<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 March 31, 2003     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 1934during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No |_|

Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act). Yes |_|  No |X|

The number of shares  outstanding of registrant's  common stock, par value $0.02
per share, at May 15, 2003 was 3,367,558.


                                       1
<PAGE>



              OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                          ASSETS
                                                                                        March 31,     September 30,
                                                                                          2003            2002
                                                                                       (unaudited)   (see note below)
                                                                                      ------------    ------------
<S>                                                                                   <C>             <C>
CASH                                                                                  $      3,000    $    325,000
CASH, restricted                                                                             4,000         309,000
DEPOSITS                                                                                 1,091,000       1,489,000
RECEIVABLES
          Broker-dealers and clearing organizations                                      1,635,000       1,269,000
          Other, net of reserve for uncollectible accounts of $209,000                   1,111,000       1,155,000
ADVANCES TO REGISTERED REPRESENTATIVES                                                     758,000         799,000
SECURITIES HELD FOR RESALE, at market                                                    1,644,000         606,000
FIXED ASSETS, net                                                                          301,000         369,000
OTHER ASSETS                                                                             1,775,000       1,627,000
                                                                                      ------------    ------------
                                                                                      $  8,322,000    $  7,948,000
                                                                                      ============    ============

                                            LIABILITIES AND STOCKHOLDERS' DEFICIT

BANK OVERDRAFT                                                                        $     97,000    $    408,000
PAYABLES - Broker-dealers and clearing organizations                                     1,320,000         490,000
SECURITIES SOLD, BUT NOT YET PURCHASED, at market                                          314,000         105,000
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES                                 2,392,000       2,821,000
NOTES PAYABLE                                                                            3,438,000       3,215,000
NOTE PAYABLE - RELATED PARTY                                                             1,000,000       1,000,000
                                                                                      ------------    ------------
                                                                                         8,561,000       8,039,000
                                                                                      ------------    ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
          Preferred stock, $.01 par value, 100,000 shares authorized; designated
             Series A 9% cumulative  convertible  preferred stock, 30,000 shares
             authorized; 27,825
             shares issued and outstanding (liquidation preference: $2,782,500)                 --              --
          Common stock, $.02 par value, 60,000,000 shares authorized, 3,367,558 and
             2,274,449 shares issued and outstanding at March 31, 2003 and
             September 30, 2002, respectively                                               67,000          45,000
          Additional paid-in capital                                                    12,628,000      12,045,000
          Deficit                                                                      (12,934,000)    (12,181,000)
                                                                                      ------------    ------------
                                                                                          (239,000)        (91,000)
                                                                                      ------------    ------------
                                                                                      $  8,322,000    $  7,948,000
                                                                                      ============    ============
</TABLE>

Note:  The balance sheet at September 30, 2002 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>
                                               -------- Three Months Ended ----------------Six Months Ended-------
                                                  March 31,          March 31,       March 31,         March 31,
                                                     2003              2002            2003              2002
                                               -----------------   --------------   --------------  --------------
REVENUES:
<S>                                               <C>             <C>             <C>             <C>
Commissions                                       $  5,887,000    $  7,077,000    $ 11,895,000    $ 14,911,000
Net dealer inventory gains                           2,668,000       2,747,000       6,225,000       5,463,000
Interest                                               304,000         338,000         616,000       1,077,000
Transfer fees                                          346,000         390,000         721,000         775,000
Investment banking                                      25,000          82,000         131,000         183,000
Other                                                  163,000         336,000         397,000         846,000
                                                  ------------    ------------    ------------    ------------
TOTAL REVENUES                                       9,393,000      10,970,000      19,985,000      23,255,000
                                                  ------------    ------------    ------------    ------------
EXPENSES:
Commissions                                          6,045,000       6,709,000      12,946,000      14,247,000
Salaries                                             1,060,000       1,481,000       2,081,000       2,759,000
Clearing fees                                          542,000       1,505,000       1,224,000       2,613,000
Communications                                         709,000         654,000       1,267,000       1,470,000
Occupancy costs                                        676,000         943,000       1,429,000       1,919,000
Interest                                                33,000          52,000          78,000         444,000
Professional fees                                      299,000         138,000         531,000         420,000
Taxes, licenses, registration                           48,000         118,000         133,000         208,000
Other                                                  572,000         486,000       1,047,000       1,016,000
                                                  ------------    ------------    ------------    ------------
TOTAL EXPENSES                                       9,984,000      12,086,000      20,736,000      25,096,000
                                                  ------------    ------------    ------------    ------------
Loss from continuing operations before                (591,000)     (1,116,000)       (751,000)     (1,841,000)
      income taxes and discontinued operations
Income tax benefit                                          --          52,000              --          40,000
                                                  ------------    ------------    ------------    ------------
Loss from continuing operations                       (591,000)     (1,064,000)       (751,000)     (1,801,000)
Income from discontinued operations, net of tax             --              --              --         300,000
                                                  ------------    ------------    ------------    ------------
Net loss                                              (591,000)     (1,064,000)       (751,000)     (1,501,000)
Preferred stock dividends                              (62,000)        (48,000)       (125,000)        (50,000)
                                                  ------------    ------------    ------------    ------------
Net loss attributable to common stockholders      $   (653,000)   $ (1,112,000)   $   (876,000)   $ (1,551,000)
                                                  ============    ============    ============    ============
NET INCOME (LOSS) PER COMMON SHARE
Basic and diluted:
            Loss from continuing operations       $      (0.20)   $      (0.50)   $      (0.29)   $      (0.83)
            Income from discontinued operations             --              --              --            0.14
                                                  ------------    ------------    ------------    ------------
            Net loss attributable to
               common stockholders                $      (0.20)   $      (0.50)   $      (0.29)   $      (0.69)
                                                  ============    ============    ============    ============
Weighted average number of shares outstanding
            Basic and diluted                        3,347,900       2,236,449       2,982,015       2,236,449
                                                  ============    ============    ============    ============
</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 31,
                                                                                  2003           2002
                                                                             -------------   -------------
<S>                                                                          <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                  $   (751,000)   $ (1,501,000)
   Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities
             Depreciation and amortization                                        123,000         428,000
             Change in net assets (liabilities) of discontinued operations             --        (300,000)
   Changes in assets and liabilities
             Cash, cash equivalents and securities                                     --      37,293,000
             Restricted Cash                                                      305,000              --
             Deposits                                                             398,000       2,804,000
             Receivables                                                         (281,000)     28,617,000
             Securities held for resale                                        (1,038,000)        (54,000)
             Other assets                                                        (148,000)       (494,000)
             Payables                                                             826,000     (64,042,000)
             Securities sold, but not yet purchased                               209,000        (512,000)
                                                                             ------------    ------------
   Net cash provided by (used in) operating activities                           (357,000)      2,239,000
                                                                             ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
             Purchase of fixed assets                                             (55,000)        (52,000)
                                                                             ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
             Payments on line of credit                                                --      (3,500,000)
             Payments on capital lease                                                 --        (127,000)
             Proceeds from notes payable                                               --       1,598,000
             Payments on notes payable                                           (153,000)       (179,000)
             Decrease in cash overdraft                                          (311,000)     (1,252,000)
             Net proceeds from issuance of preferred stock                             --       1,222,000
             Net proceeds from issuance of common stock and warrants              554,000              --
                                                                             ------------    ------------
   Net cash provided by (used in) financing activities                             90,000      (2,238,000)
                                                                             ------------    ------------
NET DECREASE IN CASH                                                             (322,000)        (51,000)
CASH BALANCE
             Beginning of the period                                              325,000         150,000
                                                                             ------------    ------------
             End of the period                                               $      3,000    $     99,000
                                                                             ============    ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
             Cash paid during the period for
             Interest                                                        $     79,000    $    466,000
                                                                             ============    ============
             Income taxes                                                    $         --    $     12,000
                                                                             ============    ============
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
                                                                             ============    ============
             Exchange of accounts payable for common stock                   $     50,000    $         --
                                                                             ============    ============
             Conversion of accounts payable for note payable                 $    375,000    $         --
                                                                             ============    ============
</TABLE>

