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 DECEMBER 31, 2003


[_]   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)


              5443 Beethoven Street, Los Angeles, California 90066
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


                                 (310) 827-6900
                           ---------------------------
                           (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 to be registered under Section 12(g) of the Act:

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

<PAGE>


         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 registrant was required to file such reports),
and (2) As 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  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference in Part III of this Form 10-KSB/A or any amendment to
this Form 10-KSB. [_ ]

      The  issuer's  revenue  for the fiscal  year ended  December  31, 2003 was
$242,076.

      The market value of the voting stock held by  non-affiliates of the issuer
as of March 31, 2004 was approximately $31,696,000.

      The number of shares of the common stock  outstanding as of March 31, 2004
was 8,841,880.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Not applicable.

Transitional Small Business Disclosure Format (check one)

                                 Yes [_] No [X]


<PAGE>


                                TABLE OF CONTENTS

                                     PART I

ITEM NUMBER AND CAPTION                                              PAGE NUMBER

ITEM 1.  DESCRIPTION OF BUSINESS.

ITEM 2.  DESCRIPTION OF PROPERTY.

ITEM 3.  LEGAL PROCEEDINGS.

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

                                     PART 2

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER
         MATTERS AND COMPANY PURCHASES OF EQUITY SECURITIES.

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

ITEM 7.  FINANCIAL STATEMENTS.

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

ITEM 8A. CONTROLS AND PROCEDURES

                                    PART III

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

ITEM 10. EXECUTIVE COMPENSATION

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.


<PAGE>
<PAGE>



                                     PART 1

ITEM 1.  DESCRIPTION OF BUSINESS

         Unless otherwise indicated,  all references to our company includes our
subsidiary, uWink California, Inc., a Delaware corporation.

BUSINESS DEVELOPMENT

         Our company was  organized  as a Utah  corporation  on October 14, 1982
under the name Prologue,  and was previously  engaged in the sales and marketing
business.  From 1994 until  December 4, 2003,  we had no operations or employees
and owned no real estate.

         On December 4, 2003,  we were the subject of a reverse  acquisition  by
uWink California, Inc., a Delaware corporation ("uWink California"), pursuant to
which we have  acquired  98.8% of the  outstanding  shares  of uWink  California
capital  stock in  exchange  for a  controlling  interest  in our common  stock.
Pursuant to a securities  purchase  agreement dated November 21, 2003, we issued
one (1) share of our common stock for every 3.15611  shares of uWink  California
capital stock transferred to us by each uWink California stockholder.  We expect
to acquire the  remaining  uWink  California  shares  outstanding  in subsequent
closings. In conjunction with the reverse acquisition,  Kevin R. Keating, Margie
L.  Blackwell  and Spencer I Browne  resigned as  directors  effective as of the
initial  closing and were  replaced by Nolan K.  Bushnell,  Peter J. Sprague and
Bruce P. Kelly as our directors. Following the close of the reverse acquisition,
we changed our corporate name from Prologue to uWink, Inc.

GENERAL

         We design,  develop and market entertainment  software for touch screen
video game terminals, amusement vending machines, and lottery and gaming kiosks.
For our video game terminals and amusement vending machines,  we also design and
develop the working  physical  prototypes for these products in preparation  for
contract  manufacturing.  We  derive  our  revenue  from  the  sale of our  game
terminals,  products  and  prizes  the  terminals  dispense,  licensing  fees on
software  sales,  and a  variety  of  network  services.  We focus  our  product
development  efforts  towards  entertainment  and gaming markets that are highly
responsive  to  innovation.  Our  hardware  systems  rely on  off-the-shelf  and
mass-produced electronic and mechanical components,  which for some products are
outsource-manufactured in China. We have an experienced product development team
with  diverse  skills,  which  allows us to  efficiently  develop  new  software
programs on a common  platform as well as perform the  majority of our  physical
prototyping in-house.

         Our  current  flagship   product,   Snap!(TM),    is   a   web-enabled,
network-capable, coin-operated touch-screen entertainment terminal that delivers
over 50 proprietary and customizable  short-form video games.  Approximately two
feet high by two feet wide,  Snap!(TM) is a  state-of-the-art  counter top kiosk
with 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!(TM)  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!(TM) video games
are all short-form  (less than five minutes in duration)  games of skill,  which
include  trivia,  sports  contests,   and  other  hand-eye  challenges.   Unlike
traditional  coin-operated  games,  Snap!(TM)  is also  Internet-enabled,  which
allows us to offer high value  network  services to our  customers,  such as the
ability to conduct  large-scale prized  tournaments,  automatic downloads of new
games and updates to existing  games,  and  continuous  tracking and analysis of
each terminal's performance. These features increase the popularity,  economics,
and income  potential  of our kiosks,  as well as the number of possible  venues
into which we can sell.  Snap!(TM) is our next  generation  product  originating
from the Eyecon(TM),  of which we sold approximately 1,500 units domestically in
the period 2000-2001.  Snap!(TM) is now being marketed globally.  We are selling
Snap!(TM) through direct marketing initiatives into vertical markets and through
established coin operated  industry  channels.  We have tiered pricing schedules
for our different sales channels and markets.

         Our most recently  completed  product,  "uWink's  Design'R  Bear", is a
vending machine that allows purchasers to design their own "toy bear" characters
with unique colors,  clothing,  and  accessories.  Design'R Bear offers a unique
packaging  solution  that allows the user to see the  stuffed  animal grow right
before his or her own eyes with the selected  clothes and accessories  delivered
at the same time.  Design'R  Bear 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.  Totally

                                       1
<PAGE>

unique in the market place as an interactive  product vending machine,  Design'R
Bear is  currently  being  tested  in  Southern  California  locations.  Typical
locations  for  Design'R  Bear include  traditional  amusement  venues,  such as
arcades and amusement parks, as well as shopping centers and supermarkets. While
we have not yet generated  any revenues  from  Design'R  Bear, we have begun the
marketing  of this  product on a global  level.  We plan to sell  Design'R  Bear
through  established  coin  operated  industry  channels as well as license  the
product to manufacturing and marketing partners in certain territories.

         Our gaming and lottery products are primarily developed for the markets
served by our strategic  partner,  Scientific Games (NASDAQ:  SGMS).  Scientific
Games has assisted us in the  development of our  intellectual  property in this
arena, by  contributing  $625,000 in equity and debt capital,  collectively,  in
addition  to paying us an  advance of  $125,000  on future  licensing  fees that
become  payable to us through the  development of certain  products.  Scientific
Games has a right of first negotiation and right of last refusal with respect to
the purchase of an  exclusive,  world-wide  license on any new product we create
for the lottery and gaming markets, which means products that operate on chance,
and not skill, including pari-mutuel wagering.

          Our short-form  video games,  which we currently sell in our Snap!(TM)
terminals,  are transferable to other hardware  applications.  While we have not
yet generated revenues from such additional applications,  we have completed and
licensed  three games to Mobilescope  for marketing into the cellular  telephone
market and are currently in the testing phase with such products.


         Our primary markets involve end users who play games and make "impulse"
purchases  of novelty  items in public  amusement  places,  as well as those who
gamble in regulated facilities.  Both Snap!(TM) and Design'R Bear products serve
the entertainment  amusement market, which in the United States is approximately
$6 billion. This market represents only a portion of our potential sales, as our
business  plan is to  include  the sale of such  products  internationally.  The
market for our gaming and lottery  products  is even  larger than the  amusement
market, with domestic instant ticket sales exceeding $14 billion and pari-mutuel
wagering totaling more than $20 billion.

         Some of  these  industry  segments  are  highly  competitive,  with new
technology and products being  constantly  introduced.  Those industry  segments
with large barriers to entry and long licensing and regulatory  approvals,  such
as lottery and gaming,  require us to license  technology as an OEM, rather than
supplying the product directly to distributors or to end users.

