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 31, 2002           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, 2002 was 2,274,449.






                                       1
<PAGE>

                      OLYMPIC CASCADE FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                     ASSETS
<TABLE>
<CAPTION>
                                                                               March 31,            September 28,
                                                                                 2002                   2001
                                                                              (unaudited)           (see Note below)
                                                                             --------------         --------------


<S>                                                                               <C>                   <C>
CASH, subject to immediate withdrawal                                             $ 99,000              $ 150,000
CASH, segregated in escrow                                                         330,000                435,000
CASH, CASH EQUIVALENTS AND SECURITIES                                                    -             37,188,000
DEPOSITS                                                                         1,850,000              4,654,000
RECEIVABLES
             Customers                                                                   -             29,755,000
             Brokers and dealers                                                 1,212,000                669,000
             Other                                                               1,431,000                836,000
SECURITIES HELD FOR RESALE, at market                                            1,185,000              1,131,000
FIXED ASSETS, net                                                                  465,000                841,000
OTHER ASSETS                                                                     2,434,000              1,940,000
                                                                             --------------         --------------
                                                                               $ 9,006,000           $ 77,599,000
                                                                             ==============         ==============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CASH OVERDRAFT                                                                   $ 304,000            $ 1,556,000
PAYABLES
             Customers                                                                   -             54,511,000
             Brokers and dealers                                                    21,000             10,020,000
SECURITIES SOLD, BUT NOT YET PURCHASED, at market                                  280,000                792,000
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES                         2,430,000              1,963,000
BANK LINE OF CREDIT                                                                      -              3,500,000
NOTES PAYABLE                                                                    4,405,000              4,035,000
CAPITAL LEASE PAYABLE                                                              173,000                300,000
NET LIABILITIES FROM DISCONTINUED OPERATIONS                                             -                300,000
                                                                             --------------         --------------
                                                                                 7,613,000             76,977,000
                                                                             --------------         --------------

CONTINGENCIES

STOCKHOLDERS' EQUITY
             Preferred stock, $.01 par value, 100,000 shares authorized,
               23,225 shares issued and outstanding at March 31, 2002                    -                      -
             Common stock, $.02 par value, 60,000,000 shares authorized,
               2,274,449 and 2,236,449 shares issued and outstanding at
               March 31, 2002 and September 28, 2001, respectively.                 45,000                 45,000
             Additional paid-in capital                                         11,584,000              9,313,000
             Accumulated deficit                                               (10,236,000)            (8,736,000)
                                                                             --------------         --------------
                                                                                 1,393,000                622,000
                                                                             --------------         --------------
                                                                               $ 9,006,000           $ 77,599,000
                                                                             ==============         ==============

</TABLE>

Note:  The balance sheet at September 28, 2001 has been derived from the audited
financial statements at that date.


                 See notes to consolidated financial statements
                                       2
<PAGE>
                      OLYMPIC CASCADE FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                  -------- Quarter Ended---------    -------Six Months Ended----------
                                                     March 31,        March 30,        March 31,        March 30,
                                                       2002              2001             2002             2001
                                                    ----------------   -------------   ---------------  ---------------
REVENUES:
<S>                                                   <C>              <C>             <C>              <C>
Commissions                                           $ 5,527,000      $5,865,000      $ 11,219,000     $ 11,532,000
Net dealer inventory gains                              4,297,000       6,479,000         9,155,000       11,610,000
Interest                                                  338,000       1,535,000         1,077,000        3,290,000
Transfer fees                                             390,000         231,000           775,000          506,000
Investment banking                                         82,000         204,000           183,000          734,000
Other                                                     336,000         972,000           846,000        1,411,000
                                                  ----------------   -------------   ---------------  ---------------
TOTAL REVENUES                                         10,970,000      15,286,000        23,255,000       29,083,000
                                                  ----------------   -------------   ---------------  ---------------
EXPENSES:
Commissions                                             6,689,000       8,255,000        14,227,000       16,039,000
Salaries                                                1,481,000       2,457,000         2,759,000        4,565,000
Clearing fees                                           1,505,000       1,194,000         2,613,000        2,158,000
Communications                                            654,000         892,000         1,470,000        1,422,000
Occupancy costs                                           943,000       1,161,000         1,919,000        2,249,000
Interest                                                   52,000         952,000           444,000        1,929,000
Professional fees                                         138,000         458,000           420,000          880,000
Taxes, licenses, registration                             138,000         205,000           228,000          434,000
Other                                                     486,000         751,000         1,016,000        1,047,000
                                                  ----------------   -------------   ---------------  ---------------
TOTAL EXPENSES                                         12,086,000      16,325,000        25,096,000       30,723,000
                                                  ----------------   -------------   ---------------  ---------------
Loss from continuing operations before                 (1,116,000)     (1,039,000)       (1,841,000)      (1,640,000)
      income taxes and extraordinary item

