<PAGE>

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


                                    FORM 10-Q

(Mark One)

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

                  FOR THE QUARTERLY PERIOD ENDED September 30, 2008

[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
          OF 1934

       For the transition period from ________________ to _______________

                                     0-29873
                            (Commission file number)

                                   UWINK, INC.
             (Exact name of registrant as specified in its charter)

                    DELAWARE                              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
                         (Registrant's telephone number)


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

Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.

<TABLE>
<S>                                                                           <C>
     Large accelerated filer [ ]                                                 Accelerated filer            [ ]

     Non-accelerated filer   [ ] (Do not check if a smaller reporting company)   Smaller reporting company    [X]
</TABLE>

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 November 14, 2008 was
12,685,247.

<PAGE>

                                   UWINK, INC.
                                      INDEX

                                                                           Page
                                                                          Number
                                                                          ------
PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements                                                2

           Consolidated Balance Sheets as of September 30, 2008 (unaudited)    2
           and January 1, 2008

           Unaudited Consolidated Statements of Operations for the three
           and nine month periods ended September 30, 2008 and October
           2, 2007                                                             3

           Unaudited Consolidated Statements of Cash Flows for the nine
           month periods ended September 30, 2008 and October 2, 2007          4

           Notes to Unaudited Consolidated Financial Statements                5

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                          17

Item 4T.   Controls and Procedures                                            32

PART II.   OTHER INFORMATION                                                  33

Item 6.    Exhibits                                                           33

SIGNATURES                                                                    34


                                        1

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<TABLE>
<S> <C>

PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

                                  UWINK, INC. AND SUBSIDIARIES
                                   CONSOLIDATED BALANCE SHEETS

                                                                     September 30,    January 1,
                                                                         2008            2008
                                                                      (Unaudited)
                                                                     ------------    ------------
                                     ASSETS

CURRENT ASSETS
     Cash and cash equivalents                                       $  1,265,526    $  7,294,019
     Accounts receivable, net of allowance for doubtful
       accounts of $72,265                                                 29,606          49,481
     Inventory, net of reserve for obsolescence                           137,602          19,547
     Prepaid expenses, deposits and other current assets                   71,412          38,447

                                                                     ------------    ------------
       TOTAL CURRENT ASSETS                                             1,504,145       7,401,493

PROPERTY AND EQUIPMENT, NET                                             3,662,313         943,938

INTANGIBLE ASSETS, NET                                                     75,750              --

LEASE DEPOSITS                                                             17,158          40,238
                                                                     ------------    ------------
       TOTAL ASSETS                                                  $  5,259,366    $  8,385,669
                                                                     ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                                $  1,144,991    $    891,124
     Accrued expenses                                                      85,299         130,313
     Accrued payroll and related benefits                                 124,141          79,492
     Deferred revenue                                                      40,999          24,980
                                                                     ------------    ------------
       TOTAL CURRENT LIABILITIES                                        1,395,429       1,125,909
                                                                     ------------    ------------

STOCKHOLDERS' EQUITY
     Common stock, $0.001 par value; 25,000,000 shares authorized;
        12,685,247 and 12,671,534 shares issued
        and outstanding, respectively                                      12,686          12,672
     Additional paid-in capital                                        48,822,643      47,717,957
     Accumulated deficit                                              (44,981,534)    (40,481,011)
     Shares to be issued                                                   10,142          10,142
                                                                     ------------    ------------
       TOTAL STOCKHOLDERS' EQUITY                                       3,863,937       7,259,760
                                                                     ------------    ------------

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $  5,259,366    $  8,385,669
                                                                     ============    ============


The accompanying notes are an integral part of these unaudited consolidated financial statements


                                               2

<PAGE>

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

                                                     Three month periods ended        Nine month periods ended
                                                    ----------------------------    ----------------------------
                                                    September 30,    October 2,     September 30,    October 2,
                                                        2008            2007            2008            2007
                                                    ------------    ------------    ------------    ------------

NET SALES                                           $  1,030,333    $    673,335    $  2,078,854    $  1,970,905

COST OF SALES                                            296,961         193,272         619,742         597,177
                                                    ------------    ------------    ------------    ------------
     GROSS PROFIT                                        733,372         480,063       1,459,111       1,373,728
                                                    ------------    ------------    ------------    ------------

OPERATING EXPENSES
     Selling, general and administrative expenses      2,398,362       1,501,148       6,057,105       5,046,382

                                                    ------------    ------------    ------------    ------------
          LOSS FROM OPERATIONS                        (1,664,990)     (1,021,085)     (4,597,994)     (3,672,655)
                                                    ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSE)
     Other income                                         25,208             950          98,271             950
     Beneficial conversion of debt                            --        (408,435)             --        (408,435)
     Gain on settlement of debt                               --              --              --          58,076
     Interest expense                                         --         (48,395)             --         (95,159)

                                                    ------------    ------------    ------------    ------------
     TOTAL OTHER INCOME                                   25,208        (455,880)         98,271        (444,568)
                                                    ------------    ------------    ------------    ------------

          LOSS BEFORE PROVISION FOR INCOME TAXES      (1,639,783)     (1,476,966)     (4,499,723)     (4,117,223)

PROVISION FOR INCOME TAXES                                    --              --             800             800
                                                    ------------    ------------    ------------    ------------

          NET LOSS                                  $ (1,639,783)   $ (1,476,966)   $ (4,500,523)   $ (4,118,023)
                                                    ============    ============    ============    ============

NET LOSS PER COMMON SHARE - BASIC AND DILUTED       $      (0.13)   $      (0.23)   $      (0.36)   $      (0.63)
                                                    ============    ============    ============    ============

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - BASIC AND DILUTED                  12,682,295       6,547,392      12,675,147       6,498,506
                                                    ============    ============    ============    ============

         Weighted average number of shares for dilutive securities has not been calculated because the effect of
          dilutive securities is anti-dilutive

         The accompanying notes are an integral part of these unaudited consolidated financial statements


                                                       3

<PAGE>

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


                                                                                 Nine month periods ended
                                                                               September 30,   October 2,
                                                                                   2008           2007
                                                                                -----------    -----------
CASH FLOW FROM OPERATING ACTIVITIES:
   Net loss                                                                     $(4,500,523)   $(4,118,023)
   Adjustment to reconcile net loss to net cash used
     in operating activities:
     Beneficial debt conversion expense                                                  --        408,435
     Employee stock option expense                                                1,095,700      1,005,318
     Depreciation and amortization expense                                          416,502        237,503
     Gain on settlement of debt                                                          --        (58,076)
     Issuance of common stock for services                                            9,000        (99,213)
     Inventory obsolescence reserve                                                      --        (17,948)
   Changes in operating assets and liabilities:
     Accounts receivable                                                             19,876          5,918
     Inventory                                                                     (118,055)        62,528
     Deposits                                                                            --          2,300
     Prepaid expenses and other current assets                                      (32,965)       (41,783)
     Accounts payable                                                               253,866        239,837
     Accrued expenses                                                               (45,014)       171,375
     Accrued payroll and related benefits                                            44,648        226,630
     Deferred revenue                                                                16,019             --
                                                                                -----------    -----------
Net cash used in operating activities                                            (2,840,945)    (1,975,199)
                                                                                -----------    -----------

CASH FLOW FROM INVESTING ACTIVITIES:
   Acquisition of property and equipment                                         (3,187,548)      (188,635)
                                                                                -----------    -----------

CASH FLOW FROM FINANCING ACTIVITIES:
   Proceeds from debt                                                                    --      1,492,500
   Repayment of debt                                                                     --        (36,920)
   Proceeds from advances from related parties                                           --        325,000
   Proceeds from warrant exercises                                                       --        199,813
   Proceeds from option exercises                                                        --        139,930
                                                                                -----------    -----------
Net cash provided by financing activities                                                --      2,120,323
                                                                                -----------    -----------

NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS                            (6,028,492)       (43,511)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    7,294,019         55,006
                                                                                -----------    -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $ 1,265,526    $    11,495
                                                                                ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

   Interest paid                                                                $        --    $        --
                                                                                ===========    ===========
   Income taxes paid                                                            $        --    $        --
                                                                                ===========    ===========

 The accompanying notes are an integral part of these unaudited consolidated financial statements
</TABLE>

                                        4

<PAGE>

                          UWINK, INC. AND SUBSIDIARIES
              Notes to Unaudited Consolidated Financial Statements


NOTE 1 - BASIS OF PRESENTATION

The unaudited consolidated financial statements have been prepared by uWink,
Inc. (the "Company", "we" or "us"), 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 January 1,
2008 included in our Annual Report on Form 10-KSB. The results of the three and
nine months ended September 30, 2008 are not necessarily indicative of the
results to be expected for the full year ending December 30, 2008.

STOCK SPLIT

Effective July 26, 2007, we effected a four-for-one reverse stock split. All per
share amounts and share numbers presented herein have been retroactively
restated for this adjustment.

FISCAL YEAR END

In 2006, with the commencement of restaurant operations, we adopted a 52/53-week
fiscal year ending on the Tuesday closest to December 31st and fiscal quarters
ending on the Tuesday closest to March 31, June 30 and September 30, as
applicable, for financial reporting purposes. As a result, our 2006 fiscal year
ended on January 2, 2007, our 2007 fiscal third quarter ended on October 2,
2007, our 2007 fiscal year ended on January 1, 2008 and our 2008 fiscal third
quarter ended on September 30, 2008.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
uWink, Inc. and our subsidiary, uWink California, Inc. and its wholly owned
subsidiary, uWink Franchise Corporation. 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 (SFAS) No. 107, "Disclosures About
Fair Value of Financial Instruments", requires us to 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
our 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. Amounts
shown for convertible debentures and notes payable also approximate fair value
because current interest rates and terms offered to us for similar debt are
substantially the same.

REVENUE RECOGNITION

We recognize revenue related to technology hardware and software sales and
licensing in accordance with the requirements of Staff Accounting Bulletin (SAB)
No. 104, "Revenue Recognition", Emerging Issues Task Force (EITF) 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables", and AICPA
Statement of Position (SOP) No. 97-2, "Software Revenue Recognition" and other
applicable revenue recognition guidance and interpretations. Net revenues
include sales and/or licensing of hardware, software and peripherals, and/or


                                       5

<PAGE>

services. We recognize revenue for these products when it is realized or
realizable and earned. Revenue is considered realized and earned when (1)
persuasive evidence of an agreement exists; (2) delivery of the product has
occurred; (3) the fee is fixed or determinable; (4) collectibility is reasonably
assured; and (5) remaining obligations under the agreement are insignificant.

In most instances, revenue is generated under sales agreements with multiple
elements, which are comprised of a combination of hardware sales, licensing fees
from customers for our software, professional services associated with
installation and training and customer support. We offer clients post-contract
support in the form of software maintenance, telephone support and unspecified
software enhancements.

In applying the provisions of EITF No. 00-21, we have determined that we do not
have objective and reliable evidence of fair value for each element of our sales
agreements that contain an annual subscription to our software and customer
support. As a result, these elements within our multiple-element sales
agreements do not qualify for treatment as separate units of accounting.
Therefore, we account for fees received under our agreements that contain these
multiple elements as a single unit of accounting and recognize the entire
arrangement ratably over the term of the related agreement, commencing upon the
later of the agreement start date or when all revenue recognition criteria have
been met. Amounts that have been invoiced are initially recorded in accounts
receivable and deferred revenue.