See notes to consolidated financial statements

                                       4


<PAGE>

             OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003
                                   (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,  2003 and March 30,  2002 are  unaudited.  The
results of operations for the interim periods are not necessarily  indicative of
the results of operations for the fiscal year. These financial statements should
be read in conjunction  with the consolidated  financial  statements and related
footnotes  included  thereto in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2002.

Certain revenues  classified as net dealer inventory gains and other revenues in
prior quarters have been reclassified as commission revenues to conform with the
presentation used in the March 31, 2003 financial  statements  without affecting
the previously reported net income (loss).

NOTE 2 - SECURITIES HELD FOR RESALE AND SECURITIES SOLD, BUT NOT YET PURCHASED

The following  table shows the quoted market values of the Company's  securities
held for resale and securities sold, but not yet purchased as of March 31, 2003:

                       Securities held  Securities sold, but
                         for resale       not yet purchased
                         ----------         ----------
Corporate Stocks         $  257,000         $  103,000
Corporate Bonds              90,000                 --
Government Obligations    1,297,000            211,000
                         ----------         ----------
                         $1,644,000         $  314,000
                         ==========         ==========


                                       5
<PAGE>

NOTE 3 - ISSUANCE OF SECURITIES

In the first  quarter of fiscal  year 2003,  the Company  consummated  a private
placement  (the  "Private  Offering") of its  securities to a limited  number of
"accredited investors" pursuant to Rule 506 of Regulation D under the Securities
Act of 1933,  as  amended  (the  "Securities  Act").  Each  unit in the  Private
Offering  sold for $0.65 and  consisted  of one  share of the  Company's  common
stock, $.02 par value per share (the "Common Stock") and one three-year  warrant
to  purchase  one share of the  Company's  Common  Stock at a per share price of
$1.25 (the "Warrants").  Net proceeds of $554,500 closed in the first quarter of
fiscal year 2003, and the Company  correspondingly  issued  1,016,186  shares of
Common Stock and 1,016,186 Warrants.

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

NOTE 4 - LOAN FROM FIRST CLEARING CORPORATION

In the first quarter of fiscal year 2003,  First  Clearing  Corporation  ("First
Clearing") loaned the Company an additional $375,000 in the form of clearing fee
rebates.  The loan is due to be  repaid in  January  2004.  Additionally,  First
Clearing has waived its stockholders'  equity covenant as of March 31, 2003, and
set the excess net capital covenant at $850,000 as of March 31, 2003. Excess net
capital as of March 31, 2003 was $873,000.  The minimum  level of  stockholders'
equity required to be maintained will be $1,000,000 as of June 30, 2003, and the
minimum  excess net capital  required to be maintained  will be $1,000,000 as of
May 31, 2003.

