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

                                    FORM 10-Q

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

For the Quarter Ended December 31, 2002         Commission File Number 001-12629

                      OLYMPIC CASCADE FINANCIAL CORPORATION
                     (Exact name of registrant as specified)


       DELAWARE                                         36-4128138
-------------------------                   -----------------------------------
(State of 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


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

The number of shares  outstanding of registrant's  common stock, par value $0.02
per share, at February 13, 2003 was 3,367,558.


                                        1
<PAGE>
              OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                           December 31,        September 30,
                                                                                              2002                 2002
                                                                                           (unaudited)        (see note below)
                                                                                          --------------      ----------------
<S>                                                                                           <C>                 <C>
CASH, subject to immediate withdrawal                                                       $   295,000         $   325,000
CASH, restricted                                                                                  4,000             309,000
DEPOSITS                                                                                      1,088,000           1,489,000
RECEIVABLES
          Broker-dealers and clearing organizations                                           1,782,000           1,269,000
          Other, net of reserve for uncollectible accounts of $209,000                        1,006,000           1,155,000
ADVANCES TO REGISTERED REPRESENTATIVES                                                          771,000             799,000
SECURITIES HELD FOR RESALE, at market                                                         1,025,000             606,000
FIXED ASSETS, net                                                                               340,000             369,000
OTHER ASSETS                                                                                  1,754,000           1,627,000
                                                                                          --------------      --------------

                                                                                            $ 8,065,000         $ 7,948,000
                                                                                          ==============      ==============


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

BANK OVERDRAFT                                                                              $    48,000         $   408,000
PAYABLES
          Broker-dealers and clearing organizations                                             810,000             490,000
SECURITIES SOLD, BUT NOT YET PURCHASED, at market                                               203,000             105,000
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES                                      2,201,000           2,821,000
NOTE PAYABLE - RELATED PARTY                                                                  1,000,000           1,000,000
NOTES PAYABLE                                                                                 3,499,000           3,215,000
                                                                                          --------------      --------------
                                                                                              7,761,000           8,039,000
                                                                                          --------------      --------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
          Preferred stock, $.01 par value, 100,000 shares authorized, 27,825
             issued and outstanding
          Common stock, $.02 par value, 60,000,000 shares authorized, 3,290,635
             and 2,274,449 issued and outstanding at December 31, 2002 and
             September 30, 2002, respectively                                                    66,000              45,000
          Additional paid-in capital                                                         12,578,000          12,045,000
          Deficit                                                                           (12,340,000)        (12,181,000)
                                                                                          --------------      --------------
                                                                                                304,000             (91,000)
                                                                                          --------------      --------------

                                                                                            $ 8,065,000         $ 7,948,000
                                                                                          ==============      ==============

Note: The balance sheet at September 30, 2002 has been derived from the audited financial statements at that date.
</TABLE>

                 See notes to consolidated financial statements.

                                        2
<PAGE>

              OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                      ---------Three Months End---------
                                                                   December 31,                 December 31,
                                                                       2002                         2001
                                                                  -------------                 ------------
<S>                                                               <C>                           <C>
REVENUES:
Commissions                                                       $   6,008,000                 $  7,833,000
Net dealer inventory gains                                            3,557,000                    2,716,000
Interest                                                                312,000                      740,000
Transfer fees                                                           375,000                      385,000
Investment banking                                                      106,000                      102,000
Other                                                                   235,000                      511,000
                                                                  -------------                 ------------

                                                                     10,593,000                   12,287,000
                                                                  -------------                 ------------

EXPENSES:
Commissions                                                           6,901,000                    7,538,000
Salaries                                                              1,021,000                    1,278,000
Clearing fees                                                           682,000                    1,108,000
Communications                                                          558,000                      816,000
Occupancy costs                                                         753,000                      975,000
Interest                                                                 45,000                      392,000
Professional fees                                                       231,000                      282,000
Taxes, licenses, registration                                            85,000                       90,000
Other                                                                   476,000                      530,000
                                                                  -------------                 ------------
                                                                     10,752,000                   13,009,000
                                                                  -------------                 ------------
Loss from continuing operations before income
             taxes and discontinued operations                         (159,000)                    (722,000)

