<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 Amendment No. 1

                                       To

                                  FORM 10-QSB/A

(Mark One)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED March 31, 2006

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

       For the transition period from ________________ to _______________

                                     0-29873
                            (Commission file number)

                                   UWINK, INC.
        (Exact name of small business issuer as specified in its charter)

                    UTAH                                 87-0412110
        (State or other jurisdiction                    (IRS Employer
      of incorporation or organization)              Identification No.)

                  16106 Hart Street, Van Nuys, California 91406
                   (Address of principal executive offices)

                                 (818) 909 6030
                           (Issuer's telephone number)

                                       N/A
             (Former name, former address and former fiscal year, if
                           changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The number of shares of common stock outstanding as of December 6, 2006 was
25,001,494.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]



<PAGE>

                                   UWINK, INC.
                                      INDEX

                                                                            Page
                                                                          Number
                                                                          ------

PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

           Consolidated Balance Sheet as of March 31, 2006 (unaudited)       3

           Consolidated Statements of Operations for the three
           months ended March 31, 2006 and 2005 (unaudited)                  4

           Consolidated Statements of Cash Flows for the three months
           ended March 31, 2006 and 2005 (unaudited)                         5

           Notes to Consolidated Financial Statements (unaudited)            6

Item 2.    Management's Discussion and Analysis or Plan of Operations       22

Item 3.    Controls and Procedures                                          31

PART II.   OTHER INFORMATION

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds      32

Item 6.    Exhibits                                                         33

SIGNATURES                                                                  33


                                        1


<PAGE>

EXPLANATORY NOTE

uWink, Inc. (referred to in this discussion as "we", "us" or "our") is amending
its Quarterly Report on Form 10-QSB for the period ended March 31, 2006 (the
"Original Report") to present amended and restated financial statements and
related financial information for the three months ended March 31, 2006.

In our unaudited quarterly financial statements for 2006 as originally filed we
had, in consultation with our external auditors, interpreted and applied EITF
00-19 to treat the fair value of financing warrants as a cost of raising equity
with a corresponding amount debited to additional paid-in capital. In a letter
to us dated November 9, 2006, the Securities and Exchange Commission raised
questions as to our interpretation of EITF 00-19 as it relates to our accounting
treatment of financing warrants issued during 2006. In consultation with our
external auditors, on December 1, 2006 our Chief Executive Officer and Chief
Financial Officer determined to amend and restate the financial statements and
information for the three months ended March 31, 2006 to recognize expense for
the fair value of the financing warrants issued during the period and to book a
corresponding amount as short term warrant liability on the balance sheet at
March 31, 2006. Further information on the restatement can be found in Note 2 to
the Unaudited Consolidated Financial Statements.

We are further amending the Original Report to include additional disclosure
information as requested by the Securities and Exchange Commission in the letter
to us dated November 9, 2006. We have amended our disclosure in Part I, Item 2
and Part II, Item 2 of this report. In addition, we have amended the statement
of cash flows for the three months ended March 31, 2006 presented in the
financial statements included in the Original Report to present separately
proceeds from the issuance of related party and non-related party debt and
repayment of related party and non-related party debt. We have also amended our
disclosure in Notes 1, 2, 5, 8, 9, 11, 12, 13 and 14 to the financial statements
presented in the Original Report. In addition, we have amended the Original
Report to include the restated comparative financial statements and information
for the three months ended March 31, 2005, as presented in our Form 10-QSB/A for
the three months ended March 31, 2005, as filed on August 1, 2006.

The disclosures in this Form 10-QSB/A continue to speak as of the date of the
Original Report, and do not reflect events occurring after the filing of the
Original Report. Accordingly, this Form 10-QSB/A should be read in conjunction
with our other filings made with the Securities and Exchange Commission
subsequent to the filing of the Original Report, including any amendments to
those filings. The filing of this Form 10-QSB/A shall not be deemed an admission
that the Original Report when made included any untrue statement of a material
fact or omitted to state a material fact necessary to make a statement not
misleading.


                                       2


<PAGE>

PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

<TABLE>
<S>     <C>
                                 UWINK, INC. AND SUBSIDIARY
                                 CONSOLIDATED BALANCE SHEET
                                         (UNAUDITED)


                                                                                 March 31,
                                                                                   2006
                                                                                 (RESTATED)
                                                                               ------------
                                           ASSETS

CURRENT ASSETS
     Cash and cash equivalents                                                 $  1,065,201
     Account receivable, net of allowance for doubtful accounts of $62,873            9,354
     Inventory, net of obsolescence reserve of $195,339                             224,167
     Advance to supplier                                                             66,398
     Prepaid expenses and other current assets                                       57,794
                                                                               ------------
TOTAL CURRENT ASSETS                                                              1,422,913
                                                                               ------------

PROPERTY AND EQUIPMENT, net of accumulated
      depreciation of $289,125                                                       21,417

CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net of
     accumulated amortization of $910,773                                                --
                                                                               ------------
                                                                               $  1,444,330
                                                                               ============


                            LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                                          $    833,093
     Accrued expenses                                                               184,249
     Accrued payroll and related benefits                                           170,148
     Due to related parties                                                         323,000
     Advances from Customers                                                         24,980
     Note Payable                                                                   111,844
     Warrant Liability                                                              500,444
                                                                               ------------
TOTAL CURRENT LIABILITIES                                                         2,147,758
                                                                               ------------

     Convertible note payable, net of discount of $14,167                            85,833

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
     Common stock, $0.001 par value; 50,000,000 shares
        authorized; 18,140,300 shares issued and outstanding                         18,146
     Additional paid-in capital                                                  24,791,621
     Accumulated deficit                                                        (25,678,880)
     Shares to be issued                                                             79,852
                                                                               ------------
TOTAL STOCKHOLDERS' DEFICIT                                                        (789,261)
                                                                               ------------
                                                                               $  1,444,330
                                                                               ============

                    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                        UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                              3


<PAGE>

                              UWINK, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                                         THREE MONTH PERIODS ENDED
                                                       ------------------------------
                                                         MARCH 31,         MARCH 31,
                                                           2006              2005
                                                        (RESTATED)        (RESTATED)
                                                       ------------      ------------

NET SALES                                              $     50,347      $    341,904

COST OF SALES                                                34,168           187,293
                                                       ------------      ------------
GROSS PROFIT                                                 16,179           154,610
                                                       ------------      ------------

OPERATING EXPENSES
      Selling, general and administrative expenses          285,292         1,105,350
                                                       ------------      ------------

LOSS FROM OPERATIONS                                       (269,113)         (950,740)

OTHER INCOME (EXPENSE)
      Other income                                               --               267
      Debt discount expense                                 (22,500)          (10,066)
      Nominal stock option expense                         (110,034)          (23,305)
      Gain on settlement of debt                                676             9,728
      Interest expense                                       (7,924)          (70,400)
      Fair value of warrant liability                      (500,444)
                                                       ------------      ------------
TOTAL OTHER EXPENSES                                       (640,226)          (93,777)
                                                       ------------      ------------

LOSS BEFORE PROVISION FOR INCOME TAXES                     (909,339)       (1,044,516)

PROVISION FOR INCOME TAXES                                       --                --
                                                       ------------      ------------

NET LOSS                                                   (909,339)       (1,044,516)
                                                       ------------      ------------
NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS             $   (909,339)     $ (1,044,516)
                                                       ============      ============

NET LOSS PER COMMON SHARE - BASIC & DILUTED            $      (0.04)     $      (0.10)
                                                       ============      ============

WEIGHTED AVERAGE COMMON SHARES
      OUTSTANDING - BASIC                                24,832,670        10,928,621
                                                       ============      ============

                 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                     UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                          4


<PAGE>

                                    UWINK, INC. AND SUBSIDIARY
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (UNAUDITED)


                                                                       THREE MONTH PERIODS ENDED
                                                                     ----------------------------
                                                                       MARCH 31,       MARCH 31,
                                                                         2006            2005
                                                                      (RESTATED)      (RESTATED)
                                                                    -----------      -----------

CASH FLOW FROM OPERATING ACTIVITIES:
   Net loss                                                             (909,339)     $(1,044,516)
   Adjustment to reconcile net loss to net cash
     Provided by (used in) operating activities:
       Amortization of debt discount on convertible note payable          24,000           10,066
       Nominal Stock Option Expense                                      110,034           23,305
       Depreciation and amortization expense                               2,663           35,905
       Bad debt allowance                                                (13,120)         173,444
       Issuance of common stock for services                                  --          893,750
       Shares to be issued for expense incurred                           11,708               --
       Issuance of common stock for accrued interest                          --           42,500
       Inventory obsolescence reserve                                    (22,116)              --
       Provision for sales returns                                            --         (150,000)
       Gain on forgiveness of debt                                            --           (9,728)
       Fair value of warrant liability                                   500,444               --
   Changes in operating assets and liabilities:
     Accounts receivable                                                   3,766          139,611
     Inventory                                                            53,294            5,108
     Deposits - inventory                                                     --           33,034

     Deposits                                                              5,000               --
     Prepaid expenses and other current assets                           (21,251)        (165,764)
     Accounts payable                                                    (69,397)         123,836
     Accrued expenses                                                    (10,897)         (51,936)
     Accrued payroll and related benefits                                 80,551          (20,777)
     Advances from Customers                                                  --              (20)
                                                                     -----------      -----------
Net cash provided by (used in) operating activities                     (254,660)          37,818
                                                                     -----------      -----------

CASH FLOW FROM INVESTING ACTIVITIES:
   Payment for property and equipment                                     (5,000)              --
   Deposits - Gameworks                                                     --            615,000
                                                                     -----------      -----------
Net cash provided by (used in) investing activities                       (5,000)         615,000
                                                                    ------------      ------------

CASH FLOW FROM FINANCING ACTIVITIES:
   Proceeds from debt                                                         --               --
   Repayment of debt                                                    (120,000)        (615,000)
   Proceeds from advances from related parties                             3,000               --
   Repayments of advances from related parties                                --          (27,000)
   Proceeds from issuance of common stock                              1,500,000           75,000
   Payment of offering costs                                             (81,898)               0
                                                                     -----------      -----------
Net cash provided by (used in) financing activities                    1,301,102         (567,000)
                                                                     -----------      -----------

NET INCREASE IN CASH AND
   CASH EQUIVALENTS                                                    1,041,442           85,819

CASH AND CASH EQUIVALENTS, Beginning of period                            23,759           57,342
                                                                     -----------      -----------

CASH AND CASH EQUIVALENTS, End of period                               1,065,201      $   143,161
                                                                     ===========      ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

   Interest paid                                                           1,778      $    70,400
                                                                     ===========      ===========
   Income taxes paid                                                          --      $        --
                                                                     ===========      ===========

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES

   Conversion of debt into 121,986 shares of common stock                     --      $   192,500
                                                                     ===========      ===========
   Issuance of common stock for services                                      --      $   893,750
                                                                     ===========      ===========


                       THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                           UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                                5
</TABLE>


<PAGE>

NOTE 1 - BASIS OF PRESENTATION AND GOING CONCERN

The unaudited consolidated financial statements have been prepared by uWink,
Inc. (the "Company"), pursuant to the rules and regulations of the Securities
and Exchange Commission. The information furnished herein reflects all
adjustments (consisting of normal recurring accruals and adjustments) which are,
in the opinion of management, necessary to fairly present the operating results
for the respective periods. Certain information and footnote disclosures
normally present in annual consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted pursuant to such rules and regulations. These
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and footnotes for the year ended December 31,
2005 included in the Company's Annual Report on Form 10-KSB. The results of the
three months ended March 31, 2006 are not necessarily indicative of the results
to be expected for the full year ending December 31, 2006.