         Our business  plan  leverages  management's  collective  experience  in
industry  segments such as interactive  gaming,  software  development,  toy and
novelty items, and hardware design. We use our in-house  capabilities to rapidly
move our products from the development to testing  phases.  At the time in which
our  products  test  successfully,   we  source  the  appropriate  manufacturing
relationships and use our industry  contacts to develop our marketing  channels,
either directly or through  distributors.  Currently,  we are in a manufacturing
relationship  with a Chinese  manufacturer  for our Snap!(TM)  product.  We have
selected a U.S.  manufacturer  for our  Design'R  Bear  product to supply  early
demand  and an  additional  manufacturer  in China to supply  our  international
demand and supplement domestic demand.

OUR STRATEGY

         Our business strategy incorporates several key aspects that position us
with a competitive advantage in the marketplace:  a uniform software development
platform that allows us to develop and integrate  new products  efficiently  and
seamlessly;  contract  manufacturing  relationships that enable us to market our
products at a discount to our  competition  if  necessary;  a recurring  revenue
model for our  Snap!(TM)  and  Design'R  Bear  products;  global  sales reach ed
through our established  distribution  channels;  and the relatively inexpensive
innovation of new products.

         Over several years of operation,  we have invested substantial time and
capital into the construction of a uniform  development  platform.  We have used
this platform to develop over 50 short-form video games and several  interactive
kiosks. We now own extensive  software and hardware  components that can be used
in multiple  products,  thereby  reducing the cost of  development,  the time to
market,  and the  integration  of existing  software  into  additional  hardware
applications.

         We are able to market our products at a discount to our  competition as
a result of our access to low-cost manufacturing.  We use contract manufacturers
to provide maximum flexibility in capacity and cost containment.  We believe our
management's  experience in foreign product sourcing is a strategic advantage in
our markets.  The  manufacturing of our Snap!(TM) product in China, for example,
greatly significantly reduces labor, sourcing, and tooling costs.

                                       2
<PAGE>

         We have developed two of our leading  products,  Snap!(TM) and Design'R
Bear,  with  recurring  revenue  models.  For our  Snap!(TM)  product,  we offer
maintenance  packages  and network  services at  additional  cost to ensure that
machine earnings are kept at peak levels.  These include software upgrades,  new
game delivery,  large-scale  tournament play, and monitoring of terminal use and
performance.  Similarly,  for our Design'R Bear product, our customers will rely
upon us to update both their software and inventory  components,  as we expect a
continually  changing selection of merchandise to maximize the earning potential
of the machine.  We will generate  incremental  revenue on software upgrades and
the replacement of inventory.

         Our  management  team has extensive  experience in global sales and has
access to multiple  international  sales channels.  We believe our products have
proven  worldwide  appeal and that the cost of accessing these markets is modest
relative to the  potential for  additional  sales.  In addition,  as a result of
differing  business cycles, we are able to balance our risks more effectively by
selling to the international marketplace.

         Our  product  development  team has a broad  array of skill  sets  that
enables us to  innovate  new  products  relatively  inexpensively.  We have many
projects  that have been  identified  that can be  brought  to market  for under
$200,000 in direct engineering and tooling.  By keeping our development costs at
this level, we are in a position to attempt multiple unproven concepts in search
of a product "hit".

OUR PRODUCTS AND SERVICES

         We have developed  products for several  markets,  which possess either
proven or potential market appeal: Snap!(TM); Design'R Bear; and our lottery and
gaming products.

         Snap!(TM) is a web-enabled, network-capable, coin-operated touch-screen
entertainment  terminal  that  delivers  over 50  proprietary  and  customizable
short-form video games.  Approximately two feet high by two feet wide, Snap!(TM)
is  a   state-of-the-art   counter  top  kiosk  with  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!(TM) 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!(TM) video games are all short-form  (less
than five minutes in duration)  games of skill,  which  include  trivia,  sports
contests, and other hand-eye challenges. Unlike traditional coin-operated games,
Snap!(TM) is also Internet-enabled,  which allows us to offer high value network
services to our  customers,  such as the ability to conduct  large-scale  prized
tournaments, automatic downloads of new games and updates to existing games, and
continuous  tracking and analysis of each  terminal's  performance.  By offering
maintenance  packages  and network  services  at  additional  cost,  we ensure a
recurring  revenue  stream for the life of the  product.  Snap!(TM)  is our next
generation   product   originating  from  the  Eyecon(TM),   of  which  we  sold
approximately  1,500 units  domestically in the period 2000-2001.  Snap!(TM) was
introduced in the Pacific Rim in November 2003, with quantity shipments starting
in January 2004.  Snap!(TM) was  introduced in Europe in January 2004 and in the
United States in March 2004.  For the first  quarter of 2004, we have  generated
more than $300,000 in revenue from the sale of Snap!(TM) units.

         Design'R  Bear is a vending  machine that allows  purchasers  to design
their own "toy bear" characters with unique colors,  clothing,  and accessories.
Design'R Bear offers a unique packaging solution that allows the user to see the
stuffed  animal  grow  right  before  his or her own eyes.  Design'R  Bear 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  Design'R  Bear include
traditional  amusement  venues,  such as arcades and amusement parks, as well as
shopping centers and supermarkets. Design'R Bear was introduced to the market at
the Amusement Showcase  International  trade show in Las Vegas in March 2004 and
is currently being tested in Southern California  locations.  Design'R Bear also
promises a recurring revenue stream, as we will generate  incremental revenue on
software upgrades and the replacement of inventory.

         Our gaming and lottery products are primarily developed for the markets
served by our strategic  partner,  Scientific Games (NASDAQ:  SGMS).  Scientific
Games has assisted us in the  development of our  intellectual  property in this
arena, by  contributing  $625,000 in equity and debt capital,  collectively,  in
addition  to paying us an  advance of  $125,000  on future  licensing  fees that
become  payable to us through the  development of certain  products.  Scientific
Games has a right of first negotiation and right of last refusal with respect to
the purchase of an  exclusive,  world-wide  license on any new product we create

                                       3
<PAGE>

for the lottery and gaming markets, which means products that operate on chance,
and not skill, including pari-mutuel wagering.

MARKETING

         Our  marketing  efforts are global in nature and are largely  dependent
upon the product being marketed in a specific region.

         Snap!(TM) is now  being  marketed  and  distributed  globally.  We  are
selling Snap!(TM) through direct marketing initiatives into vertical markets and
through  established  coin  operated  industry  channels.  In January  2004,  we
attended  trade  shows  in  the  United  Kingdom  and  Germany  and  have  since
established  company  representation in Europe.  In all regions,  we have tiered
pricing schedules for our different sales channels and markets.  We bring market
awareness to this product through our existing  relationships,  presentations at
trade shows, our website, and traditional collateral material.

         Though  still  in its  early  stages,   we  have also  begun  marketing
Design'R  Bear  on a  global  level.  We plan to sell  Design'R  Bear  into  the
amusement market through  established coin operated industry channels,  although
we  believe  that  significant  opportunities  exist to license  the  product to
manufacturing and marketing partners in certain territories.

         Our marketing  efforts for our lottery and gaming  products are limited
to, and largely  dependent upon, the marketing  strategies of our  licensing/OEM
partners,  such  as  Scientific  Games.  We  will  continue  to  seek  strategic
partnerships   for   innovative   product   concepts  in  markets  we  feel  are
substantially underserved.

COMPETITION

         Our  markets  are  highly   competitive  and  are  penetrated  by  many
well-capitalized and established  companies.  Each of our products is faced with
separate competitive forces.

         For our Snap!(TM)  product,  competitors  include those  companies that
produce  and  sell  products  for the  multi-game  countertop  market.  In North
America,  there are three main  competitors:  (1) Merit  Industries,  located in
Pennsylvania,  is a market  leader in this  product  type and has a  significant
installed  base; (2) JVL,  located in Canada,  has been in the market for over 5
years and has a number of competitive  products;  and (3) Coastal Games, located
in New  Jersey,  while a  smaller  competitor  than  those  above,  has  notable
competitive products. In Europe, there are four main sources of competition: (1)
Photoplay GBH,  located in Austria,  has the largest market share in Europe and,
similar  to our model,  has well  designed  terminals,  a  networked  tournament
system, and a large promotional effort; (2) Merkur GBH, located in Germany,  two
years ago introduced  "Trendy",  a well designed terminal with a strong presence
in that  country;  (3) Leisure Link PLC,  located in the United  Kingdom,  is an
operator  with a large and  expensive  multi game  terminal  deployed  in modest
numbers in the UK; and (4) Tab,  located in Austria,  also makes  complete  game
units.  In the  Pacific  Rim,  there is  little  or no  domestic  production  of
competitive products,  although there is some export from the North American and
European companies listed above.

