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 March 30, 2001

                        Commission File Number 001-12629

                      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, Illinois 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 May 7, 2001 was 2,227,449.


<PAGE>
                      OLYMPIC CASCADE FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                       March 30,           September 29,
                                                                                         2001                   2000
                                                                                      (unaudited)            (audited)
                                                                                   ------------------     -----------------
<S>                                                                                      <C>                   <C>
CASH, subject to immediate withdrawal                                                    $ 3,120,000           $ 3,020,000
CASH, CASH EQUIVALENTS AND SECURITIES                                                     50,513,000            29,517,000
DEPOSITS                                                                                   3,700,000             1,792,000
RECEIVABLES
   Customers                                                                              30,325,000            54,243,000
   Brokers and dealers                                                                     3,519,000             1,994,000
            Other                                                                            829,000               394,000
SECURITIES HELD FOR RESALE, at market                                                        923,000               376,000
FIXED ASSETS, net                                                                            999,000             1,112,000
GOODWILL, net                                                                                 57,000                74,000
OTHER ASSETS                                                                               3,011,000               393,000
                                                                                   ------------------     -----------------
                                                                                        $ 96,996,000          $ 92,915,000
                                                                                   ==================     =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

PAYABLES
   Customers                                                                            $ 64,491,000          $ 74,183,000
   Brokers and dealers                                                                    13,397,000             5,329,000
SECURITIES SOLD, BUT NOT YET PURCHASED, at market                                            351,000               192,000
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES                                   2,949,000             3,976,000
REVOLVING CREDIT LINE                                                                      5,000,000                     -
NOTES PAYABLE                                                                              3,065,000               614,000
CAPITAL LEASE PAYABLE                                                                        443,000               582,000
                                                                                   ------------------     -----------------
                                                                                          89,696,000            84,876,000
                                                                                   ------------------     -----------------
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, 2,227,449 and
               2,056,075 shares issued and outstanding, respectively                          45,000                43,000
            Additional paid-in capital                                                     9,264,000             8,810,000
            Deficit                                                                       (2,009,000)             (814,000)
                                                                                   ------------------     -----------------
                                                                                           7,300,000             8,039,000
                                                                                   ------------------     -----------------
                                                                                        $ 96,996,000          $ 92,915,000
                                                                                   ==================     =================
</TABLE>
The accompanying notes are an integral part of these financial statements

                                       2
<PAGE>
                      OLYMPIC CASCADE FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                  -------- Quarter Ended---------    -------Six Months Ended----------
                                                     March 30,        March 31,        March 30,        March 31,
                                                       2001              2000             2001            2000
                                                  ----------------   -------------   ---------------  --------------

REVENUES:
<S>                                                   <C>            <C>               <C>              <C>
Commissions                                           $ 6,339,000    $ 12,650,000      $ 12,579,000     $22,032,000
Net dealer inventory gains                              6,486,000       4,580,000        11,617,000       6,361,000
Interest                                                1,535,000       2,079,000         3,292,000       3,741,000
Transfer fees                                             231,000         419,000           506,000         711,000
Investment banking                                        313,000         792,000           898,000       2,008,000
Other                                                     984,000         503,000         1,428,000         640,000
                                                  ----------------   -------------   ---------------  --------------
TOTAL REVENUES                                         15,888,000      21,023,000        30,320,000      35,493,000
                                                  ----------------   -------------   ---------------  --------------
EXPENSES:
Commissions                                             8,596,000      12,664,000        16,723,000      21,192,000
Salaries                                                2,565,000       2,328,000         4,783,000       3,933,000
Clearing fees                                           1,243,000         606,000         2,253,000       1,227,000
Communications                                            940,000         300,000         1,504,000         625,000
Occupancy costs                                         1,208,000         940,000         2,375,000       1,656,000
Interest                                                  952,000       1,534,000         1,929,000       2,488,000
Professional fees                                         469,000         379,000           907,000         885,000
Taxes, licenses, registration                             214,000         245,000           461,000         453,000
Other                                                     840,000         773,000         1,195,000       1,375,000
                                                  ----------------   -------------   ---------------  --------------
TOTAL EXPENSES                                         17,027,000      19,769,000        32,130,000      33,834,000
                                                  ----------------   -------------   ---------------  --------------
Income (loss) from operations before income taxes      (1,139,000)      1,254,000        (1,810,000)      1,659,000
  and extraordinary items

