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 December 31, 2001 Commission File Number 001-12629
----------------- ---------
OLYMPIC CASCADE FINANCIAL CORPORATION
(Exact name of registrant as specified)
DELAWARE 36-4128138
- ------------------------- --------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
875 North Michigan Avenue, Suite 1560, Chicago, IL 60611
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (312) 751-8833
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___________
The number of shares outstanding of registrant's Common stock, par value $0.02
per share, at February 8, 2002 was 2,236,449.
1
OLYMPIC CASCADE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
December 31, September 28,
2001 2001
(unaudited) (see Note below)
------------- -------------
CASH, subject to immediate withdrawal $ 877,000 $ 150,000
CASH, segregated in escrow 454,000 435,000
CASH, CASH EQUIVALENTS AND SECURITIES 243,000 37,188,000
DEPOSITS 2,309,000 4,654,000
RECEIVABLES
Customers 171,000 29,755,000
Brokers and dealers 2,872,000 669,000
Other 1,289,000 836,000
SECURITIES HELD FOR RESALE, at market 516,000 1,131,000
FIXED ASSETS, net 725,000 841,000
OTHER ASSETS 1,969,000 1,940,000
------------- -------------
$ 11,425,000 $ 77,599,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CASH OVERDRAFT $ - $ 1,556,000
PAYABLES
Customers 178,000 54,511,000
Brokers and dealers 594,000 10,020,000
SECURITIES SOLD, BUT NOT YET PURCHASED, at market 1,011,000 792,000
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES 3,210,000 1,963,000
BANK LINE OF CREDIT - 3,500,000
NOTES PAYABLE 4,023,000 4,035,000
CAPITAL LEASE PAYABLE 249,000 300,000
NET LIABILITIES FROM DISCONTINUED OPERATIONS - 300,000
------------- -------------
9,265,000 76,977,000
------------- -------------
CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 100,000 shares authorized,
20,725 shares issued and outstanding at December 31, 2001 - -
Common stock, $.02 par value, 6,000,000 shares authorized,
2,236,449 shares issued and outstanding 45,000 45,000
Additional paid-in capital 11,285,000 9,313,000
Accumulated deficit (9,170,000) (8,736,000)
------------- -------------
2,160,000 622,000
------------- -------------
$ 11,425,000 $ 77,599,000
============= =============
Note: The balance sheet at September 28, 2001 has been derived from the audited
financial statements at that date.
2
See notes to consolidated financial statements
OLYMPIC CASCADE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
--------Quarter Ended---------
December 31, December 31,
2001 2000
--------------- --------------
REVENUES:
Commissions $ 5,691,000 $ 5,666,000
Net dealer inventory gains 4,858,000 5,131,000
Interest 740,000 1,757,000
Transfer fees 385,000 275,000
Investment banking 102,000 529,000
Other 511,000 440,000
--------------- --------------
12,287,000 13,798,000
--------------- --------------
EXPENSES:
Commissions 7,538,000 7,784,000
Salaries 1,278,000 2,108,000
Clearing fees 1,108,000 964,000
Communications 816,000 531,000
Occupancy costs 975,000 1,088,000
Interest 392,000 976,000
Professional fees 282,000 422,000
Taxes, licenses, registration 90,000 229,000
Other 530,000 296,000
--------------- --------------
13,009,000 14,398,000
--------------- --------------
Loss from continuing operations before income
taxes and discontinued operations (722,000) (600,000)
Income tax expense (12,000) -
--------------- --------------
Loss from continuing operations before
discontinued operations (734,000) (600,000)
Income (loss) from discontinued operations, net of tax 300,000 (72,000)
--------------- --------------
NET LOSS $ (434,000) $ (672,000)
=============== ==============
EARNINGS (LOSS) PER COMMON SHARE
Loss per share from continuing operations
Basic Loss Per Share $ (0.32) $ (0.28)
=============== ==============
Diluted Loss Per Share $ (0.32) $ (0.28)
=============== ==============
Earnings (loss) per share from discontinued operations
Basic Earnings (loss) Per Share $ 0.13 $ (0.03)
=============== ==============
Diluted Earnings (loss) Per Share $ 0.13 $ (0.03)
=============== ==============
Loss per share
Basic Loss Per Share $ (0.19) $ (0.31)
=============== ==============
Diluted Loss Per Share $ (0.19) $ (0.31)
=============== ==============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING FOR THE PERIOD: BASIC AND DILUTED 2,236,449 2,159,760
=============== ==============
3
See notes to consolidated financial statements
