United States

                       Securities and Exchange Commission

                             Washington, D.C. 20549
                                    Form 10-K

[X] Annual  Report Under Section 13 or 15(d) of The  Securities  Exchange
    Act of 1934

                   For the fiscal year ended October 26, 2002

  Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of
1934 for the Transition Period from _____________ to _______________

                           Commission File No. 1-4626

                            Harvey Electronics, Inc.
                         (Name of issuer in its charter)

          New York                                      131534671
          --------                                      ---------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                  205 Chubb Avenue, Lyndhurst, New Jersey 07071
-------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (201) 842-0078

         Securities registered under Section 12(b) of the Exchange Act:

                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.01 par value
                    Redeemable Common Stock Purchase Warrant
-------------------------------------------------------------------------------
                                (Title of Class)

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 if disclosure of delinquent filers in response to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of the registrant's  knowledge,  in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of January 2, 2003; Common Stock 3,324,525 shares.

As of January 2, 2003,  the aggregate  market value of the  registrant's  common
stock held by  nonaffiliates  computed  by  reference  to the price at which the
stock was sold was  $3,466,505.  The shares are  currently  traded on the NASDAQ
SmallCap  Market  under the symbols  "HRVE" for the Common Stock and "HRVEW" for
the Warrants to purchase Common Stock.



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>


PART 1
<S>           <C>
         Item 1. Business
         Item 2. Properties
         Item 3. Legal Proceedings
         Item 4. Submission of Matters to a Vote of Security Holders

PART II
         Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
         Item 6. Selected Financial Data
         Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
         Item 7a. Quantitative and Qualitative Disclosures About Market Risk
         Item 8. Financial Statements and Supplementary Data
         Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

PART III

         Item 10. Directors and Executive Officers of the Registrant
         Item 11. Executive Compensation
         Item 12. Security Ownership of Certain Beneficial Owners and Management
         Item 13. Certain Relationships and Related Transactions
         Item 14. Controls and Procedures

PART IV
         Item 15. Exhibits, Financial Statement Schedule and Reports on Form 8-K


SIGNATURES

EXHIBIT INDEX
         Ex-23 Consent of BDO Seidman, LLP
         Ex-23.1 Consent of Ernst and Young, LLP
         Ex-99.1 Section 906 Certification - President
         Ex-99.2 Section 906 Certification - CFO
         Ex-99.3 Section 302 Certification - President
         Ex-99.4 Section 302 Certification - CFO
</TABLE>


Part I

In  this  Annual  Report  on  Form  10-K,  the  "Company,"   "Harvey",   "Harvey
Electronics", "we," "us," and "our" mean Harvey Electronics, Inc.

This Annual Report on Form 10-K contains  forward-looking  statements  regarding
Harvey's performance,  strategy,  plans, objectives,  expectations,  beliefs and
intentions.  The actual outcome of the events described in these forward-looking
statements  could differ  materially.  This report,  and  especially the section
entitled "Management  Discussion and Analysis of Financial Condition and Results
of  Operations,"  contains  a  discussion  of some  of the  factors  that  could
contribute to those differences.

In prior fiscal years, the Company had been a small business issuer,  filing its
audited  annual report on Form 10-KSB in accordance  with  Regulation S-B of the
Securities and Exchange Act of 1934, as amended.  In fiscal 2002, the Company is
required to file its audited financial  statements in accordance with Regulation
S-X of the Securities and Exchange Act of 1934, as amended.

Item 1. Business.

General

Harvey   Electronics  is  engaged  in  the  retail  sale,   service  and  custom
installation  of high  quality  audio,  video and home  theater  equipment.  The
equipment includes high fidelity components and systems,  digital versatile disc
players ("DVD"),  high definition  television ("HDTV"),  direct view projection,
plasma  flat-screen and LCD flat panel television sets,  audio/video  furniture,
digital  satellite  systems,  conventional  telephones,  service  contracts  and
related  accessories.  The Company has been engaged in this  business in the New
York  Metropolitan area for seventy-six  years. The Company  currently  operates
nine  locations;  seven Harvey  specialty  retail  stores and two Bang & Olufsen
branded  stores.  There are two Harvey  locations in Manhattan and five suburban
locations  in  Paramus,  New  Jersey;  Mt.  Kisco,  in  Westchester;  Greenwich,
Connecticut;  Greenvale/Roslyn,  on the  north  shore  of  Long  Island,  and in
Eatontown,  New Jersey.  The Bang & Olufsen  branded stores are located in Union
Square at Broadway and 21st Street, in Manhattan, and in Greenwich,  Connecticut
on Greenwich Avenue.

The  Company's   stores  are  designed  to  offer  an  attractive  and  pleasing
environment  and to display its  products  and custom  installation  services in
realistic  home  settings  commonly  known in the  industry as  "lifestyle  home
vignettes."  Sales  personnel are highly  trained  professionals  with extensive
product  knowledge.  This  contrasts  sharply with a more rushed  atmosphere and
lesser-trained personnel of mass merchants.


Sale of Common Stock and Warrants in Public Offering

In fiscal 1999, the Company completed an issuance of its common stock and common
stock  warrants  in  a  public  offering  (the  "Offering").  The  Offering  was
co-managed by The Thornwater  Company,  L.P., which sold 1,200,000 shares of the
Company's  common stock of which  1,025,000  shares were sold by the Company and
175,000 shares by Harvey Acquisition Company, LLC ("HAC"). 2,104,500 of Warrants
("Warrants")  to acquire  additional  shares of the Company's  common stock were
also sold by the Company. The net proceeds from the Offering, approximately $4.1
million,  were used to open three new  retail  stores  and for  general  working
capital purposes.

The net  proceeds  from the  Offering  were also used to repay  temporarily  the
Company's  credit  facility  of  approximately  $2.3  million  and to retire the
principal ($350,000) and interest ($48,000) of a term loan.

Each  Warrant is  exercisable  for one share of common  stock at 110% ($5.50 per
share)  of the  Offering  price,  through  March  31,  2003.  The  Warrants  are
redeemable (at $0.10 per warrant),  at the Company's  option, if the closing bid
price of the common  stock for 20  consecutive  trading days exceeds 150% of the
Offering price per share or $7.50.

Products

The Company  offers its  customers a wide  selection  of  high-quality  consumer
audio, video and home theater products,  the distribution of which is limited to
specialty  retailers  (generally  referred  to  in  the  industry  as  "esoteric
brands").  The Company is one of the  country's  largest  retailers of "esoteric
brands"  manufactured  by Bang &  Olufsen,  Crestron,  Lexicon,  Linn,  Marantz,
McIntosh,  NAD, Vienna Acoustics,  Sonus Faber, Kef, Krell,  Loewe, Martin Logan
and Fujitsu. Many of these vendors' products have been sold by the Company for a
number of years.  The  Company  believes  that it benefits  from strong  working
relationships with these manufacturers. See below, for a discussion about Bang &
Olufsen.

For the fiscal year ended October 26, 2002,  the  Company's  audio product sales
represented  approximately  50% of the  Company's  net sales and  yielded  gross
profit  margins  of  approximately   40%.  The  Company's  video  product  sales
represented  approximately  42% of the  Company's  net sales and  yielded  gross
profit  margins of  approximately  29%. The Company also  provides  installation
services for the products it sells. Custom installation, as commonly referred to
in  the  industry  includes  both  equipment  sales  and  labor  income.  Custom
installation of both equipment and related labor accounted for approximately 51%
of the  Company's  net  sales in  fiscal  2002.  The  labor  portion  of  custom
installation  presently  represents  approximately  8% of net  sales,  while the
equipment  portion  accounting  for 43% of net  sales.  The  Company  also sells
extended  warranties  on  behalf of third  party  providers.  Sales of  extended
warranties which yielded a gross profit margin in excess of 57%, and represented
approximately 1% of the Company's net sales.

The  following  table shows,  by  percentage,  the  Company's  net product sales
attributable to each of the product categories for the periods indicated.  Audio
components include speakers, subwoofers,  receivers, amplifiers,  preamplifiers,
compact disc players,  cassette decks,  turntables and tuners.  The Company also
sells  digital  satellite  systems  (DSS) which are included in the  VCR/DVD/DSS
category.  Accessories  primarily include  headphones,  surge protectors,  blank
audio and videotapes and projection screens. The miscellaneous category includes
conventional telephones, answering machines, radios and other portable products.
<TABLE>
<CAPTION>

Fiscal Year Ended October                26, 2002      27, 2001      28, 2000      30, 1999      31, 1998
                                       ----------------------------------------------------------------------

<S>                                             <C>           <C>           <C>           <C>           <C>
Audio Components                                31%           39%           43%           49%           52%
Mini Audio Shelf Systems                         5             6             7             8             7
TV and Projectors                               39            30            25            18            17
VCR/DVD/DSS                                      6             8             7             7             7
Furniture                                        5             5             5             5             4
Cable and Wire                                   5             5             5             5             5
Accessories                                      7             6             6             6             6
Extended Warranties                              1             -             1             1             1
Miscellaneous                                    1             1             1             1             1
                                       ----------------------------------------------------------------------
                                               100%          100%          100%          100%          100%
                                               ====          ====          ====          ====          ====
</TABLE>

The  percentage  of sales by each  product  category is affected by  promotional
activities,  consumer  preferences,  store  displays,  the  development  of  new
products and elimination or reduction of existing  products and, thus, a current
sales mix may not be indicative of the future sales mix.

The Company  believes  that it is well  positioned  to benefit from  advances in
technologies because new technologies tend to be expensive when first introduced
and the Company's  target  customers  desire and can afford such  products.  New
technologies,  such as HDTV,  plasma  flat-screen and LCD flat panel televisions
were recently  introduced.  The plasma  flat-screen or LCD flat panel television
allows a small or large screen television to be only four inches wide from front
to  back.  This  allows  the  set to be  far  less  obtrusive  and  more  easily
integratable  into  the  home.  High  definition  television  has  significantly
improved picture quality.

The Company  intends to  continue  its recent  emphasis  on custom  installation
(representing  51% of net sales in fiscal 2002),  which can extend from a single
room  audio/video  system to an entire  house with a combined  selling  price of
installation,  labor and product from about $5,000 to in excess of $100,000. The
Company believes custom installation provides the opportunity to bundle products
and increase margins. For example, rather than just selling a television with an
approximate gross profit margin of 29%, custom installation  enables the Company
to sell to the same customer speakers at a margin exceeding 40%,  accessories at
a margin  approximating 48% and installation  labor with margins of over 69%. In
fiscal 2003,  the Company will continue to expand its  merchandising  efforts to
include  in-home  lighting  systems  and  distributed  in-home  cabling  for the
integration  of  computer  networks,  entertainment  systems  and other  related
services.

Based on customers'  desires,  custom  installation  projects  frequently expand
on-site.  A single  room home  theater,  for  example,  during the course of the
installation can grow into a multi-room system with increased margins.

Offering custom  installation  affords the Company a unique selling  opportunity
because  it may not be  available  at mass  merchants  and can  generate  repeat
customers and customer  referrals.  Due to the  complexity  of the  installation
provided by the Company,  customers generally remain with the Company, providing
the opportunity to sell upgrades to existing customers.  The recent introduction
of digital video products, network cabling, in-home lighting systems, as well as
other  emerging  technologies,   present  significant   opportunities  for  such
upgrades.

Operations

Supplies, Purchasing and Distribution

The Company purchases its products from approximately eighty manufacturers,  ten
of which  accounted for  approximately  63% of the  Company's  purchases for the
fiscal year ended October 26, 2002. These ten  manufacturers are Bang & Olufsen,
Fujitsu, Loewe, Marantz,  Monster Cable, Panasonic,  Pioneer Elite, Runco, Sharp
and Sony.  Fujitsu  accounted  for more than ten (10%)  percent of the Company's
purchases  for the  fiscal  year ended  October  26,  2002,  and Bang & Olufsen,
Marantz,  Panasonic,  Sharp  and Sony  each  accounted  for more  than five (5%)
percent of purchases for such period.

The  Company  has  entered  into dealer  agreements  with  primarily  all of its
vendors.  Under each dealer  agreement,  the Company is  authorized  to sell the
manufacturer's  products from specified retail locations to retail customers and
cannot sell the  products by telephone  or mail order.  Each  agreement is for a
term of a year or two, subject to renewal or extension.

The Company believes that  competitive  sources of supply would be available for
many of the  Company's  products  if a  current  vendor  ceased to supply to the
Company.  However,  a loss of a major  source of supply of limited  distribution
products could have an adverse impact on the Company.

Bang & Olufsen ("B&O") products have been sold by the Company since 1980. As B&O
focuses on developing  B&O licensed  stores  ("Branded  Stores")  throughout the
world, its products are available only in Branded Stores.

The Company opened its first B&O Branded Store in the Union Square area of lower
Manhattan  in July 1999.  In October  2000,  the  Company  opened its second B&O
Branded Store in Greenwich, Connecticut.

These new Branded  Stores sell highly  differentiated  Bang & Olufsen  products,
including uniquely designed audio systems, speakers, telephones,  headphones and
accessories.  The stores will also sell video products including LCD projectors,
HDTV's,  DVD players,  plasma  flat-screen and LCD flat panel  televisions,  A/V
furniture  and   accessories.   The  store  also  offers   professional   custom
installation of multi-room audio and home theater systems.

Due to the  Company's  strong  relationships  with many of its suppliers and its
volume of  purchases,  the  Company  has also  been  able to  obtain  additional
manufacturers'  rebates based on volume buying levels. On occasion,  the Company
has been able to negotiate  favorable  terms,  such as extended  payment  terms,
additional  cooperative  advertising  contributions  or lower  prices,  on large
purchases.  In  addition  to being a member of a consumer  electronics  industry
buying group called Home Theater  Specialists of America (HTSA),  the Company is
also a member of  Professional  Audio  Retailers  Association  (PARA) and Custom
Electronics Design Installation  Association (CEDIA),  both of which provide the
Company with additional training in sales and technology.

Purchases are received at the Company's 11,800 square foot warehouse  located in
Fairfield, New Jersey. Merchandise is distributed to the Company's retail stores
at least  twice a week (and more  frequently,  if needed),  using the  Company's
employees and equipment.

The Company's  management  information  system tracks  current  levels of sales,
inventory,  purchasing and other key  information  and provides  management with
information which facilitates  merchandising,  pricing, sales management and the
management of warehouse and store inventories. This system enables management to
review and analyze the  performance of each of its stores and sales personnel on
a periodic  basis.  The central  purchasing  department of the Company  monitors
current  sales and  inventory at the stores on a daily basis.  In addition,  the
Company  currently  conducts a physical  inventory  two times a year and between
such physical inventories it conducts monthly and daily cycle counts on selected
types of inventory.  The  purchasing  department  also  establishes  appropriate
levels of  inventory  at each  store and  controls  the  replenishment  of store
inventory based on the current delivery or replenishment schedule.

The Company  historically  has not had material losses of inventory and does not
experience material losses due to cost and market fluctuations,  overstocking or
technology.  The  Company  maintains  specific  and general  inventory  reserves
aggregating  $130,000,  $105,000  and $60,000,  for fiscal years 2002,  2001 and
2000, respectively. The Company's inventory turnover for fiscal years 2002, 2001
and 2000 was approximately 3.4, 3.4, and 3.6 times, respectively.

Sales and Store Operations

Retail sales are primarily made for cash or by major credit cards.  Revenues are
recorded by the Company  when the product or service is delivered or rendered to
customers.  Customer  deposits are recorded as liabilities  until the product is
delivered,  at which time a sale is recorded and the  liability for the customer
deposit is relieved.

In  addition,  customers  who qualify can obtain  longer term  financing  with a
Harvey credit card,  which the Company  makes  available to its  customers.  The
Harvey  credit  cards  are  issued  by  two  unrelated  finance  companies.  All
transactions  with these unrelated finance companies are without recourse to the
Company. The Company also periodically,  as part of its promotional  activities,
offers manufacturer, (i.e., Mitsubishi), sponsored financing to its customers.

Each store is operated  by a store  manager and a senior  sales  manager.  Store
managers  report to a Vice  President of  Operations  who oversees all sales and
store  operations,  and who is further  responsible  for sales  training and the
hiring of all retail  employees.  Every  Company  store has in-home  audio/video
specialists who will survey the job site at a customer's home, design the custom
installation and provide a cost estimate.  Each store independently services its
custom  installations  through  a project  manager  and  experienced  installers
employed at the store. The Company's stores are aided by the Company's  Director
of Custom  Installation,  for more difficult and technical projects.  All stores
are staffed with  professionally  trained  salespeople and warehouse  personnel.
Salespeople are paid a base salary plus commission based on gross margins.

All stores have an on-line point of sale computer system which enables the store
managers and corporate  headquarters to track sales, margins,  inventory levels,
customer deposits,  back orders,  merchandise on loan to customers,  salesperson
performance and customer histories. Store managers perform sales audit functions
before  reporting  daily  results to the sales audit group in the main office in
Lyndhurst, New Jersey.

Services and Repairs

Products  under  warranty are  delivered  to the  appropriate  manufacturer  for
repair.  Other repairs are sent to the  manufacturers  or an independent  repair
company. Revenues from non-warranty services are not material.

The Company offers an extended  warranty  contract for most of the audio,  video
and other merchandise it sells,  which provides coverage beyond the manufacturer
warranty  period.  Extended  warranties  are provided by an unrelated  insurance
company on a non-recourse basis to the Company.  The Company collects the retail
sales price of the extended  warranty  contract  from  customers  and remits the
customer  information  and the cost of the  contract to the  insurance  company.
Sales of extended warranty contracts represent approximately 1% of the Company's
net sales. The warranty obligation is solely the responsibility of the insurance
company.

Competition

The Company competes in the New York Metropolitan area with mass merchants, mail
order houses,  discount stores and numerous other consumer electronics specialty
stores.  The retail  electronics  industry is dominated by large  retailers with
massive,   "big  box"  retail  facilities  which   aggressively   discount  mass
merchandise.  These retailers  operate on narrow profit margins and high volume,
driven by aggressive  advertising  emphasizing low prices.  Nationwide  industry
leaders  are Circuit  City and Best Buy.  The New York  region is  dominated  by
Circuit City, Best Buy, and local chains  including P.C. Richard & Son, The Wiz,
J&R Music World and 6th Avenue Electronics.

Many of the competitors sell a broader range of electronic  products,  including
computers,  camcorders and office equipment,  and many have substantially larger
sales and greater  financial and other  resources than the Company.  The Company
competes  by  positioning   itself  as  a  retailer  of  high  quality   limited
distribution audio and video products and, more importantly, by offering upscale
sophisticated  custom  installations,  which are not generally offered by all of
the mass merchants.

Very few, if any, of the audio products sold by the Company, other than Bose and
certain Sony products,  radios and other portable products, are available at the
mass  merchants.  Of the major video brands sold by the Company,  generally only
Samsung,  Sony,  Panasonic  and  Mitsubishi  televisions  are  sold by the  mass
merchants.  In many of these cases,  the Company sells models which are not sold
by the mass merchants.

The Company seeks to reinforce its  positioning  by displaying  its products and
custom installation  services in customized movie theaters built within the home
and in lifestyle home vignettes in an attractive and pleasing store  environment
and by offering  personalized  service  through  trained sales personnel who are
fully  familiar with all of the Company's  products.  Additionally,  the Company
differentiates itself by offering programming  capabilities that address complex
technological  integration  issues and ultimately  give the consumer easy remote
control access to multiple devices.

Internet Website

In fiscal 2000, the Company launched its new website,  www.harveyonline.com,  to
support the continued  growth of its exclusive  consumer  electronics and custom
home theater installation showrooms. The website was designed to extend Harvey's
extraordinary  in-store  experience  onto the  Internet as a vehicle to increase
customer traffic at the Company's  retail  locations.  On-line sales,  which are
insignificant, are available seven days a week, twenty-four hours a day, and are
a secondary goal of the website.  Harvey  customers can order on-line within the
Company's trading area in the metropolitan New York marketplace.

Website visitors can experience a video tour of a Harvey showroom and a complete
Harvey  custom  installation  transaction  from  point-of-contact  at the retail
showroom  through the final  in-home  installation.  Visitors to the website are
able to leave  inquiries,  request home theater systems based on budget and room
size,  reserve equipment or schedule an in-home or in-store  consultation with a
Harvey professional.  Product specification,  price and warranty comparisons are
also  available  on the site.  The  Company's  website  was  designed to further
differentiate Harvey from its competitors.

Advertising

The Company believes it has a strong and important brand in its marketplace. The
Company strives to promote its superior products and  sophisticated  services in
its advertising campaign to both men and women.

Currently,  the  Company  has radio,  direct  mail,  print  advertising  and the
Internet with www.harveyonline.com, the Company's website, to promote its brand.

