<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

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

          FOR THE FISCAL YEAR ENDED JANUARY 2, 2007

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

          For the transition period from _________________ to _______________.


                         Commission File Number 0-27689


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

                Utah                                    86-0412110
   -------------------------------           ---------------------------------
   (State or other jurisdiction of           (IRS Employer Identification No.)
                                              incorporation or organization)

                 16106 HART STREET, VAN NUYS, CALIFORNIA 91406
              ----------------------------------------------------
                    (Address of principal executive offices)

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

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

         Title of each class                 Name of each exchange on which
         to be so registered                           registered
                None                                       N/A

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

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act Yes [__] No [X]

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [_]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K contained in this form, and will not be contained, to the best of
Company's knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-KSB or any amendment to this Form
10-KSB. [_]

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 issuer's revenue for the fiscal year ended January 2, 2007 was $450,149.

The market value of the voting stock held by non-affiliates of the issuer as of
March 30, 2007 was approximately $22,327,000.

The number of shares of the common stock outstanding as of March 30, 2007 was
25,931,197.

                       DOCUMENTS INCORPORATED BY REFERENCE

Not applicable.

Transitional Small Business Disclosure Format (check one)

                                 Yes [_] No [X]

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                                TABLE OF CONTENTS

PART I

ITEM NUMBER AND CAPTION                                                   PAGE
                                                                         NUMBER

ITEM 1.  DESCRIPTION OF BUSINESS                                           2

ITEM 2.  DESCRIPTION OF PROPERTY                                           9

ITEM 3.  LEGAL PROCEEDINGS                                                 10

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               10

PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
         AND SMALL ISSUER PURCHASE OF EQUITY SECURITIES                    11

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION         12

ITEM 7.  FINANCIAL STATEMENTS                                              27

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE                                          28

ITEM 8A. CONTROLS AND PROCEDURES                                           28

ITEM 8B. OTHER INFORMATION                                                 29

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS
         AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE
         EXCHANGE ACT                                                      29

ITEM 10. EXECUTIVE COMPENSATION                                            31

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT AND RELATED STOCKHOLDER MATTERS                        34

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS;
         DIRECTOR INDEPENDENCE                                             36

ITEM 13. EXHIBITS                                                          40

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                            42



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                    NOTE REGARDING FORWARD-LOOKING STATEMENTS

In this report we make a number of statements, referred to as "FORWARD-LOOKING
STATEMENTS" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, 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 in the
         sections of this report, including those captioned "RISK FACTORS" and
         "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION".

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


                                       1

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                                     PART 1

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

         uWink, Inc., a Utah corporation formerly known as Prologue ("we", "us"
or the "Company"), was incorporated as "Prologue" under the laws of the State of
Utah on October 14, 1982. On January 28, 2004, we changed our name to "uWink,
Inc." Our wholly-owned subsidiary, uWink California, Inc., formerly known as
uWink, Inc., was organized as a Delaware corporation on June 10, 1999. Our
principal executive offices are currently located at 16106 Hart Street, Van
Nuys, CA 91406, and our telephone number at that address is 818-909-6030. Our
web address is www.uwink.com.

         From 1982 to 1994 we were engaged in the sales and marketing business.
From 1994 until December 4, 2003, we had no operations or employees and owned no
real estate. In 2000, we became a "reporting company" by virtue of voluntarily
filing a Form 10-SB/12G to become a 12(g) registered company under the
Securities Exchange Act of 1934. Prior to the acquisition of uWink California,
Inc. described below, we had not generated significant revenues and were
considered a development stage company as defined in Statement of Financial
Accounting Standards No. 7. We were seeking business opportunities or potential
business acquisitions.

         Pursuant to a Securities Purchase Agreement and Plan of Reorganization
dated November 21, 2003 among Prologue, uWink, Inc., a Delaware corporation
("uWink-DE") and its stockholders, Prologue received all the issued and
outstanding shares of uWink-DE's capital stock. Prologue issued 1 share of its
common stock for every 3.15611 shares of uWink-DE capital stock. The uWink-DE
management team and board of directors became the management team and board of
directors of Prologue. In connection with this transaction, on January 28, 2004,
we changed our name from Prologue to uWink, Inc. and our ticker symbol on the
Over-the-Counter Bulletin Board from "PRLG" to "UWNK". In addition, our
wholly-owned subsidiary uWink-DE changed its name from uWink, Inc. to uWink
California, Inc. ("uWink Calfornia").


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         Via the acquisition of uWink California we assumed, and have continued
to engage in, uWink California's business of developing interactive
entertainment software and platforms.

BUSINESS OF THE COMPANY

         We are a digital entertainment company, based in Los Angeles,
California, that designs and develops interactive entertainment software and
platforms for restaurants, bars, and mobile devices. Over several years of
operation, we have invested substantial time and capital in the development of
over 70 short-form video games (uWink Game Library) and our SNAP! countertop
game machine and Bear Shop entertainment vending product.

         For the past several years, we have derived our revenue from the sale
of SNAP! countertop game platforms (and its predecessor platforms) and the Bear
Shop entertainment vending machine, related clothing, and software licensing
fees.

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

         We have made a strategic decision to reposition ourselves as an
entertainment restaurant company, as more fully described in this report. As a
result, we wound down our SNAP! and Bear Shop manufacturing and sales operations
and we decided not to enter the 2007 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.


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         Going forward, our strategy is to leverage our network and
entertainment software assets, including the uWink Game Library, to develop and
operate an interactive entertainment restaurant concept, called uWink. 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 touch screen
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 touch screen terminals we have
developed, and are continuing to develop, for our restaurant concept can be
deployed in other restaurants, bars and mobile devices. While we have no current
plans to do so, we may in the future seek opportunities to employ these assets
in some or all of these other venues.

         We are aiming our concept to compete in the "fast-casual dining"
segment of the restaurant market. We believe we combine some of the best
elements of the fast-casual dining market, including freshly prepared food with
generous portions at attractive price points and quick turnaround times, with
our innovative touch screen ordering and entertainment to create a new
experience for fast-casual dining patrons.

         We opened our first uWink restaurant in Woodland Hills, California in
the Westfield Promenade Shopping Center at 6100 Topanga Canyon Boulevard,
Woodland Hills, California 91367 on October 16, 2006.

RESTAURANT INDUSTRY OVERVIEW

         Studies show that, over the past 50 years, people in the United States
have relatively steadily shifted toward purchasing food away from home, instead
of preparing and eating food at home. The National Restaurant Association
estimates that the U.S. industry's sales in 2007 will reach $537 billion (about
4% of the U.S. gross domestic product) at 935,000 locations nationwide. The
National Restaurant Association further predicts that, by 2010, food purchased
away from home will represent more than half of all consumer food purchases, and
that the number of restaurants around the country will grow to more than a
million locations.


                                       4


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         We believe that there are many reasons that the restaurant industry is
expanding and eating out is becoming increasingly popular. A growing population
means more customers for restaurants to draw from, higher income levels mean
more discretionary income to spend eating out, and busier lifestyles mean people
have less time to prepare food at home. As a result, more people are willing to
pay for the convenience of quality food made by others. As the restaurant
industry adapts to consumer trends, restaurants (including fast-casual
restaurants in particular) have increasingly made available the higher-quality
food that people want, as illustrated by the proliferation of premium coffee
shops, beers, specialty supermarkets and the like.

         We believe that fast-casual restaurants, which combine characteristics
from both full-service restaurants (the more pleasant atmosphere, higher-quality
ingredients and food that's made to order) and from quick-service restaurants
(chiefly accessibility, lower prices and faster service), are poised to continue
to capitalize on this trend.

COMPETITION

         The fast-casual segment of the restaurant industry is highly
competitive and fragmented. In addition, fast-casual restaurants compete against
other segments of the restaurant industry, including quick-service restaurants
and casual dining restaurants. The number, size and strength of competitors vary
by region. All of these restaurants compete based on a number of factors,
including taste, quickness of service, value, name recognition, restaurant
location and customer service. Competition within the fast-casual restaurant
segment, however, focuses primarily on taste, quality and the freshness of the
menu items and the ambience and condition of each restaurant. For further
information about the restaurant industry, see "--Restaurant Industry Overview"
above.

         We expect to compete with national and regional fast-casual,
quick-service and casual dining restaurants. Our competition also includes a
variety of locally owned restaurants and the deli sections and in-restaurant
cafes of several major grocery restaurant chains. While we believe that there
are no significant competitors offering at-the-table touch screen ordering and
entertainment in the manner that we do, there are restaurant companies, such as
Dave and Busters, that offer away-from-the-table electronic games as part of the
experience. In addition, many bars and restaurants offer some form of trivia
game or another (both electronic and paper and pencil) and some quick service
restaurants have experimented with electronic kiosk ordering. Many of our
competitors have greater financial and other resources, have been in business
longer, have greater name recognition and are better established in the markets
where our first restaurant is located and where our future restaurants are
planned to be located. See "Risk Factors--Risks Relating to Our Business".

UWINK RESTAURANT CONCEPT

         We have developed and are continuing to refine an entertainment
restaurant concept called uWink. uWink is designed to allow customers to order
food, drinks, and games/media at the table through touch screen terminals. The
concept is further designed to integrate high quality food and uWink's
interactive entertainment software to provide what we believe is a new
entertainment dining experience that encourages social interaction, group play,
and fun.

         Prominent features of our concept include:

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

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

         DISTINCTIVE FAST-CASUAL DINING EXPERIENCE AND VALUE PROPOSITION. We are
         aiming our concept to compete in the "fast-casual dining" segment of
         the restaurant market. We believe our concept combines some of the best
         elements of the fast-casual dining market, including freshly prepared
         food with generous portions at attractive price points and quick
         turnaround times, with innovative touch screen ordering and
         entertainment to create a new experience for casual dining patrons. We
         expect our average check to be $12 to $18 per guest, excluding
         alcoholic beverages; at this price point we believe that we provide an
         attractive and entertaining value proposition for fast-casual diners.


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         Led by Nolan Bushnell, our Chairman and Chief Executive officer and the
founder of both Atari and Chuck E. Cheese, and our Director of Restaurant
Operations, John Kaufman, who helped build California Pizza Kitchen into one of
the country's leading restaurant chains and who also served as chief operating
officer of Rosti restaurants and president and chief operating officer of the
Koo Koo Roo restaurant chain, we believe we have assembled a management team
with the vision and experience to successfully execute on the uWink restaurant
concept. Mr. Kaufman is responsible for every facet of our restaurant operations
and food and menu development.

RESTAURANT OPERATIONS

         OUR MENU

         Our menu features a selection of appetizers, pizzas, burgers, salads,
pastas, entrees and desserts. We are targeting menu prices from $3.95 to $8.95
for appetizers and soups, $5.95 to $10.95 for salads, $6.95 to $9.95 for
sandwiches and lunch entrees and $6.95 to $23.95 for dinner entrees. We believe
our average guest check for lunch will be $10.00 to $12.00, and for dinner will
be $12.00 to $18.00, excluding alcoholic beverages.

         DECOR AND ATMOSPHERE

         We utilize a combination of warm earth tones, rich wood finishes and
brushed metals to juxtapose the technology features of our restaurant. We use a
variety of lighting to deliver a warm glow throughout our restaurant and expect
to be able to adjust our dining atmosphere throughout the day by adjusting the
lighting, music, and the computer-driven images that are projected on our walls.

         MARKETING AND ADVERTISING

         We expect that our ongoing marketing strategy will consist of various
public relations activities, email marketing campaigns and limited print and
internet advertising, as well as word-of-mouth recommendations. We believe that
public relations and word-of-mouth recommendations will likely be a key
component in driving guest trial and usage.

         We have implemented a coordinated public relations effort in
conjunction with the opening of the Woodland Hills location. This effort may be
supplemented by radio, print advertisements, direct mail campaigns, and other
marketing efforts. In addition, we will use our website, www.uwink.com, to help
increase our brand awareness.

         RESTAURANT UNIT ECONOMICS

         We believe that our concept has the ability to reach annual revenue of
$3.5 million in the Woodland Hills location, equating to approximately $650 per
square foot. Comparable restaurants, such as California Pizza Kitchen, generate
average unit revenues of anywhere between $400 to $700 per square foot. We also
believe that our touch screen ordering feature, which reduces the need for wait
staff, will allow us to achieve labor costs savings that will help us generate
higher annual per unit free cash flow than comparable fast-casual restaurant
concepts.

         As we develop additional company-owned restaurants as well as
franchised restaurants, we expect our concept to generate average per square
foot unit revenue of $550-$600, with technology-related labor cost savings
continuing to result in higher free cash flow than comparable fast-casual
concepts.


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SNAP! AND BEAR SHOP

         Snap! is a web-enabled, network-capable, coin-operated touch-screen
entertainment terminal that delivers over 70 proprietary and customizable
short-form video games. Approximately two feet high by two feet wide, Snap!
features 360 degree rotation, a high-resolution liquid crystal display screen,
and a currency reader able to identify and process coins, bills, and credit
cards. Typical locations for Snap! include traditional amusement venues such as
bars and arcades, as well as non-traditional public spaces, such as airport
lounges, chain restaurants, coffee houses, and hotels. The Snap! video games are
all short-form (less than five minutes in duration) games of skill, which
include trivia, sports contests, strategy, card games and other hand-eye
challenges.

         Bear Shop is a vending machine that allows purchasers to design their
own "stuffed toy bear" characters with unique colors, clothing, and accessories.
Bear Shop offers a unique packaging solution that allows the user to see the
stuffed animal grow right before his or her own eyes. Bear Shop is an
approximate seven-foot by three-foot cabinet-style machine with an embedded
high-resolution liquid crystal display touch screen that interfaces with the end
user for functional commands. Typical locations for Bear Shop include
traditional amusement venues, such as arcades and amusement parks, as well as
shopping centers and supermarkets.

         We have wound down our SNAP! and Bear Shop manufacturing and sales
operations and we decided not to enter the 2006 marketing cycle of tradeshows
and advertising for SNAP! and Bear Shop.

         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.


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DISTRIBUTION AND MARKETING

         Prior to our decision to wind down our SNAP! operations, we marketed
SNAP! in Japan, New Zealand, Europe and the United States. We sold SNAP! through
direct marketing initiatives into vertical markets and through established coin
operated industry distributors and dealers. In all regions, we maintained tiered
pricing schedules for our different sales channels and markets. We brought
market awareness to this product through our existing relationships,
presentations at trade shows, our website, and traditional collateral material.

         Prior to our decision to wind down our Bear Shop operations, we
distributed and marketed Bear Shop to the amusement market through established
coin operated industry distributors and dealers, and licensed the product to
manufacturing and marketing partners in certain territories.

MANUFACTURING RELATIONSHIPS

         Prior to our decision to wind down our SNAP! manufacturing operations,
SNAP! was being manufactured on a contract basis in Shenzhen, China.

         Prior to our decision to wind down our Bear Shop manufacturing
operations, our Bear Shop units were produced in the United States by contract
manufacturers.

         Our contract manufacturers assembled our component pieces from
readily-available supplies. None of our component pieces are custom-made and we
are not aware of any supply shortages of any of our component pieces.

CUSTOMERS

         In 2006, we generated $57,200 in revenue, amounting to 36% of total
non-restaurant revenue and 13% of total revenue, from one customer located in
the United States.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

         We regard our trademarks, service marks, copyrights, patents, domain
names, trade dress, trade secrets, proprietary technologies, and similar
intellectual property as critical to our success, and we rely on trademark,
copyright and patent law, trade-secret protection, and confidentiality and/or
license agreements with our employees, customers, partners, and others to
protect our proprietary rights. We have registered a number of domain names, and
have filed U.S. and international patent applications covering certain of our
proprietary technology.

         We generally enter into confidentiality or license agreements with our
employees and consultants, and generally control access to and distribution of
our documentation and other proprietary information. Despite these precautions,
it may be possible for a third party to copy or otherwise obtain and use our
proprietary information without authorization or to develop similar technology
independently. Effective trademark, service mark, copyright and trade secret
protection may not be available in every country in which our services are
distributed or made available through the Internet, and policing unauthorized
use of our proprietary information will be difficult.


                                       8


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GOVERNMENT REGULATION

         Our restaurant operations are subject to licensing and regulation by
state and local departments and bureaus of alcohol control, health, sanitation,
zoning, and fire and to periodic review by the state and municipal authorities
for areas in which the restaurants are located. In addition, we will be subject
to local land use, zoning, building, planning, and traffic ordinances and
regulations in the selection and acquisition of suitable sites for developing
new restaurants. Delays in obtaining, or denials of, or revocation or temporary
suspension of, necessary licenses or approvals could have a material adverse
impact on our development of restaurants.

         Our restaurant operations are also subject to regulation under the Fair
Labor Standards Act, which governs such matters as working conditions and
minimum wages. An increase in the minimum wage rate or the cost of workers'
compensation insurance, or changes in tip-credit provisions, employee benefit
costs (including costs associated with mandated health insurance coverage), or
other costs associated with employees could adversely affect our company.

         In addition, our restaurant operations are subject to the Americans
with Disabilities Act of 1990 ("ADA"). The ADA may require us to make certain
installations in our planned restaurants to meet federally and state mandated
requirements.

         In addition, to the extent we attempt to franchise our restaurant
concept, we will be subject to various state and federal laws relating to the
offer and sale of franchises and the franchisor-franchisee relationship. In
general, these laws and regulations impose specific disclosure and registration
requirements prior to the sale and marketing of franchises and regulate certain
aspects of the relationship between franchisor and franchisee.

RESEARCH AND DEVELOPMENT

         During the fiscal years 2006 and 2005, we spent $0 and $151,542,
respectively, on research and development activities related to the uWink
restaurant concept, new games, kiosks and amusement products in general. None of
the costs associated with these activities are borne directly by our customers.

EMPLOYEES

         As of the date of this report, we employ 14 people on a full-time
basis, 6 of whom are corporate management and staff, 5 of whom are engineering
staff and 3 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, 6
managers and 64 full time and part time non-managerial restaurant staff.

         None of our employees are covered by an ongoing collective bargaining
agreement with us and we believe that our relationship with our employees is
good. Competition for qualified personnel in our industry is intense,
particularly for software engineers, computer scientists, and other technical
staff, as well as restaurant management and operations personnel. We believe
that our future success will depend in part on our continued ability to attract,
hire, and retain qualified personnel.

ITEM 2. DESCRIPTION OF PROPERTIES

PROPERTIES

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


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<PAGE>

         This location consists of 5,340 square feet. The minimum annual rent
payments under the lease are $176,220 from rental commencement on October 5,
2006, through January 31, 2009; increasing in each successive year to $216,728
by the last year of this lease, which expires on January 31, 2016.

         If our gross sales from this location exceed certain annual thresholds,
we are obligated to pay additional percentage rent over and above the minimum
annual rent described above. Our percentage rent obligation is equal to 5% of
gross sales in excess of $3,524,400 through January 31, 2009, increasing in
specified annual increments to $4,334,567 in the last year of this lease.

         Effective May 31, 2006, we terminated the lease agreement at our former
corporate offices at 12536 Beatrice Street, Los Angeles, California 90066. In
consideration for the early termination of the lease, we agreed to allow the
landlord to retain $20,000 of the security deposit held by the landlord under
the lease.

         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.

ITEM 3. LEGAL PROCEEDINGS

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


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There have been no matters submitted to a vote of security holders
during the fiscal quarter ended January 2, 2007.


                                       10


<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL ISSUER
PURCHASE OF EQUITY SECURITIES.

         Our common stock is listed on the OTC Bulletin Board under the symbol
"UWNK." The following table sets forth the high and low bid information for our
common stock on the OTC Bulletin Board, as reported by the OTC Bulletin Board,
for each calendar quarter of 2005 and 2006. These quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions. We consider our common stock to be thinly traded
and, accordingly, reported sale prices may not be a true market-based valuation
of our common stock.

         Quarter Ended                     High                     Low

         March 31, 2005                    $1.45                    $0.75
         June 30, 2005                     $1.00                    $0.42
         September 30, 2005                $0.65                    $0.33
         December 31, 2005                 $0.58                    $0.27

         Quarter Ended                     High                     Low

         March 31, 2006                    $0.37                    $0.21
         June 30, 2006                     $0.30                    $0.18
         September 30, 2006                $1.78                    $0.20
         December 31, 2006                 $2.70                    $1.10

         As of March 30, 2007, there were approximately 677 record holders of
our common stock.

         We have not paid any cash dividends since our inception and do not
contemplate paying dividends in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of our business.

         The information set forth in response to Item 201(d) of Regulation S-B
in Item 11 of this Report is incorporated herein by reference in partial
response to this Item 5.


                                       11


<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES.

         On October 25, 2006, we issued 3,334 shares of common stock valued at
$2,000, based on the closing price of our common stock on the date of the
agreement, to Richard Strong in exchange for engineering consulting service
rendered. This issuance was made pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act of 1933. These shares were
reflected as shares to be issued on the September 30, 2006 balance sheet.

         On October 25, 2006, we issued 100,000 shares of common stock valued at
$27,000, based on the closing price of our common stock on the date of the
agreement, to S. Raymond Hibarger, our former Vice President of Marketing, in
final settlement of all compensation due to Mr. Hibarger. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933. These shares were reflected as shares to be issued on
the September 30, 2006 balance sheet.

         On December 6, 2006, we issued 133,334 shares of common stock valued at
$200,001 to 2 accredited individual investors upon the exercise of warrants at
an exercise price of $1.50 per share. This issuance was made pursuant to the
exemption from registration provided by SEC Rule 506 promulgated under
Regulation D of the Securities Act of 1933.

         On April 2, 2007, we completed the sale of $857,000 of convertible
promissory notes to 19 accredited individual investors. The notes have a six
month term, accrue interest at 10% and are secured by the assets of the Company.
The notes are convertible, at the option of the holder, into the same securities
issued by the Company in (and on the same terms and conditions pari passu with
the investors in) any offering of its securities that results in gross proceeds
to the Company of at least $3,000,000. Upon conversion, the holder 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.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

         Below is a discussion of our plan of operation for uWink for the next
twelve months. Following that is our Management's Discussion and Analysis of our
financial condition and results of operations for the fiscal years ended January
2, 2007 and December 31, 2005.

PLAN OF OPERATION - UWINK RESTAURANT

         We are currently operating and continuing to develop an entertainment
restaurant concept called 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.

         On March 3, 2006, we raised net proceeds of $1,425,000 via the private
placement of our equity securities.

         On September 18, 2006, we completed raising aggregate net cash proceeds
of $1,500,400 via the private placement of our equity securities.

         On April 2, 2007 we completed the sale of $857,000 of convertible
promissory notes to 19 individual investors.

         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.


                                       12
<PAGE>

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

         To staff the restaurant, we have hired an executive chef, 6 managers
and 64 full time and part time non-managerial restaurant staff.

         Our near term strategy is to prove our concept at the Woodland Hills
location and subsequently seek to open 3 to 6 additional company-owned and/or
managed restaurants within the next 6 to 12 months.

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

         We expect to need to raise additional amounts of capital through the
sale of our equity or debt securities within the next 2 to 3 months because we
do not expect to have sufficient funds remaining following completion of the
build out to fund our corporate overhead and expenses and growth; and we do not
expect the cash flow from our first restaurant location to be sufficient to
cover our corporate overhead and expenses and growth. As of the date of this
report, we have no commitments for the sale of our securities nor can we assure
you that such funds will be available on commercially reasonable terms, if at
all. Should we be unable to raise the required funds, our ability to finance our
operations and growth will be materially adversely affected.


                                       13


<PAGE>

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 with this report. 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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

         SOFTWARE DEVELOPMENT COSTS

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

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


                                       14


<PAGE>

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

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

         Restaurant revenue from food and beverage 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.

         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 for
financial reporting purposes. As a result, our 2006 fiscal year ends on January
2, 2007. For the purposes of the following discussion and the accompanying
consolidated financial statements included in this report, the years ended
January 2, 2007 and December 31, 2005 are sometimes referred to as fiscal years
2006 and 2005 respectively.

         The accompanying consolidated financial statements, included in this
report, have been prepared in conformity with accounting principles generally
accepted in the United States of America, which contemplate continuation as a
going concern. We have incurred a net loss of $10,361,065 for the fiscal year
ended January 2, 2007, as of January 2, 2007, we had an accumulated deficit of
$35,133,615 and we had a net working capital deficiency at January 2, 2007 of
$1,303,820 (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). We have incurred a net loss of $3,239,557 for the year ended December 31,
2005, and had a net working capital deficiency of $1,248,178 as of December 31,
2005.