Income tax expense                                                            -                      (12,000)
                                                                  -------------                 ------------
Loss from continuing operations                                        (159,000)                    (734,000)

Income from discontinued operations, net of tax                               -                      300,000
                                                                  -------------                 ------------
NET LOSS                                                          $    (159,000)                $   (434,000)
                                                                  =============                 ============

EARNINGS (LOSS) PER COMMON SHARE

Basic:

             Loss from continuing operations                      $       (0.06)                $      (0.32)

             Income from discontinued operations                              -                         0.13
                                                                  -------------                 ------------
                         Net loss                                 $       (0.06)                $      (0.19)
                                                                  =============                 ============
Diluted:

             Loss from continuing operations                      $       (0.06)                $      (0.32)

             Income from discontinued operations                              -                         0.13
                                                                  -------------                 ------------
                         Net loss                                 $       (0.06)                $      (0.19)
                                                                  =============                 ============


Weighted average number of shares outstanding:
             Basic                                                    2,624,085                    2,236,449
                                                                  =============                 ============
             Diluted                                                  2,624,085                    2,236,449
                                                                  =============                 ============
</TABLE>

                 See notes to consolidated financial statements.
                                        3
<PAGE>


              OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                  ------Three Months Ended-------
                                                                                December 31,          December 31,
                                                                                    2002                  2001
                                                                                -------------         -------------
<S>                                                                               <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                       $ (159,000)          $  (434,000)
   Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities
             Depreciation and amortization                                            65,000               137,000
             Change in net assets (liabilities) of discontinued operations                 -              (300,000)

   Changes in assets and liabilities
             Cash, cash equivalents and securities                                         -            36,926,000
             Restricted cash                                                         305,000                     -
             Deposits                                                                401,000             2,345,000
             Receivables                                                            (336,000)           26,928,000
             Securities held for resale                                             (419,000)              615,000
             Other assets                                                           (127,000)               29,000
             Payables                                                                 75,000           (62,536,000)
             Securities sold, but not yet purchased                                   98,000               219,000
                                                                                -------------         -------------
   Net cash provided by (used in) operating activities                               (97,000)            3,929,000
                                                                                -------------         -------------

CASH FLOWS FROM INVESTING ACTIVITIES
             Purchase of fixed assets                                                (36,000)              (21,000)
                                                                                -------------         -------------

CASH FLOWS FROM FINANCING ACTIVITIES
             Borrowings (payments) on line of credit                                       -            (3,500,000)
             Payments on capital lease                                                     -               (85,000)
             Proceeds from notes payable                                                   -             1,000,000
             Payments on notes payable                                               (91,000)              (12,000)
             Decrease in cash overdraft                                             (360,000)           (1,556,000)
             Net proceeds from issuance of preferred stock                                 -               972,000
             Net proceeds from issuance of common stock and warrants                 554,000                     -
                                                                                -------------         -------------
   Net cash provided by (used in) financing activities                               103,000            (3,181,000)
                                                                                -------------         -------------

NET INCREASE (DECREASE) IN CASH                                                      (30,000)              727,000

CASH BALANCE
             Beginning of the period                                                 325,000               150,000
                                                                                -------------         -------------

             End of the period                                                    $  295,000           $   877,000
                                                                                =============         =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
             Cash paid during the period for
             Interest                                                             $   45,000           $   345,000
                                                                                =============         =============
             Income taxes                                                         $        -           $    12,000
                                                                                =============         =============

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
                FINANCING ACTIVITIES
             Exchange of notes payable for preferred stock                        $        -           $ 1,000,000
                                                                                =============         =============
             Conversion of accounts payable to note payable                       $  375,000           $         -
                                                                                =============         =============
</TABLE>

                 See notes to consolidated financial statements.
                                        4
<PAGE>


              OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     DECEMBER 31, 2002 AND DECEMBER 31, 2001

                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

The accompanying  consolidated financial statements of Olympic Cascade Financial
Corporation  ("Olympic" or the "Company")  have been prepared in accordance with
generally accepted  accounting  principles for interim financial  statements and
with  the   instructions  to  Form  10-Q  and  Rule  10-01  of  Regulation  S-X.
Accordingly, they do not include all of the information and disclosures required
for annual financial statements.  In the opinion of management,  all adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation have been included. The consolidated financial statements as of and
for the periods ended December 31, 2002 and December 31, 2001 are unaudited. The
results of operations for the interim periods are not necessarily  indicative of
the results of operations for the fiscal year. These financial statements should
be read in conjunction  with the consolidated  financial  statements and related
footnotes  included  thereto in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2002.