Benefit for income taxes                                   52,000         200,000            40,000          200,000
                                                  ----------------   -------------   ---------------  ---------------
Loss from continuing operations                        (1,064,000)       (839,000)       (1,801,000)      (1,440,000)
                                                  ----------------   -------------   ---------------  ---------------
Income (loss) from discontinued operations, net of tax          -        (100,000)          300,000         (170,000)

 Income from extraordinary item - gain from
   extinguishment of debt, net of taxes                         -         418,000                 -          418,000
                                                  ----------------   -------------   ---------------  ---------------
NET LOSS                                             $ (1,064,000)     $ (521,000)     $ (1,501,000)    $ (1,192,000)
                                                  ================   =============   ===============  ===============

NET INCOME (LOSS) PER COMMON SHARE

Basic:
           Loss from continuing operations                $ (0.48)        $ (0.38)          $ (0.81)         $ (0.66)
           Income (loss) from discontinued operations           -           (0.05)             0.14            (0.08)
           Extraordinary gain                                   -            0.19                 -             0.19
                                                  ----------------   -------------   ---------------  ---------------
                     Net Loss                             $ (0.48)        $ (0.24)          $ (0.67)         $ (0.55)
                                                  ----------------   -------------   ---------------  ---------------
Diluted:
           Loss from continuing operations                $ (0.48)        $ (0.38)          $ (0.81)         $ (0.66)
           Income (loss) from discontinued operations           -           (0.05)             0.14            (0.08)
           Extraordinary gain                                   -            0.19                 -             0.19
                                                  ----------------   -------------   ---------------  ---------------
                     Net Loss                             $ (0.48)        $ (0.24)          $ (0.67)         $ (0.55)
                                                  ----------------   -------------   ---------------  ---------------
Weighted average number of shares outstanding
           Basic                                        2,236,449       2,214,048         2,236,449        2,186,308
                                                  ----------------   -------------   ---------------  ---------------
           Diluted                                      2,236,449       2,214,048         2,236,449        2,186,308
                                                  ----------------   -------------   ---------------  ---------------
</TABLE>
                 See notes to consolidated financial statements
                                       3
<PAGE>
                      OLYMPIC CASCADE FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                          ---------Six Months Ended---------
                                                                           March 31,            March 30,
                                                                              2002                 2001
                                                                          -------------        -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                       <C>                  <C>
   Net loss                                                               $ (1,501,000)        $ (1,192,000)
   Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities
            Depreciation and amortization                                      428,000              278,000
            Compensation related to issuance of stock options                        -               83,000
            Gain on extraordinary item - extinguishment of debt                      -             (418,000)
            Change in net assets (liabilities) of discontinued operations     (300,000)             223,000