We resell various hardware products, including touch screen computers, servers,
printers, networking equipment and other related computer equipment. In
accordance with SAB 104, hardware revenue is recognized when we have an
arrangement, the risk of ownership has passed to the buyer, there is a fixed and
determinable price and collectibility is reasonably assured. If at the time of
shipment we have not met these four criteria, recognition of the hardware
revenue is deferred until all four criteria are determined to have been met.

Our professional services revenues consist of fees generated from consulting,
custom development, installation and training. Revenues related to professional
services are generally recognized on a time and materials basis as the services
are performed.

Restaurant revenue from food, beverage and merchandise sales is recognized when
payment is tendered at the point of sale. We record gift card sales as a short
term liability in the period in which a gift card is issued and proceeds are
received. As gift cards are redeemed, this liability is reduced and revenue is
recognized.

Franchise revenue is recognized when we have performed substantially all of our
obligations as franchisor. Our area development fee consists of a one-time
payment in consideration for the services we perform in preparation of executing
each area development agreement. Substantially all of these services which
include, but are not limited to, conducting market and trade area analysis, a
meeting with our executive team, and performing potential franchise background
investigation, are completed prior to our execution of the area development
agreement and receipt of the corresponding area development fee. As a result, we
recognize the non-refundable portion of this fee in full upon receipt. We also
charge a $5,000 franchise application fee, in consideration of the services we
perform in evaluating the franchise application, which are completed
concurrently with receiving the application. As a result, we recognize the
non-refundable portion of this fee in full upon receipt. Refundable franchise
fees received are recorded as a short-term liability until such time as the fee
becomes non-refundable.

WARRANTIES

We generally warrant hardware products we resell for defects in material and
workmanship for 12 months. The scope and term of the warranty we provide
generally mirrors the scope and term of the warranty provided to us by the
hardware manufacturer. As a result, we have not incurred, and in the future do
not expect to incur, material warranty expense and, accordingly, do not make any
accrual for estimated warranty costs.

DEFERRED REVENUE

We generally invoice our technology licensing customers for software and support
annually or quarterly in advance. We record advances from customers as a
deferred revenue liability and recognize these amounts as revenue over the
period of the related agreement.

                                       6

<PAGE>

As of September 30, 2008 and January 1, 2008, deferred revenue relating to
licensing fees amounted to $40,999 and $24,980, respectively.

SALES TAXES

Restaurant revenue is presented net of sales taxes. The obligation is included
in accrued expenses until the taxes are remitted to the appropriate taxing
authorities. The sales tax payable as of September 30, 2008 and January 1, 2008
was $24,938 and $46,018, respectively.

REPORTING SEGMENTS

SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information" (SFAS No. 131), which superseded SFAS No. 14, "Financial Reporting
for Segments of a Business Enterprise", establishes standards for the way that
public enterprises report information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements regarding products and
services, geographic areas and major customers. SFAS No. 131 defines operating
segments as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performances. During the nine months ended September 30, 2008, we operated in
two reportable segments consisting of (1) Restaurant operations, reflecting the
operations of our uWink restaurants; and (2) Technology Licensing, representing
the licensing and sale of our hospitality entertainment and self service
ordering software platform and related hardware and services. See Note 11.

RECLASSIFICATIONS

Certain comparative amounts have been reclassified to conform to the current
period presentation.

RELATED PARTIES

During the nine months ended September 30, 2008 and October 2, 2007, salary
amounting to $240,000 and $177,630, respectively, was paid to employees related
to the CEO.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject us to a concentration of credit
risk are cash and cash equivalents. We currently maintain substantially all of
our day-to-day operating cash balances with major financial institutions. At
times during the year, and at September 30, 2008, cash balances were in excess
of Federal Depository Insurance Corporation insurance limits.

NOTE 2 - LOSS PER SHARE

We report 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 and nine months ended September 30, 2008 and October 2, 2007 because
the effect would have been anti-dilutive:

                                                             2008         2007
                                                          ---------    ---------
        Stock options issued to employees                   322,783      422,880
        Warrants issued to consultants and finders               --        5,545
        Warrants issued for financing                     8,177,041      442,778
                                                          ---------    ---------
                                                          8,499,824      871,203
                                                          =========    =========

Diluted earnings (loss) per share have not been presented because the assumed
conversion of options and warrants to purchase common shares would have an
anti-dilutive effect.

                                       7

<PAGE>

NOTE 3 - ACCOUNTS RECEIVABLE

Accounts receivable consists of restaurant credit card payments still in
process and receivables generated from the licensing of our entertainment and
hospitality software platform and related hardware sales. No allowance for
doubtful accounts has been recorded for these receivables as collection is
considered probable. The allowance for doubtful accounts of $72,265 at each of
September 30, 2008 and January 1, 2008 is to cover the historical accounts
receivable from non-restaurant activities.


NOTE 4 - INVENTORY

Inventory has been reviewed for obsolescence and stated at lower of cost or
market as of September 30, 2008 and January 1, 2008, determined on a first in
first out basis.

During 2005, we made a strategic decision to wind down our SNAP! and Bear
Shop manufacturing and sales operations and to liquidate our remaining
SNAP! and Bear Shop inventory. As a result, historical SNAP! and Bear Shop
related inventory at September 30, 2008 and January 1, 2008 is treated as
finished goods inventory. The obsolescence reserve at September 30, 2008 and
January 1, 2008 relates solely to this historical SNAP! and Bear Shop related
inventory.

In 2008, we began licensing our entertainment and hospitality software platform
to third parties. In connection with this business, we sell touch screen
terminals and related computer hardware to software licensees. We purchase this
hardware from third party suppliers. At September 30, 2008, we held $27,452 of
this computer hardware in inventory.

Restaurant inventory consists of food, beverages and merchandise available for
sale in the restaurants.

Inventory at September 30, 2008 and January 1, 2008 consisted of the following:

                                          September 30, 2008    January 1, 2008
                                          -----------------     ---------------
Computer hardware for sale to licensees   $          27,452     $            --
Restaurant inventory                                110,150              19,547
Historical finished goods                           291,887             291,887
Less:  obsolescence reserve                        (291,887)           (291,887)
                                          -----------------     ---------------
Total                                     $         137,602     $        19,547
                                           =================     ===============

NOTE 5 - PROPERTY AND EQUIPMENT

The cost of property and equipment at September 30, 2008 and January 1, 2008
consisted of the following:

                                         September 30, 2008     January 1, 2008
                                         -----------------      ---------------

Computer equipment                       $       1,673,549      $       670,686
Office furniture and equipment                      17,926               17,926
Restaurant Furniture and Fixtures                2,831,945              656,492
Leasehold improvements                              84,849               84,849
Machinery and equipment                             82,603               82,603
Construction in progress                                --               64,689
                                         -----------------      ---------------
                                                 4,690,872            1,577,245
Less accumulated depreciation                   (1,028,559)            (633,307)
                                         -----------------      ---------------
Total                                    $       3,662,313      $       943,938
                                           =================     ===============

Depreciation expense for the nine months ended September 30, 2008 and October 2,
2007 was $395,252 and $202,503, respectively.

                                       8

<PAGE>

NOTE 6 - PREPAID EXPENSES, DEPOSITS AND OTHER CURRENT ASSETS

Prepaid expenses, deposits and other current assets as of September 30, 2008 and
January 1, 2008 are as follows:

                                           September 30, 2008    January 1, 2008
                                           -----------------     ---------------
Prepaid insurance                          $          17,198     $        11,601
Deposit for developing gaming software                25,000                  --
Other deposits                                        21,324              11,350
Employee advances                                      7,890               7,890
Other current assets                                      --               7,606
                                           -----------------     ---------------
                                           $          71,412     $        38,447
                                           =================     ===============



NOTE 7 - INTANGIBLE ASSETS

The intangible assets as of September 30, 2008 consisted of the following:

                  Liquor Licenses                     $97,000

                  Less: Amortization                   21,250
                                                      -------
                                                      $75,750
                                                      =======

The amortization schedule for the next five years is as follows:

                2008                                  $24,250
                2009                                  $51,500


NOTE 8 - COMPONENTS OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The major components of selling, general and administrative expenses for the
nine months ended September 30, 2008 consisted of the following:

Professional fees                      $  182,503
Sarbanes-Oxley implementation             196,688
Rent                                      406,740
Restaurant operating expenses             344,872
Restaurant pre-opening expenses           260,000
Product development                       297,530
Salary expense                          2,436,000
Employee stock option expense           1,095,700
Depreciation and amortization             416,502
Other                                     420,570
                                       ----------
                                       $6,057,105
                                       ==========

The major components of selling, general and administrative expenses for the
nine months ended October 2, 2007 consisted of the following:

Professional fees                      $  459,589
Rent                                      255,060
Restaurant operating expenses             438,548
Product development                       268,912
Salary expense                          2,019,070
Employee stock option expense           1,005,318
Depreciation and amortization             237,503
Other                                     362,382
                                       ----------
                                       $5,046,382
                                       ==========


                                       9

<PAGE>

NOTE 9 - EQUITY

PREFERRED STOCK

We have authorized 5,000,000 shares of preferred stock. Our 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 our board of directors, 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
is not liable to any further call or assessment.

COMMON STOCK

Effective July 23, 2007, the authorized number of shares of our common stock was
increased from 12,500,000 shares (post-split) to 25,000,000 shares (post-split).

During the nine month period ended September 30, 2008, we issued:

on July 16,2008, 12,500 shares of common stock valued at $80,500 (valued as of
the date of grant and previously expensed as part of employee stock option
expense), pursuant to a restricted stock agreement with a former employee; and

on August 28, 2008, 1,213 shares of common stock valued at $9,000 (valued as of
the invoice date in accordance with our agreement with the vendor) in settlement
of an account payable.

SHARES TO BE ISSUED

At each of September 30, 2008 and January 1, 2008, shares to be issued consisted
of:

4,159 shares valued at $10,142 that remained unissued in connection with our
capital raising transactions in 2004. These shares remain unissued for
ministerial reasons.

NOTE 10 - STOCK OPTIONS, RESTRICTED STOCK AWARDS AND WARRANTS

We 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, we accounted for our stock option plans using the intrinsic value
method in accordance with the provisions of APB Opinion No. 25 and related
interpretations.

Primarily as a result of adopting SFAS No. 123R, we recognized $1,095,700 in
share-based compensation expense for the nine months ended September 30, 2008.
The impact of this share-based compensation expense on our basic and diluted
earnings per share was $0.09 per share. The fair value of our equity awards was
estimated using the Black-Scholes options pricing model.

We assumed the uWink.com, Inc. 2000 Employee Stock Option Plan (the "2000 Plan")
pursuant to our acquisition of uWink California. The 2000 Plan provides for the
issuance of up to 170,305 (after giving effect to a 3.15611-for-one reverse
stock split in connection with the acquisition of uWink California and to the
four-for-one reverse stock split effective July 26, 2007) incentive and
non-qualified stock options to our employees, officers, directors and
consultants. 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 September 30, 2008, there
are 132,805 shares available for issuance under the 2000 Plan.