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has
incurred a net loss of $909,339 for the three months ended March 31, 2006, and
as of March 31, 2006, the Company had an accumulated deficit of $25,678,880.
These conditions raise substantial doubt as to the Company's ability to continue
as a going concern. These unaudited consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
These unaudited consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts, or
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.

We expect to need to raise additional amounts of capital through the sale of our
equity or debt securities within the next 3 to 6 months because, as discussed
below, after funding the build out of our prototype restaurant, we do not expect
to have sufficient funds remaining to fund our corporate overhead and expenses
and we do not expect the cash flow from our first restaurant location to be
sufficient to cover our corporate overhead and expenses. As of the date of this
report, we have no commitments for the sale of our securities nor can we assure
you that such funds will be available on commercially reasonable terms, if at
all. Should we be unable to raise the required funds, our ability to finance our
operations and growth will be materially adversely affected.


                                        6


<PAGE>

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
uWink, Inc. and its subsidiary, uWink California, Inc. The accompanying
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. All
inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Fair Value of Financial Instruments

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value. For certain of
the Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses and unearned revenue,
the carrying amounts approximate fair value due to their short maturities. The
amounts shown for convertible debentures and notes payable also approximate fair
value because current interest rates and terms offered to the Company for
similar debt are substantially the same.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits,
certificates of deposit and all highly liquid debt instruments with original
maturities of three months or less.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk include accounts receivables. Exposure to losses on receivables is
principally dependent on each customer's financial condition. The Company
monitors its exposure for credit losses and maintains allowances for anticipated
losses, as required.

Research and Development

Research and development costs are charged to expense as incurred until
technological feasibility has been established. These costs consist primarily of
salaries and direct payroll related costs.


                                        7


<PAGE>

Software Development Costs

Software development costs related to computer games and network and terminal
operating systems developed by the Company are capitalized in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the
Cost of Computer Software to be Sold, Leased, or Otherwise Marketed."
Capitalization of software development costs begins upon the establishment of
technological feasibility and is discontinued when the product is available for
sale. When the software is a component part of a product, capitalization begins
with the product reaches technological feasibility. The establishment of
technological feasibility and the ongoing assessment for recoverability of
capitalized software development costs require considerable judgment by
management with respect to the completion of all planning, designing, coding and
testing activities necessary to establish that the product can be produced to
meet its design specifications and certain external factors including, but not
limited to, anticipated future gross revenues, estimated economic life, and
changes in software and hardware technologies. Capitalized software development
costs are comprised primarily of salaries and direct payroll related costs and
the purchase of existing software to be used in the Company's products.

Amortization of capitalized software development costs is provided on a
product-by-product basis on the straight-line method over the estimated economic
life of the products (not to exceed three years). Management periodically
compares estimated net realizable value by product with the amount of software
development costs capitalized for that product to ensure the amount capitalized
is not in excess of the amount to be recovered through revenues. Any such excess
of capitalized software development costs to expected net realizable value is
expensed at that time.

Revenue Recognition

The Company recognizes revenue related to software licenses in compliance with
the American Institute of Certified Public Accountants ("AICPA") Statement of
Position No. 97-2, "Software Revenue Recognition." Revenue is recognized when
the Company delivers its touch screen pay-for-play game terminals to its
customer and the Company believes that persuasive evidence of an arrangement
exits, the fees are fixed or determinable and collectibility of payments is
probable. Included with the purchase of the touch screen terminals are licenses
to use the games loaded on the terminals. The licenses for the games are in
perpetuity, the Company has no obligation to provide upgrades or enhancements to
the customer, and the customer has no right to any other future deliverables.
The Company delivers the requested terminals for a fixed price either under
agreements with customers or pursuant to purchase orders received from
customers.

The Company does not have any contractual obligations to provide post sale
support of its products. The Company does provide such support on a case by case
basis and the costs of providing such support are expensed as incurred. The
Company earned no revenue from post sale support during the periods presented.

Geographic Areas and Major Customers
For the three months ended March 31, 2006, the Company generated $10,000 in
revenue, amounting to approximately 20% of total revenue, from one customer
located in the United States.

Impairment of Long-Lived Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), 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.


                                        8


<PAGE>

30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business." The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with SFAS 144. SFAS 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal.

Advances from Customers

The Company records advances from customers as a liability and recognizes these
amounts as revenue over the period of the related agreement. As of March 31,
2006, advances from customers relating to licensing fees amounted to $24,980.

Returns

The Company does not offer customers a contractual right to return products sold
by the Company. The Company does accept product returns from time to time on a
case by case basis.

Advertising and Marketing Costs

The Company expenses costs of advertising and marketing as incurred.

Income Taxes

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.

NOTE 2 - RESTATEMENT

In its unaudited quarterly financial statements for 2006 as originally filed the
Company had, in consultation with its external auditors, interpreted and applied
EITF 00-19 to treat the fair value of financing warrants as a cost of raising
equity with a corresponding amount debited to additional paid-in capital. In a
letter to the Company dated November 9, 2006, the Securities and Exchange
Commission raised questions as to the Company's interpretation of EITF 00-19 as
it relates to the accounting treatment of financing warrants issued during 2006.
In consultation with its external auditors, on December 1, 2006 the Company's
Chief Executive Officer and Chief Financial Officer determined to amend and
restate the financial statements and information for the three months ended
March 31, 2006 to recognize expense for the fair value of the financing warrants
issued during the period and to book a corresponding amount as short term
warrant liability on the balance sheet at March 31, 2006.

As originally filed, the $500,444 fair value of certain warrants issued during
the three months ended March 31, 2006 was accounted for as a cost of raising
equity with a corresponding amount debited to additional paid-in capital.

A provision in the Securities Purchase Agreement governing the Company's private
placement transaction completed on March 3, 2006 requires the Company to file a
registration statement with the Securities and Exchange Commission covering the
resale of the shares of common stock and shares of common stock underlying the
warrants purchased by the investors in that transaction as promptly as possible
and that, if the registration statement is not declared
effective by the SEC within 180 days of the closing date of the transaction, or
if the Company fails to keep the registration statement continuously effective
until all the shares (and shares underlying warrants) are either sold or can be
sold without restriction under Rule 144(k), that the Company pay the investors
monthly liquidated damages equal to 1.5% of their investment until the
registration statement is declared and kept effective or all the shares have
been sold or can be sold without restriction under Rule 144(k) (in the case of a
failure to keep the registration statement continuously effective). In
connection with the March 3, 2006 transaction, the Company issued 450,000
immediately-exercisable, three-year warrants to a placement agent. The warrants
issued to the placement agent are not subject to this registration
rights/liquidated damages for failure to register provision.

In accordance with EITF 00-19, the Company has determined to amend and restate
the financial statements for the three months ended March 31, 2006 to recognize
expense of $500,444 for the fair value of the warrants issued to the investors
in this transaction and to record a corresponding short term warrant liability
of $500,444 on the March 31, 2006 balance sheet. Because the placement agent's
warrants are not subject to registration rights/liquidated damages for failure
to register, the fair value of the 450,000 warrants issued to the placement
agent of $90,080 was accounted for as a cost of raising equity with a
corresponding amount debited to additional paid-in capital.


                                       9


<PAGE>

The following presents the effect on the Company's previously issued financial
statements for the three months ended March 31, 2006. THE TABLES SET FORTH BELOW
ONLY PRESENT THOSE ACCOUNTS THAT WERE AFFECTED BY THE RESTATEMENT.

<TABLE>
<S>      <C>
Balance sheet at March 31, 2006:


                                                                    Previously          Increase
                                                                     Reported           (Decrease)         Restated

CURRENT LIABILITIES
Warrant Liability                                                            -            500,444           500,444
TOTAL CURRENT LIABILITIES                                            1,647,314            500,444         2,147,758

STOCKHOLDERS' EQUITY
Accumulated deficit                                                (25,178,436)          (500,444)      (25,678,880)
TOTAL STOCKHOLDERS' DEFICIT                                           (288,817)          (500,444)         (789,261)



Statement of operations for the three months ended March 31, 2006:


                                                                    Previously          Increase
                                                                     Reported           (Decrease)         Restated


OTHER INCOME (EXPENSE)
Fair value of warrant liability                                              -           (500,444)         (500,444)
TOTAL OTHER EXPENSES                                                  (139,782)          (500,444)         (640,226)
NET LOSS                                                              (408,895)          (500,444)         (909,339)
NET LOSS PER COMMON SHARE - BASIC & DILUTED                              (0.02)             (0.02)            (0.04)



Statement of cash flows for the three months ended March 31, 2006:

CASH FLOW FROM OPERATING ACTIVITIES:
Net loss                                                              (408,895)          (500,444)         (909,339)

Adjustment to reconcile net loss to net cash
used in operating activities:
Fair value of warrant liability                                              -            500,444           500,444
</TABLE>

The net effect of the restatement is an increase of $500,444 in total other
expense for the three months ended March 31, 2006 and an increase of $500,444 in
net loss for the three months ended March 31, 2006. As a result, basic and
diluted net loss per share increased by $0.02 per share for the three months
ended March 31, 2006.