         For our Design'R Bear product,  there is no direct competition from any
global  region as far as  management  is aware.  It could be  considered to be a
direct replacement for "Crane Machines", which exist in large numbers worldwide.
It could also be considered an automatic equivalent to the "Build A Bear" stores
that have enjoyed significant success in shopping malls.

         In the  lottery  and  gaming  sector,  we are  aware of the few  market
participants  that  assume the  greatest  share of the market.  However,  we are
unaware of the companies  that serve the same function as uWink in its strategic
licensing/OEM partnership with Scientific Games.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

         We regard our  technology as  proprietary  and attempt to protect it by
relying  on  trademark,  service  mark,  copyright  and  trade  secret  laws and
restrictions on disclosure and transferring  title and other methods.  We are in
the  process of  trademarking  our  Snap!(TM)  product and are  pursuing  patent
protection for the Design'R Bear product.

         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.  We intend to pursue the registration of our service marks in the
United States and internationally,  and have applied for the registration in the
United States for the service mark "uWink." 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.

                                       5
<PAGE>

EMPLOYEES

         We  currently  employ  16  people  on a  full-time  basis.  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.

COMPANY LOCATION AND FACILITIES

         Our  executive  offices  are  located in Los  Angeles,  California  and
consist of 10,000 square feet of office space. We lease this space pursuant to a
lease  expiring  on 1/1/05 at the rate of  $10,000  per month.  We  believe  our
facility  has  sufficient  capacity  to satisfy  our needs into the  foreseeable
future.

OUR MANUFACTURING RELATIONSHIPS

         Our  Snap!(TM)  product is  currently  being  manufactured,
China.  With all of the  necessary  components  in place,  the  factory  has the
ability to produce a finished product within 14 days of a purchase order and has
a weekly capacity of more than 100 terminals.

         We have not yet  selected a sole  manufacturer  for our  Design'R  Bear
product.  Our first 100 units are being  produced  on a test basis in the United
States by a local  manufacturer.  Additionally we have secured a manufacturer in
China for large-scale production of this product.

ITEM  1A.  CAUTIONARY   STATEMENT  REGARDING  FUTURE  RESULTS,   FORWARD-LOOKING
INFORMATION AND CERTAIN IMPORTANT FACTORS

         We make written and oral  statements  from time to time  regarding  our
business and prospects, such as projections of future performance, statements of
management's plans and objectives, forecasts of market trends, and other matters
that are  forward-looking  statements  within the  meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the  Securities  Exchange Act of 1934.
Statements  containing the words or phrases "will likely  result," "are expected
to," "will continue," "is  anticipated,"  "estimates,"  "projects,"  "believes,"
"expects,"  "anticipates,"  "intends,"  "target," "goal," "plans,"  "objective,"
"should" or similar expressions identify forward-looking  statements,  which may
appear  in  documents,   reports,  filings  with  the  Securities  and  Exchange
Commission,  news releases,  written or oral  presentations  made by officers or
other  representatives  made by us to analysts,  stockholders,  investors,  news
organizations   and  others,   and   discussions   with   management  and  other
representatives of us. For such statements,  we claim the protection of the safe
harbor  for  forward-looking  statements  contained  in the  Private  Securities
Litigation Reform Act of 1995.

         Our  future  results,  including  results  related  to  forward-looking
statements,  involve a number of risks and  uncertainties.  No assurance  can be
given that the  results  reflected  in any  forward-looking  statements  will be
achieved.  Any forward-looking  statement made by or on behalf of us speaks only
as of the date on which such statement is made. Our  forward-looking  statements
are based  upon  assumptions  that are  sometimes  based upon  estimates,  data,
communications  and other  information from suppliers,  government  agencies and
other sources that may be subject to revision.  Except as required by law, we do
not  undertake  any  obligation  to  update  or  keep  current  either  (i)  any
forward-looking  statement to reflect events or circumstances  arising after the
date of such  statement,  or (ii) the  important  factors  that could  cause our
future results to differ materially from historical  results or trends,  results
anticipated  or planned by us, or which are  reflected  from time to time in any
forward-looking statement which may be made by or on behalf of us.

         In addition to other matters identified or described by us from time to
time in filings  with the SEC,  there are several  important  factors that could
cause our future results to differ materially from historical results or trends,
results anticipated or planned by us, or results that are reflected from time to
time in any  forward-looking  statement  that may be made by or on behalf of us.
Some of these important  factors,  but not  necessarily  all important  factors,
include the following:

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<PAGE>

         WE HAVE A HISTORY OF LOSSES,  EXPECT TO INCUR ADDITIONAL LOSSES AND MAY
NEVER ACHIEVE PROFITABILITY.  During our fiscal year ended December 31, 2003, we
generated only $242,076 of revenue and realized a net loss  $1,609,453.  We have
yet to  generate  profits  from  operations  and  consequently  we are unable to
predict with any certainty  whether our  operations  will become a  commercially
viable business. In order for us to become profitable,  we will need to generate
and sustain a significant  amount of revenue while  maintaining  reasonable cost
and expense levels.

         WE MAY REQUIRE ADDITIONAL CAPITAL IN ORDER TO MEET OUR PROJECTED DEMAND
FOR OUR PRODUCTS AND IF NECESSARY,  TO FINANCE FUTURE LOSSES FROM  OPERATIONS AS
WE ENDEAVOR TO BUILD REVENUE,  BUT WE DO NOT HAVE ANY COMMITMENTS TO OBTAIN SUCH
CAPITAL AND WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO OBTAIN ADEQUATE CAPITAL
AS AND WHEN  REQUIRED.  On March 22,  2004,  we  completed  a private  placement
offering from which we received net proceeds of $4,048,835.  We believe that our
working  capital as of the date of this report will be sufficient to satisfy our
current  level of operations  through the end of the current  fiscal year ending
December 31, 2004.  However, we believe that we will need at least an additional
$2 million of working  capital to fund the  projected  demand for our Snap!  and
Design'R  Bear  products  and,  if  necessary,  to finance  future  losses  from
operations  as we endeavor  to build  revenue  and reach a  profitable  level of
operations. We plan to obtain the additional working capital through the private
placement sale of our equity securities. However, as of the date of this report,
we have no  commitments  for the  sale of our  securities  nor can  there be any
assurance 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 continued growth will be materially adversely affected.

         WE DO NOT HAVE A SIGNIFICANT  OPERATING HISTORY AND, AS A RESULT, THERE
IS A  LIMITED  AMOUNT  OF  INFORMATION  ABOUT US ON WHICH TO MAKE AN  INVESTMENT
DECISION. We have been in the business of designing,  developing,  and marketing
entertainment   software  and  touch  screen  pay-for-play  game  terminals  and
electronic gaming kiosks for public locations since 1999.  However,  we have not
derived  a  significant  amount  of  revenue  from  these  activities  and these
activities remain a relatively new pursuit for us. Accordingly,  there is little
operating history upon which to judge our current operations.

         IF OUR  PRODUCTS  ARE  NOT  ACCEPTED  IN  THE  COMPETITIVE  MARKET  FOR
ENTERTAINMENT SOFTWARE AND PRODUCTS, WE MAY BE UNABLE TO COMPETE. Our success as
a  entertainment  software and  products  supplier is  dependent  upon  numerous
factors,  including our ability to design,  manufacture,  market and service our
software  and products  that  achieves  customer  acceptance  while  maintaining
product quality and acceptable  margins.  If our software or products fail to be
accepted by the  entertainment  software and product market and we are otherwise
unable to develop software and products that offer technological  advantages, we
will be unable to  generate  the  revenues  necessary  to  compete  effectively.
Consequently, the results of our operations could suffer.

