<PAGE>

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

                                   FORM 10-QSB
(Mark One)

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

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

       For the transition period from ________________ to _______________

                                     0-29873
                            (Commission file number)

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

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

              5443 BEETHOVEN STREET, LOS ANGELES, CALIFORNIA 90066
                    (Address of principal executive offices)

                                 (310) 827-6900
                           (Issuer's telephone number)

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

         The number of shares of common stock outstanding as of November 15,
2004 was 9,787,360

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

<PAGE>

                                   UWINK, INC.
                                      INDEX

                                                                           Page
                                                                          Number
                                                                          ------

PART I. FINANCIAL INFORMATION                                                2

Item 1. Financial Statements                                                 2

        Consolidated Balance Sheet as of September 30, 2004 (unaudited)      2

        Consolidated Statements of Operations for the
        three and nine months ended September 30, 2004 and 2003 (unaudited)  3

        Consolidated Statements of Cash Flows for the
        nine months ended September 30, 2004 and 2003 (unaudited)            4

        Notes to Consolidated Financial Statements (unaudited)               5

Item 2. Management's Discussion and Analysis or Plan of Operations           9

Item 3. Controls and Procedures                                             13

PART II.OTHER INFORMATION                                                   14

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds         14

Item 6. Exhibits and Reports on Form 8-K                                    14

SIGNATURES                                                                  15


                                       1
<PAGE>

PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

<TABLE>
                               UWINK, INC. AND SUBSIDIARY
                               CONSOLIDATED BALANCE SHEET

<CAPTION>

                                                        September 30,     December 31,
                                                            2004              2003
                                                        -------------     -------------
                                                        (unaudited)
<S>                                                     <C>               <C>
                                         ASSETS

CURRENT ASSETS
     Cash and cash equivalents                          $      2,910      $  1,156,170
     Account receivable, net of allowance
        for doubtful accounts of $0                          720,261           132,157
     Inventory, net of obsolescence
        reserve of $99,745                                   724,077           179,136
     Prepaid expenses and other current
        assets                                               357,600            41,530
                                                        -------------     -------------
TOTAL CURRENT ASSETS                                       1,804,848         1,508,993

PROPERTY AND EQUIPMENT, net of accumulated
     depreciation of $396,322                                155,607           134,332
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net of
     accumulated amortization of $780,612                    268,768            46,777

                                                        -------------     -------------
TOTAL ASSETS                                            $  2,229,223      $  1,690,102
                                                        =============     =============

                          LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                   $    727,138      $    796,807
     Accrued expenses                                        167,532            68,615
     Accrued payroll and related benefits                         --           252,688
     Due to related parties                                   84,280            57,412
     Convertible note payable, net of
        discount of $46,106                                  150,000           228,894
     Unearned revenue                                             --           159,722

                                                        -------------     -------------
TOTAL CURRENT LIABILITIES                                  1,128,950         1,564,138
                                                        -------------     -------------

STOCKHOLDERS' EQUITY
     Common stock, $0.001 par value; 50,000,000 shares
        authorized; 10,628,594 and 8,444,049 shares
        issued and outstanding, respectively                  10,628             8,444
     Additional paid-in capital                           20,428,778        16,888,831
     Accumulated deficit                                 (19,339,133)      (16,771,311)
                                                        -------------     -------------
TOTAL STOCKHOLDERS' EQUITY                                 1,101,023           125,964
                                                        -------------     -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $  2,229,223      $  1,690,102
                                                        =============     =============

  The accompaying notes are integral part of these consolidated financial statements.


                                           2
</TABLE>
<PAGE>


<TABLE>
                                            UWINK, INC. AND SUBSIDIARY
                                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                        THREE MONTHS ENDED                NINE MONTHS ENDED
                                                  -----------------------------     ----------------------------
                                                  SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,
                                                      2004             2003             2004             2003
                                                  ------------     ------------     ------------     ------------
<S>                                               <C>              <C>              <C>              <C>
NET SALES                                         $   745,041      $  (192,077)     $ 1,364,672      $    41,671