Certain revenues  classified as net dealer inventory gains and other revenues in
prior quarters have been reclassified as commission revenues to conform with the
presentation used in the December 31, 2002 financial statements.

NOTE 2 - PRIVATE PLACEMENT

In the first  quarter of fiscal  year 2003,  the Company  consummated  a private
placement  (the  "Private  Offering") of its  securities to a limited  number of
"accredited investors" pursuant to Rule 501 of Regulation D under the Securities
Act of 1933,  as  amended  (the  "Securities  Act").  Each  unit in the  Private
Offering  sold for $0.65 and  consisted  of one  share of the  Company's  common
stock, $.02 par value per share (the "Common Stock") and one three-year  warrant
to  purchase  one share of the  Company's  Common  Stock at a per share price of
$1.25 (the "Warrants").  Net proceeds of $554,500 closed in the first quarter of
fiscal year 2003, and the Company  correspondingly  issued  1,016,186  shares of
Common Stock and 1,016,186 Warrants.

NOTE 3 - LOAN FROM FIRST CLEARING CORPORATION

In the first quarter of fiscal year 2003,  First  Clearing  Corporation  ("First
Clearing") loaned the Company an additional $375,000 in the form of clearing fee
rebates.  The loan is due to be  repaid in  January  2004.  Additionally,  First
Clearing has waived its  stockholders'  equity covenant as of December 31, 2002.
The minimum level of  stockholders'  equity  required to be  maintained  will be
$500,000 as of March 31, 2003 and $1,000,000 as of June 30, 2003.


                                        5
<PAGE>


NOTE 4 - CLOSING OF WESTAMERICA INVESTMENT GROUP

In December 2001, the Company's former subsidiary,  WestAmerica Investment Group
("WestAmerica")   voluntarily   withdrew  its   membership   with  the  National
Association  of Securities  Dealers  ("NASD"),  ceased to conduct  business as a
broker-dealer,  and filed for Chapter 7 Bankruptcy protection in accordance with
the U.S.  Bankruptcy  Code.  WestAmerica  had been operated as a separate  legal
entity,  and the Company believes it will not have any ongoing liability for any
unpaid obligations of WestAmerica.  Consequently, in the first quarter of fiscal
year 2002, the Company recorded a gain of $300,000 from discontinued  operations
related to the write-off of WestAmerica's net liabilities.

NOTE 5 - CONTINGENCIES

National  Securities   Corporation,   the  Company's   wholly-owned   subsidiary
("National"),  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 a motion 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,  National submitted its answer to
the  complaint  in which it set  forth  its  defenses.  In  November  2001,  the
plaintiffs filed a motion to certify the class.  Plaintiffs  thereafter withdrew
their motion and the case was referred to mediation.  The  mediation  process is
moving  toward a global  settlement  of the  matter.  Should  the  matter not be
settled, National will pursue its defenses, which it believes are meritorious.

In April  2002,  a former  executive  officer of the  Company,  Craig M.  Gould,
commenced  an action  against  the Company  claiming a breach of his  employment
contract, and seeking approximately $575,000 in damages. The Company believes it
has meritorious defenses and intends to vigorously defend this action,  although
the ultimate outcome of the matter cannot be determined at this time.

In June 2002,  National was named,  together  with  others,  as a defendant in a
class action lawsuit relating to a series of private placements of securities in
Fastpoint Communications, Inc. in the Superior Court for the State of California
for the County of San Diego. Plaintiffs are seeking approximately $14.0 million,
but no  specific  amount of damages  has been  sought  against  National  in the
complaint.  National's time to answer has not yet expired.  National believes it
has meritorious  defenses and intends to vigorously contest class  certification
and defend this action,  although the ultimate  outcome of the matter  cannot be
determined at this time.

