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, 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 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 [ ]

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 August 11, 2003 was 3,367,558.



                                       1
<PAGE>

              OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARY

            CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                     ASSETS

<TABLE>
<CAPTION>

                                                                                            June 30,         September 30,
                                                                                              2003               2002
                                                                                          (unaudited)       (see note below)
                                                                                         ---------------   ------------------
<S>                                                                                        <C>                <C>
CASH                                                                                       $    242,000       $     325,000
CASH, restricted                                                                                      -             309,000
DEPOSITS                                                                                        840,000           1,489,000
RECEIVABLES
          Broker-dealers and clearing organizations                                           3,884,000           1,269,000
          Other, net of reserve for uncollectible accounts of $509,000 and $209,000
               at June 30, 2003 and September 30, 2002, respectively.                           794,000           1,155,000
ADVANCES TO REGISTERED REPRESENTATIVES                                                          637,000             799,000
SECURITIES HELD FOR RESALE, at market                                                         2,103,000             606,000
FIXED ASSETS, net                                                                               261,000             369,000
OTHER ASSETS                                                                                  1,919,000           1,627,000
                                                                                         ---------------   ------------------
                                                                                           $ 10,680,000       $   7,948,000
                                                                                         ===============   ==================

                                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

BANK OVERDRAFT                                                                             $        -         $     408,000
PAYABLES - Broker-dealers and clearing organizations                                          1,809,000             490,000
SECURITIES SOLD, BUT NOT YET PURCHASED, at market                                               295,000             105,000
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES                                      4,136,000           2,821,000
NOTES PAYABLE                                                                                 3,314,000           3,215,000
NOTE PAYABLE - RELATED PARTY                                                                  1,000,000           1,000,000
                                                                                         ---------------   ------------------
                                                                                             10,554,000           8,039,000
                                                                                         ===============   ==================

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (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 June 30, 2003 and
             September 30, 2002, respectively                                                    67,000              45,000
          Additional paid-in capital                                                         12,628,000          12,045,000
          Accumulated deficit                                                               (12,569,000)        (12,181,000)
                                                                                         ---------------   ------------------
                                                                                                126,000             (91,000)
                                                                                         ---------------   ------------------
                                                                                            $10,680,000         $ 7,948,000
                                                                                         ===============   ==================

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

                                      See notes to condensed consolidated financial statements.


                                                                       2
</TABLE>


<PAGE>

                      OLYMPIC CASCADE FINANCIAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                       -------- Three Months Ended ---------------Nine Months Ended--------
                                                           June 30,         June 30,          June 30,         June 30,
                                                             2003             2002              2003             2002
                                                        -------------  -------------     -------------    --------------
<S>                                                     <C>              <C>              <C>              <C>
REVENUES:
Commissions                                              $10,566,000     $ 6,534,000      $ 22,461,000     $ 21,445,000
Net dealer inventory gains                                 3,192,000       2,324,000         9,417,000        7,787,000
Interest                                                     359,000         277,000           975,000        1,354,000
Transfer fees                                                572,000         260,000         1,293,000        1,035,000
Investment banking                                           214,000           9,000           345,000          192,000
Other                                                        172,000         425,000           570,000        1,270,000
                                                        -------------  -------------     -------------    --------------
TOTAL REVENUES                                            15,075,000       9,829,000        35,061,000       33,083,000
                                                        -------------  -------------     -------------    --------------

EXPENSES:
Commissions                                               10,328,000       5,824,000        23,274,000       20,070,000
Salaries                                                     898,000       1,205,000         2,979,000        3,964,000
Clearing fees                                                769,000         897,000         1,993,000        3,510,000
Communications                                               694,000         760,000         1,961,000        2,230,000
Occupancy costs                                              628,000         885,000         2,057,000        2,804,000
Interest                                                      31,000          33,000           109,000          477,000
Professional fees                                            382,000         267,000           912,000          687,000
Taxes, licenses, registration                                 95,000          76,000           229,000          284,000
Other                                                        887,000         496,000         1,935,000        1,512,000
                                                        -------------  -------------     -------------    --------------

TOTAL EXPENSES                                            14,712,000      10,443,000        35,449,000       35,538,000
                                                        -------------  -------------     -------------    --------------

