 2001 National entered into a forbearance
agreement through December 21, 2001, including an agreement to amend the line of
credit to $4,000,000. Borrowings bear interest at the call money rate plus 1%,
which was 5.25% at September 28, 2001. Interest is payable monthly. The line is
secured by certain assets of National, excluding items prohibited from being
pledged and assets set forth by the U.S. Securities and Exchange Commission
("SEC"). At September 28, 2001, National had $3,500,000 outstanding under the
line of credit. Such amount was reduced to $1,500,000 as of December 26, 2001.










                                      F-14

<PAGE>



11.    NOTES PAYABLE
       -------------


In November 1997, the Company executed two promissory notes totaling $925,000.
The notes bore interest at 6% and 8% with the principal to be repaid in 24
monthly installments commencing on December 31, 2000. In connection with the
notes, warrants for the purchase of 126,000 shares at an exercise price of $5.36
per share of the Company's common stock were issued. The warrants were valued at
$120,000 and were recorded as a discount to the notes. During the year ended
September 29, 2000, the Company satisfied one the above notes which had a
remaining balance of $425,000 with the proceeds from the exercise of 78,750
warrants. At September 29, 2000, the balance on the remaining note was $455,000.
During the year ended September 28, 2001, the Company settled the remaining note
for $52,000. At the time of the settlement, the outstanding balance, including
accrued interest, totaled $470,000. The gain of $418,000 has been recorded as an
extraordinary item.

In January 1998, the Company executed a promissory note for $1,000,000. This
note bears interest at 8% and the principal is to be repaid in 24 monthly
installments commencing on December 31, 2000. In connection with the note,
warrants for the purchase of 157,500 shares at an exercise price of $5.34 per
share of the Company's common stock were issued. The warrants were valued at
$157,500 and were recorded as a discount to the note.  During the year ended
September 29, 2000, the Company prepaid $841,000 of the note with the proceeds
from the exercise of 157,500 warrants, leaving a balance of $159,000. As of
September 28, 2001, the remaining balance was $113,000.

In January 2001, the Company executed two promissory notes for $1,000,000 each.
These notes bear interest at 9% with interest paid quarterly. The principal of
each note matures in January 2004. In connection with each note, warrants were
issued for the purchase of 100,000 shares of the Company's common stock at an
exercise price of $5.00 per share. The warrants, which expire on the maturity
date, have been valued at $50,000 each, and have been recorded as a discount to
the respective notes. As of September 28, 2001, the unamortized discount was
$39,000 on each note. As discussed in Note 3b(iii), the holders of such notes
are each in the process of converting $500,000 into the Company's Series A
convertible preferred stock.

In February 2001, National executed a secured demand note collateral agreement
with an employee of the Company, to borrow securities as collateral to be
pledged, as needed, through an unrelated broker-dealer, which have a borrowing
value totaling $1,000,000. This note bears interest at 5% and is paid monthly.
The demand note matures in February 2004.

As discussed in Note 3a, in August 2001, the Company was advanced $1,000,000,
payable over the term of the agreement with FCC. The note bears interest at the
lender's prime rate and is payable over the life of the agreement.





                                      F-15

<PAGE>




        The following is a schedule by years of debt maturity as of September
28, 2001:

Fiscal year ended
2002                                              $               197,000
2003                                                              116,000
2004                                                            3,100,000
2005                                                              100,000
2006                                                              100,000
Thereafter                                                        500,000
                                                       ------------------
                                                                4,113,000
Less: discount on notes                                            78,000
                                                       ------------------
                                                  $             4,035,000
                                                       ==================

12.    INCOME TAXES
       ------------

The income tax (provision) benefit consists of:
<TABLE>
<CAPTION>


                                                                   Years Ended
                                     -----------------------------------------------------------------------
                                        September 28,            September 29,             September 24,
                                            2001                      2000                     1999
                                     -------------------       ------------------      ---------------------
<S>                             <C>                         <C>                      <C>
Current federal
  income tax (provision)
    benefit                     $                 82,000    $            (367,000)   $                 8,000
Deferred federal
   income tax                                          -                   79,000                          -
Current state
income tax                                             -                  (45,000)                    (4,000)
                                     -------------------       ------------------      ---------------------
                                $                 82,000    $            (333,000)   $                 4,000
                                     ===================       ==================      =====================


