<PAGE>


                                  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 June 30, 2000         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 August 8, 2000 was 2,096,113.


<PAGE>

                      OLYMPIC CASCADE FINANCIAL CORPORATION

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>

                                                                                           June 30,           September 24,
                                                                                             2000                1999
                                                                                         (unaudited)           (audited)
                                                                                        ---------------      --------------
<S>                                                                                      <C>                   <C>


CASH, subject to immediate withdrawal                                                      $ 2,114,000           $ 384,000
CASH, CASH EQUIVALENTS AND SECURITIES                                                       33,547,000          41,416,000
DEPOSITS                                                                                     2,702,000           1,679,000
RECEIVABLES

            Customers                                                                       49,235,000          38,038,000
            Brokers and dealers                                                              1,059,000           2,342,000
            Other                                                                              335,000             976,000
SECURITIES HELD FOR RESALE, at market                                                          540,000             298,000
FIXED ASSETS, net                                                                            1,198,000           1,176,000
GOODWILL, net                                                                                   82,000              45,000
OTHER ASSETS                                                                                   429,000             343,000
                                                                                        ---------------      --------------
                                                                                          $ 91,241,000         $86,697,000
                                                                                        ===============      ==============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

PAYABLES

            Customers                                                                     $ 71,602,000         $67,158,000
            Brokers and dealers                                                              6,837,000           7,581,000
SECURITIES SOLD, BUT NOT YET PURCHASED, at market                                              148,000             139,000
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES                                     3,489,000           3,167,000
INCOME TAX PAYABLE                                                                             109,000                   -
REVOLVING LINE OF CREDIT                                                                             -           2,100,000
NOTES PAYABLE                                                                                  614,000           1,648,000
CAPITAL LEASE PAYABLE                                                                          655,000             865,000
                                                                                        ---------------      --------------
                                                                                            83,454,000          82,658,000
                                                                                        ---------------      --------------

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, 2,091,113 and
               1,694,595 shares issued and outstanding, respectively                            42,000              34,000
            Additional paid-in capital                                                       8,359,000           6,375,000
            Accumulated deficit                                                               (614,000)         (2,370,000)
                                                                                        ---------------      --------------
                                                                                             7,787,000           4,039,000
                                                                                        ---------------      --------------
                                                                                          $ 91,241,000         $86,697,000
                                                                                        ===============      ==============

</TABLE>





                                       2

                    See notes to these financial statements

<PAGE>


                      OLYMPIC CASCADE FINANCIAL CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                           --------Quarter Ended----------      -------Nine Months Ended----------
                                             June 30,          June 25,           June 30,           June 25,
                                               2000              1999               2000               1999
                                           --------------    -------------      -------------       --------------
<S>                                        <C>               <C>               <C>                 <C>

REVENUES:

Commissions                                  $ 7,718,000       $ 7,650,000       $ 29,750,000        $ 20,488,000
Net dealer inventory gains                     2,291,000         2,024,000          8,652,000           3,280,000
Interest                                       1,970,000         1,615,000          5,716,000           4,023,000
Transfer fees                                    297,000           231,000          1,008,000             668,000
Investment banking                               171,000           863,000          2,179,000           2,001,000
Other                                            708,000           292,000          1,342,000             723,000

TOTAL REVENUES                                13,155,000        12,675,000         48,647,000          31,183,000

EXPENSES:

Commissions                                    7,342,000         7,649,000         28,534,000          18,195,000
Salaries                                       1,620,000         1,492,000          5,553,000           3,569,000
Clearing fees                                    435,000           432,000          1,662,000           1,141,000
Communications                                   341,000           303,000            966,000             876,000
Occupancy costs                                  987,000           591,000          2,643,000           1,829,000
Interest                                       1,243,000         1,098,000          3,730,000           2,803,000
Professional fees                                355,000           726,000          1,240,000           1,792,000
Taxes, licenses, registration                    185,000          (158,000)           638,000              62,000
Other                                            441,000           324,000          1,816,000             937,000

TOTAL EXPENSES                                12,949,000        12,457,000         46,782,000          31,204,000

Income (loss) from operations
     before income taxes                         206,000           218,000          1,865,000             (21,000)
Income tax (expense) benefit                     (74,000)            7,000           (109,000)              5,000


NET INCOME (LOSS)                              $ 132,000         $ 225,000        $ 1,756,000           $ (16,000)
                                           ==============    ==============    ===============    ================