   Changes in assets and liabilities
            Cash, cash equivalents, securities and escrow                   37,293,000          (20,996,000)
            Deposits                                                         2,804,000           (1,903,000)
            Receivables                                                     28,617,000           21,699,000
            Securities held for resale                                         (54,000)            (550,000)
            Other assets                                                      (494,000)          (2,595,000)
            Payables                                                       (64,042,000)          (2,536,000)
            Securities sold, but not yet purchased                            (512,000)             159,000
                                                                          -------------        -------------
   Net cash provided by (used in) operating activities                       2,239,000           (7,748,000)
                                                                          -------------        -------------
CASH FLOWS FROM INVESTING ACTIVITIES
            Purchase of fixed assets                                           (52,000)            (155,000)
                                                                          -------------        -------------
CASH FLOWS FROM FINANCING ACTIVITIES
            Borrowings (payments) on line of credit                         (3,500,000)           5,000,000
            Payments on capital lease                                         (127,000)            (170,000)
            Proceeds from notes payable                                      1,598,000            3,000,000
            Payments on notes payable                                         (179,000)             (52,000)
            Decrease in cash overdraft                                      (1,252,000)                   -
            Net proceeds from issuance of preferred stock                    1,222,000                    -
            Exercise of stock options and warrants                                   -              275,000
                                                                          -------------        -------------
   Net cash provided by (used in) financing activities                      (2,238,000)           8,053,000
                                                                          -------------        -------------

INCREASE (DECREASE) IN CASH                                                    (51,000)             150,000

CASH BALANCE
            Beginning of the period                                            150,000            2,349,000
                                                                          -------------        -------------
            End of the period                                                 $ 99,000          $ 2,499,000
                                                                          =============        =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
            Cash paid during the period for
            Interest                                                         $ 466,000          $ 1,896,000
                                                                          =============        =============
            Income taxes                                                      $ 12,000            $ 324,000
                                                                          =============        =============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
                FINANCING ACTIVITIES
            Exchange of notes payable for preferred stock                  $ 1,000,000                  $ -
                                                                          =============        =============
            Exchange of notes payable for common stock                        $ 49,000                  $ -
                                                                          =============        =============
</TABLE>
                 See notes to consolidated financial statements

                                       4
<PAGE>


             OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                   (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 March 31,  2002 and March 30,  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 28, 2001.

Cash and cash  segregated in escrow have been  reclassified  in prior periods to
conform to the current period's presentation. The Company now reports based on a
calendar year ending in September,  versus a fifty-two or fifty-three week year,
ending on the last Friday in September.

NOTE 2 - LINE OF CREDIT

In January 2001,  National entered into a $5,000,000 secured line of credit with
American  National Bank and Trust Company of Chicago,  that is guaranteed by the
Company.  During  the first  quarter of fiscal  2002,  National  entered  into a
Forbearance  Agreement with American  National Bank based on an event of default
according to the original credit  agreement.  The Forbearance  Agreement amended
the line of credit to  $4,000,000.  Additionally,  Steven A.  Rothstein and Mark
Goldwasser  each  signed  a  Guaranty   unconditionally   guaranteeing   certain
indebtedness  of  the  Company  to  American  National  Bank.  These  guarantees
effectively  terminated in December 2001. The line of credit was fully repaid in
December 2001.

NOTE 3 - INVESTMENT TRANSACTION

On December 28, 2001, the Company completed a series of transactions under which
certain  new  investors   (collectively,   the  "Investors")   have  obtained  a
significant  ownership  in the Company  through a $1,072,500  investment  in the
Company and by  purchasing a majority of the shares held by Steven A.  Rothstein
and  family,  the  former  Chairman,   Chief  Executive  Officer  and  principal
shareholder of the Company (the "Investment Transaction"). The Investors include
Triage  Partners LLC  ("Triage"),  an affiliate of Sands Brothers & Co., Ltd., a