                                       10


<PAGE>

NOTE 3 - LOSS PER SHARE

The Company reports loss per share in accordance with SFAS No. 128, "Earnings
per Share." Basic loss per share is computed by dividing loss available to
common shareholders by the weighted average number of common shares available.
Diluted loss per share is computed similar to basic loss per share except that
the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilutive. The following potential
common shares have been excluded from the computation of diluted net loss per
share for the three months ended March 31, 2006 and 2005 because the effect
would have been anti-dilutive:

<TABLE>
                                                                           2006           2005
                                                                        ----------     ----------
<S>                                                                      <C>            <C>
          Shares to be issued upon conversion of convertible note          --             225,003
              Stock options issued to employees                          2,264,732      1,197,510
              Stock options issued to consultants and others                    --         28,515
              Warrants issued to consultants and finders                   335,398        213,682
              Warrants issued for financing                              5,049,939      1,507,923
                                                                        ----------     ----------
                                                                         7,650,069      3,172,633
                                                                        ==========     ==========
</TABLE>

NOTE 4 - ACCOUNTS RECEIVABLE

During the three months ended March 31, 2006, gross receivables previously
reserved for were written down by $13,120 and a corresponding reduction was made
to the allowance for doubtful accounts.

Accounts Receivable at March 31, 2006                                $   72,227
Less:  allowance for doubtful accounts                                  (62,873)
                                                                     ----------
                                                                     $    9,354
                                                                     ==========

NOTE 5 - INVENTORY

Inventory has been reviewed for obsolescence and stated at lower of cost or
market as of March 31, 2006, determined on a first in first out basis. During
2005, the Company made a strategic decision to reposition itself as an
entertainment restaurant company, to wind down its SNAP! and Bear Shop
manufacturing and sales operations and to liquidate its remaining inventory. As
a result, all inventory at March 31, 2006 is treated as finished goods
inventory.

Finished Goods Inventory at March 31, 2006                           $  419,506
Less: obsolescence reserve                                             (195,339)
                                                                     ----------
                                                                     $  224,167
                                                                     ==========

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2006, consists of the following:

                  Computer equipment and related software             $ 169,285
                  Office furniture and equipment                         17,926
                  Leasehold improvements                                 84,849
                  Machinery and equipment                                33,482
                  Construction In Progress                                5,000
                                                                      ----------
                                                                        310,542
                  Less accumulated depreciation and amortization       (289,125)
                                                                      ----------
                                                                      $  21,417
                                                                      ==========


                                       11


<PAGE>

NOTE 7 - CONCENTRATION OF CASH

The Company considers all liquid investments with an original maturity of three
months or less to be cash equivalents. As of March 31, 2006, the Company had
cash and cash equivalent balances totaling $902,199 in financial institutions,
which were in excess of federally insured amounts.

NOTE 8 - COMPONENTS OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The major components of selling, general and administrative expenses for the
three months ended March 31, 2006 consisted of the following:

         Professional fees            $ 38,179
         Rent                           30,600
         Salary expense                163,819
         Other                          52,694
                                     ----------
                                     $ 285,292
                                     ==========

The major components of selling, general and administrative expenses for the
three months ended March 31, 2005 consisted of the following:

         Financial consulting        $ 631,776
         Professional fees             138,512
         Rent                           29,903
         Salary expense                144,126
         Other                         161,033
                                     ----------
                                     $1,105,350
                                     ==========

NOTE 9 - DUE TO RELATED PARTIES

Due to related parties consists of amounts advanced to the Company by certain
related parties, specifically its employees and their family members and
directors of the Company.

Due to related parties outstanding at March 31, 2006 consisted of the following:

Convertible Note payable to Mr. Bradley Rotter, a member of the Company's board
of directors. This Convertible Note is due April 10, 2006, accrues interest at
10%, and is convertible, at the option of Mr. Rotter, into the same securities
issued by the Company in (and on the same terms and conditions pari passu with
the investors in) any offering of its securities that results in gross proceeds
to the Company of at least $3,000,000. Upon conversion, Mr. Rotter will receive
as a conversion bonus additional securities equal to 20% of the aggregate
principal value plus accrued interest converted. The Convertible Note is
mandatorily repayable immediately following the consummation of any offering of
securities that results in gross proceeds to the Company of at least $3,000,000.
Upon such repayment, or upon repayment at maturity, Mr. Rotter will receive
warrants to purchase 200,000 shares of common stock of the Company at an
exercise price of $0.59. A portion of the value of this note was recorded as a
preferential conversion feature and recorded as discount of $40,000 to be
amortized over the term of the note, 6 months. The discount of $40,000 is fully
amortized as of March 31, 2006. (See Note 15 for extension of note).

<TABLE>
<S>                                                                                     <C>
Principal Amount                                                                        $ 200,000

Loan payable to the brother-in-law of the President and CEO issued on August 10,
2005, 6% interest, unsecured, due upon demand                                              39,000

Loan payable to the wife of the President and CEO issued on various dates in
2004 and 2005, 8% interest, unsecured, due upon demand                                     23,500

Loan payable to the Company's Vice President of Operations issued on various
dates in 2004 and 2005, 8% interest unsecured, due upon demand                             60,500
                                                                                        ---------
Total                                                                                   $ 323,000
                                                                                        =========
</TABLE>

                                       12


<PAGE>

NOTE 10 - NOTES PAYABLE

Notes payable outstanding at March 31, 2006 consisted of the following:

<TABLE>
<S>                                                                                     <C>
Loan payable to the Company's former Vice President of Marketing issued on
various dates in 2004 and 2005, 12% interest secured by inventory and
receivables of the Company, due February 15, 2007. The loan payable to the
Company's Vice President of Marketing was reclassified from Due to Related
Parties to Notes Payable on the December 31, 2005 balance sheet following the
termination of the holder's employment with the Company. Accrued interest of
$76,198 outstanding on this note as of March 31, 2006 is included under
accrued expenses on the balance sheet as of March 31, 2006.                             $ 111,844
                                                                                        =========

On March 16, 2006, we repaid a $120,000 convertible note together with $7,000 of
accrued interest.


NOTE 11 - LONG TERM CONVERTIBLE NOTES PAYABLE

Long term convertible notes payable outstanding at March 31, 2006 consisted of
the following:

Convertible Note issued on September 8, 2005. The note is due September 8, 2007,
accrues interest at 10%, and is mandatorily convertible into the same securities
issued by the Company in (and on the same terms and conditions pari passu with
the investors in) any offering of its securities that results in gross proceeds
to the Company of at least $3,000,000. Upon conversion, the holder will receive
as a conversion bonus additional securities equal to 20% of the aggregate
principal value plus accrued interest converted. A portion of the value of this
note was recorded as a preferential conversion feature and recorded as discount
of $20,000 to be amortized over the term of the note, 2 years. $5,833 of this
discount is amortized as of March 31, 2006.

Principal Amount                                                                        $ 100,000
Less Discount                                                                             (14,167)
                                                                                        ---------
                                                                                        $  85,833
                                                                                        =========
</TABLE>


NOTE 12 - EQUITY

Preferred Stock of uWink

The Company has authorized 5,000,000 shares of Preferred Stock. The Board of
Directors is authorized to establish, from the authorized shares of Preferred
Stock, one or more classes or series of shares, to designate each such class and
series, and to fix the rights and preferences of each such class and series.
Without limiting the authority of the Board of Directors granted hereby, each
such class or series of Preferred Stock shall have such voting powers (full or
limited or no voting powers), such preferences and relative, participating,
optional or other special rights, and such qualifications, limitations or
restrictions as shall be stated and expressed in the resolution or resolutions
providing for the issue of such class or series of Preferred Stock as may be
adopted from time to time by the Board of Directors prior to the issuance of any
shares thereof. Fully-paid stock of the Company shall not be liable to any
further call or assessment.


                                       13


<PAGE>

Common Stock

During the three-month period ended March 31, 2006, the Company:

Issued 500,012 shares of common stock valued at $150,003 to 4 investors on
conversion of $125,003 principal amount of convertible notes plus $25,000 of
accrued interest. These shares were part of shares to be issued as of December
31, 2005.

Sold 5,000,000 shares of common stock to 22 investors for gross proceeds of
$1,500,000. The investors in the transaction also received immediately
exercisable, three-year warrants to purchase an aggregate of 2,500,000 shares of
common stock priced at $0.345 per share. Merriman Curhan Ford & Co. acted as
sole placement agent for this transaction. We paid to Merriman Curhan Ford & Co,
as placement agent, a commission of $75,000 (equal to 5% of the aggregate
offering price) plus $5,000 in expenses. Merriman also received an additional
450,000 immediately exercisable, three-year warrants to purchase common stock at
$0.345 per share as part of this fee arrangement. The fair value of the warrants
of $590,524 was calculated using the Black Scholes option pricing model using
the following assumptions: risk free rate of return of 7.5%, volatility of 109%,
expected life of 3 years and dividend yield of 0%. The Company recognized
expense of $500,444 for the fair value of the warrants issued to the investors
in this transaction with a corresponding amount booked as short term warrant
liability. The fair value of the warrants issued to the placement agent of
$90,080 and the placement agent's commission and expenses were accounted for as
cost of raising equity with a corresponding amount debited to additional paid-in
capital. A provision in the Securities Purchase Agreement governing the
transaction requires the Company to file a registration statement with the
Securities and Exchange Commission covering the resale of the shares of common
stock and shares of common stock underlying the warrants sold as promptly as
possible and that, if the registration statement is not declared effective by
the SEC within 180 days of the closing date of the transaction, or if the
Company fails to keep the registration statement continuously effective until
all the shares (and shares underlying warrants) are either sold or can be sold
without restriction under Rule 144(k), that the Company pay the investors
monthly liquidated damages equal to 1.5% of their investment until the
registration statement is declared and kept effective or all the shares have
been sold or can be sold without restriction under Rule 144(k) (in the case of a
failure to keep the registration statement continuously effective).