EARNINGS (LOSS) PER COMMON SHARE
         Basic Earnings (Loss) Per Share          $ 0.06            $ 0.14             $ 0.93             $ (0.01)
                                           ==============    ==============    ===============    ================

         Diluted Earnings (Loss) Per Share        $ 0.06            $ 0.14             $ 0.81             $ (0.01)
                                           ==============    ==============    ===============    ================
</TABLE>




                                       3


                    See notes to these financial statements
<PAGE>

                      OLYMPIC CASCADE FINANCIAL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                       --------Nine Months Ended-------
                                                                          June 30,          June 25,
                                                                            2000              1999
                                                                       --------------      ------------
<S>                                                                     <C>                  <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                                      $ 1,756,000          $ (16,000)
   Adjustments to reconcile net income (loss) to net
   cash from operating activities
           Depreciation and amortization                                      360,000            300,000
           Issuance of common stock in lawsuit settlement                           -            498,000
           Issuance of common stock as payment of expenses                          -            120,000
           Compensation related to issuance of stock options                   61,000             18,000
   Changes in assets and liabilities                                                                   -
           Cash, cash equivalents and securities                            7,869,000        (23,998,000)
           Deposits                                                        (1,023,000)          (139,000)
           Receivables                                                     (9,273,000)          (116,000)
           Income taxes receivable (payable)                                  109,000            654,000
           Securities held for resale                                        (242,000)          (142,000)
           Other assets                                                       (86,000)          (304,000)
           Customer and broker payables                                     3,700,000         21,045,000
           Securities sold, but not yet purchased                               9,000            168,000
           Accounts payable, accrued expenses, and other liabilities          367,000          1,737,000
                                                                            3,607,000           (175,000)

CASH FLOWS FROM INVESTING ACTIVITIES
           Purchase of fixed assets                                          (369,000)          (162,000)
           Purchase of goodwill                                               (30,000)                 -
                                                                             (399,000)          (162,000)


CASH FLOWS FROM FINANCING ACTIVITIES
           Borrowings (repayments) on line of credit                       (2,100,000)           300,000
           Repayment of notes payable                                      (1,034,000)          (300,000)
           Payments on capital lease                                         (255,000)          (263,000)
           Issuance of common stock through exercise of
              stock options and warrants                                    1,911,000            297,000
                                                                           (1,478,000)            34,000

INCREASE (DECREASE) IN CASH                                                 1,730,000           (303,000)

CASH BALANCE

           Beginning of the period                                            384,000            551,000

           End of the period                                              $ 2,114,000          $ 248,000
                                                                       ===============   ================


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
           Cash paid during the period for
           Interest                                                       $ 3,712,000        $ 2,766,000
                                                                       ===============   ================

           Income taxes                                                           $ -                $ -
                                                                       ===============   ================


SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
           FINANCING ACTIVITIES

           Warrant issued as part of acquistion                              $ 20,000                $ -
                                                                       ===============   ================



</TABLE>


                                       4


                    See notes to these financial statements
<PAGE>




             OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                         JUNE 30, 2000 AND JUNE 25, 1999

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 JUNE 30, 2000 AND JUNE 25, 1999 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 24, 1999.

NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               NATURE  OF  BUSINESS  -  The  Company  is  a  financial  services
organization,  operating  through its two wholly  owned  subsidiaries,  National
Securities   Corporation   ("National")   and   WestAmerica   Investment   Group
("WestAmerica").  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  brokerage and trade  clearance  operations.  In April 2000,  the Company
commenced  online  trading  services for its  customers on the Internet  through
NSCdirect (www.nscdirect.com).

               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 third
quarter of fiscal 2000 and 1999, the number of shares used in the basic earnings
per share calculation was 2,078,821 and 1,599,936,  respectively.  For the first
nine  months of fiscal  2000 and 1999,  the  number of shares  used in the basic
earnings (loss) per share calculation was 1,894,755 and 1,521,974, 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 third quarter of fiscal 2000 and 1999,
the number of shares  used in the diluted  earnings  per share  calculation  was
2,377,931 and 1,602,612,  respectively. For the first nine months of fiscal 2000
and 1999,  the number of shares  used in the diluted  earnings  (loss) per share
calculation was 2,165,863 and 1,521,974, respectively.