(Provision) benefit for income taxes                      200,000         (35,000)          200,000         (35,000)
                                                  ----------------   -------------   ---------------  --------------
Income (loss) from operations before
  extraordinary items                                    (939,000)      1,219,000        (1,610,000)      1,624,000

 Income from extraordinary items- gain from
   extinguishment of debt, net of taxes                   418,000               -           418,000
                                                  ----------------   -------------   ---------------  --------------
NET INCOME (LOSS)                                      $ (521,000)    $ 1,219,000      $ (1,192,000)    $ 1,624,000
                                                  ================   =============   ===============  ==============
EARNINGS (LOSS) PER COMMON SHARE

 Earnings (Loss) Per Share before extraordinary
   item
           Basic Earnings (Loss) Per Share                $ (0.42)         $ 0.64           $ (0.74)         $ 0.92
                                                  ================   =============   ===============  ==============
           Diluted Earnings (Loss) Per Share              $ (0.42)         $ 0.53           $ (0.74)         $ 0.81
                                                  ================   =============   ===============  ==============
 Earnings (Loss) Per Share of extraordinary
   item
           Basic Earnings (Loss) Per Share                 $ 0.18             $ -            $ 0.19             $ -
                                                  ================   =============   ===============  ==============
           Diluted Earnings (Loss) Per Share               $ 0.18             $ -            $ 0.19             $ -
                                                  ================   =============   ===============  ==============
 Earnings (Loss) Per Share after extraordinary
  item
           Basic Earnings (Loss) Per Share                $ (0.24)         $ 0.64           $ (0.55)         $ 0.92
                                                  ================   =============   ===============  ==============
           Diluted Earnings (Loss) Per Share              $ (0.24)         $ 0.53           $ (0.55)         $ 0.81
                                                  ================   =============   ===============  ==============


</TABLE>

   The accompanying notes are an integral part of these financial statements

                                        3

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

                                                                                --------------Six Months Ended---------------
                                                                                    March 30,               March 31,
                                                                                       2001                    2000
                                                                                -------------------     -------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                   <C>                      <C>
   Net Income (loss)                                                                  $ (1,192,000)         $    1,624,000
   Adjustments to reconcile net loss to net
   cash from operating activities
             Depreciation and amortization                                                 285,000                 232,000
             Compensation related to issuance of stock options                              83,000                  41,000
             (Gain) on extraordinary item-extinguishment of debt                          (418,000)
   Changes in assets and liabilities
             Cash, cash equivalents and securities                                     (20,996,000)            (21,931,000)
             Deposits                                                                   (1,908,000)             (3,756,000)
             Receivables                                                                21,958,000             (29,769,000)
             Securities held for resale                                                   (547,000)               (131,000)
             Other assets                                                               (2,618,000)               (327,000)
             Customer and broker payables                                               (1,624,000)             49,153,000
             Securities sold, but not yet purchased                                        159,000                 220,000
             Accounts payable, accrued expenses, and other liabilities                    (980,000)              3,622,000
                                                                                -------------------     -------------------
    NET CASH USED IN OPERATING ACTIVITIES                                               (7,798,000)             (1,022,000)
                                                                                -------------------     -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
             Purchase of fixed assets                                                     (155,000)               (207,000)
                                                                                -------------------     -------------------
CASH FLOWS FROM FINANCING ACTIVITIES
             Borrowings on line of credit                                                5,000,000                 900,000
             Payments on capital lease                                                    (170,000)               (170,000)
             Payments on notes                                                             (52,000)               (609,000)
             Borrowings on notes                                                         3,000,000                       -
             Exercise of stock options and warrants                                        275,000               1,735,000
                                                                                -------------------     -------------------
     NET CASH PROVIDED BY FINANCING ACTIVITIES                                           8,053,000               1,856,000
                                                                                -------------------     -------------------
INCREASE IN CASH                                                                           100,000                 627,000

