<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 October 2, 2007

[ ]      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)

                    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
                          (Issuer's telephone number)


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

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

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The number of shares of common stock outstanding as of November 16, 2007 was
12,684,403.

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

Documents incorporated by reference:  None.

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                                   UWINK, INC.
                                      INDEX

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

Item 1.    Financial Statements                                                2

           Consolidated Balance Sheet as of October 2, 2007 (unaudited)        2

           Consolidated Statement of Operations for the three and nine month
           periods ended October 2, 2007 and September 30, 2006 (unaudited)    3

           Consolidated Statement of Cash Flows for the nine month periods
           ended October 2, 2007 and September 30, 2006 (unaudited)            4

           Notes to Consolidated Financial Statements (unaudited)              5

Item 2.    Management's Discussion and Analysis or Plan of Operations         23

Item 3.    Controls and Procedures                                            32

PART II.   OTHER INFORMATION

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

Item 5.    Other Information                                                  34

Item 6.    Exhibits                                                           34

SIGNATURES                                                                    35


                                        1
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PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS


                                  UWINK, INC. AND SUBSIDIARY
                                  Consolidated Balance Sheet
                                    As of October 2, 2007
                                         (Unaudited)


                                            ASSETS

CURRENT ASSETS
      Cash and cash equivalents                                                 $     11,495
      Account receivable, net of allowance for doubtful accounts of $72,265           13,727
      Inventory, net of reserve for obsolescence                                      32,626
      Prepaid expenses and other current assets                                       63,618
                                                                                ------------
         TOTAL CURRENT ASSETS                                                        121,466

PROPERTY AND EQUIPMENT, NET                                                          886,890
                                                                                ------------
         TOTAL ASSETS                                                           $  1,008,356
                                                                                ============


                            LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
      Accounts payable and accrued expenses                                     $  1,599,363
      Accrued payroll and related benefits                                           501,320
      Notes payable                                                                1,511,385
      Due to related parties                                                         325,000
      Advance from customers                                                          24,980
                                                                                ------------
         TOTAL CURRENT LIABILITIES                                                 3,962,048
                                                                                ------------

STOCKHOLDERS' DEFICIT
      Common stock, $0.001 par value; 25,000,000 shares authorized;
         6,513,486 shares issued and outstanding                                       6,514
      Additional paid-in capital                                                  36,276,835
      Accumulated deficit                                                        (39,251,638)
      Shares to be issued                                                             14,598
                                                                                ------------
         TOTAL STOCKHOLDERS' DEFICIT                                              (2,953,692)
                                                                                ------------

         TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                            $  1,008,356
                                                                                ============


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

                                              2
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                                              UWINK, INC. AND SUBSIDIARY
                                        Consolidated Statements of Operations
                                                     (Unaudited)


                                                         Three month periods ended         Nine month periods ended
                                                       -----------------------------     ----------------------------
                                                        October 2,      September 30,    October 2,      September 30,
                                                           2007             2006            2007             2006
                                                                         (Restated)                       (Restated)
                                                       -----------      -----------      -----------      -----------

NET SALES                                              $   673,335      $    35,720      $ 1,970,905      $   145,771

COST OF SALES                                              193,272            5,250          597,177          147,373
                                                       -----------      -----------      -----------      -----------
      GROSS PROFIT / (LOSS)                                480,063           30,470        1,373,728           (1,601)
                                                       -----------      -----------      -----------      -----------

OPERATING EXPENSES
      Selling, general and administrative expenses       1,501,148          863,845        5,046,382        2,046,714
                                                       -----------      -----------      -----------      -----------
      TOTAL OPERATING EXPENSES                           1,501,148          863,845        5,046,382        2,046,714
                                                       -----------      -----------      -----------      -----------

      LOSS FROM OPERATIONS                              (1,021,085)        (833,375)      (3,672,655)      (2,048,315)
                                                       -----------      -----------      -----------      -----------

OTHER INCOME (EXPENSE)
      Other income                                             950            1,656              950           11,962
      Beneficial conversion of debt                       (408,435)         (22,500)        (408,435)         (47,500)
      Gain on settlement of debt                                --            2,497           58,076            5,873
      Interest expense                                     (48,395)         (11,347)         (95,159)         (53,788)
      Fair value of warrant liability                           --       (6,238,218)              --       (6,583,902)
                                                       -----------      -----------      -----------      -----------
      TOTAL OTHER INCOME (EXPENSE)                        (455,880)      (6,267,912)        (444,568)      (6,667,355)
                                                       -----------      -----------      -----------      -----------

      LOSS BEFORE PROVISION FOR INCOME TAXES            (1,476,966)      (7,101,287)      (4,117,223)      (8,715,670)

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

      NET LOSS                                         $(1,476,966)     $(7,101,287)     $(4,118,023)     $(8,715,670)
                                                       ===========      ===========      ===========      ===========

NET LOSS PER COMMON SHARE - BASIC & DILUTED            $     (0.23)     $     (1.51)     $     (0.63)     $     (2.10)
                                                       ===========      ===========      ===========      ===========

WEIGHTED AVERAGE COMMON SHARES
      OUTSTANDING - BASIC & DILUTED                      6,547,392        4,711,380        6,498,506        4,145,546
                                                       ===========      ===========      ===========      ===========

           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
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                                          UWINK, INC. AND SUBSIDIARY
                                     Consolidated Statements of Cash Flows
                                                  (Unaudited)


                                                                                     Nine month periods ended
                                                                                   OCTOBER 2,       SEPTEMBER 30,
                                                                                      2007              2006
                                                                                                     (Restated)
                                                                                   -----------      -----------

CASH FLOW FROM OPERATING ACTIVITIES:
    Net loss                                                                       $(4,118,023)     $(8,715,670)
    Adjustment to reconcile net loss to net cash used in operating activities:
         Beneficial debt conversion expense                                            408,435           47,500
         Employee stock option expense                                               1,005,318          365,309
         Depreciation and amortization expense                                         237,503           17,805
         Bad debt allowance                                                                              (3,728)
         Gain on settlement of debt                                                    (58,076)          (5,873)
         Issuance of warrants for debt                                                      --           16,828
         Issuance of common stock for services                                         (99,213)         217,642
         Issuance of common stock for accrued interest                                      --            8,063
         Inventory obsolescence reserve                                                (17,948)          78,275
         Fair value of warrant liability                                                    --        6,583,902
    Changes in operating assets and liabilities:
       Accounts receivable                                                               5,918            1,448
       Inventory                                                                        62,528          115,708
       Deposits                                                                          2,300           66,398
       Prepaid expenses and other current assets                                       (41,783)         (12,805)
       Accounts payable                                                                239,837          219,468
       Accrued expenses                                                                171,375          (14,826)
       Accrued payroll and related benefits                                            226,630          125,071
                                                                                   -----------      -----------
Net cash used in operating activities                                               (1,975,199)        (889,485)
                                                                                   -----------      -----------

CASH FLOW FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                                             (188,635)        (914,747)
                                                                                   -----------      -----------

CASH FLOW FROM FINANCING ACTIVITIES:
    Proceeds from debt                                                               1,492,500               --
    Repayment of debt                                                                  (36,920)        (178,959)
    Proceeds from advances from related parties                                        325,000               --
    Repayment of advances from related parties                                              --         (100,000)
    Proceeds from issuance of common stock                                                  --        2,936,002
    Proceeds from warrant exercises                                                    199,813               --
    Proceeds from option exercise                                                      139,930               --
    Payment of offering costs                                                               --               --
                                                                                   -----------      -----------
Net cash provided by (used in) financing activities                                  2,120,323        2,657,043
                                                                                   -----------      -----------

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENT                                    (43,511)         852,811

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                          55,006           23,759
                                                                                   -----------      -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $    11,495      $   876,569
                                                                                   ===========      ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    Interest paid                                                                  $        --      $     3,049
                                                                                   ===========      ===========
    Income taxes paid                                                              $        --      $        --
                                                                                   ===========      ===========

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES

    Conversion of debt into shares of common stock                                 $        --      $   123,000
                                                                                   ===========      ===========


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

                                                       4
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                           UWINK, INC. AND SUBSIDIARY
                         Notes to 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 2,
2007 included in our Annual Report on Form 10-KSB. The results of the three and
nine months ended October 2, 2007 are not necessarily indicative of the results
to be expected for the full year ending January 1, 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 first quarter ended on April 3, 2007,
our 2007 fiscal second quarter ended on July 3, 2007 and our 2007 fiscal third
quarter ended on October 2, 2007.