                                       5
<PAGE>

New York Stock Exchange  ("NYSE")  member firm, and One Clark LLC ("One Clark"),
an  affiliate  of Mark  Goldwasser,  the  current  Chief  Executive  Officer and
President of the Company.  The Investors purchased an aggregate of $1,072,500 of
Series A Preferred  Stock from the  Company,  which is  convertible  into Common
Stock at a price of $1.50 per share.  The  Company  incurred  $100,000  of legal
costs related to these capital  transactions.  In connection with the Investment
Transaction,  Triage  also  purchased  285,000  shares of Common  Stock from Mr.
Rothstein  and his  affiliates at a price of $1.50 per share.  In addition,  Mr.
Rothstein and his affiliates  have granted  Triage a three-year  voting proxy on
the balance of their Common Stock  (274,660  shares).  As part of the Investment
Transaction,  the Investors  placed  $500,000 into an escrow account to purchase
additional shares of Series A Preferred Stock in the event such funds are needed
by the Company.  As a result of the losses  incurred during the first six months
of fiscal 2002,  $250,000 in February 2002 and $250,000 in April 2002 were drawn
from the escrow account and invested into the Company on the same terms.

Concurrent with the Investment Transaction, two unrelated individual noteholders
holding $2.0 million of the Company's debt converted one-half of their debt into
the same  class of  Series A  Preferred  Stock  that was sold in the  Investment
Transaction.  The  noteholders  also had  100,000 of their  200,000  warrants to
acquire  shares of common  stock  repriced  from an exercise  price of $5.00 per
share to $1.75 per share.

NOTE 4 - CLOSING OF WESTAMERICA INVESTMENT GROUP

In December 2001, WestAmerica  voluntarily withdrew its membership with the NASD
and  ceased to  conduct  business  as a  broker-dealer.  On  December  31,  2001
WestAmerica  filed for Chapter 7 Bankruptcy  protection in  accordance  with the
U.S. Bankruptcy Code.  WestAmerica has 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 2002,
the Company recorded a gain of $300,000 from discontinued  operations related to
the write-off of  WestAmerica's  net  liabilities.  The  accompanying  financial
statements  have  been  reclassified  to  reflect  WestAmerica  as  discontinued
operations for all periods presented.

NOTE 5 - CONTINGENCIES

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,  the  Company  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.   The  Company  will  contest   class
certification and diligently pursue its defenses.

A former  executive  officer of the Company,  Craig M. Gould,  has  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.


                                       6
<PAGE>

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


NOTE 6 - ISSUANCE OF WARRANTS

In November 2001 the Company granted 5,000 warrants to purchase its common stock
exercisable  at $5.00  per share to the  individual  retirement  account  of the
Company's former chairman and chief executive officer pursuant to the terms of a
$50,000 loan made in August 2001.

NOTE 7 - COMMON STOCK

On March 12, 2002, the  stockholders of the Company approved an amendment to the
Company's  Certificate  of  Incorporation  to increase the number of  authorized
shares of common stock from 6,000,000 to 60,000,000 shares.

On March 31, 2002 an unrelated noteholder holding $49,000 of the Company's debt
converted its debt into 38,000 shares of common stock of the Company.

NOTE 8 -CLEARING AGREEMENT

In  connection  with the Clearing  Agreement  with First  Clearing  Corporation,
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.


                                       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  28, 2001 and the  Company's  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 31, 2002 Compared to Quarter Ended March 30, 2001
---------------------------------------------------------------------

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

The Company's  second  quarter of fiscal 2002 resulted in a decrease in revenues
and  expenses  compared  with the same period of fiscal  2001.  The  decrease in
revenues is due to the continued slumping securities markets, that significantly
affected  revenues.  In March  2002,  the Company  incurred a one time  clearing
charge of $548,000 that significantly increased the net loss for the quarter. As
a result, the Company reported a net loss of $1,064,000 compared with a net loss
of $521,000 for the second quarter of fiscal 2001.  Included in the net loss for
fiscal 2001 was a gain on extinguishment of debt totaling $418,000. The net loss
from continuing  operations for the second quarter of fiscal 2002, excluding the
one time clearing  charge,  income taxes and  extraordinary  item,  decreased by
$471,000 to $568,000  compared to  $1,039,000  in 2001.  This  improvement  is a
result of management's efforts to reduce the fixed costs of the Company.