                                       10

<PAGE>

In 2004, our Board of Directors approved the uWink, Inc. 2004 Stock Incentive
Plan (the "2004 Plan"). The 2004 Plan provides for the issuance of up to 300,000
incentive stock options, non-qualified stock options, restricted stock awards
and performance stock awards to our employees, officers, directors and
consultants. 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 September 30, 2008, there are 2,500 shares available for
issuance under the 2004 Plan.

In 2005, our Board of Directors approved the uWink, Inc. 2005 Stock Incentive
Plan (the "2005 Plan"). The 2005 Plan provides for the issuance of up to 500,000
incentive stock options, non-qualified stock options, restricted stock awards
and performance stock awards to our employees, officers, directors, and
consultants. 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 September 30, 2008, there are 3,125 shares available for
issuance under the 2005 Plan.

On June 8, 2006, our Board of Directors approved the uWink, Inc. 2006 Equity
Incentive Plan (the "2006 Plan"). The 2006 Plan, as subsequently amended on
November 14, 2006, provides for the issuance of up to 625,000 incentive stock
options, non-qualified stock options, restricted and unrestricted stock awards
and stock bonuses to our employees, officers, directors, and consultants. As of
September 30, 2008, there are 152,177 shares available for issuance under the
2006 Plan.

On June 21, 2007, our Board of Directors approved the uWink, Inc. 2007 Equity
Incentive Plan (the "2007 Plan"). The 2007 Plan provides for the issuance of up
to 250,000 incentive stock options (ISOs), non-qualified stock options,
restricted and unrestricted stock awards and stock bonuses to our employees,
officers, directors, and consultants. As of September 30, 2008, there are 30,000
shares available for issuance under the 2007 Plan.

Awards granted under both the 2006 Plan and the 2007 Plan vest as determined by
the Board of Directors, provided that:

       o        no option granted under the 2006 Plan or the 2007 Plan may be
                exercisable after ten years from its date of grant and no ISO
                granted to a person who owns more than ten percent of the total
                combined voting power of all classes of stock of the Company
                will be exercisable after five years from the date of grant; and

       o        an option granted to a participant who is an officer or director
                may become fully exercisable, subject to reasonable conditions
                such as continued employment, at any time or during any period
                established by the Board of Directors.

On January 2, 2008, we issued 5,000 options to an employee at an exercise price
of $1.30 per share.

On February 19, 2008, we issued 10,000 options to an employee at an exercise
price of $1.34 per share.

On March 10, 2008, we issued 25,000 options to an employee at an exercise price
of $1.42 per share.

On March 19, 2008, we issued 5,000 options to an employee at an exercise price
of $1.45 per share.

All these options are subject to 3 year cliff vesting.

On February 18, 2008, we issued 100,000 options to an employee at an exercise
price of $1.26 per share. 20,000 of these options vest after one year; an
additional 20,000 vest after two years; and the remaining 60,000 vest after
three years.

On August 26, 2008, we instituted a company-wide rationalization and
restructuring of our employee equity incentives pursuant to which we and 11 of
our employees agreed to the cancellation of an aggregate of 610,865 stock
options (including the cancellation of 167,500 options held by our CEO and the
cancellation of 100,000 options held by our President). In exchange
therefor, we granted an aggregate of 645,000 shares of our restricted common
stock to those employees (including the grant of 125,000 shares of restricted
stock to each of our CEO and President), as described below under "Restricted
Stock Awards".

                                       11

<PAGE>

As of the August 26, 2008 cancellation date, 535,515 of the 610,865 cancelled
stock options were vested and 75,350 were unvested. As a result of the
cancellation of these options, we recognized the remaining compensation expense
of $229,588 relating to the unvested options during the nine months ended
September 30, 2008.

Following is a summary of the stock option activity for the nine months ended
September 30, 2008:


                                                       Weighted-
                                                       Average     Aggregate
                                           Options     Exercise    Intrinsic
                                         outstanding    Price        Value
                                         -----------   --------    ----------
       Outstanding, January 1, 2008       1,012,648     $3.91      $   38,314
       Granted                              145,000     $1.30
       Forfeited                            224,000     $4.55
       Cancelled                            610,865     $3.91
       Exercised                                 --        --
                                         -----------   --------    ----------
       Outstanding, September 30, 2008      322,783     $2.31      $       --
       Exercisable, September 30, 2008      130,152     $1.89      $       --

Following is a summary of the status of options outstanding at September 30,
2008:

       Exercise              Options           Average Remaining     Exercisable
        Price               Outstanding        Contractual Life

    $1.00 - $1.99             248,090               8.44                 94,249
    $2.00 - $2.99              33,125               6.96                 33,125
    $7.00 - $7.99              41,568               8.17                  2,778
                       ---------------------------------------------------------
                              322,783               8.26                130,152
                       =========================================================

For options granted during the nine months ended September 30, 2008, the
weighted-average fair value of such options was $1.01.

During the nine months ended September 30, 2008, we received no proceeds from
the exercise of stock options.

The total weighted-average remaining contractual term of the options outstanding
at September 30, 2008 is 8.26 years.

The total weighted-average remaining contractual term of the options exercisable
at September 30, 2008 is 7.34 years.

We recognized expense of $572,803 for the fair value of the options vested
during the nine months ended September 30, 2008. We recognized expense of
$229,588 for the remaining unvested compensation expense relating to a total of
610,865 options cancelled by agreement with certain of our employees during the
nine months ended September 30, 2008.

The total compensation expense not yet recognized relating to unvested options
at September 30, 2008 is $446,430 and the weighted-average period over which
this expense will be recognized is 2.07 years.

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

           Risk-free interest rate                                        4.29%
           Expected life of the options                                10 years
           Expected volatility                                      67.8%-71.3%
           Expected dividend yield                                            0

Restricted Stock Awards
-----------------------

Restricted stock awards are grants that entitle the holder to shares of common
stock as the award vests. Our restricted stock awards generally vest in 24 or 36
equal monthly installments, with, in certain instances, the first 1/6 vesting
after six months, as noted below. The fair value of our restricted stock awards
is estimated using the Black-Scholes options pricing model.

                                       12



<PAGE>

On January 3, 2008, we granted 25,000 shares of restricted stock, vesting in 24
equal month installments, with a fair value of $33,250 to Mr. Bradley Rotter, as
compensation for serving as the chairman of the audit committee of our Board of
Directors. Also on January 3, 2008, we granted 50,000 shares of restricted stock
to an employee that vest in 36 equal monthly installments, with a fair value of
$66,500. During the nine months ended September 30, 2008, we accelerated the
vesting on 8,125 shares of restricted stock granted to a former employee.

On August 26, 2008, we instituted a company-wide rationalization and
restructuring of our employee equity incentives pursuant to which we and 11 of
our employees agreed to the cancellation of an aggregate of 610,865 stock
options (including the cancellation of 167,500 options held by our CEO and the
cancellation of 100,000 options held by our President). In exchange therefor, we
granted an aggregate of 645,000 shares of our restricted common stock to those
employees (including the grant of 125,000 shares of restricted stock to each of
our CEO and President). All these shares of restricted stock vest in 36 equal
monthly installments with the initial 1/6 vesting after 6 months.

Following is a summary of the restricted stock award activity for the nine
months ended September 30, 2008.

                                                    Weighted-
                                                    Average
                                                   Grant Date       Aggregate
                                         Shares    Fair Value    Intrinsic Value
                                       ----------  -----------   ---------------
Non-vested balance January 1, 2008         94,618     $5.05         $132,465
Granted                                   720,000     $0.50
Vested                                     72,743     $4.03
Forfeited                                      --        --
                                       ----------  -----------   ---------------
Non-vested balance September 30, 2008     741,875     $0.73         $385,775


For awards granted during the nine months ended September 30, 2008, the
weighted-average fair value of such awards was $0.50.

The total weighted-average remaining contractual term of the awards outstanding
at September 30, 2008 is 2.6 years.

We recognized expense of $293,309 for the fair value of the awards vested during
the nine months ended September 30, 2008.

The total compensation expense not yet recognized relating to unvested awards at
September 30, 2008 is $542,356 and the weighted average period over which this
expense will be recognized is 2.73 years.

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

           Risk-free interest rate                                        4.29%
           Expected life of the award                                 2-3 years
           Expected volatility                                    68.11%-70.24%
           Expected dividend yield                                            0

The fair value of the 645,000 shares of restricted stock granted on August 26,
2008 in exchange for the cancellation of options (as described above) was
calculated as the excess of the Black Scholes value of the restricted stock as
of the date of grant (using the above assumptions) over the Black Scholes fair
value of the options cancelled calculated as of the date of cancellation (using
the below assumptions).

The assumptions used in calculating the fair value of cancelled options
exchanged for grants of restricted stock during the period, using the
Black-Scholes option pricing model, are as follows:

           Risk-free interest rate                                        4.29%
           Expected remaining life of the cancelled options           1-9 years
           Expected volatility                                           70.24%
           Expected dividend yield                                            0


Warrants
--------

Following is a summary of the warrant activity for the nine months ended
September 30, 2008.


                                       13



<PAGE>

                                                  Weighted-
                                                    Average
                                                   Exercise       Aggregate
                                     Warrants       Price      Intrinsic Value
                                    ----------     --------    ---------------
Balance January 1, 2008              8,182,586     $   2.77    $        25,862
Granted                                     --     $     --
Exercised                                   --     $     --
Cancelled                                5,545     $   6.32
                                    ----------     --------    ---------------
Balance September 30, 2008           8,177,041     $   2.77    $            --

During the nine months ended September 30, 2008, we issued no warrants and
recognized no expense relating to warrants.

Following is a summary of the status of warrants outstanding at September 30,
2008:

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

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

     $1.38                1,293,110             0.67               1,293,110
     $2.40                6,441,153             4.21               6,441,153
     $6.00                  100,031             1.62                 100,031
     $7.00                   21,250             1.00                  21,250
     $8.00                   61,250             0.55                  61,250
     $14.00                 222,747             1.00                 222,747
     $20.00                  12,500             0.50                  12,500
     $28.00                  12,500             0.50                  12,500
     $36.00                  12,500             0.50                  12,500
     -----------------------------------------------------------------------
                          8,177,041             3.40               8,177,041
     -----------------------------------------------------------------------


NOTE 11 - SEGMENTS

During the nine months ended September 30, 2008, we operated in two reportable
segments consisting of (1) Restaurant Operations, representing the operation of
our three uWink restaurants, and (2) Technology Licensing, representing the
licensing and sale of our hospitality entertainment and food ordering software
platform and related hardware and services. The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies. We evaluate performance based on sales, gross profit
margins and operating profit (loss) before income taxes.