         These conditions raise substantial doubt as to our ability to continue
as a going concern. These financial statements do not include any adjustments
that might result from the outcome of this uncertainty. These financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts, or amounts and classification of
liabilities that might be necessary should we be unable to continue as a going
concern.

RESULTS OF OPERATIONS

         Fiscal year 2006 compared with fiscal year 2005.

         Net sales for fiscal year 2006 were $450,149, compared to $682,204 for
fiscal year 2005, representing a decrease of $232,455 (34%). The decrease in
revenue is largely attributable to our decision to wind down our SNAP! and Bear
Shop manufacturing and sales operations and reposition ourselves as an
entertainment restaurant company. Revenue from our first restaurant, which
opened on October 16, 2006, amounted to $289,929 (64% of total 2006 revenue) for
the period beginning on October 16, 2006 and ending on January 2, 2007.

         In addition, we generated licensing revenue of $46,800 (10.4% of total
revenue) in 2006. Of this, $27,200 was licensing fees from the sale of SNAP!
machines by SNAP Leisure LLC under our license agreement with SNAP Leisure and
$19,600 was licensing fees for some of our games from Mondobox LLC. In 2005, we
generated $100,000 (15% of total 2005 revenue) from the licensing of some of our
games to Bluetorch Games. This agreement had a one year term and, accordingly,
we recorded licensing revenue of $25,000 per quarter in 2005.


                                       15


<PAGE>

         The remaining revenue of $113,420 generated during 2006 largely
reflects the liquidation of part of our remaining SNAP! and Bear Shop
inventories. In 2005, we generated non-licensing revenue of $582,604, largely
from the sale of approximately 200 SNAP! units and 11 Bear Shop units. In 2005,
SNAP! sales comprised 78% of our total sales and Bear Shop units 9%.

         Cost of sales for 2006 totaled $249,248, compared to $540,974 for 2005,
representing a decrease of $291,726 (54%). Cost of sales for our restaurant
amounted to $99,728 (34% of restaurant revenue) in 2006. As our restaurant
matures and we optimize our menu and menu cost structure, we expect that our
restaurant cost of sales will drop to the 23%-26% (of restaurant revenue) range.

         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 wrote off $66,398 of
uncollectible advances to suppliers to cost of goods sold in 2006. As a result,
our non-restaurant gross margin was 6.7% in 2006, as compared to 21% in 2005.

         Selling, general and administrative expenses for 2006 totaled
$3,690,921, compared to $2,823,044 for 2005, representing an increase of
$867,877 (31%).

         The increase in SG&A is attributable to $572,282 of restaurant SG&A in
2006 (including restaurant salary expense of $336,354), higher corporate salary
expense ($945,678 in 2006 as compared to $587,000 in 2005), increased
engineering consulting expense ($315,000 in 2006 versus $152,000 in 2005) and
$180,000 of pre-opening expenses relating to our first restaurant in 2006,
together with higher legal and accounting expense ($295,559 in 2006 versus
$129,330 in 2005) and higher nominal stock option expense in 2006 resulting from
the expensing of options granted to employees based on the fair market value of
the options ($499,548 of expense in 2006 versus $97,667 of expense in 2005). In
2005, we recorded expense only for those options that were issued at an exercise
price below the closing price of the stock on the date of grant. These increases
were partially offset by an approximately $980,000 reduction in financial
consulting expense from $995,351 in 2005 to $14,750 in 2006. In 2005 we issued
in excess of $800,000 worth of shares of our common stock in exchange for
outside investor relations and financial consulting services.

         We incurred no expense for research and development during 2006,
compared to $151,542 in 2005, representing a decrease of $151,542 (100%).
Research and development expense decreased as a result of our decision to halt
SNAP! and Bear Shop related research and development in 2005.

         Impairment loss fell to $0 in 2006 from $203,125 in 2005. In 2005, we
amortized $84,403 and impaired $116,794 in capitalized software development
costs and we depreciated $23,928 and impaired $86,332 in SNAP! tooling, moulds
and dyes, as a result of our decision to wind down our SNAP! and Bear Shop
operations.

         As a result, our loss from operations for fiscal 2006 was $3,490,020,
compared to $3,036,081 for fiscal 2005, representing an increase of $453,939
(15%).

         Total other expense for 2006 was $6,871,045, compared to $201,874 in
2005, representing an increase of $6,669,171 (330%). This increase was primarily
attributable to $6,583,902 of expense relating to the issuance of financing
warrants in the first three quarters of 2006 and $151,111 of expense relating to
the conversion of debt and accounts payable into common stock at conversion
prices lower than the market price on the date of conversion. In particular, we
recorded a conversion loss of $111,227 on the conversion of $217,240 in debt,
plus an additional $43,448 reflecting a 20% conversion incentive, into 260,688
shares of common stock at $1.00 per share, when the closing price of our common
stock was $1.26. In addition, we recorded a $39,884 conversion loss on the
conversion of a $85,810 accounts payable into 60,430 shares of common stock
($1.42 per share) when the closing price of our common stock was $2.08.

         Moreover, interest expense increased by $22,008 from $154,326 in 2005
to $176,334 in 2006. While we generally reduced interest accruals in 2006 in
line with our reduced debt levels, we booked $132,950 of interest expense in
2006 relating to our issuance of 200,000 immediately-exercisable, three-year
warrants to Bradley Rotter, a director, at an exercise price of $0.345 in
connection with the repayment of a $200,000 convertible note. The fair value of
the warrants of $132,950 was calculated using the Black Scholes option pricing
model and was accounted for as interest expense. In addition, gain on
forgiveness of debt income rose from $20,156 in 2005 to $42,465 in 2006. In
2006, we settled in our favor a dispute over a $36,000 payable with our former
auditors Stonefield Josephson.

         As a result, our net loss for 2006 totaled $10,361,065, compared to a
net loss of $3,239,557 for 2005, representing an increase of $7,121,508 (220%).


                                       16


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         As of January 2, 2007, our cash position was $55,006 and we had
negative working capital of $1,303,820. 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.

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

         A $47,285 loan payable to the Company's former Vice President of
Marketing issued on various dates in 2004 and 2005, 12% interest secured by
inventory and receivables of the Company, due February 15, 2007. The holder has
agreed to defer payment of this note pending our ongoing discussions regarding
an extension of the term of this note. Accrued interest of $90,521 outstanding
on this note as of January 2, 2007 is included under accrued expenses on the
balance sheet as of January 2, 2007. During 2006, we repaid $30,000 of this note
in cash. In addition, on August 1, 2006, we credited a total of $28,959 in
receivables owed to the Company by the holder of the note against the principal
amount of this note. On December 19, 2006, we credited an additional $5,600 in
receivables owed to the Company by the holder against the principal amount of
the note.

         On June 15, 2006, we entered into an amended promissory note with Elite
Cabinet Corporation ("ECC") in relation to trade payables previously owing to
ECC. The principal amount of this note is $10,177.75 and the note accrues
interest at 8%. We are required to pay $300 per month on this note from June 15,
2006 to January 15, 2007 at which time the entire unpaid balance plus accrued
interest is due and payable. As of January 2, 2007, we have repaid $1,658 of
this note, such that the amount remaining outstanding at January 2, 2007 is
$8,520. We repaid this note in full in cash on January 12, 2007.

         On April 2, 2007, we completed the sale of $857,000 of convertible
promissory notes to 19 accredited individual investors. The notes have a six
month term, accrue interest at 10% and are secured by the assets of the Company.
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. We are using the proceeds from
this transaction for working capital purposes.

         As of the date of this report, we are not in default on any material
debt obligation. As disclosed above, we are currently in discussions with our
former Vice President of Marketing regarding an extension of the term of our
debt to him. We have filed as exhibits with the SEC all of our material
financing arrangements.

         As of the date of this report, we do not have any definitive plans to
undertake any material commitments for capital expenditures. In order for us to
open additional company-owned restaurants in furtherance of our growth plans, we
will, in all likelihood, need to raise additional capital. As of the date of
this report, we do not have any commitments for equity or debt financing.

         We expect that we can currently satisfy our cash requirements for the
next 2 to 3 months. We expect to need to raise additional amounts of capital
through the sale of our equity or debt securities within the next 2 to 3 months
because we do not expect to have sufficient funds remaining following completion
of the build out to fund our corporate overhead and expenses and growth; and we
do not expect the cash flow from our first restaurant location to be sufficient
to cover our corporate overhead and expenses. As of the date of this report, we
have no commitments for the sale of our securities nor can we assure you that
such funds will be available on commercially reasonable terms, if at all. Should
we be unable to raise the required funds, our ability to finance our operations
and growth will be materially adversely affected.

         SOURCES OF CASH

         Since January 1, 2005, we have financed our operations principally by
issuing common stock for services, collecting accounts receivable and selling
inventory and through the private sale of our common stock.

         On March 3, 2006, we raised gross proceeds of $1,500,000 via the
private placement of 5,000,000 shares of common stock plus warrants to purchase
2,500,000 shares of common stock at $0.345 per share.


                                       17


<PAGE>

         On May 9, 2006 and June 12, 2006, we sold a total of 108,333 shares of
common stock to 2 investors for gross proceeds of $32,500. These investors also
received immediately-exercisable, three-year warrants to purchase an aggregate
of 54,167 shares of common stock at $0.345 per share.

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

         On April 2, 2007, we completed the sale of $857,000 of convertible
promissory notes to 19 accredited individual investors. The notes have a six
month term, accrue interest at 10% and are secured by the assets of the Company.
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.

         We used the cash proceeds from these transactions to build out and
operate our first restaurant and for general working capital purposes.

CASH POSITION AND SOURCES AND USES OF CASH

         Our cash and cash equivalents position as of January 2, 2007 was
$55,006.

         On April 2, 2007, we completed the sale of $857,000 of convertible
promissory notes to 19 accredited individual investors. We are using the
proceeds from this transaction for working capital purposes.

         During the fiscal year ended January 2, 2007, net cash used in
operations was $1,944,172, as compared to $514,087 for the year ended December
31, 2005.

         Our net loss for 2006 was $10,361,065, but, due to a number of non-cash
transactions reflected largely in our selling, general and administrative and
other expenses, we used $1,944,172 in cash for operations. Our major uses of
cash in operations were to pay cash employee compensation of approximately
$1,282,032 (including $945,678 of corporate salary expense and $336,354 of
restaurant salary expense); cash payments to outside engineering contractors of


                                       18


<PAGE>

approximately $315,000; cash rent expense of approximately $177,028 (including
$113,196 of corporate rent expense and $63,832 of restaurant rent expense);
$180,000 of restaurant pre-opening expenses; and approximately $200,000 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 during
2006; $132,950 of non-cash expense reflecting the fair value of warrants issued
in connection with the repayment of debt; $151,111 of non-cash expense relating
to the conversion into stock of debt and accounts payable; $499,548 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 $481,240 worth of
shares of common stock to pay for services and payroll; and an increase in our
accounts payable of $96,934.

         Our net loss for the year ended December 31, 2005 was $3,239,557 but,
due to a number of non-cash transactions reflected in our selling, general and
administrative expenses, we used $514,087 in cash for operations. Our major uses
of cash in operations were to pay cash employee compensation of approximately
$500,000; cash rent expense of approximately $115,000; cash payments to outside
engineering consultants of approximately $89,000; and net additions to inventory
of approximately $44,000 (the gross reduction in inventory amounted to $417,271,
including a non-cash reduction in gross inventory of $461,941 resulting from the
write down of inventory previously reserved for). The major source of operations
cash was the cash collection of $126,622 of accounts receivable (net of the
reversal in 2005 of a $150,000 provision for sales returns booked in 2004). The
non-cash transactions that reduced cash used in operations relative to our net
loss included: $95,639 of non-cash expense relating to employee stock options,
the write off to cost of goods sold of $286,000 of inventory deposits ($250,000
upon receipt and concurrent sale of the related inventory items and $36,000 as
uncollectible), the use of $1,155,591 worth of shares of common stock to pay for
services rendered to the Company; and an increase in our accounts payable of
$77,872.

         During 2006, we used $1,002,864 in our investing activities, as
compared to generating $612,400 in 2005. In 2006, we invested in computers,
third party software, leasehold improvements and other equipment relating our
restaurant operations, including the build out of the Woodland Hills location
for our first restaurant. In 2005, we invested only $2,600 in plant, property
and equipment, in line with our reduced levels of staffing and operations during
that period. In December 2004, we invested $615,000 in a deposit related to our
pursuit of the assets of Sega Gameworks out of bankruptcy. We liquidated this
deposit during the first three months of 2005, resulting in net positive cash
from investing activities of $612,400 for 2005. In December 2004, we made a bid
to acquire the assets of Sega Gameworks out of bankruptcy. In connection with
that bid, we borrowed $615,000 to fund the payment of an earnest money deposit
required by the bankruptcy court. After SS Entertainment USA, a subsidiary, of
Sega Corporation, was determined to be the winning bidder, this deposit was
returned to us in the first quarter of 2005 and we used those funds to repay the
$615,000 in loans.

         During 2006, our financing activities provided cash in the amount of
$2,978,282 as compared to using cash of $131,896 in 2005. The increase is
primarily due to a $2,582,498 increase in net proceeds from the issuance of
common stock in 2006 as compared to 2005; $279,485 in proceeds from warrant and
options exercises in 2006; and lower levels of cash debt repayment in 2006, as
compared to 2005. In 2006, we repaid $152,100 of loans to unrelated parties and
repaid $100,000 on amounts due to related parties. In 2005, we made net
repayment of debt of $646,295, resulting from the cash repayment in 2005 of
$615,000 of short-term debt instruments issued in 2004 to support our pursuit of
the assets of Sega Gameworks out of bankruptcy and the cash repayment of
$131,295 of debt from our former Vice President of Operations used in 2004 to
fund Snap! production; partially offset by cash proceeds from the issuance of a
$100,000 note. In addition, we received net proceeds from advances from related
parties of $146,000 in 2005. In October 2005, we issued a $200,000, 6 month
convertible note to Mr. Bradley Rotter, a member of our board of directors,
which was partially offset by the repayment in 2005 of advances received from
related parties for the production of SNAP! units in China in 2004.


                                       19


<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

         We currently have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
revenue or expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to investors.

                     UNCERTAINTIES AND RISK FACTORS THAT MAY
                AFFECT OUR FUTURE RESULTS AND FINANCIAL CONDITION

         In addition to other matters identified or described by us elsewhere in
this report, there are a number of important uncertainties and risks described
below that may adversely affect our business, operating results and financial
condition. The uncertainties and risks set forth below as well as those
presented elsewhere in this report should be considered carefully in evaluating
our company and our business and the value of our securities.

RISKS RELATING TO OUR BUSINESS

         WE HAVE ACCUMULATED LOSSES SINCE OUR INCEPTION, AND WE HAVE WOUND DOWN
OUR SNAP! AND BEAR SHOP MANUFACTURING OPERATIONS, WHICH HAD BEEN THE SOURCE OF
OUR REVENUE FOR THE LAST SEVERAL YEARS. OUR INABILITY TO GENERATE REVENUE AND
PROFITS FROM OUR RESTAURANT CONCEPT COULD CAUSE US TO GO OUT OF BUSINESS AND FOR
YOU TO LOSE YOUR ENTIRE INVESTMENT.

         We have incurred cumulative losses in the amount of $35,133,615 from
our inception through January 2, 2007. We have wound down our SNAP! and Bear
Shop manufacturing operations, which have been the source of our revenue for the
last two years. Going forward, our strategy is to develop and operate an
entertainment restaurant concept. We do not believe that we will be cash flow
positive based solely on projected revenue less operating and other costs for
the restaurant concept for the foreseeable future. Our failure to generate
meaningful revenue and ultimately profits from the restaurant concept could
force us to reduce or suspend our operations and ultimately go out of business.
We cannot give you any assurance that our projections relating to revenue or
cash flow will materialize as projected.

         WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO OPERATE OUR FIRST
RESTAURANT PROFITABLY.

         Our failure to do so will negatively impact our ability to raise the
capital necessary to fund our operations. Should we fail to raise the capital
necessary to fund our operations, the value of your investment could be
adversely affected, and you could even lose your entire investment.

         WE MAY BE UNABLE TO COMPETE EFFECTIVELY IN THE WOODLAND HILLS,
CALIFORNIA AREA. OUR INABILITY TO COMPETE MAY IMPAIR OUR ABILITY TO RAISE
CAPITAL, WHICH COULD ADVERSELY AFFECT YOUR INVESTMENT.

         The restaurant industry is intensely competitive. We believe that we
compete primarily with casual, fast-casual and quick-casual establishments. Many
of our direct and indirect competitors in Woodland Hills, California, where our
first restaurant is located, are well-established national, regional or local
chains with a greater market presence than us. Further, virtually all these
competitors have substantially greater financial, marketing and other resources
than us. As described below, we expect to need to raise additional working
capital to fund our operations. Our inability to compete in the Woodland Hills
area may prohibit us from raising the necessary capital to fund our operations
and growth, which could adversely affect your investment, and you could even
lose your entire investment.

         OUR INABILITY TO RAISE ADDITIONAL WORKING CAPITAL AT ALL OR TO RAISE IT
IN A TIMELY MANNER WOULD NEGATIVELY IMPACT OUR ABILITY TO FUND OUR OPERATIONS,
TO GENERATE REVENUE, AND TO OTHERWISE EXECUTE OUR BUSINESS PLAN, LEADING TO THE
REDUCTION OR SUSPENSION OF OUR OPERATIONS AND ULTIMATELY OUR GOING OUT OF
BUSINESS. SHOULD THIS OCCUR, THE VALUE OF YOUR INVESTMENT COULD BE ADVERSELY
AFFECTED, AND YOU COULD EVEN LOSE YOUR ENTIRE INVESTMENT.

         We will most likely need to raise cash and additional working capital
to cover the anticipated shortfall in our cash and working capital until such
time as we become cash flow positive based solely on our projections for the
sales of our restaurant concept less operating and other costs. We raised cash
proceeds of $1,500,400 from the sale of our equity securities in September 2006
and $857,000 from the sale of convertible promissory notes in April 2007, but
currently do not have any binding commitments for, or readily available sources

                                       20


<PAGE>

of, additional financing. We will seek to raise additional cash and working
capital should it become necessary through the public or private sales of debt
or equity securities, the procurement of advances on contracts or licenses,
funding from joint-venture or strategic partners, debt financing or short-term
loans, or a combination of the foregoing. We may also seek to satisfy
indebtedness without any cash outlay through the private issuance of debt or
equity securities. We cannot give you any assurance that we will be able to
secure any additional cash or working capital we may require to continue our
operations.

         Our independent auditors stated in their report accompanying our
financial statements for our fiscal year ended January 2, 2007 that we had
incurred net losses since our inception and had a working capital deficit, and
stated that those conditions raised substantial doubt about our ability to
continue as a going concern. As of January 2, 2007, our accumulated deficit is
$35,133,615. We cannot assure you that our business plans will be successful in
addressing these issues. If we cannot successfully continue as a going concern,
our shareholders may lose their entire investment.

         EVEN IF WE ARE ABLE TO RAISE ADDITIONAL FINANCING, WE MIGHT NOT BE ABLE
TO OBTAIN IT ON TERMS THAT ARE NOT UNDULY EXPENSIVE OR BURDENSOME TO THE
COMPANY, OR WHICH DO NOT ADVERSELY AFFECT YOUR RIGHTS AS A COMMON SHAREHOLDER OR
THE VALUE OF YOUR INVESTMENT, INCLUDING SUBSTANTIAL DILUTION OF YOUR INVESTMENT
IN TERMS OF YOUR PERCENTAGE OWNERSHIP IN US AS WELL AS THE BOOK VALUE OF YOUR
COMMON SHARES.

         Even if we are able to raise additional cash or working capital through
the public or private sale of debt or equity securities, the procurement of
advances on contracts or licenses, funding from joint-venture or strategic
partners, debt financing or short-term loans, or the satisfaction of
indebtedness without any cash outlay through the private issuance of debt or
equity securities, the terms of such transactions may be unduly expensive or
burdensome to us or disadvantageous to our existing shareholders. For example,
we may be forced to sell or issue our securities at significant discounts to
market, or pursuant to onerous terms and conditions, including the issuance of
preferred stock with disadvantageous dividend, voting, board membership,
conversion, redemption or liquidation provisions; the issuance of convertible
debt with disadvantageous interest rates and conversion features; the issuance
of warrants with cashless exercise features; the issuance of securities with
anti-dilution provisions; and the grant of registration rights with significant
penalties for the failure to quickly register. If we raise debt financing, we
may be required to secure the financing with all of our business assets, which
could be sold or retained by the creditor upon our default. We also might be
required to sell or license our products or technologies under disadvantageous
circumstances we would not otherwise consider, including granting licenses with
low royalty rates and exclusivity provisions.

         WE ARE DEPENDENT FOR OUR SUCCESS ON OUR CHIEF EXECUTIVE OFFICER. OUR
INABILITY TO RETAIN OUR CHIEF EXECUTIVE OFFICER COULD IMPEDE OUR BUSINESS PLAN
AND GROWTH STRATEGIES, WHICH COULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS AND
THE VALUE OF YOUR INVESTMENT.

         Our success depends to a critical extent on the continued efforts and
services of our chief executive officer, Mr. Nolan Bushnell. Were we to lose Mr.
Bushnell, we would be forced to expend significant time and money in the pursuit
of a replacement, which would result in both a delay in the implementation of
our business plan and the diversion of limited working capital. We can give you
no assurance that we can find a satisfactory replacement for Mr. Bushnell at
all, or on terms that are not unduly expensive or burdensome to our company.
Although Mr. Bushnell has signed an employment agreement providing for his
service to us, this agreement is terminable by Mr. Bushnell on 30 days written
notice and, in any event, will not preclude Mr. Bushnell from leaving the
Company. We do not currently carry a key man life insurance policy on Mr.
Bushnell which would assist us in recouping our costs in the event of the loss
of Mr. Bushnell.

         WE HAVE NO INDEPENDENT AUDIT COMMITTEE. OUR FULL BOARD OF DIRECTORS
FUNCTIONS AS OUR AUDIT COMMITTEE AND IS COMPRISED OF SOME DIRECTORS WHO ARE NOT
CONSIDERED "INDEPENDENT." THIS MAY HINDER OUR BOARD OF DIRECTORS' EFFECTIVENESS
IN FULFILLING THE FUNCTIONS OF THE AUDIT COMMITTEE.

         Currently, we have no independent audit committee. Our full Board of
Directors functions as our audit committee and is comprised of some directors
who are not considered to be "independent" in accordance with the requirements
of Rule 10A-3 under the Securities Exchange Act. An independent audit committee
plays a crucial role in the corporate governance process, assessing the
Company's processes relating to its risks and control environment, overseeing
financial reporting, and evaluating internal and independent audit processes.
The lack of an independent audit committee may prevent the Board of Directors
from being independent from management in its judgments and decisions and its
ability to pursue the committee's responsibilities without undue influence. We
may have difficulty attracting and retaining directors with the requisite
qualifications. If we are unable to attract and retain qualified, independent
directors, the management of our business could be compromised.


                                       21


<PAGE>

         WE PLAN TO GROW VERY RAPIDLY, WHICH WILL PLACE STRAINS ON OUR
MANAGEMENT TEAM AND OTHER COMPANY RESOURCES TO BOTH IMPLEMENT MORE SOPHISTICATED
MANAGERIAL, OPERATIONAL AND FINANCIAL SYSTEMS, PROCEDURES AND CONTROLS AND TO
TRAIN AND MANAGE THE PERSONNEL NECESSARY TO IMPLEMENT THOSE FUNCTIONS. OUR
INABILITY TO MANAGE OUR GROWTH COULD IMPEDE OUR ABILITY TO GENERATE REVENUES AND
PROFITS AND TO OTHERWISE IMPLEMENT OUR BUSINESS PLAN AND GROWTH STRATEGIES,
WHICH WOULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS AND THE VALUE OF YOUR
INVESTMENT.

         We will need to significantly expand our operations to implement our
longer-term business plan and growth strategies. We also expect to need to
identify, develop and manage relationships with franchisees as part of our
growth plans. This expansion and these expanded relationships will require us to
significantly improve or replace our existing managerial, operational and
financial systems, procedures and controls; to improve the coordination between
our various corporate functions; and to manage, train, motivate and maintain a
growing employee base. The time and costs to effectuate these steps may place a
significant strain on our management personnel, systems and resources,
particularly given the limited amount of financial resources and skilled
employees that may be available at the time. We cannot assure you that we will
institute, in a timely manner or at all, the improvements to our managerial,
operational and financial systems, procedures and controls necessary to support
our anticipated increased levels of operations and to coordinate our various
corporate functions, or that we will be able to properly manage, train, motivate
and retain our anticipated increased employee base.