OLYMPIC CASCADE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
--------------Quarter Ended---------------
December 31, December 31,
2001 2000
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (434,000) $ (672,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization 137,000 157,000
Compensation related to issuance of stock options - 22,000
Change in net assets (liabilities) of discontinued operations (300,000) 7,000
Changes in assets and liabilities
Cash, cash equivalents, securities and escrow 36,926,000 (12,811,000)
Deposits 2,345,000 (2,188,000)
Receivables 26,928,000 19,323,000
Securities held for resale 615,000 (733,000)
Other assets 29,000 (642,000)
Payables (62,536,000) (6,676,000)
Securities sold, but not yet purchased 219,000 (51,000)
-------------- -------------
Net cash provided by (used in) operating activities 3,929,000 (4,264,000)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (21,000) (84,000)
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings (payments) on line of credit (3,500,000) 3,000,000
Payments on capital lease (85,000) (85,000)
Proceeds from notes payable 1,000,000 -
Payments on notes payable (12,000) -
Decrease in cash overdraft (1,556,000) -
Net proceeds from issuance of preferred stock 972,000 -
Exercise of stock options and warrants - 37,000
-------------- -------------
Net cash provided by (used in) financing activities (3,181,000) 2,952,000
-------------- -------------
INCREASE (DECREASE) IN CASH 727,000 (1,396,000)
CASH BALANCE
Beginning of the period 150,000 2,349,000
-------------- -------------
End of the period $ 877,000 $ 953,000
============== =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for
Interest $ 345,000 $ 968,000
============== =============
Income taxes $ 12,000 $ 324,000
============== =============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Exchange of notes payable for preferred stock $ 1,000,000 $ -
============== =============
4
See notes to consolidated financial statements
OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND DECEMBER 31, 2000
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 December 31, 2001 and December 31, 2000 are unaudited. The
results of operations for the interim periods are not necessarily indicative of
the results of operations for the fiscal year. These financial statements should
be read in conjunction with the consolidated financial statements and related
footnotes included thereto in the Company's Annual Report on Form 10-K for the
fiscal year ended September 28, 2001.
Cash and cash segregated in escrow have been reclassified in prior periods to
conform to the current period's presentation.
NOTE 2 - LINE OF CREDIT
In January 2001, National entered into a $5,000,000 secured line of credit with
American National Bank and Trust Company of Chicago, that is guaranteed by the
Company. During the first quarter of fiscal 2002, National entered into a
Forbearance Agreement with American National Bank based on an event of default
according to the original credit agreement. The Forbearance Agreement amended
the line of credit to $4,000,000. Additionally, Steven A. Rothstein and Mark
Goldwasser each signed a Guaranty unconditionally guaranteeing certain
indebtedness of the Company to American National Bank. These guarantees
effectively terminated in December 2001. At December 31, 2001, National had no
borrowings outstanding on this line of credit.
NOTE 3 - INVESTMENT TRANSACTION
On December 28, 2001, the Company completed a series of transactions under which
certain new investors (collectively, the "Investors") have obtained a
significant ownership in the Company through a $1,072,500 investment in the
Company and by purchasing a majority of the shares held by Steven A. Rothstein
and family, the former Chairman, Chief Executive Officer and principal
shareholder of the Company (the "Investment Transaction"). The Investors include
Triage Partners LLC ("Triage"), an affiliate of Sands Brothers & Co., Ltd., a
New York Stock Exchange ("NYSE") member firm, and One Clark LLC ("One Clark"),
an affiliate of Mark Goldwasser, the current Chief Executive Officer and
President of the Company. The Investors purchased an aggregate of $1,072,500 of
Series A Preferred Stock from the Company, which is convertible into Common
Stock at a price of $1.50 per share. The Company incurred $100,000 of legal
costs related to these capital transactions. In connection with the Investment
5
Transaction, Triage also purchased 285,000 shares of Common Stock from Mr.