Total  revenues  decreased  $4,316,000 or 28% to  $10,970,000  from  $15,286,000
during fiscal 2002 compared with fiscal 2001. This decrease is due mainly to the
weaker overall  securities  market, and a decrease in net dealer inventory gains
and interest income.

Commission  revenues  decreased  $338,000,  or 6% to  $5,527,000  in the  second
quarter of fiscal 2002 as compared to $5,865,000 in the second quarter of fiscal
2001.

Net dealer  inventory gains decreased  $2,182,000,  or 34%, to $4,297,000 in the
second  quarter of fiscal 2002 from  $6,479,000  in the first  quarter of fiscal
2001.  The  decrease is due to lower  trading  volume and a reduction  in market
making activities.

                                       8
<PAGE>

Interest income decreased $1,197,000,  or 78%, to $338,000 in the second quarter
of fiscal  2002 from  $1,535,000  in the  second  quarter of fiscal  2001.  This
decrease is offset by the  corresponding  decrease in  interest  expense,  which
decreased $900,000, or 95%, to $52,000 in the second quarter of fiscal 2002 from
$952,000 in the second  quarter of fiscal 2001.  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, the conversion of its clearing
business in December 2001 and a decrease in interest rates from 2002 to 2001.

Investment banking revenue decreased $122,000,  or 60%, to $82,000 in the second
quarter of fiscal 2002 from $204,000 in the second  quarter of fiscal 2001.  The
decrease is due to the  continued  down-turn  in the capital  markets  which has
limited the Company's ability to conduct private placements and other investment
banking  advisory  services.  Other  revenues  decreased  $636,000,  or 65%,  to
$336,000  in the  second  quarter  of fiscal  2002 from  $972,000  in the second
quarter of fiscal 2001. The decrease is due to a decline in various types of fee
income, mainly from trading activities attributable to the New York City office.

In proportion with the 28% decrease in total revenues, total expenses decreased
26% to $12,086,000 in the second quarter of fiscal 2002 from $16,325,000 in the
second quarter of fiscal 2001.

Commission expense,  which includes expenses related to commission revenue,  net
dealer inventory gains and investment banking,  decreased $1,566,000, or 19%, to
$6,689,000  in the second  quarter of fiscal 2002 from  $8,255,000 in the second
quarter  of fiscal  2001.  This is  consistent  with the  decrease  in  combined
revenues from  commissions,  net dealer  inventory gains and investment  banking
during the same period.  Salaries decreased $976,000, or 40%, to $1,481,000 from
$2,457,000.  This decrease is due to a reduction in senior  management  salaries
and a  reduction  in staff made  possible  by clearing  through  First  Clearing
Corporation,  as opposed to  self-clearing.  Overall,  combined  commissions and
salaries as a percentage of total revenues increased slightly to 74% from 70% in
the second quarter of fiscal 2002 compared to the second quarter of fiscal 2001.
This increase is due to the 78% reduction in interest income  associated with no
longer being a self clearing firm.

Clearing fees increased  $311,000,  or 26%, to $1,505,000 from  $1,194,000.  The
increase is due to a one time clearing charge of $548,000.  This charge resulted
from a dispute  among the Company,  one of its former  clearing  firms,  and its
current clearing firm regarding the responsibility for debit balances in certain
trading accounts. The three parties agreed to share the expense equally.

Communication,  occupancy, professional fees and other expenses all decreased as
a result  of  slower  markets  and  management's  efforts  to  reduce  expenses.
Communication  expenses decreased $238,000 to $654,000, or 27%, from $892,000 as
a result of cost cutting efforts. Occupancy costs decreased $218,000, or 19%, to
$943,000 from $1,161,000 also as a result of cost cutting efforts.  Professional
fees decreased $320,000, or 70%, to $138,000 from $458,000 in the second quarter
of fiscal 2002 compared to 2001.  Other expenses  decreased  $265,000 or 35%, to
$486,000 from $751,000 in the second quarter of fiscal 2002 compared to 2001.