The following is information for the Company's reportable segments for the nine
months ended September 30, 2008:

<TABLE>
                                       --------------------------------------------------
                                       RESTAURANT    TECHNOLOGY
                                       OPERATIONS     LICENSING
(IN THOUSANDS)                          SEGMENT       SEGMENT        OTHER        TOTAL
                                       --------------------------------------------------
<S>                                    <C>           <C>          <C>           <C>
Revenue                                $  1,988      $     91     $     --      $  2,079

Gross margin                              1,370            89           --         1,459

Salary expense (net of pre-opening)         896         1,540           --         2,436
Operating expenses (net of pre-opening)     726           834           --         1,560
Non-recurring restaurant pre-opening        260            --           --           260
Non-recurring professional fees              --            --          289           289
Employee stock option expense               106           990           --         1,096
Depreciation and amortization               411             5           --           416
Other Income                                 --            --           98            98
(Loss) from operations before tax        (1,029)       (3,280)        (191)       (4,500)

Identifiable assets                       5,103           156           --         5,259

Capital expenditures                      3,088           100           --         3,188
</TABLE>

                                       14

<PAGE>

Selling, general and administrative expenses taken into account in determining
operating profit (loss) before income taxes consist primarily of professional
fees, corporate and restaurant rent expense, salary and engineering consulting
expense, restaurant pre-opening and operating expenses, employee stock option
expense, and other expenses. Unallocated operating loss before income taxes
reflects the sum of non-recurring professional fees, largely relating to
Sarbanes-Oxley implementation costs, and other income.

NOTE 12 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements", which is an amendment of Accounting Research
Bulletin ("ARB") No. 51. This statement clarifies that a noncontrolling interest
in a subsidiary is an ownership interest in the consolidated entity that should
be reported as equity in the consolidated financial statements. This statement
changes the way the consolidated income statement is presented, thus requiring
consolidated net income to be reported at amounts that include the amounts
attributable to both parent and the noncontrolling interest. This statement is
effective for the fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Based on current conditions, the
Company does not expect the adoption of SFAS 160 to have a significant impact on
its results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations." This statement replaces FASB Statement No. 141, "Business
Combinations." This statement retains the fundamental requirements in SFAS 141
that the acquisition method of accounting (which SFAS 141 called the purchase
method) be used for all business combinations and for an acquirer to be
identified for each business combination. This statement defines the acquirer as
the entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. This statement requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, measured at their fair values as of that date,
with limited exceptions specified in the statement. This statement applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The Company does not expect the adoption of SFAS 141 to have
a significant impact on its results of operations or financial position.

In March 2008, the FASB issued FASB Statement No. 161, "Disclosures about
Derivative Instruments and Hedging Activities". The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The new standard also improves transparency about the location and
amounts of derivative instruments in an entity's financial statements; how
derivative instruments and related hedged items are accounted for under
Statement 133; and how derivative instruments and related hedged items affect
its financial position, financial performance, and cash flows. FASB Statement
No. 161 achieves these improvements by requiring disclosure of the fair values
of derivative instruments and their gains and losses in a tabular format. It
also provides more information about an entity's liquidity by requiring
disclosure of derivative features that are credit risk-related. Finally, it
requires cross-referencing within footnotes to enable financial statement users
to locate important information. Based on current conditions, the Company does
not expect the adoption of SFAS 161 to have a significant impact on its results
of operations or financial position.

In May 2008, FASB issued SFASB No. 162, "The Hierarchy of Generally Accepted
Accounting Principles". The pronouncement mandates that the GAAP hierarchy
reside in the accounting literature as opposed to the audit literature. This has
the practical impact of elevating FASB Statements of Financial Accounting
Concepts in the GAAP hierarchy. This pronouncement will become effective 60 days
following SEC approval. The Company does not believe this pronouncement will
impact its financial statements.

In May 2008, FASB issued SFASB No. 163, "Accounting for Financial Guarantee
Insurance Contracts-an interpretation of FASB Statement No. 60". The scope of
the statement is limited to financial guarantee insurance (and reinsurance)
contracts. The pronouncement is effective for fiscal years beginning after
December 31, 2008. The Company does not believe this pronouncement will impact
its financial statements.

                                       15



<PAGE>

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Litigation

In the ordinary course of business, we are generally subject to claims,
complaints, and legal actions. As of September 30, 2008, management believes
that we are not a party to any action which would have a material impact on our
financial condition, operations, or cash flows.

Bauer Industrial Group, Inc. and Thomas Bannister v. uWink, Inc., Case No. 07-
C-1001, was filed against us on November 13, 2007 in the federal district court
for the Eastern District of Wisconsin. Plaintiffs allege that we refused to pay
compensation for services rendered, which we deny. The complaint alleges claims
for breach of contract, breach of the implied covenant of good faith and fair
dealing, promissory estoppel, unjust enrichment, intentional misrepresentation,
strict responsibility misrepresentation, negligent misrepresentation, and
fraudulent representation, and seeks compensatory damages of not less than
$500,000, punitive damages, treble damages under a Wisconsin statute, and costs
of suit. We have answered the complaint by denying any wrongdoing and asserting
a number of affirmative defenses, including plaintiffs' breach of contract,
which we believe negates plaintiffs' right to any compensation under the
agreements. Our motion to dismiss the complaint for lack of personal
jurisdiction and improper venue or, alternatively, to change venue to the
Central District Court in California was denied by the Court and the case is
proceeding in Wisconsin.

Leases

Effective June 1, 2006, we entered into a lease agreement relating to our new
corporate offices at 16106 Hart Street, Van Nuys, California 91406. This
property consists of approximately 2,200 square feet of office and warehouse
space at the base rental rate of $2,300 per month. Effective January 22, 2008,
we entered into a lease agreement relating to an additional 1,650 square feet of
office and warehouse space contiguous to our corporate offices at 16106 Hart
Street, Van Nuys, California 91406 at a base rental rate of $2,442 per month.

Effective as of April 10, 2006, we secured an approximately 10 year lease on the
location for our first uWink restaurant 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, we, Mr. Bushnell and Promenade L.P. entered into an
assignment agreement pursuant to which Mr. Bushnell assigned his rights under
the lease to us (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 commenced on October 5, 2006.

                                       16



<PAGE>

On October 25, 2007, we entered into a definitive agreement and sublease to
acquire the leasehold interest of a formerly operating restaurant located at 401
Castro Street, Mountain View, CA 94041. This location consists of 6,715 square
feet. The annual rent payment under the lease is $228,000, subject to annual
adjustment based on increases in the consumer price index capped at 5%. We are
also obligated to pay our pro-rata share of the property's operating expenses.
The lease expires on November 30, 2022. Our obligation to make operating expense
payments under this lease commenced on February 1, 2008 and our obligation to
make base rent payments commenced on May 1, 2008.

On December 17, 2007, we entered into a definitive lease agreement with CIM/H&H
Retail, L.P. to open a new restaurant location in the Hollywood & Highland
Center located at 6801 Hollywood Boulevard, Hollywood, California 90028. This
location consists of 7,314 square feet. The minimum annual rent payment under
the lease is $182,850, subject to annual 3% increases. The lease expires on July
31, 2018. 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 8% of gross sales in excess of $5,000,000, with this threshold being subject
to 3% annual increases. We are also obligated pay our pro-rata share of the
property's operating expenses. Our obligation to pay rent under this lease
commenced on June 17, 2008.

Total rent expense for the nine months ended September 30, 2008 was $406,740.
Total rent expense for the nine months ended October 2, 2007 was $255,060.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

       The following discussion and analysis should be read in conjunction with
our consolidated financial statements and related footnotes for the fiscal year
ended January 1, 2008 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

INTRODUCTION

       We are an entertainment and hospitality software company. We recently won
HOSPITALITY TECHNOLOGY Magazine's 2008 award for overall technological
innovation. We also recently received a 2009 Hot Retailer Award, for originality
and innovation, from the International Council of Shopping Centers.

       We also operate a casual, full service interactive restaurant concept
named "uWink" that incorporates and showcases our entertainment and hospitality
software. We currently operate three uWink restaurants.

       Our company was started in 2000 by Nolan Bushnell, affectionately known
as the "Father of the Video Game Industry". Nolan is best known as the creator
of the video game company, Atari, and the entertainment restaurant company,
Chuck E Cheese. Our company is an extension of Nolan's passion and talent for,
and thirty-year track record of success in, creating interactive and social
entertainment technologies.

       Basically, we've built what we think is an easy to use, fun "Web
2.0"-like user interface that looks and feels a lot like the browsing the Web
(except our network is closed so you can only view the content we make
available).

       Our software runs on table-side touch screens that let you order food and
drinks from a digital menu, play games, see movie trailers, take surveys and
quizzes and more - in all the major languages. When it's time to leave, you just
swipe your credit card at the screen (you can even have your receipt emailed to
you).
       In effect, our software lets you, the guest, control the restaurant
environment - when and how you order food and drinks, when you pay and leave,
with entertainment and information just a touch away - rather than the
restaurant environment controlling you (waiting to order, trapped at the table
waiting to pay, nothing for the kids to do, etc).

       And, we think, it's great for hospitality operators too. Offering games,
other fun content and information at the table sets them apart and keeps their
customers coming back. Letting their guests order and pay through the software
frees up staff to focus on making and delivering the orders, increasing labor
efficiency. Better yet, people end up ordering more when they don't have to wait
to order. Plus, the venue has the option of charging extra for the games and
content and/or running advertising.

                                       17



<PAGE>

       Our technology isn't just for sit down restaurants. We think it also
works well in all kinds of other hospitality environments - from quick service
to fast casual to airports to hotels to stadiums. Pretty much anywhere in the
world (remember we run in all the major languages) you have to wait to order/pay
and/or could use something fun to do.

       We believe that technologies like ours are the future of the hospitality
industry.

       As described in a recent USA TODAY article (see
http://www.usatoday.com/money/industries/food/
2008-10-13-casual-dining-restaurants_N.htm), the $75 billion casual dining
industry faces significant challenges, including over-capacity, lack of
differentiation and operating cost pressures, particularly in today's difficult
economic environment.

       We believe that our technology directly addresses 5 of the 6 factors
identified by USA TODAY as keys to the future success of the casual dining
industry:

1. STAND OUT. According to the article, "Casual dining's long-term problem is
one that vexes all companies as they age: how to stay fresh, while offering a
unique draw to which no one else in the category can lay claim..."

We believe that we have demonstrated that our technology, which gives guests
control over the restaurant environment and provides at-the-table entertainment,
provides such a differentiator and unique draw.

2. LOWER PRICES. According to the article, "More than anything, high prices are
what rile USA TODAY readers."

Because our technology lets guests order and pay themselves through the
software, staff is freed up to focus on making and delivering the orders,
increasing labor efficiency by up to 50%. This increased labor efficiency gives
the operator flexibility to reduce prices as necessary.

3. IMPROVE SERVICE. According to the article, "Slow service and discourteous
staff have given casual dining a black eye... Chili's is trying to knock 15
minutes off the typical 45-minute lunch for customers who want to save time..."

Because guests do not need to wait to order or to pay, our technology
dramatically improves speed of service.

4. SPIFF UP STORES. According to the article, casual dining chains are updating
their decor to be more contemporary.

We believe our touch screens, and the digital branding and entertainment
opportunities they offer, are effective in creating a cutting edge, contemporary
environment.

5. GET KID-FRIENDLY. According to the article, "Families are a big part of
casual dining's business, and for many parents, what matters most is how happy
their hungry kids are....Looking for casual dining spots to be more
kid-friendly, she wonders if they could install kid playgrounds. Or maybe they
could lend kids handheld video games at the same time parents are handed those
electronic pagers."