Rothstein and his affiliates at a price of $1.50 per share. In addition, Mr.
Rothstein and his affiliates have granted Triage a three-year voting proxy on
the balance of their Common Stock (274,660 shares). The Investors have agreed to
purchase up to an additional $500,000 of Series A Preferred Stock on the same
terms in the event such funds are needed by the Company. The funds for this
additional purchase are being held in escrow.
Concurrent with the Investment Transaction, two unrelated individual noteholders
holding $2.0 million of the Company's debt have converted one-half of their debt
into the same class of Series A Preferred Stock that was sold in the Investment
Transaction. The noteholders also had 100,000 of their 200,000 warrants to
acquire shares of common stock repriced from an exercise price of $5.00 per
share to $1.75 per share.
NOTE 4 - CLOSING OF WESTAMERICA INVESTMENT GROUP
In December 2001, WestAmerica voluntarily withdrew its membership with the NASD
and ceased to conduct business as a broker-dealer. On December 31, 2001
WestAmerica filed for Chapter 7 Bankruptcy protection in accordance with the
U.S. Bankruptcy Code. WestAmerica has been operated as a separate legal entity,
and the Company believes it will not have any ongoing liability for any unpaid
obligations of WestAmerica. Consequently, the Company recorded a gain of
$300,000 from discontinued operations related to the write-off of WestAmerica's
net liabilities. The accompanying financial statements have been reclassified to
reflect WestAmerica as discontinued operations for all periods presented.
NOTE 5 - CONTINGENCIES
National has been named, together with others, as a defendant in a consolidated
class action lawsuit filed against Complete Management, Inc. No specific amount
of damages has been sought against the Company in the complaint. In June 2000,
the Company filed to dismiss this action. In March 2001, the United States
District Court for the Southern District of New York denied the Company's motion
to dismiss. In May 2001, the Company submitted its answer to the complaint in
which it set forth its defenses. In November 2001, plaintiffs filed a motion to
certify the class. The Company will contest class certification and diligently
pursue its defenses.
The Company is a defendant in various other arbitrations and administrative
proceedings, lawsuits and claims, which in the aggregate seek general and
punitive damages approximating $9,500,000. These matters arise out of the normal
course of business.
NOTE 6 - ISSUANCE OF WARRANTS
In November 2001 the Company granted 5,000 warrants to purchase its common stock
exercisable at $5.00 per share to the individual retirement account of the
Company's former chairman and chief executive officer pursuant to the terms of a
$50,000 loan made in August 2001.
6
NOTE 7 - INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Company has approved an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
common stock from 6,000,000 to 60,000,000 shares, subject to stockholders'
approval.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. This Quarterly Report may contain certain statements
of a forward-looking nature relating to future events or future business
performance. Any such statements that refer to the Company's estimated or
anticipated future results or other non-historical facts are forward-looking and
reflect the Company's current perspective of existing trends and information.
These statements involve risks and uncertainties that cannot be predicted or
quantified and, consequently, actual results may differ materially from those
expressed or implied by such forward-looking statements. Such risks and
uncertainties include, among others, risks and uncertainties detailed in the
Company's Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on December 28, 2001. Any forward-looking statements contained in or
incorporated into this Quarterly Report speak only as of the date of this
Quarterly Report. The Company undertakes no obligation to update publicly any
forward-looking statement, whether as a result of new information, future events
or otherwise.
Quarter Ended December 31, 2001 Compared to Quarter Ended December 31, 2000
---------------------------------------------------------------------------
The results discussed below have been restated to reflect a discontinuation of
operations for the Company's subsidiary, WestAmerica.
The Company's first quarter of fiscal 2002 resulted in a decrease in total
revenues and expenses compared with the same period of fiscal 2001.