CASH BALANCE
             Beginning of the period                                                     3,020,000                 384,000
                                                                                -------------------     -------------------
             End of the period                                                       $   3,120,000          $    1,011,000
                                                                                ===================     ===================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
             Cash paid during the period for
             Interest                                                                $   1,896,000          $    2,442,000
                                                                                ===================     ===================
             Income taxes                                                            $     324,000          $            -
                                                                                ===================     ===================
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
             FINANCING ACTIVITIES

             Warrants issued as a discount on notes payable                          $     138,000          $            -
                                                                                ===================     ===================
</TABLE>
    The accompanying notes are an integral part of these financial statements
                                       4
<PAGE>


             OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        MARCH 30, 2001 AND MARCH 31, 2000

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 March 30,  2001 and March 31,  2000 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 29, 2000.

NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Nature of  Business - The  Company is a  financial  services  organization,
operating  through its three  wholly  owned  subsidiaries,  National  Securities
Corporation  ("National"),  WestAmerica  Investment  Group  ("WestAmerica")  and
Canterbury  Securities  Corporation  ("Canterbury").  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 (i) research,  financial
advisory  services and sales,  (ii) investment  banking services for both public
offerings and private  placements and (iii) retail and institutional  brokerage,
OTC market making and trade clearance operations.

     Earnings (Loss) Per Share - Basic earnings (loss) per common share is based
upon the net income (loss) for the period divided by the weighted average number
of common shares outstanding during the period. For the second quarter of fiscal
2001 and 2000, the number of shares used in the basic earnings  (loss) per share
calculation was 2,214,048 and 1,918,493,  respectively. For the first six months
of fiscal 2001 and 2000, the number of shares used in the basic earnings  (loss)
per  share  calculation  was  2,186,308  and  1,762,616,  respectively.  Diluted
earnings (loss) per common share assumes that all common stock  equivalents have
been converted to common shares using the treasury stock method at the beginning
of the period.  For the second  quarter of fiscal  2001 and 2000,  the number of
shares used in the diluted  earnings (loss) per share  calculation was 2,214,048
and 2,295,485,  respectively.  For the first six months of fiscal 2001 and 2000,
the number of shares used in the diluted  earnings (loss) per share  calculation
was 2,186,308 and 1,995,589, respectively.


                                       5
<PAGE>


NOTE 2 - LINE OF CREDIT

In January 2001, National consummated a new secured line of credit of
$5,000,000. The line is subject to renewal on December 31, 2001. Borrowings bear
interest at the call money rate plus 1%. At March 30, 2001, the interest rate
was 7.75%. Interest is payable monthly. The line is secured by certain assets of
National excluding items prohibited from being pledged and assets included in
the SEC Customer Protection Rule 15c3-3 formula. These borrowings are short-term
and generally do not extend beyond a few days. At March 30, 2001, National had
$5,000,000 in borrowings outstanding.

NOTE 3 - NOTES PAYABLE

In January 2001, the Company executed two promissory notes each in the amount of
$1,000,000. The notes bear interest annually at 9% with interest paid quarterly.
The principal of each note matures on January 25, 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 January 25, 2004,  were valued at $50,000  each,  and have been recorded as a
discount to the respective notes.

Additionally,  on  February  1, 2001,  National  executed a secured  demand note
collateral  agreement with an employee of the Company,  to borrow  securities as
collateral  to be  pledged  through  an  unrelated  broker-dealer,  which have a
borrowing  value totaling  $1,000,000.  This note bears interest  annually at 5%
with  interest  paid  monthly.  The demand note matures on February 1, 2004.  In
connection with the note, a warrant was issued for the purchase of 75,000 shares
of the  Company's  common  stock at an  exercise  price of $5.00 per share.  The
warrant,  which expires on February 1, 2004,  was valued at $37,500 and has been
recorded as a discount to the note.

NOTE 4 - OTHER ASSETS

During the  quarter,  the Company had its initial  closing of Robotics  Ventures
Fund I, L.P.,  a venture  capital  fund  dedicated  to investing in robotics and
artificial  intelligence  companies.  The fund raised $5.1  million of which the
Company  invested  $265,000.  The Company has recorded this  investment in other
assets.

Additionally, the Company, through WestAmerica, invested $150,000 in the opening
of a branch office in Israel.  The Company has recorded such amount as a prepaid
expense, which is being amortized during the current fiscal year.