         THE MARKET FOR OUR STOCK IS LIMITED.  Our common stock is traded on the
OTC Bulletin Board under the symbol "UWNK." On March 31, 2004, the last reported
sale price of our common  stock on the OTC  Bulletin  Board was $4.99 per share.
However,  we  consider  our  common  stock to be  "thinly  traded"  and any last
reported  sale  prices may not be a true  market-based  valuation  of the common
stock. There can be no assurance that an active market for our common stock will
develop. In addition,  the stock market in general,  and technology companies in
particular,  have experienced  extreme price and volume  fluctuations  that have
often been unrelated or  disproportionate  to the operating  performance of such
companies

ITEM 2.  DESCRIPTION OF PROPERTIES

         Our executive  offices consist of 10,000 square feet and are located at
5443 Beethoven Street,  Los Angeles,  California 90066. We rent these facilities
at a monthly rate of $10,000 per month,  including property taxes, insurance and
maintenance.  Our lease  expires on December 31, 2004.  In the event that we are
unable or choose not to renew our lease,  we believe there is an adequate supply
of lease space available at comparable rates.

ITEM 3.  LEGAL PROCEEDINGS

         We are not a party in any  litigation  and we have no  knowledge of any
pending  legal  proceedings  in any court or agency of  government or government
authority.

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

         Effective   December  5,  2003,  our  board  of  directors  approved  a
resolution  authorizing us to seek shareholder approval to amend to our articles
of  incorporation.  Effective  January 5, 2004, the holders of a majority of the
outstanding  shares of our common  stock  entitled  to vote  thereon  executed a
written consent in accordance with Section 16-10a-704 of the General Corporation

                                       6
<PAGE>

Law of the State of Utah  approving and adopting an amendment to our articles of
incorporation regarding: (i) the change of our corporate name from "Prologue" to
"uWink,  Inc.;" (ii) the  authorization  of 5,000,000 shares of preferred stock,
whereby our board of directors is authorized to establish,  from the  authorized
shares of preferred stock, one or more classes or series of shares, to designate
each such class and series,  and to fix the rights and  preferences of each such
class and series,  and (iii) the  deletion  from our  articles of  incorporation
Article XII in its entirety  regarding  mandatory  indemnification of directors,
officers and employees.  This amendment to our articles of incorporation  became
effective on January 28, 2004.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is listed on the OTC  Bulletin  Board under the symbol
"UWNK." The  following  table sets forth the high and low closing  prices of our
common  stock  for each  calendar  quarter  of 2002 and 2003.  These  quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent  actual  transactions.  The table also gives effect to a 1 for
200 reverse  split which became  effective as of November 13, 2003.  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, 2002                   $0.02                    $0.01
         June 30, 2002                    $0.02                    $0.01
         September 30, 2002               $0.02                    $0.01
         December 31, 2002                $0.02                    $0.01



         Quarter Ended                      High                      Low

         March 31, 2003                    $0.01                    $0.01
         June 30, 2003                     $0.02                    $0.01
         September 30, 2003                $0.05                    $0.02
         December 31, 2003                 $8.00                    $0.03

         As of March 31, 2004,  there were  approximately  611 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.

                                       7

<PAGE>



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

<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         584,917                $0.86                  -0-
      approved by security holders (1)

            Total                                 584,917                $0.86                  -0-
</TABLE>

(1) In connection with our acquisition of uWink  California on December 4, 2003,
we agreed to assume certain options previously issued by uWink California to its
employees  as  part of our  acquisition  of  uWink  California.  The  securities
reported in the table above  reflect this  assumption  as we had no other equity
compensation plans during the fiscal year ended December 31, 2003.

         RECENT SALES OF UNREGISTERED  SECURITIES.  During the fiscal year ended
December  31,  2003,  we  sold  unregistered  shares  of our  securities  in the
following transactions:

         On November 14, 2003, our board of directors authorized the issuance of
an aggregate of 429,193 shares of our common stock in  consideration of services
rendered to us in connection with our acquisition of uWink California. Our board
of directors  also  authorized the issuance of 30,000 shares of our common stock
to Keating Reverse Merger Fund, LLC, for an aggregate  purchase price of $45,000
($1.50 per share).  These  offerings  were made only to  "accredited  investors"
pursuant to the  exemption  from  registration  provided by Section  4(2) of the
Securities Act of 1933 (the "Securities Act") and Rule 506 of Regulation D.

         On November 19, 2003,  our board of directors  approved the  Securities
Purchase  Agreement  and Plan of  Reorganization  whereby we agreed to issue one
share of our common stock to each uWink California stockholder for every 3.15611
shares of uWink California  common stock  transferred to us by such stockholder.
As of December 31, 2003, we had authorized  the issuance of 5,879,454  shares of
our common stock to the former uWink California stockholders.  This offering was
made pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

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

         The following  discussion of our consolidated  financial  condition and
results  of  operations  should  be read in  conjunction  with our  consolidated
financial statements and their explanatory notes included as part of this Annual
Report on Form 10-KSB.

OVERVIEW

         We design,  develop and market entertainment  software for touch screen
video game terminals, amusement vending machines, and lottery and gaming kiosks.
For our video game  terminals and  amusement  vending  machines,  we develop the
software  and  hardware   prototypes   internally,   and  we  rely  on  contract
manufacturers overseas to build the units delivered to our customers.  We derive
our  revenue  from the sale of our game  terminals,  licensing  fees on software
sales, and a variety of network services.

                                       8
<PAGE>

         We were incorporated under the laws of the State of Utah on October 14,
1982. Prior to the reverse  acquisition  described below, our corporate name was
Prologue.  For the last three years, 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, California
Inc., a Delaware corporation ("uWink California") and its stockholders, Prologue
acquired  98.8% of the  issued  and  outstanding  shares  of uWink  California's
capital  stock.  We expect to acquire  the  remaining  uWink  California  shares
outstanding in subsequent closings.  Prologue issued one (1) share of its common
stock for every 3.15611  shares of uWink  California  capital  stock.  Since the
stockholders of uWink California  acquired  approximately  84% of the issued and
outstanding  shares of Prologue  and the uWink  California  management  team and
board of  directors  became  the  management  team and  board  of  directors  of
Prologue,  according to FASB Statement No. 141 - "Business  Combinations,"  this
acquisition has been treated as a recapitalization for accounting purposes, in a
manner  similar  to  reverse  acquisition  accounting.  In  accounting  for this
transaction:

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

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

     As a result of the  transaction  described  above we changed  our name from
Prologue to uWink, Inc. uWink California was incorporated  under the laws of the
State of Delaware on June 10, 1999.

BASIS OF PRESENTATION

         The accompanying consolidated financial statements,  included elsewhere
in this Annual  Report on Form 10-KSB,  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
$1,609,453  for the year ended December 31, 2003 and as of December 31, 2003, we
had a working  capital  deficiency of $55,145.  In addition,  as of December 31,
2003, we had not developed a substantial source of revenue.

         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

         Net sales for the year ended  December  31, 2003  decreased  by $73,291
(23.2%) from  $315,367 for the year ended  December 31, 2002 to $242,076 for the
year ended  December 31,  2003.  We derive our revenue from the sale of our game
terminals,  licensing fees and network services. The decrease in revenue was due
to a substantial reduction in sales and marketing efforts in 2003 resulting from
limited working capital during that period.

         Cost of  sales  for the year  ended  December  31,  2003  decreased  by
$188,958  (73.4%) from $257,362 for the year ended  December 31, 2002 to $68,404
for the year ended  December 31,  2003.  The decrease in cost of sales is due to
the decrease in sales and a reduction in marketing  expenditures  resulting from
limited capital reserves during that period.

          Our gross profit  percentage was 18.4% for the year ended December 31,
2002  compared to 71.7% for the year ended  December 31, 2003.  The  significant
increase in the gross profit  percentage  was due to a significant  proportional
increase in licensing  revenue,  which was  characterized  by far lesser cost of
goods sold.