Total revenues decreased $1,511,000, or 11%, to $12,287,000 in the first quarter
of fiscal 2002 from $13,798,000 in the first quarter of fiscal 2001. The
decrease in total revenues is primarily attributable to a decrease in interest
income and investment banking revenues. Commission revenues were virtually
unchanged at $5,691,000 in the first quarter of fiscal 2002 as compared to
$5,666,000 in the first quarter of fiscal 2001.
Net dealer inventory gains decreased $273,000, or 5%, to $4,858,000 in the first
quarter of fiscal 2002 from $5,131,000 in the first quarter of fiscal 2001.
Investment banking revenue decreased $427,000, or 81%, to $102,000 in the first
quarter of fiscal 2002 from $529,000 in the first quarter of fiscal 2001. The
decrease is due to the continued down-turn in the capital markets which has
limited the Company's ability to conduct private placements and other investment
banking advisory services.
Interest income decreased $1,017,000, or 58%, to $740,000 in the first quarter
of fiscal 2002 from $1,757,000 in the first quarter of fiscal 2001. This
decrease is offset by the corresponding decrease in interest expense, which
decreased $584,000, or 60%, to $392,000 in the first quarter of fiscal 2002 from
$976,000 in the first quarter of fiscal 2001. The decrease in both interest
7
income and interest expense is attributable to a decrease in the amount of
customer credits and customer debits at National, the conversion of its clearing
business in December 2001 and a decrease in interest rates from 2002 to 2001.
Other revenues increased $71,000, or 16%, to $511,000 in the first quarter of
fiscal 2002 from $440,000 in the first quarter of fiscal 2001. The main reasons
for this increase are income from trading activities attributable to the New
York City office and increased asset management fees.
In proportion with the decrease in total revenues, total expenses decreased
$1,389,000, or 10%, to $13,009,000 in the first quarter of fiscal 2002 from
$14,398,000 in the first quarter of fiscal 2001.
Commission expense, which includes expenses related to commission revenue, net
dealer inventory gains and investment banking, decreased $246,000, or 3%, to
$7,538,000 in the first quarter of fiscal 2002 from $7,784,000 in the first
quarter of fiscal 2001. This is consistent with the decrease in combined
revenues from commissions, net dealer inventory gains and investment banking
during the same period. Salaries decreased $830,000, or 39%, to $1,278,000 from
$2,108,000. This decrease is due to a temporary reduction in senior management
salaries and a reduction in staff made possible by clearing through First
Clearing Corporation, as opposed to self-clearing. Overall, combined commissions
and salaries as a percentage of revenue remained flat at 72% during the first
quarter of fiscal 2002 and 2001.
Clearing fees increased $144,000, or 15%, to $1,108,000 from $964,000, mainly
relating to the increased trading business generated from the New York City
office. Communication expenses increased $285,000 to $816,000, or 54%, from
$531,000 due to office expansions in the New York City and Boca Raton offices
that were not fully operational until the second quarter of fiscal 2001.
Occupancy costs decreased $113,000, or 10%, to $975,000 from $1,088,000 as a
result of cost cutting efforts.
Professional fees decreased $140,000, or 33%, to $282,000 from $422,000 in the
first quarter of fiscal 2002 and 2001, respectively. Taxes, licenses and
registrations decreased $139,000, or 61%, to $90,000 from $229,000 in the first
quarter of fiscal 2002 and 2001, respectively. The decrease is a result of costs
incurred in the prior year when the New York City office was opened. Other
expenses increased $234,000, or 79%, to $530,000 from $296,000 in the first
quarter of fiscal 2002 and 2001, respectively. This increase primarily relates
to write-offs and amortization of advances paid to new brokers.
Due to the continued slumping markets, the Company reported a net loss from
continuing operations of $734,000 in the first quarter of fiscal 2002 compared
to a net loss of $600,000 the first quarter of fiscal 2001. Overall, the diluted
loss from continuing operations was $.33 per share as compared with a net loss
of $.28 per share for the first quarter ended December 31, 2002 and December 31,
2001, respectively.
WestAmerica's realized a loss of $72,000 in the first quarter of fiscal 2001, on
revenues of $635,000. On December 31, 2001, WestAmerica filed for Chapter 7
Bankruptcy protection in accordance with the U.S. Bankruptcy Code. 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.