The Company currently uses large, frequent print advertising, emphasizing image,
products,  and  technology  in the New  York  Times,  New York  Times  Magazine,
Newsday,  Bergen Record,  Greenwich Times, The Journal News,  Asbury Park Press,
and the  Gannett  Suburban  News.  The  Company  also  distributes  direct  mail
advertising  several times a year to reach its customer database of over 70,000.
Some of the direct mail promotions are for specific manufacturers,  products, or
technology, and are supported, in part, by the manufacturers.  Radio advertising
is  currently  running on the two most  listened  to news  stations on AM radio,
within the Company's market.

All  advertising   consistently  offers  attractive  financing  alternatives  on
purchases on credit without interest for an extended period of time.

The  following  table  shows  the  Company's  gross  advertising  costs  and net
advertising expense as a percentage of net sales for the periods presented.  Net
advertising  expense  represents gross advertising cost less market  development
funds,  cooperative  advertising and other promotional amounts received from the
manufacturers.
<TABLE>
<CAPTION>

Fiscal Year Ended October               26, 2002       27, 2001       28, 2000       30, 1999       31, 1998
                                     ---------------------------------------------------------------------------

<S>                                       <C>            <C>            <C>            <C>               <C>
Gross advertising costs                   $2,665,000     $2,864,000     $2,701,000     $1,220,000        $962,000
Net advertising expenses                     632,000      1,206,000        934,000        227,000         233,000
Percentage of net sales                          1.5%           3.3%           2.7%           1.1%            1.3%
</TABLE>

The Company has  retained an outside  advertising  agency that is paid a monthly
retainer of $17,000 plus approved expenses.

Licenses and Intellectual Properties

The Company owns two registered service marks.  "HARVEY  ELECTRONICS," issued in
June 1982, is registered for International Class 42, which includes retail store
services  in the field of  audio,  video,  consumer  electronics,  home  theater
products and custom  installation of home theater  products.  "Not Your Ordinary
Electronics  Store",  issued in July 2002 is registered for International  Class
35, which is for advertising,  business management,  business administration and
office functions.  The Company believes that the service mark HARVEY ELECTRONICS
has significant  value and is important in marketing the Company's  products and
services.

Employees

As of October  26,  2002,  the  Company  employed  approximately  157  full-time
employees  of  which  17  were  management  personnel,  16  were  administrative
personnel, 63 were salespeople, 18 were warehouse workers and 43 were engaged in
custom installation.

Of the salespeople,  warehouse workers,  and installation  staff, 107 people are
covered by a collective  bargaining  agreement  with the Company,  which expires
August 1, 2003.  The Company has never  experienced a material work stoppage and
believes  that  its   relationships   with  its  employees  and  the  union  are
satisfactory.

Item 2. Properties

All of the  premises  the Company  presently  occupies  are  leased.  Management
believes that the Company's facilities are adequate and suitable for its present
business.  The Company  believes that  adequate  locations are available for its
proposed expansion.

The  Company  leases  approximately  3,900  square  feet  at 205  Chubb  Avenue,
Lyndhurst,  New  Jersey,  which  the  Company  uses as its  corporate  office at
approximately $30,000 per year. This office space is under lease through January
2006. The Company also leases an 11,800 square foot warehouse in Fairfield,  New
Jersey at  approximately  $94,000 per year,  pursuant to a lease,  which expires
November 2005.

The Company leases the following retail premises:
<TABLE>
<CAPTION>

                                           Expiration                        Approximate
                                             Date of                           Selling
                                             Current          Renewal           Square            Rent
                Location                  Annual Lease        Options           Footage          Expense
  ------------------------------------- ----------------- --------------- ----------------- ---------------

<S>      <C>                               <C>  <C>                             <C>            <C>
  2 West 45th Street                       6/30/2005           None             7,500          $  587,000
  New York, NY

  556 Route 17 North                       6/30/2015           None             7,000          $  294,000
  Paramus, NJ

  888 Broadway                            12/31/2003           None             4,000          $  473,000
  at 19th St.
  New York, NY
  (within ABC Carpet & Home)

  19 West Putnam Ave.                      9/30/2006         5 years            5,300          $  304,000
  Greenwich, CT

  44 Glen Cove Road                        8/15/2008           None             4,600          $  195,000
  Greenvale, NY

  115 Main St.                             8/31/2008           None             3,500          $   75,000
  Mt. Kisco, NY

  973 Broadway                            12/31/2005          5 year            1,500          $  128,000
  New York, NY
  (Bang & Olufsen Branded Store)

  86 Greenwich Ave.                        6/30/2005         5 years            1,500          $  108,000
  Greenwich, CT
  (Bang & Olufsen Branded Store)

  57 Route 36 West                         1/01/2011         10 years           6,500          $  184,000
  Eatontown, NJ

</TABLE>

Item 3. Legal Proceedings.

Except as set forth herein,  the Company  believes that it is not a party to any
material  asserted  legal  proceedings  other than those arising in the ordinary
course of  business  and  which  are fully  covered  by  insurance  (except  for
deductible  amounts).  The Company  maintains  general  liability and commercial
insurance in amounts believed to be adequate. However, there can be no assurance
that such amounts of insurance  will fully cover claims made against the Company
in the future.

There are old  outstanding  disputed tax claims of  approximately  $52,000 which
were made against the Company during its Chapter 11 proceeding.  The Company has
provided  reserves of $40,000 for such taxes,  which the Company  believes to be
adequate. However, there can be no assurance that the reserve will be sufficient
to cover these tax claims.

Item 4. Submission of Matters to a Vote of Security Holders.

None

Part II

Item 5. Market for Registrants Common Equity and Related Stockholder Matters.

The  Company's  securities  are traded on the NASDAQ  SmallCap  Market under the
symbols  "HRVE" for the Common  Stock and "HRVEW"  for the  Warrants to purchase
Common Stock.

The outstanding shares of Common Stock are currently held by approximately 1,600
shareholders of record,  and the Preferred Stock by five holders of record.  The
transfer  agent and  registrar  for the Common Stock is  Registrar  and Transfer
Company, 10 Commerce Drive, Cranford, New Jersey 07016.

The following table indicates the quarterly high and low stock prices for fiscal
years 2002 and 2001:

                                        High              Low
                                  ----------------- ----------------
Fiscal Year 2002
----------------
January 26, 2002                      $1.95              $.65
April 27, 2002                         1.65              1.10
July 27, 2002                          1.59               .71
October 26, 2002                       1.10               .65

Fiscal Year 2001
----------------
January 27, 2001                       1.625              .75
April 28, 2001                         1.50               .75
July 28, 2001                          1.50              1.00
October 27, 2001                       1.27               .55

The Company has paid no dividends on its common stock for the last two years and
does not expect to pay dividends on common stock in the future.

Description of Securities

The total authorized  capital stock of the Company consists of 10,000,000 shares
of common stock with a par value of $0.01 per share ("Common Stock"), and 10,000
shares of 8.5% Cumulative Convertible Preferred Stock with a par value of $1,000
per share. The following descriptions contain all material terms and features of
the  securities of the Company and are qualified in all respects by reference to
the Company's  Certificate of Incorporation  and Amended and Restated By-Laws of
the Company, copies of which are filed as exhibits.

Common Stock

The Company is authorized to issue 10,000,000  shares of Common Stock with a par
value  of  $0.01  per  share.  As of  January  2,  2003,  3,324,525  shares  are
outstanding and held by approximately 1,600 shareholders of record.

The holders of Common Stock are entitled to one vote per share on all matters to
be voted on by stockholders.  There is no cumulative  voting with respect to the
election  of  directors,  with the result  that  holders of more than 50% of the
shares voted for the election of directors can elect all of the  directors.  The
holders of Common  Stock are  entitled  to  receive  dividends  when,  as and if
declared by the Board of Directors from sources legally available therefore.  In
the event of  liquidation,  dissolution  or winding up of the  Company,  whether
voluntary or  involuntary,  and after  payment in full of the amount  payable in
respect of the Preferred Stock, the holders of Common Stock are entitled, to the
exclusion of the holders of the Preferred  Stock, to share ratably in the assets
of the Company  available  for  distribution  to  stockholders  after payment of
liabilities  and  after  provision  for each  class  of  stock,  if any,  having
preference  over the Common  Stock.  Holders of Common Stock have no  preemptive
rights.  All  outstanding  shares  are,  and all shares to be sold and issued as
contemplated  hereby,  will be fully paid and non-assessable and legally issued.
The Board of Directors is authorized to issue additional  shares of Common Stock
within the limits  authorized by the Company's  charter and without  stockholder
action.

Preferred Stock

The Company's  Certificate  of  Incorporation  authorizes the issuance of 10,000
shares of 8.5% Cumulative Convertible Preferred Stock ("Preferred Stock") with a
par value of $1,000 per share.  As of January 2, 2003,  827 shares of  Preferred
Stock were issued and outstanding and were held by four holders of record.

The Preferred Stock may be issued from time-to-time without stockholder approval
in one or more  classes  or  series.  A  holder  of the  Preferred  Stock is not
entitled to vote except as required by law.

Dividends  on the  Preferred  Stock  are  cumulative  from  the day of  original
issuance, whether or not earned or declared. In the event the Board of Directors
declares  dividends  to be paid  on the  Preferred  Stock,  the  holders  of the
Preferred Stock will be entitled to receive semiannual  dividends at the rate of
eighty-five  ($85) dollars per share payable in cash on the last business day of
June and December in each year. For calendar year 1997,  the Company  elected to
defer payment of the dividends over a three-year period. The preference rate for
calendar  year 1997 was $105 per share,  with  interest  at the rate of 8.5% per
annum. The installments relating to the 1997 dividends have been paid in full by
the Company as of October 26, 2002.  Total Preferred Stock dividends of $74,151,
$107,603  and  $110,206  were  paid  in  fiscal  years  2002,   2001  and  2000,
respectively.  In addition, no dividend shall be paid, or declared, or set apart
for payment  upon,  and no other  distribution  shall at any time be declared or
made in respect of, any shares of Common  Stock,  other than a dividend  payable
solely in, or a distribution of, Common Stock, unless full cumulative  dividends
of the Preferred  Stock for all past  dividend  periods and for the then current
dividend  period have been paid or have been declared and a sum  sufficient  for
the payment thereof has been set apart.

The Preferred Stock shall be redeemable, at the Company's option, in whole or in
part,  upon payment in cash of the Redemption  Price in respect of the shares so
redeemed.  The "Redemption Price" per share shall be equal to the sum of (i) One
Thousand  and 00/100  ($1,000.00)  Dollars  and (ii) all  dividends  accrued and
unpaid  on such  shares  to the  date of  redemption.  If less  than  all of the
outstanding  Preferred  Stock is to be redeemed,  the redemption will be in such
amount and by such method (which need not be by lot or pro rata), and subject to
such other  provisions,  as may from time to time be  determined by the Board of
Directors.

In the event of liquidation,  dissolution or winding-up of the Company,  whether
voluntary or  involuntary,  resulting in any  distribution  of its assets to its
shareholders,  the holders of the Preferred Stock  outstanding shall be entitled
to receive in respect of each such share an amount  which  shall be equal to the
Redemption  Price, and no more, before any payment or distribution of the assets
of the Company is made to or set apart for the holders of Common Stock.

Commencing  January 1, 2001,  the  conversion  price of the Company's  Preferred
Stock was $1.2333 and thus  convertible  into  670,559  shares of Common  Stock,
(calculated  from the closing bid price of the Common  Stock over the 45 trading
days preceding  January 1, 2001).  875 shares of Preferred Stock were originally
issued by the Company. In June 2002, 48 shares of Preferred Stock were converted
to 38,920 shares of the Company's Common Stock by a preferred shareholder.

If at any time prior to the  exercise  of the  conversion  rights  afforded  the
holders of the Preferred  Stock, the Preferred Stock is redeemed by the Company,
in whole or in part,  then the  conversion  right shall be deemed  canceled with
respect to such redeemed stock, as of the date of such redemption.

In case of any  capital  reorganization  or any  reclassification  of the Common
Stock,  or in case of the  consolidation  or merger of the Company  with or into
another corporation, or the conveyance of all or substantially all of the assets
of the Company to another corporation,  each Preferred Share shall thereafter be
convertible  into the number of shares of stock or other  securities or property
to which a holder of the  number of shares  of  Common  Stock  deliverable  upon
conversion  of  such  Preferred   Stock  would  have  been  entitled  upon  such
reorganization, reclassification, consolidation, merger, or conveyance.

Item 6. Selected  Financial  Data  (amounts in  thousands,  except per share and
number of stores data)

Set forth below is selected  financial and  operating  data for each of the five
years ended October 26, 2002.  The selected  statement of operations and balance
sheet data for each of the five years ended  October 26, 2002 have been  derived
from our audited financial statements. The information set forth below should be
read in  conjunction  with  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations" and our financial  statements and the notes
thereto included elsewhere in this Form 10K.
<TABLE>
<CAPTION>

                                                 Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year     Fiscal Year
                                                    Ended           Ended          Ended           Ended           Ended
                                                 October 26,      October 27,    October 28,     October 30,     October 31,
                                                     2002            2001            2000            1999            1998
                                               ------------------------------------------------------------------------------

<S>                                            <C>             <C>             <C>             <C>             <C>
Net sales                                      $    41,506     $    36,687     $    34,355     $    21,386     $    17,262
Cost of sales                                       25,153          22,552          20,813          13,082          10,646
                                               ---------------------------------------------------------------------------
Gross profit                                        16,353          14,135          13,542           8,304           6,616
Gross profit percentage                               39.4%           38.5%           39.4%           38.8%           38.3%
Interest expense                                       359             340             218             179             224
Selling, general and administrative expenses        15,806          15,128          12,856           9,043           6,756
Other income                                           116              83              34              72              70
Stock compensation expense                            --              --              --              --               297
Financial advisory and consulting fee to
   underwriter                                        --              --              --              --               124
Costs associated with lease transaction               --              --              --              --               114
                                               ---------------------------------------------------------------------------
Income (Loss) before income taxes                      304          (1,250)            502            (846)           (829)
Income taxes                                           124            --               185            --              --
                                               ---------------------------------------------------------------------------
Net income (loss)                                      180          (1,250)            317            (846)           (829)

Accretion of Preferred Stock                          --              --              --              --                (6)
Preferred Stock dividend requirement                   (72)            (75)            (75)            (74)            (83)
                                               ---------------------------------------------------------------------------
Net income (loss) attributable to
   Common Stock                                $       108     $    (1,325)    $       242     $      (920)    $      (918)
                                               ===========     ===========     ===========     ===========     ===========

Net income (loss) per common share
 applicable to common shareholders:
     Basic                                     $       .03     $      (.40)    $       .07     $      (.28)    $      (.32)
                                               ===========     ===========     ===========     ===========     ===========
     Diluted                                   $       .03     $      (.40)    $       .07     $      (.28)    $      (.32)
                                               ===========     ===========     ===========     ===========     ===========

Shares used in the calculation of net income
 (loss) per common shares:
     Basic                                       3,297,827       3,282,833       3,282,833       3,282,833       2,844,751
                                               ===========     ===========     ===========     ===========     ===========
     Diluted                                     3,907,401       3,282,833       3,346,307       3,282,833       2,844,751
                                               ===========     ===========     ===========     ===========     ===========

Stores opened at end of period                           9               9               8               7               6
</TABLE>


Balance Sheet Data:
<TABLE>
<CAPTION>

                              October         October        October          October           October
                              26, 2002       27, 2001        28, 2000         30, 1999          31, 1998
                           --------------- -------------- --------------- ----------------- -----------------
Working capital
<S>                            <C>    <C>    <C>      <C>   <C>      <C>     <C>     <C>        <C>     <C>
   (deficiency)                ($600) (1)    $(1,416) (1)   $    747 (1)     $   925 (1)        $ 2,355 (1)
Total assets                   12,151          12,727         11,437           9,745              8,389
Long-term liabilities             156             160            215             251                266
Total liabilities               8,423 (1)       9,107 (1)      6,590 (1)       5,140 (1)           2,865 (1)
Total shareholders'
   equity                       3,728           3,620          4,847           4,605               5,525
<FN>

(1)  It is important to note that at the end of the four fiscal years  presented
     from 1999-2002, the Company's outstanding balances on its revolving line of
     credit  facility  ($3,119,493,   $3,442,000,   $1,068,000  and  $1,477,603,
     respectively) were classified as current liabilities, despite the long-term
     nature of the  Company's  credit  facility.  At the end of fiscal 1998,  no
     amounts were outstanding  under the credit facility.  The presentation as a
     current  liability  is in  accordance  with EITF  95-22  (See Note 2 to the
     Financial Statements for details).  Working capital was negatively impacted
     by the  Company's  significant  increase  in the  revolving  line of credit
     facility in fiscal 2001, which was necessary to fund retail store expansion
     and renovation.
</FN>
</TABLE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

The following discussion and analysis contains forward-looking  statements which
involve  risks and  uncertainties.  When used  herein,  the words  "anticipate,"
"believe,"  "estimate,"  and "expect" and similar  expressions as they relate to
the Company or its  management  are  intended to identify  such  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. The Company's  actual results,  performance or  achievements  could differ
materially  from the results  expressed  in or implied by these  forward-looking
statements.  Historical  results  are not  necessarily  indicative  of trends in
operating  results for any future  period.  Readers are  cautioned  not to place
undue reliance on these forward-looking  statements,  which speak only as of the
date the statement was made.

General

The  following  discussion  should  be read in  conjunction  with the  Company's
audited  financial  statements  for the fiscal  years ended  October  26,  2002,
October 27, 2001 and October 28, 2000, appearing elsewhere in this Form 10-K.

Results of Operations

Fiscal Year Ended  October 26, 2002 as Compared to Fiscal Year Ended October 27,
2001

Net Income

The  Company's  pre-tax  income  for the  fiscal  year ended  October  26,  2002
significantly  increased to $304,000 as compared to a pre-tax loss of $1,250,000
for the fiscal year ended October 27, 2001. Net income for fiscal 2002 increased
to $180,000 as compared to a net loss of  $1,250,000  for fiscal 2001.  Earnings
before interest, taxes, depreciation and amortization ("EBITDA") for fiscal 2002
also increased  substantially to approximately  $1,580,000 as compared to EBITDA
of approximately $79,000 for fiscal 2001.

The Company's net loss for fiscal 2001 was  materially  impacted by the horrific
events of September 11, 2001,  the total  renovation  of the Company's  flagship
store on 45th  Street in  Manhattan  and the general  slowdown in retail  sales,
experienced from the latter part of the third quarter of fiscal 2001.

Net  income for fiscal  2002 was  negatively  impacted  by  operating  losses of
approximately  $245,000,  relating  primarily to the Company's  website and to a
lesser extent from the Company's  newest Bang & Olufsen  branded store opened in
Greenwich,  Connecticut  in  October  2000.  The net  loss for  fiscal  2001 was
increased  by  approximately  $650,000  relating  to both  pre-opening  expenses
($140,000) and operating losses ($510,000) from two new stores and the Company's
website.

The  Company's net income for fiscal 2002  includes net  advertising  expense of
$632,000 as compared to $1,206,000  for fiscal 2001.  The Company's  advertising
presence  has not  materially  diminished  as the  Company's  gross  advertising
expenditures  were  $2,665,000  and  $2,864,000  in fiscal  years 2002 and 2001,
respectively.  Cooperative  advertising  income  in fiscal  2001 was  negatively
impacted  from the  shortfall  in revenues in the  Company's  fourth  quarter of
fiscal 2001, as discussed above.

Results of operations for fiscal years 2002 and 2001 also included  depreciation
and amortization expense of $917,000 and $989,000, respectively.

The  Company  recorded an income tax  equivalent  provision  of $124,000  (40.7%
effective  tax rate) in fiscal  2002.  No income tax  provision  was recorded in
fiscal 2001 as the Company reported a net loss.

Revenues

For the year ended  October  26,  2002,  net sales  aggregated  $41,507,000,  an
increase of $4,820,000, or 13.1% from the prior year. Comparable store sales for
fiscal  2002  increased  over $2.9  million or 8% from fiscal  2001.  Management
believes that a portion of the increase in the Company's  overall and comparable
store sales,  as compared to fiscal 2001,  which was negatively  impacted by the
events of September  11th,  specifically  sales in the fourth  quarter of fiscal
2001.