Issued 115,000 shares of common stock, valued at $65,550 based on the closing
price of the common stock on the date of the agreement, to Ms. Alissa Bushnell,
daughter of our CEO Nolan Bushnell, in payment for public relations services
provided to the Company during 2005. These shares were part of shares to be
issued as of December 31, 2005.

Issued 50,000 shares of common stock valued at $21,000, based on the closing
price of the common stock on the date of the agreement, to the holder of a
$120,000 convertible note in consideration for the holder extending the maturity
date of the note from November 2005 to March 2006. These shares were part of
shares to be issued as of December 31, 2005.

Shares to be Issued

At March 31, 2006, Shares to be Issued consisted of:

    o    39,026 shares valued at $11,708 to be issued for consulting services
         rendered during the first quarter of 2006.

    o    150,000 shares valued at $48,000 to be issued as compensation to a
         former employee.

    o    27,442 shares valued at $20,144 remaining unissued in connection with
         the company's capital raising transactions in 2004. These shares
         remained unissued at March 31, 2006 for ministerial reasons.


NOTE 13 - STOCK BASED COMPENSATION

The Company adopted SFAS No. 123 (Revised 2004), SHARE BASED PAYMENT ("SFAS No.
123R"), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of employee
services received in exchange for an award of equity instruments based on the
grant-date fair value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, for all share-based payments granted prior to and not yet vested
as of January 1, 2006 and share-based compensation based on the grant-date
fair-value determined in accordance with SFAS No. 123R for all share-based
payments granted after January 1, 2006. SFAS No. 123R eliminates the ability to
account for the award of these instruments under the intrinsic value method
proscribed by Accounting Principles Board ("APB") Opinion No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES, and allowed under the original provisions of SFAS No.
123. Prior to the adoption of SFAS No. 123R, the Company accounted for its stock
option plans using the intrinsic value method in accordance with the provisions
of APB Opinion No. 25 and related interpretations.


                                       14


<PAGE>

For periods presented prior to the adoption of SFAS No. 123R, pro forma
information regarding net income and earnings per share as required by SFAS No.
123 has been determined as if we had accounted for our employee stock options
under the original provisions of SFAS No. 123. The fair value of these options
was estimated using the Black-Scholes option pricing model. For purposes of pro
forma disclosure, the estimated fair value of the options is amortized to
expense over the option's vesting period. Stock compensation expense measured in
accordance with SFAS No. 123R totaled approximately $110,034, or $0.0 per basic
and diluted share in the first quarter of 2006. The adoption of SFAS No. 123R
resulted in increased expense of approximately $107,747 as compared to the stock
compensation expense that would have been recorded pursuant to APB No. 25. In
the first quarter of 2005, the Company recorded $23,305 as the stock based
compensation expense.

                                                                            2005
                                                                   ------------
             Net loss as reported                                  $(1,044,516)
             Compensation recognized under APB 25                       23,305
             Compensation recognized under SFAS 123                    (80,047)
                                                                   ------------
             Pro forma                                             $(1,101,258)
                                                                   ============

             Basic and diluted loss per common share as reported   $     (0.10)
             Pro forma                                             $     (0.10)


The Company assumed the uWink.com, Inc. 2000 Employee Stock Option Plan pursuant
to its acquisition of uWink California. The 2000 Plan provides for the issuance
of up to 681,218 (after giving effect to a 3.15611 reverse stock split in
connection with the acquisition of uWink California) incentive and non-qualified
stock options to employees, officers, directors and consultants of the Company.
Options granted under the 2000 Plan vest as determined by the Board of
Directors, provided that any unexercised options will automatically terminate on
the tenth anniversary of the date of grant. As of March 31, 2006, there are
504,321 shares available for issuance under this plan.

In 2004, the Company's Board of Directors approved the uWink, Inc. 2004 Stock
Incentive Plan (the "2004 Plan"). The 2004 Plan provides for the issuance of up
to 1,200,000 incentive stock options, non-qualified stock options, restricted
stock awards and performance stock awards to employees, officers, directors, and
consultants of the Company. Awards granted under the 2004 Plan vest as
determined by the Board of Directors, provided that no option or restricted
stock award granted under the 2004 Plan may be exercisable prior to six months
from its date of grant and no option granted under the 2004 Plan may be
exercisable after 10 years from its date of grant. As of March 31, 2006, there
are 27,165 shares available for issuance under this plan.

In 2005, the Company's Board of Directors approved the uWink, Inc. 2005 Stock
Incentive Plan (the "2005 Plan"). The 2005 Plan provides for the issuance of up
to 2,000,000 incentive stock options, non-qualified stock options, restricted
stock awards and performance stock awards to employees, officers, directors, and
consultants of the Company. Awards granted under the 2005 Plan vest as
determined by the Board of Directors, provided that no option or restricted
stock award granted under the 2005 Plan may be exercisable prior to six months
from its date of grant and no option granted under the 2005 Plan may be
exercisable after 10 years from its date of grant. As of March 31, 2006, there
are 985,000 shares available for issuance under this plan.

Pursuant to the Stock Option Plans, during the twelve months ended December 31,
2004, the Company granted 352,835 stock options to employees that remain
outstanding as of March 31, 2006. 312,500 of these options were issued on July
15, 2004 (150,000 of these options were issued at an exercise price of $2.64,
the remainder were issued at $2.40); 23,751 were issued on December 16, 2004
(10,000 of these options were issued at an exercise price of $1.60, the
remainder were issued at $1.45); and 16,584 were issued on December 31, 2004
(10,000 of these options were issued at an exercise price of $1.38, the
remainder were issued at $1.25). All these options vest in 36 equal monthly
installments with the initial one-sixth vesting after six months. All options
issued during 2004 were issued at exercise prices equal to or in excess of the
fair value of the shares on the date of grant with the exception of the 16,584
options issued on December 31, 2004. The fair value of the shares as reflected
by the closing price of the stock on December 31, 2004 was $1.45.

During the twelve months ended December 31, 2005, the Company granted 1,485,000
stock options to employees and directors that remain outstanding as of March 31,
2006. 420,000 of these options were granted on July 25, 2005 at an exercise
price of $0.36, which was equal to the fair value of the shares on that date.
350,000 of these options were granted on August 29, 2005 at an exercise price of
$0.43 per share, which was equal to the fair value of the shares on that date.
350,000 of these options were granted on September 15, 2005 at an exercise price
of $0.57 per share, which was equal to the fair value of the shares on that
date. 165,000 of these options were granted on October 21, 2005 at an exercise
price of $0.40 per share, which was equal to the fair value of the shares on
that date. 100,000 of these options were granted on November 11, 2005 at an
exercise price of $0.45 per share, which was equal to the fair value of the
shares on that date. All these options vest in 36 equal monthly installments
with the initial one-sixth vesting after 6 months, with the exception of 100,000
of these options which fully vested after 6 months.


                                       15


<PAGE>

On February 10, 2006, the Company granted 400,000 stock options to our Chief
Technology Officer, Paul Dumais, at an exercise price of $0.30 per share. These
options vest in 36 equal monthly installments with the initial one-sixth vesting
after 6 months.

The following table summarizes the options outstanding as of March 31, 2006.

                                                        Weighted
                                                        Average   Aggregate
                                            Options     Exercise  Intrinsic
                                          outstanding    Price      Value

Balance December 31, 2005                    2,400,411  $  0.88    $1,454,081
Granted                                        400,000  $  0.30
Exercised                                           --       --
Canceled                                       435,679  $  1.05
Balance March 31, 2006                       2,364,732  $  0.75    $1,056,254
Exercisable March 31, 2006                     648,941  $  1.17    $  567,002


Following is a summary of the status of options outstanding at March 31, 2006:

                               Outstanding Options
                               -------------------
                                                    Average
                                                   Remaining
                  Exercise                        Contractual
                   Price           Number             Life          Exercisable
                   -----           ------             ----          -----------
                   $0.30           400,000            9.87                  0
                   $0.32            79,212            6.12             79,212
                   $0.36           520,000            9.32            195,507
                   $0.40           165,000            9.56                  0
                   $0.43           350,000            9.41             68,402
                   $0.45           100,000            9.62                  0
                   $0.57           350,000            9.46             62,968
                   $1.25             6,584            8.75              2,736
                   $1.38            10,000            8.75              4,155
                   $1.45            13,751            8.71              5,902
                   $1.60            10,000            8.71              4,292
                   $2.37            28,516            6.00             28,516
                   $2.40           162,500            8.30             92,603
                   $2.64           150,000            8.30             85,479
                   $3.16            19,169            3.72             19,169

                                 2,364,732                            648,941


For options granted during the three months ended March 31, 2006, the
weighted-average fair value of such options was $0.28.

The total weighted-average remaining contractual term of the options outstanding
at March 31, 2006 is 9.16 years.

The total weighted-average remaining contractual term of the options exercisable
at March 31, 2006 is 8.41 years.

The Company recognized expense of $110,034 for the fair value of the options
vested during the three months ended March 31, 2006.

The total compensation expense not yet recognized relating to unvested options
at March 31, 2006 is $894,187 and the weighted average period over which this
expense will be recognized is 2.44 years.

The assumptions used in calculating the fair value of options granted during the
period using the Black-Scholes option pricing model are as follows:

For the 400,000 options granted on February 10, 2006:

           Risk-free interest rate                                        7.75%
           Expected life of the options                             10.00 years
           Expected volatility                                             109%
           Expected dividend yield                                            0


                                       16


<PAGE>

Stock Warrants

The Company has issued warrants to consultants and finders for services rendered
and to investors in connection with raising capital.

The following table summarizes the warrants outstanding as of March 31, 2006.

                                                                   Weighted-
                                                                   Average
                                                                   Exercise
                                                     Warrants       Price
                                                    ---------      -------
Balance, December 31, 2005                           2,435,337     $  3.09
Granted                                              2,950,000     $  0.35
Exercised                                                   --          --
Cancelled                                                   --          --
BALANCE MARCH 31, 2006                               5,385,337     $  0.63
EXERCISABLE                                          5,385,337     $  0.63

During the three month period ended March 31, 2006, the Company issued 2,950,000
immediately exercisable warrants at an exercise price of $0.345 to 22 investors
and a placement agent.

The fair value of the warrants of $590,524 was calculated using the Black
Scholes option pricing model using the following assumptions: risk free rate of
return of 7.5%, volatility of 109%, expected life of 3 years and dividend yield
of 0%.