8
Liquidity and Capital Resources
As with most financial services firms, substantial portions of the Company's
assets are liquid, consisting mainly of cash or assets readily convertible into
cash. While acting as a self-clearing firm, these assets were financed primarily
by National's interest bearing and non-interest bearing customer credit
balances, other payables and equity capital. National also utilized short-term
bank financing to supplement its ability to meet day-to-day operating cash
requirements. Such financing was used to maximize cash flow and is regularly
repaid. In January 2001, National entered into a $5,000,000 secured line of
credit with American National Bank and Trust Company of Chicago that is
guaranteed by the Company. As of December 31, 2001, National had no borrowings
outstanding on the line of credit, and it will not be renewed.
As a result of the losses throughout fiscal year 2001, notably those of the
fourth quarter, attributable in part to the unprecedented events in September
2001, the Company concluded that existing capital would not be sufficient to
satisfy existing operations. The Company explored various transactions to
finance the Company's operations. On December 28, 2001, the Company completed a
series of transactions under which certain new investors (collectively, the
"Investors") have obtained a significant ownership in the Company through a
$1,072,500 investment in the Company and by purchasing a majority of the shares
held by Steven A. Rothstein and family, the former Chairman, Chief Executive
Officer and principal shareholder of the Company (the "Investment Transaction").
The Investors include Triage Partners LLC ("Triage"), an affiliate of Sands
Brothers & Co., Ltd., a New York Stock Exchange ("NYSE") member firm, and One
Clark LLC ("One Clark"), an affiliate of Mark Goldwasser, the current Chief
Executive Officer and President of the Company. The Investors purchased an
aggregate of $1,072,500 of Series A Preferred Stock from the Company , which is
convertible into Common Stock at a price of $1.50 per share. In connection with
the Investment Transaction, Triage also purchased 285,000 shares of Common Stock
from Mr. Rothstein and his affiliates at a price of $1.50 per share. In
addition, Mr. Rothstein and his affiliates have granted Triage a three-year
voting proxy on the balance of their Common Stock (274,660 shares). The
Investors have agreed to purchase up to an additional $500,000 of Series A
Preferred Stock upon the same terms in the event such funds are needed by the
Company. The funds for this additional purchase are being held in escrow.
Concurrent with the Investment Transaction, two unrelated individual noteholders
holding $2.0 million of the Company's debt have converted one-half of their debt
into the same class of Series A Preferred Stock that was sold in the Investment
Transaction. The noteholders also had 100,000 of their 200,000 warrants to
acquire shares of common stock repriced from an exercise price of $5.00 per
share to $1.75 per share.
In August 2001, the Company entered into an agreement with First Clearing
Corporation ("First Clearing"), an affiliate of First Union Securities, Inc.,
under which First Clearing will provide clearing and related services for
National. The Clearing Agreement expands the products and services capabilities
for National's retail and institutional business, enables National to
consolidate its existing clearing operations and reduces fixed overhead
associated with its self-clearing activities.
9
The conversion to First Clearing began in December 2001. In connection with the
Clearing Agreement, the Company entered into a ten-year $6,000,000 promissory
note with First Clearing under which the Company immediately borrowed
$1,000,000. The funds were contributed by the Company to National, and are being
used as a deposit to secure National's performance under the Clearing Agreement.
The 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. 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.
Additional borrowings are available to the Company upon the attainment by
National of certain volume and profitability goals, none of which have been met
as of the date of filing of this Form 10-Q. Borrowings under the promissory
notes are forgivable based on certain business performance and trading volumes
of the Company over the life of the loan.
In connection with the Clearing Agreement, National is in the process of
terminating its clearing relationship with US Clearing. Upon termination of the
agreement and transfer of all customer and proprietary accounts, National is
entitled to the return of its $1,000,000 clearing deposit.
National, as a registered broker-dealer, is subject to the SEC's Uniform Net
Capital Rule 15c3-1, which requires the maintenance of minimum net capital.
National has elected to use the alternative standard method permitted by the
rule. This requires that National maintain minimum net capital equal to the
greater of $250,000 or 2% of aggregate debit items. At December 31, 2001,
National's net capital exceeded the requirement by approximately $2.6 million.