NOTE 5 - EXTRAORDINARY ITEMS-EXTINGUISHMENT OF DEBT

In March 2001, the Company  settled a note in full for $52,000.  Under the terms
of the previous  agreement,  the note was to be repaid monthly through  November
30, 2002.  The debt was recorded on the books at $455,000 plus accrued  interest
of $15,000.  The Company has recorded  the gain of $418,000 as an  extraordinary
item on the Statements of Operations.


                                       6
<PAGE>


NOTE 6 - 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  National  in the  complaint.  In June 2000,
National filed to dismiss this action. In March 2001, the United States District
Court for the Southern District of New York denied National's motion to dismiss.
National's  answer to the  complaint  is due in May  2001,  in which it will set
forth its  defenses.  National  believes  that its  defenses  are valid and will
vigorously defend this action.

The Company is a defendant  in various  other  arbitrations  and  administrative
proceedings,  lawsuits  and  claims,  which in the  aggregate  seek  general and
punitive damages. The Company believes that the resolution of these matters will
not have a material adverse effect. These matters arise out of the normal course
of business.


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 Registration Statement on Form S-3 (Registration No. 333-80247), filed
with the  Securities  and Exchange  Commission on June 9, 1999 and the Company's
other Securities and Exchange Commission filings, including the Company's Annual
Report on Form 10-K and  Quarterly  Reports  on Form 10-Q.  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.

Quarter Ended March 30, 2001 Compared to Quarter Ended March 31, 2000
---------------------------------------------------------------------

The Company's  second  quarter of fiscal 2001 resulted in a decrease in revenues
and to a lesser  extent a decrease in expenses  compared with the same period of
fiscal 2000.  The decrease in revenues is due to continued  slumping  securities
markets,  which  significantly  affected commission  revenues.  As a result, the
Company  reported a net loss of $521,000  compared with net income of $1,219,000
for the second quarter of fiscal 2000.  Included in the net loss for fiscal 2001
was a gain on extinguishment of debt totaling $418,000.


                                       7
<PAGE>

Revenues  decreased  $5,135,000 or 24% to $15,888,000  from  $21,023,000  during
fiscal 2001 compared with fiscal 2000. This decrease is due mainly to the weaker
overall  market  compared with the strong  market  during the second  quarter of
fiscal  2000.  The 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 in the second quarter of
fiscal 2001 while net dealer  inventory gains increased  during the same period.
Commission  revenue decreased  $6,311,000 or 50%, to $6,339,000 from $12,650,000
during the second quarter fiscal 2001 compared with the second quarter of fiscal
2000.  This  decrease is due to the dramatic  downturn in the market  during the
period from a very strong market for the same period of fiscal 2000.

Net dealer  inventory  gains  increased  $1,906,000 or 42%, to  $6,486,000  from
$4,580,000  during the  second  quarter  fiscal  2001  compared  with the second
quarter fiscal 2000.  This increase was primarily due to the activities  derived
from the New York office, which opened in October 2000.

Investment  banking revenue decreased $479,000 or 60% to $313,000 in fiscal 2001
from  $792,000 in fiscal 2000.  National  earned fees from  advisory  agreements
during the second quarter of fiscal 2001. During the same period in fiscal 2000,
National  earned fees from advisory  agreements and  participated in two private
placements raising approximately $3.0 million in gross proceeds for clients.

Transfer fees decreased  $188,000,  or 45%, to $231,000 from $419,000 during the
second  quarter  fiscal 2001 compared to the second  quarter  fiscal 2000.  This
decrease was due primarily to the decreased retail agency trade volume.

Other revenues  increased  $481,000 or 96% to $984,000 from  $503,000.  The main
reason for this increase is income from revenues  generated from the proprietary
execution system developed in our New York office.