         WE MAY HAVE DIFFICULTY IN ATTRACTING AND RETAINING MANAGEMENT AND
OUTSIDE INDEPENDENT MEMBERS OF OUR BOARD OF DIRECTORS AS A RESULT OF THEIR
CONCERNS RELATING TO THEIR INCREASED PERSONAL EXPOSURE TO LAWSUITS AND
SHAREHOLDER CLAIMS BY VIRTUE OF HOLDING THESE POSITIONS IN A PUBLICLY-HELD
COMPANY.

         The directors and management of publicly traded corporations are
increasingly concerned with the extent of their personal exposure to lawsuits
and shareholder claims, as well as governmental and creditor claims which may be
made against them, particularly in view of recent changes in securities laws
imposing additional duties, obligations and liabilities on management and
directors. Due to these concerns, directors and management are also becoming
increasingly concerned with the availability of directors and officers'
liability insurance to pay on a timely basis the costs incurred in defending
shareholder claims. Directors and officers liability insurance has recently
become much more expensive and difficult to obtain than it had been. If we are
unable to continue to maintain our directors and officer's liability insurance
at affordable rates, it may become increasingly more difficult to attract and
retain qualified outside directors to serve on our board of directors. The fees
of directors are also rising in response to their increased duties, obligations
and liabilities as well as increased exposure to such risks. As a company with a
limited operating history and limited resources, we will have a more difficult
time attracting and retaining management and outside independent directors than
a more established company due to these enhanced duties, obligations and
liabilities.

         OUR GROWTH PLANS DEPEND IN LARGE PART ON OUR ABILITY TO IDENTIFY,
ATTRACT AND RETAIN QUALIFIED FRANCHISEES.

         We expect to grow our restaurant concept rapidly through the
franchising of our restaurant concept. As a result, our future growth will
depend on our ability to attract and retain qualified franchisees, the
franchisees' ability to execute our concept and capitalize upon our brand
recognition and marketing, and franchisees' ability to timely develop
restaurants. We may not be able to recruit franchisees who have the business
abilities or financial resources necessary to open restaurants on schedule, or
at all, or who will conduct operations in a manner consistent with our concept
and standards. Also, our franchisees may not be able to operate restaurants in a
profitable manner.

         IF WE DO NOT SUCCESSFULLY EXPAND OUR RESTAURANT OPERATIONS, OUR GROWTH
AND RESULTS OF OPERATIONS COULD BE HARMED SIGNIFICANTLY.

         A critical factor in our future success will be our ability to
successfully expand our restaurant concept. Our growth plans contemplate opening
a number of additional company owned or managed restaurants in future years, in
addition to franchising, as described above. If we do not successfully open and
operate new restaurants, our growth and results of operations could be harmed
significantly. Our ability to open new restaurants in a timely manner and
operate them profitably depends upon a number of factors, many of which are
beyond our control, including the following:

         o        our ability to generate or raise the capital necessary to open
                  new restaurants;


                                       22


<PAGE>

         o        the availability and cost of suitable restaurant locations for
                  development and our ability to compete successfully for those
                  locations;

         o        the timing of delivery of leased premises from our landlords
                  so we can commence our build-out construction activities;

         o        construction and development costs;

         o        labor shortages or disputes experienced by our landlords or
                  outside contractors; and

         o        unforeseen engineering or environmental problems with the
                  leased premises.

         WE WILL BE DEPENDENT ON DISTRIBUTORS OR SUPPLIERS TO PROVIDE OUR
RESTAURANT WITH FOOD AND BEVERAGE. IF OUR DISTRIBUTORS OR SUPPLIERS DO NOT
PROVIDE FOOD AND BEVERAGES TO US IN A TIMELY FASHION, WE MAY EXPERIENCE
SHORT-TERM SUPPLY SHORTAGES AND INCREASED FOOD AND BEVERAGE COSTS.

         Our restaurant operations will be dependent on distributors or
suppliers for food and beverage products. We have entered into standard
arrangements with a number of such distributors or suppliers. If those
distributors or suppliers cease doing business with us, we could experience
short-term supply shortages in our restaurant and could be required to purchase
food and beverage products at higher prices until we are able to secure an
alternative supply source. In addition, any delay in replacing our suppliers or
distributors on acceptable terms could, in extreme cases, require us to remove
temporarily items from our menu.

         OUR SUCCESS DEPENDS ON OUR ABILITY TO LOCATE A SUFFICIENT NUMBER OF
SUITABLE NEW RESTAURANT SITES.

         One of our biggest challenges in meeting our growth objectives will be
to secure an adequate supply of suitable new restaurant sites. We may experience
delays in opening restaurants in the future. There can be no assurance that we
will be able to find sufficient suitable locations for our planned expansion in
any future period. Delays or failures in opening new restaurants could
materially adversely affect our business, financial condition, operating results
and/or cash flows.

         OUR EXPANSION INTO NEW MARKETS MAY PRESENT INCREASED RISKS DUE TO OUR
UNFAMILIARITY WITH THE AREA.

         As a part of our expansion strategy, we expect we will be opening
restaurants in markets in which we have no prior operating experience. These new
markets may have different competitive conditions, consumer tastes and
discretionary spending patterns. In addition, any new restaurants may take
several months to reach budgeted operating levels due to problems associated
with new restaurants, including lack of market awareness, inability to hire
sufficient staff and other factors. Although we will attempt to mitigate these
factors by paying careful attention to training and staffing needs, there can be
no assurance that we will be successful in operating new restaurants on a
profitable basis.

         INCREASES IN THE MINIMUM WAGE MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS AND FINANCIAL RESULTS.

         A number of the employees we have hired and intend to hire will be
subject to various minimum wage requirements. The federal minimum wage has
remained at $5.15 per hour since September 1, 1997. However, we are located in
California where employees receive compensation equal to the California minimum
wage, which rose from $6.25 per hour effective January 1, 2001 to $6.75 per hour
effective January 1, 2002. The possibility exists that the federal or California
state minimum wage will be increased in the near future. These minimum wage
increases may have a material adverse effect on our business, financial
condition, results of operations and/or cash flows.

RISKS RELATING TO THE RESTAURANT INDUSTRY

         NEGATIVE PUBLICITY SURROUNDING OUR RESTAURANT OR THE CONSUMPTION OF
BEEF, SEAFOOD, POULTRY, OR PRODUCE GENERALLY, OR SHIFTS IN CONSUMER TASTES,
COULD NEGATIVELY IMPACT THE POPULARITY OF OUR RESTAURANT AND OUR RESULTS OF
OPERATIONS.

         We expect that the popularity of our restaurant in general, and our
menu offerings in particular, will be key factors to the success of our
operations. Negative publicity resulting from poor food quality, illness,
injury, or other health concerns, whether related to our restaurant or to the
beef, seafood, poultry, or produce industries in general (such as negative
publicity concerning the accumulation of carcinogens in seafood, e-coli,
Hepatitis A, and outbreaks of "mad cow," "foot-and-mouth," or "bird flu"
disease), or operating problems related to our restaurant, could make our brand
and menu offerings less appealing to consumers. In addition, other shifts in
consumer preferences away from the kinds of food we offer, whether because of
dietary or other health concerns or otherwise, would make our restaurant less
appealing and adversely affect our sales and results of operations.


                                       23


<PAGE>

         REGULATIONS AFFECTING THE OPERATION OF OUR RESTAURANT COULD INCREASE
OUR OPERATING COSTS AND RESTRICT OUR GROWTH.

         We must obtain licenses from regulatory authorities allowing us to sell
liquor, beer, and wine, and we must obtain a food service license from local
health authorities for our restaurant. Our liquor license must be renewed
annually and may be revoked at any time for cause, including violation by us or
our employees of any laws and regulations relating to the minimum drinking age,
advertising, wholesale purchasing, and inventory control. In California, where
we have our first restaurant, the number of liquor licenses available is limited
and licenses are traded at market prices. We expect that liquor, beer, and wine
sales will comprise a significant portion of our sales. Therefore, obtaining and
maintaining licenses will be an important component of our restaurants'
operations, and the failure to obtain or maintain food and liquor licenses and
other required licenses, permits, and approvals would adversely impact our first
restaurant and our growth strategy.

         LITIGATION CONCERNING OUR FOOD QUALITY, OUR EMPLOYMENT PRACTICES,
LIQUOR LIABILITY, AND OTHER ISSUES COULD RESULT IN SIGNIFICANT EXPENSES TO US
AND COULD DIVERT RESOURCES FROM OUR OPERATIONS.

         Like other restaurants, we expect we may receive complaints or
litigation from, and potential liability to, our guests involving food-borne
illness or injury or other operational issues. We may also be subject to
complaints or allegations from, and potential liability to, our former,
existing, or prospective employees involving our restaurant employment practices
and procedures. In addition, we will be subject to state "dram shop" laws and
regulations, which generally provide that a person injured by an intoxicated
person may seek to recover damages from an establishment that wrongfully served
alcoholic beverages to such person. Recent litigation against restaurant chains
has resulted in significant judgments, including punitive damages, under "dram
shop" statutes. While we carry liquor liability coverage as part of our existing
comprehensive general liability insurance, we may still be subject to a judgment
in excess of our insurance coverage and we may not be able to obtain or continue
to maintain such insurance coverage at reasonable costs, if at all. Regardless
of whether any claims against us are valid or whether we are liable, our sales
may be adversely affected by publicity resulting from such claims. Such claims
may also be expensive to defend and may divert time and money away from our
operations and adversely affect our financial condition and results of
operations.

         LABOR SHORTAGES OR INCREASES IN LABOR COSTS COULD PREVENT OUR GROWTH OR
ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.

         We expect that our success will depend in part on our ability to
attract, motivate, and retain a sufficient number of qualified restaurant
employees, including restaurant general managers and kitchen managers, necessary
to build and grow our operations. If we are unable to identity, and attract a
sufficient number of qualified employees, we will be unable to open and operate
the locations called for by our development plans.

         Competition for qualified restaurant employees could require us to pay
higher wages and benefits, which could result in higher labor costs. In
addition, we may have hourly employees who are paid the federal or state minimum
wage and who rely on tips for a significant portion of their income.
Government-mandated increases in minimum wages, overtime pay, paid leaves of
absence, or health benefits, or increased tax reporting and tax payment
requirements for employees who receive gratuities, or a reduction in the number
of states that allow tips to be credited toward minimum wage requirements, could
increase our labor costs and reduce our operating margins.

RISKS RELATING TO AN INVESTMENT IN OUR SECURITIES

         TO DATE, WE HAVE NOT PAID ANY CASH DIVIDENDS AND NO CASH DIVIDENDS WILL
BE PAID IN THE FORESEEABLE FUTURE.

         We do not anticipate paying cash dividends on our common shares in the
foreseeable future, and we cannot assure an investor that funds will be legally
available to pay dividends, or that, even if the funds are legally available,
the dividends will be paid.

         THE CONCENTRATION OF OWNERSHIP OF OUR COMMON STOCK GIVES A FEW
INDIVIDUALS SIGNIFICANT CONTROL OVER IMPORTANT POLICY AND OPERATING DECISIONS
AND COULD DELAY OR PREVENT CHANGES IN CONTROL.


                                       24


<PAGE>

         As of January 2, 2007, our executive officers and directors
beneficially owned approximately 23.4% of the issued and outstanding shares of
our common stock, as calculated pursuant to Rule 13d-3 of the Securities
Exchange Act of 1934. As a result, these persons have the ability to exert
significant control over matters that could include the election of directors,
changes in the size and composition of the board of directors, mergers and other
business combinations involving our company, and operating decisions affecting
us. In addition, through control of the board of directors and voting power,
they may be able to control certain decisions, including decisions regarding the
qualification and appointment of officers, dividend policy, access to capital
(including borrowing from third-party lenders and the issuance of additional
equity securities), and the acquisition or disposition of our assets. In
addition, the concentration of voting power in the hands of those individuals
could have the effect of delaying or preventing a change in control of our
company, even if the change in control would benefit our stockholders. A
perception in the investment community of an anti-takeover environment at our
company could cause investors to value our stock lower than in the absence of
such a perception.

         OUR COMMON SHARES ARE THINLY TRADED, SO YOU MAY BE UNABLE TO SELL AT OR
NEAR ASK PRICES OR AT ALL IF YOU NEED TO SELL YOUR SHARES TO RAISE MONEY OR
OTHERWISE DESIRE TO LIQUIDATE YOUR SHARES.

         Our common shares are sporadically or "thinly" traded on the OTCBB,
meaning that the number of persons interested in purchasing our common shares at
or near ask prices at any given time may be relatively small or non-existent.
This situation is attributable to a number of factors, including the fact that
we are a small company which is relatively unknown to stock analysts, stock
brokers, institutional investors and others in the investment community that
generate or influence sales volume, and that even if we came to the attention of
such persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our
shares until such time as we became more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous
sales without an adverse effect on share price. We cannot give you any assurance
that a broader or more active public trading market for our common shares will
develop or be sustained, or that current trading levels will be sustained.

         THE MARKET PRICE FOR OUR COMMON SHARES IS PARTICULARLY VOLATILE GIVEN
OUR STATUS AS A RELATIVELY UNKNOWN COMPANY WITH A SMALL AND THINLY-TRADED PUBLIC
FLOAT AND LIMITED OPERATING HISTORY. THE PRICE AT WHICH YOU PURCHASE OUR COMMON
SHARES MAY NOT BE INDICATIVE OF THE PRICE THAT WILL PREVAIL IN THE TRADING
MARKET. YOU MAY BE UNABLE TO SELL YOUR COMMON SHARES AT OR ABOVE YOUR PURCHASE
PRICE, WHICH MAY RESULT IN SUBSTANTIAL LOSSES TO YOU.

         The market for our common shares is characterized by significant price
volatility when compared to seasoned issuers, and we expect that our share price
will continue to be more volatile than a seasoned issuer for the indefinite
future. The volatility in our share price is attributable to a number of
factors. First, as noted above, our common shares are sporadically or thinly
traded. As a consequence of this lack of liquidity, the trading of relatively
small quantities of shares by our shareholders may disproportionately influence
the price of those shares in either direction. The price for our shares could,
for example, decline precipitously in the event that a large number of our
common shares are sold on the market without commensurate demand, as compared to
a seasoned issuer which could better absorb those sales without adverse impact
on its share price. Secondly, we are a speculative or "risky" investment due to
our limited operating history and lack of profits to date, lack of capital to
execute our business plan, and uncertainty of future market acceptance for our
restaurant concept. As a consequence of this enhanced risk, more risk-adverse
investors may, under the fear of losing all or most of their investment in the
event of negative news or lack of progress, be more inclined to sell their
shares on the market more quickly and at greater discounts than would be the
case with the stock of a seasoned issuer. The following factors may add to the
volatility in the price of our common shares: actual or anticipated variations
in our quarterly or annual operating results, market acceptance of our
restaurant concept, government regulations, announcements of significant
acquisitions, strategic partnerships or joint ventures, our capital commitments,
and additions or departures of our key personnel. Many of these factors are
beyond our control and may decrease the market price of our common shares,
regardless of our operating performance. We cannot make any predictions or
projections as to what the prevailing market price for our common shares will be
at any time, including as to whether our common shares will sustain their
current market prices, or as to what effect, if any, that the sale of shares or
the availability of common shares for sale at any time will have on the
prevailing market price.

         VOLATILITY IN OUR COMMON SHARE PRICE MAY SUBJECT US TO SECURITIES
LITIGATION.


                                       25


<PAGE>

         As discussed in the preceding risk factors, the market for our common
shares is characterized by significant price volatility when compared to
seasoned issuers, and we expect that our share price will continue to be more
volatile than a seasoned issuer for the indefinite future. In the past,
plaintiffs have often initiated securities class action litigation against a
company following periods of volatility in the market price of its securities.
We may in the future be the target of similar litigation. Securities litigation
could result in substantial costs and liabilities and could divert management's
attention and resources.

         THE APPLICATION OF THE "PENNY STOCK" RULES COULD ADVERSELY AFFECT THE
MARKET PRICE OF OUR COMMON SHARES AND INCREASE YOUR TRANSACTION COSTS TO SELL
THOSE SHARES.

         As long as the trading price of our common shares is below $5 per
share, the open-market trading of our common shares will be subject to the
"penny stock" rules. From June 1, 2006 through March 30, 2007 the closing price
of our common stock has ranged between $0.25 and $2.66 per share. The "penny
stock" rules impose additional sales practice requirements on broker-dealers who
sell securities to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouse). For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of securities and have received the purchaser's
written consent to the transaction before the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the broker-dealer must
deliver, before the transaction, a disclosure schedule prescribed by the SEC
relating to the penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, monthly statements must be
sent disclosing recent price information on the limited market in penny stocks.
These additional burdens imposed on broker-dealers may restrict the ability or
decrease the willingness of broker-dealers to sell the common shares, and may
result in decreased liquidity for our common shares and increased transaction
costs for sales and purchases of our common shares as compared to other
securities.

         Shareholders should be aware that, according to SEC Release No.
34-29093, the market for penny stocks has suffered in recent years from patterns
of fraud and abuse. Such patterns include (1) control of the market for the
security by one or a few broker-dealers that are often related to the promoter
or issuer; (2) manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases; (3) boiler room practices
involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask differential
and markups by selling broker-dealers; and (5) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been manipulated to
a desired level, along with the resulting inevitable collapse of those prices
and with consequent investor losses. Our management is aware of the abuses that
have occurred historically in the penny stock market. Although we do not expect
to be in a position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities.

         A LARGE NUMBER OF COMMON SHARES ARE ISSUABLE UPON EXERCISE OF
OUTSTANDING OPTIONS OR WARRANTS. THE EXERCISE OF THESE SECURITIES COULD RESULT
IN THE SUBSTANTIAL DILUTION OF YOUR INVESTMENT IN TERMS OF YOUR PERCENTAGE
OWNERSHIP IN US AS WELL AS THE BOOK VALUE OF YOUR COMMON SHARES.

         At January 2, 2007, we had outstanding 4,699,732 options to purchase
common shares at a weighted average exercise price of $0.94 per share, and
warrants to purchase 7,851,558 common shares at a weighted average exercise
price of $1.02. In the event of the exercise of these securities, you could
suffer substantial dilution of your investment in terms of your percentage
ownership in us as well as the book value of your common shares. Exercise of the
5,823,271 warrants issued in connection with our private placement transactions
in 2006 would result in approximately 16% net dilution in your percentage
ownership of us as well as in the book value of your common shares.


                                       26


<PAGE>

ITEM 7. FINANCIAL STATEMENTS

                           UWINK, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                YEARS ENDED JANUARY 2, 2007 AND DECEMBER 31, 2005


                                    CONTENTS


                                                                            Page
                                                                            ----
Report of Independent Registered Public Accounting Firm                      F-1

FINANCIAL STATEMENTS:
Consolidated Balance Sheet as of January 2, 2007                             F-2

Consolidated Statements of Operations for the years ended
January 2, 2007 and December 31, 2005                                        F-3

Consolidated Statement of Stockholders' Deficit for the years ended
January 2, 2007 and December 31, 2005                                        F-4

Consolidated Statements of Cash Flows for the years ended
January 2, 2007 and December 31, 2005                                        F-5

Notes to Consolidated Financial Statements                                   F-6


                                       27


<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Stockholders of
uWink, Inc.
Los Angeles, California


We have audited the accompanying consolidated balance sheet of uWink, Inc. and
subsidiary as of January 2, 2007, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
January 2, 2007 and December 31, 2005. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of uWink, Inc. and
subsidiary as of January 2, 2007, and the results of its operations and its cash
flows for the years ended January 2, 2007 and December 31, 2005, in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1, the
Company has incurred significant losses and negative cash flow from operations
since its inception and has a working capital deficit. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


/s/ Kabani & Company, Inc.
CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, California
March 20, 2007


                                      F-1


<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                              AS OF JANUARY 2, 2007


                                     ASSETS

CURRENT ASSETS
     Cash and cash equivalents                                     $     55,006
     Account receivable, net of allowance for doubtful
         accounts of $72,265                                             19,645
     Inventory, net                                                      77,206
     Prepaid expenses and other current assets                           21,835
                                                                   ------------
        TOTAL CURRENT ASSETS                                            173,692

PROPERTY AND EQUIPMENT, NET                                             892,117

INTANGIBLE ASSETS, NET                                                   35,000

LONG TERM DEPOSIT                                                         2,300

                                                                   ------------
              TOTAL ASSETS                                         $  1,103,109
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
     Accounts payable                                              $    999,424
     Accrued expenses                                                   242,613
     Accrued payroll and related benefits                               154,690
     Notes payable                                                       55,805
     Advance from Customers                                              24,980
                                                                   ------------
        TOTAL CURRENT LIABILITIES                                     1,477,512
                                                                   ------------

STOCKHOLDERS' DEFICIT
     Common stock, $0.001 par value; 50,000,000 shares
         authorized; 25,179,215 shares issued and outstanding            25,179
     Additional paid-in capital                                      34,514,391
     Accumulated deficit                                            (35,133,615)
     Shares to be Issued                                                219,642
                                                                   ------------
        TOTAL STOCKHOLDERS' DEFICIT                                    (374,403)
                                                                   ------------

              TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT          $  1,103,109
                                                                   ============


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


                                      F-2


<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE YEARS ENDED JANUARY 2, 2007 AND DECEMBER 31, 2005

                                                    ---------------------------
                                                         2006           2005
                                                    ---------------------------

NET SALES                                           $    450,149   $    682,604

COST OF SALES                                            249,248        540,974
                                                    ------------   ------------

     GROSS PROFIT                                        200,901        141,630
                                                    ------------   ------------

OPERATING EXPENSES
     Selling, general and administrative expenses      3,690,921      2,823,044
     Research and development                                 --        151,542
     Impairment loss                                          --        203,125
                                                    ------------   ------------
     TOTAL OPERATING EXPENSES                          3,690,921      3,177,711
                                                    ------------   ------------

           LOSS FROM OPERATIONS                       (3,490,020)    (3,036,081)
                                                    ------------   ------------

OTHER INCOME (EXPENSE)
     Other income                                         14,504            651
     Beneficial conversion of debt                       (16,667)       (60,238)
     Gain on settlement of debt                           42,465         20,156
     Interest expense                                   (176,334)      (154,326)
     Equipment stolen                                         --         (8,117)
     Fair value of warrant liability                  (6,583,902)            --
     Loss on debt conversion                            (151,111)            --
                                                    ------------   ------------
     TOTAL OTHER INCOME (EXPENSE)                     (6,871,045)      (201,874)
                                                    ------------   ------------

           LOSS BEFORE PROVISION FOR INCOME TAXES    (10,361,065)    (3,237,955)

PROVISION FOR INCOME TAXES                                    --          1,602
                                                    ------------   ------------

           NET LOSS                                 $(10,361,065)  $ (3,239,557)
                                                    ============   ============

NET LOSS PER COMMON SHARE - BASIC AND DILUTED       $      (0.54)  $      (0.28)
                                                    ============   ============

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - BASIC & DILUTED                    19,233,185     11,737,329
                                                    ============   ============

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
                       consolidated financial statements


                                      F-3


<PAGE>

<TABLE>
                                                     UWINK, INC. AND SUBSIDIARY
                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                                      FOR THE YEARS ENDED JANUARY 2, 2007 AND DECEMBER 31, 2005

                                                                     ADDITIONAL       SHARES
                                          COMMON STOCK                PAID-IN          TO BE         ACCUMULATED
                                     SHARES          AMOUNT           CAPITAL          ISSUED           DEFICIT           TOTAL
                                 ------------     ------------     ------------     ------------     ------------     ------------
<S>                                <C>            <C>              <C>              <C>              <C>              <C>
BALANCE, DECEMBER 31, 2004         10,615,664     $     10,616     $ 21,064,324     $    176,930     $(21,532,993)    $   (281,123)