NOTE 5 - CLOSING OF WESTAMERICA INVESTMENT GROUP

In December  2001, the Company's  former  wholly-owned  subsidiary,  WestAmerica
Investment Group  ("WestAmerica")  voluntarily  withdrew its membership with the
National Association of Securities Dealers ("NASD"),  ceased to conduct business
as a broker-dealer,  and filed for Chapter 7 Bankruptcy protection in accordance
with the U.S.  Bankruptcy Code. This filing  eliminated the risk of loss for the
liabilities in excess of assets,  and  accordingly  that amount was reversed and
reflected as income  during the first  quarter of fiscal year 2002 in the amount
of $300,000.  WestAmerica had been operated as a separate legal entity,  and the
Company  believes  it will  not  have  any  ongoing  liability  for  any  unpaid
obligations of WestAmerica.

NOTE 6 - CONTINGENCIES

National  Securities   Corporation,   the  Company's   wholly-owned   subsidiary
("National"),  has  been  named,  together  with  others,  as a  defendant  in a
consolidated  class action  lawsuit  filed  against  Complete  Management,  Inc.
Plaintiffs in the class action are seeking  approximately $80.0 million from all
named parties.  In June 2000, National filed a motion to dismiss this action. In
March 2001, the United States  District  Court for the Southern  District of New
York denied National's motion to dismiss.  In May 2001,  National  submitted its
answer to the  complaint in which it set forth its defenses.  In November  2001,
the  plaintiffs  filed a motion to  certify  the  class.  Plaintiffs  thereafter
withdrew  their motion and the case was  referred to  mediation.  The  mediation
process is


                                       6
<PAGE>

moving toward a global  settlement of the matter.  National has agreed to settle
its portion of this litigation,  subject to court approval, for $100,000. Should
the matter not be settled,  National will pursue its defenses, which it believes
are meritorious.  However,  the Company is unable to predict the outcome of this
matter  and  accordingly,  no  adjustments  have been  made in the  consolidated
financial statements in response to this matter.

In April  2002,  a former  executive  officer of the  Company,  Craig M.  Gould,
commenced  an action  against  the Company  claiming a breach of his  employment
contract, and seeking approximately $575,000 in damages. The Company believes it
has meritorious defenses and intends to vigorously defend this action,  although
the ultimate  outcome of the matter cannot be determined at this time.  However,
the Company is unable to predict the outcome of this matter and accordingly,  no
adjustments have been made in the consolidated  financial statements in response
to this matter.

In June 2002,  National was named,  together  with  others,  as a defendant in a
class action lawsuit relating to a series of private placements of securities in
Fastpoint Communications, Inc. in the Superior Court for the State of California
for the County of San Diego. Plaintiffs are seeking approximately $14.0 million,
but no  specific  amount of damages  has been  sought  against  National  in the
complaint.  National filed its answer, and believes it has meritorious  defenses
and intends to vigorously  contest class  certification  and defend this action,
although the ultimate  outcome of the matter  cannot be determined at this time.
However,  the  Company  is unable to  predict  the  outcome  of this  matter and
accordingly,  no  adjustments  have  been  made  in the  consolidated  financial
statements in response to this matter.

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  $2.6  million.  These matters arise out of the
normal course of business.  The Company believes it has meritorious defenses and
intends to vigorously  defend these actions.  However,  the Company is unable to
predict the outcome of these matters and  accordingly,  no adjustments have been
made in the consolidated financial statements in response to these matters.

NOTE 7 - ADOPTION OF NEW ACCOUNTING STANDARD

During  the  current  quarter,   the  Company  adopted  Statement  of  Financial
Accounting Standard ("SFAS") No. 148, "Accounting for Stock-based Compensation -
Transition and Disclosure." This statement amended SFAS No. 123, "Accounting for
Stock-Based  Compensation."  As  permitted  under  SFAS  No.  123,  the  Company
continues to apply the Accounting  Principles Board Opinion No. 25,  "Accounting
for Stock Issued to  Employees."  As required  under SFAS No. 148, the following
table presents pro forma net loss attributable to common  stockholders for basic
and  diluted  net loss per  share as if the  fair  value-based  method  had been
applied to all awards of options granted by the Company.


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                   Three Months Ended                   Six Months Ended
                                                             March 31, 2003   March 31, 2002      March 31, 2003    March 31, 2002
                                                            ---------------------------------    ---------------------------------
<S>                                                              <C>            <C>                  <C>             <C>
Net loss attributable to common stockholders - as reported       $ (653,000)    $ (1,112,000)        $ (876,000)     $ (1,551,000)
Stock-based employee compensation cost determined
under fair value method, net of tax effects                          (7,700)         (50,000)           (15,000)          (50,000)
                                                            ---------------------------------    ---------------------------------
Net loss attributable to common stockholders - pro forma         $ (660,700)    $ (1,162,000)        $ (891,000)     $ (1,601,000)
                                                            =================================    =================================
Net income (loss) per common share
Basic and diluted:
Net loss attributable to common stockholders - as reported          $ (0.20)         $ (0.50)           $ (0.29)          $ (0.69)
Per share stock-based employee compensation cost
determined under fair value method, net of tax effects                    -            (0.02)             (0.01)            (0.02)
                                                            ---------------------------------    ---------------------------------
Net loss attributable to common stockholders - pro forma            $ (0.20)         $ (0.52)           $ (0.30)          $ (0.71)
                                                            =================================    =================================
</TABLE>