A provision in the Securities Purchase Agreement governing this transaction
requires the Company to file a registration statement with the Securities and
Exchange Commission covering the resale of the shares of common stock and shares
of common stock underlying the warrants purchased by the investors as promptly
as possible and that, if the registration statement is not declared effective by
the SEC within 180 days of the closing date of the transaction, or if the
Company fails to keep the registration statement continuously effective until
all the shares (and shares underlying warrants) are either sold or can be sold
without restriction under Rule 144(k), that the Company pay the investors
monthly liquidated damages equal to 1.5% of their investment until the
registration statement is declared and kept effective or all the shares have
been sold or can be sold without restriction under Rule 144(k) (in the case of a
failure to keep the registration statement continuously effective). The warrants
issued to the placement agent in this transaction are not subject to this
registration rights/liquidated damages for failure to register provision. In
accordance with EITF 00-19, the Company recognized expense of $500,444 for the
fair value of the warrants issued to the investors in this transaction and
recorded a short term warrant liability of $500,444 on the March 31, 2006
balance sheet to reflect its obligations in respect of the registration of the
investor warrants. Because the placement agent's warrants are not subject to
registration rights/liquidated damages for failure to register, the fair value
of the 450,000 warrants issued to the placement agent of $90,080 (along with the
placement agent's commission and expenses) was accounted for as cost of raising
equity with a corresponding amount debited to additional paid-in capital.

Following is a summary of the status of warrants outstanding at March 31, 2006:

                         Outstanding Warrants
                         --------------------

                                         Average
     Exercise                           Remaining
       Price           Number        Contractual Life      Exercisable
     --------          ------        ----------------      -----------

      $0.345         2,950,000            2.93             2,950,000

       $1.50           533,458            4.13               533,458

       $1.58            38,023            1.19                38,023

       $1.75            85,000            3.50                85,000

       $2.00           245,000            3.05               245,000

       $2.37           284,995            0.96               284,995

       $3.50           890,988            3.50               890,988

       $4.42            64,500            0.40                64,500

       $5.00            50,000            3.10                50,000

       $6.31           143,373            0.17               143,373

       $7.00            50,000            3.10                50,000

       $9.00            50,000            3.10                50,000

                     5,385,337                             5,385,337


                                       17


<PAGE>

NOTE 14 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the
Amortization Period for Leasehold Improvements ("EITF 05-6"). EITF 05-6 provides
guidance on determining the amortization period for leasehold improvements
acquired in a business combination or acquired subsequent to lease inception.
The guidance in EITF 05-6 will be applied prospectively and is effective for
periods beginning after June 29, 2005. EITF 05-6 is not expected to have a
material effect on the Company's consolidated financial position or results of
operations.

In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". SFAS No. 155, permits fair value remeasurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments acquired
or issued after the beginning of the Company's first fiscal year that begins
after September 15, 2006.


                                       15


<PAGE>

In March 2006, FASB issued SFAS 156 "Accounting for Servicing of Financial
Assets" this Statement amends FASB Statement No. 140, ACCOUNTING FOR TRANSFERS
AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES, with
respect to the accounting for separately recognized servicing assets and
servicing liabilities. This Statement:

    1.   Requires an entity to recognize a servicing asset or servicing
         liability each time it undertakes an obligation to service a financial
         asset by entering into a servicing contract.

    2.   Requires all separately recognized servicing assets and servicing
         liabilities to be initially measured at fair value, if practicable.

    3.   Permits an entity to choose "Amortization method" or "Fair value
         measurement method" for each class of separately recognized servicing
         assets and servicing liabilities.

    4.   At its initial adoption, permits a one-time reclassification of
         available-for-sale securities to trading securities by entities with
         recognized servicing rights, without calling into question the
         treatment of other available-for-sale securities under Statement 115,
         provided that the available-for-sale securities are identified in some
         manner as offsetting the entity's exposure to changes in fair value of
         servicing assets or servicing liabilities that a servicer elects to
         subsequently measure at fair value.

    5.   Requires separate presentation of servicing assets and servicing
         liabilities subsequently measured at fair value in the statement of
         financial position and additional disclosures for all separately
         recognized servicing assets and servicing liabilities.

This Statement is effective as of the beginning of the Company's first fiscal
year that begins after September 15, 2006. Management believes that this
statement will not have a significant impact on the financial statements.

In September 2006, FASB issued SFAS 157 'Fair Value Measurements'. This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Management is currently
evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 'Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements
No. 87, 88, 106, and 132(R)' This Statement improves financial reporting by
requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. An employer with publicly traded equity securities is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without publicly traded equity securities
is required to recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements: a. A brief description of the
provisions of this Statement b. The date that adoption is required c. The date
the employer plans to adopt the recognition provisions of this Statement, if
earlier. The requirement to measure plan assets and benefit obligations as of
the date of the employer's fiscal year-end statement of financial position is
effective for fiscal years ending after December 15, 2008. Management is
currently evaluating the effect of this pronouncement on financial statements.


                                       18


<PAGE>

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Other Litigation

In the ordinary course of business, the Company is generally subject to claims,
complaints, and legal actions. As of March 31, 2006, management believes that
the Company is not a party to any action which would have a material impact on
its financial condition, operations, or cash flows.

Leases

The Company's offices are located in Los Angeles, California and consist of
8,500 square feet of office and warehouse space leased at the rate of $10,200
per month. The term of this lease, which commenced May 1, 2005, is three years.
The Company is currently attempting to sublease all or part of the space, and
relocate to approximately 2,500 square feet. The Company incurred rent expense
of $30,615 and $29,903 for the three month periods ended March 31, 2006 and
2005, respectively.

Effective as of April 10, 2006, we secured an approximately 10 year lease on the
planned location for our first uWink Bistro in Woodland Hills, California,
located at 6100 Topanga Canyon Boulevard, Woodland Hills, California 91367. The
underlying lease agreement between Nolan Bushnell, our CEO, in his personal
capacity, and Promenade LP, the landlord, is as of February 3, 2006. Effective
as of April 10, 2006, the Company, Mr. Bushnell and Promenade L.P. entered into
an assignment agreement pursuant to which Mr. Bushnell assigned his rights under
the lease to the Company (but without relieving Mr. Bushnell of his liability
for the performance of the lease). In connection with this assignment, we agreed
with Mr. Bushnell that, should we fail to perform under the lease and Mr.
Bushnell become obligated under the lease as a result, Mr. Bushnell will have
the right to operate the leased premises in order to satisfy his obligations
under the lease.

This location consists of 5,340 square feet. The minimum annual rent payments
under the lease are $176,220 from rental commencement through January 31, 2009;
$181,507 from February 1, 2009 to January 31, 2010; $186,952 from February 1,
2010 to January 31, 2011; $192,560 from February 1, 2011 to January 31, 2012;
$198,337 from February 1, 2012 to January 31, 2013; $204,287 from February 1,
2013 to January 31, 2014; $210,416 from February 1, 2014 to January 31, 2015;
and $216,728 from February 1, 2015 to January 31, 2016.

If our gross sales from this location exceed certain annual thresholds, we are
obligated to pay additional percentage rent over and above the minimum annual
rent described above. Our percentage rent obligation is equal to 5% of gross
sales in excess of the following thresholds:

         Rental commencement to January 31, 2009: $3,524,400;
         February 1, 2009 to January 31, 2010: $3,630,132;
         February 1, 2010 to January 31, 2011: $3,739,036;
         February 1, 2011 to January 31, 2012: $3,851,207;
         February 1, 2012 to January 31, 2013: $3,966,743;
         February 1, 2013 to January 31, 2014: $4,085,745;
         February 1, 2014 to January 31, 2015: $4,208,318; and
         February 1, 2015 to January 31, 2016: $4,334,567.

Our obligation to pay rent under this lease commences on the earlier of the date
we open for business and October 5, 2006.


Total rent expense for the three months ended March 31, 2006 is $30,600. Total
rent expense for the three months ended March 31, 2005 was $29,903.



                                       19


<PAGE>

NOTE 16 - SUBSEQUENT EVENTS

On April 19, 2006, we entered into a letter agreement (the "Letter Agreement")
with Mr. Bradley Rotter, a member of our board of directors, in respect of the
$200,000 Convertible Promissory Note, dated October 10, 2005 and due April 10,
2006, payable to Mr. Rotter (the "2005 Note"). Pursuant to the Letter Agreement,
effective April 19, 2006, we:

         1.       Repaid $100,000 of the principal amount of, together with
                  $10,356 of accrued interest on, the 2005 Note;

         2.       Issued immediately exercisable, 3 year warrants to Mr. Rotter
                  to purchase 100,000 shares of common stock at an exercise
                  price of $0.345 per share; and

         3.       Issued a new convertible note (the "2006 Note") payable to Mr.
                  Rotter, in respect of the unpaid balance of $100,000 on the
                  2005 Note. This note is due October 19, 2006, accrues interest
                  at 10%, and is convertible, at the option of Mr. Rotter, into
                  the same securities issued by the Company in (and on the same
                  terms and conditions pari passu with the investors in) any
                  offering of its securities that results in gross proceeds to
                  the Company of at least $3,000,000. Upon conversion, Mr.
                  Rotter will receive as a conversion bonus additional
                  securities equal to 20% of the aggregate principal value plus
                  accrued interest converted. The 2006 Note is mandatorily
                  repayable immediately following the consummation of any
                  offering of securities that results in gross proceeds to the
                  Company of at least $3,000,000. Upon such repayment, or upon
                  repayment at maturity, Mr. Rotter will receive warrants to
                  purchase 100,000 shares of common stock of the Company at an
                  exercise price of $0.345.

On July 24, 2006, we issued 108,833 shares valued at $32,500 to 2 investors.
These shares were reflected as shares to be issued on the balance sheet at June
30, 2006.