Issuance of common stock
     for conversion of
     loan, and accrued
     interest                         121,986              123          192,378          171,003               --          363,504
Issuance of common stock
     for cash, net                    710,547              712          502,598         (134,911)              --          368,399
Issuance of common stock
     for services                   1,013,719            1,015        1,110,901           43,675               --        1,155,591
Issuance of common stock
     to employees
     for accrued payroll                   --               --               --           48,000               --           48,000
Issuance of common stock
     to employees for
     exercise of options                8,968               10            3,544               --               --            3,554
Merger conversion shares                4,404                5                                                                   5
Beneficial conversion
     feature related to
     convertible note                      --               --           61,714               --               --           61,714
Value of options issued
     at below market price                 --               --           95,639               --               --           95,639
Net loss                                   --               --               --               --       (3,239,557)      (3,239,557)
                                 ------------     ------------     ------------     ------------     ------------     ------------
BALANCE, DECEMBER 31, 2005         12,475,288           12,480       23,031,098          304,697      (24,772,550)      (1,424,275)

Issuance of common stock
     for conversion of
     loan, and accrued
     interest                       1,197,573            1,198          497,107         (150,003)              --          348,302
Issuance of common stock
     for cash, net                 10,109,667           10,110        2,940,788                                --        2,950,897
Issuance of common stock
     for services                   1,172,567            1,173          486,118         (134,550)              --          352,740
Issuance of common stock
     to employees
     for accrued payroll                   --               --               --          175,000               --          175,000
Issuance of common stock
     to employees
     for exercise of options          130,000              130           44,870               --               --           45,000
Issuance of common stock
     for exercise of warrants         133,333              134          199,851           34,500               --          234,485
Merger conversion shares               10,787                5            9,999          (10,002)              --                2
Shares cancelled                      (50,000)             (50)         (46,450)              --               --          (46,500)
Beneficial conversion
     feature related to
     convertible note                      --               --          (16,500)              --               --          (16,500)
Nominal stock option
     expense                               --               --          499,548               --               --          499,548
Value of warrants issued
     for interest expense                  --               --          132,950               --               --          132,950
Reverse warrant liability                  --               --        6,583,902               --               --        6,583,902
Loss on debt conversion                                                 151,111                                            151,111
Net loss                                   --               --               --               --      (10,361,065)     (10,361,065)
                                 ------------     ------------     ------------     ------------     ------------     ------------
BALANCE, JANUARY 2, 2007           25,179,215     $     25,179     $ 34,514,391     $    219,642     $(35,133,615)    $   (374,403)
                                 ============     ============     ============     ============     ============     ============


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


                                                                 F-4


<PAGE>

                                            UWINK, INC. AND SUBSIDIARY
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                             FOR THE YEARS ENDED JANUARY 2, 2007 AND DECEMBER 31, 2005

                                                                                    ------------     ------------
                                                                                         2006             2005
                                                                                    ------------     ------------
CASH FLOW FROM OPERATING ACTIVITIES:

     Net loss                                                                       $(10,361,065)    $ (3,239,557)
     Adjustment to reconcile net loss to net cash used in operating activities:
        Amortization of debt discount on convertible note payable                         16,667           61,714
        Employee Stock Option expense                                                    499,548           95,639
        Depreciation and amortization expense                                             94,826          127,082
        Impairment Loss                                                                       --          203,125
        Bad debt allowance                                                                (3,728)         (19,789)
        Loss on debt conversion                                                          111,227               --
        Gain on settlement of debt                                                       (42,465)              --
        Loss on accounts payable conversion                                               39,884               --
        Fair value of warrant liability                                                6,583,902               --
        Issuance of warrants for debt                                                    132,950               --
        Issuance of common stock for payroll                                             175,000           51,553
        Issuance of common stock for services                                            306,240        1,155,591
        Inventory obsolescence reserve                                                    78,276         (152,945)
        Issuance of common stock for accrued interest                                     13,901           88,500
     Changes in operating assets and liabilities:
        Accounts receivable                                                               18,642          301,799
        Inventory                                                                         99,863          417,271
        Deposits - inventory                                                              66,398          286,796
        Deposits                                                                          (2,300)          (2,536)
        Prepaid expenses and other current assets                                         19,348           17,214
        Accounts payable                                                                  96,934           77,872
        Accrued expenses                                                                  49,338           79,777
        Accrued payroll and related benefits                                              62,444           11,827
        Advances from Customers                                                               --          (75,020)
                                                                                    ------------     ------------
Net cash used in operating activities                                                 (1,944,172)        (514,087)
                                                                                    ------------     ------------

CASH FLOW FROM INVESTING ACTIVITIES:
     Payment for property and equipment                                                 (942,864)          (2,600)
     Payment for liquor license                                                          (60,000)              --
     Deposits - Sega Gameworks                                                                --          615,000
                                                                                    ------------     ------------
Net cash provided by (used in) investing activities                                   (1,002,864)         612,400
                                                                                    ------------     ------------

CASH FLOW FROM FINANCING ACTIVITIES:
     Proceeds from debt                                                                       --          100,000
     Repayment of debt                                                                  (152,100)        (746,295)
     Proceeds from advances from related parties                                              --          289,500
     Repayment of advances from related parties                                         (100,000)        (143,500)
     Proceeds from issuance of common stock                                            2,950,897          368,399
     Proceeds from warrant exercises                                                     234,485               --
     Proceeds from option exercise                                                        45,000               --
                                                                                    ------------     ------------
Net cash provided by (used in) financing activities                                    2,978,282         (131,896)
                                                                                    ------------     ------------

NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENT                                      31,247          (33,583)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                            23,759           57,342
                                                                                    ------------     ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                            $     55,006     $     23,759
                                                                                    ============     ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

     Interest paid                                                                  $      3,049     $      8,225
                                                                                    ============     ============
     Income taxes paid                                                              $        000     $        000
                                                                                    ============     ============

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES

     Conversion of debt into shares of common stock                                      320,000     $    275,003
                                                                                    ============     ============


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


                                                       F-5
</TABLE>


<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                YEARS ENDED JANUARY 2, 2007 AND DECEMBER 31, 2005

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND LINE OF BUSINESS

uWink, Inc. (formerly Prologue) was incorporated under the laws of the State of
Utah on October 14, 1982. Pursuant to a Securities Purchase Agreement and Plan
of Reorganization dated November 21, 2003 among Prologue, uWink, Inc., a
Delaware corporation ("uWink-DE") and its stockholders, Prologue received all
the issued and outstanding shares of uWink-DE's capital stock (subsequently,
uWink-DE changed its name to uWink California, Inc.). Prologue issued 1 share of
its common stock for every 3.15611 shares of uWink-DE capital stock. Since the
stockholders of uWink-DE received a majority of the issued and outstanding
shares of Prologue and the uWink-DE management team and board of directors
became the management team and board of directors of Prologue, according to FASB
Statement No. 141 - "Business Combinations," this acquisition has been treated
as a recapitalization for accounting purposes, in a manner similar to reverse
acquisition accounting. In accounting for this transaction:

    o    uWink-DE is deemed to be the purchaser and surviving company for
         accounting purposes. Accordingly, its net assets are included in the
         balance sheet at their historical book values.

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

uWink-DE was incorporated under the laws of the State of Delaware on June 10,
1999. Subsequent to the transaction described above, uWink-DE changes its name
to uWink California, Inc. ("uWink California"). uWink, Inc. (formerly Prologue)
and its subsidiary, uWink California are hereafter referred to as "the Company."

The Company designs, develops and markets entertainment software and platforms
for restaurants, bars and mobile devices and manufactures and sells touch screen
pay-for-play game terminals and amusement vending machines.

The Company derives its revenue from the sale of its game terminals, amusement
vending machines, licensing fees and inventory refills on the vending machines.

The Company is currently operating and continuing to develop the uWink
restaurant, an entertainment restaurant concept. The Company's restaurant
operations generated $289,929 of revenue for the fiscal year ended January 2,
2007. There were no revenues associated with the uWink restaurant for the year
ended December 31, 2005.

BASIS OF PRESENTATION

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company incurred
net losses of $10,361,065 and $3,239,557 for the fiscal years ended January 2,
2007 and December 31, 2005 respectively and had a net working capital deficiency
of $1,303,820 and $1,248,178 as of January 2, 2007 and December 31, 2005,
respectively.

These conditions raise substantial doubt as to the Company's ability to continue
as a going concern. These financial statements do not include any adjustments
that might result from the outcome of this uncertainty. These financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts, or amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.

The Company believes that its working capital as of the date of this report will
not be sufficient to fund the current level of operations through the end of the
current fiscal year 2007. The Company believes that it will need additional
amounts of working capital to finance future losses from operations as it
endeavors to build revenue and reach a profitable level of operations. The
Company plans to obtain the additional working capital through the private
placement sale of its equity and/or debt securities.



                                       F-6


<PAGE>


Fiscal Year End

In 2006, with the commencement of restaurant operations, the Company adopted a
52/53-week fiscal year ending on the Tuesday closest to December 31st for
financial reporting purposes. As a result, the Company's 2006 fiscal year ends
on January 2, 2007. For the purposes of the accompanying financial statements,
the years ended January 2, 2007 and December 31, 2005 are sometimes referred to
as fiscal years 2006 and 2005, respectively.

Principles of Consolidation

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

Use of Estimates

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

Fair Value of Financial Instruments

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

Cash and Cash Equivalents

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

Concentration of Credit Risk

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

Inventory

Non-restaurant inventory consists of finished goods and restaurant inventory
consists of food and beverages. All inventory is stated at the lower of cost,
utilizing the first-in, first-out method, or market. An obsolescence reserve is
estimated for items whose value have been determined to be impaired or whose
future utility appears limited. For the years ended January 2, 2007 and December
31, 2005, the obsolescence reserve was $295,730 and $217,454, respectively.


                                      F-7


<PAGE>

Property and Equipment

Property and equipment are stated at cost and are depreciated using the
straight-line method over their estimated useful lives of 5-10 years for
machinery and equipment and 3-5 years for office furniture and equipment.
Computer equipment and related software is depreciated using the straight-line
method over its estimated useful life of 3 years. Leasehold improvements are
amortized over the shorter of their estimated useful lives or the term of the
lease.

Expenditures for maintenance and repairs are charged to operations as incurred
while renewals and betterments are capitalized. Gains and losses on disposals
are included in the results of operations.

Research and Development

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

Software Development Costs

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

Amortization of capitalized software development costs is provided on a
product-by-product basis on the straight-line method over the estimated economic
life of the products (not to exceed three years). Management periodically
compares estimated net realizable value by product with the amount of software
development costs capitalized for that product to ensure the amount capitalized
is not in excess of the amount to be recovered through revenues. Any such excess
of capitalized software development costs to expected net realizable value is
expensed at that time. Amortization of capitalized software development costs
was $0 and $84,403 for the years ended January 2, 2007 and December 31, 2005,
respectively. There is no amortization related to software development cost for
fiscal 2006 as the cost has been fully amortized as of December 31, 2005.
Impairment loss on capitalized software development costs was $116,795 for the
year ended December 31, 2005, as described in Note 5 below.

Revenue Recognition

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

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

Restaurant revenue from food and beverage 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.


                                      F-8


<PAGE>

Impairment of Long-Lived Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business."

The Company periodically evaluates the carrying value of long-lived assets to be
held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amounts. In that event, a
loss is recognized based on the amount by which the carrying amount exceeds the
fair market value of the long-lived assets. Loss on long-lived assets to be
disposed of is determined in a similar manner, except that fair market values
are reduced for the cost of disposal. For the year ended December 31, 2005,
impairment loss on capitalized software development costs was $116,795 and
impairment loss on obsolete SNAP! tooling amounted to $86,330, as described in
Note 5 below.

Advances from Customers

The Company records advances from customers as a liability and recognizes these
amounts as revenue over the period of the related agreement. In 2004, the
Company recorded a $100,000 advances from customers liability relating to a one
year licensing agreement. Accordingly, the Company recognized licensing revenue
of $100,000 in 2005 and reduced the advances from customers liability
accordingly. As of January 2, 2007, advances from customers relating to
licensing fees amounted to $24,980.

Returns

The Company does not offer customers a contractual right to return products sold
by the Company. The Company does accept product returns from time to time on a
case by case basis. The Company recorded a Provision for Sales Returns of
$150,000 in 2004 to reflect anticipated product returns in 2005. Product returns
in 2005 were booked against this provision. The Company did not record any
increase in the Provision for Sales Returns in 2005 or 2006 because of the low
level of product sales in 2005 and 2006.

Advertising and Marketing Costs

The Company expenses costs of advertising and marketing as incurred. Advertising
and marketing expense for the years ended January 2, 2007 and December 31, 2005
amounted to $19,931 and $0, respectively.

Pre-opening Expenses

Pre-opening expenses, consisting primarily of manager salaries, advertising,
travel, food and beverage, employee payroll and related training costs incurred
prior to the opening of a restaurant, are expensed as incurred.

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 January 2, 2007 was $23,997.

Income Taxes

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


                                      F-9


<PAGE>

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Deferred taxes are provided on the liability
method whereby deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

Earnings Per Share

The Company reports earnings (loss) per share in accordance with SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is computed by dividing
income (loss) available to common shareholders by the weighted average number of
common shares available. Diluted earnings (loss) per share is computed similar
to basic earnings (loss) per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive. Diluted earnings (loss) per share has not been presented
since the effect of the assumed conversion of options and warrants to purchase
common shares would have an anti-dilutive effect. The following potential common
shares have been excluded from the computation of diluted net loss per share for
each of the fiscal years 2006 and 2005 because the effect would have been
anti-dilutive:

                                                            2006          2005
                                                         ---------     ---------

Shares to be issued upon conversion of bridge
 loans/ convertible notes                                       --       500,012
Stock options issued to employees                          360,185     2,400,411
Warrants granted to consultants and finders                  7,921       568,814
Warrants granted for financing                           1,268,062     1,866,523
                                                         ---------     ---------
                                                         1,636,168     5,335,760
                                                         =========     =========

Segment Reporting

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. The Company
allocates its resources and assesses the performance of its sales activities
based upon revenue by product line and services (see Note 12).

Comprehensive Loss

SFAS No. 130, "Reporting Comprehensive Loss," establishes standards for the
reporting and display of comprehensive income and its components in the
financial statements. For the years ended January 2, 2007 and December 31, 2005,
the Company does not have items that represented other comprehensive income and,
accordingly, has not included in the statement of stockholders' equity the
change in comprehensive loss.

Discounts on Loans

Discounts on loans are principally the values attributed to the detachable
warrants issued in connection with the loans and the value of the preferential
conversion feature associated with the loans. These discounts are accounted for
in accordance with Emerging Issues Task Force("EITF") 00-27 issued by the
American Institute of Certified Public Accountants.

Geographic Areas and Major Customers

For the year ended January 2, 2007, the Company generated $57,200 in revenue,
amounting to 13% of total revenue, from one customer located in the United
States.

                                      F-10


<PAGE>

For the year ended December 31, 2005, the Company generated $305,000 in revenue,
amounting to 45% of total revenue, from the sale of SNAP! machines to one
customer located in Japan. For the year ended December 31, 2005, the Company
also generated licensing revenue of $100,000, amounting to 15% of total revenue,
from one customer located in the United States.

Recently Issued Accounting Pronouncements

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

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

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

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

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

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

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

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

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

                                      F-11


<PAGE>

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. The company is analyzing the
potential accounting treatment.

NOTE 2 - 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 January 2, 2007 is to cover the accounts receivable from
non-restaurant activities.

NOTE 3- INVENTORY

Inventory has been reviewed for obsolescence and stated at lower of cost or
market as of January 2, 2007 and December 31, 2005, determined on a first in
first out basis. During the twelve months ended December 31, 2005, obsolete
inventory previously reserved for was written down by $485,351 and a
corresponding reduction was made to the obsolescence reserve. The remaining
inventory was marked down to its net realizable value, as reflected by an
increase in the obsolescence reserve to $217,454 at December 31, 2005. 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 January 2, 2007 and December 31, 2005
is treated as finished goods inventory. Restaurant inventory consists of food
and beverages.


Inventory at January 2, 2007:
Finished Goods                                                        $ 355,009
Restaurant                                                               17,927
Less:  obsolescence reserve                                            (295,730)
                                                                      ---------
                                                                      $  77,206
                                                                      =========

                                      F-12


<PAGE>

NOTE 4 - PROPERTY AND EQUIPMENT

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

                                                            2006
                                                         ---------
          Computer equipment                             $ 519,396
          Office furniture and equipment                    17,926
          Restaurant Furniture and Fixtures                543,631
          Leasehold improvements                            84,849
          Machinery and equipment                           82,603
                                                         ---------
                                                         1,248,405
          Less accumulated depreciation                   (356,288)
                                                         ---------
                                                         $ 892,117
                                                         =========

Depreciation expense for the fiscal years ended January 2, 2007 and December 31,
2005 was $69,826 and $42,679, respectively.

NOTE 5 - IMPAIRMENT OF PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE
DEVELOPMENT COSTS

At December 31, 2005, SNAP! tooling assets with a gross value of $159,517 were
fully impaired. As s result the gross value of property and equipment was
reduced by $159,517, accumulated depreciation was reduced by $73,187 and
impairment loss was increased by $86,330.

At December 31, 2005, remaining unamortized capitalized software development
costs of $116,795 were fully impaired and written off to impairment loss.

We recorded no impairment loss expense for the fiscal year ended January 2,
2007.

NOTE 6 - COMPONENTS OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The major components of selling, general and administrative expenses for the
fiscal year ended January 2, 2007 consisted of the following:


Professional fees              $  489,070
Corporate rent expense            113,196
Pre-opening expenses              180,000
Restaurant operating expenses     572,282
Engineering consulting            316,560
Corporate salary expense          945,678
Employee stock option expense     499,548
Inventory reserve expense         117,489
Other expenses                    457,098
                               ----------
                               $3,690,921
                               ==========

The major components of selling, general and administrative expenses for the
year ended December 31, 2005 consisted of the following:

Financial consulting           $  995,351
Professional fees                 364,634
Rent                              115,057
Engineering consulting             89,293
Salary expense                    587,605
Employee stock option expense      97,667
Inventory reserve expense         238,116
Other expenses                    335,321
                               ----------
                               $2,823,044
                               ==========

NOTE 7 - DUE TO RELATED PARTIES

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

At January 2, 2007 there were no amounts due to related parties.

                                      F-13


<PAGE>

Due to related parties outstanding at December 31, 2005 consisted of the
following:

Convertible note payable to Mr. Bradley Rotter, a member of the Company's board
of directors. This note was due April 10, 2006, accrued interest at 10%, and was
convertible, at the option of Mr. Rotter, into the same securities issued by the
Company in (and on the same terms and conditions pari passu with the investors
in) any offering of its securities that results in gross proceeds to the Company
of at least $3,000,000. Upon conversion, Mr. Rotter was to receive as a
conversion bonus additional securities equal to 20% of the aggregate principal
value plus accrued interest converted. The note was mandatorily repayable
immediately following the consummation of any offering of securities that
results in gross proceeds to the Company of at least $3,000,000. Upon such
repayment, or upon repayment at maturity, Mr. Rotter was to receive warrants to
purchase 200,000 shares of common stock of the Company at an exercise price of
$0.59. A portion of the value of this note was recorded as a preferential
conversion feature and recorded as discount of $40,000 to be amortized over the
term of the note, 6 months. $20,000 of this discount was amortized in each of
2005 and 2006.

Principal Amount                                                      $ 200,000
Less Discount                                                           (20,000)
                                                                      ---------
                                                                        180,000

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

Loan payable to the wife of the President and CEO issued on
various dates in 2004, 8% interest, unsecured, due upon demand.          20,500

Loan payable to the Company's Vice President of Operations
issued on various dates in 2004 and 2005, 8% interest
unsecured, due upon demand.                                              60,500
                                                                      ---------
Total                                                                 $ 300,000
                                                                      ---------

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

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

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

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

On October 25, 2006, we entered into a letter agreement (the "Rotter Letter
Agreement") with Mr. Rotter, in respect of this note. Pursuant to the Rotter
Letter Agreement, effective October 25, 2006:

                                      F-14


<PAGE>

         1.   Mr. Rotter agreed to convert the $100,000 principal amount and
              $5,685 in accrued interest outstanding under the note into shares
              of common stock at a conversion price of $1 per share. In
              accordance with the terms of the note, Mr. Rotter is entitled to
              receive an additional 20% of such amount in shares of common stock
              upon conversion into any offering of our securities that results
              in gross proceeds to the Company of at least $3,000,000. The note
              was due on October 19, 2006. Rather than repay the note in cash,
              we agreed with Mr. Rotter that he would be entitled to receive
              this additional 20% upon the conversion of the note into shares of
              common stock even though the conversion was not in connection with
              any such offering. As a result, the total amount to be converted
              is $126,822. As such, Mr. Rotter accepted 126,822 shares of common
              stock of the Company, together with the warrants set forth below,
              in full and final satisfaction of the Company's obligations under
              the note.

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

On the date of conversion the closing price of our common stock was $1.26.
Accordingly, we recorded a $54,111 loss on conversion of this note in the 2006
statement of operations, reflecting the 21,137 share conversion premium and the
difference between the $1.00 conversion price and the $1.26 market price.
Because the loss on conversion reflects the 20% conversion premium, we also
reversed $20,000 of preferential conversion feature expense previously recorded
in 2006 in respect of this note.

In connection with a private placement of our equity securities completed on
September 18, 2006, the Company converted $62,500 of debt and $8,062 of accrued
interest due to Nancy Bushnell, the wife of our CEO Nolan Bushnell (including
the assignment to Ms. Bushnell of a $39,000 note (plus $4,485 in accrued
interest) held by the brother-in-law of our CEO), and $60,500 of debt due to Dan
Lindquist, our Vice President of Operations, into shares of common stock and
warrants on the same terms as the third party investors who participated in the
transaction. Ms. Bushnell received 235,207 shares of common stock and warrants
to purchase 117,603 shares of common stock at $0.345 per share, and Mr.
Lindquist received 201,667 shares of common stock and warrants to purchase
100,833 shares of common stock at $0.345 per share. These issuances were made
pursuant to the exemption from registration provided by SEC Rule 506 promulgated
under Regulation D of the Securities Act of 1933. The common stock and warrants
issued as part of this conversion are on the same terms as the common stock and
warrants issued to the other investors. Because the Company issued securities on
conversion of Ms. Bushnell's and Mr. Lindquist's debt that have identical terms
to the securities issued to the third party investors for cash in the September
2006 private placement, the securities issued to Ms. Bushnell and Mr. Lindquist
represented the market value equivalent of the debt. Therefore, there is no gain
or loss recognized on conversion of debt.

During the fiscal year ended January 2, 2007, we accrued $13,861 in interest on
amounts due to related parties and paid $11,162 in interest on amounts due to
related parties.

NOTE 8 - NOTES PAYABLE

Notes payable outstanding at January 2, 2007 consisted of the following:
<TABLE>

<S> <C>
Loan payable to the Company's former Vice President of Marketing issued on
various dates in 2004 and 2005, 12% interest secured by inventory and
receivables of the Company, due February 15, 2007. The loan payable to the
Company's Vice President of Marketing was reclassified from "Due to Related
Parties" to "Notes Payable" on the December 31, 2005 balance sheet following the
termination of the holder's employment with the Company and was further
reclassified from long term liabilities to short term liabilities on the January
2, 2007 balance sheet. Accrued interest of $90,521 outstanding on this note as
of January 2, 2007 is included under accrued expenses on the balance sheet as of
January 2, 2007. During 2006, we repaid $30,000 of this note in cash.
In addition, on August 1, 2006, we credited a total of $28,959 in receivables
owed to the Company by the holder of the note against the principal amount of
this note. On December 19, 2006, we credited an additional $5,600 in receivables
owed to the Company by the holder against the principal amount of the note.             $  47,285

                                      F-15


<PAGE>

On June 15, 2006, we entered into an amended promissory note with Elite Cabinet
Corporation ("ECC") in relation to trade payables previously owing to ECC. The
principal amount of this note is $10,177.75 and the note accrues interest at 8%.
We are required to pay $300 per month on this note from June 15, 2006 to January
15, 2007, at which time the entire unpaid balance plus accrued interest is due
and payable. During 2006, we repaid in cash $1,658 of this note. We repaid this
note in cash in full on January 12, 2007.                                                   8,520

                                                                                        ---------

Total                                                                                   $  55,805
                                                                                        =========

NOTE 9 - LONG TERM NOTES PAYABLE

Long term convertible notes payable outstanding at December 31, 2005 consisted
of the following:

Convertible note issued on September 8, 2005. The note was due September 8,
2007, accrued interest at 10%, and was mandatorily convertible into the same
securities issued by the Company in (and on the same terms and conditions pari
passu with the investors in) any offering of its securities that results in
gross proceeds to the Company of at least $3,000,000. Upon conversion, the
holder was to receive as a conversion bonus additional securities equal to 20%
of the aggregate principal value plus accrued interest converted. A portion of
the value of this note was recorded as a preferential conversion feature and
recorded as discount of $20,000 to be amortized over the term of the note, 2
years. $3,333 of this discount was amortized in 2005.