         Selling,  general  and  administrative  expenses  for  the  year  ended
December 31, 2003  decreased by $912,466  (38.8%) from  $2,350,647  for the year
ended  December 31, 2002 to $1,438,181 for the year ended December 31, 2003. The
decrease was due to a significant reduction in personnel and sales and marketing
efforts in 2003 resulting from limited working capital during that period.

                                       9
<PAGE>

         Research and  development  expense for the year ended December 31, 2003
decreased by $240,818 (46.0%) from $523,051 for the year ended December 31, 2002
to $282,233  for the year ended  December  31,  2003.  The decrease was due to a
significant reduction in research and development efforts in 2003 resulting from
limited working capital during that period.

         Gain on the  settlement  of debt for the year ended  December  31, 2003
increased by $141,253 (100.0%) from $nil for the year ended December 31, 2002 to
$141,253 for the year ended  December 31, 2003.  In 2003, we were able to settle
certain  obligation  with old vendors  for amount  less than we were  originally
charged for the product or services.

         Amortization  of debt  discounts  for the year ended  December 31, 2003
decreased by $444,294 (84.9%) from $523,186 for the year ended December 31, 2002
to $78,892 for the year ended  December 31, 2003. In 2002 we issued  $550,000 of
bridge loans that included  detachable warrants to purchase shares of our common
stock  and also a  conversion  feature.  The debt  discounts  of  $523,186  were
amortized  to expense  over the six month term of the bridge  loans.  In 2003 we
issued a  convertible  note  payable in the  amount of  $125,000  that  included
detachable warrants to purchase shares of our common stock and also a conversion
feature.  The debt discounts of $124,998 are being amortized to expense over the
twelve month term of the note.

         Interest  expense for the year ended  December  31, 2003  decreased  by
$136,786  (52.2%) from $262,144 for the year ended December 31, 2002 to $125,358
for the year ended  December 31, 2003.  The decrease is due to the conversion of
bridge loans and related party debt to equity during 2003.

LIQUIDITY AND CAPITAL RESOURCES

         During the third and fourth  quarters of 2003 we raised  $3,227,756  in
gross proceeds from the sale of 1,613,884 shares of our common stock. Subsequent
to December 2003, we raised an additional  $1,426,050 in gross proceeds from the
sale of 713,025 shares of its common stock. We have used the net proceeds (after
commissions  and  professional  costs  related to the merger) of the offering to
restructure and improve its balance sheet,  pay off certain accounts payable and
accrued  liabilities,  purchase game terminal inventory and for working capital.
Our cash position after these  transactions  at December 31, 2003 was $1,156,170
million. At March 31, 2004 our cash position was approximately $ 1,200,000.

         During  the  fourth  quarter  of 2003 we also  converted  $ 862,179  of
accrued  payroll and related  benefits into 365,107  shares of our common stock.
Subsequent to December  2003, we have also  converted an additional  $108,710 of
accrued payroll and related benefits into 48,584 shares of common stock.

         We believe that our working  capital as of the date of this report will
be sufficient  to fund our current  level of  operations  through the end of the
current fiscal year ending December 31, 2004.  However,  we believe that we will
need at least an additional $2 million of working  capital to fund the projected
demand for our Snap!  and Design'R Bear  products and, if necessary,  to finance
future  losses  from  operations  as we  endeavor  to build  revenue and reach a
profitable level of operations. We plan to obtain the additional working capital
through the private placement sale of our equity securities.  However, as of the
date of this report,  we have no commitments  for the sale of our securities nor
can there be any  assurance  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  continued  growth  will be  materially  adversely
affected.

SOURCES OF CASH

         Since  January 1, 2002,  we have  principally  financed our  operations
through a combination of (1) the issuance of eight (8) bridge loans  ($550,000);
(2) the issuance of a convertible  promissory note ($125,000);  (3) the issuance
of 316,846  shares of our common stock at $1.58 per share in a private  offering
(gross proceeds of $500,000 net of offering costs of $37,500);  (4) the issuance
of 1,613,884 shares of our common stock at $2.00 per share in private  placement
offerings (gross proceeds of $3,227,756 net of offering costs of $417,502);  (5)
the  issuance  of  193,276  shares of our  common  stock for  services  rendered
($305,000);  and (6) the  conversion of $73,341 of accounts  payable into 30,984
shares of our common stock and the conversion of accrued  payroll of $862,179 to
365,107  shares of our common stock.  Subsequent  to December  2003, we has also
converted an additional  $108,710 of accrued  payroll and related  benefits into
48,584 shares of our common stock.

CASH POSITION AND SOURCES AND USES OF CASH

         Our cash and cash  equivalents  position  as of  December  31, 2003 was
$1,156,170.

                                       10
<PAGE>

         During the year ended December 31, 2003, we used  $2,085,754 in cash in
our operating  activities,  as compared to $449,692 for the year ended  December
31,  2002.  The  significant  change  in the  use of  cash  from  our  operating
activities  is due to the  infusion  of cash from the sale of our  common  stock
which allowed us to pay past due payables and accrued liabilities.

         During the year ended  December 31, 2003,  we used  $107,278 in cash in
investing  activities,  as compared to $33,510 for the year ended  December  31,
2002.

         During the year ended  December  31,  2003,  our  financing  activities
provided cash in the amount of $3,342,754,  as compared to $489,650 for the year
ended  December 31,  2002.  The  significant  increase is due to the sale of our
common stock in private placement offerings in 2003.

         Subsequent to December 31, 2003, we sold an additional  713,025  shares
of our common stock through a private  placement  offering for gross proceeds of
$1,426,050 and converted an additional  $108,710 of accrued  payroll into 48,584
shares of common stock.


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,  impairment of long-lived assets and intangible,
and value of our stock and  options/warrants  issued for  services.  We base our
estimates on  historical  experience  and on various other  assumptions  that we
believe to be reasonable under the circumstances,  the results of which form the
basis for making  judgments  about the carrying value of assets and  liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different  assumptions or conditions;  however, we believe
that  our  estimates,   including  those  for  the  above-described  items,  are
reasonable.

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

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.

<TABLE>
<CAPTION>
ITEM 7.  FINANCIAL STATEMENTS

<S>                                                                                                               <C>
Independent Auditors' Report....................................................................................F-1
Consolidated Balance Sheet as of December 31, 2003..............................................................F-2
Consolidated Statements of Operations for the years ended December 31, 2003 and 2002............................F-3
Consolidated Statements of Stockholders' Equity for the years ended
  December 31, 2003 and 2002....................................................................................F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2003 and 2002............................F-6
Notes to Consolidated Financial Statements .....................................................................F-7
</TABLE>




                                       11

<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
<S>                                                                                            <C>
INDEPENDENT AUDITORS' REPORT:
     Report on Audited Financial Statements                                                     F-1

FINANCIAL STATEMENTS:
      Consolidated Balance Sheet as of December 31, 2003                                        F-2
      Consolidated Statements of Operations for the years ended December 31, 2003 and 2002      F-3
      Consolidated Statement of Stockholders' Equity for the years ended
          December 31, 2003 and 2002                                                            F-4
      Consolidated Statements of Cash Flows for the years ended December 31, 2003 and 2002      F-5
     Notes to Consolidated Financial Statements                                                 F-7
</TABLE>


<PAGE>


                          INDEPENDENT AUDITORS' REPORT

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 December 31, 2003, and the related  consolidated  statements of
operations, stockholders' equity and cash flows for each of the two year periods
then ended.  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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  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 consolidated financial position of uWink,
Inc. and  subsidiary as of December 31, 2003,  and the  consolidated  results of
their  operations  and their  consolidated  cash  flows for each of the two year
periods then ended, in conformity with accounting  principles generally accepted
in the United States of America.

The  accompanying  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,  has a working  capital  deficit and has not  developed a substantial
source of revenue.  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  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.