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.


                                        5
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USE OF ESTIMATES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires 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. The
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

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. During the nine months ended October 2, 2007, our
franchise-related revenue consisted of a $20,000 non-refundable area development
fee and $2,000 of non-refundable franchise application fees. 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. During the nine months ended October
2, 2007, we also received a $20,000 refundable area development fee. This
payment is held in escrow and, accordingly, will not be recorded in the
financials until the contingency is resolved and the fees are released from
escrow. Our franchise application fee consists of a one-time $5,000 payment,
$1,000 of which is non-refundable, 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 application fees received
are recorded as a short-term liability until such time as the fee becomes
non-refundable.

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 touch screen pay-for-play game terminals to our customer and we
believe that persuasive evidence of an arrangement exits, the fees are fixed or
determinable and collectibility of payment is probable. Included with the
purchase of the touch screen terminals are licenses to use the games loaded on
the terminals. The licenses for the games are in perpetuity, we have no
obligation to provide upgrades or enhancements to the customer, and the customer
has no right to any other future deliverables. We deliver the requested
terminals for a fixed price either under agreements with customers or pursuant
to purchase orders received from customers.


                                        6
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We do not have any contractual obligations to provide post sale support of our
products. We provide such support on a case by case basis and the costs of
providing such support are expensed as incurred. We earned no revenue from post
sale support during the periods presented.

ADVANCES FROM CUSTOMERS

We record advances from customers as a liability and recognize these amounts as
revenue over the period of the related agreement. As of October 2, 2007,
advances from customers relating to licensing fees amounted to $24,980.

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 October 2, 2007 was $55,351.

REPORTING SEGMENTS

Statement of financial accounting standards No. 131, Disclosures about segments
of an enterprise and related information (SFAS No. 131), which superseded
statement of financial accounting standards 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. Currently,
SFAS 131 has no effect on our financial statements as substantially all of our
operations are conducted in one industry segment.

RECLASSIFICATIONS

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

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 October 2, 2007 and September 30, 2006 because
the effect would have been anti-dilutive:

                                                          2007           2006
                                                       ----------     ----------
        Stock options issued to employees                 422,880         95,984
        Warrants issued to consultants and finders          5,545         80,657
        Warrants issued for financing                     448,323        459,748
                                                       ----------     ----------
                                                          871,203        636,389
                                                       ==========     ==========


                                        7
<PAGE>

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

NOTE 3 - ACCOUNTS RECEIVABLE

Accounts receivable consist of restaurant credit card payments still in process.
No allowance for doubtful accounts has been recorded for these receivables as
collection is considered probable. The allowance for doubtful accounts of
$72,265 as of October 2, 2007 is to cover the 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 October 2, 2007, determined on a first in first out basis. During
2005, the Company made a strategic decision to reposition itself as an
entertainment restaurant company, to wind down its SNAP! and Bear Shop
manufacturing and sales operations and to liquidate its remaining inventory. As
a result, all non-restaurant inventory at October 2, 2007 is treated as finished
goods inventory.

During the nine months ended October 2, 2007, the Company generated $27,000 in
revenue from the sale of obsolete inventory previously fully reserved for at a
value of $71,000. Accordingly, gross non-restaurant inventory was written down
by $71,000 and a corresponding reduction was made to the obsolescence reserve.
The obsolescence reserve at October 2, 2007 relates solely to non-restaurant
inventory. During the nine months ended October 2, 2007, remaining
non-restaurant inventory was marked down to its net realizable value, as
reflected by an increase in the obsolescence reserve of $43,392. Restaurant
inventory consists of food, beverages and merchandise available for sale in the
restaurant.

Inventory at October 2, 2007:
Finished Goods                                                        $ 277,782
Restaurant                                                               32,626
Less:  obsolescence reserve                                            (277,782)
                                                                      ---------
                                                                       $  32,626
                                                                      =========

NOTE 5 - PROPERTY AND EQUIPMENT

The cost of property and equipment at October 2, 2007 consisted of the
following:


          Computer equipment                             $ 571,173
          Office furniture and equipment                    17,926
          Restaurant furniture and fixtures                636,831
          Leasehold improvements                            84,849
          Machinery and equipment                           82,603
          Construction in progress                          52,300
                                                         ---------
                                                         1,445,682
          Less accumulated depreciation                   (558,792)
                                                         ---------
                                                         $ 886,890
                                                         =========

Depreciation expense for the nine months ended October 2, 2007 and September 30,
2006 was $202,503 and $7,805, respectively.


                                        8
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NOTE 6 - COMPONENTS OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

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
                              ==========

The major components of selling, general and administrative expenses for the
nine months ended September 30, 2006 consisted of the following:

Professional fees           $ 239,331
Rent                          102,126
Product development           177,364
Salary expense                639,729
Employee stock option expense 365,309
Inventory reserve expense     117,489
Pre-opening expenses           89,767
Other                         315,599
                            ----------
                            $2,046,714
                            ==========

NOTE 7 - DUE TO RELATED PARTIES

Due to related parties consists of amounts advanced to us by certain of our
officers and their family members and directors of the Company.

Due to related parties outstanding at October 2, 2007 consisted of the
following:

Two convertible notes payable to Mr. Dennis Nino, brother-in-law of our CEO. A
$50,000 note was due August 28, 2007 and a $125,000 note is due December 8,
2007. Each note accrues interest at 10%, is secured by our assets, and is
convertible, at the option of Mr. Nino, 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, Mr. Nino will 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 an offering of our securities (units, priced at
$2.00 per unit, consisting of one share of our common stock and a warrant to
purchase one share of our common stock at an exercise price of $2.40 per share)
that resulted in gross proceeds to us of approximately $10.4 million. This
transaction triggered the conversion right in Mr. Nino's notes. On November 12,
2007, Mr. Nino elected not to convert these notes. Accordingly, we made cash
repayment to Mr. Nino of an aggregate of $183,897 (inclusive of $8,897 of
accrued interest) in full satisfaction of these notes.


                                        9
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Principal Amount                                                                                 $ 175,000

Convertible note payable to our CEO, Nolan Bushnell. The note is due December 8,
2007 and accrues interest at 10%, is secured by our assets, and is convertible,
at the option of Mr. Bushnell, 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, Mr. Bushnell will 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 an offering of our securities (units, priced at
$2.00 per unit, consisting of one share of our common stock and a warrant to
purchase one share of our common stock at an exercise price of $2.40 per share)
that resulted in gross proceeds to us of approximately $10.4 million. This
transaction triggered the conversion right in Mr. Bushnell's note. On November
12, 2007, Mr. Bushnell elected to convert the principal amount of the note
(together with $5,377 of accrued interest and $26,075 of conversion incentive),
in full satisfaction of our obligations under the note, into 78,226 units
(consisting of 78,226 shares of our common stock and 78,226 warrants to purchase
one share of our common stock at an exercise price of $2.40), at a purchase
price of $2.00 per unit.

Principal Amount                                                                                 $ 125,000

Convertible note payable to our CFO, Peter Wilkniss. The note was due October
10, 2007 and accrues interest at 10%, is secured by our assets, and is
convertible, at the option of Mr. Wilkniss, 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, Mr. Wilkniss will 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 an offering of our securities (units, priced at
$2.00 per unit, consisting of one share of our common stock and a warrant to
purchase one share of our common stock at an exercise price of $2.40 per share)
that resulted in gross proceeds to us of approximately $10.4 million. This
transaction triggered the conversion right in Mr. Wilkniss' note. On November
12, 2007, Mr. Wilkniss elected to convert the principal amount of the note
(together with $1,479 of accrued interest and $5,296 of conversion incentive),
in full satisfaction of our obligations under the note, into 15,888 units
(consisting of 15,888 shares of our common stock and 15,888 warrants to purchase
one share of our common stock at an exercise price of $2.40), at a purchase
price of $2.00 per unit.


Principal Amount                                                                                 $   25,000
                                                                                                 ----------
Total due to related parties                                                                     $  325,000
                                                                                                 ==========

According to EITF 98-5 paragraph 13, which covers the accounting for (a) a
security that becomes convertible only upon the occurrence of a future event
outside the control of the holder and (b) a security that is convertible from
inception but contains conversion terms that change upon the occurrence of a
future event, any contingent beneficial conversion feature should be measured at
the commitment date but not recognized in earnings until the contingency is
resolved. As the notes become convertible only upon occurrence of a future event
outside of our control ("any offering of our securities that results in gross
proceeds to us of at least $3,000,000"), the beneficial conversion feature is
contingent and, therefore, not recognized in the financials as of July 3, 2007.
On November 7, 2007, we completed an offering of our securities (units, priced
at $2.00 per unit, consisting of one share of our common stock and a warrant to
purchase one share of our common stock at an exercise price of $2.40 per share)
that resulted in gross proceeds to us of approximately $10.4 million. This
transaction triggered the conversion rights in the above notes. Therefore,
$68,150 has been recorded as beneficial conversion feature expense on these
notes payable to the related parties.