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  $4.8  million.  These matters arise out of the
normal course of business.  The Company believes it has meritorious defenses and
intends to vigorously defend these actions, although the ultimate outcome of the
matters cannot be determined at this time.

NOTE 6 - ISSUANCE OF COMMON STOCK

In  January  2003,  the  Company  issued  76,923  shares of  Common  Stock and a
three-year  warrant to purchase 76,923 shares of Common Stock at $1.25 per share
to  D'Ancona & Pflaum LLC as payment of $50,000 of legal fees that were  accrued
as of September 30, 2002.

                                        6
<PAGE>

NOTE 7 - THE AMERICAN STOCK EXCHANGE

The Company has received a letter from The American  Stock  Exchange  indicating
that it is not in  compliance  with certain  listing  standards  relating to (1)
shareholders'  equity of less than  $2.0  million  and  losses  from  continuing
operations  and/or net losses in two out of its three most recent  fiscal years,
and (2) the requirement to have and maintain an audit committee  comprised of at
least three independent directors. The Company intends to submit to the Exchange
a plan that  indicates  compliance  with item (1) above  within a maximum  of 18
months,  and the Company is actively  seeking  another  independent  director to
satisfy item (2) above.

In the event that the Company  fails to comply with the listing  standards,  the
Company's  common  stock could trade on the OTC  Bulletin  Board or in the "pink
sheets" maintained by the National Quotation Bureau,  Inc. Such alternatives are
generally  considered to be less  efficient  markets,  and the  Company's  stock
price, as well as the liquidity of the Company's  common stock, may be adversely
impacted as a result.


                                        7
<PAGE>



ITEM 2 - 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 Quarterly 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 the
Company's  Annual Report on Form 10-K,  filed with the  Securities  and Exchange
Commission on December 26, 2002. Any forward-looking  statements contained in or
incorporated  into  this  Quarterly  Report  speak  only as of the  date of this
Quarterly  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

Reclassification of Revenues

Certain revenues  classified as net dealer inventory gains and other revenues in
prior quarters have been reclassified as commission revenues to conform with the
presentation used in the December 31, 2002 financial statements.

Quarter Ended December 31, 2002 Compared to Quarter Ended December 31, 2001

The Company's  first quarter of fiscal year 2003 resulted in a decrease in total
revenues and a corresponding greater decrease in expenses compared with the same
period of fiscal year 2002.  The  decrease  in revenues is due to the  continued
weakness in the securities markets compared to a year ago. However,  as a result
of management's  efforts to reduce the fixed costs  associated with its salaried
employees,  communication  expenses,  occupancy  costs and other  expenses,  the
Company's loss from continuing  operations before income tax decreased  $563,000
from  $722,000 in the first quarter of fiscal year 2002 to $159,000 in the first
quarter of fiscal year 2003.

Total revenues decreased $1,694,000, or 14%, to $10,593,000 in the first quarter
of fiscal year 2003 from  $12,287,000  in the first quarter of fiscal year 2002.
The decrease in total revenues is primarily due to the weaker overall securities
market  compared with the  securities  market during the same period a year ago.
Accordingly,  commission  revenues decreased  $1,825,000 or 23% to $6,008,000 in
the first  quarter of fiscal year 2003 as compared  to  $7,833,000  in the first
quarter of fiscal year 2002. Net dealer inventory gains increased  $841,000,  or
31%, to $3,557,000  in the first quarter of fiscal year 2003 from  $2,716,000 in
the first quarter of fiscal year 2002.

Investment  banking  revenues were virtually  unchanged at $106,000 in the first
quarter of fiscal year 2003 from  $102,000  in the first  quarter of fiscal year
2002.  Interest  income  decreased  $428,000,  or 58%,  to $312,000 in the first
quarter of fiscal year 2003 from  $740,000  in the first  quarter of fiscal year
2002. This decrease is offset by the corresponding decrease in interest expense,
which decreased $347,000, or 89%, to $45,000 in the first quarter of fiscal year
2003 from  $392,000 in the first  quarter of fiscal year 2002.  The  decrease in
both interest  income and interest  expense is attributable to a decrease in the
amount of customer credits and customer debits at National due to the conversion
of its  clearing  business  in the first  quarter  of fiscal  year  2002,  and a
decrease in interest rates in 2003 as compared to 2002. Other revenues decreased
$276,000,  or 54%,  to  $235,000  in the first  quarter of fiscal year 2003 from
$511,000  in the first  quarter of fiscal  year 2002.  The  decrease is due to a
decline in asset  management  fees,  a decrease in service  fees on IRA accounts
that are now  collected by First  Clearing  rather than the  Company,  and fewer
order flow rebates from other broker-dealers.