</TABLE>










                                                  F-16

<PAGE>



The income tax (provision) benefit related to income (loss) from continuing
operations before income taxes and extraordinary items varies from the federal
statutory rate as follows:
<TABLE>
<CAPTION>

                                                                Years Ended
                               ---------------------       ---------------------       ---------------------
                                   September 28,               September 29,               September 24,
                                       2001                        2000                        1999
<S>                         <C>                          <C>                           <C>
Statutory federal
rate                        $              2,523,000     $              (574,000)      $             (39,000)

State income
taxes, net of
federal income
tax benefit                                        -                     (95,000)                     (4,000)

Losses for
which no benefit
is provided                               (2,441,000)                          -                           -

Tax benefit of
net operating
losses                                             -                     642,000                      47,000

Other                                              -                    (306,000)                          -
                               ---------------------       ---------------------       ---------------------
                       $                      82,000     $              (333,000)    $                 4,000
                               =====================       =====================       =====================
</TABLE>

Significant components of the Company's deferred tax assets which are included
in other assets in the accompanying financial statements are as follows:
<TABLE>
<CAPTION>


                                               September 28,              September 29,
                                                    2001                      2000
                                            --------------------      ---------------------
<S>                                  <C>                          <C>
Net operating losses                 $                 2,893,000  $                       -
Difference in depreciation
and reserves for employee
advances                                                       -                    117,000
                                            --------------------      ---------------------
Total                                                  2,893,000                    117,000
Valuation allowance                                   (2,893,000)                         -
                                             --------------------      ---------------------
   Total deferred tax asset          $                         -    $               117,000
                                            ====================      =====================



</TABLE>




                                                  F-17

<PAGE>



          At September 28, 2001, the Company has available  unused net operating
          loss  carryovers  of  approximately  $7,400,000  that  may be  applied
          against  future  taxable income and expires in 2021. The Company has a
          deferred tax asset arising from such net operating loss  carryforwards
          and has  recorded a  valuation  allowance  for the full amount of such
          deferred  tax asset since the  likelihood  of  realization  of the tax
          benefits cannot be determined.

    13.    COMMITMENTS

         Employment Agreements - During fiscal 1999 the Company entered into
         employment agreements with five executive officers. Four of such
         agreements are for a term of three years expiring in June 2002 at an
         annual salary aggregating $960,000. The agreements provide for payment
         of one year's salary upon severance of employment by the Company and of
         two years salary if the Company or executive elects to terminate
         employment after the occurrence of a change in control of the Company,
         as defined. The other agreement is for a term of four years expiring in
         June 2003 at an annual salary of $350,000 plus incentive compensation,
         as defined, not to exceed $50,000. Such agreement provides for the same
         compensation terms in the event of termination of employment. As
         discussed in Note 3b(ii), two of the aforementioned agreements are
         being terminated and replaced with consulting agreements.

         During fiscal 2000 the Company entered into an employment agreement
         with an executive officer. The term of the agreement is three years
         expiring in June 2003 with an annual salary of $400,000 and immediately
         vested options to acquire 150,000 shares of the Company's common stock
         at an exercise price of $7.25 per share. The agreement provides for
         payment of one year's salary upon severance of employment by the
         Company.

         Leases - As of September 28, 2001, the Company is committed under
         operating leases for future minimum lease payments as follows:


                        Fiscal Year Ending
                        2002                          $               2,659,000
                        2003                                          1,837,000
                        2004                                          1,363,400
                        2005                                          1,208,000
                        2006                                          1,058,000
                  Thereafter                                          1,134,000
                                                              ------------------
                                                      $               9,259,000
                                                              ==================


         Rental expense for operating leases for the years ended September 28,
         2001, September 29, 2000 and September 24, 1999 was $1,889,000,
         $1,541,000, and $933,000, respectively.




                                      F-18

<PAGE>



         In addition, in February 2001, WestAmerica entered into a 7-year lease
         commitment at an annual rate of $216,000 for years 2001 and 2002,
         $225,000 for years 2003 and 2004, and $234,000 for the remainder of the
         lease.

         Underwritings - During fiscal 2001, the Company participated in
         underwriting securities for private placements, initial and secondary
         public offerings. At September 28, 2001, the Company has no outstanding
         commitments relating to underwriting transactions.