Overall net sales  benefited  significantly  from the new Eatontown,  New Jersey
store opened in April 2001,  which has  exceeded  management's  expectations  in
sales and store profitability.  Additionally, overall and comparable store sales
for fiscal 2002  benefited  from the  rebound in sales of our totally  renovated
flagship  store on 45th Street in Midtown,  Manhattan and the  continued  strong
sales growth of the Company's  Greenvale/Roslyn,  Long Island  store,  the store
located  within ABC Carpet and Home in lower  Manhattan and the Company's Bang &
Olufsen retail showroom in Greenwich, Connecticut. Finally, the Company's Harvey
stores  in  Mount  Kisco,  New  York  and  Greenwich,   Connecticut,  which  had
experienced  declines in sales for the first six months of fiscal 2002, had also
rebounded  in sales in the second  half of fiscal  2002,  as  compared to fiscal
2001,  primarily due to personnel changes and additional  localized  advertising
efforts,  as implemented  by management.  However,  the Company's  Paramus,  New
Jersey  store  experienced  a decline in sales for fiscal  2002 as  compared  to
fiscal 2001.  Management has made additional personnel changes in this store and
has recently completed the construction of a new in-store theater. These changes
coupled  with  additional  planned   improvements  in  fiscal  2003  should,  in
management's opinion, help to improve sales.

Customer demand continues to be strong for new digital video products  including
plasma flatscreen, LCD flat panel,  high-definition televisions, DVD and related
custom home  installations.  Consumers have embraced  plasma and LCD flat screen
technologies.  The Company's unit sales of these important  categories have more
than  doubled in fiscal  2002 as compared to fiscal  2001.  Custom  installation
projects  continue to increase and accounted for  approximately 51% of net sales
for fiscal 2002, as compared to approximately  43% of net sales for fiscal 2001.
Custom  installation  sales,  including both  equipment  sales and labor income,
increased  approximately  43% to  $21,373,000  for fiscal  2002,  as compared to
$14,924,000 for fiscal 2001. The Company's  custom  installation  services yield
higher gross  profit  margins and  stronger  net  profitability,  as compared to
normal retail store sales.

The Company  differentiates itself by offering sophisticated custom installation
services,  including programming capabilities that address complex technological
integration  issues giving its  customers  easy remote  control  operation for a
variety of  functions.  Management  believes  installations  of  complete  movie
theaters in the home as well as distributed  audio,  network cabling and in-home
lighting  systems will  continue to attract  affluent  customers to the Company,
which  should  continue  to benefit  sales,  enhance  gross  margins and improve
overall store profitability.

The Company's  marketing  efforts remained  significant in fiscal 2002, which we
believe  continued to drive sales. In fiscal 2002, these efforts included radio,
newspaper, cable and network television, direct mail and catalog advertisements,
and the continued promotion of the Company's website.  www.harveyonline.com.  In
fiscal 2003, the Company's advertising expenditures will not be reduced and will
be used primarily for radio, print and direct mail advertising. The Company will
continue  to  promote  its brand  and image to both men and women  using the new
campaign launched in November 2002, "Harvey. Extraordinary. In Every Way."

Costs and Expenses

Total cost of goods  sold for fiscal  2002  increased  $2,601,000  or 11.5% from
fiscal  2001.  This was  primarily  due to an increase in sales as noted  above,
offset by an increase in the gross margin.

The gross profit margin for fiscal 2002  increased to 39.4% as compared to 38.5%
for fiscal 2001.

The gross profit margin  increases were achieved  despite a continuing  shift in
business  towards video  products,  which  generally have lower  margins.  Video
product sales for fiscal 2002,  accounted for  approximately 42% of net sales as
compared to  approximately  35% of net sales in fiscal  2001,  or an increase of
approximately  20%.  Audio sales  declined to 50% of net sales in fiscal 2002 as
compared to 58% of net sales in fiscal 2001.  The  reduction in margin from this
shift in product sales was offset by several  factors.  The new digital and flat
screen  video  products  are sold at higher  margins  (and higher  prices)  than
analog,  commodity  televisions.  Further,  the Company has been  successful  in
bundling the sale of new video products with the sale of higher margin audio and
home theater components, including furniture,  accessories,  extended warranties
and custom installation  labor. Higher margin,  custom installation labor income
increased by approximately 39% for fiscal 2002 as compared to fiscal 2001, which
significantly  helped to mitigate  the  reduction  in the gross  margin from the
increase in video sales.

Selling, general and administrative expenses ("SG&A expenses") increased 4.5% or
$678,000 for fiscal 2002, as compared to fiscal 2001.

Comparable, SG&A expenses for fiscal 2002 increased by approximately $304,000 or
2% from fiscal 2001.

The overall increase in SG&A expenses was primarily due to the increase in costs
relating to the new  Eatontown,  New Jersey  store,  which opened in April 2001.
Overall and comparable SG&A expenses also increased from additional  payroll and
payroll related costs,  insurance  expense,  occupancy costs,  credit card fees,
incentive bonuses and various other store-operating  expenses, offset by reduced
net advertising expense.

The Company continues to hire additional custom installation personnel and incur
the  necessary  associated  expenses  relating  to the  expansion  of its custom
installation services.

Interest expense for fiscal 2002 increased 5.6% or $19,000 as compared to fiscal
2001. The overall  increase was primarily due to the additional  borrowings from
the  Company's  Credit  Facility  in  fiscal  2001,  which  was used to fund the
Company's retail store expansion,  renovation and website, offset by a reduction
in the overall effective borrowing rate. Additionally,  the increased expense is
due to  amortization  of warrants  issued to the  Company's  lender and from the
amortization  of the commitment fee paid by the Company to its lender,  relating
to the increase and  extension of the Credit  Facility.  Such  amortization  was
recorded  for the entire  year in fiscal  2002 as compared to only ten months in
fiscal 2001.

In connection with the Company's  emergence from its reorganization  proceeding,
the Company adopted Fresh Start Accounting. Fresh Start Accounting requires that
the Company report an income tax equivalent  provision when there is book income
and  pre-reorganization  net  operating  loss  carryforwards.  This  requirement
applies  despite the fact that the  Company's  pre-reorganization  net operating
loss carryforward will be utilized to reduce the related income tax payable. The
current  and  any  future  year  benefit   arising  from   utilization   of  the
pre-reorganization  carryforward  is not  reflected  as a  reduction  of the tax
equivalent provision in determining net income, but instead is recorded first as
a  reduction  of  reorganization   value  in  excess  of  amounts  allocable  to
identifiable  assets until  exhausted,  and  thereafter as a direct  addition to
paid-in capital.

For fiscal  2002,  the income tax  equivalent  provision  was  $124,000  and the
reduction of reorganization value in excess of amounts allocable to identifiable
assets also amounted to $124,000.  The income tax  equivalent  provision did not
affect the Company's  cash. No income tax provision was required for fiscal 2001
due to the Company's reported net loss.

Fiscal Year Ended  October 27, 2001 as Compared to Fiscal Year Ended October 28,
2000

Net Loss

The Company's net loss for the fiscal year ended October 27, 2001 was $1,250,000
as compared to a net profit of  $317,000  for the fiscal year ended  October 28,
2000. The net loss for fiscal 2001 included  approximately $650,000 of operating
losses and  pre-opening  expenses  for two new  stores as well as the  Company's
website. Operating losses of approximately $225,000 related to the Company's new
Bang & Olufsen  branded store which opened in Greenwich,  Connecticut in October
2000.  Approximately  $260,000 of  operating  losses  related to the new website
launched in October  2000.  Included  in the  $260,000  of  operating  losses is
$193,000 of  amortization,  as website  related  assets are being  amortized  to
expense over a period of one to three years.  Pre-opening expenses,  relating to
the new Eatontown, New Jersey store opened in April 2001, approximated $140,000.
Operating  losses for the seven-month  period  Eatontown was open,  approximated
$25,000.

The  Company's  net loss for fiscal 2001  includes  net  advertising  expense of
$1,206,000  as  compared  to  $934,000  for fiscal  2000.  The  Company's  gross
advertising  costs  increased to  $2,864,000  in fiscal 2001 from  $2,701,000 in
fiscal 2000.

Results of operations for fiscal years 2001 and 2000 also included  depreciation
and amortization expense of $989,000 and $647,000, respectively.

The Company's net loss for fiscal 2001 was  materially  impacted by the horrific
events of September 11, 2001,  the total  renovation  of the Company's  flagship
store on 45th  Street in  Manhattan  and the general  slowdown in retail  sales,
experienced from the latter part of the third quarter.

The fourth  quarter of fiscal 2000 included  pre-operating  expenses of $125,000
relating to the  opening of the new Bang & Olufsen  store in  Greenwich  and the
October  2000 launch of the  Company's  new  website.  In the fourth  quarter of
fiscal 2000, the Company also recorded  occupancy expense of $90,000 relating to
additional  rent, which was contingent upon actual sales levels achieved for one
of the  Company's  retail  stores.  Finally,  the fourth  quarter of fiscal 2000
included incentive bonuses of approximately $125,000.

The Company recorded an income tax equivalent  provision  recorded within income
taxes,  which arose from the  utilization  of  pre-reorganization  net operating
losses for fiscal 2000 of $160,000. This income tax equivalent provision did not
require the use of cash.  No income tax  equivalent  provision was necessary for
fiscal 2001.

Revenues

For the year ended October 27, 2001, net sales  approximated  $36.7 million,  an
increase  of over $2.3  million or 6.8% from the prior  year.  Comparable  store
sales for fiscal 2001 decreased slightly by approximately  $101,000 or less than
1% from fiscal 2000.

Overall net sales  increases  have been achieved from a base year,  fiscal 2000,
that  resulted in  approximately  60%  increases  over fiscal 1999.  Fiscal 2000
increases  included the maturation of several retail locations.  As noted above,
the Company's comparable store sales results for fiscal 2001 were down slightly;
however,  these sales were competing  against very high  comparable  store sales
increases of 52%, from the prior year.

Overall net sales benefited  primarily from the new Bang & Olufsen branded store
opened in Greenwich,  Connecticut in October 2000 and, to a greater extent, from
the new Harvey showroom opened in Eatontown,  New Jersey in April 2001. To date,
sales and operating  profitability  from the new  Eatontown  store have exceeded
management's  expectations,  while  sales from the new Bang & Olufsen  store for
fiscal 2001 had been slower than anticipated.

While the Company's  overall sales and  comparable  store sales results  through
June 2001 were favorable in comparison to certain other  electronics  retailers,
the  slowing  economy  did  have a  negative  impact  on  third  quarter  sales,
especially  in the month of July.  The  decline in  comparable  store  sales was
primarily related to slower sales from the Company's  Paramus,  New Jersey store
and its 45th Street  store in Manhattan  and from the events of September  11th.
The reduction in comparable store sales at Paramus and 45th Street was offset by
sales growth from the  Company's  Harvey  showrooms in  Greenwich,  Connecticut,
Mount Kisco, New York, Greenvale,  Long Island and from the retail store located
within ABC Carpet and Home in Manhattan.

The decline in sales for the Company's  45th Street  flagship store in Manhattan
was largely due to the extensive renovation at this store. Subsequent to October
2001,  sales  have  rebounded  for the  45th  Street  store,  as well as for the
Company's Bang & Olufsen branded stores.

Net  sales  and  comparable  store  sales  benefited  from  increases  in custom
installation  projects  including both equipment  sales and labor income.  These
sales were stimulated by strong demand for new digital video  technologies  such
as plasma and LCD flat-screen,  high definition and HD-ready  televisions,  DVD,
DSS as well as home theaters. Custom installation sales continue to increase and
accounted for approximately 41% of net sales ($14.9 million) for fiscal 2001, as
compared to only 33% ($11.4 million) for fiscal 2000.

Sales  also have  benefited  from the  Company's  increased  marketing  efforts,
including  radio,  newspaper,  cable and  network  television,  direct  mail and
catalog   advertisements.   The  Company   also   promoted   its  new   website,
www.harveyonline.com  which  was  launched  in  October  2000 as well as the new
Harvey  Eatontown  and new Bang & Olufsen,  Connecticut  stores.  The  Company's
website  has been  successful  in  generating  leads for the  retail  showrooms;
however, as expected, website sales have been insignificant. The Company expects
its website to continue to create consumer  interest and increase sales leads to
its retail stores in fiscal 2002 and beyond.

Costs and Expenses

Total cost of goods sold for fiscal 2001 increased approximately $1.7 million or
8.4% from the prior  fiscal  year.  This was  primarily  related to the  overall
increase  in net sales as noted  above,  offset by a small  decline in the gross
profit margin.

The gross  profit  margin for fiscal 2001 was 38.5% as compared to 39.4% for the
prior  fiscal  year.  The small  decrease  in the gross  profit  margin  was due
primarily  to the  increased  sale of  video  products,  which  is  driving  the
Company's  overall  business and which  typically  have lower gross margins than
audio  products.  The increase in video sales was  primarily  due to  additional
customer demand for new digital  technologies such as HDTV, DVD, DSS, plasma and
LCD flat-screen televisions. It should be noted that sales of these new products
do benefit from higher gross margins and higher overall sales prices as compared
to commodity analog televisions and VCR's.  Interest in these new video products
will also cultivate  larger  projects  including new sales of audio  components,
speakers, home theater systems,  furniture,  accessories and custom installation
services, which all realize higher margins for the Company. For fiscal 2001, the
Company's  sales of video  products  accounted  for over 35% of its net sales as
compared to 31% in fiscal 2000.

The increase in higher margin custom  installation  labor income  (approximately
$1.9 million in fiscal 2001 as compared to approximately  $1.1 million in fiscal
2000) has helped to mitigate the reduction in the gross margin from the increase
in video sales.

Selling,  general and administrative  expenses ("SG&A expenses") increased 17.7%
or approximately $2.3 million for fiscal 2001, as compared to fiscal 2000.

Comparable  SG&A expenses for fiscal 2001  increased  approximately  $945,000 or
7.4%.  Comparable  SG&A  expenses  actually  decreased in the  Company's  fourth
quarter by $200,000 or 5.7% primarily  from a reduction in payroll,  bonuses and
payroll  related  expenses  as  prescribed  by  management.  This was  primarily
accomplished  by a reduction in personnel and the  implementation  of a one-week
non-paid  furlough  for all  Company  employees,  including  officers  and other
management employees.

The overall increase in total SG&A expense was affected by costs relating to the
new Bang & Olufsen and Eatontown stores and additionally  from costs relating to
the Company's new website.  Comparable  SG&A expenses  increased  primarily from
additional payroll, commissions and payroll-related items resulting in part from
the new  three-year  union  contract,  which was  completed at the end of fiscal
2000.  Comparable SG&A expenses also increased from additional  occupancy costs,
advertising  expenditures,  depreciation  expense,  insurance costs,  consulting
fees, investor relations costs and various other store-operating  expenses.  The
Company also  continued to hire  additional  custom  installation  personnel and
incur  other  associated  expenses  relating  to the  expansion  of  its  custom
installation business. In July 2000, the Company also expanded its warehouse and
distribution  facility,  which  increased  occupancy  costs  and  other  related
expenses for all of fiscal 2001.

Interest  expense for fiscal 2001 increased 56.1% or  approximately  $122,000 as
compared to fiscal 2000. The increase was primarily due to additional borrowings
from the  Company's  revolving  line of credit  facility  to fund the  Company's
retail store expansion and renovation.  Additionally,  the increased  expense is
due to  amortization  of warrants  issued to the  Company's  lender and from the
amortization of the commitment fee paid by the Company to its lender in December
2000, relating to the increase and extension of the line of credit.

In connection with the Company's  emergence from its reorganization  proceeding,
the Company adopted Fresh Start Accounting. Fresh Start Accounting requires that
the Company report an income tax equivalent  provision when there is book income
and  pre-reorganization  net  operating  loss  carryforwards.  This  requirement
applies  despite the fact that the  Company's  pre-reorganization  net operating
loss carryforward will be utilized to reduce the related income tax payable. The
current  and  any  future  year  benefit   arising  from   utilization   of  the
pre-reorganization  carryforward  is not  reflected  as a  reduction  of the tax
equivalent provision in determining net income, but instead is recorded first as
a  reduction  of  reorganization   value  in  excess  of  amounts  allocable  to
identifiable  assets until  exhausted,  and  thereafter as a direct  addition to
paid-in capital.

As noted  above,  for  fiscal  2000,  the income tax  equivalent  provision  was
$185,000  and the  reduction  of  reorganization  value  in  excess  of  amounts
allocable to identifiable assets amounted to $160,000. The income tax equivalent
provision did not affect the Company's cash.

Liquidity and Capital Resources

At October 26, 2002 and October 27, 2001, the Company's  ratio of current assets
to current liabilities was .93 and .84,  respectively.  The Company had negative
working  capital of $600,000 and  $1,416,000 at October 26, 2002 and October 27,
2001,  respectively.  However,  it is important to note that at October 26, 2002
and October 27, 2001, the Company's  outstanding balances on its Credit Facility
($3,119,000   and   $3,442,000,   respectively)   were   classified  as  current
liabilities,  despite the three-year term of the Company's Credit Facility.  The
presentation as a current liability is in accordance with EITF 95-22 (See Note 2
to the Financial Statements for details).

The  increase in the Credit  Facility,  in fiscal  2001,  was  necessary to fund
retail store expansion, renovation and the Company's website. The improvement in
the current ratio at October 26, 2002 was  positively  impacted by the Company's
pre-tax income. Other factors primarily improving working capital,  included the
reduction  of the Credit  Facility  and  accounts  payable  and an  increase  in
inventory and accounts receivable, offset by an increase in accrued expenses and
other current liabilities.

Net cash  provided from  operations  for fiscal 2002 was $721,000 as compared to
net cash used in operations of $263,000 for fiscal 2001. The improvement in cash
provided from operations for fiscal 2002 was primarily due to additional pre-tax
income  ($1,555,000),  a decrease in accounts receivable ($50,000) and inventory
($151,000),  an increase in accrued  expenses,  other  current  liabilities  and
income taxes ($370,000), offset by a decrease in accounts payable ($563,000) and
customer deposits ($530,000).

Net cash used in investing  activities was $234,000 for fiscal 2002, as compared
to net cash used of $1,727,000  for fiscal 2001. Net cash used for the purchases
of property and equipment and website  enhancements was $237,000 for fiscal 2002
as compared to  $1,734,000  for fiscal 2001.  Additions  for fiscal 2001 related
primarily to furniture,  fixtures, computer equipment,  website improvements and
leaseholds  relating to the new store  openings  and for the  renovation  of the
Company's 45th Street store in Midtown Manhattan.

Net cash used in financing  activities was $499,000 for fiscal 2002, as compared
to net cash provided from  financing  activities of $1,984,000  for fiscal 2001.
Financing activities for fiscal 2002 included net payments of $323,000, reducing
the Credit  Facility,  preferred  stock  dividends  paid of  $74,000,  principal
payments  on capital  leases of $81,000  and note  payable  payments of $22,000.
Financing  activities for fiscal 2001 included net borrowings of $2,374,000 from
the Credit Facility,  preferred stock dividend payments of $108,000, payments on
capital  leases of  $198,000,  note  payable  payments  of $10,000 and a $75,000
commitment fee relating to the increase and extension of the Credit Facility.

The  Company  has a  three-year  revolving  line  of  credit  facility  ("Credit
Facility") with Wells Fargo Retail Finance ("Wells Fargo"),  whereby the Company
can borrow up to $7 million based upon a lending formula (as defined) calculated
on eligible  inventory.  The Credit  Facility  expires  November 30,  2003.  The
interest rate on all  borrowings  under the Credit  Facility is one percent (1%)
over the prime rate with a minimum  interest  rate of 8%.  Effective  January 1,
2002,  the  minimum  interest  rate was  reduced  to 6.5% and will be in  effect
throughout fiscal 2003. At January 2, 2003, there was  approximately  $1,958,000
in  outstanding  borrowings  under  the  Credit  Facility,   with  approximately
$3,911,000 available to borrow under the Credit Facility.

The maximum  amount of  borrowings  available  to the Company  under this Credit
Facility is limited by formulas,  as  prescribed  by Wells Fargo.  The Company's
maximum  borrowing  availability  is equal to 75% of  eligible  inventory,  less
existing borrowings and certain reserves established by Wells Fargo.

Pursuant to the Credit Facility, the Company cannot exceed certain advance rates
on eligible inventory and must maintain certain levels of net income or loss and
minimum gross profit margins.  Additionally,  the Company's capital expenditures
cannot exceed a predetermined amount.

Wells Fargo  obtained a senior  security  interest in  substantially  all of the
Company's  assets.  The Credit  Facility  provides  Wells  Fargo with  rights of
acceleration upon the breach of certain financial covenants or the occurrence of
certain customary events of default.  The Company is also restricted from paying
dividends  on common  stock,  retiring or  repurchasing  its common  stock,  and
generally from entering into additional indebtedness (as defined).