                                        8
<PAGE>

In comparison with the 14% decrease in total revenues,  total expenses decreased
$2,257,000, or 17%, to $10,752,000 in the first quarter of fiscal year 2003 from
$13,009,000  in the first  quarter of fiscal  year 2002.  The  decrease in total
expenses is a result of  management's  efforts to streamline  its operations and
reduce costs.

Commission expense,  which includes expenses related to commission revenue,  net
dealer inventory gains and investment  banking,  decreased  $637,000,  or 8%, to
$6,901,000  in the first  quarter of fiscal  2003 from  $7,538,000  in the first
quarter  of fiscal  2002.  This is  consistent  with the  decrease  in  combined
revenues from  commissions,  net dealer  inventory gains and investment  banking
during the same period.  Salaries decreased  $257,000,  or 20%, to $1,021,000 in
the first  quarter of fiscal year 2003 from  $1,278,000  in the first quarter of
fiscal year 2002. This decrease is due to management's ongoing efforts to reduce
its fixed costs associated with salaried employees. Overall, combined commission
and salary  expenses as a percentage  of revenue  increased 3% to 75% during the
first  quarter of fiscal year 2003  compared to 72% during the first  quarter of
fiscal year 2002.

Clearing fees  decreased  $426,000,  or 38%, to $682,000 from  $1,108,000 in the
first  quarter of fiscal year 2003  compared to the first quarter of fiscal year
2002.  The decrease in clearing  fees is due to the  Company's  self  clearing a
majority of its  business in the first  quarter of fiscal year 2002  compared to
clearing  all of its business  through  First  Clearing in the first  quarter of
fiscal year 2003,  as well as lower trading  volume  during the current  period.
Communication expenses decreased $258,000, or 32%, to $558,000 from $816,000 due
to management's  ongoing  efforts to reduce its fixed costs  associated with its
communication expenses.  Occupancy costs decreased $222,000, or 23%, to $753,000
from $975,000 in first quarter of fiscal year 2003 compared to the first quarter
of fiscal year 2002.  The decrease in occupancy  expense is due to the Company's
renegotiating  certain long-term office leases, and finding subtenants to occupy
unused space.

Professional  fees decreased  $51,000,  or 18%, to $231,000 from $282,000 in the
first  quarter of fiscal  years 2003 and 2002,  respectively.  The  decrease  in
professional  fees is due to a reduction  in both the number and amount of legal
consultations used in operating our business.  Taxes, licenses and registrations
were virtually unchanged at $85,000 in the first quarter of fiscal year 2003 and
$90,000 in the first  quarter  of fiscal  year 2002.  Other  expenses  decreased
$54,000,  or 10%, to $476,000 from $530,000 in the first quarter of fiscal years
2003 and 2002,  respectively.  The decrease in other expenses is attributable to
management's efforts to reduce travel and miscellaneous expenses.

Due to the  continued  slumping  markets,  the Company  reported a net loss from
continuing  operations  of  $159,000  in the first  quarter of fiscal  year 2003
compared to a net loss from continuing  operations of $734,000 the first quarter
of fiscal year 2002.  Overall,  the diluted loss from continuing  operations was
$.06 per share for the  first  quarter  of  fiscal  year 2003 as  compared  to a
diluted loss from continuing  operations of $.32 per share for the first quarter
of fiscal year 2002.

                                        9
<PAGE>

In the first  quarter of fiscal  2002,  the Company  recorded a gain of $300,000
from  discontinued  operations  related to the  write-off of  WestAmerica's  net
liabilities.  Overall,  the net loss was $.06 per share in the first  quarter of
fiscal  year  2003 as  compared  to a net loss of $.19 per  share  for the first
quarter of fiscal year 2002.