       We believe we have demonstrated that our suite of casual video games and
other content aimed at people of all ages, including a broad range of kids'
games, is effective in driving families to our restaurants and in creating an
environment where kids are entertained at the table, allowing parents a greater
opportunity to enjoy the restaurant experience.

       In our view, some combination of these success factors, and the
corresponding solutions our technology provides, are equally applicable in
virtually every hospitality and public-venue market segment, including hotels,
fast food/fast casual restaurants, bars, apartments, universities, stadiums,
theme parks, casinos, and golf and ski resorts.

OUR TECHNOLOGY

       Over the past three years, we have invested substantial time and capital
in the development of our touch-based interactive digital content
operating/display/delivery system and real-time, multi-player game platform, as
well as our game and content library, which comprises over 100 single and
multi-player short-form video games and other digital content.

       Our software assets include:

HOSPITALITY ORDERING: we offer a customer-facing, touch-based user interface
that allows guests to self-order all of their food and drink via touch screen
terminals at each table. We have integrated our ordering system with commercial
point-of-sale systems, providing seamless transaction billing, processing and
accounting.

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<PAGE>

SELF CHECK-IN/CHECKOUT: our software allows restaurant customers to self-check
in at the table using a credit card or prepaid debit card and to self-pay and
checkout by swiping a card at the table. Our auto tab splitting function
automatically places patrons' orders into individual tabs. Each patron has the
option to pay only his or her tab, including selecting the tip percentage.

GAME AND CONTENT LIBRARY: we feature a library of over 100 single and
multi-player short-form, casual and "social" video games and other digital
content, including a selection of trivia games, games of perception, memory
games and puzzles. In addition, we offer other forms of digital media including
movie trailers, horoscopes and fortunes, and "panoramic views" of various
well-known cities and places.

Some of this content is provided by third parties at no cost to us in exchange
for promotion on our terminals. We do not currently plan on paying material
amounts to third parties for this type of content.

MULTIPLAYER GAME PLATFORM: allows patrons throughout the venue to play digital
games against one another in real time, including real-time scoring, either
head-to-head individually or in teams.

"MICRO-TRANSACTION" CONTENT MONETIZATION SOFTWARE: allows for game "credit"
purchasing, tracking and redemption, facilitating game/media purchases ($0.25 to
$1.00 value per play). Our system supports multiple automated triggers for how
and when content is free or charged for, allowing for effective table turn
management.

MEDIA DELIVERY AND DISPLAY SYSTEM: our system allows for the display of, and
interaction with, virtually all forms of web-based digital content, including
advertising and promotional content. Our system also features large wall
projections that exhibit revolving dynamic imagery, allowing for promotional and
advertising display, as well the ability to change the venue's "look and feel"
at a moment's notice. The projection system is also used for venue-wide group
gaming and for the display of customized "special event" digital media,
including for corporate presentations and meetings as well as birthday parties.

Our platform includes automated content delivery and full ad server
functionality, so that content can be scheduled and displayed by time of day,
day of week, time of year, type of venue, etc..., and customer content
interaction can be quantitatively tracked.

MULTIPLE LANGUAGES: automated, real-time full user interface translation into
all major languages.

BRANDS "POWERED BY UWINK": our platform is specifically designed to be easily
digitally re-skinned to support multiple brands.

MODULAR PRODUCT SUPPORT: our platform is modular such that any particular
deployment can be entertainment-only or self-order/self-payment-only or both.

       Our software is built using standardized "Web 2.0" technologies,
including RESTful API, Flash, XML, Python, Java, and Linux. We believe that this
allows us to deliver an easy, intuitive and familiar customer-facing interface
and also facilitates resource-efficient internal software development and
integration with third-party software partners and content developers. To the
guest, our interface looks and feels very much like the Internet, but our
network is closed (no web browsing) to ensure that content is at all times
appropriate for the particular hospitality environment and desired customer
experience.

       Over the past two years we have spent significant time and effort
refining our technology through real-time customer feedback and stress testing
in our 200+ seat prototype uWink restaurants in Woodland Hills, California
(opened in October 2006), Hollywood, California (opened in June 2008) and
Mountain View, California (opened on September 15, 2008).

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<PAGE>

       Based on this experience, we believe that our hospitality and
entertainment technology:

   o   is a differentiator, increasing customer traffic;

   o   provides unique revenue streams;

   o   increases speed of service and order accuracy;

   o   increases customer satisfaction;

   o   increases average check; and

   o   significantly reduces labor costs and enhances labor efficiency.

OPERATING BUSINESS SEGMENTS

       Having completed the prototyping and testing of our base technology
platform, we have begun licensing our technology to third party hospitality
operators, as described below.

       To that end, in November 2008 we formed a new wholly owned subsidiary of
uWink, Inc, called uWink Interactive, Inc., a Delaware corporation (uWink
Interactive), to operate our technology licensing business. In connection with
the formation uWink Interactive, we contributed all our technology-related
intellectual property to uWink Interactive.

       Following this transaction, uWink, Inc. continues to own the trademarks
and copyrights relating to our uWink restaurants which are operated by uWink,
Inc.'s wholly owned subsidiary uWink California, Inc. ("uWink California").

       As a result of the foregoing, we now operate in two business segments:
Technology Licensing (which is conducted out of uWink Interactive) and
Restaurant Operations (which is conduced out of uWink California), each of which
is described below.

                              TECHNOLOGY LICENSING

       We license our proprietary software platform to third party operators. In
addition, we resell the touch screen terminals and server/network hardware
required to run our software. We purchase the hardware that we resell from third
party manufacturers.

       All of our technology products undergo extensive prototyping and quality
assurance as well as intensive customer testing - first in our corporate test
lab and then in our three uWink prototype restaurants - prior to being released.

       For any given installation, our technology platform supports the full
combination of, or any subset of, our self-service ordering and payment
functionality, our digital entertainment content library and delivery software
as well as our digital branding, promotion and advertising system.

       Because each installation, regardless of functionality and industry
segment, is supported by the same basic software and hardware infrastructure,
and because we have largely automated our software roll-out process, we believe
that we are able to cost effectively scale, roll-out, support and maintain our
platform within and across different industry segments and geographies.

THE MARKET

       The hospitality industry is a global industry comprising a number of
industry segments, including lodging, table service restaurants, quick service
restaurants, entertainment venues (e.g., stadiums and arenas), business
foodservice operations, casinos, transportation foodservice, government
operations, and cruise ships.

       According to the National Restaurant Association (NRA), the U.S. food and
beverage industry alone is expected to generate $558 billion in revenue in 2008,
equal to about 4% of U.S. Gross Domestic Product. Based on NRA data, the
domestic food and beverage industry employs an estimated 13.1 million people
(expected to grow to 15 million people over the next 10 years), making it the
nation's second-largest employer outside of government.

       The NRA also notes that restaurant and bar operations are extremely
labor-intensive. Sales per full-time-equivalent employee were $61,344 in 2006,
notably lower than other industries.

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<PAGE>

       In our observation, virtually all hospitality industry segments currently
employ the same basic (manual and labor intensive) food and beverage service
process. Typically, a guest sits down at a table or enters a line, chooses from
a printed menu or menu board and verbally communicates the order to a venue
staff member. The staff member then manually keys the order into the venue's
point-of-sale computer system, which then electronically transmits the order
information to the kitchen for preparation and delivery. The staff member
subsequently calculates the amount due, manually communicates that information
to the guest who then manually surrenders cash or a credit card to the staff
member for manual processing by the staff member.

       In our view, the current service process is creating an unsustainable
lose-lose proposition for venue operators - unhappy customers combined with
ever-escalating operating costs. On the one hand, as noted in the recent USA
TODAY article on the challenges facing casual dining (described above),
ever-busier consumers are more and more frustrated by the order/payment waiting
times inherent in this system, while also noting interaction with discourteous
staff as a negative. On the other hand, operators must bear ever-increasing
hourly labor, benefit, staff training and retention costs (and, in more and more
environments, operators simply cannot find enough labor) to support the current
labor-intensive service process.

       Another industry trend highlighted by USA TODAY is the lack of
differentiation among operators at a time when too many restaurants are chasing
reduced consumer dining out dollars. We believe that the challenge operators
have in standing out to attract key demographic groups, including younger people
and families, is particularly acute in the digital age. Whereas historically
restaurants could address entertainment needs through crayons and coloring
books, large format playground-style "play places", big screen TV's and arcade
style video game machines, today operators must be relevant in an on-demand,
interactive, consumer-controlled and connected "social" digital media world.

       As a result of these trends and resulting challenges, operators have
recently begun experimenting with new information and entertainment
technologies. In the bigger picture, given the size and importance of the
hospitality industry to the U.S. economy, taken together with the self-described
labor intensive nature of the current service process, the low penetration in
hospitality of customer-controlled information and entertainment technologies is
surprising.

       In any event, we see experimentation with, and increased use of,
technologies like digital menu and signage boards, online food ordering, e-mail
and other forms of digital marketing and promotion, kiosk-based self service
ordering and staff-controlled handheld food ordering and payment devices as
evidence that operators are recognizing the need to address these trends and
challenges with technology.

       When we look at the current landscape of in-venue technologies that are
emerging, in particular staff-controlled handheld ordering and payment devices,
we do not see those technologies addressing the crux of today's service problem
- the intensive involvement of staff in the ordering and payment process, which
creates customer-frustrating wait times as well as higher operating costs. In
contrast, our technology effectively removes staff from the ordering and payment
process, thereby reducing problematic wait times and increasing labor
efficiency.

       Moreover, our system also makes interactive digital entertainment,
branding and promotional content available to consumers table-side, offering
meaningful and relevant differentiation to the operator.

       It is worth noting that the technology we offer to the hospitality
industry is, generally speaking, the type of customer-facing technology that
people now take for granted on the Web and that has been successfully deployed
in many other service industries, ranging from airports to banks to grocery
stores.

       As a result, we believe that our proven, award-winning, cost effective,
reliable and fully-integrated table-side interactive self-ordering and digital
entertainment platform gives us a unique competitive advantage in addressing and
capitalizing on these industry trends and positions us to become the
category-leading provider of in-venue, customer-facing interactive digital
technologies to the hospitality industry.

OUR SOLUTIONS AND OFFERINGS

       We offer an engaging, touch-based, "Web 2.0"-like customer interface
running on table-side touch screen terminals that lets customer browse and
self-order from an attractive digital menu featuring high-resolution item
pictures, full item descriptions and a multitude of item customization and
up-sell options.

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<PAGE>

       Customer orders are electronically transmitted to the kitchen via our
software interface with the venue's point-of-sale (POS) system. From there,
orders are processed, prepared, delivered and accounted for in the customary
way. Moreover, our system allows for self-checkout using a credit card at the
table, eliminating the need for staff to be involved in the payment process.
Customer payments are then electronically processed through our POS interface in
the customary way.

       As such, our system is, simply put, a tool for customers to self-enter
orders and payments directly into the POS, rather than waiting to verbally
communicate with a staff member who then manually interacts with the POS. We
believe our ordering and payment system offers the convenience and control -
much like a bank ATM or an airport check in kiosk - that is expected by today's
consumer.