14.      CONTINGENCIES

         The Company has been named, together with others, as a defendant in a
         consolidated class action lawsuit filed against Complete Management,
         Inc. No specific amount of damages has been sought against the Company
         in the complaint. In June 2000, the Company filed to dismiss this
         action. In March 2001, the United States District Court for the
         Southern District of New York denied the Company's motion to dismiss.
         In May 2001, the Company submitted its answer to the complaint in which
         it set forth its defenses. In November 2001, plaintiffs filed a motion
         to certify the class. The Company will contest class certification and
         diligently pursue its defenses.

         The Company is a defendant in various other arbitrations and
         administrative proceedings, lawsuits and claims which in the aggregate
         seek general and punitive damages of approximately $9,500,000,
         including one arbitration case seeking from $500,000 to $5,000,000,
         plus punitive damages. These matters arise out of the normal course of
         business. The Company intends to vigorously defend itself in these
         actions.

15.      STOCKHOLDERS' EQUITY

         Stock Options - The Company's stock option plans provide for the
         granting of stock options to certain key employees, directors and
         investment executives. Generally, options outstanding under the
         Company's stock option plan are granted at prices equal to or above the
         market value of the stock on the date of grant, vest either immediately
         or ratably over up to five years, and expire five years subsequent to
         award.

         The Company applies APB Opinion No. 25 and related Interpretations in
         accounting for its plans. SFAS Statement No. 123 "Accounting for
         Stock-Based Compensation" ("SFAS 123") was issued by the Financial
         Accounting Standards Board and, if fully adopted, changes the methods
         for recognition of cost on plans similar to those of the Company. Had
         compensation cost for the Company's stock option plans been determined
         base upon the fair value at the grant date for awards under these plans
         consistent with the methodology prescribed under SFAS 123, the
         Company's net income and earnings per share would have been reduced by
         approximately $535,000 or $.24 per share in 2001, $1,696,000 or $.80
         per share in 2000, $705,000, or $.45 per share in 1999. The fair value
         of the options granted during 2001, 2000 and 1999 is estimated at
         $818,000, $1,696,000, and $946,000, respectively, on the date of grant
         using the Black-Scholes option-pricing model with the following
         assumptions:




                                      F-19

<PAGE>


<TABLE>
<CAPTION>


                                              2001                   2000                  1999
                                        -----------------      ----------------      ----------------
<S>                                                <C>                  <C>                   <C>
Volatility                                         96.00%               106.00%               144.00%
Risk-free interest rate                             5.00%                 6.25%                 5.00%
Expected life                                     5 years               5 years               5 years
</TABLE>

         A summary of the status of the Company's stock options and warrants
outstanding is presented below:

Stock Options Under Plan
<TABLE>
<CAPTION>


                                                                                                    Weighted
                                                                                                    Average
                                                                                                     Price
                                 Authorized               Granted              Available            Per Share
                             -------------------      ----------------      ---------------      --------------

Balance,
<S>       <C> <C>                      <C>                     <C>                  <C>      <C>
September 25, 1998                     1,020,454               766,278              254,176  $        4.84
  Creation of new plan                   500,000                     -              500,000
  Granted                                      -               425,000             (425,000)
  Exercised                              (82,613)              (82,613)                   -           3.62
  Forfeitures                            (40,643)              (40,643)                   -
                             -------------------      ----------------      ---------------
Balance,
September 24, 1999                     1,397,198             1,068,522              328,676           4.65
 Creation of new plan                    500,000                     -              500,000
  Granted                                      -               383,600             (383,600)
  Exercised                             (139,063)             (139,063)                   -           4.14
  Forfeitures                            (75,918)              (75,918)                   -
                             -------------------      ----------------      ---------------
Balance,
September 29, 2000                     1,682,217             1,237,141              445,076           5.41
  Granted                                      -               294,500             (294,500)
  Exercised                              (73,603)              (73,603)                   -           3.73
  Forfeitures                           (186,530)             (186,530)                   -
                             -------------------      ----------------      ---------------
Balance,
September 28, 2001                     1,422,084             1,271,508              150,576           5.66
                             ===================      ================      ===============

</TABLE>





The following table summarizes information about stock options outstanding at
September 28, 2001.