                                       5
<PAGE>

               RECLASSIFICATION  - Other revenue and commission  expense for the
third  quarter of fiscal 1999 and the nine months  ended June 25, 1999 have been
reclassified to reflect  comparable figures for the third quarter of fiscal 2000
and the nine months ended June 30, 2000. The effect of this  reclassification is
to  increase  other  revenue  and  commission  expense by $49,000  for the third
quarter of fiscal 1999 and the nine months  ended June 25,  1999,  respectively.
This reclassification did not affect net income.

NOTE 2 - LINE OF CREDIT

National has a secured line of credit of up to  $3,000,000.  The line is subject
to renewal in January 2001.  Borrowings  bear interest at the bank's prime rate.
Interest is payable monthly.  The line is secured by certain assets of National,
excluding  items  prohibited  from being  pledged  and assets  included  the SEC
Customer  Protection  Rule 15c3-3 formula.  These  borrowings are short-term and
generally do not extend  beyond a few days.  At June 30,  2000,  National had no
borrowings outstanding on this line.

NOTE 3 - ACQUISITION

On  June  30,  2000,  the  Company  acquired  all of the  outstanding  stock  of
Canterbury  Securities  Corporation  (Canterbury),  a  Chicago,  Illinois  based
broker-dealer  specializing in private  placement  transactions.  Canterbury was
acquired for cash of $30,000 and the  issuance of five-year  warrants to acquire
5,000  unregistered  shares of common  stock of the Company at a price of $6.375
per share. The Company  recorded this  transaction  under the purchase method of
accounting and has recorded goodwill of $50,000,  which will be amortized over a
period of 36 months.

NOTE 4 - COMMITMENTS

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


ITEM 2 -         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OFOPERATIONS

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
REPORTS 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.


                                        6

<PAGE>

Quarter Ended June 30, 2000 Compared to Quarter Ended June 25, 1999

The Company's  third  quarter of fiscal 2000  resulted in a minimal  increase in
revenues and virtually no change in pre-tax income compared with the same period
of fiscal  1999.  The  increase in total  revenue is due to  increased  interest
revenue, a large increase in other revenue, and a decrease in investment banking
revenue. Commissions, net dealer inventory gains and transfer fees all increased
slightly over the same period in 1999.  Overall,  the Company  reported  pre-tax
income of  $206,000  in the third  quarter of fiscal 2000 as compared to pre-tax
income of $218,000 in the third  quarter of fiscal  1999.  Net income,  however,
decreased  to  $132,000  from  $225,000  for the third  quarter  of fiscal  2000
compared to the third  quarter of fiscal 1999.  The reason for this decrease was
the income tax expense of $74,000  recorded in fiscal 2000.  There was no income
tax  expense  recorded  during  fiscal  1999  due  to the  utilization  of a net
operating loss (NOL) carry forward from fiscal 1998.

Total revenues increased 4% or $480,000, to $13,155,000 from $12,675,000. During
the quarter,  market trading volumes decreased  significantly  from the previous
six months of fiscal year 2000 which caused commissions and net dealer inventory
gains to be lower than the second quarter of fiscal 2000. Although,  the Company
has increased its overall registered  representative base from the third quarter
of fiscal 1999,  because of the lower market trading volumes there was no marked
increase in commissions or net dealer inventory gains.

Investment banking revenue decreased $692,000, or 80%, to $171,000 from $863,000
during the third of quarter  fiscal 2000 compared to the third quarter of fiscal
1999. During both the third quarter of fiscal 2000 and 1999, the Company did not
manage a public  underwriting.  Investment  banking revenue decreased during the
third  quarter of fiscal 2000  because the Company did not  complete any private
placement  transactions,  but rather the revenue was generated  through advisory
fees.  In the third  quarter  of fiscal  1999  investment  banking  revenue  was
generated  primarily from the completion of private  placement  transactions and
advisory fees.

Other revenue, consisting of asset management fees and revenue from market trade
order flow,  increased  $416,000,  or 142%, to $708,000 from $292,000 during the
third quarter of fiscal 2000  compared to the third quarter of fiscal 1999.  The
increase in other revenue was due mainly to an increase in asset management fees
received  through  National Asset  Management,  a subsidiary of National.  Asset
management fees increased  $246,000 during the quarter,  due to increased assets
under management.


                                       7

<PAGE>

Expenses increased  proportionately with the modest increase in revenues.  Total
expenses increased $492,000,  or 4%, to $12,949,000 from $12,457,000.  Expenses,
which increased during the quarter, include salaries, occupancy costs, interest,
taxes, licenses and registration and other.