On September 18, 2006, we completed the sale of a total of 5,001,333 shares of
common stock to 51 investors for cash proceeds of $1,500,400. These investors
also received immediately-exercisable, three-year warrants to purchase an
aggregate of 2,500,667 shares of common stock priced at $0.345 per share. In
addition, we converted $70,562 of debt and accrued interest due to Nancy
Bushnell, the wife of our CEO Nolan Bushnell, and $60,500 of debt due to Dan
Lindquist, our Vice President of Operations, into shares of common stock and
warrants on the same terms as the investors in the transaction. Ms. Bushnell
received 235,207 shares of common stock and warrants to purchase 117,603 shares
of common stock at $0.345 per share, and Mr. Lindquist received 201,667 shares
of common stock and warrants to purchase 100,833 shares of common stock at
$0.345 per share. These issuances were made pursuant to the exemption from
registration provided by SEC Rule 506 promulgated under Regulation D of the
Securities Act of 1933.

On October 26, 2006, we entered into a letter agreement (the "Hines Letter
Agreement") with Dr. William Hines in respect of the $100,000 Convertible
Promissory Note, dated September 8, 2005 and due September 8, 2007, from the
Company to Dr. Hines (the "Hines Note"). Pursuant to the Hines Letter Agreement,
effective October 26, 2006:

Dr. Hines agreed to convert the $100,000 principal amount and $11,555 in accrued
interest outstanding under the Hines Note into shares of common stock of the
Company at a conversion price of $1 per share. In accordance with the terms of
the Hines Note, Dr. Hines is entitled to receive an additional 20% of such
amount in shares of common stock, such that the total amount to be converted is
$133,866. As such, Dr. Hines accepted 133,866 shares of common stock of the
Company in full and final satisfaction of the Company's obligations under the
Hines Note.

On October 25, 2006, we entered into a letter agreement (the "Rotter Letter
Agreement") with Mr. Bradley Rotter, a member of our board of directors, in
respect of the $100,000 Convertible Promissory Note, dated April 19, 2006 and
due October 19, 2006, from the Company to Mr. Rotter (the "Rotter Note").
Pursuant to the Rotter Letter Agreement, effective October 25, 2006:

         1.       Mr. Rotter agreed to convert the $100,000 principal amount and
                  $5,685 in accrued interest outstanding under the Rotter Note
                  into shares of common stock at a conversion price of $1 per
                  share. In accordance with the terms of the Rotter Note, Mr.
                  Rotter is entitled to receive an additional 20% of such amount
                  in shares of common stock, such that the total amount to be
                  converted is $126,822. As such, Mr. Rotter accepted 126,822
                  shares of common stock of the Company, together with the
                  warrants set forth below, in full and final satisfaction of
                  the Company's obligations under the Rotter Note.

         2.       In accordance with the terms of the Rotter Note, the Company
                  also issued to Mr. Rotter three-year immediately exercisable
                  warrants to purchase 100,000 shares of common stock at an
                  exercise price of $0.345 per share.


                                       20


<PAGE>

On August 14, 2006, we received a demand for arbitration from Stonefield
Josephson, our former auditors, seeking $36,850 for past audit work. We disputed
this claim. On November 6, 2006, we entered into a release and settlement
agreement with Stonefield Josephson, pursuant to which Stonefield has withdrawn
its claim and has released us from any and all claims relating to Stonefield's
provision of services to us. In return, we released Stonefield from any and all
claims we may have against Stonefield relating to such services.


                                       21


<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

GENERAL

The following discussion and analysis should be read in conjunction with our
consolidated financial statements and related footnotes for the year ended
December 31, 2005 included in our Annual Report on Form 10-KSB. The discussion
of results, causes and trends should not be construed to imply any conclusion
that such results or trends will necessarily continue in the future.

OVERVIEW

uWink, Inc. ("uWink", "we", "us", or the "Company") is a digital entertainment
company, based in Los Angeles, California, that designs and develops interactive
entertainment software and platforms for restaurants, bars, and mobile devices.

Over several years of operation, we have invested substantial time and capital
in the construction of a uniform development platform. We have used this
platform to develop over 70 short-form video games (the "uWink Game Library")
and interactive entertainment and vending products. We believe our software and
hardware components can be used in multiple products, thereby reducing the cost
of development, the time to market, and the integration of existing software
into additional hardware applications.

For the past two years we have derived our revenue from the sale of our SNAP!
countertop game platforms (and its predecessor platforms) and the Bear Shop (aka
Boxter Bear, hereinafter "Bear Shop") entertainment vending platform, products
the entertainment vending platform dispenses, such as plush bears and related
clothing, and software licensing fees.

SNAP!, our countertop video game terminal, enables customers to play over 70
short form video games from the uWink Game Library.

Our entertainment vending platform, Bear Shop, offers animated point of purchase
vending. The Bear Shop product allows customers to pick outfits and accessories
for a plush/stuffed bear using an interactive touch screen resulting in
thousands of combinations. The foundation of the Bear Shop product is an
interactive entertainment-vending platform that we believe can be leveraged to
create various vending solutions.

We have made a strategic decision to reposition the Company as an entertainment
restaurant company. As a result, we are winding down our SNAP! and Bear Shop
manufacturing and sales operations and we have decided not to enter the 2006
marketing cycle of tradeshows and advertising for SNAP! and Bear Shop. This
decision also allowed us to reduce staff and liquidate inventory and
product-related receivables. We believe that the restaurant project is the most
cost effective way to monetize our investment in technology. We are currently
seeking to license our SNAP! and Bear Shop intellectual property to 3rd party
manufacturers in exchange for licensing fees.


                                       22


<PAGE>

Going forward, our strategy is to leverage our network and entertainment
software assets, including the uWink Game Library, to develop an interactive
entertainment restaurant concept, the uWink Bistro. uWink Bistro is designed to
allow customers to order food, drinks, and games/media via touch screens at the
table. This concept integrates food and our interactive entertainment software
to provide what we believe to be a new entertainment dining experience. We are
currently planning on opening our first uWink Bistro in the Los Angeles,
California area in the summer of 2006. We have not yet generated any revenue
from the uWink Bistro.

Prominent features of the uWink Bistro concept are expected to include:

         AT-THE-TABLE TOUCH-SCREEN ORDERING. We plan to offer our guests the
         ability to order food and drinks via touch-screens at the table, rather
         than from a waitperson. We are planning that orders from the table will
         go straight to the kitchen and that, as the food is ready, it will be
         delivered by runners from the kitchen to the table.

         AT-THE-TABLE ENTERTAINMENT. We expect to provide our guests with
         at-the-table entertainment, including games from the uWink Game
         Library, video, cartoons, and film trailers, via touch screen
         terminals.

         DISTINCTIVE CASUAL DINING EXPERIENCE AND VALUE PROPOSITION. We are
         aiming our concept to compete in the "casual dining" segment of the
         restaurant market. We believe our concept will combine some of the best
         elements of the casual dining market, including freshly prepared food
         with generous portions at attractive price points and quick turnaround
         times, with innovative at-the-table ordering and entertainment to
         create a new experience for casual dining patrons. We are targeting our
         average check to be $10 to $15 per guest, excluding alcoholic
         beverages; at this price point we believe that we will provide an
         attractive and entertaining value proposition for casual diners.

Led by Nolan Bushnell, our Chairman and Chief Executive officer and the founder
of both Atari and Chuck E. Cheese, and our Director of Restaurant Operations (on
a consulting basis), John Kaufman, former Vice President of Operations at
California Pizza Kitchen, we believe we have assembled a management team with
the vision and experience to successfully execute on the uWink Bistro concept.


                                       23


<PAGE>

We plan to open our first restaurant in Woodland Hills, California (Los Angeles
area) at the Westfield Promenade Shopping Center in the summer of 2006. This
location is approximately 5300 square feet and has seating for approximately 160
guests, excluding patio seats. We have secured an approximately 10 year lease on
this location.

On March 3, 2006, we raised gross proceeds of $1,500,000 via the private
placement of 5,000,000 shares of common stock to 22 investors. The investors in
the transaction also received immediately exercisable, three-year warrants to
purchase an aggregate of 2,500,000 shares of common stock priced at $0.345 per
share. Merriman Curhan Ford & Co. acted as sole placement agent for this
transaction. We paid to Merriman Curhan Ford & Co, as placement agent, a
commission of $75,000 (equal to 5% of the aggregate offering price) plus $5,000
in expenses. Merriman also received an additional 450,000 immediately
exercisable, three-year warrants to purchase common stock at $0.345 per share as
part of this fee arrangement.

We plan to use the net proceeds from this private placement to fund the capital
expenditures, and provide the operating capital, required to open our first
uWink Bistro.

We currently expect that we will be required to spend approximately $500,000 to
$700,000 over the next 3 months to build out and equip the Woodland Hills
location. To staff the restaurant we expect to hire, in the next 2 to 3 months,
an executive chef, 3 managers and 35-50 full-time and part-time non-managerial
restaurant staff.

We expect to need to raise additional amounts of capital through the sale of our
equity or debt securities within the next 3 to 6 months because, after funding
the build out of the restaurant, we do not expect to have sufficient funds
remaining to fund our corporate overhead and expenses and we do not expect the
cash flow from the Woodland Hills location to be sufficient to cover our
corporate overhead and expenses. As of the date of this report, we have no
commitments for the sale of our securities nor can we assure you that such funds
will be available on commercially reasonable terms, if at all. Should we be
unable to raise the required funds, our ability to finance our operations and
growth will be materially adversely affected.

Our near term strategy is to prove our concept at the Woodland Hills location
within the next 6 to 9 months and then raise additional capital necessary to
fund our operations and to open 2 to 3 additional company-owned and/or managed
restaurants within the next 12 to 18 months. We are currently in discussions
with a number of potential joint venture partners that would provide the capital
and real estate for additional restaurants that would be managed, but not owned,
by the Company.

Our longer term growth strategy is to open additional company-owned restaurants
in new markets and to franchise our concept, focusing on multiple-unit area
development agreements with experienced operators. We are targeting a mix of
one-third company-owned restaurants and two-thirds franchised restaurants. We
will also seek to generate additional revenue through the sale of media
equipment to franchisees.


                                       24


<PAGE>

BASIS OF PRESENTATION

The accompanying consolidated financial statements, included elsewhere in this
Quarterly Report on Form 10-QSB, have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation as a going concern. We have incurred a net loss of
$909,339 for the three months ended March 31, 2006, and as of March 31, 2006, we
had an accumulated deficit of $25,678,880. These conditions raise substantial
doubt as to our ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. The consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts, or amounts and classification of liabilities that might
be necessary should we be unable to continue as a going concern.