The following is a summary of our significant  contractual  cash obligations for
the  periods  indicated  that  existed  as of October  26,  2002 and is based on
information appearing in the Notes to the Financial Statements:
<TABLE>
<CAPTION>

                                   2003         2004-2005       2006-2007       After 2007        Total
------------------------------ -------------- --------------- --------------- --------------- ---------------
<S>                              <C>            <C>             <C>             <C>            <C>
Operating leases                 $2,278,000     $3,875,000      $1,969,000      $3,959,000     $12,081,000
Capital lease obligations            23,000              -               -               -          23,000
------------------------------ -------------- --------------- --------------- --------------- ---------------
Total contractual cash
  obligations                    $2,301,000     $3,875,000      $1,969,000      $3,959,000     $12,104,000
============================== ============== =============== =============== =============== ===============
</TABLE>

The Company has 2,104,500 redeemable common stock purchase warrants ("Warrants")
outstanding from its public offering of common stock and Warrants in fiscal 1998
(the  "Offering").  Each  outstanding  Warrant is  exercisable  for one share of
common stock at 110% ($5.50 per share) of the Offering  price  through March 31,
2003. The Warrants are also  redeemable (at $.10 per Warrant),  at the Company's
option, if the closing bid price of the common stock for 20 consecutive  trading
days exceeds 150% of the Offering price per share of $7.50.

The  Company  has  authorized  10,000  shares  of  8.5%  Cumulative  Convertible
Preferred Stock  ("Preferred  Stock") with a par value of $1,000 per share.  The
conversion  price of the  Company's  preferred  stock is $1.2333.  875 shares of
Preferred Stock were originally  issued by the Company.  In June 2002, 48 shares
of Preferred Stock were converted to 38,920 shares of the Company's common stock
by a preferred  shareholder.  At October 26, 2002, 827 shares of Preferred Stock
were  issued  and  outstanding.  The  Company's  remaining  Preferred  Stock  is
convertible into 670,559 shares of common stock.

In fiscal 2001, the Company entered into a ten-year lease for a new 6,500 square
foot Harvey showroom in Eatontown,  New Jersey.  This store opened in April 2001
and is the Company's ninth. Capital expenditures, including inventory, necessary
to operate this new retail store approximated $1,500,000.

The Company's  expansion plan, if any, for fiscal 2003 has not been developed at
this time, as the economic outlook remains uncertain. The Company will, however,
make  improvements  to  certain  of  its  Harvey  retail  showrooms,   including
additional  renovations at its Paramus, New Jersey store and the installation of
total movie theaters  within certain of its stores.  Miscellaneous  purchases of
equipment and other assets for fiscal 2003 are not expected to be significant.

The  Company  intends to  continue  its  advertising  campaign  in fiscal  2003,
primarily with print, radio and direct mail.

The  Company's  website gives its  customers  access to one of Harvey's  upscale
retail showrooms or offers its customers a private, in-home consultation through
the  convenience  of the Internet.  The  anticipated  costs of  maintaining  and
improving the website are not expected to be material for 2003.

In March 2001, the Company  engaged Porter,  LeVay & Rose, Inc.  ("PL&R") as its
investor relations' advisor. The Company's goal in engaging PL&R was to heighten
its  visibility  as the Company  pursued its  business  strategy  and  selective
expansion.  After one year,  the Company's  Board of Directors  decided that the
services of an investor relations' advisor would currently not be needed, and as
a result, the Company discontinued the services from PL&R effective May 1, 2002.

Net sales and operating  results for the  Company's  first quarter of its fiscal
year are positively affected by a strong holiday demand.

Management  believes that cash on hand, cash flow from operations and funds made
available under the Credit Facility with Wells Fargo, will be sufficient to meet
the  Company's   anticipated  working  capital  needs  for  at  least  the  next
twelve-month period.

Critical Accounting Policies

The  accompanying   financial   statements  were  prepared  in  accordance  with
accounting  principles  generally  accepted  in the  United  States of  America.
Significant  accounting  policies are  discussed in Footnote 1 to the  Financial
Statements,  Item 8.  Inherent in the  application  of many of these  accounting
policies is the need for  management  to make  estimates  and  judgments  in the
determination of certain revenues,  expenses,  assets and liabilities.  As such,
materially  different  financial  results can occur as circumstances  change and
additional  information  becomes known. The policies with the greatest potential
effect on our results of operation and financial position include:

     Revenue Recognition

     Revenue is recognized when merchandise is delivered to customers or, in the
     case of custom installation  revenue,  when the service has been performed.
     For the Company,  net sales and operating revenues include items related to
     normal  business  operations,  including the sale of goods to customers and
     custom installation  revenue.  Retail sales are recorded at the time of the
     sale to the customer.  Customer installation revenue is recognized when the
     installation is complete.

     Inventory

     Inventory is the Company's largest asset class,  comprising over 50% of the
     Company's total assets. The Company's  inventory consists of finished goods
     held for  retail  sale.  Purchase-based  volume  rebates  are  credited  to
     inventory or cost of products sold, as  appropriate.  The Company  assesses
     the market value of its inventory on a regular  basis by  reviewing,  on an
     item-by-item  basis,  the  realizable  value  of  its  inventory,   net  of
     anticipated selling costs. If it is management's  judgment that the selling
     price of an item must be lowered below its cost in order for it to be sold,
     then the  carrying  value  of the  related  inventory  is  written  down to
     realizable value. A number of factors would be taken into  consideration in
     assessing  realizable  value  including  the  quantity on hand,  historical
     sales,  technological advances, the existence of a replacement product, and
     consumer demand and preferences. Depending on market conditions, the actual
     amount received on sale could differ from management's estimate.

     Long-Lived Assets

     Long-lived  assets such as property,  plant and  equipment,  goodwill,  and
     reorganization  value are reviewed for impairment when events or changes in
     circumstances  indicate  the  carrying  value  of  the  assets  may  not be
     recoverable.  We would recognize an impairment  loss when estimated  future
     undiscounted  cash flows  expected  to result from the use of the asset and
     its value upon disposal are less than its carrying amount. If our estimates
     regarding future undiscounted cash flows or useful lives were to change, we
     could be exposed to losses that are material in nature.

     Accrued expenses

     The Company is  constantly  required to make  estimates of future  payments
     that will be made which  relate to the  current  accounting  period.  These
     estimates range from things such as accrued but unpaid wages and bonuses to
     estimates  of  pending  litigation  claims.  In  establishing   appropriate
     accruals,  management  must  make  judgments  regarding  the  amount of the
     disbursement that will ultimately be incurred.  In making such assessments,
     management  uses  historical  experience  as  well  as  any  other  special
     circumstances  surrounding a particular  item. The actual amount paid could
     differ from management's estimate.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

The  information  required  by this item is  incorporated  by  reference  to the
Company's financial statements.

Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure.

The Company changed its independent  public  accounting firm in fiscal 2002 from
Ernst & Young LLP to BDO Seidman,  LLP. There were no disagreements  between the
Company & Ernst & Young LLP.



Part III

Item  10.  Directors,   Executive  Officers,   Promoters  and  Control  Persons;
Compliance With Section 16(a) of the Exchange Act.

The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>

              Name                   Age (1)                            Position
--------------------------------- --------------- ----------------------------------------------------

<S>                                     <C>       <C>
Michael E. Recca                        52        Chairman and Director
William F. Kenny, III                   71        Director
Jeffrey A. Wurst                        53        Director
Fredric J. Gruder                       56        Director
Franklin C. Karp                        49        President and Director
Joseph J. Calabrese                     43        Executive Vice President, Chief Financial Officer,
                                                      Treasurer, Secretary and Director
Michael A. Beck                         44        Vice President of Operations
Roland W. Hiemer                        41        Merchandise Manager
<FN>

(1)      As of October 26, 2002.
</FN>
</TABLE>


Michael E. Recca became the Chairman of the Board of Directors of the Company in
November  1996.  Mr.  Recca is also a member and  manager of Harvey  Acquisition
Company,  LLC, which is a principal shareholder of the Company. Mr. Recca was an
employee of Taglich  Brothers,  D'Amadeo,  Wagner & Co., Inc., a NASD registered
broker-dealer,  through December 31, 1998. From January 2001 through April 2002,
Mr.  Recca was also a principal  in NorthStar  Capital,  LLC,  which was a joint
venture with Ruskin,  Moscou, Evans & Faltischek,  P.C., the Company's corporate
counsel.  Currently,  Mr.  Recca is a  director  of Sky  Holdings  LTD,  and the
President of Sky Capital, LLC, a NASD broker dealer.

Franklin C. Karp began his career in the retail  consumer  electronics  industry
over 25 years ago,  working  then as a salesman  for one of the most  successful
chain operations in the New York metropolitan area. He held various positions in
sales management,  purchasing and operations. In 1990, Mr. Karp joined Harvey as
Merchandise Manager and later as Vice President in charge of merchandising.  Mr.
Karp was appointed President of Harvey in 1996.

Joseph J.  Calabrese,  a  certified  public  accountant,  joined the  Company as
Controller in 1989.  Since 1991,  Mr.  Calabrese  has served as Vice  President,
Chief Financial Officer,  Treasurer and Secretary of the Company.  Mr. Calabrese
was elected  Executive Vice President and a Director of the Company in 1996. Mr.
Calabrese  began  his  career  with  Ernst & Young  LLP in  1981  where  for the
eight-year  period prior to his joining the Company he performed  audit services
with respect to the Company.

Fredric J. Gruder, has been a director since July 1998. Since December 2001, Mr.
Gruder  has been a sole  practitioner  in his own law  firm.  From  July 1999 to
December  2001,  Mr.  Gruder has been of counsel to Dorsey & Whitney  LLP.  From
September  1996 to July  1999,  he was a  partner  in the law  firm of  Gersten,
Savage,  Kaplowitz & Fredericks,  LLP ("Gersten"),  which represented Thornwater
Company, L.P.  ("Thornwater"),  representative of the Company's  underwriters in
the Offering.  From March 1996 through September 1996, Mr. Gruder was of counsel
to Gersten,  having been a sole  practitioner  from May 1995 through March 1996.
From March 1992 until  March  1996,  Mr.  Gruder  served as vice  president  and
general counsel to Sbarro,  Inc., then a publicly traded corporation which owns,
operates,  and franchises  Italian  restaurants.  Prior to this time, Mr. Gruder
practiced  law in New York for over  twenty  years,  specializing  in  corporate
securities and retail real estate.

William F.  Kenny,  III has been a director  of the  Company  since  1975.  From
January 1992 to December  2000,  Mr.  Kenny was a consultant  to Meenan Oil Co.,
Inc. Prior to 1992, Mr. Kenny was the President and Chief  Executive  Officer of
Meenan Oil Co., Inc. Mr. Kenny has also served as a director of the Empire State
Petroleum  Association,  Petroleum Research  Foundation and was the President of
the  East  Coast  Energy  Council.  Mr.  Kenny  was also  the  President  of the
Independent  Fuel Terminal  Operators  Association and the  Metropolitan  Energy
Council.

Jeffrey A. Wurst,  a director  since February 2000, is a Partner at the law firm
of  Ruskin  Moscou  Faltischek,  P.C.  ("Ruskin"),  where he chairs  the  firm's
Financial  Services Group. Mr. Wurst began his legal career with Ruskin in 1987.
Mr. Wurst is experienced in asset based lending,  factoring,  commercial finance
and  bankruptcy  matters.  Mr. Wurst  graduated  from the Jacob D. Fuchsburg Law
Center of Touro  College  in 1987 and  earned  his B.S.  and M.A.  from  Hofstra
University.  Mr. Wurst's law firm has been involved in the legal  representation
of the Company since it reorganized under the bankruptcy laws in 1996.

Michael A. Beck has been Vice President of Operations of the Company since April
1997. From June 1996 until such date he was the Company's Director of Operations
and from October 1995 until April 1996 he served as Director of  Operations  for
Sound City, a consumer  electronics  retailer.  Mr. Beck was a store manager for
the  Company  from  August  1989  until  October  1995.  Mr.  Beck holds a BA in
Psychology from Merrimack College.

Roland W.  Hiemer  is an  executive  officer  of the  Company  and  Director  of
Inventory  Control.  Mr. Hiemer has been with the Company for eleven  years.  He
started with the Company as a salesman and advanced to Senior Sales  Manager for
the Paramus store in 1991. He was further promoted to Inventory  Control Manager
in 1991. In 1997, he was promoted to Director of Inventory  Control and in 2001,
Mr.  Hiemer was  promoted  to  Merchandise  Manager.  Mr.  Hiemer  holds a BA in
Business Administration from Hofstra University.

Committees of the Board of Directors

The Board of  Directors  has an Audit  Committee  and a  Compensation  and Stock
Option Committee.

Audit   Committee.   The  function  of  the  Audit  Committee   includes  making
recommendations  to the Board of Directors with respect to the engagement of the
Company's  independent  auditors  and the  review of the scope and effect of the
audit engagement. The Company's Audit Committee is governed by a written charter
approved by the Board of Directors. William F. Kenny, III, Fredric J. Gruder and
Jeffrey A. Wurst were the members of the Audit Committee in fiscal 2002.

Compensation  and Stock Option  Committee.  The function of the Compensation and
Stock Option Committee is to make  recommendations  to the Board with respect to
the  compensation of management  employees and to administer  plans and programs
relating  to  stock  options,  pension  and  other  retirement  plans,  employee
benefits, incentives, and compensation. Fredric J. Gruder, William F. Kenny, III
and  Jeffrey A. Wurst were the  members  of the  Compensation  and Stock  Option
Committee in fiscal 2002.

Item 11. Executive Compensation.

The following  table sets forth the cash  compensation  paid by the Company,  as
well as any other compensation paid to or earned by the Chairman of the Company,
the  President of the Company and those  executive  officers  compensated  at or
greater than  $100,000 for  services  rendered to the Company in all  capacities
during the three most recent fiscal years.

Summary Compensation Table
<TABLE>
<CAPTION>

                                                                               Stock
     Name of Individual                                                   Options Granted       Long-Term
   and Principal Position        Year         Salary          Bonus             (5)           Compensation
------------------------------ --------- ----------------- ------------- ------------------- ----------------

<S>                              <C>       <C>                <C>              <C>                <C>
Michael Recca                    2002      $120,000           $     -          25,000             $  -
Chairman (1)                     2001      $ 120,000          $     -          37,500             $  -
                                 2000      $ 108,000 (1)      $15,000                -            $  -

Franklin C. Karp (2)             2002      $ 156,000          $109,000         50,000             $  -
President                        2001      $ 147,000          $50,000          37,500             $  -
                                 2000      $ 138,000          $60,000                -            $  -

Joseph J. Calabrese (3)          2002      $ 146,000          $88,000          50,000             $  -
Executive Vice President         2001      $ 138,000          $40,000          37,500             $  -
Chief Financial Officer,         2000      $ 128,000          $46,000                -            $  -
   Treasurer and Secretary


Michael A. Beck (4)              2002      $ 131,000          $88,000           50,000            $  -
Vice President of                2001      $ 123,000          $40,000           37,500            $  -
   Operations                    2000      $ 113,000          $46,000                -            $  -

<FN>

(1)--From  April 1,  1998 to April  30,  2000,  Mr.  Recca  received  an  annual
     director's fee of $95,000 at the rate of $7,917 per month,  in his capacity
     as the Chairman of the Board of Directors of the Company.  Effective May 1,
     2000,  Mr.  Recca had been  placed on the  Company's  payroll  at an annual
     salary of $120,000, plus Company sponsored benefits.

(2)--At October 26, 2002, Mr. Karp's annual salary was $160,000.

(3)--At October 26, 2002, Mr. Calabrese's annual salary was $150,000.

(4)--At October 26, 2002, Mr. Beck's annual salary was $135,000.

(5)--See "Stock  Option Plan" for related  information  relating to stock option
     grants.
</FN>
</TABLE>

Severance Agreements

In fiscal year 2000, the Company's  Board of Directors  approved and the Company
entered into  substantially  similar Amended and Restated  Severance  Agreements
(each an "Amended Severance  Agreement") with each of Michael E. Recca, Franklin
C. Karp, Joseph J. Calabrese, and Michael A. Beck, executives of the Company.

Each Amended  Severance  Agreement  provides  that in the event the executive is
terminated for any reason other than for cause, as defined in the agreement, and
in the event of a change in  control  (as  defined),  such as a merger,  sale or
disposition of assets,  change in the  constitution of the Board of Directors or
the current Chairman, the assignment to the executive of a position inconsistent
with the executive's  current position or relocation of the corporate office (as
defined),  or in the event of a  potential  change in control (as  defined),  or
disability  (as defined),  and within one hundred eighty (180) days from the day
of one of the foregoing  events the  executive is  terminated  for reasons other
than for cause or the executive  terminates his  employment for any reason,  the
respective executive shall receive, among other things:

i.   a cash amount equal to the higher of: (x) the executive's base salary prior
     to termination or the event giving rise to the change in control, potential
     change in control or disability,  or (y) the executive's  base salary prior
     to the  event  giving  rise  to the  executive's  right  to  terminate  his
     employment for any reason;

ii.  a cash  payment  equal to the  higher of:  (x)  twelve  (12)  months of the
     executive's  highest  monthly  car  allowance  or  monthly  average  travel
     reimbursement in effect within the six (6) month period  immediately  prior
     to  termination  or the change in control,  potential  change in control or
     disability,  not to exceed twelve thousand and 00/100 ($12,000) dollars, or
     (y) twelve (12) months of the executives  highest  monthly car allowance or
     monthly  average  travel  reimbursement  in effect within the six (6) month
     period  immediately  prior  to  the  date  the  executive   terminates  his
     employment  for any  reason,  not to  exceed  twelve  thousand  and  00/100
     ($12,000) dollars; and

iii. the maximum /highest benefits which the executive was receiving at any time
     during  a  two-year  period  prior  to  termination,   relating  to  health
     insurance,   accident   insurance,   long-term  care,  life  insurance  and
     disability,  which  shall  continue  for one (1)  year  beyond  the date of
     termination of the executive's employment.

Roland W. Hiemer's severance agreement provides that in the event the Company is
sold or merged with another company, involved in a corporate reorganization,  or
if a change of the current  management  takes  place,  and Mr.  Hiemer,  for the
foregoing  reasons,  is terminated or asked to accept a position other than that
of a  senior  officer  requiring  similar  responsibilities  to  those  that  he
currently  performs,  or if the  current  corporate  office  is  moved  to a new
location which is more than thirty miles Lyndhurst, New Jersey, as a result of a
reorganization  or change in  ownership  or  control,  and he  declines  the new
position  or  relocation,  the  Company  or its  successor  in  control  will be
obligated,  and continue,  to pay him at the same salary and car  allowance,  if
any, he had most recently been earning, for a period of six months. In addition,
he will be fully covered under the Company's benefit plans,  including,  without
limitation,  the  Company's  medical,  dental,  life  and  disability  insurance
programs, during the six-month period.

If, following termination of Mr. Hiemer as described in the preceding paragraph,
Mr.  Hiemer  obtains  employment  at a lesser  compensation  than  Mr.  Hiemer's
compensation  by the  Company,  the Company will pay Mr.  Hiemer the  difference
between  the two  salaries  for the  remainder  of the six  month  period,  plus
continued  coverage of the  Company's  benefit  plans for the same  period.  The
severance  agreement  for Mr.  Hiemer  also  provides  that in the  event  he is
terminated for any other reasons, except conduct that is materially injurious to
the Company or conviction of any crime  involving moral  turpitude,  the Company
will be obligated  and continue to pay Mr. Hiemer at the same salary he has most
recently been earning,  for a period following  termination of three months plus
full coverage of the Company's benefits for the same period.

Compensation Committee Report on Executive Compensation

The Compensation and Stock Option  Committee  ("Compensation  Committee") of the
Board of Directors  establishes the Company's general  compensation  policies as
well as the compensation  plans and specific  compensation  levels for executive
officers.  It also  administers  our employee  stock  option plan for  executive
officers.

The  Compensation  Committee  believes  that the  compensation  of the Company's
executive officers should be influenced by performance.  Base salary levels, and
any salary increases are approved by the Compensation Committee. In fiscal 2002,
2001 and 2000,  additional  compensation  in the form of cash  bonuses and stock
options  were made in  accordance  with a quarterly  and annual  bonus plan,  as
approved by the Compensation Committee. The Compensation Committee believes that
the executive  officers salaries during these years did not exceed levels in the
industry for  similarly-sized  businesses.  Severance  agreements  exist for all
executive officers.

As  previously  mentioned,  stock option grants have been part of the bonus plan
for executive officers. The Compensation Committee viewed these option grants as
an  important  component  of  its  long-term,   performance-based   compensation
philosophy.  Since  the value of an option  bears a direct  relationship  to the
Company's stock price, the Compensation Committee believes that options motivate
executive  officers  to manage the  Company in a manner  that will also  benefit
stockholders.  As such,  options were granted,  only if performance  levels were
achieved,  at the current market price. One of the principal factors  considered
in granting options to an executive officer was the executive  officer's ability
to influence the companies long-term growth and profitability. As only a limited
number of options  remain  available  for grant,  no options are  expected to be
granted to executive officers in fiscal 2003.