Income (loss) from continuing operations before
      income taxes and discontinued operations               363,000        (614,000)         (388,000)      (2,455,000)

Income tax benefit                                               -            40,000               -             80,000
                                                        -------------  -------------     -------------    --------------

Income (loss) from continuing operations                     363,000        (574,000)         (388,000)      (2,375,000)

Income from discontinued operations, net of tax                  -               -                 -            300,000

                                                        -------------  -------------     -------------    --------------
Net income (loss)                                            363,000        (574,000)         (388,000)      (2,075,000)

Preferred stock dividends                                    (62,000)        (57,000)         (187,000)        (107,000)
                                                        -------------  -------------     -------------    --------------

Net income (loss) attributable to common stockholders    $   301,000     $  (631,000)     $   (575,000)    $ (2,182,000)
                                                        =============  ==============    ==============   ==============


NET INCOME (LOSS) PER COMMON SHARE

Basic:
           Income (loss) from continuing operations      $      0.09     $    (0.28)      $     (0.18)     $     (1.10)
           Income from discontinued operations                   -              -                 -               0.13
           Net income (loss) attributable to            -------------  --------------    --------------   --------------
              common stockholders                        $      0.09     $    (0.28)      $     (0.18)     $     (0.97)
                                                        =============  ==============    ==============   ==============

Diluted:
           Income (loss) from continuing operations      $      0.07     $    (0.28)      $     (0.18)     $     (1.10)
           Income from discontinued operations                   -              -                 -               0.13
           Net income (loss) attributable to            -------------  --------------    --------------   --------------
              common stockholders                        $      0.07     $    (0.28)      $     (0.18)     $     (0.97)
                                                        =============  ==============    ==============   ==============

Weighted average number of shares outstanding
           Basic                                           3,367,558       2,274,449         3,110,530        2,249,116
                                                        =============  ==============    ==============   ==============
           Diluted                                         5,229,722       2,274,449         3,110,530        2,249,116
                                                        =============  ==============    ==============   ==============


                                         See notes to condensed consolidated financial statements.


                                                                        3
</TABLE>


<PAGE>

                      OLYMPIC CASCADE FINANCIAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                --------------Nine Months Ended------
                                                                                  June 30,              June 30,
                                                                                    2003                  2002
                                                                                -------------        ----------------
<S>                                                                                <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                        $(388,000)          $ (2,075,000)
   Adjustments to reconcile net loss to net cash
   provided by operating activities
             Depreciation and amortization                                           174,000                499,000
             Change in net assets (liabilities) of discontinued operations               -                 (300,000)

   Changes in assets and liabilities
             Cash, cash equivalents and securities                                       -               37,313,000
             Restricted Cash                                                         309,000                    -
             Deposits                                                                649,000              3,204,000
             Receivables                                                          (2,092,000)            29,076,000
             Securities held for resale                                           (1,497,000)                64,000
             Other assets                                                           (292,000)               (98,000)
             Payables                                                              3,059,000            (64,124,000)
             Securities sold, but not yet purchased                                  190,000               (602,000)
                                                                                -------------        ----------------
   Net cash provided by operating activities                                         112,000              2,957,000
                                                                                -------------        ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
             Purchase of fixed assets                                                (65,000)               (84,000)
                                                                                -------------        ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
             Payments on line of credit                                                  -               (3,500,000)
             Payments on capital lease                                                   -                 (300,000)
             Proceeds from notes payable                                                 -                1,548,000
             Payments on notes payable                                              (276,000)              (211,000)
             Decrease in cash overdraft                                             (408,000)            (1,556,000)
             Net proceeds from issuance of preferred stock                               -                1,472,000
             Net proceeds from issuance of common stock and warrants                 554,000                    -
                                                                                -------------        ----------------
   Net cash used in financing activities                                            (130,000)            (2,547,000)
                                                                                -------------        ----------------

NET INCREASE (DECREASE) IN CASH                                                      (83,000)               326,000

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

             End of the period                                                     $ 242,000              $ 476,000
                                                                                =============        ================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
             Cash paid during the period for
             Interest                                                              $ 109,000              $ 501,000
                                                                                -------------        ----------------
             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             $      -
                                                                                =============        ================



                                         See notes to condensed consolidated financial statements.