During the nine month period ended October 2, 2007, we accrued $12,500 in
interest on amounts due to related parties and paid $0 in interest on amounts
due to related parties.

During the nine months ended October 2, 2007, salary amounting to $177,630 was
paid to employees related to the CEO.


                                       10
<PAGE>

NOTE 8 - NOTES PAYABLE

Notes payable outstanding at October 2, 2007 consisted of the following:

Loan payable to our former Vice President of Marketing issued on various dates
in 2004 and 2005, 10% interest secured by certain inventory and receivables, due
November 14, 2007. On May 14, 2007, we amended the terms of this note to: reduce
the interest rate from 12% to 10%; extend the term from February 15, 2007 to
November 14, 2007; prohibit prepayments on the note; and make the principal and
accrued interest outstanding under the note convertible, at the option of the
holder, into the same securities issued in (and on the same terms and conditions
pari passu with the investors in) any offering of our securities that results in
gross proceeds of at least $3,000,000. Upon conversion, the holder will receive
as a conversion incentive additional securities equal to 20% of the aggregate
principal value plus accrued interest converted.

This loan was reclassified from "Due to Related Parties" to "Notes Payable" on
the December 31, 2005 balance sheet following the termination of the holder's
employment and was further reclassified from long term liabilities to short term
liabilities on the January 2, 2007 balance sheet. Accrued interest of $101,422
outstanding on this note as of October 2, 2007 is included under accrued
expenses on the balance sheet as of October 2, 2007. During the nine month
period ended October 2, 2007, we repaid $14,400 of this note in cash and
credited $14,000 in receivables due from the holder against the principal
balance of the note.

On November 12, 2007, the holder declined the conversion right triggered by our
November 7, 2007 financing. Accordingly, we repaid in cash a total of $121,595
(inclusive of accrued interest) in full satisfaction of the note.

Principal Amount                                                                             $   18,885

Convertible notes in favor of 27 accredited investors with maturity dates
ranging from August 12, 2007 to December 8, 2007. The notes accrue interest at
10%, are secured by our assets, and are 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 of at least $3,000,000. Upon conversion, the holder
will 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 an offering of our securities (units, priced at
$2.00 per unit, consisting of one share of our common stock and a warrant to
purchase one share of our common stock at an exercise price of $2.40 per share)
that resulted in gross proceeds to us of approximately $10.4 million. This
transaction triggered the conversion rights in the notes. On November 12, 2007,
22 holders, representing an aggregate of $1,367,500 in principal amount of
notes, an aggregate of $79,929 in accrued interest and an aggregate of $289,486
of conversion incentive, elected to convert their notes, in full satisfaction of
our obligations under the notes, into an aggregate of 868,458 units at $2.00 per
unit (such units collectively consisting of 868,458 shares of our common stock
and 868,458 warrants to purchase one share of our common stock at an exercise
price of $2.40). 5 holders elected not to convert a total of $125,000 in
principal amount of notes. We repaid the $125,000 principal amount plus an
aggregate of $7,396 in accrued interest to those non-converting holders, in full
satisfaction of those notes.


Aggregate Principal Amount
                                                                                              1,492,500
                                                                                             ----------
Total notes payable                                                                          $1,511,385
                                                                                             ==========
</TABLE>

According to EITF 98-5 paragraph 13, which covers the accounting for (a) a
security that becomes convertible only upon the occurrence of a future event
outside the control of the holder and (b) a security that is convertible from
inception but contains conversion terms that change upon the occurrence of a
future event, any contingent beneficial conversion feature should be measured at
the commitment date but not recognized in earnings until the contingency is
resolved. As the notes become convertible only upon occurrence of a future event
outside of our control ("any offering of our securities that results in gross
proceeds to us of at least $3,000,000"), the beneficial conversion feature is
contingent and, therefore, not recognized in the financials as of July 3, 2007.
On November 7, 2007, we completed an offering of our securities (units, priced
at $2.00 per unit, consisting of one share of our common stock and a warrant to
purchase one share of our common stock at an exercise price of $2.40 per share)
that resulted in gross proceeds to us of approximately $10.4 million. This
transaction triggered the conversion rights in all the above notes. Therefore,
$340,285 has been recorded as beneficial conversion feature expense on these
notes payable.

During the nine month period ended October 2, 2007, we accrued $72,263 in
interest on the above notes payable and paid $0 in cash interest on these notes
payable.


                                       11
<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

Unless otherwise indicated below, all common stock issuances were valued at the
closing price of the common stock on the date of the relevant event or
agreement.

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.

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 October 2, 2007, we issued:

73,425 shares of common stock valued at $139,930 upon the exercise of stock
options. Out of these, 8,750 shares of common stock valued at $17,500 were
issued to employees related to our CEO;

169,792 shares of common stock valued at $234,313 upon the exercise of warrants.
Out of these, 25,000 shares of common stock valued at $34,500 were issued to our
CFO and 25,000 shares of common stock valued at $34,500 were issued to a
director;

an aggregate of 8,750 shares of common stock valued at $71,800 to five employees
in settlement of accrued compensation. Out of these, 2,500 shares of common
stock valued $22,000 were issued to employees related to our CEO; and

12,459 shares of common stock in exchange for consulting
services valued at $89,337.

During the nine months ended October 2, 2007, we cancelled 46,250 shares of
common stock valued at $205,350. These shares were returned to us by Redwood
Consultants pursuant to a settlement we entered into with Redwood Consultants
relating to a total of 100,000 shares of common stock valued at $444,000 issued
to Redwood Consultants in 2005 for consulting services rendered in 2005.


                                       12
<PAGE>

SHARES TO BE ISSUED

At October 2, 2007, shares to be issued consisted of:

8,444 shares valued at $14,598. Of these, 4,285 shares valued at $4,456 were
issuable pursuant to option exercises, and were issued subsequent to October 2,
2007. The remaining 4,159 shares valued at $10,142 remained unissued in
connection with our capital raising transactions in 2004. These shares remain
unissued for ministerial reasons.

During the nine months ended October 2, 2007, we reclassified 23,728 shares of
common stock valued at $193,750 from shares to be issued to accrued
compensation. These shares were to be issued in settlement of accrued employee
compensation as of April 3, 2007. Out of these, 14,865 shares valued at $115,750
were to be issued to employees related to our CEO. Of these reclassified shares,
an aggregate of 8,750 shares of common stock valued at $71,800 were subsequently
issued to five employees in settlement of accrued compensation. Out of these,
2,500 shares of common stock valued $22,000 were issued to employees related to
our CEO.

NOTE 10 - STOCK OPTIONS, WARRANTS AND RESTRICTED STOCK AWARDS

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.

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 $1,005,318 in
share-based compensation expense for the nine months ended October 2, 2007. The
impact of this share-based compensation expense on our basic and diluted
earnings per share was $0.16 per share. The fair value of our stock options was
estimated using the Black-Scholes option pricing model.

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 October 2, 2007, there are 372 shares available for
issuance under this 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
October 2, 2007, there are 39,830 shares available for issuance under this 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, non-qualified stock options, restricted and
unrestricted stock awards and stock bonuses to our employees, officers,
directors, and consultants. As of October 2, 2007, there were 250,000 shares
available for issuance under the 2007 Plan.


                                       13
<PAGE>

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 February 21, 2007, we issued 2,500 options to an employee at an exercise
price of $7.04 per share.

On March 14, 2007, we issued 1,000 options to 2 employees at an exercise price
of $4.76 per share.

On March 19, 2007, we issued 7,500 options to an employee at an exercise price
of $4.48 per share.

On April 13, 2007, we issued 3,750 options to an employee at an exercise price
of $4.92 per share.

On April 25, 2007, we issued 500 options to an employee at an exercise price of
$5.00 per share.

On April 30, 2007, we issued 10,000 options to an employee at an exercise price
of $5.08 per share.

On May 4, 2007, we issued 37,500 options to an employee at an exercise price of
$6.20 per share.