Principal Amount                                                                        $ 100,000
Less Discount                                                                             (16,667)
                                                                                        ---------
                                                                                        $  83,333
                                                                                        ---------
</TABLE>

On October 26, 2006, we entered into a letter agreement (the "Hines Letter
Agreement") with Dr. William Hines, the holder of this note. Pursuant to the
Hines Letter Agreement, effective October 26, 2006:

Dr. Hines agreed to convert the $100,000 principal amount and $11,555 in accrued
interest outstanding under the note into shares of common stock of the Company
at a conversion price of $1 per share. In accordance with the terms of the note,
Dr. Hines is entitled to receive an additional 20% of such amount in shares of
common stock upon conversion into any offering of our securities that results in
gross proceeds to the Company of at least $3,000,000. While the note was not yet
due, we believed it advantageous to the Company to remove the Hines note from
the balance sheet, particularly because the Hines note was secured by assets of
the Company. As such, we agreed with Dr. Hines that he would be entitled to
receive this additional 20% upon the conversion of the Hines note into shares of
common stock even though the conversion was not in connection with any such
offering. As a result, the total amount to be converted is $133,866. As such,
Dr. Hines accepted 133,866 shares of common stock of the Company in full and
final satisfaction of the Company's obligations under the note.

On the date of conversion the closing price of our common stock was $1.26.
Accordingly, we recorded a $57,116 loss on conversion of this note in the fiscal
2006 statement of operations, reflecting the 22,311 share conversion premium and
the difference between the $1.00 conversion price and the $1.26 market price.
Because the loss on conversion reflects the 20% conversion premium, we also
reversed $10,833 of preferential conversion feature expense previously recorded
in 2005 and 2006 in respect of this note.

Long term notes payable outstanding at December 31, 2005 consisted of the
following:

A $111,844 loan payable to the Company's former Vice President of Marketing
issued on various dates in 2004 and 2005, 12% interest secured by inventory and
receivables of the Company, due February 15, 2007. The loan payable to the
Company's Vice President of Marketing was reclassified from Due to Related
Parties to Notes Payable on the December 31, 2005 balance sheet following the
termination of the holder's employment with the Company. Accrued interest of
$70,667 outstanding on this note as of December 31, 2005 is included under
accrued expenses on the balance sheet as of December 31, 2005. This loan was
reclassified to notes payable under current liabilities on the January 2, 1007
balance sheet (see Note 8).

                                      F-16


<PAGE>

NOTE 10 - STOCKHOLDERS' EQUITY

Preferred Stock of uWink

The Company has authorized 5,000,000 shares of Preferred Stock. The Board of
Directors is authorized to establish, from the authorized shares of Preferred
Stock, one or more classes or series of shares, to designate each such class and
series, and to fix the rights and preferences of each such class and series.
Without limiting the authority of the Board of Directors granted hereby, each
such class or series of Preferred Stock shall have such voting powers (full or
limited or no voting powers), such preferences and relative, participating,
optional or other special rights, and such qualifications, limitations or
restrictions as shall be stated and expressed in the resolution or resolutions
providing for the issue of such class or series of Preferred Stock as may be
adopted from time to time by the Board of Directors prior to the issuance of any
shares thereof. Fully-paid stock of the Company 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.

During the year ended December 31, 2005, the Company:

On January 1, 2005, issued 50,000 shares of common stock in exchange for
financial consulting services valued at $127,500.

On January 14, 2005, issued 60,000 shares of common stock in exchange for
business development services valued at $90,000.

On January 19, 2005, issued 12,500 shares of common stock for financial
consulting services valued at $21,875.

On February 22, 2005, issued 175,000 shares of common stock in exchange for
consulting services valued at $194,250.

On March 8, 2005, issued 40,000 shares of common stock in exchange for public
relations services valued at $38,000.

On March 8, 2005, issued 400,000 shares of common stock in exchange for investor
relations services valued at $444,000.

On March 14, 2005, sold 100,000 shares of common stock for cash to an investor
in a private placement offering for gross proceeds of $75,000.

On April 1, 2005, issued 2,600 shares of common stock in exchange for financial
consulting service valued at $2,737.

On April 1, 2005, issued 13,500 shares of common stock in exchange for
consulting services valued at $13,750.

On April 1, 2005, issued 7,500 shares of common stock in exchange for financial
consulting services valued at $7,895.

On April 1, 2005, issued 20,000 shares of common stock valued at $17,000 as a
financial penalty for failing to register common stock.

On April 12, 2005, issued 50,000 shares of common stock in exchange for
financial consulting services valued at $46,500.

On May 15, 2005, sold 533,458 shares of common stock for cash to 6 investors for
$293,402. In addition, the Company issued these investors warrants to purchase
533,458 shares of common stock at $1.50 per share. These warrants are
immediately exercisable and expire on May 15, 2010. There were no registration
rights associated with the warrants. The fair value of the warrants was
accounted for as cost of raising equity with a corresponding amount debited to
additional paid-in capital.

On May 25, 2005, issued 121,986 shares of common stock upon conversion of
$150,000 in principal and $42,500 in accrued interest outstanding on a
convertible note issued in 2002.

On August 3, 2005, issued 10,000 shares of common stock valued at $5,500 as a
financial penalty for failing to register common stock.

                                      F-17


<PAGE>

On September 12, 2005, issued 50,000 shares of common stock in exchange for
consulting services valued at $22,500.

On October 7, 2005, issued 10,000 shares of common stock valued at $6,000 as a
financial penalty for failing to register common stock.

During the year ended January 2, 2007, the Company:

On January 10, 2006, issued 500,012 shares of common stock valued at $150,003 to
4 investors on conversion of $125,003 principal amount of convertible notes plus
$25,000 of accrued interest. These shares were part of shares to be issued as of
December 31, 2005.

On March 31, 2006, issued 115,000 shares of common stock, valued at $65,550
based on the closing price of the common stock on the date of the agreement, to
Ms. Alissa Bushnell, daughter of our CEO Nolan Bushnell, in payment for public
relations services provided to the Company during 2005. These shares were part
of shares to be issued as of December 31, 2005.

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

On June 8, 2006, issued 434,453 shares of common stock to various service
providers valued at $122,076, based on the closing price of our common stock on
the date of the relevant agreement. 150,000 of these shares were included in
shares to be issued as of December 31, 2005.

On June 8, 2006, issued 33,333 shares of common stock valued at $10,000, based
on the closing price of our common stock on the date of the agreement, to Cody
Management in exchange for financial consulting services rendered.

On August 4, 2006, issued 241,582 shares of common stock to various service
providers valued at $63,134, based on the closing price of our common stock on
the date of the relevant agreement.

On September 20, 2006, issued 100,000 shares of common stock valued at $36,000
upon the exercise of stock options.

On March 3, 2006, sold 5,000,000 shares of common stock to 22 investors for
gross proceeds of $1,500,000. The investors in the transaction also received
immediately exercisable, three-year warrants to purchase an aggregate of
2,500,000 shares of common stock priced at $0.345 per share. Merriman Curhan
Ford & Co. acted as sole placement agent for this transaction. We paid to
Merriman Curhan Ford & Co, as placement agent, a commission of $75,000 (equal to
5% of the aggregate offering price) plus $5,000 in expenses. Merriman also
received an additional 450,000 immediately exercisable, three-year warrants to
purchase common stock at $0.345 per share as part of this fee arrangement. The
fair value of the warrants of $590,524 (as calculated as of the issuance date)
was calculated using the Black Scholes option pricing model using the following
assumptions: stock price of $0.30, risk free rate of return of 7.5%, volatility
of 109%, expected life of 3 years and dividend yield of 0%. The fair value of
the warrants issued to the investors of $500,444 (as calculated as of the
issuance date) was recognized as an expense at March 31, 2006 with a
corresponding amount booked as a short term liability. The fair value of the
warrants issued to the placement agent of $90,080 was accounted for as a cost of
raising equity with a corresponding amount debited to additional paid-in
capital. In accordance with EITF 00-19, at the end of each reporting period, the
fair value of the warrants is recalculated, and changes to the warrant liability
and related gain or loss are booked appropriately.

As of June 30, 2006, the fair value of the warrant liability relating to the
2,500,000 warrants issued to the investors was $338,010, as calculated using the
Black Scholes option pricing model using the following assumptions: stock price
of $0.28, risk free rate of return of 7.5%, volatility of 78.43%, expected life
of 2.75 years and dividend yield of 0%. In accordance with EITF 00-19, the
Company reduced the short term warrant liability relating to these warrants as
of June 30, 2006 by $162,424 to reflect the fair value as of June 30, 2006 and
recognized fair value of warrant liability income (other income) of $162,434 in
the statement of operations for the six months ended June 30, 2006.

                                      F-18


<PAGE>

As of September 30, 2006, the fair value of the warrant liability relating to
the 2,500,000 warrants issued to the investors was $3,104,000, as calculated
using the Black Scholes option pricing model using the following assumptions:
stock price of $1.42, risk free rate of return of 7.5%, volatility of 123%,
expected life of 2.5 years and dividend yield of 0%. In accordance with EITF
00-19, the Company increased the short term warrant liability relating to these
warrants as of September 30, 2006 by $2,765,990 to reflect the fair value as of
September 30, 2006 and recognized fair value of warrant liability expense (other
expense) of $2,765,990 in the statement of operations for the nine months ended
September 30, 2006.

On May 9, 2006 and June 12, 2006, sold a total of 108,333 shares of common stock
to 2 investors for gross proceeds of $32,500. These investors also received
immediately-exercisable, three-year warrants to purchase an aggregate of 54,167
shares of common stock at $0.345 per share. The fair value of the warrants of
$8,920 (as calculated as of the issuance dates) was calculated using the Black
Scholes option pricing model using the following assumptions: stock price of
$0.30 for the May 9 warrants and $0.28 for the June 12 warrants, risk free rate
of return of 7.5%, volatility of 86%, expected life of three years and dividend
yield of 0%. As of June 30, 2006, the fair value of these warrants was $7,674,
as calculated using the Black Scholes option pricing model using the following
assumptions: stock price of $0.28, risk free rate of return of 7.5%, volatility
of 78.43%, expected life of 3 years and dividend yield of 0%. The fair value of
these warrants of $7,674, as calculated as of June 30, 2006, was recognized as a
fair value of warrant liability expense (other expense) with a corresponding
amount booked as a short term warrant liability as of June 30, 2006. The shares
of common stock issued to these investors are reflected as shares to be issued
on the June 30, 2006 balance sheet. We issued these shares on July 24, 2006.

As of September 30, 2006, the fair value of the warrant liability relating to
the 54,167 warrants issued to the investors was $67,947, as calculated using the
Black Scholes option pricing model using the following assumptions: stock price
of $1.42, risk free rate of return of 7.5%, volatility of 123%, expected life of
2.75 years and dividend yield of 0%. In accordance with EITF 00-19, the Company
increased the short term warrant liability relating to these warrants as of
September 30, 2006 by $60,272 to reflect the fair value as of September 30, 2006
and recognized fair value of warrant liability expense (other expense) of
$60,272 in the statement of operations for the nine months ended September 30,
2006.

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

The fair value of the warrants of $2,630,405 (as calculated as of the date of
issuance) was calculated using the Black Scholes option pricing model using the
following assumptions: stock price of $1.12, risk free rate of return of 3.93%,
volatility of 123%; expected life of 3 years and dividend yield of 0%. The fair
value of these warrants, as calculated as of September 30, 2006, was $3,411,955,
as calculated using the Black Scholes option pricing model using the following
assumptions: stock price of $1.42, risk free rate of return of 3.93%, volatility
of 123%; expected life of 3 years and dividend yield of 0%. The September 30,
2006 fair value of the warrants of $3,411,955 was recognized as an expense with
a corresponding amount booked as a short term warrant liability. 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.

A provision in the Securities Purchase Agreements governing the Company's sales
of common stock and warrants on March 3, 2006, May 9, 2006, June 12, 2006 and
September 18, 2006 requires the Company to file a registration statement with
the Securities and Exchange Commission covering the resale of the shares of
common stock and shares of common stock underlying the warrants sold as promptly
as possible and that, if the registration statement is not declared effective by
the SEC within 180 days of the closing date of the transaction, or if the
Company fails to keep the registration statement continuously effective until


                                      F-19


<PAGE>

all the shares (and shares underlying warrants) are either sold or can be sold
without restriction under Rule 144(k), that the Company pay the investors
monthly liquidated damages equal to 1.5% of their investment until the
registration statement is declared and kept effective or all the shares have
been sold or can be sold without restriction under Rule 144(k) (in the case of a
failure to keep the registration statement continuously effective). Because the
warrants are subject to registration rights with liquidated damages for failure
to register, under EITF 00-19, the fair value of the warrants is accounted for
as a liability and, at the end of each reporting period, the fair value of the
warrants is recalculated, and changes to the warrant liability and related gain
or loss are booked appropriately.

On August 25, 2006, the investors in the March 3, 2006 transaction waived this
liquidated damages provision for an additional three-month period, as it relates
to the registration statement becoming effective by September 3, 2006. On
December 3, 2006, the investors in each of the 2006 transactions agreed, without
additional consideration, to permanently waive their right to registration of
the warrants and shares of common stock underlying the warrants issued in these
transactions as well as their right to liquidated damages for our failure to
register the shares issued or issuable in these transactions. As a result, the
warrant liability of $6,583,902 as of September 30, 2006 was reclassified to
equity as of December 3, 2006.

On October 25, 2006, issued 99,582 shares of common stock to various service
providers valued at $38,776, based on the closing price of our common stock on
the date of the relevant agreement.

On October 25, 2006, issued 3,334 shares of common stock valued at $2,000, based
on the closing price of the common stock on the date of the agreement, to
Richard Strong in exchange for engineering consulting service rendered.

On October 25, 2006, issued 100,000 shares of common stock valued at $27,000,
based on the closing price of our common stock on the date of the agreement, to
S. Raymond Hibarger, its former Vice President of Marketing, in final settlement
of all compensation due to Mr. Hibarger.

On October 25, 2006, issued 10,787 shares valued at $10,007 to 2 accredited
individual investors relating to our merger with uWink California in 2003 and
our capital raising transactions in 2004. These shares were included as shares
to be issued on the December 31, 2005 balance sheet and had remained unissued
for ministerial reasons.

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

         1.     Mr. Rotter agreed to convert the $100,000 principal amount and
                $5,685 in accrued interest outstanding under the Rotter Note
                into shares of common stock at a conversion price of $1 per
                share. In accordance with the terms of the Rotter Note, Mr.
                Rotter is entitled to receive an additional 20% of such amount
                in shares of common stock upon conversion into any offering of
                securities that results in gross proceeds to the Company of at
                least $3,000,000. The note was due on October 19, 2006. Rather
                than repay the note in cash, the Company agreed with Mr. Rotter
                that he would be entitled to receive this additional 20% upon
                the conversion of the Rotter Note into shares of common stock
                even though the conversion was not in connection with any such
                offering. As a result, the total amount to be converted is
                $126,822. As such, Mr. Rotter accepted 126,822 shares of common
                stock of the Company, together with the warrants set forth
                below, in full and final satisfaction of the Company's
                obligations under the Rotter Note.

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

                                      F-20


<PAGE>

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

Dr. Hines agreed to convert the $100,000 principal amount and $11,555 in accrued
interest outstanding under the Hines Note into shares of common stock of the
Company at a conversion price of $1 per share. In accordance with the terms of
the Hines Note, Dr. Hines is entitled to receive an additional 20% of such
amount in shares of common upon conversion into any offering of Company
securities that results in gross proceeds to the Company of at least $3,000,000.
While the Hines Note was not yet due, the Company believed it advantageous to
remove the Hines Note from the balance sheet, particularly because the Hines
Note was secured by assets of the Company. As such, the Company agreed with Dr.
Hines that he would be entitled to receive this additional 20% upon the
conversion of the Hines Note into shares of common stock even though the
conversion was not in connection with any such offering. As a result, the total
amount to be converted is $133,866. As such, Dr. Hines accepted 133,866 shares
of common stock of the Company in full and final satisfaction of the Company's
obligations under the Hines Note.

On November 18, 2006, issued 85,898 shares of common stock to various service
providers valued at $119,705, based on the closing price of our common stock on
the date of the relevant agreement.

On December 6, 2006, issued 133,334 shares of common stock valued at $200,001 on
the exercise of warrants at an exercise price of $1.50 per share.

On December 6, 2006 issued 30,000 shares of common stock valued at $9,000 on the
exercise of employee stock options at an exercise price of $0.30 per share.

On December 31, 2006, issued 9,386 shares of common stock to various service
providers valued at $18,048.

In November 2006, pursuant to a settlement entered into with Burt Martin Arnold,
cancelled 50,000 shares of common stock originally issued to Burt Martin Arnold
on April 11, 2005 and valued at $46,500.

Shares to be Issued

At December 31, 2005, Shares to be Issued consisted of:

         o        27,442 shares valued at $20,144 remaining unissued from 2004.

         o        500,012 shares valued at $150,003 on due on conversion of
                  $125,003 principal amount of convertible notes plus accrued
                  interest of $25,000.

         o        50,000 shares valued at $21,000 to be issued in consideration
                  of the extension of the maturity date of a convertible note.

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

         o        115,000 shares valued at $65,550 to be issued for consulting
                  services rendered during 2005.

At January 2, 2007, Shares to be Issued consisted of:

         o        79,545 shares valued at $175,000 to be issued in settlement of
                  accrued employee compensation as of January 2, 2007.

         o        100,000 shares valued at $34,500 to be issued upon exercise of
                  warrants at an exercise price of $0.345 per share.

         o        16,635 shares valued at $10,142 remaining unissued in
                  connection with the Company's capital raising transactions in
                  2004. These shares remained unissued at January 2, 2007 for
                  ministerial reasons.

                                      F-21


<PAGE>

NOTE 11 - STOCK OPTIONS AND WARRANTS

Stock Options

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

Primarily as a result of adopting SFAS No. 123R, the Company recognized $499,548
in share-based compensation expense for the year ended January 2, 2007. The
impact of this share-based compensation expense on the Company's basic and
diluted earnings per share was $0.03 per share. The fair value of our stock
options was estimated using the Black-Scholes option pricing model.

For periods presented prior to the adoption of SFAS No. 123R, pro forma
information regarding net income and earnings per share as required by SFAS No.
123 has been determined as if we had accounted for our employee stock options
under the original provisions of SFAS No. 123. The fair value of these options
was estimated using the Black-Scholes option pricing model. For purposes of pro
forma disclosure, the estimated fair value of the options is amortized to
expense over the option's vesting period. During the year ended December 31,
2005, the Company recorded $95,639 as the stock based compensation expense.

                                                                       2005
                                                                   ------------
             Net loss as reported                                  $(3,239,557)
             Compensation recognized under APB 25                       95,639
             Compensation recognized under SFAS 123                   (392,870)
                                                                   ------------
             Pro forma                                             $(3,536,788)
                                                                   ============

             Basic and diluted loss per common share as reported   $     (0.28)
             Pro forma                                             $     (0.30)

The Company assumed the uWink.com, Inc. 2000 Employee Stock Option Plan pursuant
to its acquisition of uWink California. The 2000 Plan provides for the issuance
of up to 681,218 (after giving effect to a 3.15611 reverse stock split in
connection with the acquisition of uWink California) incentive and non-qualified
stock options to employees, officers, directors and consultants of the Company.
Options granted under the 2000 Plan vest as determined by the Board of
Directors, provided that any unexercised options will automatically terminate on
the tenth anniversary of the date of grant. As of January 2, 2007, there are 0
shares available for issuance under this plan.

In 2004, the Company's Board of Directors approved the uWink, Inc. 2004 Stock
Incentive Plan (the "2004 Plan"). The 2004 Plan provides for the issuance of up
to 1,200,000 incentive stock options, non-qualified stock options, restricted
stock awards and performance stock awards to employees, officers, directors, and
consultants of the Company. Awards granted under the 2004 Plan vest as
determined by the Board of Directors, provided that no option or restricted
stock award granted under the 2004 Plan may be exercisable prior to six months
from its date of grant and no option granted under the 2004 Plan may be
exercisable after 10 years from its date of grant. As of January 2, 2007, there
are 0 shares available for issuance under this plan.

                                      F-22


<PAGE>

In 2005, the Company's Board of Directors approved the uWink, Inc. 2005 Stock
Incentive Plan (the "2005 Plan"). The 2005 Plan provides for the issuance of up
to 2,000,000 incentive stock options, non-qualified stock options, restricted
stock awards and performance stock awards to employees, officers, directors, and
consultants of the Company. Awards granted under the 2005 Plan vest as
determined by the Board of Directors, provided that no option or restricted
stock award granted under the 2005 Plan may be exercisable prior to six months
from its date of grant and no option granted under the 2005 Plan may be
exercisable after 10 years from its date of grant. As of January 2, 2007, there
are 1,486 shares available for issuance under this plan.

On June 8, 2006, the Company's Board of Directors approved the uWink, Inc. 2006
Equity Incentive Plan (the "2006 Plan"). The 2006 Plan provides for the issuance
of up to 1,000,000 incentive stock options, non-qualified stock options,
restricted and unrestricted stock awards and stock bonuses to employees,
officers, directors, and consultants of the Company. On November, 14, 2006, the
Company's Board of Directors approved an amendment to the 2006 Plan to increase
the number of shares available under the plan by 1,500,000 to a total of
2,500,00. As of January 2, 2007, there are 688,485 shares available for issuance
under this plan.

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

       o        no option granted under the 2006 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.

Pursuant to the Stock Option Plans, during the twelve months ended December 31,
2004, the Company granted 352,835 stock options to employees that remain
outstanding as of January 2, 2007.

During the twelve months ended December 31, 2005, the Company granted 1,385,000
stock options to employees and directors that remain outstanding as of January
2, 2007. 420,000 of these options were granted on July 25, 2005 at an exercise
price of $0.36, which was equal to the fair value of the shares on that date.
350,000 of these options were granted on August 29, 2005 at an exercise price of
$0.43 per share, which was equal to the fair value of the shares on that date.
350,000 of these options were granted on September 15, 2005 at an exercise price
of $0.57 per share, which was equal to the fair value of the shares on that
date. 165,000 of these options were granted on October 21, 2005 at an exercise
price of $0.40 per share, which was equal to the fair value of the shares on
that date. 100,000 of these options were granted on November 11, 2005 at an
exercise price of $0.45 per share, which was equal to the fair value of the
shares on that date. All these options vest in 36 equal monthly installments
with the initial one-sixth vesting after 6 months.

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

On May 12, 2006, the Company granted 500,000 stock options to our CEO, Nolan
Bushnell, at an exercise price of $0.33 per share. These options vest in 36
equal monthly installments with the initial one-sixth vesting after 6 months.

On July 5, 2006, the Company granted 125,000 stock options to an employee at an
exercise price of $0.28 per share. These options vest in 36 equal monthly
installments with the initial one-sixth vesting after 6 months.

On August 4, 2006, the Company granted 100,000 stock options to an employee at
an exercise price of $0.26 per share. These options vest in 36 equal monthly
installments with the initial one-sixth vesting after 6 months.

On August 10, 2006, the Company granted 150,000 stock options to an employee at
an exercise price of $0.28 per share. These options vest in 36 equal monthly
installments with the initial one-sixth vesting after 6 months.

                                      F-23


<PAGE>

On August 24, 2006, the Company granted a total of 100,000 stock options to
three employees at an exercise price of $0.55 per share. These options vest in
36 equal monthly installments with the initial one-sixth vesting after 6 months.

On September 1, 2006, the Company granted 70,000 stock options to an employee at
an exercise price of $0.60 per share. These options vest in 36 equal monthly
installments with the initial one-sixth vesting after 6 months.

On September 22, 2006, the Company granted 400,000 stock options to our Director
of Restaurant Operations, John Kaufman, at an exercise price of $1.17 per share.
50,000 of these options vest in a lump sum after 3 months. The remaining 350,000
options will vest over a thirty-six month period, with the initial one-sixth
vesting after six months.