                                      F-20

<PAGE>
<TABLE>
<CAPTION>




                Options Outstanding                                                            Options Exercisable
---------------------------------------------------------------------------------     ----------------------------------

                                                Weighted             Weighted                                  Weighted
    Range of                                    Average               Average                                   Average
    Exercise               Number              Remaining             Exercise              Number              Exercise
     Prices              Outstanding         Contract Life            Prices            Exercisable             Prices
----------------      -----------------     ----------------      ---------------     ----------------      ---------------
<C>   <C>                       <C>               <C>           <C>                            <C>        <C>
$3.56-3.88                      150,700           3.78          $      3.77                    132,925    $      3.60
$4.00-4.69                      284,038           2.08                 4.29                    245,288           4.32
$5.36-5.75                      370,856           2.79                 5.61                    155,856           5.42
$6.13-6.75                       85,500           3.94                 6.27                     70,125           6.13
$7.12-7.50                      338,914           2.32                 7.23                    338,914           7.23
   $8.00-8.50                    41,500           3.58                 8.26                     37,167           8.21
                      -----------------                                               ----------------
                              1,271,508                                                        980,275
                      =================                                               ================

</TABLE>

Warrants
<TABLE>
<CAPTION>
                                                         Weighted Average
                                                             Exercise
                                     Shares                    Price              Exercisable
                                 ---------------        -------------------      --------------
<C> <C>                                  <C>      <C>                               <C>
Outstanding at September
25, 1998                                 348,113  $            5.22                 348,113
                                                                                 ==============
Granted                                   50,000               4.00
Exercised                              (315,188)               5.06
                                 ---------------
Outstanding at
September 25, 1999                        82,925               5.09                  82,925
                                                                                 ==============
Granted                                    5,000               6.38
                                 ---------------
Outstanding at
September 29, 2000                        87,925               5.17                  87,925
                                                                                 ==============
Granted                                  375,000               4.87
                                 ---------------
Outstanding at
September 28, 2001                       462,925               4.92                 462,925
                                 ===============                                 ==============



</TABLE>







The  following  table  summarizes  information  about  warrants  outstanding  at
September 28, 2001




                                                     F-21

<PAGE>

<TABLE>
<CAPTION>



                                         Warrants Outstanding                                 Warrants Exercisable
                      -----------------------------------------------------------     -------------------------------------
                                                Weighted              Weighted                                 Weighted
                                                Average               Average                                   Average
    Range of               Number              Remaining              Exercise             Number              Exercise
 Exercise Prices         Outstanding         Contract Life             Prices           Exercisable             Prices
-----------------     -----------------    ------------------      --------------     ----------------      ---------------
<C>                              <C>              <C>            <C>                            <C>       <C>
$3.00                            25,000           2.75           $      3.00                    25,000    $      3.00

$4.00-4.76                       35,675           0.81                  4.70                    35,675           4.70
$5.00-5.36                      397,250           2.00                  5.04                   397,250           5.04
$6.38                             5,000           3.75                  6.38                     5,000           6.38
                      -----------------                                               ----------------
                                462,925                                                        462,925
                      =================                                               ================

</TABLE>

16.      NET CAPITAL REQUIREMENTS

         National, as a registered broker-dealer is subject to the SEC's Uniform
         Net Capital Rule 15c3-1, which requires the maintenance of minimum net
         capital. National has elected to use the alternative standard method
         permitted by the rule. This requires that National maintain minimum net
         capital equal to the greater of $1,000,000 or 2% of aggregate debit
         items. At September 28, 2001, National's net capital exceeded the
         requirement by $881,000

         WestAmerica, as a registered broker-dealer is also subject to the SEC's
         Net Capital Rule 15c3-1, which, under the standard method, requires
         that each company maintain minimum net capital equal to the greater of
         $100,000 or 6 2/3% of aggregate indebtedness. At September 28, 2001,
         WestAmerica did not satisfy the net capital requirement.

         Canterbury is also subject to the Securities and Exchange Commission=s
         Uniform Net Capital Rule 15c3-1, which requires the maintenance of
         minimum net capital. Canterbury must meet a minimum capital requirement
         of $5,000. As of September 28, 2001, Canterbury was in compliance with
         the minimum capital requirement.

         Advances, dividend payments and other equity withdrawals from its
         subsidiaries are restricted by the regulations of the SEC, and other
         regulatory agencies. These regulatory restrictions may limit the
         amounts that these subsidiaries may dividend or advance to the Company.

17.      EMPLOYEE BENEFITS

         The Company's subsidiaries have defined 401(k) profit sharing plans
         which cover substantially all of their employees. Under the terms of
         the plans, employees can elect to defer up to 25% of eligible
         compensation, subject to certain limitations, by making voluntary
         contributions to their respective plans. Each company's annual
         contributions are made at the discretion of the respective Board of
         Directors. During the fiscal years September 28, 2001, September 29,
         2000 and September 24, 1999, the Company made no such contributions.