/s/ Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS

Santa Monica, California
April 7, 2004


                                      F-1
<PAGE>

                           UWINK, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                               December
                                                                               31, 2003
                                                                             ------------
<S>                                                                          <C>
       ASSETS

CURRENT ASSETS
      Cash and cash equivalents                                              $  1,156,170
      Account receivable, net of allowance for doubtful accounts of $0            132,157
      Inventory, net                                                              179,136
      Deposits and other current assets                                            41,530
                                                                             ------------
TOTAL CURRENT ASSETS                                                            1,508,993

PROPERTY AND EQUIPMENT, net                                                       134,332
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net of
      accumulated amortization of $733,835                                         46,777
                                                                             ------------
TOTAL ASSETS                                                                 $  1,690,102
                                                                             ============

               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts payable                                                       $    796,807
      Accrued expenses                                                             68,615
      Accrued payroll and related benefits                                        252,688
      Unearned revenue                                                            159,722
      Due to related parties                                                       57,412
      Convertible note payable, net of discount of $46,106                         78,894
      Bridge loan payable                                                         150,000
                                                                             ------------
TOTAL CURRENT LIABILITIES                                                       1,564,138
                                                                             ------------

COMMITMENT AND CONTINGENCIES (Note 10)                                                 --

STOCKHOLDERS' EQUITY
      Common stock, $0.001 par value; 50,000,000 shares
         authorized; 8,444,049 shares issued and outstanding                        8,444
      Additional paid-in capital                                               16,888,831
      Accumulated deficit                                                     (16,771,311)
                                                                             ------------
TOTAL STOCKHOLDERS' EQUITY                                                        125,964
                                                                             ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $  1,690,102
                                                                             ============
</TABLE>

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

                                      F-2
<PAGE>

                           UWINK, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  Years Ended
                                                         ------------------------------
                                                          December           December
                                                          31, 2003           31, 2002
                                                         -----------        -----------
<S>                                                      <C>                <C>
NET SALES                                                $   242,076        $   315,367

COST OF SALES                                                 68,404            257,362
                                                         -----------        -----------
GROSS PROFIT                                                 173,672             58,005
                                                         -----------        -----------

OPERATING EXPENSES
      Selling, general and administrative expenses         1,438,181          2,350,647
      Research and development                               282,233            523,051
                                                         -----------        -----------

TOTAL OPERATING EXPENSES                                   1,720,414          2,873,698
                                                         -----------        -----------

LOSS FROM OPERATIONS                                      (1,546,742)        (2,815,693)
                                                         -----------        -----------

OTHER INCOME (EXPENSE)
      Interest income                                            286              1,213
      Gain on settlement of debt                             141,253                 --
      Amortization of debt discounts                         (78,892)          (523,186)
      Interest expense                                      (125,358)          (262,144)
                                                         -----------        -----------

TOTAL OTHER INCOME (EXPENSE)                                 (62,711)          (784,117)
                                                         -----------        -----------

LOSS BEFORE PROVISION FOR INCOME TAXES                    (1,609,453)        (3,599,810)

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

NET LOSS                                                  (1,609,453)        (3,599,810)

AMORTIZATION OF PREFERRED STOCK DISCOUNTS                   (199,768)          (138,358)
                                                         -----------        -----------
NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS               $(1,809,221)       $(3,738,168)
                                                         ===========        ===========

NET LOSS PER COMMON SHARE - BASIC AND DILUTED            $     (0.49)       $     (1.49)
                                                         ===========        ===========

WEIGHTED AVERAGE COMMON SHARES
      OUTSTANDING - BASIC AND DILUTED                      3,679,222          2,501,871
                                                         ===========        ===========
</TABLE>

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

                                   F-3

<PAGE>

                           UWINK, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                   PREFERRED STOCK               PREFERRED STOCK
                                                      SERIES A                      SERIES B                    COMMON STOCK
                                              SHARES            AMOUNT       SHARES           AMOUNT      SHARES           AMOUNT
                                         ------------------------------------------------------------------------------------------
<S>                                      <C>                  <C>        <C>            <C>           <C>              <C>
BALANCE, DECEMBER 31, 2001                   2,950,000            295      2,131,395            213      2,434,484          2,435

Issuance of common stock for
      accounts payable                                                                                      30,984             31

Issuance of common stock for services                                                                      193,276            193

Value of warrants issued for services

Issuance of warrants attached
      to bridge loans

Beneficial conversion feature
      related to bridge loans

Amortization of discount on
      preferred stock

Value of options issued at below
      market price

Net loss
                                         ------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2002                   2,950,000   $        295      2,131,395   $        213      2,658,744          2,659

Issuance of common stock for
      conversion of bridge loans and
      related accrued interest                                                                             789,938            790

Issuance of common stock for conversion
      of related party debt                                                                                380,215            380

Issuance of common stock for cash, net                                                                   1,930,730          1,931

Issuance of common stock to employees
     for accrued payroll                                                                                   365,107            365

Issuance of warrants attached to
      convertible note

Beneficial conversion feature related
      to convertible note

Amortization of discount on
      preferred stock

Value of options issued at below
      market price

Conversion of Series A and B preferred
      stock into common stock               (2,950,000)          (295)    (2,131,395)          (213)     1,610,122          1,610

Issuance of common stock in connection
      with merger of Prologue                                                                              709,193            709

Net loss
                                         ------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2003                               $         --             --   $         --      8,444,049          8,444
                                         ==========================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                            ADDITIONAL
                                              PAID-IN      ACCUMULATED
                                              CAPITAL        DEFICIT          TOTAL
                                         ----------------------------------------------
<S>                                      <C>              <C>              <C>
BALANCE, DECEMBER 31, 2001                   8,804,860     (11,223,922)     (2,416,119)

Issuance of common stock for
      accounts payable                          73,310                          73,341

Issuance of common stock for services          304,807                         305,000

Value of warrants issued for services           91,429                          91,429

Issuance of warrants attached
      to bridge loans                          261,593                         261,593

Beneficial conversion feature
      related to bridge loans                  261,593                         261,593

Amortization of discount on
      preferred stock                          138,358        (138,358)             --

Value of options issued at below
      market price                              46,027                          46,027

Net loss                                                    (3,599,810)     (3,599,810)
                                         ----------------------------------------------

BALANCE, DECEMBER 31, 2002                 $  9,981,977    $(14,962,090)  $ (4,976,946)

Issuance of common stock for
      conversion of bridge loans and
      related accrued interest               1,659,059                       1,659,849

Issuance of common stock for conversion
      of related party debt                    599,620                         600,000

Issuance of common stock for cash, net       3,270,823                       3,272,754

Issuance of common stock to employees
     for accrued payroll                       861,814                         862,179

Issuance of warrants attached to
      convertible note                          62,499                          62,499

Beneficial conversion feature related
      to convertible note                       62,499                          62,499

Amortization of discount on
      preferred stock                          199,768        (199,768)             --

Value of options issued at below
      market price                             193,333                         193,333

Conversion of Series A and B preferred
      stock into common stock                   (1,102)                             --

Issuance of common stock in connection
      with merger of Prologue                   (1,459)                           (750)

Net loss                                            --      (1,609,453)     (1,609,453)
                                         ----------------------------------------------

BALANCE, DECEMBER 31, 2003                $ 16,888,831    $(16,771,311)   $    125,964
                                         ==============================================
</TABLE>

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

                                      F-4

<PAGE>

                           UWINK, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                            Years Ended
                                                                    --------------------------
                                                                     December       December
                                                                     31, 2003       31, 2002
                                                                    -----------    -----------
CASH FLOW FROM OPERATING ACTIVITIES:
<S>                                                                 <C>            <C>
    Net loss                                                        $(1,609,453)   $(3,599,810)
    Adjustment to reconcile net loss to net cash
      used in operating activities:
        Value of warrants issued for services                                --         91,429
        Amortization of discount on bridge loans/convertible note        78,892        523,186
        Common stock issued for services                                     --        305,000
        Value of options issued below market price                      193,333         46,027
        Depreciation and amortization expense                           140,084        438,965
        Allowance for doubtful accounts                                      --          4,958
        Inventory obsolescence reserve                                       --         50,000
    Changes in operating assets and liabilities:
      Accounts receivable                                               (71,988)        24,213
      Inventory                                                         (21,233)       371,806
      Deposits and other current assets                                 (19,815)        18,506
      Accounts payable                                                 (280,014)       253,172
      Accrued expenses                                                   27,555         64,584
      Accrued payroll and related benefits                             (682,837)       988,357
      Unearned revenue                                                  159,722        (30,085)
                                                                    -----------    -----------
Net cash used in operating activities                                (2,085,754)      (449,692)
                                                                    -----------    -----------