On October 10, 2006, the Company granted 25,000 stock options to an employee at
an exercise price of $1.52 per share. These options vest in 36 equal monthly
installments with the initial one-sixth vesting after 6 months.

On October 30, 2006, the Company granted 200,000 stock options to an employee at
an exercise price of $1.30 per share. These options vest in 36 equal monthly
installments with the initial one-sixth vesting after 6 months.

On November 8, 2006, the Company granted 25,000 stock options to an employee at
an exercise price of $1.50 per share. These options vest in 36 equal monthly
installments with the initial one-sixth vesting after 6 months.

On November 30, 2006, the Company granted a total of 600,000 stock options to 2
employees at an exercise price of $1.95 per share. These options vest in 36
equal monthly installments with the initial one-sixth vesting after 6 months.

On December 27, 2006, the Company granted a total of 170,000 stock options to 2
employees at an exercise price of $2.20 per share. 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 year ended January
2, 2007:

                                                       Weighted
                                                       Average
                                           Options     Exercise     Aggregate
                                         outstanding    Price    Intrinsic Value
                                         -----------   --------  ---------------
       Outstanding, December 31, 2005     2,400,411     $0.88      $ 1,454,081
       Granted                            2,865,000     $0.99
       Forfeited                            435,679     $1.05
       Exercised                            130,000     $0.35      $  (253,500)
                                         ----------
       Outstanding, January 2, 2007       4,699,732     $0.94      $ 6,461,941
       Exercisable, January 2, 2007       1,267,179     $0.97      $ 1,761,242

Following is a summary of the status of options outstanding at January 2, 2007:

                  Outstanding Options
                                        Remaining
                              Exercise Contractual
                          Price Number Life Exercisable
      --------------------------------------------------------------
       $0.26           100,000               9.60                  0

       $0.28           275,000               9.57                  0

       $0.30           370,000               9.12             88,357

       $0.32            79,212               5.87             79,212

       $0.33           500,000               9.37            106,393

       $0.36           420,000               8.56            200,986

       $0.40           165,000               8.81             65,699

       $0.43           350,000               8.66            156,301

       $0.45           100,000               8.86             37,900

       $0.55           100,000               9.65                  0

       $0.57           350,000               8.71            150,868

                                      F-24


<PAGE>

       $0.60            70,000               9.68                  0

       $1.17           400,000               9.73             50,000

       $1.25             6,584               8.00              4,389

       $1.30           200,000               9.84                  0

       $1.38            10,000               8.00              6,667

       $1.45            13,751               7.96              9,356

       $1.50            25,000               9.86                  0

       $1.52            25,000               9.78                  0

       $1.60            10,000               7.96              6,804

       $1.95           600,000               9.92                  0

       $2.20           170,000              10.00                  0

       $2.37            28,516               5.25             28,516

       $2.40           162,500               7.55            133,413

       $2.64           150,000               7.55            123,151

       $3.16            19,169               2.97             19,169
      --------------------------------------------------------------
                     4,699,732                             1,267,179
      --------------------------------------------------------------

For options granted during the year ended January 2, 2007, the weighted-average
fair value of such options was $0.93.

During the year ended January 2, 2007 we received $45,000 from the exercise of
130,000 stock options at a weighted-average exercise price of $0.35 per share.

The total weighted-average remaining contractual term of the options outstanding
at January 2, 2007 is 9.1 years.

The total weighted-average remaining contractual term of the options exercisable
at January 2, 2007 is 8.22 years.

The Company recognized expense of $499,548 for the fair value of the options
vested during the year ended January 2, 2007.

The total compensation expense not yet recognized relating to unvested options
at January 2, 2007 is $2,988,156 and the weighted average period over which this
expense will be recognized is 2.4 years.

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

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

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

For the 500,000 options granted on May 12, 2006:

           Risk-free interest rate                                        7.75%
           Expected life of the options                             10.00 years
           Expected volatility                                           85.78%
           Expected dividend yield                                            0

For the 125,000 options granted on July 5, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                           70.62%
           Expected dividend yield                                            0

                                      F-25


<PAGE>

For the 100,000 options granted on August 4, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                           70.62%
           Expected dividend yield                                            0

For the 150,000 options granted on August 10, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                           70.37%
           Expected dividend yield                                            0

For the 100,000 options granted on August 24, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                           70.37%
           Expected dividend yield                                            0

For the 70,000 options granted on September 1, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                          104.80%
           Expected dividend yield                                            0

For the 400,000 options granted on September 22, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                          122.77%
           Expected dividend yield                                            0

For the 25,000 options granted on October 10, 2006, the 200,000 options granted
on October 30, 2006, and the 25,000 options granted on November 8, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                          119.24%
           Expected dividend yield                                            0

For the 600,000 options granted on November 30, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                          126.64%
           Expected dividend yield                                            0

For the 170,000 options granted on December 27, 2006:

           Risk-free interest rate                                        4.29%
           Expected life of the options                             10.00 years
           Expected volatility                                           115.09%
           Expected dividend yield                                            0

Warrants
--------

Following is a summary of the warrant activity for the year ended January 2,
2007.

                                                                  Weighted-
                                                                   Average
                                                                   Exercise
                                                     Warrants       Price
                                                    ----------     --------
Balance, December 31, 2005                           2,435,337     $  3.09
Granted                                              5,923,271     $  0.35
Exercised                                              233,334     $  1.01
Cancelled                                              273,716     $  4.87
Balance January 2, 2007                              7,851,558     $  1.02

                                      F-26


<PAGE>

During the year ended January 2, 2007, the Company issued:

on March 3, 2006, 2,500,000 immediately-exercisable, three-year warrants at an
exercise price of $0.345 to 22 investors and 450,000 immediately-exercisable,
three-year warrants at an exercise price of $0.345 to a placement agent. The
fair value of the warrants of $590,524 was calculated, as of the date of
issuance, using the Black Scholes option pricing model using the following
assumptions: stock price of $0.30, risk free rate of return of 7.5%, volatility
of 109%, expected life of 3 years and dividend yield of 0%;

on May 9, 2006 and June 12, 2006, 54,167 immediately-exercisable, three-year
warrants to 2 investors at an exercise price of $0.345. The fair value of the
warrants of $8,920 was calculated, as of the date of issuance, using the Black
Scholes option pricing model using the following assumptions: stock price of
$0.30 for the May 9 warrants and $0.28 for the June 12 warrants, risk free rate
of return of 7.5%, volatility of 86%, expected life of three years and dividend
yield of 0%; and

on September 18, 2006, 2,719,104 immediately-exercisable, three-year warrants to
51 investors at an exercise price of $0.345. The fair value of the warrants of
$2,630,405 was calculated, as of the date of issuance, using the Black Scholes
option pricing model using the following assumptions: stock price of $1.12, risk
free rate of return of 3.93%, volatility of 123%; expected life of 3 years and
dividend yield of 0%.

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

Because the warrants were subject to registration rights with liquidated damages
for failure to register, under EITF 00-19, the fair value of the warrants was
accounted for as a liability and, at the end of each reporting period, the fair
value of the warrants was recalculated, and changes to the warrant liability and
related gain or loss were booked appropriately. On August 25, 2006, the
investors in the March 3, 2006 transaction waived this liquidated damages
provision for an additional three-month period, as it relates to the
registration statement becoming effective by September 3, 2006. On December 3,
2006, the investors in each of the 2006 transactions agreed, without additional
consideration, to permanently waive their right to registration of the warrants
and shares of common stock underlying the warrants issued in these transactions
as well as their right to liquidated damages for our failure to register the
shares issued or issuable in these transactions. As a result, the cumulative
warrant liability of $6,583,902 at September 30, 2006 was reclassified to equity
as of December 3, 2006.

In accordance with EITF 00-19, the $500,444 fair value of the 2,500,000 warrants
issued to the investors in the March 3, 2006 transaction was recognized as an
expense in the March 31, 2006 statement of operations with a corresponding
amount booked as short term warrant liability on the March 31, 2006 balance
sheet. As of June 30, 2006, the fair value of the warrant liability relating to
the 2,500,000 warrants issued to the investors was $338,010, as calculated using
the Black Scholes option pricing model using the following assumptions: stock
price of $0.28, risk free rate of return of 7.5%, volatility of 78.43%, expected
life of 2.75 years and dividend yield of 0%. In accordance with EITF 00-19, the
Company reduced the short term warrant liability relating to these warrants as
of June 30, 2006 by $162,424 to reflect the fair value at June 30, 2006 and
recognized fair value of warrant liability income (other income) of $162,434 in
the statement of operations for the six months ended June 30, 2006. As of
September 30, 2006, the fair value of the warrant liability relating to the
2,500,000 warrants issued to the investors in the March 3, 2006 transaction was
$3,104,000, as calculated using the Black Scholes option pricing model using the
following assumptions: stock price of $1.42, risk free rate of return of 7.5%,
volatility of 123%, expected life of 2.5 years and dividend yield of 0%. In
accordance with EITF 00-19, the Company increased the short term warrant
liability relating to these warrants as of September 30, 2006 by $2,765,990 to


                                      F-27


<PAGE>

reflect the fair value as of September 30, 2006 and recognized fair value of
warrant liability expense (other expense) of $2,765,990 in the statement of
operations for the nine months ended September 30, 2006. Because the warrants
issued to the placement agent in the March 3, 2006 transaction are not subject
to registration rights/liquidated damages for failure to register, the issuance
date fair value of the 450,000 warrants issued to the placement agent of $90,080
(along with the placement agent's commission and expenses) was accounted for as
a cost of raising equity with a corresponding amount debited to additional
paid-in capital.

As of June 30, 2006, the fair value of the 54,167 warrants issued in May and
June 2006 was $7,674, as calculated using the Black Scholes option pricing model
using the following assumptions: stock price of $0.28, risk free rate of return
of 7.5%, volatility of 78.43%, expected life of 3 years and dividend yield of
0%. The fair value of these warrants of $7,674, as calculated as of June 30,
2006, was recognized as fair value of warrant liability expense (other expense)
in the statement of operations for the six month ended June 30, 2006, with a
corresponding amount booked as a short term warrant liability as of June 30,
2006. As of September 30, 2006, the fair value of the warrant liability relating
to the 54,167 warrants issued to the investors was $67,947, as calculated using
the Black Scholes option pricing model using the following assumptions: stock
price of $1.42, risk free rate of return of 7.5%, volatility of 123%, expected
life of 2.75 years and dividend yield of 0%. In accordance with EITF 00-19, the
Company increased the short term warrant liability relating to these warrants as
of September 30, 2006 by $60,272 to reflect the fair value as of September 30,
2006 and recognized fair value of warrant liability expense (other expense) of
$60,272 in the statement of operations for the nine months ended September 30,
2006.

The fair value of the 2,719,104 warrants issued in the September 18, 2006
transaction, as calculated as of September 30, 2006, was $3,411,955, as
calculated using the Black Scholes option pricing model using the following
assumptions: stock price of $1.42, risk free rate of return of 3.93%, volatility
of 123%; expected life of 3 years and dividend yield of 0%. The September 30,
2006 fair value of these warrants of $3,411,955 was recognized as fair value of
warrant liability expense (other expense) with a corresponding amount booked as
a short term warrant liability as of September 30, 2006.

As discussed above, the cumulative warrant liability of $6,583,902 at September
30, 2006 was reclassified to equity as of December 3, 2006.

On April 19, 2006, the Company issued 100,000 immediately-exercisable,
three-year warrants to Mr. Bradley Rotter, a director of the Company, at an
exercise price of $0.345 in connection with the partial repayment and partial
extension of a $200,000 convertible note. The fair value of the warrants of
$16,828 was calculated using the Black Scholes option pricing model using the
following assumptions: risk free rate of return of 7.5%, volatility of 86%,
expected life of 3 years and dividend yield of 0%. The fair value of the
warrants was accounted for as interest expense with a corresponding amount
debited to additional paid-in capital.

On October 26, 2006, the Company issued an additional 100,000
immediately-exercisable, three-year warrants at an exercise price of $0.345 to
Mr. Rotter in connection with the conversion into common stock of a $100,000
note issued to Mr. Rotter on April 19, 2006. The fair value of the warrants of
$116,122 was calculated using the Black Scholes option pricing model using the
following assumptions: risk free rate of return of 3.93%, volatility of 119.24%,
expected life of 3 years and dividend yield of 0%. The fair value of the
warrants was accounted for as interest expense with a corresponding amount
debited to additional paid-in capital.

The Company recognized interest expense for the year ended January 2, 2007 of
$132,950 in respect of the 200,000 warrants issued to Bradley Rotter discussed
above. In addition, the Company recognized $6,583,902 of expense in the
statement of operations relating to the financing warrants issued during the
period. Of this $6,583,902 expense, $3,139,769 reflects expense related to the
issuance date fair value of the warrants and $3,444,133 reflects net expense
related to the change in the fair value of the warrants.

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

                                      F-28


<PAGE>

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

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

     $0.345               5,823,271             2.44               5,823,271
     $1.50                  400,124             3.37                 400,124
     $1.58                   22,180             1.04                  22,180
     $1.75                   85,000             2.75                  85,000
     $2.00                  245,000             2.30                 245,000
     $2.37                  234,995             0.23                 234,995
     $3.50                  890,988             2.75                 890,988
     $5.00                   50,000             2.25                  50,000
     $7.00                   50,000             2.25                  50,000
     $9.00                   50,000             2.25                  50,000
     -----------------------------------------------------------------------
                          7,851,558                                7,851,558
     -----------------------------------------------------------------------

NOTE 12 - SEGMENTS

In 2006, the Company had two reportable segments consisting of (1) Restaurant
operations and (2) Products, representing the sale of SNAP! and Bear Shop
machines and the licensing of SNAP! and Bear Shop intellectual property. The
Company had no restaurant operations prior to 2006. The accounting policies of
the segments are the same as those described in the summary of significant
accounting policies. The Company evaluates performance based on sales, gross
profit margins and operating profit (loss) before income taxes. Selling, general
and administrative expenses taken into account in determining operating profit
(loss) before income taxes consist primarily of professional fees, corporate and
restaurant rent expense, salary and engineering consulting expense, restaurant
pre-opening and operating expenses, employee stock option expense, inventory
reserve expense and other expenses. Unallocated operating loss before income
taxes reflects the sum of fair value of warrant liability expense, loss on
conversion of debt expense, interest expense, beneficial conversion feature
expense, and gain on settlement of debt and other income.

The following is information for the Company's reportable segments for the year
ended January 2, 2007:

<TABLE>
                                     --------------------------------------------------
                                     RESTAURANT    PRODUCTS
(IN THOUSANDS)                        SEGMENT       SEGMENT        OTHER        TOTAL
                                     --------------------------------------------------
<S>                                  <C>           <C>          <C>           <C>
Revenue                              $    290      $    160     $     --      $    450

Gross margin                              190            11           --           201

(Loss) from operations before tax      (3,179)         (311)      (6,871)      (10,361)

Identifiable assets                     1,044            59           --         1,103
Depreciation and amortization              60             2           --            62


Capital expenditures                    1,003            --           --         1,003
</TABLE>

The Company operated in one segment in the year ended December 31, 2005.

NOTE 13 - INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial statement
purposes and the amounts used for income tax purposes.

Significant components of the Company's deferred tax liabilities and assets as
of January 2, 2007 are as follows:

                                      F-29


<PAGE>

          Deferred tax assets:

               Federal net operating loss                          $  6,962,511
               State net operating loss                               1,949,041
                                                                   ------------

               Total deferred tax assets                              8,911,552
               Less valuation allowance                              (8,911,552)
                                                                   ------------
                                                                   $         --
                                                                   ============

At January 2, 2007, the Company had federal and state net operating loss ("NOL")
carryforwards of approximately $22,427,014 and $22,047,979, respectively.
Federal NOLs could, if unused, expire in varying amounts in the years 2018
through 2022. State NOLs, if unused, could expire in varying amounts from 2007
through 2010.

Significant components of the Company's deferred tax liabilities and assets as
of December 31, 2005 are as follows:


         Deferred tax assets:

               Federal net operating loss                          $  6,051,055
               State net operating loss                               1,689,083
                                                                   ------------

               Total deferred tax assets                              7,740,138
               Less valuation allowance                              (7,740,138)
                                                                   ------------
                                                                   $         --
                                                                   ============

At December 31, 2005, the Company had federal and state net operating loss
("NOL") carryforwards of approximately $19,486,303 and $19,107,268,
respectively. Federal NOLs could, if unused, expire in varying amounts in the
years 2017 through 2021. State NOLs, if unused, could expire in varying amounts
from 2006 through 2009.

The reconciliation of the effective income tax rate to the federal statutory
rate for the fiscal years ended January 2, 2007 and December 31, 2005 is as
follows:

                                                        2006               2005
                                                      -------            -------
              Federal income tax rate                   (34%)              (34%)
              State tax, net of federal benefit          (6%)               (6%)
              Increase in valuation allowance            40%                40%
                                                      -------            -------
              Effective income tax rate                 0.0%               0.0%
                                                      =======            =======

Utilization of the net operating loss and tax credit carryforwards is subject to
significant limitations imposed by the change in control rules under I.R.C. 382,
limiting its annual utilization to the value of the Company at the date of
change in control times the federal discount rate. A significant portion of the
NOL may expire before it can be utilized.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

Other Litigation

In the ordinary course of business, the Company is generally subject to claims,
complaints, and legal actions. As of January 2, 2007 and December 31, 2005,
management believes that the Company is not a party to any action which would
have a material impact on its financial condition, operations, or cash flows.

Effective May 31, 2006, we terminated the lease agreement at our former
corporate offices at 12536 Beatrice Street, Los Angeles, California 90066. In
consideration for the early termination of the lease, we agreed to allow the
landlord to retain $20,000 of the security deposit held by the landlord under
the lease.

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.

                                      F-30


<PAGE>

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, the Company, Mr. Bushnell and Promenade L.P. entered into
an assignment agreement pursuant to which Mr. Bushnell assigned his rights under
the lease to the Company (but without relieving Mr. Bushnell of his liability
for the performance of the lease). In connection with this assignment, we agreed
with Mr. Bushnell that, should we fail to perform under the lease and Mr.
Bushnell become obligated under the lease as a result, Mr. Bushnell will have
the right to operate the leased premises in order to satisfy his obligations
under the lease.

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

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

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

Our obligation to pay rent under this lease commenced on October 5, 2006.

Total rent expense for the year ended January 2, 2007 is $177,028. Total rent
expense for the year ended December 31, 2005 as $115,057.

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). 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.

                                      F-31


<PAGE>

NOTE 15 - SUBSEQUENT EVENTS

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.

On April 2, 2007, we completed the sale of $857,000 of convertible promissory
notes to 19 accredited individual investors. The notes have a six month term,
accrue interest at 10% and are secured by the assets of the Company. The notes
are convertible, at the option of the holder, into the same securities issued by
the Company in (and on the same terms and conditions pari passu with the
investors in) any offering of its securities that results in gross proceeds to
the Company of at least $3,000,000. Upon conversion, the holder is entitled to
receive, as a conversion incentive, additional securities equal to 20% of the
aggregate principal value plus accrued interest converted.

                                      F-32


<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On July 27, 2005, our board of directors approved the dismissal of Stonefield
Josephson, Inc. as our independent public accountants and the selection of
Kabani & Company, Inc. as their replacement.

Stonefiled Josephson's reports on our consolidated financial statements for the
two fiscal years ended December 31, 2004 and 2003 did not contain any adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
audit scope, procedure or accounting principles except that the reports were
modified as to uncertainty and contained a disclosure stating that the financial
statements were prepared based on the assumption that we would continue as a
going concern.

During the fiscal years ended December 31, 2004 and 2003 and the subsequent
interim period through July 27, 2005, there were no disagreements between us and
Stonefield Josephson on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Stonefield Josephson's satisfaction, would
have caused them to make reference to the subject matter of the disagreement in
connection with their reports on our consolidated financial statements for such
years; and there were no reportable events as described in Item 304(a)(1)(v) of
Regulation S-K. We provided Stonefield Josephson with a copy of the foregoing
disclosures. A copy of Stonefield Josephson's letter, dated September 1, 2005,
stating its agreement with such statements was filed as an exhibit to our
current report on Form 8-KA dated September 9, 2005.

In addition, during our two fiscal years ended December 31, 2004 and 2003 and
the subsequent interim periods, we did not consult with Kabani & Company with
respect to the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on our consolidated financial statements, or any other matters or
reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

These changes in our independent accounting firm were reported on Form 8-K dated
July 28, 2005. Our 2005 financial statements were audited by Kabani & Co. and
our 2004 financial statements, originally audited by Stonefield Josephson, were
reaudited by Kabani & Company.

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our senior management,
including the Chief Executive Officer, we conducted an evaluation of the
effectiveness of the design and operation of its disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
as of January 2, 2007 (the "2006 Evaluation Date"). Based on this evaluation,
our CEO concluded as of the 2006 Evaluation Date that our disclosure controls
and procedures were effective.

Under the supervision and with the participation of our senior management,
including the Chief Executive Officer, we conducted an evaluation of the
effectiveness of the design and operation of its disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act,
as of the year ended December 31, 2005 (the "2005 Evaluation Date"). Based on
this evaluation, our CEO concluded as of the 2005 Evaluation Date that certain
of our disclosure controls and procedures were not effective, as evidence by the
following failures:

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

Failure to file a report on Form 8-K regarding the appointment of Bradley Rotter
to our Board of Directors effective November 11, 2005 and regarding the
issuance, in October 2005, of a $200,000 note to Mr. Rotter.

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.


                                       28


<PAGE>

There has not been any change in our internal control over financing reporting
(as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended
January 2, 2007 that has materially affected, or is likely to materially affect,
our internal control over financial reporting.

ITEM 8B

None.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

EXECUTIVE OFFICERS, SIGNIFICANT EMPLOYEES AND DIRECTORS

Set forth below is certain information concerning each of our directors and
executive officers and certain significant employees. Each of the individuals
listed as a director below shall serve as a director until the next annual
meeting of our shareholders and until their successors have been elected and
qualified, or until their resignation, death or removal.

<TABLE>
<S>     <C>
         NAME              AGE                  POSITION OR CAPACITY
         ----              ---                  --------------------
     Nolan Bushnell         63         Chief Executive Officer, Chairman of the Board of Directors
     Peter Wilkniss         41         Chief Financial Officer and Secretary
     Paul Dumais            43         Chief Technology Officer
     John Kaufman           44         Director of Restaurant Operations
     Bruce Kelly            60         Director
     Kevin McLeod           51         Director
     Bradley Rotter         51         Director
</TABLE>

Mr. Bushnell has been the Chairman of our Board of Directors, and Chief
Executive Officer since December 4, 2003 following our acquisition of uWink
California. Mr. Bushnell founded uWink California and has acted as its Chairman,
Chief Executive Officer and President since 1999. Mr. Bushnell is best known as
the creator of Atari Corporation and Chuck E. Cheese's Pizza Time Theater. In
1980, Mr. Bushnell founded Catalyst Technologies, an incubator which spawned
more than 20 companies, including Etak, ACTV, Androbot, Axlon, Magnum Microwave,
Irata and ByVideo. Mr. Bushnell holds several patents on some of the basic
technologies for many of the early video games developed and is also the
inventor or co-inventor of numerous patents in various other fields and
industries. Mr. Bushnell received his B.S. in Electrical Engineering from the
University of Utah, where he is a "Distinguished Fellow," and later attended
Stanford University Graduate School. Mr. Bushnell is also currently a director
of Wave Systems Corp. (NASDAQ: WAVX), an SEC reporting company.

Mr. Wilkniss has been our Chief Financial Officer and Secretary since August 29,
2005. Mr. Wilkniss has over 12 years experience in operational and financial
leadership in entrepreneurial technology-driven arenas. His areas of expertise
include corporate finance and financial reporting, M&A, business development and
strategic planning. From June 2004 to April 2005, Mr. Wilkniss was Chief
Operating Officer of Juriscape, Inc., an early stage ecommerce company. From
January 2003 to May 2004, Mr. Wilkniss was a private investor and business
consultant. From 2000 to 2002, Mr. Wilkniss was Managing Director and CFO of the
Helfant Group, Inc. (now Jefferies Execution Services, Inc.) subsidiary of
Jefferies Group, Inc. (NYSE: JEF). From 1998 to 2000, Mr. Wilkniss was a
corporate attorney at Wachtell, Lipton, Rosen & Katz. Mr. Wilkniss holds an MBA
from Columbia Business School and a JD from Columbia Law School (with highest
honors). He received his BA from the University of Virginia.