COST OF SALES                                          69,665           11,851          841,049            5,681
                                                  ------------     ------------     ------------     ------------
GROSS PROFIT                                          675,376         (203,928)         523,623           35,990
                                                  ------------     ------------     ------------     ------------
OPERATING EXPENSES
     Selling, general and
       administrative expenses                        968,046          246,180        2,979,550          455,783
     Research and development                          31,414           35,985          293,412          115,120
                                                  ------------     ------------     ------------     ------------
TOTAL OPERATING EXPENSES                              999,960          282,165        3,272,962          570,902
                                                  ------------     ------------     ------------     ------------
LOSS FROM OPERATIONS                                 (324,584)        (486,093)      (2,749,339)        (534,912)
                                                  ------------     ------------     ------------     ------------
OTHER INCOME (EXPENSE)
     Other income                                           3           44,337              478           48,433
     Debt discount expense                                 --          (47,742)        (138,719)         (47,742)
     Gain on settlement of debt                        34,939           48,396          375,739           48,396
     Interest expense                                  (7,247)         (91,507)         (55,231)         (93,964)
                                                  ------------     ------------     ------------     ------------
TOTAL OTHER INCOME (EXPENSE)                           27,695          (46,516)         182,267          (44,877)
                                                  ------------     ------------     ------------     ------------
LOSS BEFORE PROVISION FOR INCOME TAXES               (296,889)        (532,608)      (2,567,072)        (579,789)

PROVISION FOR INCOME TAXES                                 --               --               --               --
                                                  ------------     ------------     ------------     ------------
NET LOSS                                             (296,889)        (532,608)      (2,567,072)        (579,789)
                                                  ------------     ------------     ------------     ------------
NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS        $  (296,889)     $  (532,608)      (2,567,072)     $  (579,789)
                                                  ============     ============     ============     ============
NET LOSS PER COMMON SHARE - BASIC AND DILUTED     $     (0.03)     $     (0.18)           (0.26)     $     (0.20)
                                                  ============     ============     ============     ============
WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - BASIC AND DILUTED                9,668,119        2,929,823        9,799,067        2,929,823
                                                  ============     ============     ============     ============

               The accompaying notes are integral part of these consolidated financial statements.


                                                        3
</TABLE>
<PAGE>
<TABLE>

                                       UWINK, INC. AND SUBSIDIARY
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                                  NINE MONTHS ENDED
                                                                          -----------------------------
                                                                          SEPTEMBER 30,    SEPTEMBER 30,
                                                                              2004             2003
                                                                          ------------     ------------
                                                                           (unaudited)      (unaudited)
<S>                                                                       <C>              <C>
     CASH FLOW FROM OPERATING ACTIVITIES:
        Net loss                                                          $(2,567,072)     $  (579,789)
        Adjustment to reconcile net loss to net cash
          used in operating activities:
            Amortization of debt discount on convertible note payable         138,719               --
            Amortization of options issued below market price                 161,466               --
            Depreciation and amortization expense                             114,252           67,500
            Issuance of common stock for services                             508,777               --
        Changes in operating assets and liabilities:
          Accounts receivable                                                (588,104)          14,441
          Inventory                                                          (544,942)           1,976
          Deposits                                                           (272,803)              --
          Prepaid expenses and other current assets                           (43,317)          35,291
          Accounts payable, net of forgiveness of
             trade payables in the amount of ($357,739)                      (324,656)        (169,631)
          Accrued expenses                                                    (61,769)        (244,658)
          Accrued payroll and related benefits                               (212,002)        (137,876)
          Unearned revenue, net of converson in
             the amount of $125,000                                           (34,722)         163,889
                                                                          ------------     ------------
     Net cash used in operating activities                                 (3,726,173)        (848,858)
                                                                          ------------     ------------

     CASH FLOW FROM INVESTING ACTIVITIES:
        Payment for property and equipment                                    (88,750)        (107,278)
        Payment for capitalized product development costs                    (268,768)          26,979
                                                                          ------------     ------------
     Net cash used in investing activities                                   (357,517)         (80,299)
                                                                          -----------      -----------

     CASH FLOW FROM FINANCING ACTIVITIES:
        Proceeds from issuance of debt, net of conversion of debt             105,501         (352,256)
        Proceeds from advances from related parties                            33,500           (5,000)
        Proceeds from issuance of common stock                              3,167,209        1,307,298
        Payment of offering costs                                            (375,780)              --
                                                                          ------------     ------------
     Net cash provided by financing activities                              2,930,430          950,042
                                                                          ------------     ------------

     NET INCREASE (DECREASE) IN CASH AND
        CASH EQUIVALENTS                                                   (1,153,260)          20,884

     CASH AND CASH EQUIVALENTS, Beginning of period                         1,156,170            6,683
                                                                          ------------     ------------