                                       9
<PAGE>

Due to the continued  slumping  securities  markets,  the Company reported a net
loss from  continuing  operations of $1,064,000 in the second  quarter of fiscal
2002 compared to a net loss from continuing operations before extraordinary item
of $839,000 in the second quarter of fiscal 2001. Overall, the diluted loss from
continuing  operations before extraordinary items was $.48 per share as compared
with a net loss of $.38 per share for the second  quarter  ended  March 31, 2002
and March 30, 2001, respectively.

On December  31, 2001,  WestAmerica,  a  subsidiary  of the  Company,  filed for
Chapter 7 Bankruptcy  protection in accordance  with the U.S.  Bankruptcy  Code.
WestAmerica realized a loss of $100,000 in the second quarter of fiscal 2001, on
revenues of $602,000.

Six Months Ended March 31, 2002 Compared to Six Months Ended March 30, 2001
---------------------------------------------------------------------------

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

The Company's first six months of fiscal 2002 resulted in a decrease in revenues
and a corresponding decrease in expenses compared with the same period of fiscal
2001.  The  decrease  in revenues is due to the  continued  slumping  securities
markets.  As a result,  the Company  reported a net loss of $1,501,000  compared
with a net loss of $1,192,000 for the first six months of fiscal 2001.

Total  revenues  decreased  $5,828,000 or 20% to  $23,255,000  from  $29,083,000
during fiscal 2002 compared with fiscal 2001. This decrease is due mainly to the
weaker  overall  securities  markets  that  resulted in a decrease in net dealer
inventory gains, investment banking and interest income revenues.

Commission  revenues decreased  $313,000,  or 3% to $11,219,000 in the first six
months of fiscal 2002 as compared  to  $11,532,000  in the same period of fiscal
2001.

Net dealer  inventory gains decreased  $2,455,000,  or 21%, to $9,155,000 in the
second quarter of fiscal 2002 from $11,610,000 in the first six months of fiscal
2001.  The  decrease is due to lower  trading  volume and a reduction  in market
making activities.

Interest  income  decreased  $2,213,000,  or 67%, to $1,077,000 in the first six
months of fiscal 2002 from  $3,290,000  in the first six months of fiscal  2001.
This decrease is offset by the corresponding decrease in interest expense, which
decreased $1,485,000, or 77%, to $444,000 in the first six months of fiscal 2002
from  $1,929,000  in the first six months of fiscal  2001.  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,  the  conversion  of its
clearing business in December 2001 and a decrease in interest rates from 2002 to
2001.

Investment banking revenue decreased $551,000,  or 75%, to $183,000 in the first
six months of fiscal 2002 from  $734,000 in the first six months of fiscal 2001.
The decrease is due to the continued  down-turn in the capital markets which has
limited the Company's ability to conduct private placements and other investment

                                       10
<PAGE>

banking  advisory  services.  Other  revenues  decreased  $565,000,  or 40%,  to
$846,000 in the first six months of fiscal 2002 from $1,411,000 in the first six
months of fiscal 2001.  The decrease is due to a decline in various types of fee
income, mainly from trading activities attributable to the New York City office.

In comparison with the 20% decrease in total revenues, total expenses decreased
18% to $25,096,000 during the first six months of fiscal 2002 compared to
$30,723,000 in the first six months of fiscal 2001.

Commission expense,  which includes expenses related to commission revenue,  net
dealer inventory gains and investment banking,  decreased $1,812,000, or 11%, to
$14,227,000 in the first six months of fiscal 2002 from  $16,039,000 in the same
period of fiscal 2001. Salaries decreased $1,806,000, or 40%, to $2,759,000 from
$4,565,000.  This decrease is due to a reduction in senior  management  salaries
and a  reduction  in staff made  possible  by clearing  through  First  Clearing
Corporation,  as opposed to  self-clearing.  Overall,  combined  commissions and
salaries as a percentage of total revenues increased slightly to 73% from 71% in
the first six months of fiscal 2002 compared to the same period in 2001.