                                                                        4
</TABLE>

<PAGE>


             OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 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 June 30, 2003 and June 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 consolidated 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.

The revenues generated from principal trades to institutions for which the
Company receives commission revenues previously 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 June 30, 2003
consolidated financial statements without affecting the previously reported net
income (loss).

NOTE 2 - NEW ACCOUNTING STANDARDS

During the quarter ended March 31, 2003, 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.


                                       5
<PAGE>


<TABLE>
<CAPTION>

                                                                             Three Months Ended              Nine Months Ended
                                                                       June 30, 2003  June 30, 2002    June 30, 2003  June 30, 2002
                                                                       ----------------------------    ----------------------------
<S>                                                                    <C>           <C>               <C>           <C>
Net income (loss) attributable to common stockholders - as reported     $ 301,000    $  (631,000)       $ (575,000)   $  (2,182,000)

Stock-based employee compensation cost determined
under fair value method, net of tax effects                               (11,000)       (25,000)          (26,000)         (75,000)
                                                                       ----------------------------    ----------------------------
Net income (loss) attributable to common stockholders - pro forma       $  290,000   $  (656,000)       $ (601,000)   $  (2,257,000)
                                                                       ============================    ============================

Earnings (loss) per share

Basic earnings (loss) per share:
Net income (loss) attributable to common stockholders - as reported     $    0.09    $     (0.28)       $    (0.18)   $       (0.97)

Per share stock-based employee compensation cost

determined under fair value method, net of tax effects                        -            (0.01)            (0.01)           (0.03)
                                                                       ----------------------------    ----------------------------
Net income (loss) attributable to common stockholders - pro forma       $    0.09    $     (0.29)       $    (0.19)   $       (1.00)
                                                                       ============================    ============================

Diluted earnings (loss) per share:
Net income (loss) attributable to common stockholders - as reported     $    0.07    $     (0.28)       $    (0.18)   $       (0.97)

Per share stock-based employee compensation cost
determined under fair value method, net of tax effects                        -            (0.01)            (0.01)           (0.03)
                                                                       ----------------------------    ----------------------------
Net income (loss) attributable to common stockholders - pro forma       $    0.07    $     (0.29)       $    (0.19)   $       (1.00)
                                                                       ============================    ============================
</TABLE>


The Black-Scholes option valuation model was used to estimate the fair value of
the options granted in the quarter and nine months ending June 30, 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 traded options. 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:


                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                      Periods ended June 30,
                                                       2003           2002
                                                      -----------------------
<S>                                                     <C>             <C>
Assumptions:
Risk-free interest rate                                 4.01%           5.7%

Expected life, in years                                   5.0            5.0

Expected volatility                                      311%           286%

Results:
Fair value of options granted                         $  0.36        $  1.15
</TABLE>


In November 2002, the FASB issued Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." FIN No. 45 requires a company, at the
time it issues a guarantee, to recognize an initial liability for the fair value
of obligations assumed under the guarantee and elaborates on existing disclosure
requirements related to guarantees and warranties. The initial recognition
requirements of FIN No. 45 are effective for guarantees issued or modified after
December 31, 2002. The Company's adoption of the recognition requirements of FIN
No. 45 did not have any effect on its consolidated financial position or results
of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" which is
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. This Statement establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a liability. The
Company is still evaluating the effect of this pronouncement on its consolidated
financial statements.

NOTE 3 - 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 June 30, 2003:

<TABLE>
<CAPTION>
                                  Securities held          Securities sold, but
                                    for resale              not yet purchased
                                ---------------------    -----------------------
<S>                               <C>                               <C>
Corporate Stocks                  $      275,000                    $ 67,000
Corporate Bonds                          576,000                     162,000
Government Obligations                 1,252,000                      66,000
                                ---------------------    -----------------------
                                  $    2,103,000                   $ 295,000
                                =====================    =======================
</TABLE>


                                       7
<PAGE>


NOTE 4 - 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. The Warrants issued in connection with the
Private Offering have been included along with the proceeds of the shares of
Common Stock issued as additional paid-in capital.

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 5 - 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 waived its stockholders' equity covenant as of June 30, 2003. The
minimum level of stockholders' equity required to be maintained will be
$1,000,000 as of September 30, 2003. The Company believes that future waivers
will be available if needed; however, no assurances can be given that such
waivers will be granted.