On May 16, 2007, we issued 10,000 options to an employee at an exercise price of
$5.60 per share.

On May 31, 2007, we issued 7,500 options to an employee at an exercise price of
$6.20 per share.

On September 20, 2007, we issued 7,500 options to an employee at an exercise
price of $4.05 per share.

All these options vest in 36 equal monthly installments with the initial
one-sixth vesting after 6 months.

Following is a summary of the stock option activity for the nine months ended
October 2, 2007:

                                                       Weighted
                                                       Average
                                           Options     Exercise     Aggregate
                                         outstanding    Price    Intrinsic Value
                                         -----------   --------  ---------------
       Outstanding, January 2, 2007       1,174,933     $3.76      $6,461,691
       Granted                               87,750     $5.62
       Forfeited                            169,375     $4.60
       Exercised                             73,425     $1.91      $  146,850
                                         ----------
       Outstanding, October 2, 2007       1,019,883     $3.93      $1,402,944
       Exercisable, October 2, 2007         508,015     $3.84      $  799,419


                                       14
<PAGE>

The following is a summary of the status of options outstanding at October 2,
2007:

<TABLE>
<S>            <C>
       Exercise                     Options           Average Remaining        Exercisable
        Price                      Outstanding        Contractual Life

    $1.00 - $1.99                    475,928               8.18                   275,939
    $2.00 - $2.99                    123,575               8.27                    70,069
    $4.00 - $4.99                     99,750               9.08                    21,931
    $5.00 - $5.99                     28,084               8.96                     7,008
    $6.00 - $6.99                     60,000               9.39                     6,239
    $7.00 - $7.99                    102,500               9.18                    28,454
    $8.00 - $8.99                     42,500               9.24                    10,829
    $9.00 - $9.99                     45,254               6.43                    45,254
   $10.00 - $10.99                    37,500               6.79                    37,500
   $12.00 - $12.99                     4,792               2.22                     4,792
                          ----------------------------------------------------------------
                                   1,019,883               8.36                   508,015
                          ================================================================

</TABLE>

For options granted during the nine months ended October 2, 2007, the
weighted-average fair value of such options was $5.62.

During the nine months ended October 2, 2007, we received $139,930 from the
exercise of 73,425 stock options at a weighted-average exercise price of $1.91
per share.

The total weighted-average remaining contractual term of the options outstanding
at October 2, 2007 is 8.4 years.

The total weighted-average remaining contractual term of the options exercisable
at October 2, 2007 is 7.9 years.

We recognized expense of $865,325 for the fair value of the options vested
during the nine months ended October 2, 2007.

The total compensation expense not yet recognized relating to unvested options
at October 2, 2007 is $1,929,621 and the weighted-average period over which this
expense will be recognized is 1.8 years.

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


                                       15
<PAGE>

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                         82%-125%
           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, as noted below. The fair value of our restricted
stock awards is estimated using the Black-Scholes option pricing model.

On April 3, 2007, we granted restricted stock awards to our executive officers
and directors totaling 125,000 shares, with a fair value of $4.88 per share.
50,000 of these shares vest in 36 equal monthly installments and 75,000 of these
shares vest in 24 equal monthly installments. On June 14, 2007, we granted
12,500 restricted stock awards to an employee that vest in 36 equal monthly
installments, with a fair value of $6.44 per share.

Following is a summary of the restricted stock award activity for the nine
months ended October 2, 2007.

                                                    Weighted-
                                                     Average
                                                    Grant Date      Aggregate
                                          Shares    Fair Value   Intrinsic value
                                         --------   ----------   ---------------
Non-vested balance January 2, 2007            --        --          $     --
Granted                                   137,500    $5.02
Vested                                     28,299    $4.95
Forfeited                                     --        --
Non-vested balance October 2, 2007        109,201    $5.04          $426,977


For awards granted during the nine months ended October 2, 2007, the
weighted-average fair value of such awards was $5.02.

The total weighted-average remaining contractual term of the awards outstanding
at October 2, 2007 is 2.0 years.

We recognized expense of $139,993 for the fair value of the awards vested during
the nine months ended October 2, 2007.

The total compensation expense not yet recognized relating to unvested awards at
October 2, 2007 is $550,507 and the weighted average period over which this
expense will be recognized is 2.0 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                                      122.9%-125%
           Expected dividend yield                                            0


                                       16
<PAGE>

Warrants
--------

Following is a summary of the warrant activity for the nine months ended October
2, 2007.

                                                  Weighted-
                                                    Average
                                                   Exercise       Aggregate
                                     Warrants       Price      Intrinsic Value
                                    ----------     --------   -----------------
Balance January 2, 2007              1,962,889     $  4.08       $11,840,814
Granted                                     --          --
Exercised                              144,792     $  1.38
Cancelled                               58,748     $  9.47
Balance October 2, 2007              1,759,349     $  4.12       $ 3,356,227

During the nine months ended October 2, 2007, we issued no warrants and
recognized no expense relating to warrants.

Following is a summary of the status of warrants outstanding at October 2, 2007:


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

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

     $1.38                1,311,026             1.67               1,311,026
     $6.00                  100,031             2.62                 100,031
     $6.32                    5,545             0.28                   5,545
     $7.00                   21,250             2.00                  21,250
     $8.00                   61,250             1.55                  61,250
     $14.00                 222,747             2.00                 222,747
     $20.00                  12,500             1.50                  12,500
     $28.00                  12,500             1.50                  12,500
     $36.00                  12,500             1.50                  12,500
     -----------------------------------------------------------------------
                          1,759,349                                1,759,349
     -----------------------------------------------------------------------


                                       17
<PAGE>

NOTE 11 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

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

a. A brief description of the provisions of this Statement

b. The date that adoption is required

c. The date the employer plans to adopt the recognition provisions of this
Statement, if earlier.

The requirement to measure plan assets and benefit obligations as of the date of
the employer's fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. Management is currently evaluating
the effect of this pronouncement on financial statements.

In February 2007 the FASB issued SFAS 159, "The Fair Value Option for Financial
Assets and Financial Liabilities--Including an amendment of FASB Statement No.
115." The statement permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. The statement is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. Management is currently
evaluating the effect of this pronouncement on financial statements.


                                       18
<PAGE>

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Litigation

In the ordinary course of business, we are generally subject to claims,
complaints, and legal actions. As of October 2, 2007, 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.

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 as of April 10, 2006, we secured an approximately 10 year lease on the
planned 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.

Total rent expense for the nine months ended October 2, 2007 was $255,061. Total
rent expense for the nine months ended September 30, 2006 was $102,000.


                                       19
<PAGE>

Licensing Agreements

Effective September 15, 2006, we entered into a license agreement with SNAP
Leisure LLC, a company owned and operated by our former Vice President of
Marketing. Pursuant to this agreement, we licensed our SNAP intellectual
property, including the games featured on SNAP in the form they currently run on
SNAP (we have made significant enhancements to our games for display in our
restaurant and SNAP Leisure LLC has no right to those enhancements or any future
enhancements or new games we develop), to SNAP Leisure LLC for use in the "pay
to play" amusements market worldwide (the "pay to play" amusements market is
generally considered to be the coin operated video game machine market). The
agreement provides that we are to receive royalties calculated per SNAP machine
sold ($200 royalty per machine for the first 300 machines sold; $80 per machine
royalty for the next 700 machines sold; and $50 per machine royalty for any
additional machines sold thereafter). The agreement further provides that SNAP
Leisure LLC cannot affix the name "uWink" to any new product sold under the
license following the first anniversary of the agreement and must remove all
references to uWink from all products sold under the agreement within a 5 year
period. We have no obligation to provide any support or software maintenance,
upgrades or enhancements under this agreement.

On January 26, 2007, we entered into an Inventory Purchase Agreement, a License
Agreement and a Non-Competition Agreement with Interactive Vending Corporation
("IVC"). Pursuant to these agreements, we agreed to sell our remaining Bear Shop
machine inventory (at $2,000 per complete machine, payable in 2 installments)
and accessories inventory (at our cost) to IVC. In addition, we granted IVC an
exclusive, worldwide license to our Bear Shop intellectual property (excluding
any intellectual property relating to the name "uWink" or any derivation
thereof), including US Patent # 6,957,125,(except that we retain the right of
use in the restaurant industry subject to the limitations in the Non-Competition
Agreement) in exchange for royalties based on the revenue generated by IVC from
the licensed intellectual property, ranging from 5% of revenue in the first year
of the agreement to 3% of revenue in years seven, eight, nine and ten of the
agreement. We have no obligation to provide any support or software maintenance,
upgrades or enhancements under these agreements. We also entered into a
Non-Competition Agreement with IVC, pursuant to which we agreed not to engage in
the business of interactive vending, other than in the restaurant industry to
the extent the interactive vending is integrated into the operations of the
restaurant, for as long as IVC is obligated to make royalty payments under the
License Agreement.