The Black-Scholes  option valuation model was used to estimate the fair value of
the options  granted in the quarter and the six months ending March 31, 2003 and
2002. The model includes subjective input assumptions that can materially affect
the fair value estimates. The model was developed for use in estimating the fair
value of traded  options  that have no vesting  restrictions  and that are fully
transferable.  For example,  the expected  volatility is estimated  based on the
most recent  historical period of time equal to the weighted average life of the
options   granted.   Options  issued  under  the  Company's  option  plans  have
characteristics  that differ from other options that are traded. In management's
opinion,  this valuation  model does not  necessarily  provide a reliable single
measure of the fair value of its employee stock options.  Principal  assumptions
used in applying the  Black-Scholes  model along with the results from the model
were as follows:


                                        2003         2002
                                    -------------------------
Periods ended March 31,
Assumptions:
Risk-free interest rate                 4.06%         5.7%
Expected life, in years                  4.6          5.0
Expected volatility                      311%         286%

Results:
Fair value of options granted         $ 0.36       $ 1.15


                                       8
<PAGE>

NOTE 8 - CUMULATIVE DIVIDENDS ON CONVERTIBLE PREFERRED STOCK

The  holders  of the  Series A  Cumulative  Convertible  Preferred  Stock are to
receive dividends on a quarterly basis at a rate of 9% per annum when, as and if
declared by the Company's  Board of Directors.  At March 31, 2003, the amount of
accumulated  dividends on the Company's 27,825 issued and outstanding  shares of
preferred stock was $293,000.

NOTE 9 - INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per share is computed  based on the weighted  average number
of shares of Common  Stock  outstanding  during the  period.  Net income  (loss)
attributable to common  stockholders  reflects  cumulative but unpaid  preferred
stock dividends on the Company's Preferred Stock issued during fiscal year 2002.
Common  Stock  equivalents  have  been  omitted  as  their  inclusion  would  be
antidilutive.  For the  three  month  periods  ended  March  31,  2003 and 2002,
2,384,065 and 1,406,751 shares, respectively,  attributable to outstanding stock
options and warrants were excluded from the calculation of diluted  earnings per
share because the effect was antidilutive. For the six month periods ended March
31, 2003 and 2002, 2,384,065 and 1,406,751 shares, respectively, attributable to
outstanding  stock options and warrants were  excluded from the  calculation  of
diluted earnings per share because the effect was antidilutive.

NOTE 10 - THE AMERICAN STOCK EXCHANGE

The  Company  has  received  a letter  from The  American  Stock  Exchange  (the
"Exchange")  indicating  that  it is  not in  compliance  with  certain  listing
standards  relating to (1)  shareholders'  equity of less than $2.0  million and
losses from continuing operations and/or net losses in two out of its three most
recent  fiscal  years,  and (2) the  requirement  to have and  maintain an audit
committee  comprised of at least three  independent  directors.  The Company has
submitted to the Exchange a plan that indicates  compliance  with item (1) above
within a maximum  of 18 months  and the  Company  is  actively  seeking  another
independent  director to satisfy  item (2) above.  In the event that the Company
fails to comply with the listing  standards,  the  Company's  common stock could
trade  on the OTC  Bulletin  Board or in the  "pink  sheets"  maintained  by the
National Quotation Bureau, Inc. Such alternatives are generally considered to be
less efficient markets,  and the Company's stock price, as well as the liquidity
of the Company's common stock, may be adversely impacted as a result.

NOTE 11 - BUSINESS OPERATIONS

Although  the Company  has  continued  to incur  operating  losses,  the Company
believes that based on the  continuation of the improved  market  conditions and
the Company's increased volume of business experienced in the month of April and
the  beginning  of May 2003,  funds will be  sufficient  to maintain its current
level  of  business  activities  through  the end of March  2004.  Additionally,
effective in April 2003, the Company implemented a temporary salary decrease for
its employees.  If current market conditions do not continue,  the Company would
need to consider curtailing certain of its business activities, further reducing
its fixed overhead costs and/or seek additional sources of financing.


                                       9
<PAGE>

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

The Private Securities  Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. This Quarterly Report may contain certain statements
of a  forward-looking  nature  relating  to future  events  or  future  business
performance.  Any such  statements  that  refer to the  Company's  estimated  or
anticipated future results or other non-historical facts are forward-looking and
reflect the Company's  current  perspective of existing trends and  information.
These  statements  involve risks and  uncertainties  that cannot be predicted or
quantified and,  consequently,  actual results may differ  materially from those
expressed  or  implied  by  such  forward-looking  statements.  Such  risks  and
uncertainties  include,  among others,  risks and uncertainties  detailed in the
Company's  Annual Report on Form 10-K,  filed with the  Securities  and Exchange
Commission on December 26, 2002. Any forward-looking  statements contained in or
incorporated  into  this  Quarterly  Report  speak  only as of the  date of this
Quarterly  Report.  The Company  undertakes no obligation to update publicly any
forward-looking statement, whether as a result of new information, future events
or otherwise.

Results of Operations

Reclassification of Revenues

Certain revenues  classified as net dealer inventory gains and other revenues in
prior quarters have been reclassified as commission revenues to conform with the
presentation used in the March 31, 2003 consolidated  financial statements.  The
revenues  formerly  classified as net dealer inventory gains were generated from
principal trades to institutions that National charges a commission.