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. Through December 2001, while acting as a self-clearing  firm, these assets
were financed primarily by National's interest bearing and non-interest  bearing
customer credit balances,  other payables and equity capital.  National utilized
short-term bank financing to supplement its ability to meet day-to-day operating
cash  requirements.  Such  financing  was  used to  maximize  cash  flow and was
regularly  repaid.  The Company's line of credit was fully repaid and expired on
December 31, 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 a specified amount per security based on the bid price of
each  security  for which the Company is a market  maker.  At December 31, 2002,
National's net capital exceeded the requirement by $1,178,000.

In December 2001, WestAmerica voluntarily withdrew its membership with the NASD,
ceased  conducting  business  as  a  broker-dealer,  and  filed  for  Chapter  7
Bankruptcy  protection in accordance with the U.S. Bankruptcy Code.  WestAmerica
had been operated as a separate legal entity,  and although the Company believes
it  will  not  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.

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

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  explored  various  transactions  to
finance the Company's  operations.  In December  2001,  the Company  completed a
series of transactions  under which certain new investors obtained a significant
ownership  in  the  Company.   (For  a  more  complete   description   of  these
transactions,  see Item 1(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2002.) The Company  continued to incur operating
losses throughout  fiscal year 2002, and as a result,  the Company believed that
its then  existing  capital was not  sufficient  to satisfy its current level of
operations.  Accordingly, the Company pursued additional sources of capital from
various  potential  investors.  In the fourth  quarter of fiscal year 2002,  the
Company completed  $210,000 of financing in the form of Series A Preferred Stock
and continued to seek additional investors.

In the first  quarter of fiscal  year 2003,  the Company  consummated  a private
placement  (the  "Private  Offering") of its  securities to a limited  number of
accredited  investors  pursuant to Rule 501 of Regulation D under the Securities
Act of 1933,  as  amended  (the  "Securities  Act").  Each  unit in the  Private
Offering sold for $0.65 and consisted of one share of the Company's Common Stock
and one three-year  warrant to purchase one share of the Company's  Common Stock
at a per share price of $1.25 (the  "Warrants").  Net proceeds of $554,500  were
received  in  the  first   quarter  of  fiscal   year  2003,   and  the  Company
correspondingly  issued 1,016,186 shares of Common Stock and 1,016,186 Warrants.
The Company has agreed to file a Registration Statement under the Securities Act
for the  resale of the  shares of Common  Stock and the  shares of Common  Stock
issuable upon exercise of the Warrants,  on or before March 3, 2003, and use its
commercially  reasonable efforts to cause such registration  statement to become
effective within 60 days after such filing and to maintain the  effectiveness of
such registration  statement for a period of no less than the earlier of (i) the
date  on  which  all  of  the  registrable  securities  may  be  resold  without
restriction  pursuant to Rule 144(k) under the Securities  Act, or (ii) the date
on which all of the registrable securities have been sold. National acted as the
placement agent on a best efforts basis for the Private Offering.

                                       10
<PAGE>

In August 2001, the Company  entered into an agreement with First Clearing under
which First Clearing  provides  clearing and related services for National.  The
Clearing Agreement expands the products and services capabilities for National's
retail and  institutional  business,  and enables  National to  consolidate  its
existing clearing  operations and reduce the fixed overhead  associated with its
self-clearing activities.

The  conversion  to First  Clearing  began in December 2001 and was completed in
March 2002. In connection with the Clearing  Agreement,  the Company  executed a
ten-year  promissory  note in favor of 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  provided  for another
$1,000,000 loan that was extended to the Company upon substantial  completion of
the conversion on December 31, 2001 that was also  contributed to National.  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.
Borrowings under the promissory note are forgivable  based on achieving  certain
business  performance  and trading  volumes of the Company  over the life of the
loan,  that the Company has  satisfied  through the quarter  ended  December 31,
2002.