       Our software platform also offers significant advantages for operators
and their staff.

INCREASED COVERAGE AREA OF WAIT STAFF. Freeing staff up from order taking and
payment processing allows them to cover more tables. For staff, more tables per
shift means more tips per shift. For the operator, fewer staff members per shift
means increased labor productivity - we estimate that our system can increase
front-of-the-house labor productivity by up to 50%.

Moreover, deploying touch screen ordering terminals allows operators to
cost-effectively offer on-demand food and beverage service in environments that
were previously impractical or sub-optimal (e.g. stadium luxury boxes and
"premier" seating).

SELF-ORDER INCREASES ORDER FREQUENCY AND ACCURACY. Guests order more when they
don't have to wait to communicate with a staff member to order. Eliminating
verbal order communication between guests and staff also minimizes order
mistakes.

SELF-PAYMENT REDUCES CASH THEFT/LOSS. Our self-payment system encourages credit
card usage (using a credit card speeds the self-checkout process), reducing the
amount of cash handled at the location.

INCREASED TABLE TURNS. Eliminating order/payment wait times means guests spend
less time at the table, more quickly freeing-up the table for the next guest.

ENTERTAINMENT DIFFERENTIATES. Offering table-side digital entertainment attracts
families and other desirable demographics and increases repeat visits.

INCREMENTAL REVENUE OPPORTUNITIES. Our system effectively presents customers
with compelling up-sell and promotional offers 100% of the time. Moreover,
operators can choose to monetize content through our software.

SEAMLESS INTEGRATION WITH BACK-OF-THE-HOUSE SYSTEMS. Our POS interface means
orders entered into our system are displayed in the kitchen and accounted for as
is already customary, requiring no changes to the operator's back-of-the-house
processes.

ABILITY TO CAPTURE CUSTOMER DATA. Using Internet advertising-style
display, tracking and data capture methods, our system offers operators the
ability to quantitatively track customer purchasing preferences, and well as
capture customer survey and demographic data (e.g. email addresses, zip codes
and cell phone numbers).

PROVEN COST EFFECTIVENESS, SCALABILITY AND RELIABILITY. We believe we are a
unique technology vendor in that we operate our own restaurants to prototype and
test our system. Because we are an operator and feel an operator's pain, our
system is built with a single-minded focus on delivering return-on-investment to
the operator. In addition, as a result of our 2+ year experience in developing,
installing, maintaining and operating close to 400 screens across multiple
venues, running 7 days a week and generating multi-million dollar annual
revenues with 99.9% system uptime, we believe that we offer operators unmatched
system scalability and reliability.

Some representative installations/applications of our system are described
below.

CASUAL FULL SERVICE RESTAURANTS. We are currently piloting a 13 screen
table-side and booth-mounted installation in a Chili's restaurant at the Ft.
Lauderdale, Florida airport, running fully POS integrated self-ordering and
payment, with full entertainment and branding/promotional functionality. The
implementation is designed to drive labor efficiencies and increase customer
satisfaction through speed of service. Based on the success of this
installation, we will seek to become a Chili's system-wide approved technology
vendor.

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<PAGE>

       QUICK SERVICE RESTAURANTS (QSR). Table and booth-mounted screens offering
digital entertainment (with a focus on kid's entertainment), promotional
content, customer surveys and email data capture. This implementation is
designed to help foster a sit-down family-oriented dining environment to drive
incremental sit-down business and to enhance operator promotional efforts.

       We have been prototyping this system in a major QSR restaurant in Texas
over the past several months. Based on the success of this prototype, we have
begun the corporate vendor approval process with two of the major QSR chains. To
facilitate this process, we have partnered with a group of sales executives with
prior experience in securing entertainment technology vendor approvals with the
major QSR chains.

       FAST CASUAL RESTAURANTS. A kiosk-style self-order and credit card-only
self-payment system designed to reduce ordering/payment lines. We are awaiting
approvals to install a prototype of this system in a major fast casual
restaurant in an airport in the Southwest U.S.

       STADIUMS/ARENAS. A kiosk-style or wall/table-mounted self-order and
credit card-only self-payment system designed to facilitate labor-efficient
on-demand food and beverage service in luxury suites and stadium "premier"
seating. We are currently in advanced discussions on installing this system in
two major arenas.

       AIRPORTS. Table or wall-mounted screens running fully POS integrated
self-ordering and payment, with full entertainment and branding/promotional
functionality. Screens are deployed in airport concourses/gate waiting areas and
offer food and beverage service from multiple restaurants operated by the
airport concessionaire. We are awaiting approvals to install a prototype of this
system in an airport in the Southwest U.S.

PRODUCT PRICING

       We license our software on an annually-renewable basis and resell the
hardware required to run our software. Generally speaking, our pricing strategy
is to minimize the all-in upfront costs of our system and rely on annual
subscription-based licensing fees for our revenue. We are actively seeking to
develop advertising and sponsorship models that will subsidize the upfront
hardware costs of our system.

HARDWARE PLATFORMS

       Guests access our system through 12"-17" touch screen thin-client units
outfitted with a magnetic stripe reader. Screens can be mounted to tables or in
walls, pole-mounted or deployed as a standalone kiosk. Due to their solid state
design (no fans or other moving parts), the touch screen units are generally
certified for a mean life of 50,000 hours. If a touch screen unit should fail,
it is designed to be easily removed and replaced with a new unit.

       The touch screen units require power wiring and Ethernet or wireless
connectivity to a small local server. This server is usually 4ft x 4ft x 4ft (or
smaller) and placed inconspicuously in the ceiling or an area in the back of the
facility and is Internet connected. All wiring can be concealed in existing
furniture and structures.

       Our system is designed to be fully PCI compliant and our proprietary POS
gateway interface allows us to integrate with virtually all major POS software
systems.

       Content is managed from a centralized data center and pushed out to local
servers over the Internet.

REGIONAL AND INTERNATIONAL LOCALIZATION

       Our automated, real-time user interface language translation feature and
modular content management and distribution system allow us to efficiently
create and maintain regionally and internationally-localized versions of the
platform.

SALES, SERVICE AND SUPPORT

       We conduct our technology sales efforts with a mix of in-house and
outsourced resources. Our senior management team, including our CEO, President,
CTO, VP of sales/restaurant operations and VP of infrastructure, is very
actively involved in sales efforts on a day-to-day basis.

       In addition, we have established a contractual, commission-based
relationship with Ted Leovich, the former VP of franchising for Brinker
International. Mr. Leovich focuses on representing our interests with major
domestic and international restaurant operators.

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<PAGE>

       We have also established a contractual, commission-based relationship
with Allied Sales Professionals, a group of established independent sales
agents, to sell our technology into the hospitality industry with a focus on the
quick service and broader restaurant markets in North America. The principals of
Allied Sales Professionals have a combined 80+ years in entertainment technology
sales experience in multiple markets, with an emphasis on the quick service
segment of the restaurant industry.

       We currently handle installation, training and technical support for our
products with our in-house team. Most technical support is handled via a
dedicated toll free number and remote access to the local server. To the extent
onsite support is required, which we expect to be minimal, we dispatch a
technician to the location.

       Going forward, we expect to outsource day-to-day installation, training
and technical support to third party providers.

COMPETITION - TECHNOLOGY LICENSING

       We are aware of a number of companies that offer technology that is
similar to various components of our system. In particular, companies that offer
self-service ordering/payment kiosks (but no entertainment) include EMN8 and
Nextep Systems. Tabletop Media offers a table-side pay-at-the table solution,
with promotional capabilities and limited entertainment (but no ordering). NTN
Buzztime offers in-venue interactive entertainment (but no ordering or payment).
Kidzpace Interactive offers free play interactive electronic game systems with a
focus on quick service restaurants (but without promotional/advertising
capabilities and no ordering/payment).

       We are not aware of any company that offers a fully-integrated
table-side/kiosk deployable, self-service ordering/payment and interactive
entertainment/promotional/advertising system with the depth and breadth of
functionality that matches ours.

EMPLOYEES - TECHNOLOGY LICENSING

       As of the date of this report, company-wide we employ 18 corporate-level
staff.

       In our Technology Licensing business we employ a CTO and 7 software
engineers; and a VP of infrastructure and 4 other infrastructure development,
installation, training and support personnel.

       In addition, our President is predominantly engaged in the Technology
Licensing business segment and our CEO, Controller and VP of sales/restaurant
operations are partially allocated to the Technology Licensing business segment.

       A corporate-level bookkeeper is fully allocated to the Restaurant
Operations business segment, as described below.

RESEARCH AND DEVELOPMENT - TECHNOLOGY LICENSING

       Historically, as we developed our base technology platform, we have spent
material sums on outside engineering contractors, including spending
approximately $297,500 on outside contractors during the first nine months of
2008. As we have now reached completion of our base platform, we plan to
dramatically reduce our use of outside engineering contractors during the
remainder of 2008 and do not expect to spend material amounts on outside
engineering contractors in 2009.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS - TECHNOLOGY LICENSING

       Our success depends upon our ability to protect our core technology and
intellectual property. To accomplish this, we rely on a combination of
intellectual property rights, including trade secrets, copyrights and
trademarks, as well as customary contractual protections.

       We view our trade secrets and know-how as a significant component of our
intellectual property assets, as we have spent a number of years designing and
developing our software platform, which we believe differentiates us from our
competitors.

       We maintain a policy requiring our employees, consultants and other third
parties to enter into confidentiality and proprietary rights agreements and to
control access to software, documentation and other proprietary information.

       The intellectual property rights to our software platform are held by
uWink Interactive, Inc., a wholly owned subsidiary of uWink, Inc. uWink, Inc.
holds the various copyrights and trademarks relating to our restaurant
operations.

                                       24



<PAGE>

FACILITIES - TECHNOLOGY LICENSING

       Our Technology Licensing business is operated out of our corporate
offices located at 16106 Hart Street, Van Nuys, California 91406. This property
consists of approximately 3,850 square feet of office and warehouse space at the
base rental rate of $4,742 per month.

GROWTH STRATEGY - TECHNOLOGY LICENSING

       As outlined under "Introduction" above, we believe that our technology is
directly responsive to many of the challenges (as highlighted by USA TODAY)
facing the casual dining industry (and, by extension, the broader hospitality
industry). Moreover, the pressure on operators to differentiate, create
cost/pricing efficiencies, improve service and create a contemporary and (in
certain instances) family-friendly environment is, in our view, all the greater
in an economic environment driven by reduced consumer spending combined with
rising raw material and labor costs.

       As described above, we believe that operators are now beginning to
recognize that efficiency and satisfaction-creating customer-facing information
and entertainment technologies will play an important role in addressing the
challenges facing the hospitality industry. As this trend unfolds and
accelerates, we believe we are uniquely positioned to become the
category-leading provider of in-venue, customer-facing, interactive digital
technologies to hospitality. Consequently, going forward, we are focusing our
efforts on third-party licensing of our technology.


                              RESTAURANT OPERATIONS

       The uWink restaurant is a casual full service restaurant serving a
selection of appetizers, entrees, burgers, salads, pastas and desserts, along
with a full bar. The concept was designed to create a fun, casual atmosphere
where customers can enjoy freshly prepared, reasonably priced meals while
interacting with our media, games and entertainment platform through our
tabletop touch interface. Our average check is approximately $16 per person,
including alcoholic beverages.