Quarter Ended March 31, 2003 Compared to Quarter Ended March 31, 2002

The Company's second quarter of fiscal year 2003 resulted in a decrease in total
revenues and a corresponding greater decrease in expenses compared with the same
period of fiscal year 2002.  The  decrease  in revenues is due to the  continued
weakness in the securities markets compared to a year ago. However,  as a result
of management's  efforts to reduce the fixed costs associated with its business,
the Company's  loss from  continuing  operations  before income taxes  decreased
$525,000 from  $1,116,000 in the second  quarter of fiscal year 2002 to $591,000
in the second quarter of fiscal year 2003.

Total revenues decreased $1,577,000, or 14%, to $9,393,000 in the second quarter
of fiscal year 2003 from  $10,970,000 in the second quarter of fiscal year 2002.
The decrease in total  revenues is primarily due to a continued  weaker  overall
securities market caused by the geopolitical crisis surrounding the conflicts in
the Mid-East.  Accordingly,  commission revenues decreased  $1,190,000 or 17% to
$5,887,000  in the second  quarter of fiscal year 2003 as compared to $7,077,000
in the second quarter of fiscal year 2002. Net dealer  inventory gains decreased
$79,000,  or 3%, to  $2,668,000  in the second  quarter of fiscal year 2003 from
$2,747,000 in the second quarter of fiscal year 2002. The decrease in commission
revenue and net dealer  inventory gains is due to an approximate 13% decrease in
the Company's trading volume from the prior period.


                                       10
<PAGE>

Investment banking revenues decreased $57,000,  or 70%, to $25,000 in the second
quarter of fiscal  year 2003 from  $82,000 in the second  quarter of fiscal year
2002.  The decrease in revenues is primarily  due to a general  slow-down in the
broader capital markets.  Interest income decreased $34,000, or 10%, to $304,000
in the second quarter of fiscal year 2003 from $338,000 in the second quarter of
fiscal year 2002. The decrease in interest  income is attributable to a decrease
in the amount of customer  credits and customer debits in National's  customers'
accounts.  Other revenues decreased $173,000,  or 51%, to $163,000 in the second
quarter of fiscal year 2003 from  $336,000 in the second  quarter of fiscal year
2002.  The  decrease  is due to a  decline  in order  flow  rebates  from  other
broker-dealers.

In comparison with the 14% decrease in total revenues,  total expenses decreased
$2,102,000, or 17%, to $9,984,000 in the second quarter of fiscal year 2003 from
$12,086,000  in the second  quarter of fiscal year 2002.  The  decrease in total
expenses is a result of  management's  efforts to streamline  its operations and
reduce costs.

Commission expense,  which includes expenses related to commission revenue,  net
dealer inventory gains and investment banking, decreased by $664,000, or 10%, to
$6,045,000  in the second  quarter of fiscal 2003 from  $6,709,000 in the second
quarter of fiscal 2002.  Salaries decreased  $421,000,  or 28%, to $1,060,000 in
the second quarter of fiscal year 2003 from  $1,481,000 in the second quarter of
fiscal year 2002. This decrease is due to management's ongoing efforts to reduce
its fixed costs associated with salaried employees. Overall, combined commission
and salary expenses as a percentage of revenue increased by 1% to 76% during the
second  quarter of fiscal year 2003 compared to 75% during the second quarter of
fiscal  year 2002.  The  increase is due to the  decrease in interest  and other
income in the second  quarter of fiscal year 2003 compared to the second quarter
of fiscal year 2002.

Clearing fees decreased by $963,000,  or 64%, to $542,000 from $1,505,000 in the
second quarter of fiscal year 2003 compared to the second quarter of fiscal year
2002.  The decrease in clearing fees is due to lower  trading  volume during the
current period and a one time clearing charge of $548,000 incurred in the second
quarter of fiscal year 2002. Communication expenses increased by $55,000, or 8%,
to $709,000  from  $654,000.  The  increase is due to higher  usage of telequote
services.  Occupancy costs decreased $267,000, or 28%, to $676,000 from $943,000
in second  quarter of fiscal year 2003 compared to the second  quarter of fiscal
year  2002.  The  decrease  in  occupancy   expense  is  due  to  the  Company's
renegotiating  certain long-term office leases, and finding subtenants to occupy
unused space.

Professional  fees  increased  by $161,000,  or 117%,  to $299,000 in the second
quarter of fiscal year 2003 from  $138,000 in the second  quarter of fiscal year
and 2002. The increase in  professional  fees is due to an increase in the legal
fees  relating  to  various  lawsuits  and  arbitrations.  Taxes,  licenses  and
registrations  decreased by $70,000, or 59% in the second quarter of fiscal year
2003 to $48,000  from  $118,000 in the second  quarter of fiscal year 2002.  The
decrease  is due to fewer  license and  registration  fees  associated  with the
Company's  employees.  Other expenses increased by $86,000,  or 18%, to $572,000
from $486,000 in the second quarter of fiscal years 2003 and 2002, respectively.
The  decrease  is due to reduced  travel and  entertainment  expenses as well as
fewer write-offs of bad debts.


                                       11
<PAGE>

Due to the  continued  slumping  markets,  the Company  reported a net loss from
continuing  operations  of  $591,000  in the second  quarter of fiscal year 2003
compared to a net loss from  continuing  operations  of $1,064,000 in the second
quarter  of  fiscal  year  2002.  Overall,  the  diluted  loss  from  continuing
operations  was $.20 per share for the  second  quarter  of fiscal  year 2003 as
compared to a diluted loss from continuing  operations of $.50 per share for the
second quarter of fiscal year 2002.