Salaries increased $128,000, or 9%, to $1,620,000 from $1,492,000.  In September
1998, certain members of management of the Company received temporary reductions
in  compensation,  ranging from 10% to 62%. These  reductions were reinstated in
full prior to the first quarter of fiscal 2000.  Overall,  combined  commissions
and salaries as a percentage of revenue decreased 4% to 68% in the third quarter
of fiscal 2000 compared with 72% in the third quarter of fiscal 1999.

Occupancy expense, consisting mainly of rent, office supplies, computer services
and depreciation,  increased $396,000,  or 67%, to $987,000 from $591,000.  This
increase was due mainly to increased rent,  depreciation and computer  services.
Rent  increased  approximately  $124,000 at National  due to a new office  lease
signed in July 1999 at a higher rate per square  foot,  as well as office  space
added for NSCdirect.  Additionally, with the commencement of NSCdirect, computer
services and depreciation increased approximately $198,000, due to the costs for
additional equipment and computer services such as web hosting,  off-site server
maintenance  and other costs  associated  with online trade execution and online
account access.

Taxes,  licenses and registration  increased $343,000, to $185,000 from a credit
of  $158,000  in the third  quarter of fiscal  1999.  This  increase  is because
National  received a refund of $330,000 in the third quarter of fiscal 1999 from
the prior years' business operating taxes.

Other  expenses  increased  $117,000,  or 36%, to $441,000  from $324,000 in the
third  quarter of fiscal 2000 and 1999,  respectively.  In the third  quarter of
fiscal 2000, the Company  incurred  travel and moving  expense of  approximately
$245,000,  an increase of  approximately  $60,000 from the prior year. Also, the
Company  incurred  additional  employment  agency fees  totaling  $28,000 as the
Company hired new regional compliance officers.

Interest expense increased $145,000, or 13%, to $1,243,000 from $1,098,000.  The
main reason for this  increase was the increase in customer  deposits,  on which
the Company pays interest.  Customer  deposits  increased $9.5 million from June
25,  1999 to June 30,  2000.  However,  this  increase  was more than  offset by
increased  interest  income from  customer  margin debt that  increased by $11.0
million during the same period.  Interest income increased $355,000,  or 22%, to
$1,970,000 from  $1,615,000  during the third quarter of fiscal 2000 as compared
with the third quarter of fiscal 1999.

Despite the general increase in expenses during the third quarter of fiscal 2000
as compared to the third  quarter of fiscal 1999,  professional  fees  decreased
$371,000,  or 51%, to  $355,000  from  $726,000.  This  decrease  was due to the
settlement of several lawsuits during the previous fiscal year.


                                       8
<PAGE>

Overall, diluted earnings were $0.06 per share and $0.14 per share for the third
quarters of fiscal 2000 and 1999, respectively.

Nine Months Ended June 30, 2000 Compared to Nine Months Ended June 25, 1999
---------------------------------------------------------------------------

The first nine months of fiscal 2000 resulted in a dramatic increase in revenues
and net income  compared  with the same period of fiscal  1999.  The increase in
revenues was due to growth in retail brokerage and dealer  operations  causing a
significant  increase in commission  revenue and net dealer inventory gains. The
Company  reported  net income of  $1,756,000  in the first nine months of fiscal
2000  compared  with a loss of $16,000  during  the first nine  months of fiscal
1999.

Revenues  increased  $17,464,000,  or 56% to $48,647,000 from $31,183,000.  This
increase  is due  primarily  to the  increase in  commission  revenue and dealer
inventory  gains  resulting  from the strong  markets in the first six months of
fiscal year 2000 and the solid performance of investment executives at National.
Commission revenue increased  $9,262,000 or 45% to $29,750,000 from $20,488,000.
National  added  additional  offices  in New York as well as adding an office in
Florida.  Net dealer inventory gains increased  $5,372,000 or 164% to $8,652,000
in the first nine months of fiscal 2000 from $3,280,000 in the first nine months
of fiscal 1999.  Transfer fees  increased  $340,000,  or 51% to $1,008,000  from
$668,000, due to the increase in overall trade volume.