       We opened our first uWink restaurant in Woodland Hills, California in
October 2006. We opened our second restaurant at the Hollywood & Highland Center
in Hollywood, California on June 17, 2008 and our third restaurant in Mountain
View, California on September 15, 2008.

COMPETITION - RESTAURANT OPERATIONS

       The fast casual and casual full service dining segments of the restaurant
industry are highly competitive and fragmented. In addition, fast casual and
casual full service restaurants compete against other segments of the restaurant
industry, including quick service restaurants. The number, size and strength of
competitors vary by region. All of these restaurants compete based on a number
of factors, including taste, speed of service, value, name recognition,
restaurant location and overall customer service. Competition within the fast
casual and casual full service restaurant segments, however, focuses primarily
on taste, quality and the freshness of the menu items and the ambience and
condition of each restaurant.

       We compete with national and regional fast casual, quick service and
casual full service dining restaurants, as well as a variety of locally owned
restaurants and the deli sections and in-restaurant cafes of several major
grocery restaurant chains. Certain of our menu offerings, price points,
restaurant decor and other aspects of our restaurants may be similar to those of
our competitors, including California Pizza Kitchen and BJ's Restaurant and
Brewhouse. In addition, there are restaurant companies, such as Dave & Busters,
that offer away-from-the-table electronic games as part of the experience. Many
bars and restaurants also offer some form of trivia game (both electronic and
paper and pencil) and some quick service restaurants have experimented with
electronic kiosk ordering. We are aware that many of our competitors have
greater financial and other resources, have been in business longer, have
greater name recognition and are better established in the markets where our
restaurants are located.

EMPLOYEES - RESTAURANT OPERATIONS

       To staff our restaurants, we employ an executive chef/manager and 5 other
managers, each of whom earn an annual salary, and approximately 110 full-time
and part-time non-managerial restaurant staff, who are generally compensated on
an hourly basis.

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<PAGE>

       In addition, we employ a bookkeeper to perform the day-to-day accounting
functions of the restaurants and our CEO, Controller and VP of sales/restaurant
operations are partially allocated to the Restaurant Operations business
segment.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS - RESTAURANT OPERATIONS

       uWink, Inc. holds the various copyrights and trademarks relating to our
restaurant operations. The intellectual property rights to the software platform
used in our restaurants are owned by uWink Interactive, Inc., a wholly owned
subsidiary of uWink, Inc.

FACILITIES - RESTAURANT OPERATIONS

       Effective as of April 10, 2006, we secured an approximately ten-year
lease on the location for our first uWink restaurant 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, uWink, Inc., Mr. Bushnell and Promenade L.P.
entered into an assignment agreement pursuant to which Mr. Bushnell assigned his
rights under the lease to us (but without relieving Mr. Bushnell of his
liability for the performance of the lease). In connection with this assignment,
uWink, Inc. agreed with Mr. Bushnell that, should we fail to perform under the
lease and Mr. Bushnell becomes 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 payment under the lease is $176,220 through January 31,
2009; increasing in each successive year to $216,728 by the last year of this
lease, which expires on 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 $3,524,400 through January
31, 2009, increasing in specified annual increments to $4,334,567 in the last
year of this lease.

       On October 25, 2007, uWink California entered into a definitive agreement
and sublease to acquire the leasehold interest of a formerly operating
restaurant located at 401 Castro Street, Mountain View, CA 94041. This location
consists of 6,715 square feet. The annual rent payment under the lease is
$228,000, subject to annual adjustment based on increases in the consumer price
index capped at 5%. uWink California is also obligated to pay its pro-rata share
of the property's operating expenses. The lease expires on November 30, 2022.

       On December 17, 2007, uWink California entered into a definitive lease
agreement with CIM/H&H Retail, L.P. for the uWink restaurant at 6801 Hollywood
Boulevard, Hollywood, California 90028. uWink California's obligations under
this lease are guaranteed by uWink, Inc. This location consists of 7,314 square
feet. The minimum annual rent payment under the lease is $182,850, subject to
annual 3% increases. The lease expires on July 31, 2018. If gross sales from
this location exceed certain annual thresholds, uWink California is obligated to
pay additional percentage rent over and above the minimum annual rent described
above. The percentage rent obligation is equal to 8% of gross sales in excess of
$5,000,000, with this threshold being subject to 3% annual increases. uWink
California is obligated to pay our pro-rata share of the property's operating
expenses.

FUTURE STRATEGY - RESTAURANT OPERATIONS

       In view of the opportunity we see in technology licensing to third party
hospitality operators (described above), coupled with our perception of the
short to medium-term over-capacity in the casual dining industry, we expect to
pursue third-party technology licensing going forward and do not have any
current plans to open additional uWink restaurants.


BASIS OF PRESENTATION

       In 2006, with the commencement of restaurant operations, we adopted a
52/53-week fiscal year ending on the Tuesday closest to December 31st, and
fiscal quarters ending on the Tuesday closest to March 31, June 30 and September
30, as applicable, for financial reporting purposes. As a result, our 2006
fiscal year ended on January 2, 2007, our 2007 fiscal year ended on January 1,
2008, our fiscal third quarter of 2007 ended on October 2, 2007 and our fiscal
third quarter of 2008 ended on September 30, 2008. For purposes of the following
discussion, the periods ended September 30, 2008 and October 2, 2007 are
sometimes referred to as fiscal quarters.

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<PAGE>

RESULTS OF OPERATIONS

       Nine months ended September 30, 2008 compared with the nine months ended
October 2, 2007.

       Net sales for the three and nine months ended September 30, 2008
increased by $356,998 and $107,949 (53% and 5.5%) to $1,030,333 and $2,078,854,
from $673,335 and $1,970,905, respectively, for the three and nine months ended
October 2, 2007.

       Restaurant sales revenue from our Restaurant Operations business segment
amounted to $939,841 (91% of total revenue) and $1,988,281 (96% of total
revenue) for the three and nine months ended September 30, 2008, compared to
$659,560 (98% of total revenue) and $1,899,532 (96% of total revenue) for the
three and nine months ended October 2, 2007. During the nine months ended
September 30, 2008 we operated 3 restaurants: our Woodland Hills, CA restaurant,
which was open during the entire nine month period; our Hollywood, CA
restaurant, which opened on June 17, 2008; and our Mountain View, CA restaurant,
which opened on September 15, 2008. During the nine months ended October 2, 2007
we operated only our Woodland Hills, CA restaurant. Revenue from our Hollywood
restaurant amounted to $527,082 and $609,152 for the three and nine months ended
September 30, 2008. Revenue from our Mountain View restaurant amounted to
$74,527 for the last two weeks of the three and nine months ended September 30,
2008. Revenue from our Woodland Hills restaurant amounted to $338,232 and
$1,304,601 for the three and nine months ended September 30, 2008, compared to
$659,560 and $1,899,532 for the comparable periods in 2007.

       During the nine months ended October 2, 2007, our Restaurant Operations
business segment generated additional revenue of $22,000 through $20,000 of
non-refundable franchise area development fees and $2,000 of non-refundable
franchise application fees.

       Our Technology Licensing business segment generated $90,492 and $90,573
of revenue for the three and nine months ended September 30, 2008, respectively,
consisting of software licensing fees related to third-party technology
installations in Lancaster, California and Ft. Lauderdale, Florida. We generated
no revenue from Technology Licensing during the comparable periods in 2007. We
record amounts that have been invoiced to Technology Licensing customers but not
yet recognized as revenue as deferred revenue. At September 30, 2008, we had
$16,019 of deferred revenue from our Technology Licensing business segment,
representing certain amounts invoiced in respect of our third party technology
installation in Ft. Lauderdale, Florida (the remaining deferred revenue of
$24,980 relates to historical, discontinued licensing activities).

       During the nine months ended October 2, 2007, we generated other revenue
of $49,373, consisting of $14,000 of licensing revenue under our agreement with
SNAP Leisure LLC; and the liquidation of $35,373 of our remaining SNAP! and Bear
Shop inventories.

       Cost of sales for the three and nine months ended September 30, 2008
totaled $296,961 and $619,742 compared to $193,272 and $597,177 for the three
and nine months ended October 2, 2007, representing an increase of $103,690 and
$22,566 (54% and 3.8%), respectively.

       Cost of sales for our Restaurant Operations business segment amounted to
$295,792 and $618,573 (31.5% and 31.1% of restaurant revenue) in the first three
and nine months of 2008, respectively. For the comparable periods in 2007, cost
of sales for our Restaurant Operations amounted to $187,186 and $581,306 (28.4%
and 30.6% of restaurant revenue).

       Cost of sales for our Technology Licensing business segment amounted to
$1,169, reflecting the cost associated with the resale of certain computer
hardware.

       Non-restaurant cost of sales amounted to $15,871 for the first nine
months of 2007. We sold 27 Bear Shop machines in the first nine months of 2007
for $27,000. There was no cost of sales associated with these machines, as they
had been fully reserved for in prior periods. As a result, our non-restaurant
gross margin was 78% for the first nine months of 2007.

       Selling, general and administrative expenses for the three and nine
months ended September 30, 2008 totaled $2,398,362 and $6,057,105 compared to
$1,501,148 and $5,046,382 for the three and nine months ended October 2, 2007,
representing an increase of $897,214 and $1,010,723 (60% and 20%), respectively.
This increase is largely attributable to $197,000 of non-recurring consulting
fees relating to the implementation of certain internal procedures required by
the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") and approximately $260,000 of
non-recurring pre-opening costs relating to the opening of our Hollywood and


                                       27



<PAGE>

Mountain View restaurants, together with higher restaurant SG&A resulting from
the opening of our Hollywood and Mountain View restaurants in 2008. Restaurant
SG&A (including restaurant salaries but excluding pre-opening costs) amounted to
approximately $1,622,000 in the first nine months of 2008 as compared to
approximately $1,197,206 in the first nine months of 2007; corporate salaries
were approximately $1,540,000 in the first nine months of 2008 versus
approximately $1,260,412 in the first nine months of 2007; engineering
consulting expense was approximately $297,530 in the first nine months of 2008
versus $268,912 in the first nine months of 2007; and professional fees were
approximately $379,191 (including $197,000 of Sarbanes-Oxley implementation
fees) in the first nine months of 2008 compared to approximately $459,589 in the
first nine months of 2007. Employee stock option expense was $1,095,700 in the
first nine months of 2008 as compared to $1,005,318 in the first nine months of
2007. Depreciation and amortization expense was $416,502 in the first nine
months of 2008 as compared to $237,503 in the first nine months of 2007.

       Approximately $3,369,000 of our total SG&A expense for the nine months
ended September 30, 2008 is attributable to our Technology Licensing business
segment and approximately $2,399,000 is attributable to our Restaurant
Operations business segment. See Note 11 to the financials statements above.

       As a result, our loss from operations for the three and nine months ended
September 30, 2008 was $1,664,990 and $4,597,994, compared to a loss of
$1,021,085 and $3,672,655 for the three and nine months ended October 2, 2007,
representing an increase of $643,905 (63%) and $925,339 (25%), respectively.