NOTE 6 - 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. In the first quarter of fiscal year 2002, the
Company recorded a gain of $300,000 from discontinued operations related to the
write-off of WestAmerica's net liabilities. The Bankruptcy filing in the first
quarter of fiscal year 2002 eliminated the risk of loss for the liabilities in
excess of assets, and accordingly, that amount was reversed and reflected as
income in the first quarter of fiscal year 2002. The Company did not guarantee
any of the obligations of WestAmerica, a distinct legal entity. Consequently,
the Company believes that it has no liability to creditors of WestAmerica. To
date, no creditors of WestAmerica have sought recovery from the Company.



                                       8
<PAGE>


NOTE 7 - CONTINGENCIES

National Securities Corporation ("National"), the Company's wholly-owned
subsidiary, was named, together with others, as a defendant in a consolidated
class action lawsuit filed against Complete Management, Inc. Plaintiffs in the
class action sought 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 resulted in a global
settlement of the matter. In the third quarter of fiscal year 2003, National
settled its portion of this litigation for $100,000.

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, seeking approximately $575,000 in damages. The arbitration commenced
in July 2003, and is expected to continue later in this calendar year. 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. Since the Company is unable to predict the outcome of this matter, 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.
Accordingly, the Company is unable to predict the outcome of this matter, and 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, including customer allegations of unsuitability,
churning, and various other brokerage related charges. 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 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, per share.
Such dividends are cumulative and accrue whether or not declared by the
Company's Board of Directors, but are payable only when, as and if declared by
the Company's Board of Directors. At June 30, 2003, the amount of accumulated



                                       9
<PAGE>

dividends on the Company's 27,825 issued and outstanding shares of preferred
stock was $355,000.

NOTE 9 - INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per share is computed on the basis of the weighted average
number of common shares outstanding. Diluted income (loss) per share is computed
on the basis of the weighted average number of common shares outstanding plus
the potential dilution that could occur if securities or other contracts to
issue common shares were exercised or converted. Stock options and warrants, and
conversion of the cumulative convertible preferred stock, were excluded from the
diluted loss per share computation for the nine-month periods ended June 30,
2003 and 2002 and the three-month period ended June 30, 2002, since the Company
incurred losses for these periods and the inclusion of such securities would be
antidilutive.

The following table sets forth the components used in the computation of basic
and diluted income (loss) per common share:

<TABLE>
<CAPTION>
                                                                        Three Months Ended                 Nine Months Ended
                                                                   June 30, 2003    June 30, 2002     June 30, 2003   June 30, 2002
                                                                   ------------------------------     -----------------------------
<S>                                                                  <C>             <C>               <C>           <C>
Net income (loss) attributable to common stockholders - basic        $   301,000       $ (631,000)      $ (575,000)   $ (2,182,000)

Effect of dilutive securities - preferred stock dividends                 62,000              -                -               -

                                                                   ------------------------------     -----------------------------
Net income (loss) attributable to common stockholders - diluted      $   363,000       $ (631,000)      $ (575,000)   $ (2,182,000)
                                                                   ==============================     =============================

Basic-weighted average common shares outstanding                       3,367,558        2,274,449        3,110,530       2,249,116

Dilutive stock options                                                     7,166              -                -               -

Weighted average assumed conversion of 9%
   cumulative convertible preferred stock                              1,854,998              -                -               -
                                                                   ------------------------------     -----------------------------
Diluted-weighted average common shares outstanding                     5,229,722        2,274,449        3,110,530       2,249,116
                                                                   ==============================     =============================

Net income (loss) attributable to common stockholders - basic        $      0.09       $    (0.28)      $    (0.18)   $      (0.97)
                                                                   ==============================     =============================
Net income (loss) attributable to common stockholders - diluted      $      0.07       $    (0.28)      $    (0.18)   $      (0.97)
                                                                   ==============================     =============================
</TABLE>


For the three-month period ended June 30, 2002, 1,282,718 shares attributable to
outstanding stock options and warrants were excluded from the calculation of
diluted loss per share because the effect was antildilutive. For the nine-month
periods ended June 30, 2003 and 2002, 2,376,065 and 1,282,718 shares,
respectively, attributable to outstanding stock options and warrants were
excluded from the calculation of diluted loss per share because the effect was
antildilutive.