As expected,  with the  decrease in revenues,  expenses  also  decreased.  Total
expenses  decreased  $2,742,000,  or 14%, to $17,027,000 from  $19,769,000.  The
largest component of this decrease was commission  expense.  Commission  expense
decreased 32%, or $4,068,000,  to $8,596,000 from $12,664,000  during the second
quarter fiscal 2001 compared with the second quarter fiscal 2000.  This decrease
is  consistent  with the  dramatic  decrease  in  commission  revenue.  Although
revenues  decreased,  salaries  increased  $237,000,  or 10%, to $2,565,000 from
$2,328,000.  This increase was due to the  increased  number of employees in New
York City,  the addition of new  employees in the latter part of fiscal 2000 and
annual raises given during the first quarter of fiscal 2001.  Overall,  combined
commissions and salaries as a percentage of revenue decreased 1% to 71% from 70%
in the second quarter of fiscal 2001 and 2000, respectively.



                                       8
<PAGE>

As anticipated with the business expansion,  expenses regarding  communications,
occupancy,  and clearing fees have increased from the second quarter fiscal 2000
to the second quarter fiscal 2001. The most significant  expense  increases were
clearing fees, communications and occupancy costs.

Clearing fees increased  $637,000 or 105% to $1,243,000  from  $606,000,  mainly
relating  to  the  increased  business  generated  from  the  New  York  office.
Communication  expenses increased $640,000 to $940,000 or 213% from $300,000 due
to the New York office as well as costs  associated  with a branch office opened
in Boca Raton,  Florida during the first quarter of fiscal 2001. Occupancy costs
increased $268,000 or 29% to $1,208,000 from $940,000,  again mainly relating to
the New York office.

Interest expense  decreased during the second quarter of fiscal 2001 as compared
with the second quarter of fiscal 2000.  Interest expense decreased  $582,000 or
38% to $952,000 from $1,534,000. The decrease relates to lower customer balances
on which the Company pays interest,  during the second quarter of fiscal 2001 as
compared with the second quarter of fiscal 2000.  Customer credits at the end of
the second fiscal quarter 2001 totaled $64 million  compared with $98 million at
the end the second  quarter of fiscal 2000.  Additionally,  in fiscal 2000,  the
Company  recorded  interest  expense of  $232,000  relating  to  original  issue
discount.  The  decrease in interest  expense was greater  than the  decrease in
interest revenue.  Interest revenue decreased $544,000 or 26% to $1,535,000 from
$2,079,000  as a result of the decrease in margin debits of $35 million from the
end of fiscal 2000 to the end of fiscal 2001.

Overall,  the diluted loss before the extraordinary  gain was $0.42 per share as
compared  with  diluted  earnings of $0.53 per share for the second  quarters of
fiscal 2001 and 2000,  respectively.  The diluted  loss after the  extraordinary
gain was $0.24 per share as compared  with  diluted  earnings of $0.53 per share
for the second quarters of fiscal 2001 and 2000, respectively.

Six Months Ended March 30, 2001 Compared to Six Months Ended March 31, 2000
---------------------------------------------------------------------------

The Company's first six months of fiscal 2001 resulted in a decrease in revenues
and to a lesser  extent a decrease in expenses  compared with the same period of
fiscal 2000.  The decrease in revenue is due to  continued  slumping  securities
markets,  which  significantly  affected commission  revenues.  As a result, the
Company reported a net loss of $1,192,000 compared with net income of $1,624,000
for the first six  months of fiscal  2000.  Included  in the net loss for fiscal
2001 was a gain on extinguishment of debt totaling $418,000.

Revenues  decreased  $5,173,000 or 15% to $30,320,000  from  $35,493,000  during
fiscal 2001 compared with fiscal 2000. This decrease is due mainly to the weaker
overall  market  compared  with the strong market during the first six months of
fiscal  2000.  The 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 in the first six months
of fiscal  2001  while net  dealer  inventory  gains  increased  during the same

                                       9
<PAGE>

period.  Commission  revenue  decreased  $9,453,000 or 43%, to $12,579,000  from
$22,032,000  during the first six months of fiscal 2001  compared with the first
six months of fiscal 2000. This decrease is due to the dramatic  downturn in the
market during the period from a very strong market for the same period of fiscal
2000.

Net dealer  inventory  gains  increased  $5,256,000 or 83%, to $11,617,000  from
$6,361,000  during the first six months of fiscal 2001  compared  with the first
six months of fiscal 2000.  This increase was  primarily  due to the  activities
derived from the New York office, which opened in October 2000.