Clearing fees increased  $455,000,  or 21%, to $2,613,000 from  $2,158,000.  The
increase is mainly due to the one time clearing charge of $548,000.  This charge
resulted from a dispute among the Company, one of its former clearing firms, and
its current  clearing firm  regarding the  responsibility  for debit balances in
certain trading accounts. The three parties agreed to share the expense equally.

Communication  expenses  increased slightly to $1,470,000 from $1,422,000 in the
first six months of fiscal 2002 compared to fiscal 2001. The net increase is due
in part to the  expansion of the  Company's New York City and Boca Raton offices
that were not fully  operational  during  the  first six  months of fiscal  2001
offset by management's  efforts to reduce  communication  expenses during fiscal
2002. These efforts have resulted in an 20% decrease in  communication  expenses
from  $816,000 in the first  quarter of fiscal 2002  compared to $654,000 in the
second quarter of fiscal 2002.

As a result of cost  cutting  efforts,  occupancy,  professional  fees and other
expenses all  decreased  during the first six months of fiscal 2002  compared to
the  same  period  in 2001.  Occupancy  costs  decreased  $330,000,  or 15%,  to
$1,919,000 from $2,249,000.  Professional  fees decreased  $460,000,  or 52%, to
$420,000  from $880,000 in the first six months of fiscal 2002 compared to 2001.
Other expenses  decreased  $31,000 or 3%, to $1,016,000  from  $1,047,000 in the
first six months of fiscal 2002 compared to 2001.

Due to the continued  slumping  securities  markets,  the Company reported a net
loss from  continuing  operations  of  $1,801,000  in the first six months of of
fiscal  2002  compared  to  a  net  loss  from  continuing   operations   before
extraordinary  item of  $1,440,000  in the  first six  months  of  fiscal  2001.
Overall, the diluted loss from continuing  operations before extraordinary items
was $.81 per  share as  compared  with a net loss of $.66 per  share for the six
months ended March 31, 2002 and March 30, 2001, respectively.


                                       11
<PAGE>

On December  31, 2001,  WestAmerica,  a  subsidiary  of the  Company,  filed for
Chapter 7 Bankruptcy  protection in accordance  with the U.S.  Bankruptcy  Code.
WestAmerica  realized a loss of $170,000 in the first six months of fiscal 2001,
on revenues of  $1,238,000.  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.


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. 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 also utilized short-term
bank  financing to  supplement  its ability to meet  day-to-day  operating  cash
requirements.

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.  On December 28, 2001, the Company completed a
series  of  transactions  (the  "Investment  Transaction")  that are more  fully
described in Footnote 3.

In August  2001,  the Company  entered  into an  agreement  with First  Clearing
Corporation  ("First Clearing"),  an affiliate of First Union Securities,  Inc.,
under which First  Clearing  will  provide  clearing  and related  services  for
National.  The Clearing Agreement expands the products and services capabilities
for  National's   retail  and  institutional   business,   enables  National  to
consolidate  its  existing  clearing   operations  and  reduces  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 entered into
a  ten-year  promissory  note  with  First  Clearing  under  which  the  Company
immediately  borrowed  $1,000,000.  The funds were contributed by the Company to
National, and are being used as a deposit to secure National's performance under
the  Clearing  Agreement.  The  Clearing  Agreement  also  provided  for another
$1,000,000 loan that was extended to the Company upon substantial  completion of
the conversion on December 31, 2001. 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 certain  business  performance  and trading  volumes of the
Company over the life of the loan.

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 $1,000,000 clearing deposit from US Clearing.

                                       12
<PAGE>

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  31,  2002,
National's net capital exceeded the requirement by approximately $1.6 million.