                                       10
<PAGE>

NOTE 10 - THE AMERICAN STOCK EXCHANGE

In February 2003, the Company received a letter from The American Stock Exchange
(the "Exchange") indicating that it was 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
submitted to the Exchange a plan that indicated compliance with these items. In
May 2003, the Exchange notified the Company that it had accepted the Company's
plan of compliance and granted the Company an extension of time to August 5,
2004 to satisfy the financial standards, and an extension of time to July 18,
2003 to comply with the independent audit committee requirement, which was
satisfied in July 2003. The Company will be subject to periodic review by
Exchange Staff during the extension period. Failure to make progress consistent
with the plan or to regain compliance with the continued listing standards by
the end of the extension period could result in the Company's common stock being
delisted from The American Stock Exchange. 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 generated net income for the third quarter of fiscal year
2003, the Company has incurred operating losses for the nine month period ending
June 30, 2003. The Company believes that based on the continuation of the
improved market conditions and the Company's increased volume of business
experienced during the third quarter of fiscal year 2003 and in the month of
July 2003, funds will be sufficient to maintain its current level of business
activities through the end of June 2004. 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.



                                       11
<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

The revenues generated from principal trades to institutions for which the
Company receives commission revenues, previously 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 June 30, 2003
consolidated financial statements without affecting the previously reported net
income (loss). The revenues formerly classified as net dealer inventory gains
were generated from principal trades to institutions that National charges a
commission.

QUARTER ENDED JUNE 30, 2003 COMPARED TO QUARTER ENDED JUNE 30, 2002

The Company's third quarter of fiscal year 2003 resulted in a significant
increase in total revenues compared with the same period of fiscal year 2002.
The increase in revenues is primarily due to the improved securities markets
compared to a year ago. As a result of the increase in revenues combined with
management's efforts to reduce the fixed costs associated with its business,
income from continuing operations was $363,000 in the third quarter of fiscal
year 2003 compared to a loss of $574,000 in the third quarter of fiscal year
2002, an improvement of $937,000.

Total revenues increased $5,246,000, or 53%, to $15,075,000 in the third quarter
of fiscal year 2003 from $9,829,000 in the third quarter of fiscal year 2002.
The increase in total revenues is primarily due to the improved overall
securities market. Commission revenues increased $4,032,000 or 62% to
$10,566,000 in the third quarter of fiscal year 2003 as compared to $6,534,000
in the third quarter of fiscal year 2002. Net dealer inventory gains increased
$868,000, or 37%, to $3,192,000 in the third quarter of fiscal year 2003 from
$2,324,000 in the third quarter of fiscal year 2002. The increase in commission
revenue and net dealer inventory gains is due to the improved securities
markets.



                                       12
<PAGE>

Investment banking revenues increased $205,000, to $214,000 in the third quarter
of fiscal year 2003 from $9,000 in the third quarter of fiscal year 2002. The
increase in investment banking revenues is primarily due to the Company's
completing a private placement during the current quarter. Interest income
increased $82,000, or 30%, to $359,000 in the third quarter of fiscal year 2003
from $277,000 in the third quarter of fiscal year 2002. The increase in interest
income is attributable to an increase in the amount of customer debits in
National's customers' accounts. Transfer fees increased $312,000, or 120%, to
$572,000 in the third quarter of fiscal year 2003 from $260,000 in the third
quarter of fiscal year 2002. The increase is due to an increase in transaction
volume associated with the Company's retail brokerage business. Other revenues
decreased $253,000, or 60%, to $172,000 in the third quarter of fiscal year 2003
from $425,000 in the third quarter of fiscal year 2002. The decrease is due to a
decline in order flow rebates from other broker-dealers and a decline in the
Company's institutional execution service revenues.

In comparison with the 53% increase in total revenues, total expenses increased
only 41%, or $4,269,000 to $14,712,000 in the third quarter of fiscal year 2003
from $10,443,000 in the third quarter of fiscal year 2002. The increase in total
expenses is a result of greater commission expenses directly associated with
commission revenues, as well as the $300,000 increase in its reserve for
uncollectible accounts on its other receivables. This increase, however, was
minimized by management's efforts to streamline its operations and reduce fixed
expenses associated with its salaried employees, communication and occupancy
expenses.