NOTE 13 - RESTATEMENT

In our unaudited quarterly financial statements for 2006 as originally filed we
had, in consultation with our external auditors, interpreted and applied EITF
00-19 to treat the fair value of financing warrants as a cost of raising equity
with a corresponding amount debited to additional paid-in capital. In letters to
us dated November 9, 2006 and January 5, 2007, the Securities and Exchange
Commission raised questions as to our interpretation of EITF 00-19 as it relates
to the accounting treatment of financing warrants issued during 2006. In
consultation with our external auditors, on December 1, 2006 our Chief Executive
Officer and Chief Financial Officer determined to amend and restate the
financial statements and information for the three and nine months ended
September 30, 2006 to recognize expense for the fair value of the financing
warrants issued during 2006 and to book a corresponding amount as short term
warrant liability on the balance sheet at September 30, 2006. Furthermore, on
January 17, 2007, our Chief Executive Officer and Chief Financial Officer
determined, in consultation with our external auditors, to further amend and
restate the financial statements and information for the three and nine months
ended September 30, 2006 to reflect the change in the fair value of the warrant
liability as of September 30, 2006.

As originally filed, the $3,139,769 fair value (as calculated as of the issuance
dates) of certain warrants issued during the nine months ended September 30,
2006 was accounted for as a cost of raising equity with a corresponding amount
debited to additional paid-in capital.


                                       20
<PAGE>

A provision in the Securities Purchase Agreements governing our private
placement transactions completed on March 3, 2006, May 9, 2006, June 12, 2006
and September 18, 2006 requires us to file a registration statement with the
Securities and Exchange Commission covering the resale of the shares of common
stock and shares of common stock underlying the warrants purchased by the
investors in those transactions as promptly as possible and that, if the
registration statement is not declared effective by the SEC within 180 days of
the closing date of the transaction, or if we fail to keep the registration
statement continuously effective until all the shares (and shares underlying
warrants) are either sold or can be sold without restriction under Rule 144(k),
that we pay the investors monthly liquidated damages equal to 1.5% of their
investment until the registration statement is declared and kept effective or
all the shares have been sold or can be sold without restriction under Rule
144(k) (in the case of a failure to keep the registration statement continuously
effective). In connection with the March 3, 2006 transaction, we issued 450,000
immediately-exercisable, three-year warrants to a placement agent. The warrants
issued to the placement agent are not subject to this registration
rights/liquidated damages for failure to register provision.

The fair value of the warrants issued to the investors in these transactions, as
calculated as of September 30, 2006, was $6,583,902. In accordance with EITF
00-19, we have determined to amend and restate the financial statements for the
three and nine months ended September 30, 2006 to recognize expense of
$6,583,902 for the fair value of the warrants, as calculated as of September 30,
2006, issued to the investors in these transactions and to record a
corresponding short term warrant liability of $6,583,902 on the September 30,
2006 balance sheet. Because the placement agent's warrants are not subject to
registration rights/liquidated damages for failure to register, the fair value
of the 450,000 warrants issued to the placement agent of $90,080 was accounted
for as cost of raising equity with a corresponding amount debited to additional
paid-in capital.


                                       21
<PAGE>

The following presents the effect on our previously issued financial statements
for the nine months ended September 30, 2006. THE TABLES SET FORTH BELOW ONLY
PRESENT THOSE ACCOUNTS THAT WERE AFFECTED BY THE RESTATEMENT.

Statement of operations for the nine months ended September 30, 2006:

<TABLE>
<S>     <C>

                                                                                 Previously        Increase
                                                                                  Reported        (Decrease)       Restated

OTHER INCOME (EXPENSE)
Fair value of warrant liability                                                         --       (6,583,902)      (6,583,902)
TOTAL OTHER INCOME (EXPENSE)                                                       (83,453)      (6,583,902)      (6,667,355)
NET LOSS                                                                        (2,131,768)      (6,583,902)      (8,715,670)
NET LOSS PER COMMON SHARE - BASIC & DILUTED                                          (0.13)           (0.40)           (0.53)

Statement of cash flows for the nine months ended September 30, 2006:

CASH FLOW FROM OPERATING ACTIVITIES:
Net loss                                                                        (2,131,768)      (6,583,902)      (8,715,670)

Adjustment to reconcile net loss to net cash used in operating activities:
Fair value of warrant liability                                                         --        6,583,902        6,583,902

</TABLE>

The net effect of the restatement is an increase of $6,583,902 in total other
expense for the nine months ended September 30, 2006 and an increase of
$6,583,902 in net loss for the nine months ended September 30, 2006. As a
result, basic and diluted net loss per share increased by $0.40 per share for
the nine months ended September 30, 2006.


NOTE 14 - SUBSEQUENT EVENTS

On October 25, 2007, we entered into a definitive agreement to acquire the
leasehold interest and certain other assets of a currently operating restaurant
in downtown Mountain View, California, which we intend to convert to the uWink
concept and open by early 2008, subject to the satisfaction of customary closing
conditions.

On November 7, 2007, we completed the sale, in a registered equity offering, of
5.2 million units at a purchase price of $2.00 per unit, consisting of one share
of common stock and a warrant to purchase one share of our common stock at an
exercise price of $2.40, generating gross proceeds of approximately $10.4
million. The net proceeds from this transaction were approximately $9.3 million
after deducting placement agent fees and offering expenses.

Our November 7, 2007 financing triggered the conversion rights in the
convertible promissory notes issued in April 2007 and June 2007. Effective
November 12, 2007, holders representing an aggregate of $1,517,500 in principal
amount of convertible notes (including aggregate accrued interest of $86,785 and
an aggregate conversion incentive of $320,857) elected to convert (in full
satisfaction of our obligations under the notes) their notes into the same units
issued in the November 7, 2007 financing (each unit consisting of one share of
common stock and a warrant to purchase one share of our common stock at an
exercise price of $2.40) at a purchase price of $2.00 per unit. Accordingly, we
issued an aggregate 962,571 of units to these investors.

Holders representing an aggregate of $318,885 in principal amount of convertible
notes elected not to convert their notes. Accordingly, we made cash repayment of
a total of $437,888 (inclusive of $119,003 of accrued interest), in full
satisfaction of those notes.


                                       22
<PAGE>

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

PLAN OF OPERATION - UWINK RESTAURANT

         We are currently operating and continuing to develop an entertainment
restaurant concept named uWink. We opened our first uWink restaurant in the
Westfield Promenade Shopping Center in Woodland Hills, California (Los Angeles
area) on October 16, 2006. We have secured an approximately 10 year lease on
this location.

         We spent approximately $1,000,000 to build out and equip the Woodland
Hills location for our first restaurant, including approximately $400,000 on
leasehold improvements; $375,000 on technology, furniture and fixtures; $180,000
on certain "pre-opening" expenses (including staffing, staff training and menu
development costs and initial inventory); and $75,000 on licenses.

         As of the date of this report, we employ 18 people on a full-time
basis, seven of whom are corporate management and staff, five of whom are
engineering staff and six of whom are operations staff. We are currently
outsourcing, and plan to continue to outsource, certain software engineering
personnel. In addition, to staff the restaurant, we employ an executive chef,
six managers and 64 full-time and part-time non-managerial restaurant staff.

         Our growth strategy is to open three to four additional company-owned
and/or managed restaurants within the next six to twelve months and to franchise
our concept, focusing on multiple-unit area development agreements. We are
targeting a mix of one-third company-owned restaurants and two-thirds franchised
restaurants. We expect we will also seek to generate additional revenue through
the sale of media equipment to franchisees. In addition, we believe that our
concept is well suited for specialized locations, including airports and
schools, and we are pursuing opportunities in these areas. We also believe that
the software platforms and touchscreen terminals we have developed, and are
continuing to develop, for our restaurant concept can be deployed in other
restaurants, bars and mobile devices. We are currently engaged in preliminary
discussions and will continue to seek opportunities to employ these assets in
some or all of these other venues, although we have not entered into any
definitive agreements to do so.