Six Months Ended March 31, 2003 Compared to Six Months Ended March 31, 2002

The  Company's  first six months of fiscal  year 2003  resulted in a decrease in
total revenues and a corresponding  greater  decrease in expenses  compared with
the same  period of fiscal  year 2002.  The  decrease  in revenues is due to the
continued weakness in the securities markets compared to a year ago. However, as
a result of management's  efforts to reduce the fixed costs  associated with its
salaried employees,  communication expenses, occupancy costs and other expenses,
the Company's loss from continuing  operations  before income taxes decreased by
$1,090,000  from  $1,841,000  in the  first six  months  of fiscal  year 2002 to
$751,000 in the first six months of fiscal year 2003.

Total revenues decreased by $3,270,000,  or 14%, to $19,985,000 in the first six
months of fiscal  year 2003 from  $23,255,000  in the first six months of fiscal
year 2002. The decrease in total revenues is primarily due to a continued weaker
overall  securities  market caused by the  geopolitical  crisis  surrounding the
conflicts  in  the  Mid-East.  Accordingly,  commission  revenues  decreased  by
$3,016,000 or 20% to  $11,895,000 in the first six months of fiscal year 2003 as
compared  to  $14,911,000  in the first six  months of  fiscal  year  2002.  The
decrease  in  commission  revenue  is  due an  approximate  8%  decrease  in the
Company's  trading  volume from the prior  period.  Net dealer  inventory  gains
increased by $762,000,  or 14%, to  $6,225,000 in the first six months of fiscal
year 2003 from $5,463,000 in the first six months of fiscal year 2002.

Investment  banking  revenues  decreased by $52,000,  or 28%, to $131,000 in the
first six months of fiscal  year 2003 from  $183,000  in the first six months of
fiscal year 2002. The decrease in revenues is attributed to a general  slow-down
in the broader capital markets.  Interest income decreased by $461,000,  or 43%,
to $616,000 in the first six months of fiscal year 2003 from  $1,077,000  in the
first six  months of fiscal  year  2002.  The  decrease  in  interest  income is
attributable to a decrease in the amount of customer credits and customer debits
in National's  customers' accounts Other revenues decreased by $449,000, or 53%,
to  $397,000  in the first six months of fiscal  year 2003 from  $846,000 in the
first six months of fiscal year 2002.  The decrease is due to a decline in order
flow rebates from other broker-dealers.

In comparison with the 14% decrease in total revenues,  total expenses decreased
by  $4,360,000,  or 17%, to  $20,736,000  in the first six months of fiscal year
2003 from  $25,096,000 in the first six months of fiscal year 2002. The decrease
in  total  expenses  is a result  of  management's  efforts  to  streamline  its
operations and reduce costs.

Commission expense,  which includes expenses related to commission revenue,  net
dealer inventory gains and investment banking,  decreased by $1,301,000,  or 9%,
to  $12,946,000  in the first six


                                       12
<PAGE>

months of fiscal 2003 from  $14,247,000  in the first six months of fiscal 2002.
Salaries decreased by $678,000, or 25%, to $2,081,000 in the first six months of
fiscal  year 2003 from  $2,759,000  in the first six months of fiscal year 2002.
This decrease is due to  management's  ongoing efforts to reduce its fixed costs
associated  with salaried  employees.  Overall,  combined  commission and salary
expenses as a percentage of revenue  increased by 2% to 75% during the first six
months of fiscal year 2003 compared to 73% during the first six months of fiscal
year 2002. The increase is due to the decrease in interest income from the first
six months of fiscal  year 2003  compared to the first six months of fiscal year
2002.

Clearing fees decreased by $1,389,000,  or 53%, to $1,224,000 from $2,613,000 in
the first six  months of fiscal  year 2003  compared  to the first six months of
fiscal year 2002.  The decrease in clearing fees is due to lower trading  volume
during the current period and a one time clearing charge of $548,000 incurred in
the first six  months of fiscal  year  2002.  Communication  expenses  decreased
$203,000,  or 14%,  to  $1,267,000  from  $1,470,000  in the first six months of
fiscal  year 2003  compared  to the first six months of fiscal  year  2002.  The
decrease  is due to a  reduction  in voice  and data  charges.  Occupancy  costs
decreased by $490,000, or 26%, to $1,429,000 from $1,919,000 in first six months
of fiscal year 2003  compared  to the first six months of fiscal year 2002.  The
decrease in  occupancy  expense is due to the  Company's  renegotiating  certain
long-term office leases, and finding subtenants to occupy unused space.

Professional  fees  increased by $111,000,  or 26%, to $531,000 in the first six
months of fiscal year 2003 from  $420,000 in the first six months of fiscal year
and 2002. The increase in  professional  fees is due to an increase in the legal
fees  relating  to  various  lawsuits  and  arbitrations.  Taxes,  licenses  and
registrations  decreased  by  $75,000,  or 36% in the first six months of fiscal
year 2003 to $133,000 from $208,000 in the first six months of fiscal year 2002.
The decrease is due to fewer license and  registration  fees associated with the
Company's  employees.  Other expenses increased by $31,000, or 3%, to $1,047,000
from  $1,016,000  in the first six months of fiscal  year 2003  compared  to the
first six months of fiscal year 2002..