Commission expense, which is directly related to commission revenue, net dealer
inventory gains and investment banking, increased $4,504,000, or 77%, to
$10,328,000 in the third quarter of fiscal 2003 from $5,824,000 in the third
quarter of fiscal 2002. Salaries decreased $307,000, or 25%, to $898,000 in the
third quarter of fiscal year 2003 from $1,205,000 in the third 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 approximately 3% to
74.5% during the third quarter of fiscal year 2003 compared to 71.5% during the
third quarter of fiscal year 2002. The increase is due to higher commission
percentages paid to National's registered representatives based on greater gross
commission revenues.

Clearing fees decreased by $128,000, or 14%, to $769,000 in the third quarter of
fiscal year 2003 from $897,000 in the third quarter of fiscal year 2002.
Although there was an increase in trading volume, clearing fees decreased due to
a change in the number of lower priced tickets from the prior period.
Communication expenses decreased by $66,000, or 9%, to $694,000 from $760,000.
The decrease is due to a reduction in voice and data charges. Occupancy costs
decreased $257,000, or 29%, to $628,000 from $885,000 in the third quarter of
fiscal year 2003 compared to the third 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 $115,000, or 43%, to $382,000 in the third
quarter of fiscal year 2003 from $267,000 in the third quarter of fiscal year
and 2002. The increase in professional



                                       13
<PAGE>

fees is due to an increase in the legal fees relating to various lawsuits and
arbitrations. Taxes, licenses and registrations increased by $19,000, or 25% in
the third quarter of fiscal year 2003 to $95,000 from $76,000 in the third
quarter of fiscal year 2002. Other expenses increased by $391,000, or 79%, to
$887,000 from $496,000 in the third quarter of fiscal years 2003 and 2002,
respectively. The increase is primarily due to the Company's increasing its
reserve for uncollectible accounts on its other receivables by $300,000, related
to registered representatives formerly associated with National.

Due to the improved securities markets, the Company reported net income of
$363,000 in the third quarter of fiscal year 2003 compared to a net loss of
$574,000 in the third quarter of fiscal year 2002. Net income attributable to
common stockholders was $301,000 in the third quarter of fiscal year 2003
compared to net loss attributable to common stockholders of $631,000 in the
third quarter of fiscal year 2002. The diluted net income per share was $.07
compared to the diluted loss per share of $.28 for the third quarter of fiscal
years 2003 and 2002, respectively.

NINE MONTHS ENDED JUNE 30, 2003 COMPARED TO NINE MONTHS ENDED JUNE 30, 2002

The Company's first nine months of fiscal year 2003 resulted in an increase in
total revenues and a decrease in expenses compared with the same period of
fiscal year 2002. The increase in revenues is primarily due to the significant
increase in revenues generated in the third quarter of fiscal year 2003 compared
to the third quarter of fiscal year 2002. As a result of the improved revenues
in the third quarter, and 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 decreased by
$1,987,000 to $388,000 from $2,375,000 in the first nine months of fiscal years
2003 and 2002, respectively.

Total revenues increased by $1,978,000, or 6%, to $35,061,000 in the first nine
months of fiscal year 2003 from $33,083,000 in the first nine months of fiscal
year 2002. The increase in total revenues is due to the improved overall
securities markets in the third quarter of fiscal year 2003. Commission revenues
increased $1,016,000 or 5% to $22,461,000 in the first nine months of fiscal
year 2003 as compared to $21,445,000 in the first nine months of fiscal year
2002. Net dealer inventory gains increased $1,630,000, or 21%, to $9,417,000 in
the first nine months of fiscal year 2003 from $7,787,000 in the first nine
months of fiscal year 2002. The increase in commission revenue and net dealer
inventory gains is due to the improved securities markets in the third quarter
of fiscal year 2003.