RESULTS OF OPERATIONS

Three months ended March 31, 2006 compared with the three months ended March 31,
2005.

Net sales for the three months ended March 31, 2006 decreased by $291,557 (85%)
from $341,904 for the three months ended March 31, 2005 to $50,347 for the three
months ended March 31, 2006. The decrease in revenue is largely attributable to
our decision to wind down our SNAP! and Bear Shop manufacturing and sales
operations and reposition the Company as an entertainment restaurant company.
There was no revenue associated with our entertainment restaurant operations for
the three months ended March 31, 2006. In addition, we generated licensing
revenue of $10,000 (20% of total revenue) in the first three months of 2006, as
compared to $25,000 (7% of total revenue) for the first three months of 2005.
For the year ended December 31, 2005, we generated $100,000 from the licensing
of some of our games to Bluetorch Games. This license had a one year term and,
accordingly, we recorded licensing revenue of $25,000 per quarter in 2005. In
2006, we generated $10,000 in licensing fees for some of our games from Mondobox
LLC.

Cost of sales for the three months ended March 31, 2006 decreased by $153,126
(82%) from $187,293 for the three months ended March 31, 2005 to $34,168 for the
three months ended March 31, 2006. The decrease in cost of sales is attributable
to lower SNAP! and Bear Shop sales volume resulting from our decision to wind
down our SNAP! and Bear Shop operations.

As a result of the decrease in revenue described above, together with the
decrease in our gross margin described below, our gross profit for the three
months ended March 31, 2006 decreased by $138,432(89%) to $16,179 from $154,610
for the three months ended March 31, 2005. Our gross profit percentage was 32%
for the three months ended March 31, 2006, compared to 45% for the three months
ended March 31, 2005. The decrease in the gross profit percentage is primarily
attributable to the sales of remaining inventory at depressed prices in 2006.

Selling, general and administrative expenses for the three months ended March
31, 2006 decreased by $820,058 (74%) from $1,105,305 for the three months ended
March 31, 2005 to $285,292 for the three months ended March 31, 2006. The
decrease is attributable generally to lower levels of operations resulting from
our decision to wind down our SNAP! and Bear Shop operations and an
approximately $615,000 reduction in financial consulting expense from $631,776
in the first quarter of 2005 to $16,000 in the first quarter of 2006. In the
first quarter of 2005 we issued approximately $450,000 worth of shares of our
common stock in exchange for investor relations services. In addition, legal
expenses fell by approximately $77,000 from $77,279 in the first quarter of 2005
to $380 in the first quarter of 2006. The higher level of legal fees in the
first quarter of 2005 relates to legal fees in connection with our pursuit of
the assets of Sega Gameworks out of bankruptcy.


                                       25


<PAGE>

As a result, our loss from operations for the three months ended March 31, 2006
was reduced by $681,627 (71%) to $269,113, from a loss of $950,740 for the three
months ended March 31, 2005.

Total other expense for the three months ended March 31, 2006 increased by
$546,449 (583%) from $93,777 for the three months ended March 31, 2005 to
$640,226 for the three months ended March 31, 2006. This increase was primarily
attributable to $500,444 of expense relating to the issuance of financing
warrants in the first quarter of 2006 and to higher nominal stock option expense
resulting from the expensing of options granted to employees based on the fair
market value of the options offset by an approximately $62,000 reduction in
interest expense from $70,400 for the first quarter of 2005 to $7,924 for the
first quarter of 2006. The reduction in interest expense is attributable to
lower levels of debt in 2006 resulting from the conversion and repayment of
convertible notes in late 2005 and early 2006 and the repayment in 2005 of
amounts borrowed to fund our pursuit of the assets of Sega Gameworks out
of bankruptcy. In December 2004, we made a bid to acquire the assets of Sega
Gameworks out of bankruptcy. In connection with that bid, we borrowed $615,000
to fund the payment of an earnest money deposit required by the bankruptcy
court. After SS Entertainment USA, a subsidiary, of Sega Corporation, was
determined to be the winning bidder, this deposit was returned to us in the
first quarter of 2005 and we used those funds to repay the $615,000 in loans.

As a result, our net loss for the three months ended March 31, 2006 was reduced
by $135,177 (13%) to $909,339, from a net loss of $1,044,516 for the three
months ended March 31, 2005.


LIQUIDITY AND CASH RESOURCES

As of March 31, 2006, our cash position was $1,065,201 and we had negative
working capital of $724,844. Working capital represents our current assets minus
our current liabilities and is related to our ability to pay short term debt as
it becomes due.

On March 3, 2006, we raised gross proceeds of $1,500,000 via the private
placement of 5,000,000 shares of common stock to 22 investors. The investors in
the transaction also received immediately exercisable, three-year warrants to
purchase an aggregate of 2,500,000 shares of common stock priced at $0.345 per
share. Merriman Curhan Ford & Co. acted as sole placement agent for this
transaction. We paid to Merriman Curhan Ford & Co, as placement agent, a
commission of $75,000 (equal to 5% of the aggregate offering price) plus $5,000
in expenses. Merriman also received an additional 450,000 immediately
exercisable, three-year warrants to purchase common stock at $0.345 per share as
part of this fee arrangement. We plan to use the net proceeds from this private
placement to fund the capital expenditures, and provide the operating capital,
required to open our first uWink Bistro.

On March 16, 2006, we repaid a $120,000 convertible note together with $7,000 of
accrued interest.

Our debt at March 31, 2006 consisted of the following:

A $200,000 convertible note payable to Mr. Bradley Rotter, a member of the
Company's board of directors. This note is due April 10, 2006, accrues interest
at 10%, and is convertible, at the option of Mr. Rotter, into the same
securities issued by the Company in (and on the same terms and conditions pari
passu with the investors in) any offering of its securities that results in
gross proceeds to the Company of at least $3,000,000. Upon conversion, Mr.
Rotter will receive as a conversion bonus additional securities equal to 20% of
the aggregate principal value plus accrued interest converted. The note is
mandatorily repayable immediately following the consummation of any offering of
securities that results in gross proceeds to the Company of at least $3,000,000.
Upon such repayment, or upon repayment at maturity, Mr. Rotter will receive
warrants to purchase 200,000 shares of common stock of the Company at an
exercise price of $0.59.


                                       26


<PAGE>

A $100,000 convertible note issued on September 8, 2005 issued to Mr. William
Hines. The note is due September 8, 2007, accrues interest at 10%, and is
mandatorily convertible into the same securities issued by the Company in (and
on the same terms and conditions pari passu with the investors in) any offering
of its securities that results in gross proceeds to the Company of at least
$3,000,000. Upon conversion, the holder will receive as a conversion bonus
additional securities equal to 20% of the aggregate principal value plus accrued
interest converted.

A $111,844 loan payable to the Company's former Vice President of Marketing
issued on various dates in 2004 and 2005, 12% interest secured by inventory and
receivables of the Company, due February 15, 2007. Accrued interest of $76,198
outstanding on this note as of March 31, 2006 is included under accrued expenses
on the balance sheet as of March 31, 2006.

A $39,000 loan payable to the brother-in-law of our CEO issued on August 10,
2005, 6% interest, unsecured, due upon demand.

A $23,500 loan payable to the wife of our CEO issued on various dates in 2004,
2005 and 2006, 8% interest, unsecured, due upon demand.

A $60,500 loan payable to the Company's Vice President of Operations issued on
various dates in 2004 and 2005, 8% interest unsecured, due upon demand.

As of the date of this report, we are not in default on any material debt
obligation. We have filed as exhibits with the SEC all of our material financing
arrangements.

We currently expect to undertake capital expenditures of
$500,000 to $700,000 over the next 3 months to build out and equip the Woodland
Hills location.

We expect to be able to satisfy our cash requirements for the next 3 to 6
months. We expect to need to raise additional amounts of capital through the
sale of our equity or debt securities within the next 3 to 6 months because,
after funding the build out of the restaurant, we do not expect to have
sufficient funds remaining to fund our corporate overhead and expenses and we do
not expect the cash flow from the Woodland Hills location to be sufficient to
cover our corporate overhead and expenses. As of the date of this report, we
have no commitments for the sale of our securities nor can we assure you that
such funds will be available on commercially reasonable terms, if at all. Should
we be unable to raise the required funds, our ability to finance our operations
and growth will be materially adversely affected.


                                       27


<PAGE>

CASH POSITION AND USES OF CASH

Our cash and cash equivalents position as of March 31, 2006 was $1,065,201.

During the three months ended March 31, 2006, net cash used in operations was
$254,660, as compared to providing cash of $37,819 for the three months ended
March 31, 2005.

Our major uses of cash in operations in the first quarter of 2006 were to pay
cash employee compensation of approximately $83,000 and cash rent expense of
approximately $30,600. The non-cash transactions that reduced cash used in
operations relative to our net loss included: $500,444 of non-cash expense
related to the expensing of the fair value of financing warrants issued in the
first quarter of 2006; $110,034 of non-cash expense relating to employee stock
options, and an increase in our accrued payroll of $80,551.

Our net loss for the three months ended March 31, 2005 was $1,044,516 but, due
to a number of non-cash transactions reflected largely in our selling, general
and administrative expenses, we generated $37,189 in cash for operations. Our
major source of cash was the sale of SNAP! machines produced during the period
and sold for cash during the period. Our major uses of cash in operations were
to pay cash employee compensation of approximately $140,000; cash rent expense
of approximately $30,000; and cash payments to outside engineering consultants
of approximately $54,000. The non-cash transactions that reduced cash used in
operations relative to our net loss included: the use of $893,750 worth of
shares of common stock to pay for services rendered to the Company; and an
increase in our accounts payable of $123,836.

During the three months ended March 31, 2006, we used $5,000 in our investing
activities. During the three months ended March 31, 2005, we generated $615,000
from our investing activities. In December 2004, we invested $615,000 in a
deposit related to our pursuit of the assets of Sega Gameworks out of
bankruptcy. This deposit was returned to us in cash during the first three
months of 2005, following the conclusion of the bankruptcy proceeding.