Due to the  continued  slumping  markets,  the Company  reported a net loss from
continuing  operations  of  $751,000 in the first six months of fiscal year 2003
compared to a net loss from continuing operations of $1,801,000 in the first six
months of fiscal year 2002. Overall, the diluted loss from continuing operations
was $.29 per share for the first six months of fiscal year 2003 as compared to a
diluted  loss  from  continuing  operations  of $.83 per share for the first six
months of fiscal year 2002.

In the first  quarter of fiscal  2002,  the Company  recorded a gain of $300,000
from  discontinued  operations  related to the  write-off of  WestAmerica's  net
liabilities. Overall, the net loss was $.29 per share in the first six months of
fiscal  year 2003 as  compared to a net loss of $.69 per share for the first six
months of fiscal year 2002.

Liquidity and Capital Resources


                                       13
<PAGE>

As with most financial  services  firms,  substantial  portions of the Company's
assets are liquid,  consisting mainly of cash or assets readily convertible into
cash. Through December 2001, while acting as a self-clearing  firm, these assets
were financed primarily by National's interest bearing and non-interest  bearing
customer credit balances,  other payables and equity capital.  National utilized
short-term bank financing to supplement its ability to meet day-to-day operating
cash  requirements.  Such  financing  was  used to  maximize  cash  flow and was
regularly  repaid.  The Company's line of credit was fully repaid and expired on
December 31, 2001.

National,  as a registered  broker-dealer,  is subject to the SEC's  Uniform Net
Capital Rule 15c3-1,  which  requires  the  maintenance  of minimum net capital.
National has elected to use the  alternative  standard  method  permitted by the
rule.  This  requires that  National  maintain  minimum net capital equal to the
greater of $250,000 or a specified amount per security based on the bid price of
each  security  for which the  Company  is a market  maker.  At March 31,  2003,
National's net capital exceeded the requirement by $873,000.

In December 2001, WestAmerica voluntarily withdrew its membership with the NASD,
ceased  conducting  business  as  a  broker-dealer,  and  filed  for  Chapter  7
Bankruptcy  protection in accordance with the U.S. Bankruptcy Code.  WestAmerica
had been operated as a separate legal entity,  and although the Company believes
it  will  not  have  any  ongoing  liability  for  any  unpaid   obligations  of
WestAmerica,  there can be no assurances that creditors of WestAmerica  will not
seek recovery of their claims from the Company.

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

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

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

In the first  quarter of fiscal  year 2003,  the Company  consummated  a private
placement  (the  "Private  Offering") of its  securities to a limited  number of
accredited  investors  pursuant to Rule 506 of Regulation D under the Securities
Act of 1933,  as  amended  (the  "Securities  Act").  Each


                                       14
<PAGE>

unit in the Private  Offering  sold for $0.65 and  consisted of one share of the
Company's  Common Stock and one three-year  warrant to purchase one share of the
Company's  Common  Stock at a per share  price of $1.25  (the  "Warrants").  Net
proceeds of $554,500 were received in the first quarter of fiscal year 2003, and
the  Company  correspondingly  issued  1,016,186  shares  of  Common  Stock  and
1,016,186 Warrants.  The Company has filed a Registration  Statement on Form S-3
under the  Securities  Act for the resale of the shares of Common  Stock and the
shares of Common Stock issuable upon exercise of the Warrants  during the second
quarter of fiscal year 2003.  The  Registration  Statement  is  currently  being
reviewed by the SEC.

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

The  conversion  to First  Clearing  began in December 2001 and was completed in
March 2002. In connection with the Clearing  Agreement,  the Company  executed a
ten-year  promissory  note in favor of First  Clearing  under  which the Company
immediately  borrowed  $1,000,000.  The funds were contributed by the Company to
National, and are being used as a deposit to secure National's performance under
the  Clearing  Agreement.  The  Clearing  Agreement  also  provided  for another
$1,000,000 loan that was extended to the Company upon substantial  completion of
the conversion on December 31, 2001 that was also  contributed to National.  The
amount of the note that is repayable on each  anniversary  date is the principal
and  interest  then  outstanding  divided  by the  remaining  life of the  note.
Borrowings under the promissory note are forgivable  based on achieving  certain
business  performance  and trading  volumes of the Company  over the life of the
loan that the Company has satisfied through the quarter ended March 31, 2003.

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

In the first quarter of fiscal year 2003,  First Clearing  loaned the Company an
additional  $375,000 in the form of clearing fee rebates.  The loan is due to be
repaid  in  January   2004.   Additionally,   First   Clearing  has  waived  its
stockholders'  equity  covenant  as of March 31,  2003,  and set the  excess net
capital  covenant  at  $850,000  as of March  31,  2003.  The  minimum  level of
stockholders' equity required to be maintained will be $1,000,000 as of June 30,
2003,  and the minimum  excess net capital  required  to be  maintained  will be
$1,000,000 as of May 31, 2003. The Company  believes that future waivers will be
available if needed.


                                       15
<PAGE>

Although  the Company  has  continued  to incur  operating  losses,  the Company
believes that based on the  continuation of the improved  market  conditions and
the Company's increased volume of business experienced in the month of April and
the  beginning  of May 2003,  funds will be  sufficient  to maintain its current
level  of  business  activities  through  the end of March  2004.  Additionally,
effective in April 2003, the Company implemented a temporary salary decrease for
its employees.  If current market conditions do not continue,  the Company would
need to consider curtailing certain of its business activities, further reducing
its fixed  overhead  costs  and/or seek  additional  sources of  financing.  The
Company's ability to obtain such financing could be adversely affected by recent
developments  relating  to the  listing  of the  Company's  common  stock on The
American Stock Exchange (See Note 10 herein).