In December 2001, WestAmerica voluntarily withdrew its membership with the NASD
and ceased to conduct business as a broker-dealer. On December 31, 2001
WestAmerica filed for Chapter 7 Bankruptcy protection in accordance with the
U.S. Bankruptcy Code. WestAmerica has been operated as a separate legal entity,
and the Company believes it will not have any ongoing liability for any unpaid
obligations of WestAmerica.
Canterbury Securities Corporation ("Canterbury"), a wholly owned subsidiary of
the Company, is a registered as a broker-dealer with the SEC and is licensed in
Illinois. Canterbury is a member of the NASD, the MSRB and the SIPC. Canterbury
formerly engaged in private placement transactions. Canterbury has no retail
customer accounts and, therefore, operates pursuant to the exemptive provisions
of SEC Rule 15c3-3(k)(2)(i). Since acquisition in June 2000, Canterbury has had
no activity. The Company has agreed to sell Canterbury for its book value of
approximately $11,000 to Mr. Rothstein. At December 31, 2001, Canterbury's net
capital exceeded the requirement by $2,800.
Advances, dividend payments and other equity withdrawals from the Company's
subsidiaries are restricted by the regulations of the SEC and other regulatory
agencies. These regulatory restrictions may limit the amounts that these
subsidiaries may dividend or advance to the Company .
The objective of liquidity management is to ensure that the Company has ready
access to sufficient funds to meet commitments, fund deposit withdrawals and
efficiently provide for the credit needs of customers.
As of the quarter ended December 31, 2001, total assets were $11,425,000
compared to total assets of $77,599,000 as of the fiscal year ended September
28, 2001. This material decrease in the Company's assets is due to the change in
the Company's clearing arrangements. Customer assets that were included in the
10
fiscal year end 2001 balance sheet are no longer accounted for on the Company's
books. These assets are now held at First Clearing as part of the new clearing
arrangement.
PART II
ITEM 1 - LEGAL PROCEEDINGS
During the quarter, there were no significant developments in the Company's
legal proceedings. For a detailed discussion of the Company's legal proceedings,
please refer to the Company's Annual Report on Form 10-K for the fiscal year
ended September 28, 2001.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
3.3 The Company's By-Laws, as amended and restated on December 12, 2001.
10.28 Clearing Agreement
10.29 First Amendment to Clearing Agreement.
10.30 Purchase Agreement by and among Olympic Cascade Financial Corporation,
Mark Goldwasser and Triage Partners, LLC dated as of December 14,
2001, previously filed as Exhibit 10.30 to Form 8-K in January 2002
and hereby incorporated by reference.
10.31 Stock Purchase Agreement between Steven A. Rothstein, certain other
persons or entities and Triage Partners, LLC dated as of December 14,
2001, previously filed as Exhibit 10.31 to Form 8-K in January 2002
and hereby incorporated by reference.
10.32 Securities Exchange Agreement by and among Olympic Cascade Financial
Corporation, Gregory P. Kusnick, Karen Jo Gustafson, Gregory C. Lowney
and Maryanne K. Snyder dated as of December 14, 2001, previously filed
as Exhibit 10.32 to Form 8-K in January 2002 and hereby incorporated
by reference.
10.33 Escrow Agreement by and made among Olympic Cascade Financial
Corporation, Mark Goldwasser, Triage Partners, LLC and National
Securities Corporation dated as of December 28, 2001, previously filed
as Exhibit 10.33 to Form 8-K in January 2002 and hereby incorporated
by reference.
10.34 Second Amendment to Clearing Agreement.
b) Reports on Form 8-K
The Company filed a report on Form 8-K dated January 11, 2002 regarding the
Investment Transaction described in Note 3 hereto.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLYMPIC CASCADE FINANCIAL CORPORATION AND SUBSIDIARIES
February 13, 2002 By: /s/ Mark Goldwasser
Date -------------------------
Mark Goldwasser
President and Chief Executive Officer
February 13, 2002 By: /s/Robert H. Daskal
Date -------------------------
Robert H. Daskal
Acting Chief Financial Officer
12