CASH FLOW FROM INVESTING ACTIVITIES:
    Payments for property and equipment                                (107,278)            --
    Payments for software development costs                                  --        (33,510)
                                                                    -----------    -----------
Net cash used in investing activities                                  (107,278)       (33,510)
                                                                    -----------    -----------

CASH FLOW FROM FINANCING ACTIVITIES:
    Change in cash overdraft                                                 --        (13,600)
    Proceeds from issuance of bridge loans                                   --        550,000
    Proceeds from issuance of convertible note                          125,000             --
    Repayments from advances from related parties                       (55,000)       (46,750)
    Proceeds from issuance of common stock                            3,727,756             --
    Payment of offering costs                                          (455,002)            --
                                                                    -----------    -----------
Net cash provided by financing activities                             3,342,754        489,650
                                                                    -----------    -----------

NET INCREASE IN CASH AND
    CASH EQUIVALENTS                                                  1,149,722          6,448

CASH AND CASH EQUIVALENTS, Beginning of year                              6,448             --
                                                                    -----------    -----------

CASH AND CASH EQUIVALENTS, End of year                              $ 1,156,170    $     6,448
                                                                    ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
    Interest paid                                                   $    68,334    $        --
                                                                    ===========    ===========
    Income taxes paid                                               $        --    $        --
                                                                    ===========    ===========
</TABLE>

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

                                      F-5

<PAGE>


                           UWINK, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

      During the year  ended  December  31,  2003,  the  Company:  1)  converted
      $1,400,000  of bridge loans and $259,849 of accrued  interest into 789,938
      shares of common stock, 2) converted $600,000 of an advance from a related
      party into 380,215  shares of common  stock,  3) converted  2,950,000  and
      2,131,395  shares of Series A and Series B preferred  stock,  respectively
      into  1,610,122  shares of common  stock,  and 4)  converted  $862,179  of
      accrued payroll into 365,107 shares of common stock.

      During the year ended December 31, 2002, the Company: 1) converted $73,341
      of accounts  payable into 30,984 shares of common stock, 2) issued 193,276
      shares  of common  stock for  services  valued at  $305,000  and 3) issued
      71,290 warrants valued at $91,429 for services rendered.



                                      F-6
<PAGE>


                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


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,   California  Inc.,  a  Delaware   corporation  ("uWink
      California") and its  stockholders,  Prologue  acquired all the issued and
      outstanding  shares of uWink California's  capital stock.  Prologue issued
      one (1)  share of its  common  stock  for  every  3.15611  shares of uWink
      California  capital  stock.  Since the  stockholders  of uWink  California
      acquired a majority of the issued and  outstanding  shares of Prologue and
      the uWink  California  management  team and board of directors  became the
      management  team and board of  directors  of  Prologue,  according to FASB
      Statement No. 141 - "Business  Combinations,"  this  acquisition  has been
      treated as a recapitalization for accounting purposes, in a manner similar
      to reverse acquisition accounting. In accounting for this transaction:

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

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

      uWink California was incorporated  under the laws of the State of Delaware
      on June 10, 1999.  uWink,  Inc.  (formerly  Prologue) and its  subsidiary,
      uWink  California,  Inc. are hereafter  referred to as "the  Company." The
      Company designs,  develops and markets  entertainment  software along with
      touchscreen  pay-for-play  game terminals and lottery and gaming kiosks in
      public  locations.  The Company  derives its revenue  from the sale of its
      game terminals, licensing fees and network services.

      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  has  incurred  a net loss of  $1,609,453  for the year ended
      December 31, 2003 and as of December  31, 2003,  the Company had a working
      capital deficiency of $55,145.  In addition,  as of December 31, 2003, the
      Company has not developed a substantial source of revenue.


                                      F-7
<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


      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.

      In the  second  half of  2003,  the  Company  raised  $3,227,756  in gross
      proceeds from the sale of 1,613,884  shares of the Company's common stock.
      Subsequent to December 2003,  the Company raised an additional  $1,426,050
      in gross proceeds from the sale of 713,025 shares of its common stock. The
      Company has used the net  proceeds  (after  commissions  and  professional
      costs  related to the merger) of the offering to  restructure  and improve
      its  balance  sheet,   pay  off  certain   accounts  payable  and  accrued
      liabilities, purchase game terminal inventory and for working capital. The
      Company's cash position after these  transactions at December 31, 2003 was
      $1,156,170.   At  March  31,  2004  the   Company's   cash   position  was
      approximately $ 1,200,000.

      The  Company  believes  that its  working  capital  as of the date of this
      report will be sufficient to fund the current level of operations  through
      the end of the current fiscal year ending December 31, 2004. However,  the
      Company  believes  that it will need at least an  additional $2 million of
      working  capital to fund the projected  demand for its Snap!  and Design'R
      Bear products and, if necessary,  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 securities.  However,  as
      of the date of this report,  there are no commitments  for the sale of our
      securities  nor  can  there  be any  assurance  that  such  funds  will be
      available on commercially  reasonable terms, if at all. Should the Company
      be unable  to raise  the  required  funds,  its  ability  to  finance  our
      continued growth will be materially adversely affected.

      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  accounting
      principles  generally  accepted in the United  States of America  requires
      management  to make  estimates  and  assumptions  that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities  at the  date of the  financial  statements  and the  reported
      amounts of  revenue  and  expenses  during the  reporting  periods.  As of
      December  31,  2003,  the  Company  used  estimates  in  determining   the
      realization of its accounts  receivable and inventory,  capitalization and
      amortization  of software  development  costs,  unearned  revenue and fair
      value of equity  instruments  issued for  services.  Actual  results could
      differ from these estimates.


                                      F-8
<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


      Fair Value of Financial Instruments

      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

      For purposes of the  statements  of cash flows,  the Company  defines cash
      equivalents  as  all  highly  liquid  debt  instruments  purchased  with a
      maturity of three months or less, plus all certificates of deposit.

      Concentration of Credit Risk

      Financial   instruments,   which   potentially   subject  the  Company  to
      concentrations  of credit risk,  consist of cash and cash  equivalents and
      accounts  receivables.  The  Company  places  its cash with  high  quality
      financial institutions and at times may exceed the FDIC $100,000 insurance
      limit. The Company extends credit based on an evaluation of the customer's
      financial condition,  generally without collateral.  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

      Inventory consisting of raw materials,  work in process and finished goods
      are stated at the lower of cost utilizing the first-in,  first-out  method
      or market.  An  obsolescence  reserve is estimated  for parts whose values
      have been  determined  to be  impaired  or whose  future  utility  appears
      limited.

      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.
      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.


                                      F-9
<PAGE>


                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

      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 certain external factors including,  but not limited to,  technological
      feasibility,  anticipated future gross revenues,  estimated economic life,
      and changes in software and hardware  technologies.  Capitalized  software
      development  costs are comprised  primarily of salaries and direct payroll
      related  costs and the  purchase  of  existing  software to be used in the
      Company's products.

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

      Revenue Recognition

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

      The Company also  recognizes  revenue from tournament play and league play
      at the time the entry fees are paid and accrues the cost of the  estimated
      payouts.

      Impairment of Long-Lived Assets

      In October 2001, the FASB issued SFAS No. 144,  "Accounting for Impairment
      of  Disposal  of  Long-Lived  Assets",  which  supercedes  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  provision of
      APB Opinion No.  30,"Reporting  the  Results of  Operations-Reporting  the


                                      F-10
<PAGE>


                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


      Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
      and Infrequently Occurring Events and Transactions", for the disposal of a
      segment  of  a  business.   This   statement   also  amends  ARB  No.  51,
      "Consolidated  Financial  Statements",   to  eliminate  the  exception  to
      consolidation for a subsidiary for which control is likely to be impaired.
      SFAS No. 144 requires  that  long-lived  assets to be disposed of by sale,
      including  those of discontinued  operations,  be measured at the lower of
      carrying  amount or fair  value  less cost to sell,  whether  reported  in
      continuing operations or in discontinued operations. SFAS No. 144 broadens
      the reporting of  discontinued  operations to include all components of an
      entity  with  operations  that can be  distinguished  from the rest of the
      entity and that will be  eliminated  from the  ongoing  operations  of the
      entity  in a  disposal  transaction.  SFAS  No.  144  also  establishes  a
      "primary-asset"  approach to determine the cash flow estimation period for
      a group of assets and  liabilities  that represents the unit of accounting
      for a long-lived  asset to be held and used.