Mr. Dumais became our Chief Technology Officer on October 1, 2005. Mr. Dumais
has over 19 years experience as a software developer and systems architect,
specializing in the integration of technology and entertainment. For the past 8
years, Mr. Dumais has been CEO of Moose Factory, Inc., a private technology
development and investment firm focused on new media and the Internet. From 2004
to 2005, Mr. Dumais also served as Chief Executive Officer of Supernation, LLC
(Superdudes.net), a privately held online social gaming company. Prior to
founding Moose Factory, Mr. Dumais was a Senior Software Engineer and Project
Leader at Apple Computer, where, in their Interactive Marketing Group, he
oversaw Apple's entire webcasting efforts and website development. As the
founder of Moose Factory, Mr. Dumais has developed technology solutions for
Comedy Central, Nike, Endeavor Agency, Filmbazaar, LegalZoom and Intermix, among
others.

Mr. Kaufman became employed by us as our Director of Restaurant Operations on
September 22, 2006. Prior to that, Mr. Kaufman acted as our Director of
Restaurant Operations on a consulting basis. Mr. Kaufman has over 20 years of
restaurant experience, specializing in operations. For the past 4 ears, Mr.


                                       29


<PAGE>

Kaufman has been principal of JSK Management, LLC, a restaurant operations and
strategic planning consultancy. From 1999 to 2002, Mr. Kaufman as principal of
Concepts Etc., Inc., a restaurant management and consultancy specializing in
joint ventures, franchise and operating contracts with new and existing
restaurants. From 1996 to 1998, Mr. Kaufman was president and chief operating
officer of Koo Koo Roo, Inc., where he was responsible for reversing company
losses into gains, opening 34 new locations in multiple states, and assisted in
a merger with Family Restaurants. From 1995 to 1996, Mr. Kaufman was chief
operating officer of Rosti, where he helped develop the prototype restaurant
concept, participated in raising $5,000,000 for expansion, and managed the
opening of three new restaurants in the Los Angeles market. In 1986, Mr. Kaufman
joined California Pizza Kitchen, where he stayed until 1994, as he helped build
the company from a single location to more than 68 locations. At California
Pizza Kitchen, Mr. Kaufman eventually supervised more than 3,000 employees
including 250 managers and 12 area supervisors and two regional vice-presidents
of operations.

Mr. Kelly has been a director since December 4, 2003. Since 1998, Mr. Kelly has
been President and CEO of Nolan Securities, a registered broker-dealer in
securities and investment banking firm.

Mr. McLeod has been a director since March 2004. Since 1998, Mr. McLeod has been
the Managing Director of Aircool Engineering, Ltd. of Somerset England. Aircool
Engineering is one of the United Kingdom's largest mechanical and electrical
contractors. Mr. McLeod is a native of New Zealand currently residing in London.

Mr. Rotter has been a director since November 11, 2005. From 1988 to the present
Mr. Rotter has served as Managing Member of the Echelon Group, a private
specialty finance company. From 2003 to 2004 Mr. Rotter was Chief Executive
Officer of MR3 Systems, Inc. (OTCBB: MRMR), an SEC reporting company. From 1985
to 2004, Mr. Rotter served as President of Presage Corporation, a private
investment company. From 1993 to 2003, Mr. Rotter was Chairman of Point West
Capital Corporation (OTCBB: PWCC), an SEC reporting company. From 1999 to 2001,
Mr. Rotter served on the board of directors of Homeseekers.com Inc., at the time
an SEC reporting company and now called Realigent, a private company. Mr. Rotter
currently serves on the boards of directors of Sequella, Inc., AirPatrol
Corporation and Authentisure, all private companies.

There are no family relationships among any of our executive officers or
directors. Except as disclosed in the applicable employment agreements discussed
in Item 10 of this report and as further disclosed in Item 12 of this report, no
arrangement or understanding exists between any director or executive officer
and any other person pursuant to which any director or executive officer was
selected to serve as a director or an executive officer. To the best of our
knowledge, (i) there are no material proceedings to which any of our directors
or executive officers is a party, or has a material interest, adverse to us; and
(ii) there have been no events under any bankruptcy act, no criminal proceedings
and no judgments or injunctions that are material to the evaluation of the
ability or integrity of any director or executive officer during the past five
years. Our executive officers are elected or appointed by the Board and hold
office until their successors are elected and qualified, or until their death,
resignation or removal, subject to the terms of applicable employment
agreements.

We do not have a nominating, audit or compensation committee of the Board of
Directors, or any committee performing similar functions. Nominees for election
as a director are selected by the Board of Directors.

AUDIT COMMITTEE

We do not have a separately segregated audit committee, and our full board of
directors performs the functions of an audit committee. We are not required to
have an audit committee because we are not a listed security as defined in
Section 240.10A-3.

As a result, we do not have an audit committee financial expert, as defined
under Section 228.401.

CODE OF ETHICS

We have adopted a code of ethics that applies to all of our employees, including
our Chief Executive Officer and Chief Financial Officer, as well as our
directors. We will provide to any person without charge, upon request, a copy of
our code of ethics. Requests may be directed to our principal executive offices
at 16106 Hart Street, Van Nuys, California 91406.

                                       30


<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities and Exchange Act of 1934 requires any person who
is a director or executive officer of our company, or who beneficially holds
more than 10% of any class of our securities which have been registered with the
SEC, to file reports of initial ownership and changes in ownership with the SEC.
These persons are also required under SEC regulations to furnish us with copies
of all Section 16(a) reports they file. To our knowledge based solely on our
review of the copies of the Section 16(a) reports furnished to us and
representations to us that no other reports were required, the following
directors and executive officers were late or deficient with respect to the
following filings under Section 16(a) during 2006 and to date in 2007:

Mr. McLeod failed to timely file form 4's with respect to his acquisition of (1)
333,333 shares of common stock on March 3, 2006; and (2) warrants to acquire
166,667 shares of common stock at an exercise price of $0.345 on March 3, 2006.


ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth compensation information for services rendered to
us by our executive officers (collectively, our "Named Executive Officers") in
all capacities, other than as directors, during each of the prior two fiscal
years. The following table summarizes all compensation for fiscal years 2006 and
2005 received by our Chief Executive Officer and Chief Financial Officer, our
only executive officers. The following information includes the dollar value of
base salaries, bonus awards, stock options granted and certain other
compensation, if any, whether paid or deferred.

<TABLE>
SUMMARY COMPENSATION TABLE

                                                                                      Non-
                                                                                      Equity     Nonqualified
                                                                                      Incentive  Deferred
                                                                                      Plan       Compen-      All Other
                                                                   Stock    Option    Compen-    sation       Compen-
                                                                   Awards   Awards    sation     Earnings     sation
Name and principal position    Year     Salary ($)     Bonus ($)    ($)     ($)(5)      ($)       ($)         ($)         Total($)
---------------------------    ----     ----------     ---------  --------  -------   --------   ---------    --------    --------
<S>                             <C>
Nolan K. Bushnell, Chief
Executive Officer (1)           2006     $100,000          --        --   $140,689        --         --         --        $240,689
                                2005     $  9,000          --        --         --        --         --         --        $  9,000

Peter F. Wilkniss, Chief
Financial Officer (2)           2006     $120,000 (3)      --        --    $62,000        --         --         --        $182,000
                                2005     $ 30,000 (4)      --        --         --        --         --         --        $ 30,000

</TABLE>

(1)      The aggregate number of stock awards and option awards issued to Mr.
         Bushnell and outstanding as of January 2, 2007 is 0 and 670,000,
         respectively.

(2)      The aggregate number of stock awards and option awards issued to Mr.
         Wilkniss and outstanding as of January 2, 2007 is 0 and 400,000,
         respectively.

(3)      $20,000 of Mr. Wilkniss' salary for 2006 was accrued and has not yet
         been paid.

(4)      Represents salary from October 2005 to December 2005. $25,000 of this
         amount was accrued and has not yet been paid.

(5)      Reflects dollar amounts expensed by us during 2006 for
         financial statement reporting purposes pursuant to FAS 123R. FAS 123R
         requires us to determine the overall value of the options as
         of the date of grant based upon the Black Scholes method of valuation,
         and to then expense that value over the service period over which the
         options become exercisable (vest). As a general rule, for time in
         service based options, we will immediately expense any option
         or portion thereof which is vested upon grant, while expensing the
         balance on a pro rata basis over the remaining vesting term of the
         option.


                                       31


<PAGE>

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
--------------------------------------------

The following table summarizes the amount of our executive officers'
equity-based compensation outstanding at the fiscal year ended January 2, 2007.

<TABLE>
<S> <C>

                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
-----------------------------------------------------------------------------------------

                                             OPTIONS AWARDS
-----------------------------------------------------------------------------------------

                                                EQUITY INCENTIVE
                    NUMBER OF    NUMBER OF      PLAN AWARDS;
                    SECURITIES   SECURITIES     NUMBER OF
                    UNDERLYING   UNDERLYING     SECURITIES
                    UNEXERCISED  UNEXERCISED    UNDERLYING         OPTION     OPTION
                    OPTIONS      OPTIONS        UNEXERCISED        EXERCISE   EXPIRATION
NAME                EXERCISABLE  UNEXERCISABLE  UNEARNED OPTIONS   PRICE      DATE
------------------  -----------  -------------  ----------------  ----------  -----------
                         (#)          (#)             (#)            ($)

Nolan K. Bushnell      123,151        26,849             --         $2.64       7/16/14
                         6,804         3,196             --         $1.60      12/14/14
                         6,667         3,333             --         $1.38      12/29/14
                       106,393       393,607             --         $0.33       5/12/16

Peter F. Wilkniss       89,315       110,685             --         $0.43       8/27/15
                        86,210       113,790             --         $0.57       9/13/15


                                               STOCK AWARDS
                     -----------------------------------------------------------------
                                                                    EQUITY INCENTIVE
                                                 EQUITY INCENTIVE   PLAN AWARDS:
                                                 PLAN AWARDS:       MARKET OR
                     NUMBER OF     MARKET        NUMBER OF          PAYOUT VALUE OF
                     SHARES OR     VALUE OF      UNEARNED SHARES,   UNEARNED SHARES,
                     UNITS OF      SHARES OR     UNITS OR           UNITS, OR
                     STOCK THAT    UNITS THAT    OTHER RIGHTS       OTHER RIGHTS
                     HAVE NOT      HAVE NOT      THAT HAVE          THAT HAVE
NAME                 VESTED        VESTED        NOT VESTED         NOT VESTED
------------------   ------------  -----------   ----------------   ----------------
                          (#)         ($)              (#)               ($)

Nolan K. Bushnell            --      $     --             --                 --

Peter F. Wilkniss            --      $     --             --                 --

</TABLE>


AGGREGATED OPTION EXERCISES DURING 2006 AND FISCAL YEAR-END OPTION TABLE
------------------------------------------------------------------------

The following table summarizes information regarding stock options exercised by
the Named Executive Officers in 2006 and the value of unexercised "in-the-money"
options they held at January 2, 2007.
<TABLE>
                                                       Number of Securities
                                                          Underlying               Value of Unexercised
                                                      Unexercised Options          In-The-Money Options at
                                                      at January 2, 2007            at January 2, 2007 (3)
                                                   ---------------------------   ----------------------------
                            Shares of
                             Common
                             Stock
                            Acquired      Value
Name                       on Exercise   Realized   Exercisable   Unexercisable   Exercisable   Unexercisable
----                       -----------   --------   -----------   -------------   -----------   -------------
<S>                                                   <C>            <C>            <C>             <C>
Nolan K. Bushnell(1)           --          --         243,014        426,986        $220,489        $780,711
Peter F. Wilkniss(2)           --          --         175,525        224,475        $316,163        $403,837
</TABLE>


                                       32


<PAGE>

(1)      150,000 options were issued on July 15, 2004; 10,000 options were
         issued on December 16, 2004; 10,000 options were issued on December 31,
         2004; and 500,000 options were issued on May 12, 2006. All options vest
         pro-rata over 36 months with the initial one-sixth vesting after six
         months.

(2)      200,000 options were issued on August 29, 2005 and 200,000 options were
         issued on September 15, 2005. All options vest pro-rata over 36 months
         with the initial one-sixth vesting after six months.

(3)      In-the-money options represent unexercised options having a per-share
         exercise price below $2.30, the closing price of our common stock at
         December 29, 2006. The value of unexercised in-the-money options equals
         the number of in-the-money options multiplied by the excess of $2.30
         over the per-share exercise prices of the options. The value of
         unexercised in-the-money options at January 2, 2007, may never be
         realized by the option holders.

DIRECTOR COMPENSATION

We do not currently have any standard or annual arrangements regarding director
compensation. All directors receive reimbursement for out-of-pocket expenses in
attending board of directors meetings. We issued no options to our non-employee
directors in 2006.

EMPLOYMENT AND MATERIAL CONSULTING AGREEMENTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS

On March 3, 2006, we entered into an employment agreement with our Chairman and
Chief Executive Officer, Nolan Bushnell. Pursuant to the terms of Mr. Bushnell's
employment agreement, we will pay Mr. Bushnell an initial base salary of
$120,000. Mr. Bushnell will also be eligible to participate in a bonus program
to be established by the board of directors.

Pursuant to this agreement, on May 12, 2006, Mr. Bushnell was granted options to
purchase 500,000 shares of Company common stock at an exercise price of $0.33
per share. These options vest pro rata over a thirty-six month period, with the
initial one-sixth vesting after six months.

Mr. Bushnell's employment is at will. Mr. Bushnell's employment agreement may be
terminated by either party with or without cause at any time upon thirty (30)
days prior written notice. If the agreement is terminated by us without Cause or
by Mr. Bushnell for Good Reason, Mr. Bushnell will be entitled to receive a
severance payment equal to 12 months base salary, a pro rata portion of his
annual bonus, immediate vesting of all stock options, and payment of any COBRA
amount due for the provision of any and all health benefits provided to him and
his family immediately prior to his termination for a period of up to 18 months.

On August 29, 2005, we entered into an employment agreement with our Chief
Financial Officer, Peter Wilkniss. Pursuant to the terms of Mr. Wilkniss'
employment agreement, we will pay Mr. Wilkniss an initial base salary of
$150,000. Mr. Wilkniss will also be eligible for an annual bonus of up to 33% of
his base salary upon successfully achieving certain goals as specified by
Company management. Up to $50,000 of any annual bonus payable to Mr. Wilkniss
may be paid in shares of Company common stock in lieu of cash, at our option.

Mr. Wilkniss was granted options to purchase 200,000 shares of Company common
stock at an exercise price of $0.43 and options to purchase an additional
200,000 shares of Company common stock at an exercise price equal to the closing
price of our common stock on September 9, 2005, $0.57. These options vest pro
rata over a thirty-six month period, with the initial one-sixth vesting after
six months.

Mr. Wilkniss' employment is at will. Mr. Wilkniss' employment agreement may be
terminated by either party with or without cause at any time upon thirty (30)
days prior written notice. If the agreement is terminated by us without Cause or
by Mr. Wilkniss for Good Reason, Mr. Wilkniss will be entitled to receive a
severance payment equal to one month of base salary for every 2 months worked,
up to a maximum of 12 months' base salary, as well as a pro rata portion of the
annual bonus for the year of termination. A pro rata portion of stock options
for the year terminated shall also vest upon such termination.

On September 22, 2006, we entered into an employment agreement with John
Kaufman, our Director of Restaurant Operations. Previously, Mr. Kaufman had been
a consultant us.

Pursuant to the terms of Mr. Kaufman's employment agreement, we will pay Mr.
Kaufman an initial base salary of $120,000. Mr. Kaufman will also be eligible
for an annual bonus of up to 50% of his base salary upon successfully achieving
certain goals as specified by Company management. Up to $50,000 of any annual
bonus payable to Mr. Kaufman may be paid in shares of Company common stock in
lieu of cash, at our option.


                                       33


<PAGE>

Mr. Kaufman will be granted options to purchase 400,000 shares of Company common
stock at an exercise price of equal to the closing price of our common stock on
September 22, 2006. 50,000 of these options will vest in a lump sum after three
months. The remaining 350,000 options will vest over a thirty-six month period,
with the initial one-sixth vesting after six months.

Mr. Kaufman's employment is at will. Mr. Kaufman's employment agreement may be
terminated by either party with or without cause at any time upon thirty (30)
days prior written notice. If the agreement is terminated by us without Cause or
by Mr. Kaufman for Good Reason, Mr. Kaufman will be entitled to receive a
severance payment equal to one month of base salary for every 2 months worked,
up to a maximum of 12 months' base salary, as well as a pro rata portion of the
annual bonus for the year of termination. A pro rata portion of stock options
for the year terminated shall also vest upon such termination.

In each of the employment agreements described above, "Cause" is defined as (i)
an action or omission which constitutes a material breach of, or material
failure or refusal to perform his duties, (ii) fraud, embezzlement or
misappropriation of funds, or (iii) a conviction of any crime which involves
dishonesty or a breach of trust or involves us or our executives.

"Good Reason" is defined as (i) a reduction by us in the
executive's base salary to a rate less than the initial base salary rate; (ii) a
change in the eligibility requirements or performance criteria under any
employee benefit plan or incentive compensation arrangement under which the
executive is covered, and which materially adversely affects the executive;
(iii) our requiring the executive to be based anywhere other than our
headquarters or the relocation of our headquarters more than 20 miles from its
current location, except for required travel on our business; (iv) the
assignment to the executive of any duties or responsibilities which are
materially inconsistent with his status or position as a member of our executive
management group; or (v) the executive's good faith and reasonable
determination, after consultation with nationally-recognized counsel, that he is
being unduly pressured or required by our board of directors or a senior
executive to directly or indirectly engage in criminal activity.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, as consisting of sole or shared voting power (including the power to
vote or direct the vote) and/or sole or shared investment power (including the
power to dispose of or direct the disposition of) with respect of security
through any contract, arrangement, understanding, or relationship or otherwise,
subject to community property laws where applicable.

As of January 2, 2007, we had a total of 25,179,215 shares of common stock
issued and outstanding, which is the only issued and outstanding voting equity
security of the Company.

The following table sets forth, as of January 2, 2007; (a) the names of each
beneficial owner of more than five percent (5%) of our common stock known to us,
the number of shares of common stock beneficially owned by each such person, and
the percent of our common stock so owned; and (b) the names of each director,
executive officer and significant employee, the number of shares of common stock
beneficially owned and the percentage of our common stock so owned, by each such
person, and by all directors, executive officers and significant employees as a
group. Each person has sole voting and investment power with respect to the
shares of Common Stock, except as otherwise indicated.

NAME AND ADDRESS OF
BENEFICIAL OWNER*                       NUMBER OF SHARES      PERCENT OF CLASS
--------------------------------------------------------------------------------
Nolan Bushnell (1)(2)                      2,760,582                10.7%

Paul Dumais (1)(3)                           522,223                 2.1%

John Kaufman (1)(9)                          194,866                  **

Peter Wilkniss (1)(4)                        477,778                 1.9%

Kevin McLeod (1)(5)                        1,274,936                 5.0%

Tallac Corp.(6)(7)                         2,500,001                 9.6%

Bradley Rotter (1)(8)                      1,115,711                 4.4%

Bruce Kelly (1)                                   --                   **

All officers, directors
and significant employees as a group       6,346,096                23.4%
(7 persons)

--------------------------------


                                       34


<PAGE>

* Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership
includes any shares as to which a shareholder has sole or shared voting power or
investment power, and also any shares which the shareholder has the right to
acquire within 60 days, including upon exercise of options or warrants or other
convertible securities.

**Less than one percent

(1) Address is 16106 Hart Street, Van Nuys, California 91406.
(2) Includes 1,959,321 shares held by the Bushnell Living Trust, 177,434 shares
held by the Nolan K. Bushnell Insurance Trust, 200,936 shares issuable upon
exercise of warrants held by the Bushnell Living Trust, 249,722 shares issuable
upon exercise of stock options held by Mr. Bushnell, and 173,169 shares issuable
upon exercise of stock options held by Nancy Bushnell, wife of Mr. Bushnell.
(3)Includes 266,667 shares held by Mr. Dumais, 133,334 shares issuable upon
exercise of warrants held by Mr. Dumais, and 122,222 shares issuable upon
exercise of stock options held by Mr. Dumais.
(4) Includes 200,000 shares held by Mr. Wilkniss, 100,000 shares issuable upon
exercise of warrants held by Mr. Wilkniss, and 177,778 shares issuable upon
exercise of stock options held by Mr. Wilkniss.
(5) Includes 933,281 shares held by Mr. McLeod, 291,654 shares issuable upon
exercise of warrants held by Mr. McLeod, and 50,001 shares issuable upon
exercise of stock options held by Mr. McLeod.
(6) Address is 555 Montgomery St. #603, San Francisco, CA 94111.
(7) Includes 1,666,667 shares held by Tallac Corp. and 833,334 shares issuable
upon exercise of a warrant held Tallac Corp. There is no relationship between
Tallac Corp and/or John E. Lee and us other than as a shareholder.
(8) Includes 626,822 shares held by Mr. Rotter, 450,000 shares issuable upon
exercise of warrants held by Mr. Rotter, and 38,889 shares issuable upon
exercise of stock options held by Mr. Rotter.
(9) Includes 132,366 shares held by JSK Management, over which Mr. Kaufman has
voting and dispositive control, 41,667 shares held by Mr. Kaufman and 20,833
shares issuable upon exercise of warrants held by Mr. Kaufman.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. The
following provides information concerning compensation plans under which our
equity securities are authorized for issuance at January 2, 2007.


<TABLE>
<CAPTION>
                                                    (a) (b) (c)

                                                                                        Number of securities
                                                                                        remaining available
                                                                    Weighted-average    for future issuances
                                            Number of securities   exercise price of        under equity
                                             to be issued upon        outstanding        compensation plans
                                                exercise of        options, warrants   (excluding securities
                                            outstanding options,       and rights           reflected in
      Plan Category                         warrants and rights                             column (a))

<S>                                             <C>                      <C>               <C>
      Equity compensation plans approved            -0-                   -0-                   -0-
      by security holders

      Equity compensation plans not
      approved by security holders (1)          5,659,833(2)             $1.12               689,971
                                            ------------------      ----------------      -----------------
            Total                               5,659,833                $1.12               689,971
</TABLE>

(1)      In connection with our acquisition of uWink California, we assumed the
         uWink.com, Inc. 2000 Employee Stock Option Plan (the "2000 Plan") and
         584,917 options previously issued under the 2000 Plan. The 2000 Plan
         provides for the issuance of up to 681,218 (after giving effect to a
         3.15611 reverse stock split in connection with the uWink California
         acquisition) incentive and non-qualified stock options to our
         employees, officers, directors and consultants. Options granted under
         the 2000 Plan vest as determined by the board of directors, provided
         that any unexercised options will automatically terminate on the tenth
         anniversary of the date of grant. On June 24, 2004, we filed a
         registration statement of Form S-8 to register 584,917 of these shares.
         As of January 2, 2007, there are no shares available for issuance under
         this plan and there were 681,218 shares to be issued upon the exercise
         of options under this plan.


                                       35


<PAGE>

         In 2004, our Board of Directors approved the uWink, Inc. 2004 Stock
         Incentive Plan (the "2004 Plan"). The 2004 Plan provides for the
         issuance of up to 1,200,000 incentive stock options, non-qualified
         stock options, restricted stock awards and performance stock awards to
         our employees, officers, directors, and consultants. Awards granted
         under the 2004 Plan vest as determined by the Board of Directors,
         provided that no option or restricted stock award granted under the
         2004 Plan may be exercisable prior to six months from its date of grant
         and no option granted under the 2004 Plan may be exercisable after 10
         years from its date of grant. On June 24, 2004, we filed a registration
         statement of Form S-8 to register 1,200,000 of these shares. As of
         January 2, 2007, there are no shares available for issuance under this
         plan and there were 1,100,000 shares to be issued upon the exercise of
         options under this plan.