       Total other income for the three and nine months ended September 30, 2008
consisted of interest income of $25,208 and $98,271, respectively.

       Total other expense for the three and nine months ended October 2, 2007
was $455,880 and $444,568, consisting largely of $408,435 of beneficial debt
conversion expense in the first nine months of 2007 relating to approximately $2
million of convertible promissory notes issued in 2007. The notes were
convertible, at the option of the holder, into the same securities issued by us
in (and on the same terms and conditions pari passu with the investors in) any
offering of our securities that results in gross proceeds to us of at least
$3,000,000. Upon conversion, the holder was entitled to receive, as a conversion
incentive, additional securities equal to 20% of the aggregate principal value
plus accrued interest converted. On November 7, 2007, we completed a financing
transaction that triggered the conversion rights in these notes. Accordingly, we
recorded the 20% conversion incentive on the full amount of the notes plus
accrued interest, amounting to $408,435, in the statement of operations for the
three and nine months ended October 2, 2007. In addition, during the nine months
ended October 2, 2007 we recorded $58,076 of gain on settlement of debt income
resulting from the settlement at a discount of accounts payable owing to outside
law firms, as well as interest expense of $95,159.

       As a result, our net loss for the three and nine months ended September
30, 2008 totaled $1,639,783 and $4,500,523, compared to a net loss of $1,476,966
and $4,118,023 for the three and nine months ended October 2, 2007, representing
an increase of $162,817 (11%) and $382,500 (9.3%), respectively.

LIQUIDITY AND CAPITAL RESOURCES

       As of September 30, 2008, our cash position was $1,265,526 and we had
working capital of $108,706. 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 November 7, 2007 we raised approximately $9.3 million of net proceeds
pursuant to a registered offering of our equity securities. We used the proceeds
from this transaction for new restaurant development and working capital
purposes.

       We spent approximately $1,100,000 (net of landlord tenant improvement
allowances) on the build-out of our Hollywood, California uWink restaurant,
which opened for business on June 17, 2008. We have applied to the Hollywood
landlord to receive a $182,850 tenant improvement allowance payment in
accordance with the terms of our lease. As a condition of receiving this
payment, we are required to post a standby letter of credit in favor of the
landlord that will burn off over a 42 month period provided that we are at all
times in compliance with the lease. We expect to complete this transaction prior
to the end of 2008. We spent approximately $1,500,000 (including pre-opening
rent expense) on the build-out of our Mountain View, California restaurant.

       As of the date of this report, we have no material debt obligations and
are not in default on any material debt obligation. We have filed as exhibits
with the SEC all of our material financing arrangements.

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<PAGE>

       Following the opening of our Mountain View restaurant, we have no current
plans to open additional company-owned uWink restaurants. Consequently, in our
Restaurant Operations business segment we are executing a cost-rationalization
strategy to ensure that this business segment will operate on a self-sustaining
basis without material additional capital requirements, beyond a minimal cash
working capital balance, for at least the next 12 months. As part of this
strategy, we are reviewing our leases and, where appropriate, are seeking to
reduce rental payments to levels commensurate with the current business
environment. We believe that our Restaurant Operations business segment can
operate with minimal working capital because we collect restaurant revenue by
cash or credit card at the time of visit and turn restaurant inventory quickly,
while our restaurant suppliers, generally speaking, extend 30 day payment terms
to us.

       Having now completed the prototyping and testing of our base technology
platform and begun third-party licensing, we are able to operate our Technology
Licensing business segment with lower levels of software engineering and related
expenses. Consequently, going forward, we expect that we can operate our
Technology Licensing segment with annual cash operating cost requirements in the
range of $1.5-$1.6 million (including general corporate overhead).

       As a result, we expect that we can currently satisfy our cash
requirements for the next 6-9 months.

CASH POSITION AND SOURCES AND USES OF CASH

       For the first nine months of 2008, we used $2,840,945 of cash for
operations, as compared to a use of $1,975,199 for the first nine months of
2007.

       Our major uses of operating cash in the first nine months of 2008 were to
pay salaries of approximately $2,436,000 ($1,540,000 of corporate salaries and
$896,000 of restaurant salaries, excluding pre-opening but including
training), cash non-salary restaurant operating expenses of $344,872 (excluding
rent), cash rent expense of $406,740, $297,530 of product development expenses
(largely outside software engineering consultants), $379,000 of professional
fees and $260,000 of restaurant pre-opening expenses. Our major source of cash
during the period was our overall gross margin of $1,459,111. The non-cash
transactions that reduced cash used in operations relative to our net loss
included: $1,095,700 of non-cash expense relating to employee stock options and
restricted stock and $416,502 of depreciation and amortization expense.

       Our major uses of cash in operations in the first nine months of 2007
were to pay cash employee compensation and benefits of approximately $2.0
million, cash non-salary restaurant operating expenses of $438,548 (excluding
rent) and cash rent expense of $255,060, $268,912 of product development
expenses (largely outside software engineering consultants), and $459,589 of
professional fees. Our major source of cash during the period was our overall
gross margin of $1,373,728. The non-cash transactions that reduced cash used in
operations relative to our net loss included: $1,005,318 of non-cash expense
relating to employee stock options and restricted stock, beneficial debt
conversion expense of $408,435, $237,503 of depreciation and amortization
expense, an increase in accounts payable of $239,837, an increase in accrued
expenses of $171,375 and an increase in our accrued payroll of $226,630.

       During the first nine months of 2008, we used $3,187,548 in investing
activities, largely reflecting investments in leaseholds and technology for our
new Hollywood and Mountain View restaurants, as well as corporate computer
hardware purchases. During the nine months ended October 2, 2007, we used
$188,635 in our investing activities, largely related to equipping the outside
patio area of our Woodland Hills restaurant, computer hardware purchases and
expense relating to new restaurant construction.

       During the first nine months of 2008, we had no financing activities.
During the nine months ended October 2, 2007, our financing activities provided
cash in the amount of $2,120,323. Net proceeds from debt issuance amounted to
$1,780,580 in the first nine months of 2007, largely due to the sale of
$1,817,500 of convertible notes to 30 investors (including $175,000 from the
brother-in-law of our CEO, $125,000 from our CEO and $25,000 from our CFO). In
addition, we received cash proceeds of $339,743 from the exercise of warrants
and options in the first nine months of 2007. Other than proceeds from option
and warrant exercises, we received no proceeds from the issuance of common stock
to investors in the first nine months of 2007.

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<PAGE>

CRITICAL ACCOUNTING POLICIES AND 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, 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.

       SOFTWARE DEVELOPMENT COSTS

       Software development costs related to computer games and network and
terminal operating systems developed by us 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 our 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

       We recognize revenue related to technology hardware and software sales
and licensing in accordance with the requirements of Staff Accounting Bulletin
(SAB) No. 104, "Revenue Recognition", Emerging Issues Task Force (EITF) 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables", and AICPA
Statement of Position (SOP) No. 97-2, "Software Revenue Recognition" and other
applicable revenue recognition guidance and interpretations. Net revenues
include sales and/or licensing of hardware, software and peripherals, and/or
services. We recognize revenue for these products when it is realized or
realizable and earned. Revenue is considered realized and earned when (1)
persuasive evidence of an agreement exists; (2) delivery of the product has
occurred; (3) the fee is fixed or determinable; (4) collectibility is reasonably
assured; and (5) remaining obligations under the agreement are insignificant.

       In most instances, revenue is generated under sales agreements with
multiple elements, which are comprised of a combination of hardware sales,
licensing fees from customers for our software, professional services associated
with installation and training and customer support. We offer clients
post-contract support in the form of software maintenance, telephone support and
unspecified software enhancements.

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<PAGE>

       In applying the provisions of EITF No. 00-21, we have determined that we
do not have objective and reliable evidence of fair value for each element of
our sales agreements that contain an annual subscription to our software and
customer support. As a result, these elements within our multiple-element sales
agreements do not qualify for treatment as separate units of accounting.
Therefore, we account for fees received under our agreements that contain these
multiple elements as a single unit of accounting and recognize the entire
arrangement ratably over the term of the related agreement, commencing upon the
later of the agreement start date or when all revenue recognition criteria have
been met. Amounts that have been invoiced are initially recorded in accounts
receivable and deferred revenue.

       We resell various hardware products, including touch screen computers,
servers, printers, networking equipment and other related computer equipment. In
accordance with SAB 104, hardware revenue is recognized when we have an
arrangement, the risk of ownership has passed to the buyer, there is a fixed and
determinable price and collectibility is reasonably assured. If at the time of
shipment we have not met these four criteria, recognition of the hardware
revenue is deferred until all four criteria are determined to have been met.

       Our professional services revenues consist of fees generated from
consulting, custom development, installation and training. Revenues related to
professional services are generally recognized on a time and materials basis as
the services are performed.

       Restaurant revenue from food, beverage and merchandise sales is
recognized when payment is tendered at the point of sale. Revenue from the sale
of gift cards is deferred and recognized upon redemption.

       Franchise revenue is recognized when we have performed substantially all
of our obligations as franchisor. Our area development fee consists of a
one-time payment in consideration of the services we perform in preparation of
executing each area development agreement. Substantially all of these services,
which include, but are not limited to, conducting market and trade area
analysis, a meeting with our executive team, and performing potential franchise
background investigation, are completed prior to our execution of the area
development agreement and receipt of the corresponding area development fee. As
a result, we recognize the non-refundable portion of this fee in full upon
receipt. We recognize the non-refundable portion of franchise application fees
in full upon receipt as these fees are in consideration of the services we
perform in evaluating the franchise application, which are completed
concurrently with receiving the application. Refundable franchise fees received
are recorded as a short-term liability until such time as the fee becomes
non-refundable.

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;

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<PAGE>

         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 fiscal year ended January 1, 2008.

       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. 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.

ITEM 4T. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The management of uWink, Inc. is responsible for establishing and maintaining
adequate internal control over financial reporting as such term is defined in
Exchange Act Rules 13a-15(f) and 15d-15(f). uWink's internal control over
financial reporting was designed to provide reasonable assurance to the
Company's management and Board of Directors regarding the preparation and fair
presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation.

Under the supervision and participation of the Company's Chairman and Chief
Executive Officer and the Chief Operating Officer, management conducted an
evaluation of the effectiveness of the Company's internal control over financial
reporting as of September 30, 2008, based on the framework established by the
Committee of Sponsoring Organizations of the Treadway Commission in INTERNAL
CONTROL -- INTEGRATED FRAMEWORK (commonly referred to as the COSO framework).
Based on its evaluation, management concluded that the Company's internal
control over financial reporting was effective as of September 30, 2008, based
on the criteria outlined in the COSO framework.

(b) 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. There has not been any change in our internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) during the quarter ended September 30, 2008 that has materially
affected, or is likely to materially affect, our internal control over financial
reporting.


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<PAGE>

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

(a) Exhibits

      REGULATION
      S-K NUMBER                          EXHIBIT
      ----------                          -------

         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.


                                       33



<PAGE>

                                   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.


November 14, 2008                          By:  /s/ NOLAN K. BUSHNELL
                                                ------------------------
                                                Nolan K. Bushnell
                                                Chief Executive Officer


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



                                       34