                                      F-22

<PAGE>
18.      FINANCIAL INFORMATION - OLYMPIC CASCADE FINANCIAL CORPORATION


         Olympic was formed on February 6, 1997. The following Olympic (parent
         company only) financial information should be read in conjunction with
         the other notes to the consolidated financial statements.






                                      F-23



<PAGE>
                      OLYMPIC CASCADE FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

        SEPTEMBER 28, 2001 AND SEPTEMBER 29, 2000 AND SEPTEMBER 24, 1999
                                   (CONTINUED)


NOTE 18- FINANCIAL INFORMATION - OLYMPIC

The following Olympic (parent company only) financial information should be read
in conjuction with notes to the consolidated financial statements.


                        STATEMENTS OF FINANCIAL CONDITION

                                     ASSETS
<TABLE>
<CAPTION>

                                                                September 28,         September 29,
                                                                     2001                 2000
                                                               -----------------    ------------------
<S>                                                                    <C>                   <C>
           Cash, subject to immediate withdrawal                       $ 43,000              $ 31,000
           Receivable from subsidiaries                                       -               567,000
           Other receivables                                             12,000                41,000
           Capital lease                                                281,000               546,000
           Investment in subsidiaries                                 3,521,000             8,219,000
           Other assets                                                 501,000               122,000
                                                               -----------------    ------------------
                                                                    $ 4,358,000           $ 9,526,000
                                                               =================    ==================


     LIABILITIES AND STOCKHOLDERS' EQUITY

           Accounts payable, accrued expenses and other liabilities   $ 138,000             $ 291,000
           Payable to subsidiaries                                      263,000                     -
           Capital lease payable                                        300,000               582,000
           Note payable                                               3,035,000               614,000
                                                               -----------------    ------------------
                                                                      3,736,000             1,487,000
                                                               -----------------    ------------------
           Stockholders' equity                                         622,000             8,039,000
                                                               -----------------    ------------------
                                                                    $ 4,358,000           $ 9,526,000
                                                               =================    ==================

</TABLE>



                                      F-24

<PAGE>

                      OLYMPIC CASCADE FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

         SEPTEMBER 28, 2001, SEPTEMBER 29, 2000, AND SEPTEMBER 24, 1999
                                   (CONTINUED)

NOTE 18 - FINANCIAL INFORMATION - OLYMPIC (CONTINUED)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                     Fiscal Year Ended
                                                            --------------------------------------------------------------

                                                              September 28, 2001   September 29, 2000   September 24, 1999
                                                            ---------------------  -------------------  ------------------
<S>                                                               <C>                 <C>                   <C>
       Operating expenses                                         $ (1,111,000)       $ (1,164,000)         $ (624,000)
       Other income(expense)
             Interest and other income                                   3,000              60,000              20,000
             Gain (loss) on investment in subsidiaries              (6,230,000)          2,460,000             607,000
             Gain (loss) on sale of investments                              -                   -               5,000
                                                            ---------------------  -------------------  ------------------
       Net income (loss) before income tax                          (7,338,000)          1,356,000               8,000
       Income tax benefit                                                    -                   -                   -
       Discontinued operations, net of tax                          (1,002,000)            200,000             110,000
       Extraordinary item, net of tax                                  418,000                   -                   -
                                                            ---------------------  -------------------  ------------------
       Net income (loss) before income tax                        $ (7,922,000)        $ 1,556,000           $ 118,000
                                                            =====================  ===================  ==================
</TABLE>
       STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                         Common Stock                Additional
                                             ----------------------------------       Paid-In
                                                 Shares            Amount             Capital             Deficit           Total
                                             ---------------  -----------------   -----------------   -----------------  -----------

BALANCE, September 25, 1998                       1,463,007           $ 29,000         $ 9,183,000        $ (6,264,000) $ 2,948,000
                                             ---------------  -----------------   -----------------   -----------------  -----------
<S>                                                  <C>                 <C>               <C>                              <C>
       Exercise Stock Options                        82,613              2,000             297,000                   -      299,000
       Exercise of Stock Warrants                     5,000                  -              20,000                   -       20,000
       Treasury stock                                (1,025)                 -              (5,000)                  -       (5,000)
       Issuance of Common Stock in
        legal settlements
        and payment of services                      145,000              3,000             498,000                   -      501,000
       Warrants issued in conjunction
        with legal settlements                            -             120,000                   -      120,000
       Options issued to consultants                      -                  -              38,000                   -       38,000
       Net Income                                         -                  -                                 118,000      118,000
                                             ---------------  -----------------   -----------------   -----------------  -----------
BALANCE, September 24, 1999                       1,694,595             34,000          10,151,000          (6,146,000)   4,039,000