     CASH AND CASH EQUIVALENTS, End of period                             $     2,910      $    27,567
                                                                          ============     ============

     SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
        Interest paid                                                     $    55,766      $        --
                                                                          ============     ============
        Income taxes paid                                                 $       800      $        --
                                                                          ============     ============

     SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES
        Conversion of unearned revenue into
           270,333 shares of common stock                                 $   125,000      $        --
                                                                          ============     ============
        Conversion of debt into 250,000
           shares of common stock                                         $   237,133      $        --
                                                                          ============     ============
        Issuance of common stock for salaries                             $   133,793      $        --
                                                                          ============     ============
        Issuance of common stock for services                             $   288,650      $        --
                                                                          ============     ============


          The accompaying notes are integral part of these consolidated financial statements.


                                                   4
</TABLE>

<PAGE>

NOTE 1 - BASIS OF PRESENTATION

The unaudited consolidated financial statements have been prepared by uWink,
Inc. (the "Company"), pursuant to the rules and regulations of the Securities
and Exchange Commission. The information furnished herein reflects all
adjustments (consisting of normal recurring accruals and adjustments) which are,
in the opinion of management, necessary to fairly present the operating results
for the respective periods. Certain information and footnote disclosures
normally present in annual consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted pursuant to such rules and regulations. These
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and footnotes for the year ended December 31,
2003 included in the Company's Annual Report on Form 10-KSB. The results of the
nine months ended September 30, 2004 are not necessarily indicative of the
results to be expected for the full year ending December 31, 2004.

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has
incurred a net loss of $2,567,072 for the nine months ended September 30, 2004,
and as of September 30, 2004, the Company had an accumulated deficit of
$19,339,133. These conditions raise substantial doubt as to the Company's
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
These financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

The Company will need additional working capital to fund its expanding
operations over the next 12 months. The Company believes that it will need at
least an additional $2.5 million of working capital to fund the demand for its
Snap! and Bear Shop products and, if necessary, to finance future losses from
operations. The Company plans to obtain the additional working capital through
the private placement sale of its equity securities. As of the date of this
report, there are no commitments for the sale of the Company's securities nor
can there be any assurance that such funds will be available on commercially
reasonable terms, if at all. Should the Company be unable to raise additional
funds, its ability to finance its continued growth will be materially adversely
affected.


                                       5
<PAGE>

Stock Options
-------------

The Company has adopted only the disclosure provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." It applies Accounting Principles Bulletin ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its Stock Option Plan recognizes an expense in accordance with
APB No. 25 when the exercise price is less than the fair market value at the
date of grant of the stock. When the exercise price is the same as the fair
market value at the date of grant of the stock the Company does not recognize
compensation expense for its Stock Option Plan other than for restricted stock
and options issued to outside third parties. If the Company had elected to
recognize compensation expense based upon the fair value at the grant date for
awards under the Stock Option Plan consistent with the methodology prescribed by
SFAS No. 123, the Company's net loss and loss per share would be reduced to the
pro forma amounts indicated below for the nine months ended September 30, 2004
and 2003:

                                                      2004              2003
                                                  ------------     ------------
     Net loss
       As reported                                $(2,567,072)     $  (579,789)
       Compensation recognized under APB 25           161,466           48,333
       Compensation recognized under SFAS 123      (1,139,810)         (85,487)
                                                  ------------     ------------
                  Pro forma                       $(3,545,416)     $  (616,943)
                                                  ============     ============

     Basic and diluted loss per common share
       As reported                                $     (0.26)     $     (0.20)
       Pro forma                                  $     (0.36)     $     (0.21)


This option valuation model requires input of highly subjective assumptions.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing model does not necessarily provide a reliable single
measure of fair value of its employee stock options.

For purposes of computing the pro forma disclosures required by SFAS No. 123,
the fair value for these options was estimated at the date of grant in 2004
using a Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rate of 3.0%; dividend yields of 0%; volatility
factors of the expected market price of the Company's common stock of 40%; and a
weighted average expected life of the option of 10 years, respectively. There
were no options granted in 2003.