Additionally,  other revenue,  consisting of asset  management  fees and revenue
from market trade order flow,  increased  $619,000,  or 86% to  $1,342,000  from
$723,000.  The  increase  in  other  revenue  was due to an  increase  in  asset
management  fees received  through  National Asset  Management,  a subsidiary of
National. Asset management fees increased $204,000 during the nine-month period,
due to increased assets under management.  Additionally, the increase related to
increased  rebates for trade order flow from market  makers due to the increased
trading volume for the first six months of fiscal year 2000.

Finally, investment banking revenue increased $178,000, or 9% to $2,179,000 from
$2,001,000.  National  participated in private placements raising  approximately
$13.0  million in gross  proceeds for clients in the first nine months of fiscal
2000.  During the same period in fiscal 1999,  National  participated in private
placements raising approximately $8.0 million in gross proceeds for clients. The
Company  did not manage any public  underwritings  during  either the first nine
months of fiscal 2000 or fiscal 1999.

Concurrent  with the 55% increase in revenues,  total  expenses  increased  50%.
Total expenses  increased by $15,578,000 to $46,782,000  from  $31,204,000.  The
most significant increases were commission expense and salaries.

Commission expense increased $10,339,000 or 57% to $28,534,000 in the first nine
months of fiscal 2000 from  $18,195,000 in the first nine months of fiscal 1999.
Salaries increased $1,984,000 or 56% to $5,553,000 from $3,569,000. In September


                                       9

<PAGE>

1998,  certain  management of the Company had received  temporary  reductions in
compensation  ranging from 10% to 62%. These  reductions had been  reinstated in
full prior to the first quarter of fiscal 2000. Additionally, with the increased
growth the Company has hired additional  employees at National.  These increases
were  mainly  relating  to  the  information  technology  department,  including
NSCdirect.com,  the online  brokerage  division of National.  Overall,  combined
commissions  and  salaries  as a  percentage  of  revenue  did not  change  from
approximately   70%  in  the  first  nine   months  of  fiscal  2000  and  1999,
respectively.

Consistent with the increased revenues, expenses regarding occupancy,  clearing,
taxes,  licenses and  registration  and other have increased from the first nine
months  of fiscal  1999 to the  first  nine  months  of  fiscal  2000.  The most
significant expense increases were clearing, occupancy, interest and other.

Clearing fees increased $521,000,  or 46%, to $1,662,000 from $1,141,000,  which
mainly relates to the increased business in National's  European offices and the
business  generated  from the additional  New York offices.  Occupancy  expenses
increased  $814,000,  or 45%, to  $2,643,000  from  $1,829,000 in the first nine
months of fiscal 2000 as compared  with the first nine months of fiscal 1999. As
discussed  in the  quarterly  results  above,  this  increase  was due mainly to
increased rent and computer services. Taxes, licenses and registration increased
$576,000,  or 929%,  to $638,000 from $62,000 in the first nine months of fiscal
1999.  This  increase is because  National  received a refund of $330,000 in the
third quarter fiscal 1999, from the prior years' business operating taxes. Other
expenses increased $879,000 or 94% to $1,816,000 from $937,000 in the first nine
months of fiscal 2000 and 1999, respectively. In the first nine months of fiscal
2000, the Company incurred travel and moving expense of approximately  $690,000,
an increase of approximately  $241,000 from the prior year's nine-month  period.
Also, the Company incurred additional employment agency fees totaling $83,000 as
the  Company  hired  more  people  to  accommodate  growth.  Finally,   customer
write-offs and bad debt expense increased  approximately $391,000 from the first
nine months of fiscal 1999.

Interest  expense  increased  during  the first  nine  months of fiscal  2000 as
compared with the first nine months of fiscal 1999.  Interest expense  increased
$927,000,  or 33%,  to  $3,730,000  from  $2,803,000.  The main  reason for this
increase  is the  increase  in  customer  deposits,  on which the  Company  pays
interest and the  accelerated  accretion of interest on original  issue discount
notes,  which were repaid  during the second  quarter of fiscal  2000.  Original
issue  discount  interest for the nine months  totaled  $232,000.  The remaining
interest expense  increase was due to the increase in customer  deposits of $4.4
million during the current nine-month period. This increase was more than offset
by increased  interest  income from customer margin debt that increased by $11.2
million  during  the  current  nine-month  period.   Interest  income  increased
$1,693,000,  or 42%, to $5,716,000 from $4,023,000  during the first nine months
of fiscal 2000 as compared with the first nine months of fiscal 1999.