In connection with the Clearing Agreement,  additional borrowings were available
to  the  Company  upon  the   attainment  by  National  of  certain  volume  and
profitability  goals.  In finalizing the  conversion,  a dispute arose among the
Company,  US Clearing  (one of its former  clearing  firms) and First  Clearing,
regarding the responsibility for debit balances in certain trading accounts. The
three parties agreed to share the expense  equally.  The Company's share of this
settlement, $548,000, was advanced to the Company by First Clearing and added to
the existing  promissory  note. As part of the settlement,  the minimum level of
stockholders'  equity  required  to be  maintained  by  the  Company  under  the
promissory  note was  reduced  from  $2,000,000  to  $1,000,000  and no  further
borrowings are available  under the promissory  note, as amended.  Additionally,
National  received its  clearing  deposit,  net of  miscellaneous  expenses,  of
$975,000 from US Clearing.  National  terminated its clearing  agreement with US
Clearing.

In the first quarter of fiscal year 2003,  First Clearing  loaned the Company an
additional  $375,000 in the form of clearing fee rebates.  The loan is due to be
repaid  in  January   2004.   Additionally,   First   Clearing  has  waived  the
stockholders'  equity  covenant as of December  31, 2002.  The minimum  level of
stockholders'  equity  required to be maintained was further amended to $500,000
as of March 31, 2003 and $1,000,000 as of June 30, 2003.

The Company  believes  that given the  improved  market  conditions  experienced
during the first  quarter of fiscal year 2003  compared  with the prior  quarter
ended September 30, 2002, the  continuation of such improved market  conditions,
and the proceeds from its capital-raising  activities,  funds will be sufficient
to maintain its current level of business activities during fiscal year 2003. If
current  market  conditions do not continue,  the Company would need to consider
curtailing  certain  of its  business  activities,  further  reducing  its fixed
overhead  costs  and/or seek  additional  sources of  financing.  The  Company's
ability  to  obtain  such  financing  could  be  adversely  affected  by  recent
developments  relating  to the  listing  of the  Company's  common  stock on The
American Stock Exchange (See Note 7 herein).

                                       11
<PAGE>

New Accounting Standards

In December  2002, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 148,  "Accounting for
Stock-Based  Compensation  -  Transition  and  Disclosure - an amendment of FASB
Statement  No.  123.  " SFAS No.  148  amends  SFAS  No.  123,  "Accounting  for
Stock-Based  Compensation," to provide  alternative  methods of transition for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation.   In  addition,  SFAS  No.  148  amends  the  disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim  financial  statements  about the method of accounting  for  stock-based
employee compensation and the effect of the method used on reported results. The
disclosure  requirements  apply to all  companies  for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial
reports  containing  financial  statements for interim  periods  beginning after
December  15,  2002.  The  adoption  of SFAS No. 148 is not  expected  to have a
material impact on the Company's financial statements.

ITEM 3 - 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.

                                       12
<PAGE>

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 December 31, 2002:

<TABLE>
<CAPTION>

                           Long             Short             Net
                           --------         ---------         ---------
<S>                        <C>              <C>               <C>
Corporate Stocks           $505,000         $132,000          $373,000 (long)
Corporate Bonds            $485,000         $     -           $485,000 (long)
Government Obligations     $ 35,000        $  71,000          $ 36,000 (short)
</TABLE>

ITEM 4 - CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report,  we carried out an  evaluation,
under the  supervision  and with the  participation  of our principal  executive
officer and principal  financial officer, of the effectiveness of the design and
operation  of our  "disclosure  controls  and  procedures"  (as  defined  in the
Securities Exchange Act of 1934 Rules 13a-14(c) and 15(d)-14(c)).  Based on this
evaluation,  our principal  executive  officer and principal  financial  officer
concluded  that our  disclosure  controls and procedures are effective in timely
alerting  them to material  information  required to be included in our periodic
SEC reports.

In  addition,  we  reviewed  our  internal  controls,  and  there  have  been no
significant  changes in our  internal  controls or in other  factors  that could
significantly affect those controls subsequent to the date of our evaluation.