                                       6
<PAGE>

NOTE 2 - LOSS PER SHARE

The Company reports (loss) per share in accordance with SFAS No. 128, "Earnings
per Share." Basic (loss) per share is computed by dividing (loss) available to
common shareholders by the weighted average number of common shares available.
Diluted (loss) per share is computed similar to basic (loss) per share except
that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares had been
issued and if the additional common shares were dilutive. Diluted (loss) per
share has not been presented since the effect of the assumed conversion of
options and warrants to purchase common shares would have an anti-dilutive
effect. The following potential common shares have been excluded from the
computation of diluted net (loss) per share for the nine months ended September
30, 2004 and 2003 because the effect would have been anti-dilutive:


                                                           2004          2003
                                                        ----------    ----------
     Shares to be issued upon conversion
         of preferred stock                                    --     1,610,018
     Shares to be issued upon conversion
         of convertible note                               85,714       517,515
     Stock options issued to employees                  1,364,588       566,521
     Stock options issued to consultants and others        28,515        46,892
     Warrants issued to consultants and finders           113,273       137,036
     Warrants issued for financing                      1,536,380       504,653
                                                        ----------    ----------
                                                        3,128,470     3,382,635
                                                        ==========    ==========

NOTE 3 - INVENTORY

Inventory at September 30, 2004, consists of the following:


     Raw materials                                               $ 277,572
     Work in process                                               227,543
     Finished goods                                                318,707
                                                                 ----------
                                                                   823,822
     Less allowance for obsolete inventory                         (99,745)
                                                                 ----------
                                                                 $ 724,077
                                                                 ==========

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment at September 30, 2004, consists of the following:

     Computer equipment and related software                     $ 247,478
     Office furniture and equipment                                 17,927
     Leasehold improvements                                         84,849
     Machinery and equipment                                       201,675
                                                                 ----------
                                                                   551,929
     Less accumulated depreciation and amortization               (396,322)
                                                                 ----------

                                                                 $ 155,607
                                                                 ==========


                                       7
<PAGE>

NOTE 5 - EQUITY

During the nine months ended September 30, 2004, the Company:

         o        sold 843,286 shares of common stock for cash in private
                  placement offerings for gross proceeds of $1,484,082. The
                  Company paid $301,568, issued 43,850 shares of the Company's
                  common stock and issued 245,000 warrants to purchase the
                  Company's common stock at an exercise price of $2.00 per share
                  in payment for services related to the sales of the Company's
                  securities. The compensation paid to Falcon Capital was
                  treated in accordance with generally accepted accounting
                  principles as a reduction to shareholders' equity. The
                  issuances to Falcon Capital were made pursuant to the
                  exemption from registration provided by Section 4(2) of the
                  Securites Act;

         o        issued 48,485 shares of common stock in exchange for the
                  cancellation of accrued payroll of $108,710;

         o        issued 30,000 shares of common stock to CCRI, Inc. in exchange
                  for investor relation services valued at $60,000 rendered on
                  behalf of the Company;

         o        issued 5,000 shares of common stock to Jaffoni & Collins for
                  public relations services valued at $10,000 rendered on behalf
                  of the Company.

         o        issued 10,000 shares of common stock to Mr. Gary Ramirez in
                  exchange for the services of an employee valued at $25,132;

         o        issued 10,000 shares of common stock to Mr. Nimish Patel in
                  exchange for serving on our Board of Directors valued at
                  $25,000; and

         o        Beginning on May 11 and ending on October 21, we sold 890,992
                  units for gross proceeds of $1,559,203 to 56 individual
                  investors. Each Unit consists of one share of our common stock
                  (a "Share") and a warrant (a "Warrant") to purchase one share
                  of our common stock at an exercise price of $3.50 per share.
                  The Warrant will be immediately exercisable, and will remain
                  exercisable for five years. Falcon Capital acted as a
                  placement agent for this offering and received a finder's fee
                  of $166,739 payment for services related to the sales of the
                  Company's securities. These issuances were made only to
                  "foreign investors" pursuant to the exemption from
                  registration provided by Regulation S of the Securities Act of
                  1933.

NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2003, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") No. 104, "Revenue Recognition." SAB 104 supersedes
SAB 101, "Revenue Recognition in Financial Statements." SAB 104's primary
purpose is to rescind accounting guidance contained in SAB 101 related to
multiple element revenue arrangements, superseded as a result of the issuance of
EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables."
Additionally, SAB 104 rescinds the SEC's Revenue Recognition in Financial
Statements Frequently Asked Questions and Answers ("the FAQ") issued with SAB
101 that had been codified in SEC Topic 13, Revenue Recognition. Selected
portions of the FAQ have been incorporated into SAB 104. While the wording of
SAB 104 has changed to reflect the issuance of EITF 00-21, the revenue
recognition principles of SAB 101 remain largely unchanged by the issuance of
SAB 104, which was effective upon issuance. The adoption of SAB 104 did not
impact the consolidated financial statements.

