Harvey Electronics Inc. (fka HRVEQ)

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Cornell pissed - HRVE filed bankruptcy

On August 22, 2007, the Registrant completed a private placement pursuant
to which it issued to YA Global Investments, L.P. (Cornell) ("YA = Yorkville Advisors") a 12% secured
convertible debenture (the "Debenture") with a principal amount of $4,000,000,
and one warrant to purchase a total of 1,262,274 shares of the Registrant's
common stock. By letter agreement dated December 19, 2007, the Registrant and YA
have agreed that: (a) the full unpaid principal amount of the Debenture,
together with interest and other amounts owing, is immediately due and payable
to YA in cash without the necessity of the passage of additional time; (b) YA
may remove from escrow the sum of $375,000 and apply such amount to the
accelerated indebtedness under the Debenture; and (c) YA shall refrain from
pursuing other collection rights and remedies under the Debenture and related
agreements for a period of not more than 10 days, but in no event later than the
date upon which the Registrant may commence proceedings for relief under the
bankruptcy or similar laws relating to debtor or creditor relief.

In connection with the foregoing, the parties have executed the agreement
referred to in Item 9.01 of this Current Report on Form 8K (and attached hereto
as an exhibit). The foregoing description of the Registrant's agreements with YA
is merely a summary and is not intended to be complete. You are encouraged to
read Exhibit 10.1 hereto in its entirety, as well as documents relating to the
Debenture previously filed by the Registrant on a Current Report on Form 8K
filed with the Securities and Exchange Commission on August 28, 2007.

Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial
Obligation or an Obligation Under an Off-Balance Sheet Arrangement

The information set forth under Item 1.01 of this Current Report on Form 8K
is hereby incorporated by reference into this Item 2.04 in its entirety.

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Harvey Electronics, Inc. Announces Filing for Protection under Chapter 11

12/28/07

LYNDHURST, N.J. — Harvey Electronics, Inc. ("Harvey" or the "Company" Symbol HRVE.OB) announced today that it has filed a voluntary petition for Chapter 11 with the United States Bankruptcy Court for the Southern District of New York (the "Court"). Harvey will continue to operate its business and manage its property as a debtor-in-possession, and expects to promptly file a plan of reorganization. This plan, as finally approved, may adversely affect Harvey's outstanding common stock through the issuance of substantial additional shares or common stock, or otherwise. The Debtor hopes to emerge from Court protection by the spring of 2008.

Several recent events have necessitated the Chapter 11 filing. The distraction and expense related to unsuccessful merger negotiations with Myer-Emco, Inc. cost Harvey over $1.2 million. The merger talks broke off after financing became more difficult as credit markets tightened. The expense of the failed Myer-Emco transaction, plus the inability to raise new equity capital in the months immediately following the failed acquisition, triggered a delisting of its common stock from the NASDAQ Stock Market and created an event of default under the existing senior secured credit agreement.

Michael E. Recca, Harvey's Interim Chief Executive Officer at the time of today's filing, was also named Chief Restructuring Officer of the Debtor. Mr. Recca said, "We regret that Harvey's best path to reorganization is through the Courts, but despite the other distractions over the past year, our custom installation business remains strong. This step allows us to accelerate the transformation of our business from a specialty retailer with a home installation business to a home installation expert with appropriate retail distribution. While we will be closing and right-sizing some locations, we expect the majority of our stores will continue to play a critical role in our future operations. We offer some of the finest audio, video and home theater products from some of the most prestigious lines in the world. Most importantly, Harvey believes it has the finest team of sales consultants, design engineers, and field installation technicians in the business, and with their help we will continue to provide our customers superior audio and video entertainment solutions in the tri-state area."

YA Global Investments, L.P., the current secured lender, has agreed to provide Harvey with a $1.5 million Debtor-in-Possession line of credit, subject to bankruptcy court approval of the terms of the financing.

Ruskin Moscou Faltischek, P.C. of Uniondale, NY is acting as Harvey's bankruptcy counsel, BDO Consulting, a division of BDO Seidman, LLP, will act as financial advisor, and the Trenwith Group, LLC is providing investment banking services to the Debtor.

From time to time, information provided by the Company, statements made by its employees or information, included in its filings with the Securities and Exchange Commission may contain statements, which are so-called "forward-looking statements" and not historical facts. Forward-looking statements can be identified by the use of words such as "believe," "expect," "intend," "anticipate," "in my opinion," and similar words or variations. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company's actual future results may differ significantly from those stated in any forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including, but not limited to, product demand, pricing, market acceptance, litigation, risks in product and technology development and other risk factors detailed in the Company's Prospectus dated March 31, 1998 and from time to time in the Company's Securities and Exchange Commission reports including its Form 10-K and Forms 10-Q.

Harvey Electronics, Inc. (operating as Debtor-in-Possession) Michael E. Recca, Interim CEO & Chief Restructuring Officer 201-846-0078, ext 2501 [e-mail] or Ruskin Moscou Faltischek, P.C. -- Debtor Counsel Jeffrey A. Wurst, Esq. and Harold S. Berzow,

http://sec.gov/cgi-bin/browse-edgar?company=Harvey+Electronics&action=getcompany