With respect to the base salary  granted to Mr. Karp,  the Company's  President,
the Compensation  Committee made a favorable  assessment of the Company's actual
operating  results for fiscal 2002, as compared to the Company's  goals and from
the  performance  of Mr. Karp on various  accomplishments  for fiscal 2002.  The
Compensation  Committee also considered Mr. Karp's relative position as compared
to his peers in the  industry.  Based on these  factors,  Mr.  Karp's salary was
increased to $160,000 in fiscal  2002.  During  fiscal 2002,  as a result of the
Company  achieving its performance  objectives,  a total of 50,000 stock options
were also granted to Mr. Karp.

During 2002, a total of 205,000 options were granted to the Company's  executive
officers.

Stock Option Plan

In April 1997, the Company adopted a stock option plan,  which currently  covers
1,000,000  shares of the Common Stock.  At October 26, 2002,  options  currently
outstanding  aggregating  989,100 and 10,900  options are  available  for grant.
Options may be designated as either (i) incentive  stock options  ("ISOs") under
the Internal Revenue Code of 1986, as amended (the "Code") or (ii) non-qualified
stock options.  ISOs may be granted under the Stock Option Plan to employees and
officers of the Company.  Non-qualified  options may be granted to  consultants,
directors  (whether  or not they are  employees),  employees  or officers of the
Company  (collectively  "Options").  In certain  circumstances,  the exercise of
Options may have an adverse effect on the market price of the Common Stock.  The
Stock Option Plan was approved by the Company's shareholders in fiscal 1998.

The Stock Option Plan is intended to encourage  stock  ownership by employees of
the Company, so that they may acquire or increase their proprietary  interest in
the Company and to  encourage  such  employees  and  directors  to remain in the
employ of the  Company and to put forth  maximum  efforts for the success of the
business.  Options  granted  under the Stock Option Plan may be  accompanied  by
either stock appreciation  rights ("SARS") or limited stock appreciation  rights
(the "Limited SARS"), or both.

The  Plan  is  administered  by the  Compensation  Committee  as the  Board  may
establish or designate.  The  Compensation  Committee  shall be comprised of not
less than two members, and all of who shall be outside directors. The members of
the Compensation and Stock Option Committee are William F. Kenny III, Jeffrey A.
Wurst and Fredric J. Gruder, outside directors.

The Compensation and Stock Option Committee,  within the limitation of the Stock
Option Plan,  shall have the  authority to determine  the types of options to be
granted,  whether an Option shall be  accompanied  by SARS or Limited SARS,  the
purchase price of the shares of Common Stock covered by each Option (the "Option
Price"),  the persons to whom, and the time or times at which,  Options shall be
granted,  the number of shares to be  covered  by each  Option and the terms and
provisions of the option agreements.

The  maximum  aggregate  number of shares of Common  Stock as to which  Options,
Rights and Limited  Rights may be granted under the Stock Option Plan to any one
optionee  during any fiscal  year of the Company is  100,000,  as  approved  and
amended by the shareholders in fiscal 2000.

With respect to the ISOs,  in the event that the  aggregate  fair market  value,
determined as of the date the ISO is granted, of the shares of Common Stock with
respect to which Options  granted and all other option plans of the Company,  if
any,  become  exercisable for the first time by any optionee during any calendar
year exceeds $100,000,  Options granted in excess of such limit shall constitute
non-qualified stock options for all purposes.  Where the optionee of an ISO is a
ten (10%)  percent  stockholder,  the Option Price will not be less than 110% of
the fair market value of the Company's  Common Stock,  determined on the date of
grant,  and the exercise  period will not exceed five (5) years from the date of
grant of such ISO. Otherwise, the Option Price will not be less than one hundred
(100%) percent of the fair market value of the shares of the Common Stock on the
date of grant,  and the exercise  period will not exceed ten (10) years from the
date of grant.  Options granted under the Plan shall not be  transferable  other
than by will or by the laws of descent  and  distribution,  and  Options  may be
exercised,  during the lifetime of the optionee,  only by the optionee or by his
guardian or legal representative.

In fiscal 2002, the Company's  Compensation and Stock Option Committee  approved
two grants of incentive  stock  options  aggregating  205,000,  to the Company's
officers to purchase the Company's  Common Stock at exercise prices from $1.15 -
$1.35 per  share.  The fiscal  2002  incentive  stock  options  are  exercisable
immediately.

In fiscal 2001, the Company's  Compensation and Stock Option Committee  approved
three grants of incentive stock options  aggregating  262,500,  to the Company's
officers  and outside  directors,  to purchase  the  Company's  common  stock at
exercise prices from  $.8125-$1.375  per share.  The fiscal 2001 incentive stock
options are exercisable immediately.

In fiscal 2000, the Company's  Compensation  Committee  approved three grants of
incentive  stock options  aggregating  172,500,  to the Company's  officers,  to
purchase the Company's  common stock at exercise  prices from  $1.75-$1.925  per
share. The fiscal 2000 incentive stock options are exercisable immediately.

The  following  table sets forth  information  relating to the  205,000  options
granted in the fiscal year ended October 26, 2002,  all of which were granted to
the named executive officers and directors:
<TABLE>
<CAPTION>

                               Number of      % of total options
                              securities          granted to
                              underlying         employees in        Exercise or base           Grant
Name                        options granted       fiscal year          price ($/sh)           Date Value        Expiration date
-------------------------- ------------------ -------------------- --------------------- -------------------- --------------------

<S>                                 <C>               <C>                   <C>               <C>                  <C>
Michael E. Recca                    25,000            12.2%                 1.265             $  21,627            03/04/2007
Franklin C. Karp                    25,000            12.2%                 1.150                26,209            03/04/2012
                                    25,000            12.2%                 1.350                30,767            05/29/2012
Joseph C. Calabrese Jr.             25,000            12.2%                 1.150                26,209            03/04/2012
                                    25,000            12.2%                 1.350                30,767            05/29/2012
Michael A. Beck                     25,000            12.2%                 1.150                26,209            03/04/2012
                                    25,000            12.2%                 1.350                30,767            05/29/2012
Roland W. Hiemer                    15,000             7.3%                 1.150                15,725            03/04/2012
                                    15,000             7.3%                 1.350                18,460            05/29/2012
                                   -------           ------                                    --------
                                   205,000           100.0%                                    $226,740
                                   =======           ======                                    ========
</TABLE>
The following  table sets forth  information  concerning  the excercise of stock
options by the named  executives and directors  during the Company's fiscal year
ended October 26, 2002, the number of options owned by the named  executives and
directors  and the value of any  in-the-monry  unexcercised  stock options as of
October 26, 2002.

<TABLE>
<CAPTION>

                                                                Value of
                                             Number of          Unexercised
                                             Unexercised        In-the-Money
                                             Options at         Options at
                    Shares                   October 26, 2002   October 26, 2002
                    Acquired     Value       Exercisable (E)/   Exercisable (E)/
Name                on Exercise  Realized $  Unexercisable (U)  Unexercisable (U)
----                -----------  ----------  -----------------  -----------------
<S>                      <C>       <C>       <C>                 <C>
Michael E. Recca         0         0         25,000 (E)          $-0- (E)

Franklin C. Karp         0         0         50,000 (E)          $-0- (E)

Joseph J. Calabrese, Jr. 0         0         50,000 (E)          $-0- (E)

Michael A. Beck          0         0         50,000 (E)          $-0- (E)

Roland W. Hiemer         0         0         30,000 (E)          $-0- (E)

                    --------------------------------------------------------
Total                    0         0        205,000 (E)          $-0- (E)
                        ===       ===       =======              ====

</TABLE>

PERFORMANCE GRAPH

The following graph shows a 55-month  comparison of the cumulative  total return
to  shareholders  for the  Company,  The Russell  2000 Index and a peer group of
substantially larger electronics companies.  The graph assumes that the value of
investment in the Company's  common stock and in each index was $100 on April 2,
1998 (the date the Company  completed  its public  offering  of common  stock on
common stock  warrants),  including the  reinvestment of dividends,  if any. The
Company's fiscal year is either a 52 or 53-week year with the fiscal year ending
on the  Saturday  closest to  October  31. All  fiscal  years  presented  in the
performance graph include 52 weeks.

[GRAPH OMITTED]

Item 12. Security Ownership of Certain Beneficial Owners and Management.

The  following  table  sets  forth  certain  information  with  respect  to  the
beneficial  ownership of shares of Common Stock as of October 26, 2002, based on
information  obtained from the persons named below,  by (i) each person known to
the Company to beneficially own more than 5% of the outstanding shares of Common
Stock,  (ii) each executive  officer and director of the Company,  and (iii) all
officers and directors of the Company as a group:
<TABLE>
<CAPTION>

                Name and Address of                       Title        Amount and Nature of
                  Beneficial Owner                       of Class      Beneficial Ownership     Percentage
----------------------------------------------------- --------------- ------------------------ --------------

<S>                            <C>                        <C>                 <c>                   <C>
Harvey Acquisition Company LLC ("HAC")                    Common              253,932               7.6%
c/o Michael E. Recca
949 Edgewood Avenue
Pelham Manor, NY 10803

Michael E. Recca                                          Common              430,078 (1)          12.3%
949 Edgewood Avenue
Pelham Manor, NY 10803

Matthew and Alicia Larson                                 Common              304,300               9.2%
c/o CIBC 200 Liberty Street
New York, NY 10281

Bruce Goldstein, Inc.                                     Common              242,530               7.3%
111 North Beach Road
Hoke Sound, Florida 33455

Ronald I. And Joyce L. Heller                             Common              194,900               5.9%
74 Farview Road
Tenafly, New Jersey 07670

Jeffrey A. Wurst                                          Common               46,050 (6)           1.4%
c/o Ruskin Moscou Faltischek, P.C.
190 EAB Plaza
Uniondale, NY 11556

William F. Kenny, III                                     Common               48,989 (2)           1.5%
Harvey Electronics, Inc.
205 Chubb Avenue
Lyndhurst, NJ 07071

Fredric J. Gruder                                         Common               42,500 (2)           1.3%
775 Park Avenue
Huntington, NY 11753

Franklin C. Karp                                          Common              234,500 (3)           6.6%
Harvey Electronics, Inc.
205 Chubb Avenue
Lyndhurst, NJ 07071

Joseph J. Calabrese                                       Common              201,702 (4)           5.7%
Harvey Electronics, Inc.
205 Chubb Avenue
Lyndhurst, NJ 07071

Michael A. Beck                                           Common              197,500 (4)           5.6%
Harvey Electronics, Inc.
205 Chubb Avenue
Lyndhurst, NJ 07071

Roland W. Hiemer                                          Common              107,500 (5)           3.1%
Harvey Electronics, Inc.
205 Chubb Avenue
Lyndhurst, NJ 07071

All Directors and Officers as a group                     Common            1,308,819 (7)          30.2%
(8 Persons)

All Beneficial Owners as a group                          Common            2,050,549 (7)          47.4%

<FN>

(1)  Includes  shares  owned by HAC,  of which Mr.  Recca is a member and one of
     three  managers,  plus  options to  purchase  up to  165,000  shares of the
     Company's  Common  Stock  which are  exercisable  at an  exercise  price of
     between $.8937-$1.925 per share.

(2)  Includes  options to purchase up to 40,000 shares of the  Company's  Common
     Stock,  which is exercisable at an exercise price of between  $.8125-$1.375
     per share.

(3)  Includes  options to purchase up to 212,500 shares of the Company's  Common
     Stock,  which are exercisable at an exercise price of between  $.8125-$.300
     per share.

(4)  Includes  options to purchase up to 190,000 shares of the Company's  Common
     Stock,  which are exercisable at an exercise price of between  $.8125-$3.00
     per share.

(5)  Includes  options to purchase up to 105,000 shares of the Company's  Common
     Stock,  which are exercisable at an exercise price of between  $.8125-$3.00
     per share.

(6)  Includes a warrant to purchase 15,000 shares of the Company's Common Stock,
     in the name of Ruskin Moscou  Faltischek,  P.C.,  the law firm in which Mr.
     Wurst is a Partner,  at an exercise price of $5.00 per share. Mr. Wurst has
     expressly disclaimed  beneficial  ownership of this warrant.  Also includes
     options to  purchase up to 30,000  shares of the  Company's  Common  Stock,
     which is  exercisable  at an exercise  price of between  $.8125-$1.375  per
     share.

(7)  Includes  options and  warrants to purchase up to 982,500  shares of Common
     Stock,  which are exercisable at an exercise price of between  $.8125-$5.00
     per share.
</FN>
</TABLE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
officers  and  directors,  and  persons  who own more  than ten  percent  of the
Company's common stock, to file reports of ownership and changes in ownership on
Forms  3,4  and 5 with  the  Securities  and  Exchange  Commission  and  Nasdaq.
Officers,  directors and greater than ten percent  shareholders  are required by
Securities  and  Exchange  Commission  regulations  to furnish the Company  with
copies of all Section 16(a) forms they file.

To the  Company's  knowledge,  based  solely on its review of the copies of such
forms received by it, and written representations from certain reporting persons
that no Forms 5 were  required  for those  persons,  the Company  believes  that
during  the fiscal  year ended  October  26,  2002,  all  Section  16(a)  filing
requirements applicable to its officers,  directors and greater than ten percent
beneficial owners were complied.

Item 13. Certain Relationships and Related Transactions.

From April 1, 1998 through April 30, 2000, Mr. Recca received  $7,917 per month,
representing a director's  fee in the annual amount of $95,000,  in his capacity
as the Chairman of the Board of Directors of the Company. Effective May 1, 2000,
Mr. Recca was placed on the  Company's  payroll at an annual salary of $120,000,
plus all Company sponsored benefits.

In December  2000,  $23,000 was paid to Recca & Co. Inc.,  of which Mr. Recca is
the  sole  shareholder.  Amounts  paid  relate  to  management  fees  and  other
miscellaneous amounts from fiscal 1998.

From  January  2001 to April  2002,  Mr.  Recca  had also  been a  principal  of
NorthStar Capital, LLC which was a joint venture between certain of the partners
of Ruskin Moscou Faltischeck,  P.C. ("Ruskin"),  the Company's corporate counsel
and Mr. Recca.  Since April 2002,  Mr. Recca has been a director of Sky Holdings
LTD, and the President of Sky Capital, LLC, a NASD broker dealer.

Jeffrey A. Wurst, Director, is also a Senior Partner with Ruskin. At October 26,
2002 and  October  27,  2001,  the  Company  had  amounts  payable  to Ruskin of
approximately  $26,000 and  $25,000,  respectively.  The Company also paid legal
fees to Ruskin of $81,000,  $64,000 and $127,000, in fiscal years 2002, 2001 and
2000, respectively.

At October 28, 2000, the Company had a receivable of  approximately  $45,000 due
from Mr. E.H.  Arnold,  a member of HAC and a holder of  Preferred  Stock.  This
amount was subsequently collected by the Company in December 2000.

Dividends  paid to  preferred  stockholders  aggregated  $74,000,  $108,000  and
$110,000 for fiscal years 2002, 2001 and 2000, respectively.

In fiscal 1999, the Company signed a consulting agreement with a previous member
of its  underwriter.  Pursuant  to the  terms  of the  two-year  agreement,  the
consultant received an annual fee of $75,000 for fiscal 1999. This agreement was
terminated  by the Company  effective  February  29, 2000.  In August 2000,  the
consultant was again engaged by the Company, pursuant to a consulting agreement,
at $5,000 per month.  At December 15, 2000,  the agreement was terminated by the
Company.  The consultant  received fees aggregating $5,000 and $40,000 in fiscal
years 2001 and 2000, respectively.

Item 14. Controls and Procedures

The Company's  President and Chief  Financial  Officer (its principal  executive
office and principal financial officer,  respectively) have concluded,  based on
their  evaluation  as of a date  within 90 days prior to the filing date of this
report,  that the Company's  disclosure controls and procedures are effective to
ensure that  information  required to be disclosed by the Company in the reports
filed or submitted by it under the Securities  Exchange Act of 1934, as amended,
is  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in the  Securities  and  Exchange  Commission's  rules and forms,  and
include controls and procedures designed to ensure that information  required to
be disclosed by the Company in such reports is accumulated  and  communicated to
the Company's  management,  including the President and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such  evaluation  including any  corrective  actions with regard to  significant
deficiencies and material weaknesses.

Item 15. Exhibits, Financial Statement Schedule and Reports on Form 8-K.

(a)--List  of  Financial   Statements  and  Financial  Statement  Schedule  and
     Exhibits:

(1)  List of Financial Statements:

     Balance Sheets - October 26, 2002 and October 27, 2001

     Statements of Operations - Fiscal years ended October 26, 2002, October 27,
     2001 and October 28, 2000

     Statements of  Shareholders'  Equity - Fiscal years ended October 26, 2002,
     October 27, 2001 and October 28, 2000

     Statements of Cash Flows - Fiscal years ended October 26, 2002, October 27,
     2001 and Octobeer 28, 2000

     Notes to Financial Statements

(2)  List of Financial Statements Schedule:

     Schedule II - Valuation and Qualifying Accounts

     All  other  schedules  for  which  provision  is  made  in  the  applicable
     accounting  regulation  of  the  Securities  Exchange  Commission  are  not
     required under the related  instructions or are  inapplicable and therefore
     have been omitted.

(3)  The  following  exhibits  are hereby  incorporated  by  reference  from the
     corresponding exhibits filed under the Company's Form SB-2 under Commission
     File #333--42121:
<TABLE>
<CAPTION>

Exhibit Number Description

<C>                                             <C>
3.1.1--Restated Certificate of Incorporation of 1967

3.1.2--Certificate of Amendment of the Certificate of Incorporation of 1997

3.1.3--Certificate of Amendment of the Certificate of Incorporation of December 1996

3.1.4--Certificate of Amendment of Certificate of Incorporation of July 1988

3.1.5--Certificate of Amendment of Certificate of Incorporation of July 1971

3.1.6--Certificate of Amendment of Certificate of Incorporation of February 1971

3.1.7--Certificate of Amendment of Certificate of Incorporation of June 1969

3.1.8--Certificate of Amendment of Certificate of Incorporation of September 1968

4.1--Sections in Certificate of Incorporation and the Amended and Restated By-Laws of Harvey  Electronics,  Inc., that define
     the rights of the holders of shares of Common Stock, Preferred Stock and holders of Warrants(included in Exhibit Nos. 3.1.2
     and 3.1.3)

4.2--Form of Common Stock Certificate

4.3--Form of Redeemable Common Stock Purchase Warrant

4.4--Form of Representative's Warrant

4.5--Form of Warrant to Holders of Preferred Stock

10.1.1--Stock Option Plan of Harvey Electronics, Inc.

10.1.2--Form of Stock Option Agreement

10.2.1--Severance Agreement with Franklin C. Karp

10.2.2--Severance Agreement with Joseph J. Calabrese

10.2.3--Severance Agreement with Michael A. Beck

10.2.4--Severance Agreement with Roland W. Hiemer

10.4.1--Dealer Agreement between the Company and Mitsubishi Electronics America, Inc.

10.4.2--Dealer Agreement between the Company and Niles Audio Corporation, Inc.

10.5.1--Lease between the Company and Joseph P. Day Realty Corp. (2)

10.5.2--Lease between the Company and Goodrich Fairfield Associates, L.L.C. (2)

10.5.3--Lease between the Company and Sprout Development Co. (2)

10.5.4--Lease between the Company and Service Realty Company (2)

10.5.5--Lease between the Company and 205 Associates (2)

10.5.6--Sublease between the Company and Fabian Formals, Inc. and Affiliate First Nighter of Canada (2)

10.6--Loan and Security Agreement, Master Note and Trademark Security Agreement with Paragon Capital L.L.C.

(ii) The following exhibits are hereby incorporated by reference from Exhibit A
filed as part of the registrant's Form 8-K dated November 3, 1997:

2.1.1--Restated Modified Amended Joint and Substantially Consolidated Plan of Reorganization of Harvey Electronics, Inc.

2.1.2--Order dated November 13, 1996 Confirming Plan of Reorganization

(iii) The following exhibits are hereby incorporated by reference from Item 7
filed as part of the registrant's Form 8-K dated April 7, 1998:

4.4--Representative's Warrant Agreement

4.5--Warrant Agent Agreement

10.1--Underwriting Agreement

10.2--Financial Advisory and Investment Banking Agreement between the Company and The Thornwater Company, L.P.