In March 2004, the Financial Accounting Standards Board (FASB) approved the
consensus reached on the Emerging Issues Task Force (EITF) Issue No. 03-1, "The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments." The objective of this Issue is to provide guidance for identifying
impaired investments. EITF 03-1 also provides new disclosure requirements for
investments that are deemed to be temporarily impaired. The accounting
provisions of EITF 03-1 are effective for all reporting periods beginning after
June 15, 2004, while the disclosure requirements for certain investments are
effective for annual periods ending after December 15, 2003, and for other
investments such disclosure requirements are effective for annual periods ending
after June 15, 2004. The Company has evaluated the impact of the adoption of
EITF 03-1 and does not believe the impact will be significant to the Company's
overall results of operations or financial position.


                                       8
<PAGE>

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

GENERAL

The following discussion and analysis should be read in conjunction with the our
consolidated financial statements and related footnotes for the year ended
December 31, 2003 included in our Annual Report on Form 10-KSB. The discussion
of results, causes and trends should not be construed to imply any conclusion
that such results or trends will necessarily continue in the future.

OVERVIEW

uWink, Inc. designs, develops and markets entertainment and gaming software.
Much of our software is bundled on our proprietary credit card- and
cash-operated game terminals and amusement vending machines. We derive revenue
from the sale of our game terminals, amusement vending machines and prizes that
the machines dispense. We generate recurring revenue from ongoing software
upgrades, tournament network services and reorders of vending machine products.
We realize additional revenue from the licensing of our software to lottery,
gaming and electronics manufacturers. We sell our products in the United States
and some international markets with the majority of our sales being generated in
Asia. Our core product line includes: Snap, a network-capable countertop game
terminal offering 60 proprietary short-form video games; and Bear Shop, a
vending machine utilizing interactive and entertaining software to dispense
customized plush teddy bear toys and accessories. We anticipate the use of the
Bear Shop vending technology will be utilized for the sale of a range of other
products. We have an experienced product development team with diverse skills,
allowing us to develop new software programs on a common platform as well as
perform the majority of our physical prototyping in-house.

Our primary customers are established domestic and international distributors of
coin-operated amusement products. Sales to distributors accounted for more than
95% of our sales for the nine months ended September 30, 2004. We also sell to
the owners and operators of establishments who place our products into their own
businesses. Our end users are individuals who play games and make impulse
purchases of novelty items in public amusement places.

We were incorporated under the laws of the State of Utah on October 14, 1982.
Prior to the reverse acquisition described below, our corporate name was
Prologue. We had not generated significant revenues and were considered a
development stage company as defined in Statement of Financial Accounting
Standards No. 7. Pursuant to a Securities Purchase Agreement and Plan of
Reorganization dated November 21, 2003 among Prologue, uWink, California Inc., a
Delaware corporation ("uWink California") and its stockholders, Prologue has
acquired 99.5% of the issued and outstanding shares of uWink California's
capital stock. We expect to acquire the remaining uWink California shares
outstanding in subsequent closings. Prologue issued one (1) share of its common
stock for every 3.15611 shares of uWink California capital stock. Since the
stockholders of uWink California acquired approximately 84% of the issued and
outstanding shares of Prologue and the uWink California management team and
board of directors became the management team and board of directors of
Prologue, according to FASB Statement No. 141 - "Business Combinations," this
acquisition has been treated as a recapitalization for accounting purposes, in a
manner similar to reverse acquisition accounting. In accounting for this
transaction:

         o        uWink California is deemed to be the purchaser and surviving
                  company for accounting purposes. Accordingly, its net assets
                  are included in the balance sheet at their historical book
                  values and the results of operations of uWink California have
                  been presented for the comparative prior period;


                                       9
<PAGE>

         o        Control of the net assets and business of Prologue was
                  acquired effective December 4, 2003. This transaction has been
                  accounted for as a purchase of the assets and liabilities of
                  Prologue by uWink California. The historical cost of the net
                  liabilities assumed was $750.

As a result of the transaction described above we changed our name from Prologue
to uWink, Inc.