         On May 1, 2007, we announced the signing of a letter of intent to open
a new restaurant location at the Promenade at Howard Hughes Center in Los
Angeles, California. Effective June 4, 2007, we and the landlord entered into a
definitive lease agreement for the Howard Hughes location.

         On May 7, 2007, we announced the signing of a letter of intent to open
a new restaurant location at the Hollywood & Highland Center in Hollywood,
California.

         On August 6, 2007, we announced the signing of a letter of intent to
open a new restaurant location at the Galleria Dallas in Dallas, Texas.

         The Hollywood & Highland and Galleria Dallas transactions remain
subject to the negotiation and execution of a definitive lease agreement.
Assuming prompt execution of the definitive lease agreements for these
locations, we expect these locations to be open by early to mid 2008.

          On October 25, 2007, we entered into a definitive agreement to acquire
the leasehold interest and certain other assets of a currently operating
restaurant in downtown Mountain View, California, which we intend to convert to
the uWink concept and open by early 2008, subject to the satisfaction of
customary closing conditions.


                                       23
<PAGE>

          On November 7, 2007, we completed an approximately $10.4 million
registered equity financing. The proceeds of the raise will be used to fund our
new restaurants and general working capital needs. Investors purchased
approximately 5.2 million units at a purchase price of $2.00 per unit, each of
which consists of one share of common stock and a warrant to purchase one share
of our common stock at an exercise price of $2.40. The warrants are immediately
separable from the units, immediately exercisable and will expire on the fifth
anniversary of the date of their issuance. The net proceeds were approximately
$9.3 million after deducting placement agent fees and other offering expenses.

         On June 8, 2007, our subsidiary, uWink Franchise Corporation, entered
into an area development agreement with OCC Partners, LLC for our first three
planned franchised restaurants to be built in Miami-Dade County, Florida, over
the next four years.

         Also in June 2007, we announced plans to establish a joint venture in
Canada with Jefferson Partners, a leading Canadian venture capital firm, to
develop the Canadian market for uWink restaurants and related uWink products and
services. We expect that the Canadian joint venture, in which we will have an
initial 50% equity interest, will be independently funded in Canada and be
managed in conjunction with an experienced Canadian restaurant operator to be
selected by us and Jefferson Partners. Subject to prompt negotiation and
execution of definitive agreements, we expect the first Canadian uWink to open
late winter or early spring of 2008.

         As of the date of this report, we do not have any material commitments
for capital expenditures.

        We expect that we can currently satisfy our cash requirements through
the end of our 2008 fiscal year.


MANAGEMENT'S DISCUSSION AND ANALYSIS

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 2, 2007 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

         We are a developer and operator of digital media entertainment software
and an interactive restaurant concept named uWink. Over the past three years, we
have invested substantial time and capital in the development of the uWink Game
Library comprising over 70 short-form video games, our proprietary "tabletop"
touchscreen terminal and software and most recently, the development of our
interactive restaurant concept.

         The uWink restaurant concept was designed to create a fun, casual
atmosphere where customers can enjoy freshly prepared, reasonably priced meals
while interacting with our tabletop media, games and entertainment platform. Our
intention is to define a new segment of the "casual dining" restaurant market by
combining our proprietary tabletop food ordering and game/media delivery
interface with the best elements of the fast-casual and casual full-service
dining segments, including:

         o A wide variety of freshly prepared dishes designed to appeal to a
         broad audience, from health-conscious to sinful, at attractive price
         points, with quick turnaround times;

         o Full bar, including extensive wine list; and

         o Delivery, catering and take out capabilities, along with full-service
         private party and meeting facilities supported by customized
         entertainment and presentation options.


                                       24
<PAGE>

         In 2005, we made a strategic decision to reposition ourselves as an
entertainment restaurant company. As a result, we wound down our SNAP! and Bear
Shop manufacturing and sales operations and we did not enter the 2006 marketing
cycle of tradeshows and advertising for SNAP! and Bear Shop. This decision also
allowed us to liquidate inventory and product-related receivables. Given our
perception of the market opportunity in combining dining with short form, social
video gaming/entertainment and our management team's experience in the digital
entertainment and restaurant industries, we believe that the restaurant project
is the most cost effective way to monetize our investment in technology. As a
result, we have licensed our SNAP! and the Bear Shop intellectual property to
third party manufacturers in exchange for licensing fees. We do not expect
material revenue from these agreements.

         Going forward, our strategy is to leverage our network and
entertainment software assets, including our uWink Game Library, to develop and
operate the uWink interactive entertainment restaurant concept. The uWink
concept is designed to allow customers to order food, drinks, games from the
uWink Game Library and other digital media at the table through proprietary
software and touchscreen terminals. This concept integrates food and our
interactive entertainment software to provide what we believe to be a new
entertainment dining experience. We believe that the software platforms and
touchscreen terminals we have developed, and are continuing to develop, for our
restaurant concept can be deployed in other restaurants, bars and mobile
devices. We are currently engaged in preliminary discussions and will continue
to seek opportunities to employ these assets in some or all of these other
venues, although we have not entered into any definitive agreements to do so.

         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 fiscal first quarter 2007 ended on
April 3, 2007, our fiscal second quarter 2007 ended on July 3, 2007 and our
fiscal third quarter 2007 ended on October 2, 2007. For purposes of the
following discussion, the three and nine month periods ended October 2, 2007 and
September 30, 2006 are sometimes referred to as fiscal quarters.

RESULTS OF OPERATIONS

         Fiscal third quarter 2007 compared with fiscal third quarter 2006.

         Net sales for the three and nine months ended October 2, 2007 increased
by $637,615 and $1,825,134 (1,785% and 1,252%) to $673,335 and $1,970,905, from
$35,720 and $145,771, respectively, for the same periods in 2006. In 2006, we
wound down our SNAP! and Bear Shop manufacturing and sales operations and
repositioned ourselves as an entertainment restaurant company. Revenue from our
first restaurant, which opened on October 16, 2006, amounted to $1,899,532 (96%
of total revenue) for the nine months ended October 2, 2007. There was no
revenue associated with our entertainment restaurant operations for the nine
months ended September 30, 2006. The other revenue for the nine month period
ended October 2, 2007 of $71,373 was generated through $20,000 of non-refundable
franchise area development fees paid to us upon execution of our franchise area
development agreement with OCC Partners; $2,000 of non-refundable franchise
application fees; $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. 2006 revenue largely reflects the liquidation of part of our
remaining SNAP! and Bear Shop inventories. We also generated licensing revenue
of $37,600 (25.7% of total revenue) in the first nine months of 2006, made up of
$21,600 in licensing fees from the sale of SNAP machines by SNAP Leisure LLC
under our license agreement with SNAP Leisure and $16,000 in licensing fees for
some of our games from Mondobox LLC.


                                       25
<PAGE>

         Cost of sales for the three and nine month periods ended October 2,
2007 totaled $193,272 and $597,177, compared to $5,250 and $147,373 for same
periods in 2006, representing an increase of $188,022 and $449,804 (3,581% and
305%), respectively. Cost of sales for our restaurant amounted to $581,306
(30.6% of restaurant revenue) in the nine months ending October 2, 2007. For the
three months ended October 2, 2007, cost of sales for our restaurant was
$187,186 (28.4% of restaurant revenue). As our restaurant continues to mature
and we continue to optimize our menu and menu cost structure and generate a
greater percentage of media revenue, we expect that our restaurant cost of sales
will drop to the 25%-27% (of restaurant revenue) range.

         Non-restaurant cost of sales amounted to $15,871 for the first nine
months of 2007, as compared to $147,373 for the first nine months of 2006. The
decrease in non-restaurant cost of sales is attributable to lower SNAP! and Bear
Shop sales volume resulting from our decision to wind down our SNAP! and Bear
Shop operations. In addition, 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. During
the nine months ended September 30, 2006, we wrote off $66,398 of uncollectible
advances to suppliers to cost of good sold, resulting in negative gross profit
of $1,601 for the nine months ended September 30, 2006.

         Selling, general and administrative expenses for the three and nine
months ended October 2, 2007 totaled $1,501,148 and $5,046,382, compared to
$863,845 and $2,046,714 for the three and nine months ended September 30, 2006,
representing an increase of $637,303 and $2,999,668 (74% and 147%),
respectively.