Investment banking revenues increased $153,000, or 80%, to $345,000 in the first
nine months of fiscal year 2003 from $192,000 in the first nine months of fiscal
year 2002. The increase in revenues is primarily attributed to the Company's
completing a private placement in the third quarter of fiscal year 2003.
Interest income decreased by $379,000, or 28%, to $975,000 in the first nine
months of fiscal year 2003 from $1,354,000 in the first nine months of fiscal
year 2002. The decrease in interest income is attributable to a decrease in the
amount of customer debits in National's customers' accounts during the period
and a decrease in interest rates from the prior period. Transfer fees increased
$258,000, or 25%, to $1,293,000 in the first nine months of fiscal year 2003
from $1,035,000 in the first nine months of fiscal year 2002. The increase is
due to an



                                       14
<PAGE>

increase in transaction volume associated with the Company's retail brokerage
business. Other revenues decreased by $700,000, or 55%, to $570,000 in the first
nine months of fiscal year 2003 from $1,270,000 in the first nine months of
fiscal year 2002. The decrease is due to a decline in order flow rebates from
other broker-dealers and a decline in the Company's institutional execution
service revenues.

In comparison with the 6% increase in total revenues, total expenses were
virtually unchanged in the first nine months of fiscal year 2003 compared to the
first nine months of fiscal year 2002. The slight decrease in total expenses is
a result of the increase in commission expenses directly related to the increase
in total revenues that was offset by management's efforts to streamline its
operations and reduce fixed expenses.

Commission expense, which includes expenses related to commission revenue, net
dealer inventory gains and investment banking, increased $3,204,000, or 16%, to
$23,274,000 in the first nine months of fiscal 2003 from $20,070,000 in the
first nine months of fiscal 2002. Salaries decreased $985,000, or 25%, to
$2,979,000 in the first nine months of fiscal year 2003 from $3,964,000 in the
first nine 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 2.2% to 74.8% during the first nine months of fiscal year 2003
compared to 72.6% during the first nine months of fiscal year 2002. The increase
is due to higher commission percentages paid to National's registered
representatives based on greater gross commission revenues and the decrease in
interest income from the first nine months of fiscal year 2003 compared to the
first nine months of fiscal year 2002.

Clearing fees decreased $1,517,000, or 43%, to $1,993,000 from $3,510,000 in the
first nine months of fiscal year 2003 compared to the first nine months of
fiscal year 2002. Although there was an increase in trading volume, clearing
fees decreased due to a change in the number of lower priced tickets from the
prior period, and a one time clearing charge of $548,000 incurred in the first
nine months of fiscal year 2002. Communication expenses decreased $269,000, or
12%, to $1,961,000 from $2,230,000 in the first nine months of fiscal year 2003
compared to the first nine months of fiscal year 2002. The decrease is due to a
reduction in voice and data charges. Occupancy costs decreased $747,000, or 27%,
to $2,057,000 from $2,804,000 in first nine months of fiscal year 2003 compared
to the first nine 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 $225,000, or 33%, to $912,000 in the first nine
months of fiscal year 2003 from $687,000 in the first nine 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. Interest expense decreased
$368,000, or 77%, to $109,000 in the first nine months of fiscal year 2003 from
$477,000 in the first nine months of fiscal year 2002. The decrease is primarily
due to the Company's change from self-clearing which occurred during the first
quarter of fiscal year 2002. Taxes, licenses and registrations decreased
$55,000, or 19%, in the first nine months of fiscal year 2003 to $229,000 from
$284,000 in the first nine months of fiscal year 2002. The decrease



                                       15
<PAGE>

is due to fewer license and registration fees associated with the Company's
employees. Other expenses increased $423,000, or 28%, to $1,935,000 from
$1,512,000 in the first nine months of fiscal year 2003 compared to the first
nine months of fiscal year 2002. The increase in other expenses is primarily due
to the Company's increase of its reserve for uncollectible accounts on its other
receivables related to registered representatives formerly associated with
National, by $300,000 during the third quarter of fiscal year 2003.

Despite the positive results of the third quarter of fiscal year 2003, the
slumping markets experienced during the first six months of fiscal year 2003
resulted in the Company reporting a loss from continuing operations of $388,000
in the first nine months of fiscal year 2003 compared to a loss from continuing
operations of $2,375,000 in the first nine months of fiscal year 2002. Overall,
the diluted loss from continuing operations per share was $.18 and $1.10 for the
nine months of fiscal years of 2003 and 2002, respectively.