                                       10
<PAGE>

BASIS OF PRESENTATION

The accompanying consolidated financial statements, included elsewhere in this
Quarterly Report on Form 10-QSB, have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation as a going concern. We have incurred a net loss of
$2,567,072 for the nine months ended September 30, 2004 and as of September 30,
2004, we had an accumulated deficit of $19,339,133. These conditions raise
substantial doubt as to our ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty. The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts, or amounts and classification of
liabilities that might be necessary should we be unable to continue as a going
concern.

RESULTS OF OPERATIONS

Nine months Ended September 30, 2004 Compared With Nine months Ended September
30, 2003.

Net sales for the nine months ended September 30, 2004 increased by $1,323,001
(3,175%) from $41,671 for the nine months ended September 30, 2003 to $1,364,672
for the nine months ended September 30, 2004. For the nine months ended
September 30, 2003 the Company's operations were very limited. For this period,
there were 2 employees and less than $30,737 in revenue generated by product
sales. We recognized $180,000 in licensing revenue, representing approximately
75% of the total revenue for the period. Upon completion of the reverse merger
previously discussed and the related sale of the the Company's equity
securities, the Company was effectively recapitalized and restarted. In January
2004, we commenced sales of the Snap! unit and sold $315,000 of this product in
the first 60 days after the product launch. Based on the initial response from
the marketplace, we suspended sales to reconfigure the product. We reintroduced
the Snap! product into the marketplace in June 2004 and recorded $200,000 in
orders for the month then ended. For nine months ended September 30, 2004, we
generated more than $750,000 in revenue from the sale of 375 Snap! units. As of
September 30, 2004, the Company has an order backlog for 305 Snap! units with a
value of $620,000. In July 2004, we introduced the Bear Shop, a vending machine
that allows purchasers to design their own "toy bear" characters with unique
colors, clothing, and accessories. For the nine months ended September 30, 2004,
we sold approximately $540,000 in Bear Shop units and related plush reorders. As
of September 30, 2004, the Company has an order backlog for 265 Bear Shop units
with a value of $1,600,000.

Cost of sales for the nine months ended September 30, 2004 increased by $835,368
(14,705%) from $5,681 for the nine months ended September 30, 2003 to $841,049
for the nine months ended September 30, 2004. Cost of sales activity during 2003
reflected the very low level of product sales for that period. In 2004,
approximately $275,000 of the increase in cost of sales is attributable to the
cost associated with the seeding of the marketplace by issuing Snap! and Bear
Shop units for evaluation by distributors with the anticipation of the eventual
conversion into sales. Additionally, $358,000 of the increase was attributable
to the increase in sales of the Snap! product. As hardware products with
embedded software, Snap! and Bear Shop are constructed with a variety of
hardware components, each of which incurs a cost on a per-unit basis. As a
result, as we increase the number of units sold, we correspondingly increase our
cost of sales.


                                       11
<PAGE>

Selling, general and administrative expenses for the nine months ended September
30, 2004 increased by $2,523,767 (554%) from $455,783 for the nine months ended
September 30, 2003 to $2,979,550 for the nine months ended September 30, 2004.
As stated above, during the nine months ended September 30, 2003, there were few
employees or product sales. For the nine months ended September 30, 2004:
approximately $1,275,000 of the increase is attributable to the cost associated
with the hiring of additional personnel; $250,000 of the increase is
attributable to marketing, advertising and trade show expenses; and $670,000 of
the increase is attributable to audit, legal, consulting, and other expenses
resulting from public reporting requirements. We anticipate that as sales
increase we will continue to hire additional personnel in sales, marketing and
engineering to support the organization.

Research and development expense for the nine months ended September 30, 2004
increased by $178,292 (154%) from $115,120 for the nine months ended September
30, 2003 to $293,412 for the nine months ended September 30, 2004. The increase
in the nine months ended September 30, 2004 was principally due to the ongoing
development efforts on the Bear Shop product and continued enhancement of the
Snap! product.

Gain on the settlement of debt for the nine months ended September 30, 2004
increased by $327,343 (676%) from $48,396 for the nine months ended September
30, 2003 to $375,739 for the nine months ended September 30, 2004. In 2003 and
2004, the Company received proceeds from the sale of its equity securities. Upon
receipt of these funds, we entered into negotiations to settle outstanding
vendor obligations from the years 2001, 2002 and 2003. In consideration for
immediate payment of long outstanding invoices, we were able to settle certain
obligation with vendors for amounts less than we were originally charged for the
product or services. None of these vendor obligations were long term in nature.