Investment  banking  revenue  decreased  $1,110,000,  or  55% to  $898,000  from
$2,008,000.  National earned fees from advisory  agreements and  participated in
two private  placement  raising  approximately  $1.0  million in gross  proceeds
during the first six months of fiscal 2001 compared with  participating in seven
private  placements  raising  approximately  $13.0 million in gross proceeds for
clients during the first six months of fiscal 2000.

Transfer fees decreased  $205,000,  or 29%, to $506,000 from $711,000 during the
first six months of fiscal 2001 compared to the first six months of fiscal 2000.
This decrease was due primarily to the decreased retail agency trade volume.

Other revenues increased $788,000 or 123% to $1,428,000 from $640,000.  The main
reason for this increase is income from revenues  generated from the proprietary
execution system developed in our New York office.

As  expected,  with the  decrease in revenues  expenses  also  decreased.  Total
expenses  decreased  $1,704,000,  or 5%, to $32,130,000  from  $33,834,000.  The
largest component of this decrease was commission  expense.  Commission  expense
decreased 21%, or $4,469,000,  to $16,723,000 from $21,192,000  during the first
six months of fiscal  2001  compared  with the first six months of fiscal  2000.
This decrease is consistent  with the dramatic  decrease in commission  revenue.
Although revenues decreased,  salaries increased $850,000, or 22%, to $4,783,000
from  $3,933,000.  This increase was due to the increased number of employees in
New York City,  the addition of new  employees in the latter part of fiscal 2000
and annual  raises  given  during the first  quarter  of fiscal  2001.  Overall,
combined  commissions and salaries,  as a percentage of revenue,  did not change
from 71% in the six months of fiscal 2001 and 2000, respectively.

As anticipated with the business expansion,  expenses regarding  communications,
occupancy,  and clearing fees have increased from the first six months of fiscal
2000 to the  first  six  months of fiscal  2001.  The most  significant  expense
increases were clearing fees, communications and occupancy costs.

Clearing fees increased $1,026,000 or 84% to $2,253,000 from $1,227,000,  mainly
relating  to  the  increased  business  generated  from  the  New  York  office.
Communication  expenses  increased  $879,000 to $1,504,000 or 141% from $625,000
due to the New York  office  as well as costs  associated  with a branch  office


                                       10
<PAGE>

opened in Boca Raton, Florida during the first quarter of fiscal 2001. Occupancy
costs  increased  $719,000 or 43% to $2,375,000  from  $1,656,000,  again mainly
relating to the New York office.

Interest  expense  decreased  during  the  first six  months  of fiscal  2001 as
compared with the first six months of fiscal 2000.  Interest  expense  decreased
$559,000 or 22% to $1,929,000  from  $2,488,000.  The decrease  relates to lower
customer  balances  on which the  Company  pays  interest,  during the first six
months of fiscal  2001 as  compared  with the first six  months of fiscal  2000.
Customer  credits at the end of the first six months of fiscal 2001  totaled $64
million  compared  with $98  million  at the end the first six  months of fiscal
2000.  Additionally,  in fiscal 2000, the Company  recorded  interest expense of
$232,000  relating to original issue discount.  The decrease in interest expense
was greater than the decrease in interest  revenue.  Interest revenue  decreased
$449,000 or 12% to  $3,292,000  from  $3,741,000  as a result of the decrease in
margin  debits of $35  million  from the end of fiscal 2000 to the end of fiscal
2001.

Overall,  the diluted loss before the extraordinary  gain was $0.74 per share as
compared  with  diluted  earnings of $0.81 per share for the first six months of
fiscal 2001 and 2000,  respectively.  The diluted  loss after the  extraordinary
gain was $0.55 per share as compared  with  diluted  earnings of $0.81 per share
for the first six months of fiscal 2001 and 2000, respectively.

Liquidity and Capital Resources

As with most financial 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.  National
also  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. At March 30, 2001,  National had a $5,000,000
secured line of credit with American National Bank and Trust Company of Chicago,
which is guaranteed  by the Company.  The line is subject to renewal on December
31, 2001.  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.  At March 30, 2001,  National had  $5,000,000  in  borrowings
outstanding.  Additionally, National may borrow up to 70% of the market value of
eligible securities pledged through an unrelated broker-dealer.