         The increase in SG&A for the first nine months of 2007 is attributable
to $1,197,206 of restaurant SG&A in 2007 (including restaurant salary expense of
$758,658); higher corporate salary expense ($1,260,412 in 2007 as compared to
$639,729 in 2006); increased engineering consulting expense ($268,912 in 2007
versus $177,364 in 2006); higher legal, accounting and other professional
expense ($459,589 in 2007 versus $239,331 in 2006); higher depreciation and
amortization expense ($237,503 in 2007 versus $17,805 in 2006); and higher
nominal stock option expense in 2007 resulting from the continued amortization
of fair value expense of options issued prior to 2007, coupled with the
recording of expense relating to the increased issuance of employee options in
2006 and 2007 ($1,005,318 of expense for the third quarter of 2007 versus
$365,309 of expense for the third quarter of 2006).

         As a result, our loss from operations for the three and nine months
ended October 2, 2007 was $1,021,085 and $3,672,655, compared to a loss of
$833,375 and $2,048,315 for the three and nine months ended September 30, 2006,
representing an increase of $187,710 and $1,624,340 (23% and 79%), respectively.

         Total other expense for the three and nine months ended October 2, 2007
was $455,880 and $444,568, compared to other expense of $6,267,912 and expense
of $6,667,355 for the same periods in 2006, representing a decrease in expense
for the first nine months of 2007 of $6,222,787 (93%). This decrease was
primarily attributable to the non-recurrence in 2007 of $6,583,902 of expense
relating to the issuance of financing warrants in the first nine months of 2006
coupled with $58,076 of gain on settlement of debt income recorded in 2007
resulting from the settlement at a discount of accounts payable owing to outside
law firms, partially offset by $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.

         As a result, our net loss for the three and nine months ended October
2, 2007 totaled $1,476,966 and $4,118,023, compared to a net loss of $7,101,287
and $8,715,670 for the same periods in 2006, representing a decrease of
$5,624,321 and $4,597,647 (79% and 53%), respectively.

                                       26
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         As of October 2, 2007, our cash position was $11,495 and we had
negative working capital of $2,953,692. 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 April 2, 2007, we completed the sale of $857,000 of convertible
promissory notes to 19 accredited individual investors, including our CFO and
the brother-in-law of our CEO ($25,000 of these proceeds were received from our
CFO on April 10, 2007 and accordingly we issued the $25,000 note in favor of our
CFO on that date). The notes have a six month term, accrue interest at 10% and
are secured by our assets. The notes are 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 is entitled to receive, as a conversion incentive, additional securities
equal to 20% of the aggregate principal value plus accrued interest converted.

         On June 8, 2007, we sold $960,500 of convertible promissory notes to 16
individual accredited investors, including our CEO and the brother-in-law of our
CEO. The notes have a six month term, accrue interest at 10% and are secured by
our assets. The notes are 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 is 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 the sale, in a registered equity
offering, of 5.2 million units at a purchase price of $2.00 per unit, consisting
of one share of common stock and a warrant to purchase one share of our common
stock at an exercise price of $2.40, generating gross proceeds of approximately
$10.4 million. The net proceeds from this transaction were approximately $9.3
million after deducting placement agent fees and offering expenses.

         Our November 7, 2007 financing triggered the conversion rights in the
convertible promissory notes issued in April 2007 and June 2007. Effective
November 12, 2007, holders representing an aggregate of $1,517,500 in principal
amount of convertible notes (including aggregate accrued interest of $86,785 and
an aggregate conversion incentive of $320,857) elected to convert (in full
satisfaction of our obligations under the notes) their notes into the same units
issued in the November 7, 2007 financing (each unit consisting of one share of
common stock and a warrant to purchase one share of our common stock at an
exercise price of $2.40) at a purchase price of $2.00 per unit. Accordingly, we
issued an aggregate 962,571 of units to these investors.

         Holders representing an aggregate of $318,885 in principal amount of
convertible notes elected not to convert their notes. Accordingly, we made cash
repayment of a total of $437,888 (inclusive of $119,003 of accrued interest), in
full satisfaction of those notes.


                                       27
<PAGE>

         Our obligations under our 2007 convertible promissory notes are now
fully satisfied.

         Our debt at October 2, 2007 consisted of the following:

         A $18,885 loan payable to our former Vice President of Marketing issued
on various dates in 2004 and 2005, 10% interest secured by certain inventory and
receivables, due November 14, 2007. On May 14, 2007, we amended the terms of
this note to: reduce the interest rate from 12% to 10%; extend the term from
February 15, 2007 to November 14, 2007; prohibit prepayments on the note; and
make the principal and accrued interest outstanding under the note convertible,
at the option of the holder, into the same securities issued in (and on the same
terms and conditions pari passu with the investors in) any offering of our
securities that results in gross proceeds of at least $3,000,000. Upon
conversion, the holder will receive as a conversion incentive additional
securities equal to 20% of the aggregate principal value plus accrued interest
converted.

         This loan was reclassified from "Due to Related Parties" to "Notes
Payable" on the December 31, 2005 balance sheet following the termination of the
holder's employment and was further reclassified from long term liabilities to
short term liabilities on the January 2, 2007 balance sheet. Accrued interest of
$101,422 outstanding on this note as of October 2, 2007 is included under
accrued expenses on the balance sheet as of October 2, 2007. During the nine
month period ended October 2, 2007, we repaid $14,400 of this note in cash and
credited $14,000 in receivables due from the holder against the principal
balance of the note.

         On November 12, 2007, the holder declined the conversion right
triggered by our November 7, 2007 financing. Accordingly, we repaid in cash a
total of $121,595 (inclusive of accrued interest) in full satisfaction of the
note.

         $1,492,500 of convertible notes in favor of 27 accredited investors
with maturity dates ranging from August 12, 2007 to December 8, 2007. The notes
accrue interest at 10%, are secured by our assets, and are 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 of at least $3,000,000. Upon
conversion, the holder will receive as a conversion incentive additional
securities equal to 20% of the aggregate principal value plus accrued interest
converted.

          The conversion rights in these notes were triggered by our November 7,
2007 financing. On November 12, 2007, 22 holders, representing an aggregate of
$1,367,500 in principal amount of notes, an aggregate of $79,929 in accrued
interest and an aggregate of $289,486 of conversion incentive, elected to
convert their notes, in full satisfaction of our obligations under the notes,
into an aggregate of 868,458 units at $2.00 per unit (such units collectively
consisting of 868,458 shares of our common stock and 868,458 warrants to
purchase one share of our common stock at an exercise price of $2.40). 5 holders
elected to not to convert a total of $125,000 in principal amount of notes. We
repaid in cash the $125,000 principal amount plus an aggregate of $7,396 in
accrued interest to those non-converting holders.

         Two convertible notes payable to Mr. Dennis Nino, brother-in-law of our
CEO, totaling $175,000. A $50,000 note was due August 28, 2007 and a $125,000
note is due December 8, 2007. Each note accrues interest at 10%, is secured by
our assets, and is convertible, at the option of Mr. Nino, 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, Mr. Nino will receive as a
conversion incentive additional securities equal to 20% of the aggregate
principal value plus accrued interest converted.

         The conversion rights in these notes were triggered by our November 7,
2007 financing. On November 12, 2007, Mr. Nino elected not to convert these
notes. Accordingly, we made cash repayment to Mr. Nino of an aggregate of
$183,897 (inclusive of $8,897 of accrued interest) in full satisfaction of these
notes.


                                       28
<PAGE>

         A $125,000 convertible note payable to our CEO, Nolan Bushnell. The
note is due December 8, 2007 and accrues interest at 10%, is secured by our
assets, and is convertible, at the option of Mr. Bushnell, 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, Mr. Bushnell will receive as a
conversion incentive additional securities equal to 20% of the aggregate
principal value plus accrued interest converted.

          On November 12, 2007, Mr. Bushnell elected to exercise the conversion
right in the note triggered by our November 7, 2007 financing and convert (in
full satisfaction of our obligations under the note) the $125,000 principal
amount of the note (together with accrued interest of $5,377 and the conversion
incentive of $26,075) into the same units issued in the November 7, 2007
financing (each unit consisting of one share of common stock and a warrant to
purchase one share of our common stock at an exercise price of $2.40) at a
purchase price of $2.00 per unit. Accordingly, we issued 78,226 units to Mr.
Bushnell.

         A $25,000 convertible note payable to our CFO, Peter Wilkniss. The note
is due October 10, 2007 and accrues interest at 10%, is secured by our assets,
and is convertible, at the option of Mr. Wilkniss, 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, Mr. Wilkniss will receive as a
conversion incentive additional securities equal to 20% of the aggregate
principal value plus accrued interest converted.