         In 2005, our Board of Directors approved the uWink, Inc. 2005 Stock
         Incentive Plan (the "2005 Plan"). The 2005 Plan provides for the
         issuance of up to 2,000,000 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. On June 19, 2006, we filed a registration
         statement of Form S-8 to register 2,000,000 of these shares. As of
         January 2, 2007, there are 1,486 shares available for issuance under
         this plan and there were 1,968,514 shares to be issued upon the
         exercise of options 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 provides for the
         issuance of up to 1,000,000 incentive stock options, non-qualified
         stock options, restricted and unrestricted stock awards and stock
         bonuses to employees, officers, directors, and consultants of the
         Company. On June 19, 2006, we filed a registration statement on Form
         S-8 to register 1,000,000 of these shares. On November, 14, 2006, the
         Company's Board of Directors approved an amendment to the 2006 Plan to
         increase the number of shares available under the plan by 1,500,000 to
         a total of 2,500,00 and on November 17, 2006 we amended the
         registration statement on Form S-8 to register these additional shares.
         As of January 2, 2007, there are 688,485 shares available for issuance
         under this plan and there were 950,000 shares to be issued upon the
         exercise of options under this plan.

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

         o        no option granted under the 2006 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 our stock 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.

(2)      Includes 960,101 of shares of common stock underlying warrants
         outstanding at January 2, 2007 issued to consultants for services
         provided to Company.

       During the calendar year 2006, we issued 861,515 shares in lieu of
payment for services rendered on Form S-8. None of these payments were in
connection with any fund raising activity.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; DIRECTOR INDEPENDENCE.

At various dates throughout 2004, S. Raymond Hibarger, Vice President of
Marketing, extended amounts under a promissory note totaling $243,139, to fund
the production of SNAP! units in China. Our indebtedness to Mr. Hibarger was
evidenced by a note bearing interest at 12% per annum and secured by all our
inventory and receivables.


                                       36


<PAGE>

In December 2004, Mr. Dennis Nino, the brother-in-law of our CEO, Nolan
Bushnell, loaned us $117,000 related to the manufacture of SNAP! units in China.
In consideration for the extension of this loan, we paid Mr. Nino an additional
$5,000 upon final payment of the note in 2005.

On April 19, 2005, Mr. Nino loaned us an additional $39,000 to be used for
operations. This loan, which accrued interest at 6% and was due upon demand, was
assigned by Mr. Nino to Nancy Bushnell, the wife of our CEO Nolan Bushnell, on
August 1, 2006, and was converted into common stock and warrants in connection
with our September 18, 2006 equity financing.

At various dates in 2004, Nancy Bushnell loaned us an aggregate $47,000 for our
operations. Our note evidencing this indebtedness accrued interest at 8% per
annum and was due on demand. $26,500 of this note was repaid in 2005. Ms.
Bushnell loaned us an additional $3,000 in January and February of 2006. This
indebtedness was converted into common stock and warrants in connection with our
September 18, 2006 equity financing.

At various dates in 2004 and 2005, Dan Lindquist, our Vice President of
Operations, loaned us an aggregate $60,500 to be used for operations. This
indebtedness, inclusive of accrued interest of 8% per annum thereon, was
converted into shares of our common stock and warrants in connection with our
September 18, 2006 equity financing.

On December 6, 2004, we issued a convertible note to Mr. Kevin McLeod, one of
our directors, in the amount of $50,000. The proceeds of this note were used to
fund operations. The note, which accrued interest at 20%, was converted at $0.30
per share into 200,000 shares of our common stock in December 2005. At the time
of conversion, the market price of our common stock was $0.30.

On July 25, 2005, Mr. McLeod was granted options to purchase 100,000 shares of
our common stock at $0.36 per share.

On November 11, 2005, Mr. Rotter was granted options to purchase 100,000 shares
of our common stock at $0.45 per share.

As described more fully in Description of Properties, 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. 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, us, Mr. Bushnell and Promenade LP 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.

Certain of our officers and directors, and family members of officers and
directors, participated in a private placement transaction we completed on March
3, 2006 on the same terms as the third party investors who participated in the
transaction. Peter Wilkniss, our Chief Financial Officer, invested $30,000 in
the transaction and received 100,000 shares of common stock and
immediately-exercisable, three-year warrants to purchase 50,000 shares of common
stock at an exercise price of $0.345 per share. Paul Dumais, our Chief
Technology Officer, invested $30,000 in the transaction and received 100,000
shares of common stock and immediately-exercisable, three-year warrants to
purchase 50,000 shares of common stock at an exercise price of $0.345 per share.
Kevin McLeod, a director, invested $100,000 in the transaction and received
333,333 shares of common stock and immediately-exercisable, three-year warrants
to purchase 166,667 shares of common stock at an exercise price of $0.345 per
share. Dennis Nino, the brother-in-law of our CEO, invested $75,000 in the
transaction and received 250,000 shares of common stock and
immediately-exercisable, three-year warrants to purchase 125,000 shares of
common stock at an exercise price of $0.345 per share. Robert Nino, the
brother-in-law of our CEO, invested $100,000 in the transaction and received
333,333 shares of common stock and immediately-exercisable, three-year warrants
to purchase 166,667 shares of common stock at an exercise price of $0.345 per
share. In addition, Tallac Corp. invested $500,000 in this transaction and
received 1,666,667 shares of common stock and immediately-exercisable,
three-year warrants to purchase 833,334 shares of common stock at an exercise
price of $0.345 per share; by virtue of this investment, Tallac Corp. became a
greater than 10% shareholder of the Company. There is no relationship between
the Company and Tallac Corp or John E. Lee other than as a shareholder.

At the time we entered into this transaction, the market price of our common
stock was $0.21, although the market price had fluctuated between $0.21 and
$0.30 in the three weeks prior to the consummation of the transaction, and the
exercise price of the warrants was at a 64% premium to the market price.


                                       37


<PAGE>

Certain of our officers and directors, and family members of officers and
directors, participated in a private placement transaction we completed on
September 18, 2006 on the same terms as the third party investors who
participated in the transaction. Peter Wilkniss, our Chief Financial Officer,
invested $30,000 in the transaction and received 100,000 shares of common stock
and immediately-exercisable, three-year warrants to purchase 50,000 shares of
common stock at an exercise price of $0.345 per share. Paul Dumais, our Chief
Technology Officer, invested $50,000 in the transaction and received 166,667
shares of common stock and immediately-exercisable, three-year warrants to
purchase 83,333 shares of common stock at an exercise price of $0.345 per share.
Kevin McLeod, a director, invested $45,000 in the transaction and received
150,000 shares of common stock and immediately-exercisable, three-year warrants
to purchase 75,000 shares of common stock at an exercise price of $0.345 per
share. Robert Nino, the brother-in-law of our CEO, invested $25,000 in the
transaction and received 83,333 shares of common stock and
immediately-exercisable, three-year warrants to purchase 41,667 shares of common
stock at an exercise price of $0.345 per share. Dan Lindquist, our Vice
President of Operations, invested $55,500 in the transaction and received
185,000 shares of common stock and immediately-exercisable, three-year warrants
to purchase 92,500 shares of common stock at an exercise price of $0.345 per
share. Bradley Rotter, a director, invested $150,000 in the transaction and
received 500,000 shares of common stock and immediately-exercisable, three-year
warrants to purchase 250,000 shares of common stock at an exercise price of
$0.345 per share. Brent Bushnell, the son of our CEO, invested $50,000 in the
transaction and received 166,667 shares of common stock and
immediately-exercisable, three-year warrants to purchase 83,333 shares of common
stock at an exercise price of $0.345 per share. Nancy Bushnell, the wife of our
CEO, as trustee for the Bushnell Living Trust, invested $50,000 in the
transaction and received 166,667 shares of common stock and
immediately-exercisable, three-year warrants to purchase 83,333 shares of common
stock at an exercise price of $0.345 per share. John Kaufman, our Director of
Restaurant Operations, invested $12,500 in the transaction and received 41,666
shares of common stock and immediately-exercisable, three-year warrants to
purchase 20,833 shares of common stock at an exercise price of $0.345 per share.
Jeffrey Tappan, the husband of our Vice President of User Experience, Alissa
Bushnell, invested $25,000 in the transaction and received 83,333 shares of
common stock and immediately-exercisable, three-year warrants to purchase 41,667
shares of common stock at an exercise price of $0.345 per share.

In connection with the private placement of our equity securities completed on
September 18, 2006, we converted $70,562 of debt and accrued interest due to
Nancy Bushnell, the wife of our CEO Nolan Bushnell, and $60,500 of debt due to
Dan Lindquist, our Vice President of Operations, on the same terms as the third
party investors who participated in the transaction. Ms. Bushnell received
235,207 shares of common stock and warrants to purchase 117,603 shares of common
stock at $0.345 per share, and Mr. Lindquist received 201,667 shares of common
stock and warrants to purchase 100,833 shares of common stock at $0.345 per
share.

At the time we initiated the September 18, 2006 private placement transaction
(and the related debt conversion) in the beginning of August 2006, the market
price of our common stock had consistently been below $0.30 per share since
March 2006, and had been as low as $0.21 per share, and continued in that range
until August 16, 2006. In the three weeks leading up to the September 8, 2006
closing of the first $804,000 of cash proceeds under this transaction and the
Bushnell and Lindquist debt conversions, as reported in our September 12, 2006
Form 8-K, the closing price of our stock rose from $0.27 to $0.55. On September
8, 2006, when Messrs. Wilkniss, Dumais, Rotter, Tappan and Lindquist became
committed to the transaction, and the Bushnell and Lindquist debt conversions
became committed, the $0.345 exercise price of the warrants was at a 37%
discount to the $0.55 closing price. On September 18, 2006, when we completed
the remainder of this transaction and when the Bushnells, and Messrs. Kaufman,
Nino and McLeod became committed to the transaction, the $0.345 exercise price
of the warrants was at a 70% discount to the $1.12 closing price.

On April 19, 2006, we entered into a letter agreement (the "April Rotter
Letter Agreement") with Bradley Rotter, a member of our board of directors,
pursuant to which we:

         1.       Repaid $100,000 of the principal amount of, together with
                  $10,356 of accrued interest on, a $200,000 10% note issued to
                  Mr. Rotter in October 2005;

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

                                       38


<PAGE>

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

The market price of our common stock on April 19, 2006, was $0.30. Consequently,
the exercise price of the warrants issued to Mr. Rotter on that date was at a
15% premium to the market price.

On October 25, 2006, we entered into a letter agreement (the "October Rotter
Letter Agreement") in respect of the 2006 Rotter Note pursuant to which:

         1.       Mr. Rotter agreed to convert the $100,000 principal amount and
                  $5,685 in accrued interest outstanding under the 2006 Rotter
                  Note into shares of common stock at a conversion price of $1
                  per share. Rather than repay the 2006 Rotter Note in cash, we
                  agreed with Mr. Rotter that he would be entitled to receive an
                  additional 20% upon conversion of the 2006 Rotter Note into
                  shares of our common stock. As a result, Mr. Rotter accepted
                  126,822 shares of our common stock, together with the warrants
                  set forth below, in full and final satisfaction of our
                  obligations under the 2006 Rotter Note.

         2.       In accordance with the terms of the 2006 Rotter Note, we also
                  issued to Mr. Rotter three-year immediately-exercisable
                  warrants to purchase 100,000 shares of common stock at an
                  exercise price of $0.345 per share.

At the time we converted the 2006 Rotter Note, the market price of our common
stock was $1.26. At the time we agreed to issue these warrants, the exercise
price was at 15% premium to the $0.30 market price. At the time we issued these
warrants, the exercise price was at a 73% discount to the $1.26 market price.

On April 2, 2007, we completed the sale of $857,000 of convertible promissory
notes to 19 accredited individual investors. The notes have a six month term,
accrue interest at 10% and are secured by the assets of the Company. Among those
participating in this transaction, were Peter Wilkniss, our Chief Financial
Officer, who invested $25,000 and Dennis Nino, the brother-in-law of our CEO,
who invested $50,000.


                                       39


<PAGE>

ITEM 13. EXHIBITS.

Index to Exhibits

<TABLE>
                                             EXHIBIT LIST

--------------------------------------------------------------------------------------------------------

 EXHIBIT
   NO.                                                        EXHIBIT METHOD OF FILING
 -------                                                      ------------------------
<S>        <C>                                             <C>
  2.1      Securities Purchase Agreement and Plan of       Incorporated by reference to our
           Reorganization among Prologue, uWink, Inc.      Current Report on Form 8-K filed December
           and the stockholders of uWink listed on the     18, 2003.
           signature pages thereto, dated as of November
           21, 2003.
  3.1      Restated Certificate of Incorporation.          Incorporated by reference to our
                                                           Quarterly Report on
                                                           Form 10-KSB for the
                                                           Year ended December
                                                           31, 2003.
  3.2      Restated Bylaws                                 Incorporated by reference to our
                                                           Annual Report on Form
                                                           10-QSB for the
                                                           Quarter ended June
                                                           30, 2004.
  4.1      Form of uWink, Inc. Warrant, dated March 3,     Incorporated by reference to our
           2006.                                           Current Report on Form 8-K filed on March 9,
                                                           2006.
  4.2      Form of uWink, Inc. Warrant, dated May 15,      Incorporated by reference to Exhibit 4.2 to
           2005.                                           our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
  4.3      Form of uWink, Inc. Warrant, dated 2004.        Incorporated by reference to Exhibit 4.3 to
                                                           our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
  4.4      Convertible Promissory Note, dated September    Incorporated by reference to Exhibit 4.4 to
           8, 2005.                                        our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
  4.5      Convertible Promissory Note, dated October      Incorporated by reference to Exhibit 4.5 to
           10, 2005.                                       our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
  4.6      Promissory Note in favor of S. Raymond and      Incorporated by reference to Exhibit 4.6 to
           Victoria Hibarger and related Financing         our Annual Report on Form 10-KSB
           Agreement, dated July 23, 2001,                 filed April 17, 2006.
           as amended as of February 15, 2006.
  4.7      Form of Convertible Promissory Note, dated      Incorporated by reference to Exhibit 4.7 to
           November 2004.                                  our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
  4.8      Line of Credit between the Company and Nancy    Incorporated by reference to Exhibit 4.8 to
           Bushnell dated December 23, 2004.               our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
  4.9      Line of Credit between the Company and Dan      Incorporated by reference to Exhibit 4.9 to
           Lindquist dated December 23, 2004.              our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
 4.10      Demand Note, dated August 10, 2005, in favor    Incorporated by reference to Exhibit 4.10 to
           of Dennis Nino.                                 our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
 4.11      Letter Agreement, dated April 19, 2006,         Incorporated by reference to our
           between the Company and Mr. Bradley Rotter.     Current Report on Form 8-K filed on April 19,
                                                           2006.
 4.12      Form of uWink, Inc. Warrant issued to Bradley   Incorporated by reference to our
           Rotter.                                         Current Report on Form 8-K filed on April 19,
                                                           2006.
 4.13      $100,000 Convertible Promissory Note, dated     Incorporated by reference to our
           April 19, 2006.                                 Current Report on Form 8-K filed on April 19,
                                                           2006.
 4.14      Form of uWink, Inc. Warrant, dated March 3,     Incorporated by reference to our
           2006.                                           Current Report on Form 8-K filed on March 9,
                                                           2006.
 4.15      Form of uWink, Inc. Warrant, dated September    Incorporated by reference to our
           2006.                                           Current Report on Form 8-K filed on September
                                                           11, 2006.
 4.16      Form of Waiver from March 2006 investors.       Incorporated by reference to Exhibit 4.16 to
                                                           Amendment No. 2 to our Registration
                                                           Statement on Form SB-2 filed on January 18, 2006.

                                       40


<PAGE>

 4.17      Form of Waiver from September 2006 investors.   Incorporated by reference to Exhibit 4.17 to
                                                           Amendment No. 2 to our Registration
                                                           Statement on Form SB-2 filed on January 18, 2006.
 4.18      Form of Convertible Promissory Note,            Incorporated by reference to our
           Dated March 2007.                               Current Report on Form 8-K filed on
                                                           April 2, 2007.
*10.1      2005 Stock Incentive Plan.                      Incorporated by reference to our
                                                           Current Report on
                                                           Form 8-K filed on
                                                           September 15, 2005.
*10.2      2004 Stock Incentive Plan.                      Incorporated by reference to Exhibit 10.2 to
                                                           our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
*10.3      2000 Stock Incentive Plan.                      Incorporated by reference to Exhibit 10.3 to
                                                           our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
*10.4      Amended and Restated 2006 Stock Incentive Plan. Incorporated by reference to Exhibit 4.1 to
                                                           our Registration Statement on Form S-8
                                                           filed November 17, 2006.
*10.5      Employment Agreement between the Company and    Incorporated by reference to our
           Nolan Bushnell.                                 Current Report on Form 8-K filed on March 9,
                                                           2006.
*10.6      Employment Agreement between the Company and    Incorporated by reference to Exhibit 10.1 to
           Peter Wilkniss.                                 our Current Report on Form 10-QSB
                                                           for the Quarter ended September 30, 2005 filed
                                                           on November 21, 2005.
*10.7      Employment Agreement between the Company and    Incorporated by reference to Exhibit 10.1 to
           John Kaufman.                                   our Current Report on Form 8-K filed
                                                           September 27, 2006.
 10.8      Lease Agreement between the Company and Patco   Incorporated by reference to Exhibit 10.7 to
           Properties, L.P., dated April 21, 2005.         our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
 10.9      Lease Agreement between Nolan Bushnell and      Incorporated by reference to Exhibit 10.8 to
           Promenade LP, dated February 3, 2006.           our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
 10.10     Assignment, Assumption and Consent Agreement    Incorporated by reference to Exhibit 10.9 to
           among Nolan Bushnell, the Company and           our Annual Report on Form 10-KSB
           Promenade LP, dated April 10, 2006.             filed April 17, 2006.
 10.11     Letter Agreement between the Company and        Incorporated by reference to Exhibit 10.10 to
           Nolan Bushnell, dated April 10, 2006.           our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
 10.12     Lease Termination Agreement, dated May 10,      Incorporated by reference to our Current
           2006, between the Company, Patco Properties     Report on Form 8- K filed on June 5, 2006.
           LP and Nolan Bushnell.
 10.13     Lease Agreement, dated May 22, 2006, between    Incorporated by reference to our Current
           the Company and Clyde C. Berkus.                Report on Form 8- K filed on June 5, 2006.
 10.14     Securities Purchase Agreement dated March 3,    Incorporated by reference to our
           2006 between uWink, Inc. and Investors.         Current Report on Form 8-K filed on March 9,
                                                           2006.
 10.15     Securities Purchase Agreement dated September   Incorporated by reference to our
           8, 2006 between uWink, Inc. and Investors.      Current Report on Form 8-K filed on September
                                                           11, 2006.
 10.16     Licensing and Distribution Agreement            Incorporated by reference to Exhibit 10.16 to
           Dated September 15, 2006 between uWink,Inc.     Amendment No. 1 to our Registration
           And SNAP Leisure LLC.                           Statement on Form SB-2 filed on December 8, 2006.
 10.17     License Agreement with Bell-Fruit Games.        Incorporated by reference to Exhibit 4.18 to
                                                           Amendment No. 2 to our Registration
                                                           Statement on Form SB-2 filed on January 18, 2006.
 10.18     Inventory Purchase Agreement with Interactive   Incorporated by reference to Exhibit 4.19 to
           Vending Corporation                             Amendment No. 3 to our Registration
                                                           Statement on Form
                                                           SB-2 filed on February 5, 2006.
 10.19     License Agreement with Interactive              Incorporated by reference to Exhibit 4.20 to
           Vending Corporation                             Amendment No. 3 to our Registration
                                                           Statement on Form
                                                           SB-2 filed on February 5, 2006.
 10.20     Non-Competition Agreement with Interactive      Incorporated by reference to Exhibit 4.21 to
           Vending Corporation                             Amendment No. 3 to our Registration
                                                           Statement on Form
                                                           SB-2 filed on February 5, 2006.
 14.1      Code of Ethics and Conduct.                     Incorporated by reference to Exhibit 14.1 to
                                                           our Annual Report on Form 10-KSB
                                                           filed April 17, 2006.
 16.1      Letter from Stonefield Josephson, Inc., dated   Incorporated by reference to our
           September 1, 2005.                              Current Report on Form 8-K filed September 9,
                                                           2005.


                                       41


<PAGE>

 21.1      Subsidiaries of the Company.                    Incorporated by reference to Exhibit 21.1 to
                                                           Amendment No. 3 to our Registration
                                                           Statement on Form SB-2 filed on February 5, 2006.
 23.1      Consent of Kabani & Company, Inc., Certified    Filed herewith.
           Public Accountants.
 31.1      Rule 13a-14(a)/15d-14(a) Certification of       Filed herewith.
           Chief Executive Officer.
 31.2      Rule 13a-14(a)/15d-14(a) Certification of       Filed herewith.
           Chief Financial Officer.
 32.1      Certification Pursuant to 18 U.S.C.ss.1350      Filed herewith.
           of Chief Executive Officer.
 32.2      Certification Pursuant to 18 U.S.C.ss.1350      Filed herewith.
           of Chief Financial Officer.

*Management contract or compensatory plan or arrangement.
</TABLE>


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Kabani & Company, Inc., is our independent auditor. Kabani & Company audited our
financial statements for the fiscal years ended January 2, 2007 and December 31,
2005 and reaudited our financial statements for the fiscal year ended December
31, 2004. Stonefield Josephson audited our financial statements for the fiscal
years ended December 31, 2004 and 2003 and. We replaced Stonefield Josephson
with Kabani & Company effective July 27, 2005 as reported by us on Form 8-K
dated July 28, 2005.

AUDIT AND NON-AUDIT FEES

Aggregate fees for professional services rendered to us by Kabani & Company for
our 2006 audit, our 2005 audit, the reaudit of 2004 and reviews of our
interim statements for the quarters ended March 31, 2006, June 30, 2006,
September 30, 2006, June 30, 3005 and September 30, 2005 were as follows:

Services Provided             2006        2005         2004
-----------------             ----        ----         ----
Audit Fees.............    $ 84,600     $  39,500    $  32,500 (reaudit of 2004)
Audit Related Fees.....    $ -          $  -         $  -
Tax Fees...............    $ -          $  -         $  -
All Other Fees.........    $ -          $  -         $  -
Total..................    $ 84,600     $  39,500    $  32,500

Aggregate fees for professional services rendered to us by Stonefield Josephson
for the audit of our financials statements for the fiscal year ended December
31, 2004 and reviews of our interim statements included in our quarterly reports
for 2004 and the quarter ended March 31, 2005 were as follows:

Services Provided                2005          2004
-----------------                ----          ----
Audit Fees.............       $ 19,877       $  81,032
Audit Related Fees.....       $ -            $  -
Tax Fees...............       $ -            $  -
All Other Fees.........       $ 1,740        $  10,893
Total..................       $ 21,617       $  91,872

AUDIT FEES. The aggregate fees billed for the years ended January 2, 2007,
December 31, 2005 and December 31, 2004 were for the audits of our financial
statements and reviews of our interim financial statements included in our
annual and quarterly reports.

AUDIT RELATED FEES. There were no fees billed for the years ended January 2,
2007, December 31, 2005 and December 31, 2004 for the audit or review of our
financial statement that are not reported under Audit Fees.

TAX FEES. There were no fees billed for the years ended January 2, 2007,
December 31, 2005 and December 31, 2004 for professional services by Kabani &
Company or Stonefield Josephson for tax compliance, tax advice and tax planning.

ALL OTHER FEES. Fees were billed for services related to the review of documents
prepared by us which incorporated the audited financial statements for the year
ended December 31, 2004 prepared by Stonefield Josephson.

PRE-APPROVAL POLICIES AND PROCEDURES. We have implemented pre-approval policies
and procedures related to the provision of audit and non-audit services. Under
these procedures, our board of directors pre-approves both the type of services
to be provided by our auditors and the estimated fees related to these services.
The percentage of services set forth in the table above that were approved by
our board of directors was 100%


                                       42


<PAGE>

                                   SIGNATURES

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

                                     uWINK, INC.

Dated April 2, 2007             By:  /s/ Nolan K. Bushnell
                                     ----------------------------------
                                     Nolan K. Bushnell
                                     President, Chief Executive Officer

In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the Company and in the capacities and on the
dates indicated.


Signatures                Title                                   Date
--------------------------------------------------------------------------------
/s/ Nolan K. Bushnell     President, Chief Executive Officer      April 2, 2007
-----------------------
Nolan K. Bushnell

/s/ Peter F. Wilkniss     Chief Financial Officer,
-----------------------   Chief Accounting Officer and Secretary  April 2, 2007
Peter F. Wilkniss

/s/ Bruce P. Kelly        Director                                April 2, 2007
-----------------------
Bruce P. Kelly

/s/ Bradley N. Rotter     Director                                April 2, 2007
-----------------------
Bradley N. Rotter

/s/ Kevin McLeod          Director                                April 2, 2007
-----------------------
Kevin McLeod


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