In the first quarter of fiscal year 2002, the Company recorded a gain of
$300,000 from discontinued operations related to the write-off of WestAmerica's
net liabilities. The net loss was $388,000 and $2,075,000 for the first nine
months of fiscal years 2003 and 2002, respectively. Overall, the net loss
attributable to common stockholders was $575,000 and $2,182,000 for the first
nine months of fiscal years 2003 and 2002, respectively. The diluted net loss
attributable to common stockholders per share was $.18 and $.97 for the first
nine months of fiscal years 2003 and 2002, respectively.

LIQUIDITY AND CAPITAL RESOURCES

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

National, as a registered broker-dealer, is subject to the SEC's Uniform Net
Capital Rule 15c3-1, which requires the maintenance of minimum net capital.
National has elected to use the alternative standard method permitted by the
rule. This requires that National maintain minimum net capital equal to the
greater of $250,000 or a specified amount per security based on the bid price of
each security for which the Company is a market maker. At June 30, 2003,
National's net capital exceeded the requirement by $1,486,000.

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. The Company
did not guarantee any of the obligations of WestAmerica, a distinct legal
entity. Consequently, the Company believes that it has no liability to creditors
of WestAmerica. To date, no creditors of WestAmerica have sought recovery from
the Company.



                                       16
<PAGE>

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 equity 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 the Private
Offering of its securities to a limited number of accredited investors pursuant
to Rule 506 of Regulation D under 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. 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. It is standard business practice in the brokerage industry for
clearing firms to provide financial support to correspondent clearing firms. As
such, 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



                                       17
<PAGE>

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. The Company would
need to generate approximately 250,000 tickets per year over the ten-year term
of the note to satisfy the trading volume requirement, which has been satisfied
through the quarter ended June 30, 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 waived its stockholders'
equity covenant as of June 30, 2003. The minimum level of stockholders' equity
required to be maintained will be $1,000,000 as of September 30, 2003. The
Company believes that future waivers will be available if needed; however, no
assurances can be given that such waivers will be granted.

Although the Company has continued to incur operating losses through the first
nine months of fiscal year 2003, the Company believes that based on the
continuation of the improved market conditions experienced during the third
quarter of fiscal year 2003 and the continuation of the Company's increased
volume of business that has been experienced in the month of July 2003, funds
will be sufficient to maintain its current level of business activities through
the end of June 2004. 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
developments relating to the listing of the Company's common stock on The
American Stock Exchange (See Note 10 to the condensed consolidated financial
statements).


                                       18
<PAGE>


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
held for resale ("long"), securities sold, but not yet purchased ("short") and
net positions as of June 30, 2003:

<TABLE>
<CAPTION>
                                 LONG               SHORT             NET
                                 --------           ---------         ------
<S>                              <C>                <C>               <C>
Corporate Stocks                 $  275,000         $   67,000        $  208,000 (long)
Corporate Bonds                  $  576,000         $  162,000        $  414,000 (long)
Government Obligations           $1,252,000         $   66,000        $1,186,000 (long)
</TABLE>

ITEM 4 - CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision and with the participation of our 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-15). This evaluation has
provided our Chief Executive Officer and Acting Chief Financial Officer with
reasonable assurance that our



                                       19
<PAGE>

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, 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 June 30, 2003, the Company settled its portion of the
litigation relating to Complete Management, Inc. 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 of the Notes to our Consolidated Financial Statements contained
herein, and the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2002.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5 - OTHER INFORMATION

None.


                                       20
<PAGE>


<PAGE>


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

31.1  Chief Executive Officer's Certificate pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.
31.2  Acting Chief Financial Officer's Certificate pursuant to Section 302
      of the Sarbanes-Oxley Act of 2002.
32.1  Chief Executive Officer's Certificate pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
32.2  Acting Chief Financial Officer's Certificate pursuant to Section 906
      of the Sarbanes-Oxley Act of 2002.

(b)   Reports on Form 8-K

      None.



                                       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



August 12, 2003                 By: /s/ MARK GOLDWASSER
                                    -------------------------------------
                                    Mark Goldwasser
                                    President and Chief Executive Officer




August 12, 2003                 By: /s/ ROBERT H. DASKAL
                                    -------------------------------------
                                        Robert H. Daskal
                                        Acting Chief Financial Officer



                                       22