          On November 12, 2007, Mr. Wilkniss elected to exercise the conversion
right in the note triggered by our November 7, 2007 financing and convert (in
full satisfaction of our obligations under the note) the $25,000 principal
amount of the note (together with accrued interest of $1,479 and the conversion
incentive of $5,296) into the same units issued in the November 7, 2007
financing (each unit consisting of one share of common stock and a warrant to
purchase one share of our common stock at an exercise price of $2.40) at a
purchase price of $2.00 per unit. Accordingly, we issued 15,888 units to Mr.
Wilkniss.

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

CASH POSITION AND SOURCES AND USES OF CASH

         Our cash and cash equivalents position as of October 2, 2007 was
$11,495.

         On April 2, 2007, we completed the sale of $857,000 of convertible
promissory notes to 19 accredited individual investors ($25,000 of these
proceeds were received on April 10, 2007). On June 8, 2007, we completed the
sale of $960,500 of convertible promissory notes to 16 individual accredited
investors. We used the proceeds from these transactions for working capital
purposes. On November 7, 2007 we raised approximately $9.3 million of net
proceeds pursuant to a registered offering of our equity securities. We are
using the proceeds from this transaction for new restaurant development and
working capital purposes.

         During the nine months ended October 2, 2007, net cash used in
operations was $1,975,199, compared to a use of cash of $889,485 for the nine
months ended September 30, 2006.

         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 and cash rent
expense of $255,060. 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.


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<PAGE>

         Our net loss for the nine months ended September 30, 2006 was
$8,715,670, but, due to a number of non-cash transactions reflected largely in
our selling, general and administrative and other expenses, we used $889,485 in
cash for operations. Our major uses of cash in operations were to pay cash
employee compensation of approximately $443,000; cash payments to outside
engineering contractors of approximately $150,000; cash rent expense of
approximately $102,000; $90,000 of non-salary "pre-opening" expenses for first
restaurant; and approximately $120,000 of outside auditor, legal counsel and SEC
filing fees. The major source of operating cash during the period was the sale
of inventory valued at approximately $115,000. The non-cash transactions that
reduced cash used in operations relative to our net loss included: $6,583,902 of
non-cash expense related to the expensing of the fair value of financing
warrants issued in the first three quarters of 2006; $365,309 of non-cash
expense relating to employee stock options, the write off to cost of goods sold
of $66,000 of uncollectible inventory deposits, the use of $217,462 worth of
shares of common stock to pay for services rendered; and an increase in our
accounts payable of $219,468.

         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, CA restaurant, computer hardware purchases and expense relating
to new restaurant construction. During the nine months ended September 30, 2006,
we used $914,747 in our investing activities, largely reflecting capital
expenditures relating to the construction of our Woodland Hills, CA restaurant.

         During the nine months ended October 2, 2007, our financing activities
provided cash in the amount of $2,120,323, as compared to providing cash of
$2,657,043 for the nine months ended September 30, 2006. 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), as compared to net repayment of $278,959 in the first nine months of 2006.
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, compared to proceeds of
$2,936,002 in the first nine months of 2006.

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.


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<PAGE>

         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
with the product reaches technological feasibility. The establishment of
technological feasibility and the ongoing assessment for recoverability of
capitalized software development costs require considerable judgment by
management with respect to the completion of all planning, designing, coding and
testing activities necessary to establish that the product can be produced to
meet its design specifications and certain external factors including, but not
limited to, anticipated future gross revenues, estimated economic life, and
changes in software and hardware technologies. Capitalized software development
costs are comprised primarily of salaries and direct payroll related costs and
the purchase of existing software to be used in the 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 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 touch screen pay-for-play game terminals to our customer and we
believe that persuasive evidence of an arrangement exits, the fees are fixed or
determinable, and collectibility of payment is probable. Included with the
purchase of the touch screen terminals are licenses to use the games loaded on
the terminals. The licenses for the games are in perpetuity, we have no
obligation to provide upgrades or enhancements to the customer, and the customer
has no right to any other future deliverables. We deliver the requested
terminals for a fixed price either under agreements with customers or pursuant
to purchase orders received from customers.

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

         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.


                                       31
<PAGE>

FORWARD-LOOKING STATEMENTS

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

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

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

         o        the accuracy of our estimates and projections;

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

         o        changes in our business plan and corporate strategies; and

         o        other risks and uncertainties discussed in greater detail
                  under "Risk Factors" in our Annual Report on Form 10-KSB for
                  the fiscal year ended January 2, 2007.

         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 3.    CONTROLS AND PROCEDURES

         Under the supervision and with the participation of our senior
management, including our Chief Executive Officer, we conducted an evaluation of
the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
as of the end of the period covered by this report (the "Evaluation Date").
Based on this evaluation, our CEO concluded as of the Evaluation Date that our
disclosure controls and procedures were effective.

LIMITATIONS ON CONTROLS

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


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<PAGE>

PART II.   OTHER INFORMATION


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         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.

         During the nine months ended October 2, 2007, we sold or issued
unregistered shares of our equity securities in the following transactions:

         On April 2, 2007, we completed the sale of $857,000 of convertible
promissory notes to 19 accredited individual investors ($25,000 of these
proceeds were received on April 10, 2007). The notes have a six month term,
accrue interest at 10% and are secured by the our assets. The notes are
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 is entitled to receive, as a conversion
incentive, additional securities equal to 20% of the aggregate principal value
plus accrued interest converted. These issuances were made pursuant to the
exemption from registration provided by SEC Rule 506 promulgated under
Regulation D of the Securities Act of 1933. We are using the net proceeds from
this transaction for working capital purposes.

         On June 8, 2007, we sold $960,500 of convertible promissory notes to 16
individual accredited investors. The notes have a six month term, accrue
interest at 10% and are secured by our assets. The notes are 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 is entitled to receive, as a conversion incentive,
additional securities equal to 20% of the aggregate principal value plus accrued
interest converted. These issuances were made pursuant to the exemption from
registration provided by SEC Rule 506 promulgated under Regulation D of the
Securities Act of 1933. We are using the net proceeds from this transaction for
working capital purposes.

         Between January 3, 2007 and May 7, 2007 we issued 169,792 shares of
common stock valued at $234,313 to 14 accredited investors upon the exercise of
warrants with an exercise price of $1.38 per share. These issuances were made
pursuant to the exemption from registration provided by SEC Rule 506 promulgated
under Regulation D of the Securities Act of 1933. We are using the net proceeds
from these transactions for working capital purposes.

         On May 25, 2007, we issued an aggregate of 8,750 shares of common stock
valued at $71,800 to five employees in settlement of accrued compensation. These
issuances were made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder.

          On August 24, 2007, we issued an aggregate of 2,769 shares of common
stock valued at $13,713 to four service providers in exchange for consulting
services rendered. These issuances were made pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act of 1933 and Rule 506
promulgated thereunder.


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<PAGE>

          Our November 7, 2007 financing triggered the conversion rights in the
convertible promissory notes issued in April 2007 and June 2007. Effective
November 12, 2007, holders representing an aggregate of $1,517,500 in principal
amount of convertible notes (including aggregate accrued interest of $86,785 and
an aggregate conversion incentive of $320,857) elected to convert (in full
satisfaction of our obligations under the notes) their notes into the same units
issued in the November 7, 2007 financing (each unit consisting of one share of
common stock and a warrant to purchase one share of our common stock at an
exercise price of $2.40) at a purchase price of $2.00 per unit. Accordingly, we
issued an aggregate 962,571 of units to these investors. These issuances were
made pursuant to the exemption from registration provided by SEC Rule 506
promulgated under Regulation D of the Securities Act of 1933.


ITEM 5.  OTHER INFORMATION

(a) On November 15, 2007, we amended the terms of employment of our Chairman and
Chief Executive Officer, Nolan Bushnell, to increase Mr. Bushnell's base salary
to $225,000. On November 15, 2007, we amended the terms of employment of our
Chief Financial Officer, Peter Wilkniss, to increase Mr. Wilkniss' base salary
to $225,000 and to provide immediate vesting of Mr. Wilkniss' options and
restricted stock in the event Mr. Wilkniss' employment is terminated by us
without Cause or is terminated by Mr. Wilkniss with Good Reason (as those terms
are defined in the terms of employment).


ITEM 6.  EXHIBITS

(a) Exhibits

      REGULATION
      S-B 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.


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<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 16, 2007                                 By:  /s/ NOLAN K. BUSHNELL
                                                       ------------------------
                                                       Nolan K. Bushnell
                                                       Chief Executive Officer


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


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