(iv) The following exhibits are hereby incorporated by reference to the
corresponding exhibits filed with the Company's Form 8-K dated October 12, 1998:

10.01--Bang & Olufsen America, Inc. Termination Letter dated September 7, 1998

10.02--Bang & Olufsen America, Inc. New Agreement Letter dated October 8, 1998

10.03--Agreement with Thornwater regarding termination of agreements and lock-up amendments dated October 31, 1998

(v) The following exhibits are hereto incorporated by reference to the Company's
Form 10KSB dated October 31, 1998:

10.5.7--Lease Agreement with Martin Goldbaum and Sally Goldbaum

10.5.8--Lease Agreement with Bender Realty

10.7--Surrender of Lease with 873 Broadway Associates

10.8--Contract of Sale with Martin Goldbaum, Sally Goldbaum, the Sound Mill, Inc. and Loriel Custom Audio Video Corp.

10.9--License Agreement with ABC Home Furnishings, Inc.

(vii) The following exhibits are hereto incorporated by reference to the
Company's Form 10KSB dated October 28, 2000:

10.2.5--Severance Agreement between the Company and Michael E. Recca

10.2.6--Amended and Restated Severance Agreement between the Company and Franklin C. Karp

10.2.7--Amended and Restated Severance Agreement between the Company and Joseph J. Calabrese

10.2.8--Amended and Restated Severance Agreement between the Company and Michael A. Beck

10.5.9--Sublease Agreement between the Company and Bang & Olufsen America, Inc.

10.6--Lease Agreement between the Company and WSG Eatontown LP

10.6.1--Lease Modification Agreement between the Company and WSG Eatontown LP

10.6.2--Renewal of License Agreement with ABC Home Furnishings, Inc.

10.10--Repurchase Agreement between the Company, Bang & Olufsen America, Inc. and Paragon Capital, L.L.C.

10.11--Addendum to Repurchase Agreement between the Company, Bang & Olufsen America, Inc. and Paragon Capital, L.L.C.

10.12--Second Amendment to Loan and Security Agreement with Paragon Capital, L.L.C.

10.13--Third Amendment to Loan and Security Agreement with Paragon Capital, L.L.C.

10.14--Consulting Agreement with Mesa Partners Inc.

10.15--Addendum to Consulting Agreement with Mesa Partners, Inc.

10.16--Warrant to purchase 15,000 shares of the Company's common stock, issued
to Mesa Partners, Inc.

10.17--Investor relations agreement with Porter, LeVay & Rose

(viii)--The following exhibits are hereto incorporated by reference to the
Company's Form 10KSB dated October 27, 2001:

10.6.3--Modification of Lease between the Company and Service Realty Company

10.6.4--First Amendment of Lease between the Company and 205 Associates

(ix) --The following exhibits are annexed hereto:

10.6.5--Lease Extension Agreement between the Company and Sprout Development Co.

10.6.6--Second Amendment of lease between the Company and 205 Chubb Avenue, LLC

23. --Consent of BDO Seidman, LLP

23.1--Consent of Ernst and Young, LLP

99.1--Section 906 Certification - President

99.2--Section 906 Certification - CFO

99.3--Section 302 Certification - President

99.4--Section 302 Certification - CFO
</TABLE>

(b) --Reports on Form 8-K:

     On November 25, 2002,  the Company filed Form 8-K with the  Securities  and
Exchange Commission, announcing compliance with NASDAQ Listing Qualifications.


Signatures

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                            Harvey Electronics, Inc.

                            By: /s/ Franklin C. Karp
                                --------------------
                                Franklin C. Karp, President

Dated: January 24, 2003

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dated indicated.
<TABLE>
<CAPTION>

             Signature                                     Title                                Date

<S>                                                                                             <C> <C>
/s/ Franklin C. Karp                  President and Director                            January 24, 2003
-------------------------------------
    Franklin C. Karp

/s/ Joseph J. Calabrese               Executive Vice President, Chief Financial         January 24, 2003
------------------------------------- Officer, Treasurer, Secretary and Director
    Joseph J. Calabrese


/s/ Michael E. Recca                  Chairman and Director                             January 24, 2003
-------------------------------------
    Michael E. Recca

/s/ William F. Kenny, III             Director                                          January 24, 2003
-------------------------------------
    William F. Kenny, III

/s/ Fredric J. Gruder                 Director                                          January 24, 2003
-------------------------------------
    Fredric J. Gruder

/s/ Jeffrey A. Wurst                  Director                                          January 24, 2003
-------------------------------------
    Jeffrey A. Wurst
</TABLE>

Item 8. Financial Statements and Supplementary Data

                            Harvey Electronics, Inc.

               Index to Financial Statements and Supplemental Data

<TABLE>
<CAPTION>

<S>                                                                                                      <C>
Report of Independent Certified Public Accountants.................................................    F-2

Report of Independent Auditors.....................................................................    F-3

Balance Sheets--October 26, 2002 October 27, 2001..................................................    F-4

Statements of Operations--Fiscal years ended October 26,2002,
   October 27, 2001 and October 28, 2000...........................................................    F-5

Statements of Shareholders' Equity--Fiscal years ended October 26,2002,
   October 27, 2001 and October 28, 2000...........................................................    F-6

Statements of Cash Flows--Fiscal years ended October 26, 2002,
   October 27, 2001 and October 28, 2000...........................................................    F-7

Notes to Financial Statements...................................................................... F-8-26

The following financial statement schedule of Harvey Electronics, Inc. is included as
supplementary data:

Schedule II - Valuation and Qualifying Accounts....................................................   F-27

Report of Independent Certified Public Accountants................................................    F-28


</TABLE>


                                       F-1


               Report of Independent Certified Public Accountants



The Board of Directors and Shareholders
Harvey Electronics, Inc.


We have audited the accompanying balance sheet of Harvey Electronics, Inc. as of
October 26, 2002, and the related statements of operations, shareholders' equity
and cash  flows for the year then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Harvey  Electronics,  Inc. at
October 26, 2002,  and the results of its  operations and its cash flows for the
year then ended, in conformity with accounting  principles generally accepted in
the United States of America.

s/BDO Seidman, LLP
-----------------------------
BDO Seidman, LLP
Melville, New York
December 20, 2002



                                       F-2


                         Report of Independent Auditors



The Board of Directors and Shareholders
Harvey Electronics, Inc.


We have audited the accompanying balance sheet of Harvey Electronics, Inc. as of
October 27, 2001 and the related statements of operations,  shareholders' equity
and cash flows for the years ended  October 27, 2001 and October 28,  2000.  Our
audit also included the financial statement schedule listed in the index at Item
15(a).  These financial  statements and schedule are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Harvey  Electronics,  Inc. at
October 27, 2001 and the  results of its  operations  and its cash flows for the
years ended October 27, 2001 and October 28, 2000, in conformity with accounting
principles  generally accepted in the United States.  Also, in our opinion,  the
related financial statement  schedule,  when considered in relation to the basic
financial  statements taken as a whole,  present fairly in all material respects
the information set forth therein.


                                                             s/Ernst & Young LLP
                                               ---------------------------------
Melville, New York
December 28, 2001




                                       F-3


<TABLE>
<CAPTION>

                            Harvey Electronics, Inc.
                                 Balance Sheets
                                                                          October 26,     October 27,
                                                                             2002             2001
                                                                       ----------------------------------
Assets
Current assets:
<S>                                                                              <C>             <C>
   Cash and cash equivalents                                                     $15,990         $28,336
   Accounts receivable, less allowance of $20,000 and $25,000                    634,663         578,905
   Inventories                                                                 6,804,161       6,709,125
   Prepaid expenses and other current assets                                     212,692         214,270
                                                                       ----------------------------------
Total current assets                                                           7,667,506       7,530,636
Property and equipment:
   Leasehold improvements                                                      3,363,928       3,194,392
   Furniture, fixtures and equipment                                           1,941,765       1,799,369
   Internet website                                                              441,670         415,630
                                                                       ----------------------------------
                                                                               5,747,363       5,409,391
   Less accumulated depreciation and amortization                              2,730,164       1,981,683
                                                                       ----------------------------------
                                                                               3,017,199       3,427,708
Equipment under capital leases, less accumulated amortization
  of $382,537 and $377,131                                                        62,023         119,365
Cost in excess of net assets acquired, less accumulated amortization
  of $25,000 and $19,000                                                         125,000         131,000
Reorganization value in excess of amounts allocable to identifiable
  assets, less accumulated amortization of $378,023 and $324,023                 986,440       1,164,440
Other assets, less accumulated amortization of $183,794 and $111,347             293,297         354,051
                                                                       ----------------------------------
Total assets                                                                 $12,151,465     $12,727,200
                                                                       ==================================
Liabilities and shareholders' equity
Current liabilities:
  Revolving line of credit facility                                           $3,119,493      $3,442,020
  Trade accounts payable                                                       2,274,833       2,823,781
  Customer deposits                                                            1,484,237       1,522,106
  Accrued expenses and other current liabilities                               1,293,207       1,033,136
  Income taxes                                                                    50,200          28,200
  Cumulative Preferred Stock dividends payable                                    23,432          24,792
  Current portion of long-term debt                                                    -          21,985
  Current portion of capital lease obligations                                    22,420          50,921
                                                                       ----------------------------------
Total current liabilities                                                      8,267,822       8,946,941
Long-term liabilities:
  Capital lease obligations                                                            -           5,265
  Deferred rent                                                                  155,615         154,660
                                                                       ----------------------------------
                                                                                 155,615         159,925
Commitments and contingencies
Shareholders' equity:
 8-1/2% Cumulative Convertible Preferred Stock, par value $1,000 per share;
 authorized 10,000 shares; issued and outstanding 827 and 875 shares (aggregate
 liquidation preference--$827,000 and $875,000)

                                                                                 379,982         402,037
Common Stock, par value $.01 per share; authorized 10,000,000 shares;
  issued and outstanding 3,324,525 and 3,282,833 shares                           33,245          32,828
  Additional paid-in capital                                                   7,601,305       7,579,667
  Accumulated deficit                                                        (4,286,504)     (4,394,198)
                                                                       ----------------------------------
Total shareholders' equity                                                     3,728,028       3,620,334
                                                                       ----------------------------------
Total liabilities and shareholders' equity                                   $12,151,465     $12,727,200
                                                                       ==================================
</TABLE>

See notes to financial statements.

                                       F-4



                            Harvey Electronics, Inc.

                            Statements of Operations


<TABLE>
<CAPTION>

                                                                             Fiscal Years Ended
                                                              October 26,         October 27,        October 28,
                                                                   2002               2001               2000
                                                      -----------------------------------------------------------

<S>                                                            <C>                <C>                <C>
Net sales                                                      $41,506,577        $36,687,206        $34,355,415
Interest and other income                                          116,021             82,917             33,519
                                                      -----------------------------------------------------------
                                                                41,622,598         36,770,123         34,388,934
                                                      -----------------------------------------------------------

Cost of sales                                                   25,153,269         22,552,054         20,813,396
Selling, general and administrative expenses                    15,806,022         15,128,410         12,856,155
Interest expense                                                   358,836            339,894            217,724
                                                      -----------------------------------------------------------
                                                                41,318,127         38,020,358         33,887,275
                                                      -----------------------------------------------------------

Income (loss) before income taxes                                  304,471        (1,250,235)            501,659
Income taxes                                                       124,000                  -            185,000
                                                      -----------------------------------------------------------
Net income (loss)                                                  180,471        (1,250,235)            316,659

Preferred Stock dividend requirement                                72,777             74,376             74,376
                                                      -----------------------------------------------------------
Net income (loss) applicable to Common Stock                      $107,694       ($1,324,611)           $242,283
                                                      ===========================================================

Net income (loss) per share applicable to
 common shareholders:

  Basic                                                              $0.03            ($0.40)              $0.07
                                                      ===========================================================
  Diluted                                                            $0.03            ($0.40)              $0.07
                                                      ===========================================================

Shares used in the calculation of net income
 (loss) per common share:
  Basic                                                          3,297,827          3,282,833          3,282,833
                                                      ===========================================================
  Diluted                                                        3,907,401          3,282,833          3,346,307
                                                      ===========================================================
</TABLE>

See notes to financial statements.

                                       F-5




                            Harvey Electronics, Inc.

                       Statements of Shareholders' Equity
<TABLE>
<CAPTION>


                                          Preferred Stock         Common Stock         Additional                        Total
                                       ----------------------------------------------  Paid-in        Accumulated    Shareholders'
                                        Shares     Amount      Shares      Amount      Capital          Deficit         Equity
                                       --------------------------------------------------------------------------------------------
<S>                <C> <C>                   <C>    <C>         <C>          <C>        <C>          <C>                <C>
Balance at October 30, 1999                  875    $402,037    3,282,833    $32,828    $7,481,667   $ (3,311,870)      $4,604,662
   Net income for the year                     -           -            -          -             -         316,659         316,659
   Preferred Stock dividend                    -           -            -          -             -        (74,376)        (74,376)
                                       --------------------------------------------------------------------------------------------
Balance at October 28, 2000                  875     402,037    3,282,833     32,828     7,481,667     (3,069,587)       4,846,945
   Net loss for the year                       -           -            -          -             -     (1,250,235)     (1,250,235)
   Recorded value of Common Stock
     warrants granted                          -           -            -          -        98,000               -          98,000
   Preferred Stock dividend                    -           -            -          -             -        (74,376)        (74,376)
                                       --------------------------------------------------------------------------------------------
Balance at October 27, 2001                  875     402,037    3,282,833     32,828     7,579,667     (4,394,198)       3,620,334
   Net income for the year                     -           -            -          -             -         180,471         180,471
   Preferred Stock dividend                    -           -            -          -             -        (72,777)        (72,777)
   Conversion of Preferred Stock
     to Common Stock                        (48)    (22,055)       38,920        389        21,666               -               0
   Exercise of cash-less Common Stock
     warrant                                   -           -        2,772         28          (28)               -               0
                                       --------------------------------------------------------------------------------------------
Balance at October 26, 2002                  827   $379,982     3,324,525   $33,245    $7,601,305     ($4,286,504)     $3,728,028
                                             ===   =========    =========   ========   ===========    ============     ==========

</TABLE>
See notes to financial statements.

                                       F-6


                            Harvey Electronics, Inc.
                            Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                              Fiscal Years Ended
                                                                             October 26,          October 27,         October 28,
                                                                                 2002                 2001                2000
                                                                   ---------------------------------------------------------------
Operating activities
<S>                                                                              <C>             <C>                     <C>
Net income (loss)                                                                $180,471        ($1,250,235)            $316,659
Adjustments to reconcile net income (loss) to net cash provided
  by (used in) operating activities:
    Depreciation and amortization                                                 916,873             989,055             647,064
    Income tax equivalent provision                                               124,000                   -             160,000
    Straight-line impact of rent escalations                                          955            (21,556)            (22,867)
    Consulting fees                                                                     -               3,516              10,000
    Miscellaneous                                                                (14,473)             (8,980)            (12,667)
    Changes in operating assets and liabilities:
      Accounts receivable                                                        (50,758)           (105,808)            (24,040)
      Allowance for bad debts                                                     (5,000)                   -                   -
      Note receivable - previous member of Underwriter                                  -                   -              54,914
      Inventories                                                                (17,901)           (168,729)         (1,341,791)
      Prepaid expenses and other current assets                                     1,578             (8,708)             179,863
      Trade accounts payable                                                    (659,035)            (95,782)             976,338
      Customer deposits                                                          (37,923)             491,920             374,240
      Accrued expenses, other current liabilities and income taxes
        income taxes                                                              282,125            (88,057)             477,291
                                                                   ---------------------------------------------------------------
Net cash provided by (used in) operating activities                               720,912           (263,364)           1,795,004
                                                                   ---------------------------------------------------------------
Investing activities
Purchases of property and equipment excluding
  Internet website development                                                  (220,845)         (1,661,398)           (688,550)
Internet website development                                                     (16,040)            (73,032)           (342,598)
Purchases of other assets                                                         (9,140)               (563)            (53,927)
Security deposits-net                                                              11,935                   -                   -
Note receivable - officer                                                               -               7,500               7,500
                                                                   ---------------------------------------------------------------
Net cash used in investing activities                                           (234,090)         (1,727,493)         (1,077,575)
                                                                   ---------------------------------------------------------------
Financing activities
Net (payments) proceeds from revolving credit facility                          (322,527)           2,374,311           (409,894)
Commitment fee from increased revolving credit facility                                 -            (75,000)                   -
Preferred Stock dividends paid                                                   (74,151)           (107,603)           (110,206)
Principal payments on note payable                                               (21,985)            (10,374)                   -
Principal payments on capital lease obligations                                  (80,505)           (197,514)           (185,903)
                                                                   ---------------------------------------------------------------
Net cash (used in) provided by financing activities                             (499,168)           1,983,820           (706,003)
                                                                   ---------------------------------------------------------------
(Decrease) increase in cash and cash equivalents                                 (12,346)             (7,037)              11,426
Cash and cash equivalents at beginning of year                                     28,336              35,373              23,947
                                                                   ---------------------------------------------------------------
Cash and cash equivalents at end of year                                          $15,990             $28,336             $35,373
                                                                   ===============================================================
Supplemental cash flow information:
Interest paid                                                                    $361,000            $302,000            $247,000
                                                                   ===============================================================
Taxes paid                                                                         $6,000             $17,000             $11,000
                                                                   ===============================================================
</TABLE>
See notes to financial statements.

                                      F-7



1. Description of Business and Summary of Significant Accounting Policies

                             Description of Business

The  Company is a  specialty  retailer  and  custom  installer  of high  quality
audio/video  consumer  electronics and home theater products in the Metropolitan
New York area.  Revenues from retail sales are  recognized at the time goods are
delivered  to the  customer  or, for certain  installation  services,  when such
services are performed and accepted by the customer.  The Company's  fiscal year
ends the  Saturday  closest to October 31. The fiscal  years  ended  October 26,
2002, October 27, 2001 and October 28, 2000 each consist of 52 weeks.

Net sales and operating  results for the  Company's  first quarter of its fiscal
year are positively affected by a strong holiday demand.

Accounting Estimates

The  preparation  of the  financial  statements in  conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates and assumptions that affect the financial  statements and accompanying
notes. Actual results could differ from those estimates.

Long-Lived Assets

In accordance with Financial  Accounting  Standards Board Statement of Financial
Accounting  Standards  ("SFAS")  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to Be Disposed Of," when impairment
indicators are present,  the Company reviews the carrying value of its assets in
determining the ultimate recoverability of their unamortized values using future
undiscounted  cash flows expected to be generated by the assets.  If such assets
are  considered  impaired,  the  impairment  loss  recognized is measured by the
amount by which the  carrying  amount of the asset  exceeds the  estimated  fair
value. No such impairment  exists at October 26, 2002.  Assets to be disposed of
are  reported at the lower of the  carrying  amount or fair value,  less cost to
sell.


                                       F-8


1. Description of Business and Summary of Significant Accounting Policies
(continued)

The Company  evaluates the periods of  amortization  continually  in determining
whether  later  events and  circumstances  warrant  revised  estimates of useful
lives. If estimates are changed,  the unamortized  cost will be allocated to the
increased or decreased number of remaining periods in the revised lives.

Stock-Based Compensation

SFAS No. 123,  "Accounting for Stock-Based  Compensation,"  defines a fair value
method  of  accounting  for the  issuance  of stock  options  and  other  equity
instruments.  Under the fair value method,  compensation cost is measured at the
grant  date  based on the fair  value of the  award and is  recognized  over the
service period,  which is usually the vesting period.  Pursuant to SFAS No. 123,
companies are encouraged,  but are not required,  to adopt the fair value method
of  accounting  for  employee  stock-based  transactions.   Companies  also  are
permitted  to  continue  to  account  for  such  transactions  under  Accounting
Principles  Board  Opinion  ("APB")  No.  25,  "Accounting  for Stock  Issued to
Employees,"  as the Company  has elected to do, but are  required to disclose in
the financial statement footnotes, pro forma net income and per share amounts as
if the  Company had  applied  the new method of  accounting  for all grants made
since 1996.  SFAS No. 123 also requires  increased  disclosures  for stock-based
compensation  arrangements.  The Company follows the disclosure  requirements of
SFAS No. 123 (see Note 4).

Segment Disclosures

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information," establishes standards for the way that public business enterprises
report information about operating  segments in annual financial  statements and
requires that those  enterprises  report  selected  information  about operating
segments in interim financial reports.  SFAS No. 131 also establishes  standards
for related disclosure about products and services,  geographic areas, and major
customers. The Company operates in one business segment.

Inventories

Inventories,  consisting  of  finished  goods,  are  stated at the lower of cost
(average-cost  method,  which  approximates the first-in,  first-out  method) or
market value.



                                       F-9


1.  Description  of Business  and  Summary of  Significant  Accounting  Policies
(continued)

Depreciation and Amortization

Property and  equipment  are stated at cost less  accumulated  depreciation  and
amortization.  Depreciation  of  property  and  equipment,  including  equipment
acquired under capital leases, is calculated using the straight-line method over
the  estimated  useful  lives of the related  assets,  ranging from three to ten
years.   Amortization  of  leasehold   improvements  is  calculated   using  the
straight-line  method  over the  shorter of the lease term or  estimated  useful
lives of the improvements.