Amortization of debt discounts for the nine months ended September 30, 2004
increased by $90,977 (190%) from $47,742 for the nine months ended September 30,
2003 to $138,719 for the nine months ended September 30, 2004. In the second
quarter of 2003 we issued a convertible note payable in the amount of $125,000
that included detachable warrants to purchase shares of our common stock and
also a conversion feature. On May 19, 2004, the holder of the note elected to
convert and exercise on two promissory notes that included detachable warrants.
Due to the early exercise of the warrants, we recorded $139,000 in unamortized
beneficial conversion feature discount expense.

Interest expense for the nine months ended September 30, 2004 decreased by
$38,733 (41%) from $93,964 for the nine months ended September 30, 2003 to
$55,231 for the nine months ended September 30, 2004. The decrease in interest
expense reflects the Company's decreased use of borrowings to fund its
expansion.

LIQUIDITY AND CASH RESOURCES

As of September 30, 2004 our cash position was $2,910 and we had working capital
of $675,898. 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.


                                       12
<PAGE>

During the first three quarters of 2004 we sold 1,734,278 shares of common stock
for cash in private placement offerings for gross proceeds of $3,043,285. We
have used the net proceeds (after commissions and professional fees) of the
offering to complete the development of our products, restructure and improve
our balance sheet, pay off certain accounts payable and accrued liabilities,
purchase game terminal inventory and for working capital.

We will need additional working capital to fund our expanding operations over
the next 12 months. We believe that we will need at least an additional $2.5
million of working capital to fund the projected demand for our Snap! and Bear
Shop products and, if necessary, to finance future losses from operations. We
expect to use approximately $1.7 million of the additional $2.5 million of
working capital to finance the production of our Bear Shop and Snap! units. We
intend to use the remaining net proceeds to finance research and development
activities, sales and marketing activities, general and administrative matters
and on capital expenditures. We have not yet allocated specific amounts for
these purposes. We plan to obtain the additional working capital through the
private placement sale of our equity securities. As of the date of this report,
there are no commitments for the sale of the Company's securities nor there be
any assurance that such funds will be available on commercially reasonable
terms. Should we be unable to raise the required additional funds, our ability
to finance our continued growth will be materially adversely affected.


                                       13
<PAGE>

CASH POSITION AND USES OF CASH

Our cash and cash equivalents position as of September 30, 2004 was $2,910.

During the nine months ended September 30, 2004, we used $3,726,173 in cash in
our operating activities, as compared to $848,858 for the nine months ended
September 30, 2003. The significant increase in the use of cash by the Company's
operating activities is primarily attributable to the increased level of
operations and development activity undertaken. Additionally, we increased
inventory by approximately $545,000; increased accounts receivable by
approximately $580,000; and supplied over $270,000 in deposits to fund ongoing
production of our products.

During the nine months ended September 30, 2004, we used $357,517 in cash in
investing activities, as compared to $80,299 for the nine months ended September
30, 2003. The increase is principally the result of payment for capitalized
product development costs and new computer equipment purchases to both replace
aging equipment and to support the increase in the Company's headcount. The
Company will continue to make capital purchases to support its ongoing
operations.

During the nine months ended September 30, 2004, our financing activities
provided cash in the amount of $2,930,430 as compared to $950,042 for the nine
months ended September 30, 2003. The significant increase is due to the sale of
our common stock in private placement offerings in the first three quarters of
2004.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

REVENUE RECOGNITION - We recognize revenue related to software licenses in
compliance with the American Institute of Certified Public Accountants ("AICPA")
Statement of Position No. 97-2, "Software Revenue Recognition." Revenue is
recognized when we deliver our touchscreen pay-for-play game terminals to our
customer and we believe that collectability is probable. Included with the
purchase of the touchscreen terminals are licenses to use the games loaded on
the terminals. We usually have agreements with our customers to deliver the
requested terminals for a fixed price. Any insignificant post-contract support
obligations are accrued for at the time of the sale. Post-contract customer
support ("PCS") that is bundled with the initial purchase and is for one year or
less is recognized at the time of the initial purchase, if collectability of the
resulting receivables is probable. The estimated cost to us to provide such
services is accrued and amortized over the expected weighted average life of the
obligation period of nine months. We also recognize revenue from tournament play
and league play at the time the entry fees are paid and accrue the cost of the
estimated payouts.