       Exercise Stock Options                       144,063              3,000             744,000                   -      747,000
       Exercise of Stock Warrants                   315,188              6,000           1,589,000                   -    1,595,000
       Options issued to consultants                      -                  -              82,000                   -       82,000
       Warrants issuance in connection
        with acquisition                                  -                  -              20,000                   -       20,000
       Net Income                                         -                  -                   -           1,556,000    1,556,000
                                             ---------------  -----------------   -----------------   -----------------  -----------
BALANCE, September 29, 2000                       2,153,846             43,000          12,586,000          (4,590,000)   8,039,000

       Exercise Stock Options                        73,603              2,000             273,000                   -      275,000
       Issuance of restricted stock to
        former employee                               9,000                  -              25,000                   -       25,000
       Options issued to consultants                      -                  -             105,000                   -      105,000
       Original discount on notes payable                 -                  -             100,000                   -      100,000
       Net loss                                           -                  -                   -          (7,922,000)  (7,922,000)
                                             ---------------  -----------------   -----------------   -----------------  -----------
BALANCE, September 28, 2001                       2,236,449           $ 45,000        $ 13,089,000       $ (12,512,000)   $ 622,000
                                             ===============  =================   =================   =================  ===========
</TABLE>
                                      F-25

<PAGE>

                      OLYMPIC CASCADE FINANCIAL CORPORATION
                                AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

         SEPTEMBER 28, 2001, SEPTEMBER 29, 2000 AND SEPTEMBER 24, 1999
                                  (CONTINUED)

NOTE 18- FINANCIAL INFORMATION - OLYMPIC (CONTINUED)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                   Fiscal Year Ended
                                                                 -----------------------------------------------------------
                                                                 September 28, 2001  September 29, 2000   September 24, 1999
                                                                 ------------------  ------------------   ------------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                               <C>                 <C>                     <C>
       Net income (loss)                                          $ (7,922,000)       $ 1,556,000             $ 118,000
       Adjustments to reconcile net income to net
        cash from operating activities
           Loss on investment in subsidiaries                        8,204,000         (1,602,000)              232,000
           Loss (gain) on sale of subsidiaries                               -                  -                (5,000)
           (Gain) on extraordinary item-extinguisment of debt         (418,000)
           Issuance of common stock in lawsuit settlement                    -                  -               501,000
           Issuance of common stock in payment of expenses                   -                  -               120,000
           Compensation related to issuance of stock options           105,000             82,000                38,000
           Depreciation and amortization                               339,000            290,000               285,000
           Changes in assets and liabilities                          (123,000)          (388,000)             (720,000)
                                                                 --------------    ---------------    ------------------
                                                                       185,000            (62,000)              569,000
                                                                 --------------    ---------------    ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
       Purchase of goodwill                                                  -            (30,000)                    -
       Capital contributions to subsidiaries                        (3,072,000)          (860,000)             (233,000)
                                                                 --------------    ---------------    ------------------
                                                                    (3,072,000)          (890,000)             (233,000)
                                                                 --------------    ---------------    ------------------

CASH FLOWS FROM FINANCING ACTIVITIES
       Exercise of stock options                                       275,000            747,000               319,000
       Proceeds from notes payable                                   3,000,000                  -                     -
       Exercise of stock warrants                                            -          1,595,000                     -
       Issuance of common stock                                         25,000                  -                     -
       Payments on capital lease                                      (340,000)          (340,000)             (348,000)
       Payments on notes payable                                       (61,000)        (1,034,000)             (300,000)
                                                                 --------------    ---------------    ------------------
                                                                     2,899,000            968,000              (329,000)
                                                                 --------------    ---------------    ------------------
                                                                        12,000             16,000                 7,000

CASH BALANCE
       Beginning of year                                                31,000             15,000                 8,000
                                                                 --------------    ---------------    ------------------
       End of year                                                    $ 43,000           $ 31,000              $ 15,000
                                                                 ==============    ===============    ==================



</TABLE>





                                      F-26