Professional  fees decreased  $552,000,  or 31%, to $1,240,000 from  $1,792,000.
This decrease is due to the Company resolving several of its lawsuits during the
previous fiscal year.


                                       10

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Overall,  diluted  earnings  were $0.81 per share as compared with a net loss of
$0.01 per share for the first nine months of fiscal 2000 and 1999, 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.
Occasionally,  National  utilizes  short-term  bank  financing to supplement its
ability to meet day-to-day operating cash requirements.  Such financing has been
used to maximize  cash flow and is regularly  repaid.  National has a $3,000,000
revolving  secured credit  facility with Bank of America.  These  borrowings are
short-term  and  generally  do not extend  beyond a few days.  At June 30, 2000,
National had no borrowings  outstanding on this line.  Additionally National may
borrow up to 70% of the market  value of  eligible  securities  pledged  with an
unrelated broker dealer.

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.  Accordingly,  the increased
customer margin debt during the current  quarter  resulted in an increase in the
net capital requirements.  At June 30, 2000, National's net capital exceeded the
requirement by $4,744,000.

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 June 30, 2000, WestAmerica's net capital exceeded the
requirement by $232,000.

Any advances,  dividend  payments and other equity  withdrawals from National or
WestAmerica  may  be  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,   is  sufficient  to  satisfy  existing
operations.  However,  as the Company expands its operations,  including its new
online trading services,  or acquires other businesses,  the Company will likely
require additional capital.


                                       11

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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

The following  table shows the quoted market values of the Company's  securities
owned  ("long"),  securities  sold  but  not  yet  purchased  ("short")  and net
positions at June 30, 2000 and September 24, 1999:

                                            JUNE 30, 2000

                                 LONG                 SHORT           NET

Corporate stocks              $540,000              $148,000     $392,000 (long)


                                          SEPTEMBER 24, 1999

                                 LONG                 SHORT           NET

Corporate stocks              $294,000              $134,000     $160,000 (long)
Stock options                 $  4,000              $  5,000     $  1,000(short)


                                       12

<PAGE>

                                     PART II

ITEM 1 - LEGAL PROCEEDINGS

1.   THE MAXAL TRUST, ET AL.. V. NATIONAL SECURITIES  CORPORATION ET AL., United
     States District Court, Central District of California,  Case No. CV-97-4392
     ABC (Shx).  See disclosure in the Company's Form 10-Q for the quarter ended
     December  31,  1998 and Form 10-K for the fiscal year ended  September  24,
     1999.

2.   IN RE  COMPLETE  MANAGEMENT,  INC.  SECURITIES  LITIGATION,  United  States
     District Court, Southern District of New York, Case No. 99 Civ. 1454 (NRB).
     See  disclosure in the Company's  Form 10-Q for the quarter ended March 31,
     2000.

The Company is a defendant  in various  other  arbitrations  and  administrative
proceedings,  lawsuits  and  claims  that  arise  out of the  normal  course  of
business.  The Company  believes  that the  resolution of these matters will not
have an  adverse  material  effect  on the  Company's  financial  statements  or
business operations.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

On June  30,  2000,  as part of the  purchase  of all the  outstanding  stock of
Canterbury  Securities  Corporation,  the Company issued  five-year  warrants to
acquire  5,000  unregistered  shares  of common  stock at a price of $6.375  per
share. The issuance of these securities was exempt from  registration  under the
Securities  Act  pursuant  to  Section  4(2)  thereof  on  the  basis  that  the
transaction did not involve a public offering.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

a)       Exhibits

10.21    Employment contract dated June 2000
10.22    Audit committee charter

27. Financial Data Schedule (This financial data schedule is only required to be
submitted  with  the  registrant's  Quarterly  Report  on  Form  10-Q  as  filed
electronically with the SEC's EDGAR database.)

b) Reports on Form 8-K (None)


                                       13

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                                   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

August 10, 2000                               By:/s/ Steven A. Rothstein
Date                                              Steven A. Rothstein, Chairman,
                                           President and Chief Executive Officer




August 10, 2000                               By: /s/ Robert H. Daskal
Date                                               Robert H. Daskal, Senior Vice
                                             President, Chief Financial Officer,
                                                         Secretary and Treasurer




August 10, 2000                               By:  /s/ David M. Williams
Date                                                   David M. Williams
                                                        Corporate Controller and
                                                        Chief Accounting Officer
                                       14

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