Internet Website

The  Company  follows  the  provisions  of EITF 00-2,  "Accounting  for  Website
Development Costs",  which provides guidance or how an entity should account for
website  development  costs. In accordance with EITF 00-2, costs incurred in the
website  application  and  infrastructure  development  stage  relating  to  the
acquisition  or  development  of software  or the  development  of graphics  for
internal  use,  should be  accounted  for under the  provisions  of Statement of
Position ("SOP") 98-1,  "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use" and  capitalized.  As such, and in accordance with
SOP 98-1, the Company capitalized  approximately  $26,000,  $73,000 and $343,000
for fiscal years 2002, 2001 and 2000, respectively,  relating to the development
of their website.  These costs are being amortized on a straight-line basis over
a period of one to three years.

Income Taxes

The Company  follows the  liability  method in  accounting  for income  taxes as
described in SFAS No. 109,  "Accounting  for Income  Taxes."  Under this method,
deferred tax assets and liabilities are determined based on differences  between
financial  reporting  and tax bases of assets and  liabilities  and are measured
using the enacted tax rates and laws that will be in effect when the differences
are  expected  to  reverse.  Deferred  income  taxes  reflect the net effects of
temporary differences between the carrying amounts of assets and liabilities for
financial  reporting  purposes and the amounts used for income tax purposes (see
Note 6).

Income (Loss) Per Share

Basic and diluted income (loss) per share are calculated in accordance with SFAS
No. 128,  "Earnings  Per Share." The basic and diluted  income (loss) per common
share for the fiscal years ended October 26, 2002,  October 27, 2001 and October
28, 2000 were  computed  based on the  weighted-average  number of common shares
outstanding.  Common  equivalent  shares  relating to stock options  aggregating
88,476 were included in the weighted average number of common shares outstanding
for  fiscal  2002 for the  diluted  earnings  per share  computation.  No common
equivalent  shares.  F-10 1.  Description of Business and Summary of Significant
Accounting  Policies  (continued)  relating to stock  options or  warrants  were
included in the weighted  average number of shares  outstanding for the basic or
diluted  loss per share  computation  for fiscal  year 2001 as their  effect was
anti-dilutive.  For fiscal  2000,  common  equivalent  shares  relating to stock
options  aggregating  63,474 were  included in the  weighted  average  number of
common shares outstanding for the diluted earnings per share computation.

Commencing  January 1, 2001,  the  conversion  price of the Company's  preferred
stock was $1.2333.  In June 2002, 48 shares of preferred stock were converted to
38,920 shares of the  Company's  common stock by a preferred  shareholder.  As a
result,  13,969  shares of common stock were  included in the  weighted  average
number  of  common  shares  outstanding  for  the  diluted  earnings  per  share
computation for fiscal 2002.  Common  equivalent  shares (670,559 in fiscal 2002
and  709,479  in fiscals  2001 and  2000),  relating  to the  conversion  of the
remaining outstanding preferred stock, were not included in the weighted average
number  of  common  shares   outstanding  of  the  diluted  earnings  per  share
calculation, as their effect was antidilutive.

In June 2002,  15,000  warrants  to purchase  the  Company's  common  stock were
exchanged for 2,772 shares of common stock, effected under a cash-less exercise.
As a result, 1,025 shares were included in the weighted average number of common
shares  outstanding  for the diluted  earnings per share  computation for fiscal
2002.

Options and  warrants  aggregating  3,066,457,  3,361,233  and  2,240,600,  were
excluded  from  the   computation   for  fiscal  years  2002,   2001  and  2000,
respectively, as their effect would have been antidilutive.

Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.

Fair Value of Financial Instruments

The  recorded  amounts  of the  Company's  cash and cash  equivalents,  accounts
receivable,  revolving  line of credit  facility,  accounts  payable and accrued
liabilities  approximate their fair values principally because of the short-term
nature of these items.

Concentration of Credit Risk

The  Company's  operations  consist  of the  retail  sale,  service  and  custom
installation of high quality audio,  video and home theater equipment in the New
York  Metropolitan   area.  The  Company  performs  credit  evaluations  of  its
customers'  financial  condition  and  payment  history  but  does  not  require
collateral.  Generally,  accounts  receivable  are due within 30 days and credit
losses have  historically  been immaterial.

                                      F-11

1.  Description  of Business  and  Summary of  Significant  Accounting  Policies
(continued)

Advertising Expense

In accordance  with SOP 93-7,  "Reporting of  Advertising  Costs," the Company's
advertising expense, net of cooperative  advertising  allowances,  is charged to
operations when the advertising takes place.  Advertising  expense for the years
ended October 26, 2002,  October 27, 2001 and October 28, 2000 was approximately
$632,000, $1,206,000 and $934,000,  respectively.  Prepaid advertising for print
advertisements  not run and  broadcast  advertisements  not aired at October 26,
2002 and October 27, 2001 was approximately $29,000 and $53,000, respectively.

Reorganization Value and Fresh Start Reporting

The  Company  adopted  Fresh  Start  Reporting  in  accordance  with  SOP  90-7,
"Financial  Reporting by Entities in Reorganization  under the Bankruptcy Code,"
when it emerged from a Chapter 11 proceeding on December 26, 1996. At that time,
Fresh  Start  Reporting  resulted  in changes to the  balance  sheet,  including
valuation of assets and  liabilities  at fair market value,  elimination  of the
accumulated deficit and valuation of equity based on the reorganization value of
the ongoing business.

The   reorganization   value  of  the  Company  was  determined   based  on  the
consideration  received from Harvey Acquisition Company LLC. (HAC) to obtain its
principal ownership in the Company. A carrying value of $318,000 was assigned to
the Preferred  Stock (see Note 5).  Subsequent to the  Reorganization  Date, the
Company  issued an  additional  51,565  shares of  Common  Stock to  InterEquity
Capital Partners, L.P., a pre-reorganization subordinated secured debtholder, as
authorized  by the  Court,  for an  approved  finders  fee.  The  excess  of the
reorganization value over the fair value of net assets and liabilities ($986,440
and  $1,164,440,  net of  amortization at October 26, 2002 and October 27, 2001,
respectively)  is  reported  as  "Reorganization  value  in  excess  of  amounts
allocable to identifiable assets" and was amortized over a 25-year period, prior
to the  adoption of SFAS No. 142 (see below).  Amortization  expense of $54,000,
$60,000  and  $66,000  was  recorded  for  fiscal  years  2002,  2001 and  2000,
respectively.

Reclassification

Certain  items in the  fiscal  2001  and 2000  financial  statements  have  been
reclassified to conform to fiscal 2002 presentation.


                                      F-12


Recent Accounting Pronouncements

1.  Description  of Business  and  Summary of  Significant  Accounting  Policies
(continued)

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
"Business  Combinations,"  and SFAS No.  142,  "Goodwill  and  Other  Intangible
Assets", effective for fiscal years beginning after December 15, 2001. Under the
new rules,  goodwill and other intangible assets deemed to have indefinite lives
will no longer be amortized  but will be subject to annual  impairment  tests in
accordance  with the  Statement.  Other  intangible  assets will  continue to be
amortized over their useful lives.  In addition,  Statement 141,  eliminates the
pooling-of-interest method of accounting for business combinations.  The Company
will adopt SFAS No. 141 and 142  beginning in the first  quarter of fiscal 2003.
During  fiscal  2003,  the  Company  will  perform  the  first  of the  required
impairment  tests of  goodwill  and  indefinite  lived  intangible  assets as of
October  27,  2002.  Management  does not  expect  that there will be a material
effect on the Company's financial position and results of operations due to this
pronouncement.  The total net amount of goodwill, including reorganization value
in excess of amounts  allocable to  identifiable  assets at October 26, 2002 was
$1,111,440.  Amortization expense of net goodwill was $60,000 for the year ended
October 26, 2002.

In June 2001,  the FASB issued  SFAS No. 143  "Accounting  for Asset  Retirement
Obligations.  "SFAS No. 143 required the fair value of a liability  for an asset
retirement  obligation  to be  recognized in the period that it is incurred if a
reasonable  estimate of fair value can be made. The associated  asset retirement
costs are  capitalized as part of the carrying  amount of the long-lived  asset.
SFAS No. 143 is effective for fiscal years  beginning  after June 15, 2002.  The
adoption  of SFAS No.  143 by the  Company  is not  expected  to have a material
impact on the Company's financial position, results of operations or cash flows.

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting  for  the  Impairment  or  Disposal  of  Long-Lived  Assets,"  which
addresses  financial  accounting and reporting for the impairment or disposal of
long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived  Assets  and  for  Long-Lived  Assets  to be  Disposed  Of,"  and the
accounting and reporting provisions of APB Opinion No 30, "Reporting the Results
of  Operations,"  for a  disposal  of a segment of a  business.  SFAS No. 144 is
effective  for fiscal years  beginning  after  December  15, 2001,  with earlier
application encouraged.  The Company expects to adopt SFAS No. 144 as of October
27, 2002,  the first day of fiscal 2003,  and  management  does not expect,  the
adoption of SFAS No. 144 to have a material  effect on the  Company's  financial
position and results of operations.

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44 and 64,  Amendment of FASB  Statement No. 13 and  Technical  Corrections".
Among other things,  this statement  rescinds FASB  Statement No. 4,  "Reporting
Gains and Losses  from  Extinguishment  of Debt"  which  requires  all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an  extraordinary  item, net of related income tax effect.  As a result,  the
criteria in APB Opinion No. 30, "Reporting the Results of Operations - Reporting
the  Effects of


                                      F-13

Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring  Events and  Transactions,  " will now be used to classify those gains
and losses.  The adoption of SFAS No. 145 by the Company is not expected to have
a material impact on the Company's financial position or results of operations.

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associates with
Exit or  Disposal  Activities".  SFAS  No.  146  provides  new  guidance  on the
recognition of costs associated with exit or disposal  activities.  The standard
requires   companies  to  recognize  costs  associated  with  exit  or  disposal
activities  when they are incurred  rather than at the date of  commitment to an
exit or disposal plan.  SFAS No. 146  supercedes  previous  accounting  guidance
provided  by EITF Issue No. 94-3  "Liability  Recognition  for Certain  Employee
Termination  Benefits  and Other  Costs to Exit an Activity  (including  Certain
Costs Incurred in a Restructuring). "EITF Issue No. 94-3 required recognition of
costs at the date of commitment to an exit or disposal plan.  SFAS No. 146 is to
be applied prospectively to exit or disposal activities initiated after December
31,  2002.  The impact of the adoption of SFAS No. 146 is not expected to have a
material impact on the Company's financial position and results of operations.

In December 2002,. The Financial  Accounting Standards Board (the "FASB") issued
Statement of Financial  Accounting Standards Board ("SFAS") No. 148, "Accounting
for Stock-Based  Compensation - Transition and Disclosure - an amendment of FASB
Statement  No.  123 ." SFAS  No.  148  amends  SFAS  No.  123,  "Accounting  for
Stock-Based  Compensation," to provide  alternative  methods of transition for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation.   In  addition,  SFAS  No.  148  amends  the  disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim  financial  statements  about the method of accounting  for  stock-based
employee compensation and the effect on the method used on reported results. The
disclosure  requirements  apply to all  companies  for fiscal years ending after
December 15, 2002. Due to the recent release of this  pronouncement,  management
has not yet  determined  the  impact  it will  have on the  Company's  financial
statements.

2. Amendments and Extension of Revolving Line of Credit Facility

In fiscal 1998, the Company  entered into a three-year  revolving line of credit
facility  with Paragon  Capital  L.L.C.,  currently  Wells Fargo Retail  Finance
("Wells Fargo"),  whereby the Company could borrow up to $3,300,000 based upon a
lending formula (as defined) calculated on eligible inventory.

In fiscal 2000,  the Company  entered into a Second  Amendment to its  revolving
line of credit  facility  ("Amended  Agreement")  with Wells Fargo.  The Amended
Agreement  includes a three-year  extension enabling the Company to borrow up to
$3,500,000  based upon a lending formula  calculated on eligible  inventory,  as
defined. The interest rate on borrowings up to $2.5 million was

                                      F-14

2. Amendments and Extension of Revolving Line of Credit Facility (continued)

reduced to three  quarters of 1% (.75%) over the prime rate. The rate charged on
outstanding  balances  over $2.5  million was also reduced to 1% above the prime
rate. Additionally, the Amended Agreement provides for an annual facility fee of
$17,500 and reduced maintenance fees of $1,500 per month.

In fiscal 2001,  the Company  entered into the Third  Amendment to its revolving
line of credit facility ("Third Amended Agreement"). The Third Amended Agreement
increased the amount available under the credit facility to $7.0 million,  again
based on a lending formula  calculated on eligible  inventory,  as defined,  and
extended the credit facility through November 30, 2003. The new interest rate on
all  borrowings  was fixed at one  percent  (1%) over the  prime  rate  (6.5% at
October 26, 2002) with a minimum interest rate of 8%. However, effective January
1, 2002,  the  minimum  interest  rate was reduced to 6.5% and will be in effect
throughout  fiscal  2003.  Prepayment  fees also exist  under the Third  Amended
Agreement.  A commitment fee of $75,000  (being  amortized over the three years)
was also paid by the Company in fiscal 2001. The balance  outstanding  under the
revolving  line of credit  facility at October 26, 2002 and October 27, 2001 was
$3,119,000 and $3,442,000,  respectively and is presented as a current liability
in  accordance  with EITF 95-22,  "Balance  Sheet  Classification  of Borrowings
Outstanding  under  Revolving  Credit  Agreements that include both a Subjective
Acceleration  clause  and a Lock-Box  Arrangement",  since the  Company's  daily
receipts are used to reduce the outstanding  balance under the revolving  credit
facility.

Wells Fargo has a senior security interest in all of the Company's  assets.  The
amended line of credit facility provides Wells Fargo with rights of acceleration
upon the  occurrence of certain  customary  events of default  including,  among
others, the event of bankruptcy. The Company is restricted from paying dividends
on common  stock,  retiring or  repurchasing  its common stock and entering into
additional  indebtedness (as defined). The line of credit facility also contains
certain financial covenants. No covenant defaults existed at October 26, 2002.

In  connection  with the  Third  Amended  Agreement,  Wells  Fargo  received  an
additional  warrant to purchase  100,000  shares of the Company's  common stock,
subject to  adjustment,  which is currently  exercisable at a price of $2.00 per
share and expires  November 30, 2003.  Wells Fargo also received an extension of
an  existing  warrant to purchase  125,000  shares of common  stock,  subject to
adjustment,  which is  currently  exercisable  at a price of $5.50 per share and
also expires  November 30, 2003. In accordance with EITF 96-18,  "Accounting for
Equity Instruments that are Issued to Other than Employees for Acquiring,  or in
Conjunction  with  Selling,  Goods or Services,"  the Company  recorded the fair
value of the  warrants  $75,000)  in fiscal  2001 (net book value of $27,000 and
$52,000  included  in Other  Assets  in the  accompanying  balance  sheets as of
October 26, 2002 and October 27, 2001,  respectively),  which is being amortized
over a three-year period.

                                      F-15


3. Sale of Common Stock and Warrants in Public Offering

In April 1998, the Company  completed an issuance of its common stock and common
stock  warrants  in  a  public  offering  (the  "Offering").  The  Offering  was
co-managed  by The  Thornwater  Company,  L.P.  (the  "Underwriter")  which sold
1,200,000  shares of the Company's  common stock, of which 1,025,000 shares were
sold by the Company  and  175,000  shares  were sold by HAC,  and  2,104,500  of
Warrants  ("Warrants")  to acquire  additional  shares of the  Company's  common
stock. The net proceeds from the Offering, which approximated $4.1 million, were
used to temporarily repay amounts borrowed under the Wells Fargo credit facility
(approximately $2.3 million) and to retire the principal ($350,000) and interest
($48,000) of a term loan,  with the balance of the  proceeds  used to open three
new retail stores and for general working capital purposes.

Each  Warrant is  exercisable  for one share of common  stock at 110% ($5.50 per
share) of the Offering price for a period of  three-years  expiring on March 31,
2003.  The Warrants also are  redeemable  (at $.10 per warrant) at the Company's
option,  through March 31, 2003 if the closing bid price of the common stock for
20  consecutive  trading days  exceeds  150% of the Offering  price per share or
$7.50 per share.

4. Stock-Based Compensation

Stock Option Plan

The  Company's  Board  of  Directors  and   shareholders   approved  the  Harvey
Electronics,  Inc.  Stock Option Plan ("Stock  Option Plan") in fiscal 1998. The
Stock  Option  Plan  provides  for the  granting  of up to  1,000,000  shares of
incentive and non-qualified  common stock options and stock appreciation  rights
to directors,  officers and employees.  All options are  exercisable at times as
determined  by the Board of  Directors  not to exceed ten years from the date of
grant.

Common  equivalent  shares  relating to stock  options  aggregating  88,476 were
included in the weighted  average  number of common shares  outstanding  for the
diluted earnings per share computation.

In fiscal 2002, the Company's  Compensation and Stock Option Committee  approved
two grants of  incentive  stock  options  aggregating  205,000 to the  Company's
officers to purchase the Company's  Common Stock at exercise prices from $1.15 -
$1.35 per  share.  The fiscal  2002  incentive  stock  options  are  exercisable
immediately.

In fiscal 2001, the Company's  Compensation and Stock Option Committee  approved
three grants of incentive stock options  aggregating  262,500,  to the Company's
officers  and outside  directors,  to purchase  the  Company's  common  stock at
exercise prices from  $.8125-$1.375  per share.  The fiscal 2001 incentive stock
options are exercisable immediately.

                                      F-16

4. Stock-Based Compensation (continued)

In fiscal 2000,  the Company's  Compensation  and Stock Option  Committee of the
Board of Directors ("Compensation Committee") approved three grants of incentive
stock options aggregating  172,500,  to the Company's officers,  to purchase the
Company's  common  stock at exercise  prices from  $1.75-$1.925  per share.  The
fiscal 2000 incentive stock options are exercisable immediately.

In fiscal years 2002, 2001 and 2000, the Company reserved  197,500,  262,500 and
172,500 shares of common stock,  respectively,  for issuance in connection  with
stock options.  The following table summarizes  activity in stock options during
fiscal 2001 and 2000:
<TABLE>
<CAPTION>

                                                                                             Weighted-
                                              Shares            Shares Under Option           Average
                                                          --------------------------------
                                          Available for     Option Price      Number of       Exercise
                                             Granting        per Share         Shares          Price
                                          --------------- ----------------- -------------- ---------------

<S>                   <C> <C>                  <C>                              <C>            <C>
   Balance at October 30, 1999                 4,600                            362,900        $1.65
      2000 Stock option grants               172,500
      Granted--March 1, 2001                 (57,500)          $1.75             57,500        $1.50
      Granted--July 3, 2001                  (57,500)          $1.86             57,500        $1.86
      Granted--July 28, 2001                  (57,500)       $1.75-$1.925         57,500        $1.79
      Forfeited                               10,450        $1.00-$2.00         (10,450)       $1.02
                                          ---------------                   --------------
   Balance at October 28, 2000                15,050                            524,950        $1.68
      2001 Stock option grants               262,500
      Granted--November 29, 2000              (45,000)          $1.375            45,000        $1.375
      Granted--December 28, 2000             (102,500)      $.8125-$.8937        102,500       $  .82
      Granted--March 12, 2001                (115,000)      $.9375-$1.0313       115,000       $  .96
      Forfeited                                2,175        $1.00-$3.00          (2,175)       $2.13
                                          ---------------                   --------------
    Balance at October 27, 2001                17,225                            785,275        $1.44
      2002 Stock option grants               197,500
      Granted - March 5, 2002               (115,000)       $1.15-$1.265        115,000        $1.175
      Granted - May 30, 2002                 (90,000)          $1.35             90,000        $1.35
      Forfeited                                1,175        $1.00-$2.00          (1,175)       $1.574
                                          ---------------                   --------------
        Balance at October 26, 2002           10,900                            989,100        $1.416
        ---------------------------           ======                            =======
</TABLE>

At October 26,  2002,  October 27, 2001 and October 28,  2000,  all  outstanding
options are  exercisable.  The  weighted-average  fair value of options  granted
during the fiscal years ended October 26, 2002, October 27, 2001 and October 28,
2000 was $1.11, $.76 and $1.43, respectively.