In January 2001, the Company executed two promissory notes each in the amount of
$1,000,000. The notes bear interest annually at 9% with interest paid quarterly.
The principal of each note matures on January 25, 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 January 25, 2004,  were valued at $50,000  each,  and have been recorded as a
discount to the respective notes.

                                       11
<PAGE>


Additionally,  on  February  1, 2001,  National  executed a secured  demand note
collateral  agreement with an employee of the Company,  to borrow  securities as
collateral  to be  pledged  through  an  unrelated  broker-dealer,  which have a
borrowing  value totaling  $1,000,000.  This note bears interest  annually at 5%
with  interest  paid  monthly.  The demand note matures on February 1, 2004.  In
connection with the note, a warrant was issued for the purchase of 75,000 shares
of the  Company's  common  stock at an  exercise  price of $5.00 per share.  The
warrant,  which expires on February 1, 2004,  was valued at $37,500 and has been
recorded as a discount to the note.

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  March  30,  2001,
National's net capital exceeded the requirement by $5,122,000.

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 the company
maintain  minimum  net  capital  equal to the  greater of  $100,000 or 6 2/3% of
aggregate  indebtedness.  At March 30, 2001,  WestAmerica's net capital exceeded
the requirement by $146,000.

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 March 30, 2001,  Canterbury's
net capital exceeded the requirement by $3,174.

Advances,   dividend  payments  and  other  equity  withdrawals  from  National,
WestAmerica or Canterbury 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.

The Company believes its internally generated liquidity, together with access to
external  capital and debt  resources  will be  sufficient  to satisfy  existing
operations.  The $3,000,000 of additional capital raised by the Company,  in the
second  quarter of fiscal 2001,  will be used  primarily to support its expanded
National's market making  activities.  Furthermore,  as the Company continues to
expand its  operations,  or acquires other  businesses,  the Company will likely
require additional capital.  Additionally,  the Company is rigorously  reviewing
its overhead expenses, and in April 2001 implemented multiple expense reductions
including reductions in the salaries of members of management of 10% to 20%.


                                       12
<PAGE>

                                     PART II

ITEM 1 - LEGAL PROCEEDINGS

During the quarter, there was a development in the following proceeding:

Complete  Management,  Inc.,  United  States  District  Court  for the  Southern
District of New York.  See  disclosure in the Company's Form 10-K for the fiscal
year ended September 29, 2000.

In  March  2001,  the  District  Court  denied  National's  motion  to  dismiss.
National's  answer to the  complaint  is due in May  2001,  in which it will set
forth its  defenses.  National  believes  that its  defenses  are valid and will
vigorously defend this action.

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

The Company held its annual meeting of shareholders on March 12, 2001. The
following lists all the proposals and the voting results.

The number of shares voted for and withhold authority in connection with the
election of the four nominees to the Board of Directors of the Company was as
follows:

                  Steven A. Rothstein
                                                              Withhold
                                            For               Authority
                                            ---              ----------
                  In Person                   0                     0
                                              -                     -
                  By Proxy            1,533,039               616,702
                                      ---------               -------
                  Total               1,533,039               616,702
                                      ---------               -------

                  James C. Holcomb, Jr.
                                                              Withhold
                                            For               Authority
                                            ---               ----------
                  In Person                   0                     0
                                              -                     -
                  By Proxy            1,553,502                596,239
                                      ---------                -------
                  Total               1,553,502                596,239
                                      ---------                -------

                  D. S. Patel
                                                              Withhold
                                            For               Authority
                                            ---              ----------
                  In Person                   0                     0
                                              -                     -
                  By Proxy             1,552,039                597,702
                                       ---------                -------
                  Total                1,552,039                597,702
                                       ---------                -------

                  Gary A. Rosenberg

                                                              Withhold
                                            For               Authority
                                            ---              ----------
                  In Person                   0                     0
                                              -                     -
                  By Proxy            1,532,502                617,239
                                      ---------                -------
                  Total               1,532,502                617,239
                                      ---------                -------


                                       13
<PAGE>

As a result of the  separate  approval of a By-Laws  amendment  providing  for a
classified board of directors,  Mr. Patel was elected for a term expiring at the
2002 Annual Meeting of Shareholders, Mr. Holcomb was elected for a term expiring
at the 2003 Annual Meeting, and Messrs. Rothstein and Rosenberg were elected for
terms expiring at the 2004 Annual Meeting.