During the three months ended March 31, 2006, our financing activities provided
cash in the amount of $1,301,102 as compared to using cash of $567,000 for the
three months ended March 31, 2005. The increase is primarily due to a $1,425,000
increase in proceeds from the issuance of common stock in the first quarter of
2006 as compared to the first quarter of 2005, and lower levels of debt
repayment in the first quarter of 2006 as compared to the first quarter of 2005.
In the first quarter of 2005 we repaid $615,000 borrowed in 2004 relating to our
pursuit of the assets of Sega Gameworks out of bankruptcy. In December 2004, we
borrowed $615,000 to fund a deposit related to our pursuit of the assets of Sega
Gameworks out of bankruptcy. This deposit was returned to us in cash during the
first three months of 2005, following the conclusion of the bankruptcy
proceeding, and we used these proceeds to repay the $615,000 in loans.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

ESTIMATES - Our discussion and analysis of our consolidated financial condition
and results of operations are based upon our consolidated financials statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these consolidated
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. On an ongoing basis, we
evaluate our estimates, including those related to allowance for doubtful
accounts, inventory reserves, impairment of long-lived assets and intangibles,
and value of our stock and options/warrants issued for services. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions; however, we believe
that our estimates, including those for the above-described items, are
reasonable.


                                       28


<PAGE>

Software Development Costs

Software development costs related to computer games and network and terminal
operating systems developed by the Company are capitalized in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the
Cost of Computer Software to be Sold, Leased, or Otherwise Marketed."
Capitalization of software development costs begins upon the establishment of
technological feasibility and is discontinued when the product is available for
sale. When the software is a component part of a product, capitalization begins
when the product reaches technological feasibility. The establishment of
technological feasibility and the ongoing assessment for recoverability of
capitalized software development costs require considerable judgment by
management with respect to the completion of all planning, designing, coding and
testing activities necessary to establish that the product can be produced to
meet its design specifications and certain external factors including, but not
limited to, anticipated future gross revenues, estimated economic life, and
changes in software and hardware technologies. Capitalized software development
costs are comprised primarily of salaries and direct payroll related costs and
the purchase of existing software to be used in the Company's products.

Amortization of capitalized software development costs is provided on a
product-by-product basis on the straight-line method over the estimated economic
life of the products (not to exceed three years). Management periodically
compares estimated net realizable value by product with the amount of software
development costs capitalized for that product to ensure the amount capitalized
is not in excess of the amount to be recovered through revenues. Any such excess
of capitalized software development costs to expected net realizable value is
expensed at that time.

Revenue Recognition

The Company recognizes revenue related to software licenses in compliance with
the American Institute of Certified Public Accountants ("AICPA") Statement of
Position No. 97-2, "Software Revenue Recognition." Revenue is recognized when
the Company delivers its touch screen pay-for-play game terminals to its
customer and the Company believes that persuasive evidence of an arrangement
exits, the fees are fixed or determinable, and collecitiblity of payment is
probable. Included with the purchase of the touch screen terminals are licenses
to use the games loaded on the terminals. The licenses for the games are in
perpetuity, the Company has no obligation to provide upgrades or enhancements to
the customer, and the customer has no right to any other future deliverables.
The Company delivers the requested terminals for a fixed price either under
agreements with customers or pursuant to purchase orders received from
customers.

The Company does not have any contractual obligations to provide post sale
support of its products. The Company does provide such support on a case by case
basis and the costs of providing such support are expensed as incurred. The
Company earned no revenue from post sale support during the periods presented.


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<PAGE>

FORWARD-LOOKING STATEMENTS

In this report we make a number of statements, referred to as "FORWARD-LOOKING
STATEMENTS", which are intended to convey our expectations or predictions
regarding the occurrence of possible future events or the existence of trends
and factors that may impact our future plans and operating results. These
forward-looking statements are derived, in part, from various assumptions and
analyses we have made in the context of our current business plan and
information currently available to us and in light of our experience and
perceptions of historical trends, current conditions and expected future
developments and other factors we believe to be appropriate in the
circumstances. You can generally identify forward-looking statements through
words and phrases such as "SEEK", "ANTICIPATE", "BELIEVE", "ESTIMATE", "EXPECT",
"INTEND", "PLAN", "BUDGET", "PROJECT", "MAY BE", "MAY CONTINUE", "MAY LIKELY
RESULT", and similar expressions. When reading any forward looking statement you
should remain mindful that all forward-looking statements are inherently
uncertain as they are based on current expectations and assumptions concerning
future events or future performance of our company, and that actual results or
developments may vary substantially from those expected as expressed in or
implied by that statement for a number of reasons or factors, including those
relating to:

         o        whether or not markets for our products and services develop
                  and, if they do develop, the pace at which they develop;

         o        our ability to attract the qualified personnel to implement
                  our growth strategies;

         o        the accuracy of our estimates and projections;

         o        our ability to fund our short-term and long-term financing
                  needs;

         o        changes in our business plan and corporate strategies; and

         o        other risks and uncertainties discussed in greater detail
                  under "Risk Factors" in our Annual Report on Form 10-KSB for
                  the year ended December 31, 2005.

Each forward-looking statement should be read in context with, and with an
understanding of, the various other disclosures concerning our company and our
business made elsewhere in this report as well as other pubic reports filed with
the United States Securities and Exchange Commission (the "SEC"). You should not
place undue reliance on any forward-looking statement as a prediction of actual
results or developments. We are not obligated to update or revise any
forward-looking statement contained in this report to reflect new events or
circumstances unless and to the extent required by applicable law.


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<PAGE>

ITEM 3.    CONTROLS AND PROCEDURES

Under the supervision and with the participation of its senior management,
including the Chief Executive Officer, the Company conducted an evaluation of
the effectiveness of the design and operation of its disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
as of the end of the period covered by this report (the "Evaluation Date").
Based on this evaluation, the Company's CEO concluded as of the Evaluation Date
that certain of the Company's disclosure controls and procedures were not
effective, as evidenced by the following failures:

Failure to timely file the financial statements and proforma financial
information in connection with our acquisition of our wholly owned subsidiary
uWink California. This filing was due on February 19, 2004 and was not made
until May 18, 2004.

Failure to file a report on Form 8-K regarding our sale, on May 15, 2005, of
533,458 shares of common stock for cash to 6 investors for $293,402.

Failure to file a report on Form 8-K regarding the appointment of Bradley Rotter
to our Board of Directors effective November 11, 2005.

As set forth in our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2005 and our Current Report on Form 8-K filed on May 2, 2006,
during a re-audit of our 2004 financial results we discovered a number of
accounting errors that required the restatement of our financial statements for
the fiscal year ended December 31, 2004.

Changes in Internal Control Over Financial Reporting

The Company intends to address the ineffective controls and procedures, and to
take appropriate action to correct the deficiencies identified. The Board of
Directors is performing oversight of the implementation of enhancements and
improvements to its internal controls.

Limitations on Controls

Management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will prevent or detect all error and
fraud. Any control system, no matter how well designed and operated, is based
upon certain assumptions and can provide only reasonable, not absolute,
assurance that its objectives will be met. Further, no evaluation of controls
can provide absolute assurance that misstatements due to error or fraud will not
occur or that all control issues and instances of fraud, if any, within the
Company have been detected.


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<PAGE>

PART II.   OTHER INFORMATION


ITEM 2.  CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
         SECURITIES

During the three months ended March 31, 2006, we sold or issued unregistered
shares of our equity securities in the following transactions:

On January 10, 2006, we issued 500,012 shares of common stock valued at $150,003
to 4 accredited, individual investors on conversion of $125,003 principal amount
of convertible notes plus $25,000 of accrued interest. These issuances were made
pursuant to the exemption from registration provided by SEC Rule 506 promulgated
under Regulation D of the Securities Act of 1933.

On March 3, 2006, we sold 5,000,000 shares of common stock to 22 investors (one
accredited institutional investor and 21 accredited, individual investors) for
gross proceeds of $1,500,000. The investors in the transaction also received
immediately exercisable, three-year warrants to purchase an aggregate of
2,500,000 shares of common stock priced at $0.345 per share. Merriman Curhan
Ford & Co. acted as sole placement agent for this transaction. We paid to
Merriman Curhan Ford & Co, as placement agent, a commission of $75,000 (equal to
5% of the aggregate offering price) plus $5,000 in expenses. Merriman also
received an additional 450,000 immediately exercisable, three-year warrants to
purchase common stock at $0.345 per share as part of this fee arrangement. These
issuances were made pursuant to the exemption from registration provided by SEC
Rule 506 promulgated under Regulation D of the Securities Act of 1933.

On March 31, 2006, we issued 115,000 shares of common stock, valued at $65,550
based on the closing price of the common stock on the date of the agreement, to
Ms. Alissa Bushnell, daughter of our CEO Nolan Bushnell, in payment for public
relations services provided to the Company during 2005. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.

On March 31, 2006, we issued 50,000 shares of common stock valued at $21,000,
based on the closing price of the common stock on the date of the agreement, to
the holder (an accredited, individual investor) of a $120,000 convertible note
in consideration for the holder extending the maturity date of the note from
November 2005 to March 2006. This issuance was made pursuant to the exemption
from registration provided by SEC Rule 506 promulgated under Regulation D of the
Securities Act of 1933.


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<PAGE>

ITEM 6.  EXHIBITS

(a) Exhibits

      REGULATION
      S-B NUMBER                           EXHIBIT


         4.1      Form of uWink, Inc. Warrant, dated March 3, 2006 (incorporated
                  by reference to the Company's Current Report on Form 8-K filed
                  on March 9, 2006).

         10.1     Securities Purchase Agreement dated March 3, 2006 between
                  uWink, Inc. and Investors (incorporated by reference to the
                  Company's Current Report on Form 8-K filed on March 9, 2006).

         31.1     Rule 13a-14(a) Certification of Chief Executive Officer.*

         31.2     Rule 13a-14(a) Certification of Chief Financial Officer and
                  Chief Accounting Officer.*

         32.1     Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.*

         32.2     Certification of Chief Financial Officer and Chief Accounting
                  Officer pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

*Filed herewith


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                   UWINK, INC.


December 8, 2006

                                                   By: /s/ NOLAN K. BUSHNELL
                                                       ------------------------
                                                       Nolan K. Bushnell
                                                       Chief Executive Officer


                                                   By: /s/ PETER F. WILKNISS
                                                       ------------------------
                                                       Peter F. Wilkniss
                                                       Chief Financial Officer
                                                       Chief Accounting Officer


                                       33