In December 2001, WestAmerica  voluntarily withdrew its membership with the NASD
and  ceased to  conduct  business  as a  broker-dealer.  On  December  31,  2001
WestAmerica  filed for Chapter 7 Bankruptcy  protection in  accordance  with the
U.S. Bankruptcy Code.  WestAmerica has been operated as a separate legal entity,
and the Company  believes it will not have any ongoing  liability for any unpaid
obligations of WestAmerica.

Canterbury Securities Corporation  ("Canterbury"),  a wholly owned subsidiary of
the Company,  is a registered as a broker-dealer with the SEC and is licensed in
Illinois.  Canterbury is a member of the NASD, the MSRB and the SIPC. Canterbury
formerly  engaged in private  placement  transactions.  Canterbury has no retail
customer accounts and, therefore,  operates pursuant to the exemptive provisions
of SEC Rule 15c3-3(k)(2)(i).  Since acquisition in June 2000, Canterbury has had
no  activity.  The Company has agreed to sell  Canterbury  for its book value of
approximately  $11,000 to Mr.  Rothstein.  At March 31, 2002,  Canterbury's  net
capital exceeded the requirement by $2,800.

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

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 of the period ended March 31, 2002,  total assets were $9.0 million  compared
to total assets of $77.6 million as of the fiscal year ended September 28, 2001.
This  material  decrease  in the  Company's  assets is due to the  change in the
Company's  clearing  arrangements.  Customer  assets  that were  included in the
fiscal year end 2001 balance sheet are no longer  accounted for on the Company's
books.  These assets are now held at First  Clearing as part of the new clearing
arrangement.





                                       13
<PAGE>



                                     PART II

ITEM 1 - LEGAL PROCEEDINGS

A former  executive  officer of the Company,  Craig M. Gould,  has  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.

For a detailed discussion of the Company's other legal proceedings, please refer
to the Company's  Annual Report on Form 10-K for the fiscal year ended September
28, 2001.


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

The Company  held its annual  meeting of  shareholders  on March 12,  2002.  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 two  nominees as Class I Directors  to the Board of Directors of
the Company was as follows:

                  Steven B. Sands

                                             For            Withhold Authority
                  In Person                     0                     0
                                                -                     -
                  By Proxy              3,294,289                44,639
                                        ---------                ------
                  Total                 3,294,289                44,639
                                        ---------                ------

                  Martin S. Sands

                                             For            Withhold Authority
                  In Person                     0                     0
                                                -                     -
                  By Proxy              3,294,289                44,639
                                        ---------                ------
                  Total                 3,294,289                44,639
                                        ---------                ------


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
number of shares of Common Stock that the Company is authorized to issue from
6,000,000 to 60,000,000, was approved as follows:

                                       14
<PAGE>

                                   For           Against               Abstain
                  In Person            0                0                     0
                                       -                -                     -
                  By Proxy     3,184,315          132,795                21,818
                               ---------          -------                ------
                  Total        3,184,315          132,795                21,818
                               ---------          -------                ------



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 2002 fiscal year, was approved as follows:

                                   For           Against               Abstain
                  In Person            0                0                     0
                                       -                -                     -
                  By Proxy     3,297,554           34,674                 6,700
                               ---------           ------                 -----
                  Total        3,297,554           34,674                 6,700
                               ---------           ------                 -----


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

a)   Exhibits

     3.4          Certificate of Amendment to the Certificate of Incorporation.

b)       Reports on Form 8-K

The Company filed a report on Form 8-K dated April 10, 2002 regarding the
resignation of a member of the board of directors.


















                                       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 13, 2002                        By:/s/ Mark Goldwasser
                                           --------------------
Date                                       Mark Goldwasser
                                           President and Chief Executive Officer





May 13, 2002                        By:/s/ Robert H. Daskal
                                           -------------------------
Date                                       Robert H. Daskal
                                           Acting Chief Financial Officer








                                       16