The number of shares  voted for,  against  and  abstain in  connection  with the
proposal to amend the  Company's  By-Laws to provide for a  classified  Board of
Directors, was approved as follows:

                                   For             Against               Abstain
                  In Person          0                  0                     0
                                     -                  -                     -
                  By Proxy   1,032,204            690,850                12,667
                             ---------            -------                ------
                  Total      1,032,204            690,850                12,667
                             ---------            -------                ------

The number of shares  voted for,  against  and  abstain in  connection  with the
proposal to amend the Company's  Certificate  of  Incorporation  to require that
election of directors proceed by written ballot, was approved as follows:

                                   For             Against               Abstain
                  In Person          0                  0                     0
                                     -                  -                     -
                  By Proxy   1,603,642            540,422                 5,677
                             ---------            -------                 -----
                  Total      1,603,642            540,422                 5,677
                             ---------            -------                 -----

The number of shares voted for, against and abstain in connection with the
proposal to amend the Company's Certificate of Incorporation to provide that
actions by written consent of the shareholders require approval by all
shareholders, was approved as follows:

                                   For             Against               Abstain
                  In Person          0                  0                     0
                                     -                  -                     -
                  By Proxy   1,111,470            621,802                 2,449
                             ---------            -------                 -----
                  Total      1,111,470            621,802                 2,449
                             ---------            -------                 -----

The number of shares voted for, against and abstain in connection with the
proposal to amend the Company's Certificate of Incorporation in connection with
who can call a special meeting of the shareholders, which was not approved as
follows:

                                   For             Against               Abstain
                  In Person          0                  0                     0
                                     -                  -                     -
                  By Proxy   1,036,477            697,376                 1,868
                             ---------            -------                 -----
                  Total      1,036,477            697,376                 1,868
                             ---------            -------                 -----



                                       14
<PAGE>





The number of shares voted for, against and abstain in connection with the
proposal to amend the Company's Certificate of Incorporation to increase the
vote required to amend the By-Laws relating to approval of a business
combination, which was not approved as follows:

                                   For             Against               Abstain
                  In Person          0                  0                     0
                                     -                  -                     -
                  By Proxy   1,077,191            652,149                 6,381
                             ---------            -------                 -----
                  Total      1,077,191            652,149                 6,381
                             ---------            -------                 -----

The number of shares voted for, against and abstain in connection with approving
the Company's 2001 Stock Option Plan, was approved as follows:

                                   For             Against               Abstain
                  In Person          0                  0                     0
                                     -                  -                     -
                  By Proxy   1,013,913            715,550                 6,258
                             ---------            -------                 -----
                  Total      1,013,913            715,550                 6,258
                             ---------            -------                 -----


The number of shares  voted for,  against  and  abstain in  connection  with the
ratification  of Feldman Sherb & Co., P.C. as the Company's  independent  public
accountants for the 2001 fiscal year, was approved as follows:

                                   For             Against               Abstain
                  In Person          0                  0                     0
                                     -                  -                     -
                  By Proxy   1,562,401            584,482                 2,858
                             ---------            -------                 -----
                  Total      1,562,401            584,482                 2,858
                             ---------            -------                 -----


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

a)       Exhibits

     3.4          The Company's Amended Certificate of Incorporation.
     3.5          The Company's Amended and Restated By-Laws.
    10.23         Form of Note payable agreement dated January 2001.
    10.24         Secured Demand Note dated February 2001.

b)   Reports on Form 8-K (None)





                                      15
<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 SUBSIDIARIES



May 10, 2001                              By: /s/ Steven A. Rothstein
                                              -------------------------
Date                                          Steven A. Rothstein, Chairman
and Chief Executive Officer




May 10, 2001                              By: /s/ Robert H. Daskal
                                             -------------------------
Date                                         Robert H. Daskal, Senior Vice
                                             President, Chief Financial Officer,
                                             Secretary and Treasurer




May 10, 2001                              By: /s/ David M. Williams
                                              -------------------------
Date                                         David M. Williams
                                             Corporate Controller and
                                             Chief Accounting Officer




                                       16