                                      F-17


4. Stock-Based Compensation (continued)

Exercise prices for options outstanding as of October 26, 2002, are as follows:
<TABLE>
<CAPTION>

                                                                               Weighted-
                                 Number of                                      Average
                                  Options               Options                Remaining
       Range of               Outstanding at         Exercisable at         Contractual Life
    Exercise Price               Year End              End of Year             in Years
------------------------ ---------------------- ---------------------- ----------------------

<S>     <C>                       <C>                    <C>                       <C>
        $.8125                    90,000                 90,000                    9
        $.8937                    12,500                 12,500                    9
        $.9375                    90,000                 90,000                    9
         $1.00                    62,625                 62,625                    6
        $1.0313                   25,000                 25,000                    9
         $1.15                    90,000                 90,000                   10
        $1.265                    25,000                 25,000                    5
         $1.35                    90,000                 90,000                   10
        $1.375                    45,000                 45,000                    9
         $1.50                   222,500                222,500                    7
         $1.75                   102,500                102,500                    8
         $1.86                    57,500                 57,500                    8
        $1.925                    12,500                 12,500                    8
         $2.00                     4,975                  4,975                    5
         $3.00                    59,000                 59,000                    5
                         ---------------------- ----------------------
                                 989,100                989,100                    8
                         ====================== ======================
</TABLE>

At October 26, 2002 and October 27,  2001,  the Company has  reserved  shares of
common stock for issuance  under common stock  options,  warrants and  preferred
stock of approximately 3,780,000 and 3,576,000, respectively.

The alternative fair value accounting  provided for under SFAS No. 123, requires
use of option  valuation  models  that  were not  developed  for use in  valuing
employee  stock  options.  Under  APB 25,  because  the  exercise  price  of the
Company's  Stock  Options  equals or exceeds the market price of the  underlying
stock on the date of grant, no compensation expense is recognized.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options,  which have no vesting  restrictions and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.

Because the Company's employee stock options have characteristics  significantly
different from


                                      F-18

4. Stock-Based Compensation (continued)

those of traded options, and because changes in the subjective input assumptions
can materially  affect the fair value  estimate,  in management's  opinion,  the
existing  models do not provide a reliable  single  measure of the fair value of
its stock options.

Pro forma information  regarding net (loss) income and net loss per share (basic
and  diluted)  is  required  by SFAS  No.  123,  which  also  requires  that the
information  be determined as if the Company had accounted for its stock options
granted under the fair value of that statement.

The fair value of these  options  was  estimated  at the date of grant using the
Black-Sholes  option  pricing  model with the following  assumptions  for fiscal
years 2002,  2001 and 2000:  risk-free  interest rate ranging from  4.44%-5.02%,
4.88%-5.47% and 6.20%-6.36%,  respectively; no dividend yield; volatility factor
of the expected  market price of the Company's  common stock of 1.00,  0.938 and
0.897, respectively; and a weighted-average expected life of the options of 9.39
years, 7 years and 6.57 years, respectively.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma information for fiscal year 2002, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>

                                                                  2002              2001             2000
                                                         ----------------- ----------------- ----------------

<S>                                                             <C>         <C>                <C>
Pro forma net (loss) income                                     $(46,000)   $   (1,475,000)    $      49,000
Pro forma net loss attributable to common stock
                                                               $(119,000)  $    (1,549,000)    $     (25,000)
Pro forma basic and diluted loss per share                         $(.04)            $(.47)           $(.01)
</TABLE>

5.  8.5% Cumulative Convertible Preferred Stock

The  Company's  Preferred  Stock has no voting  rights and is  redeemable at the
option of the Company's  Board of Directors,  in whole or in part, at face value
plus  any  accrued  dividends.  The  carrying  value of the  Preferred  Stock is
$379,982, and $402,037 at October 26, 2002 and October 27, 2001, respectively.

In the event of liquidation of the Company,  the holders of the Preferred  Stock
shall receive  preferential rights and shall be entitled to receive an aggregate
liquidation preference of $827,000 plus any outstanding dividends,  prior to any
distributions to common  shareholders.  The holders of the Preferred Stock shall
receive a semiannual

                                      F-19


5.  8.5% Cumulative Convertible Preferred Stock (continued)

8.5%  cumulative  dividend ($85 per share or $70,295  annually),  payable on the
last  business  day in June and  December.  The Company had elected to defer the
fiscal 1997 dividends, at a preference rate of $105 per share annually ($91,875)
plus  interest  at 8.5% per annum over a  three-year  period.  All  installments
relating to the 1997  dividends  have been paid by the Company as of October 27,
2001.

Commencing on January 1, 2001, the Preferred  Stock is convertible at $1.2333 or
709,479 shares of common stock (calculated from the average closing price of the
Company's Common Stock for the preceding  45-day trading period).  875 shares of
Preferred Stock were originally  issued by the Company.  In June 2002, 48 shares
of Preferred Stock were converted to 38,920 shares of the Company's common stock
by a preferred  shareholder.  At October 26, 2002 and October 27, 2001,  827 and
875 shares of Preferred Stock,  respectively  were issued and  outstanding.  The
Company's remaining Preferred Stock is convertible into 670,559 shares of common
stock.

Cumulative  Preferred  Stock  dividends  payable  of  $23,432  and  $24,792  are
outstanding  and  classified  as a current  liability  at October  26,  2002 and
October 27,  2001,  respectively.  Dividends  aggregating  $72,777,  $74,376 and
$74,376 were recorded as a charge to  accumulated  deficit in fiscal years 2002,
2001 and 2000, respectively.

6. Income Taxes

Fresh Start  Accounting  requires the Company to report an income tax equivalent
provision  when  there  is book  taxable  income  and a  pre-reorganization  net
operating loss carryforward.  This requirement applies despite the fact that the
Company's pre-reorganization net operating loss carryforward would eliminate (or
reduce)  the related  income tax  payable.  The current and future year  benefit
related to the  carryforward  is not  reflected  in net  income,  but instead is
recorded as an adjustment to reorganization value in excess of amounts allocable
to  identifiable  assets.  During the year ended  October 26, 2002,  the Company
recorded  an  income  tax   equivalent   provision   of  $124,000   and  reduced
Reorganization  Value in Excess of Amounts  Allowable to Identifiable  Assets by
the same amount.  There was no provision  (benefit)  for income taxes during the
year ended October 27, 2001.  During the year ended October 28, 2000, the income
tax equivalent  provision and the associated  adjustment to reorganization value
amounted to $160,000.  The income tax  equivalent  provisions did not affect the
Company's tax liability.



                                      F-20


6. Income Taxes (continued)

The provision for income taxes for the years ended October 26, 2002, October 27,
2001 and October 28, 2000 consists of the following:

<TABLE>
<CAPTION>

                                            October 26, 2002           October 27, 2001       October 28, 2000
                                            ----------------           ----------------       ----------------
Current:
<S>                                        <C>                                <C>             <C>
Federal                                    $          -                       $ -             $    13,500
State                                                 -                         -                  11,500
Equivalent tax expense                          124,000                         -                 160,000
                                           -------------------------- ---------------------- ----------------------
                                                124,000                         -                 185,000
Deferred                                              -                         -                       -
                                           -------------------------- ---------------------- ----------------------
                                                $124,000                       $ -                $185,000
                                               ========                       ====               ========
</TABLE>


The effective income tax rate differed from the Federal statutory rate as
follows:
<TABLE>
<CAPTION>

                                             Year Ended
                                          October 26, 2002           October 27, 2001      October 28, 2000
                                       ---------------------------------------------------------------------------
                                          Amount        %            Amount           %         Amount        %
                                       ---------------------------------------------------------------------------
Federal income tax provision
<S>                                     <C>           <C>          <C>            <C>         <C>         <C>
   (benefit) at statutory rate          $104,000      34.0%        $(425,000)     (34.0%)     $171,000    34.0%
State income taxes, net of Federal
   benefit                                23,000       7.6%          (55,000)       (4.4)       47,400      9.5
Nondeductible reorganization
   amortization                           18,000       5.9%            20,000         1.6       22,400      4.5
Operating losses not currently
   deductible                                  -         -            453,000        36.2            -        -
Other, net                                 5,000       1.6%             7,000          .6       11,500      2.4
Benefit from post reorganization
   temporary differences on tax
   equivalent provision                 (26,000)     (8.3%)                 -           -     (67,300)    (13.4)
                                        ------------- ------------ ------------ ----------- ----------- ----------
                                         $124,000     40.8%        $0                  0%     $185,000    36.9%
                                        ========      =====        ==                  ==     ========    =====
</TABLE>


The Company has deferred tax assets and deferred tax liabilities as presented in
the table  below.  The net  deferred  tax  assets  are  subject  to a  valuation
allowance,  which was  approximately  $1,758,000,  $1,886,000  and $1,483,000 at
October 26, 2002, October 27, 2001 and October 28, 2000, respectively.

                                      F-21


6. Income Taxes (continued)

Deferred tax assets and  liabilities as of October 26, 2002 and October 27, 2001
prior to the allocation of the valuation allowance consisted of the following:
<TABLE>
<CAPTION>

                                                         October 26,     October 27,
                                                            2002             2001
                                                       -------------  ---------------
<S>                                                    <C>            <C>
Pre-reorganization net operating loss carryforwards    $   352,000    $   442,000
Pre-reorganization deductible temporary differences         74,000         77,000
Pre-reorganization tax credits                              53,000         53,000
Post-reorganization net operating loss carryforwards       981,000        981,000
Deferred rent                                               16,000         16,000
Expenses not currently deductible                             --           33,000
Inventories                                                 75,000         98,000
Depreciable assets                                         262,000        270,000
Tax credits                                                  2,000          2,000
                                                       -----------    -----------

Total deferred tax assets                                1,815,000      1,972,000
Website development costs                                  (50,000)       (81,000)
Intangible assets                                           (7,000)        (5,000)
                                                       -----------    -----------
Total deferred tax liabilities                             (57,000)       (86,000)

Net                                                      1,758,000      1,886,000

Valuation allowance                                      1,758,000      1,886,000
                                                       ===========    ===========
Total                                                  $      --      $      --
                                                       ===========    ===========
</TABLE>

At October 26, 2002, the Company has available net operating loss  carryforwards
of approximately $3,300,000,  which expire in various years through fiscal 2021.
Of  this  amount,  approximately  $900,000  relates  to  pre-reorganization  net
operating loss carryforwards. Under section 382 of the IRS code, it is estimated
that  these  pre-reorganization  net  operating  loss  carryforwards  and  other
pre-reorganization  tax attributes will be limited to approximately $150,000 per
year. A full valuation allowance has been provided on the net deferred tax asset
due to uncertainty regarding the future utilization of the deferred tax assets.

7. Pension and Profit Sharing Plan

The Company maintains the Harvey  Electronics,  Inc. Savings and Investment Plan
(the "Plan") which includes  profit  sharing,  defined  contribution  and 401(k)
provisions and is available to all eligible employees of the Company. There were
no contributions to the Plan for fiscal 2002, 2001 and 2000.

                                      F-22


8. Commitments and Contingencies

Commitments

The Company's  financial  statements reflect the accounting for equipment leases
as capital leases by recording the asset and the related liability for the lease
obligation.  Capital  lease  additions  of  approximately  $47,000,  $99,000 and
$241,000 were  recorded  during fiscal 2002,  2001 and 2000,  respectively.  The
Company leases stores and warehouse  facilities  under operating  leases,  which
provide,  in  certain  cases,  for  payment  of  additional  rentals  based on a
percentage of sales over a fixed amount.  Future minimum rental commitments,  by
year  and in the  aggregate,  for  equipment  under  capital  and  noncancelable
operating  leases with initial or remaining  terms of one-year or more consisted
of the following at October 26, 2002:
<TABLE>
<CAPTION>

                                                              Operating Leases          Capital
                                                                                        Leases
                                                            --------------------- --------------------

<S>    <C>                                                  <C>                       <C>
Fiscal 2003                                                 $   2,278,000             $   23,000
Fiscal 2004                                                       2,077,000                    -
Fiscal 2005                                                       1,798,000                    -
Fiscal 2006                                                       1,128,000                    -
Fiscal 2007                                                         841,000                    -
Thereafter                                                        3,959,000                    -
                                                                                  --------------------
                                                            ---------------------
Total minimum lease payments                                $ 12,081,000                  23,000
                                                            =====================
Less amount representing interest                                                          1,000
                                                                                  --------------------
Present value of net minimum lease payments                                               22,000
Less current portion                                                                      22,000
                                                                                  --------------------
                                                                                      $       -0-
                                                                                  ====================
</TABLE>

Total  rental  expense  for  operating  leases  was  approximately   $2,783,000,
$2,535,000 and $2,123,000  for fiscal years 2002,  2001 and 2000,  respectively.
Certain  leases  provide  for the  payment of  insurance,  maintenance  charges,
electric and taxes and contain renewal options.

                                  Contingencies

The  Company  is a party in certain  legal  actions,  which  arose in the normal
course of  business.  The  outcome of these  legal  actions,  in the  opinion of
management, will not have a material effect on the Company's financial position,
results of operations or liquidity.

                                      F-23


9. Other Information

Accrued Expenses and Other Current Liabilities
<TABLE>
<CAPTION>

                                                   October 26,                 October 27,
                                                      2002                         2001
                                           ---------------------------- ---------------------------

<S>                                                <C>                         <C>
Payroll and payroll related items                  $ 496,000                   $ 397,000
Accrued professional fees                            116,000                     167,000
Sales taxes                                          170,000                     129,000
Accrued occupancy                                    213,000                     156,000
Accrued bonuses                                      167,000                      66,000
Other                                                131,000                     118,000
                                           ---------------------------- ---------------------------
                                                   $ 1,293,000                 $ 1,033,000
                                                   ===========                 ===========
</TABLE>

Consulting Agreements

In fiscal  2001,  the Company  engaged  Mesa  Partners,  Inc.  ("Mesa")  under a
consulting  agreement.  Mesa was engaged to provide consulting services relating
to the integration of computer networks, entertainment systems and other related
services.  In connection with the consulting  agreement with Mesa, and a related
addendum,  the  Company  issued a  warrant  to  purchase  15,000  shares  of the
Company's common stock,  exercisable at any time at $3.00 per share. The warrant
has a  three-year  term and was  issued as  partial  compensation  for  services
rendered by Mesa.  The fair value of the warrant of  approximately  $8,000,  was
amortized  to expense in fiscal 2001 as the Company  elected to  terminate  this
agreement  in fiscal  2001.  Additionally,  as was  required  by the  consulting
agreement,  Mesa was paid a fee of $20,000 a month plus  related  expenses.  For
fiscal 2001,  the Company  recorded  consulting  fees of  approximately  $70,000
relating to Mesa.

Effective fiscal 1999, the Company signed a consulting agreement with a previous
member of its underwriter.  Pursuant to the terms of the two-year agreement, the
consultant  received an annual fee of $75,000 in fiscal 1999. This agreement was
terminated by the Company in fiscal 2000. In the latter part of fiscal 2000, the
consultant was again engaged by the Company, pursuant to a consulting agreement,
at $5,000 per  month.  In fiscal  2001,  the  agreement  was  terminated  by the
Company.  The consultant  received fees aggregating $5,000 and $40,000 in fiscal
years 2001 and 2000, respectively.

Investor Relations Advisor

On fiscal  2001,  the  Company  engaged  Porter,  LeVay & Rose  ("PL&R")  as its
investor  relations  advisor.  In connection with the agreement,  the Company is
required to and will issue a warrant to purchase  60,000 shares of the Company's
common stock,  exercisable  immediately at various  exercise prices ranging from
$1.25-$2.50.  The warrant's fair value of approximately $15,000 was amortized to
expense ($5,000 in fiscal 2002 and $10,000 in fiscal 2001). In June 2002, 15,000
warrants to purchase the Company's  common stock were exchanged for 2,772 shares
of common

                                      F-24


9. Other Information (continued)

stock, effected under a cash-less exercise, by PL&R.  Additionally,  the Company
paid PL&R a $5,000 monthly fee for its services.  For the year ended October 27,
2001, the Company recorded an investor relations expense of $54,000, relating to
PL&R.

Union Contract

The Company is party to a  collective  bargaining  agreement  with a union which
covers  certain  sales,  warehouse and  installation  employees.  This agreement
expires on August 1, 2003.

Fourth Quarter Adjustments

The  fourth  quarter  of fiscal  2002 and 2000  included  incentive  bonuses  of
approximately $73,000 and $125,000,  respectively. No significant fourth quarter
bonuses were recorded in fiscal 2001.

The fourth  quarter of fiscal 2000 included  pre-operating  expenses of $125,000
relating to the opening of the Company's  Bang & Olufsen store in Greenwich,  CT
and the October 2000 launch of the Company's new website.  In the fourth quarter
of fiscal 2000, the Company also recorded  occupancy expense of $90,000 relating
to additional  rent,  which was contingent upon actual sales levels achieved for
one of the Company's retail stores.

Other

A Director of the Company also is a Senior  Partner in a law firm  providing the
Company  with legal  services.  At October 26, 2002 and  October 27,  2001,  the
Company had $26,000 and  $25,000,  respectively,  payable to this law firm.  The
Company paid legal fees to this law firm of approximately  $81,000,  $64,000 and
$127,000 in fiscal years 2002, 2001 and 2000, respectively.

During  fiscal  year 2001,  $23,000  was paid to a company  affiliated  with the
Company's  Chairman of the Board of Directors  relating  primarily to management
fees from fiscal 1998. Additionally,  the Chairman of the Board of Directors was
also a  principal  in a  Company,  which  was a joint  venture  with a law  firm
providing legal services to the Company.

At October 27, 2001, the Company recorded a note payable to a real estate broker
of approximately $22,000 classified as a current liability.

10. Retail Store Expansion

During  fiscal year 2000,  the Company  entered into a ten-year  lease for a new
6,500  square foot  Harvey  showroom in  Eatontown,  New Jersey.  This new store
opened in April 2001. Since this time, results of operations from this new store
have been included in the Company's results of operations.  Pre-opening expenses
have been  included in the Company's  results of  operations  for the year ended
October 27,  2001.  This is the  Company's  ninth store and is the fifth  opened
since its public offering, completed in April 1998.

                                      F-25


11. Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>

                                                                        Net Income (Loss)
                                                                           Applicable
2002                          Net Sales            Gross Profit         to Common Stock        Basic EPS         Diluted EPS
----------------------- ---------------------- ---------------------- ---------------------- ------------------ ------------------
<S>                           <C>                     <C>                       <C>                 <C>                <C>
First quarter                 $12,420,559             $4,880,360               $371,854             $0.11              $0.09
Second quarter                 10,363,725              4,110,488                 72,015              0.02               0.02
Third quarter                   9,583,471              3,789,013                (98,947)            (0.03)             (0.03)
Fourth quarter                  9,138,822              3,573,447               (237,228)            (0.07)             (0.07)

2001
----------------------- ---------------------- ---------------------- ---------------------- ------------------ ------------------
First quarter                 $11,556,469             $4,511,741               $304,005             $0.09              $0.09
Second quarter                  9,131,017              3,565,729               (166,024)            (0.05)             (0.05)
Third quarter                   8,838,309              3,369,273               (440,352)            (0.13)             (0.13)
Fourth quarter                  7,161,411              2,688,409             (1,022,240)            (0.31)             (0.31)
</TABLE>



                                      F-26



                 Schedule II - Valuation and Qualifying Accounts

                            Harvey Electronics, Inc.

<TABLE>
<CAPTION>

                                               Balance at        Additions      Charged to     Other changes -
                                                beginning     charged to costs other accounts-  add (deduct) -  Balance at end of
             Description                        of period      and expenses      describe          describe         period
----------------------------------------- -------------------------------------------------------------------------------------

Fiscal year ended October 26, 2002
 Reserves and allowances deducted from asset
    accounts:
<S>                                              <C>              <C>                             <C>       <C>    <C>
         Allowance for doubtful accounts         $25,000          $18,627                         $(23,627) (1)    $20,000

Fiscal year ended October 27, 2001
 Reserves and allowances deducted from asset
    accounts:
         Allowance for doubtful accounts         $25,000          $25,098                         $(25,098) (1)    $25,000

Fiscal year ended October 28, 2000
 Reserves and allowances deducted from asset
    accounts:
         Allowance for doubtful accounts         $25,000          $24,618                         $(24,618) (1)    $25,000

<FN>

(1)  Uncollectible accounts written off, net of recoveries.
</FN>
</TABLE>

                                      F-27



               Report of Independent Certified Public Accountants



The Board of Directors and Shareholders
Harvey Electronics, Inc.


The audit  referred to in our report  dated  December  20, 2002  relating to the
financial  statements  of Harvey  Electronics,  Inc.  included  the audit of the
financial statement Schedule II - Valuation and Qualifying Accounts for the year
ended October 26, 2002. The financial  statement  schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audit.

In our opinion,  such  financial  statement  schedule  presents  fairly,  in all
material respects, the information set forth therein.




BDO Seidman, LLP
Melville, New York
December 20, 2002




                                      F-28