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 as of March 31, 2003:

                         Long                      Short             Net
                         ----                      -----             ---

                                       16
<PAGE>

Corporate Stocks           $    257,000       $ 103,000       $   154,000 (long)
Corporate Bonds            $     90,000       $      --       $    90,000 (long)
Government Obligations     $  1,297,000       $ 211,000       $ 1,086,000 (long)

ITEM 4 - CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report,  we carried out an  evaluation,
under the supervision and with the  participation of our Chief Executive Officer
and Acting  Chief  Financial  Officer,  of the  effectiveness  of the design and
operation  of our  "disclosure  controls  and  procedures"  (as  defined  in the
Securities  Exchange Act of 1934, as amended,  Rules 13a-14(c) and 15(d)-14(c)).
This  evaluation  has  provided  our Chief  Executive  Officer and Acting  Chief
Financial  Officer with  reasonable  assurance that our disclosure  controls and
procedures are effective and can be relied upon to gather,  analyze and disclose
all information required to be included in our periodic SEC reports.

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

                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

During the  quarter  ended  March 31,  2003,  the  Company  agreed to settle its
portion of the  litigation  relating to Complete  Management,  Inc.,  subject to
court approval,  for $100,000.  There were no other significant  developments in
the Company's legal proceedings during the quarter. For a detailed discussion of
the  Company's  legal  proceedings,  please  refer  to  Note 6  herein,  and the
Company's  Annual  Report on Form 10-K for the fiscal year ended  September  30,
2002.


                                       17
<PAGE>

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

In the first  quarter of fiscal  year 2003,  the Company  consummated  a private
placement  (the  "Private  Offering") of its  securities to a limited  number of
"accredited investors" pursuant to Rule 506 of Regulation D under the Securities
Act of 1933,  as  amended  (the  "Securities  Act").  Each  unit in the  Private
Offering sold for $0.65 and consisted of one share of the Company's Common Stock
and one three-year  warrant to purchase one share of the Company's  Common Stock
at a per share price of $1.25 (the  "Warrants").  Net proceeds of $554,500  were
received  in  the  first   quarter  of  fiscal   year  2003,   and  the  Company
correspondingly  issued 1,016,186 shares of Common Stock and 1,016,186 Warrants.
National  acted as the  placement  agent on a best efforts basis for the Private
Offering.  In consideration of the services  rendered by National,  National was
(i) paid a cash fee equal to ten percent (10%) of the gross proceeds received by
the Company,  and (ii) issued warrants to purchase such number of Units equal to
ten  percent  (10%)  of the  Units  sold in the  Private  Offering,  at the same
valuation received by investors in the Private Offering. The offering period for
the Private Offering expired on February 17, 2003.

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

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

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

The Company held its annual meeting of shareholders  on March 13, 2003.  Proxies
were solicited by the Company  pursuant to Regulation 14A under the Exchange Act
of 1934, as amended. At the annual meeting, the Company's  shareholders approved
the following proposals:

1. The number of shares voted "for" and "withhold  authority" in connection with
the election of Robert J. Rosan as a Class II Director to the Board of Directors
of the Company was as follows:

                                                          Withhold
                                            For          Authority
                                         ---------       ---------
                  In Person                285,000               0
                  By Proxy               3,190,060          78,980
                                         ---------          ------
                  Total                  3,475,060          78,980
                                         ---------          ------

The terms of Steven B. Sands and Martin S. Sands,  Class I  Directors,  and Mark
Goldwasser, Gary A. Rosenberg and Peter Rettman, Class III Directors,  continued
after the annual meeting.

2. The number of shares voted "for",  "against" and "abstain" in connection with
the ratification of Grassi & Co., CPAs P.C. as the Company's  independent public
accountants  for the fiscal year ending  September  30,  2003,  was  approved as
follows:


                                       18
<PAGE>

                               For                Against           Abstain
                            ---------             -------           -------
      In Person               285,000                   0                 0
      By Proxy              3,233,354              35,449               237
                            ---------              ------               ---
      Total                 3,518,354              35,449               237
                            ---------              ------               ---

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

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

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

(b) Reports on Form 8-K

The Company  filed a Report on Form 8-K dated May 5, 2003  reporting a change in
its independent public accountants.


                                       19
<PAGE>

                                  CERTIFICATION

I, Mark Goldwasser, certify that:

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

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

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

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

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

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

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

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

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

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

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

                                                        /s/ Mark Goldwasser
                                                        ------------------------
                                                        Mark Goldwasser
                                                        Chief Executive Officer
                                                        May 15, 2003


                                       20
<PAGE>

                                  CERTIFICATION

I, Robert H. Daskal, certify that:

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

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

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

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

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

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

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

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

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

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

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

                                               /s/ Robert H. Daskal
                                               ------------------------------
                                               Robert H. Daskal
                                               Acting Chief Financial Officer
                                               May 15, 2003


                                       21
<PAGE>

                                   SIGNATURES

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

              OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARY

May 15, 2003                        By: /s/ Mark Goldwasser
                                        -------------------------
                                        Mark Goldwasser
                                        President and Chief Executive Officer

May 15, 2003                        By:/s/ Robert H. Daskal
                                       ---------------------------
                                       Robert H. Daskal
                                       Acting Chief Financial Officer


                                       22

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