                                       14
<PAGE>

FORWARD LOOKING STATEMENTS

We make written and oral statements from time to time in this Quarterly Report
regarding our business and prospects, such as projections of future performance,
statements of management's plans and objectives, forecasts of market trends, and
other matters that are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Statements containing the words or phrases "are expected to,", "is
anticipated," "estimates," "projects," "believes," "expects," "anticipates,"
"intends," "target," "goal," "plans," "objective," "should" or similar
expressions identify forward-looking statements, which may appear in documents,
reports, filings with the Securities and Exchange Commission, news releases,
written or oral presentations made by officers or other representatives made by
us to analysts, stockholders, investors, news organizations and others, and
discussions with management and other representatives of us.
Our future results, including results related to forward-looking statements,
involve a number of risks and uncertainties described in our 2003 Annual Report
on Form 10-KSB, including our ability to obtain development financing as and
when need; the market's acceptance of our products; the completion and
successful shipment of our purchase orders; our present financial condition;
increased competition and overall economic conditions. No assurance can be given
that the results reflected in any forward-looking statements will be achieved.
Any forward-looking statement made by or on behalf of us speaks only as of the
date on which such statement is made. Our forward-looking statements are based
upon assumptions that are sometimes based upon estimates, data, communications
and other information from suppliers, government agencies and other sources that
may be subject to revision. Except as required by law, we do not undertake any
obligation to update or keep current either (i) any forward-looking statement to
reflect events or circumstances arising after the date of such statement, or
(ii) the important factors that could cause our future results to differ
materially from historical results or trends, results anticipated or planned by
us, or which are reflected from time to time in any forward-looking statement
which may be made by or on behalf of us.

ITEM 3.    CONTROLS AND PROCEDURES

As required by SEC rules, we have evaluated the effectiveness of the design and
operation of our disclosure controls and procedures at the end of the period
covered by this report. This evaluation was carried out under the supervision
and with the participation of our management, including our principal executive
officer and principal financial officer. Based on this evaluation, these
officers have concluded that the design and operation of our disclosure controls
and procedures are effective. There were no changes in our internal control over
financial reporting or in other factors that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

Our disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file under the Exchange Act is accumulated and communicated to our management,
including principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure.


                                       15
<PAGE>

PART II.   OTHER INFORMATION

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

During the three months ended September 30, 2004, we sold unregistered shares of
our securities in the following transactions:

         1.       Issued 10,000 shares of common stock to Mr. Nimish Patel in
                  exchange for serving on our Board of Directors valued at
                  $25,000. This issuance was made pursuant to the exemption from
                  registration provided by Section 4(2) of the Securities Act
                  and Rule 506 of Regulation D;

         2.       Issued 10,000 shares of common stock to Mr. Gary Ramirez in
                  exchange for the services of an employee valued at $25,132;
                  This issuance was made pursuant to the exemption from
                  registration provided by Section 4(2) of the Securities Act
                  and Rule 506 of Regulation D.

         3.       Beginning on May and ending on October 21, we sold 890,992
                  units for gross proceeds of $1,559,203 to 56 individual
                  investors. Each Unit consists of one share of our common stock
                  (a "Share") and a warrant (a "Warrant") to purchase one share
                  of our common stock at an exercise price of $3.50 per share.
                  The Warrant will be immediately exercisable, and will remain
                  exercisable for five years. Falcon Capital acted as a
                  placement agent for this offering and received a finder's fee
                  of $166,739 and 75,000 shares of the Company's common stock as
                  payment for services related to the sales of the Company's
                  securities. These issuances were made only to "foreign
                  investors" pursuant to the exemption from registration
                  provided by Regulation S of the Securities Act of 1933.


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

      REGULATION
      S-B NUMBER                  EXHIBIT

         10.1     Lease for office space at 5443 Beethoven Street Los Angeles
                  California 90066

         10.2     $150,000 10% Convertible Promissory Note dated March 15, 2004

         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


                                       16
<PAGE>

(b) Reports on Form 8-K
            No reports on Form 8-K were filed during the quarter for which this
report is filed.


                                   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 15, 2004                         By: /s/ NOLAN K BUSHNELL
                                              ---------------------------
                                                  Nolan K. Bushnell
                                                  Chief Executive Officer



                                          By: /S/ LAWRENCE C. EARLY
                                              ----------------------------
                                                  Lawrence C. Early
                                                  Chief Financial Officer
                                                  Chief Accounting Officer


                                       17