                                     PART II

ITEM 1 - LEGAL PROCEEDINGS

During the quarter,  there were no  significant  developments  in the  Company's
legal proceedings. For a detailed discussion of the Company's legal proceedings,
please refer to Note 5 herein,  and the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2002.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

In the first  quarter of fiscal  year 2003,  the Company  consummated  a private
placement  (the  "Private  Offering") of its  securities to a limited  number of
"accredited investors" pursuant to Rule 501 of Regulation D under the Securities
Act of 1933,  as  amended  (the  "Securities  Act").  Each  unit in the  Private
Offering sold for $0.65 and consisted of one share of the Company's Common Stock
and one three-year  warrant to purchase one share of the Company's  Common Stock
at a per share price of $1.25 (the  "Warrants").  Net proceeds of $554,500  were
received  in  the  first   quarter  of  fiscal   year  2003,   and  the  Company
correspondingly  issued 1,016,186 shares of Common Stock and 1,016,186 Warrants.
The Company has agreed to file a Registration Statement under the Securities Act
for the  resale of the  shares of Common  Stock and the  shares of Common  Stock
issuable upon exercise of the Warrants,  on or before March 3, 2003, and use its
commercially  reasonable efforts to cause such registration  statement to become
effective within 60 days after such filing and to maintain the  effectiveness of
such registration  statement for a period of no less than the earlier of (i) the
date  on  which  all  of  the  registrable  securities  may  be  resold  without
restriction  pursuant to Rule 144(k) under the Securities  Act, or (ii) the date
on which all of the registrable securities have been sold.

                                       13
<PAGE>

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

99.1     Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002.
99.2     Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
         1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002.

b) Reports on Form 8-K

None.


                                       14
<PAGE>



                                  CERTIFICATION

I, Mark Goldwasser, certify that:

1) I have reviewed this quarterly report on Form 10-Q of Olympic Cascade
Financial Corporation;

2) Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3)  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4)  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) Designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly is being prepared;

b) Evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) Presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5) The registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function);

a) All significant deficiencies in the design or operations of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) Any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6) The  registrant's  other  certifying  officer  and I have  indicated  in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.



                                                         /s/ Mark Goldwasser
                                                         Mark Goldwasser
                                                         Chief Executive Officer
                                                         February 13, 2003

                                       15
<PAGE>

                                  CERTIFICATION

I, Robert H. Daskal, certify that:

1) I have reviewed this quarterly report on Form 10-Q of Olympic Cascade
Financial Corporation;

2) Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3)  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4)  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5) The registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function);

a) all significant deficiencies in the design or operations of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6) The  registrant's  other  certifying  officer  and I have  indicated  in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


                                                  /s/ Robert H. Daskal
                                                  Robert H. Daskal
                                                  Acting Chief Financial Officer
                                                  February 13, 2003

                                       16
<PAGE>

                                   SIGNATURES

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


              OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARY



February 13, 2003                      By: /s/ Mark Goldwasser
                                           -------------------------------------
                                           Mark Goldwasser
                                           President and Chief Executive Officer




February 13, 2003                      By:/s/ Robert H. Daskal
                                          --------------------------------------

                                          Robert H. Daskal
                                          Acting Chief Financial Officer


                                       17

<PAGE>

                                                                    Exhibit 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the  Quarterly  Report of  Olympic  Cascade  Financial
Corporation  (the  "Company") on Form 10-Q for the fiscal quarter ended December
31, 2002 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"),  I, Mark  Goldwasser,  Chief  Executive  Officer of the Company,
certify,  pursuant to 18 U.S.C.  ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)      The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act of 1934, as amended; and

(2)      The information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations of
         the Company.




                                                        /s/Mark Goldwasser
                                                        Mark Goldwasser
                                                        Chief Executive Officer
                                                        February 13, 2003

                                       18
<PAGE>




                                                                    Exhibit 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the  Quarterly  Report of  Olympic  Cascade  Financial
Corporation  (the  "Company") on Form 10-Q for the fiscal quarter ended December
31, 2002 as filed with the Securities and Exchange Commission on the date hereof
(the  "Report"),  I, Robert H.  Daskal,  Acting Chief  Financial  Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)      The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act of 1934, as amended; and

(2)      The information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations of
         the Company.




                                                  /s/Robert H. Daskal
                                                  Robert H. Daskal
                                                  Acting Chief Financial Officer
                                                  February 13, 2003




                                       19