      Stock Based Compensation

      SFAS No. 123, "Accounting for Stock-Based  Compensation,"  establishes and
      encourages  the use of the fair  value  based  method  of  accounting  for
      stock-based  compensation  arrangements  under which  compensation cost is
      determined using the fair value of stock-based  compensation determined as
      of the date of grant  and is  recognized  over the  periods  in which  the
      related  services are rendered.  The statement  also permits  companies to
      elect to continue  using the current  intrinsic  value  accounting  method
      specified  in  Accounting   Principles   Board  ("APB")  Opinion  No.  25,
      "Accounting  for Stock Issued to  Employees,"  to account for  stock-based
      compensation.  The Company has  elected to use the  intrinsic  value based
      method  and has  disclosed  the pro forma  effect of using the fair  value
      based  method  to  account  for its  stock-based  compensation  issued  to
      employees.  For options  granted to employees  where the exercise price is
      less than the fair  value of the stock at the date of grant,  the  Company
      recognizes an expense in accordance  with APB 25. For  non-employee  stock
      based  compensation  the Company  recognizes an expense in accordance with
      SFAS No. 123 and values the equity  securities  based on the fair value of
      the  security on the date of grant.  For  stock-based  awards the value is
      based on the  market  value  for the stock on the date of grant and if the
      stock has  restrictions as to  transferability  a discount is provided for
      lack  of   tradability.   Stock   option   awards  are  valued  using  the
      Black-Scholes option-pricing model.

      If the Company had elected to recognize  compensation  expense  based upon
      the fair value at the grant date for awards  under the Stock  Option  Plan
      consistent with the methodology  prescribed by SFAS No. 123, the Company's
      net loss and loss per share  would be  reduced  to the pro  forma  amounts
      indicated below for the year ended December 31, 2003 and 2002:

                                      F-11
<PAGE>


                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                            2003               2002
                                                         -----------        -----------
<S>                                                      <C>                <C>
          Net loss
            As reported                                  $(1,609,453)       $(3,599,810)
            Compensation recognized under APB 25             193,333             46,027
            Compensation recognized under SFAS 123          (333,841)          (602,035)
                                                         -----------        -----------
                       Pro forma                         $(1,749,961)       $(4,155,818)
                                                         ===========        ===========

          Basic and diluted loss per common share
            As reported                                  $     (0.49)       $     (1.49)
            Pro forma                                    $     (0.48)       $     (1.66)
</TABLE>


      The fair value for these  options was estimated at the date of grant using
      a Black-Scholes  option pricing model with the following  weighted-average
      assumptions for 2002:  risk-free interest rate of 3.5%; dividend yields of
      0%;  volatility  factors of the  expected  market  price of the  Company's
      common stock of 223%; and a weighted  average  expected life of the option
      of 10 years, respectively. There were no options granted in 2003.

      Advertising and Marketing Costs

      The Company  expenses  costs of  advertising  and  marketing  as incurred.
      Advertising  and marketing  expense for the years ended  December 31, 2003
      and 2002 amounted to $14,014 and $35,626, respectively.

      Income Taxes

      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 the
      years ended  December 31, 2003 and 2002 because the effect would have been
      anti-dilutive:


                                      F-12
<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


<TABLE>
<CAPTION>
                                                                            2003               2002
                                                                          ---------          ---------
<S>                                                                       <C>                <C>
              Shares to be issued upon conversion of preferred stock              -          1,610,018
              Shares to be issued upon conversion of bridge loans/
                 Convertible notes                                          174,265            770,991
              Stock options issued to employees                             613,413            794,332
              Warrants issued to consultants and finders                    258,824            137,036
              Warrants issued for financing                                 583,865            504,653
                                                                          ---------          ---------
                                                                          1,630,367          3,817,030
                                                                          =========          =========
</TABLE>

      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 year ended December 31, 2003 and 2002,
      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.

      Discount on Bridge Loans, Convertible Note and Preferred Stock

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

      Recently Issued Accounting Pronouncements

      During April 2003,  the FASB issued SFAS No. 149,  "Amendment of Statement
      133 on  Derivative  Instruments  and Hedging  Activities",  effective  for
      contracts  entered into or modified  after  September 30, 2003,  except as
      stated below and for hedging relationships  designated after September 30,
      2003.  In  addition,  except  as  stated  below,  all  provisions  of this
      Statement  were applied  prospectively.  The  provisions of this Statement
      that relate to Statement 133 Implementation Issues that were effective for
      fiscal  quarters  that  began  prior to June 15,  2003,  were  applied  in
      accordance with their respective effective dates. In addition,  paragraphs
      7(a) and 23(a),  which relate to forward purchases or sales of when-issued
      securities or other securities that do not yet exist, should be applied to
      both existing contracts and new contracts entered into after September 30,
      2003.  The  Company  does  not  participate  in  such   transactions   and
      accordingly,  the  adoption  of FASB  149 did not  have an  impact  on the
      Company's consolidated financial statements.

      During May 2003,  the FASB issued SFAS No.  150,  "Accounting  for Certain
      Financial   Instruments  with  Characteristics  of  both  Liabilities  and
      Equity",  effective  for  financial  instruments  entered into or modified
      after May 31, 2003,  and  otherwise  is effective at the  beginning of the
      first  interim  period  beginning  after  June 15,  2003.  This  Statement
      establishes  standards for how an issuer  classifies and measures  certain
      financial instruments with characteristics of both liabilities and equity.
      It requires that an issuer  classify a freestanding


                                      F-13
<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


      financial  instrument that is within its scope as a liability (or an asset
      in  some  circumstances).   Many  of  those  instruments  were  previously
      classified  as  equity.  Some  of the  provisions  of this  Statement  are
      consistent  with the current  definition of  liabilities  in FASB Concepts
      Statement No. 6, Elements of Financial Statements. The Company has adopted
      FASB  150  which  did not have an  impact  on the  Company's  consolidated
      financial statements.

      In January 2003, the FASB issued  Interpretation No. 46, "Consolidation of
      Variable  Interest  Entities" (an  interpretation  of Accounting  Research
      Bulletin (ARB) No. 51, Consolidated Financial Statements).  Interpretation
      46 addresses  consolidation  by business  enterprises of entities to which
      the usual condition of  consolidation  described in ARB-51 does not apply.
      The  Interpretation  changes the  criteria  by which one company  includes
      another  entity in its  consolidated  financial  statements.  The  general
      requirement to consolidate  under ARB-51 is based on the presumption  that
      an enterprise's  financial statement should include all of the entities in
      which it has a  controlling  financial  interest  (i.e.,  majority  voting
      interest).  Interpretation  46 requires a variable  interest  entity to be
      consolidated by a company that does not have a majority  voting  interest,
      but  nevertheless,  is subject to a majority  of the risk of loss from the
      variable interest entity's activities or entitled to receive a majority of
      the  entity's  residual  returns or both. A company  that  consolidates  a
      variable interest entity is called the primary beneficiary of that entity.

      In December 2003, the FASB concluded to revise certain elements of FIN 46,
      primarily to clarify the  required  accounting  for  interests in variable
      interest  entities.  FIN-46R replaces  FIN-46,  that was issued in January
      2003.  FIN-46R exempts certain entities from its requirements and provides
      for special  effective  dates for  entities  that have fully or  partially
      applied  FIN-46 as of December 24, 2003. In certain  situations,  entities
      have the option of  applying  or  continuing  to apply  FIN-46 for a short
      period of time before applying FIN-46R. In general,  for all entities that
      were  previously  considered  special purpose  entities,  FIN 46 should be
      applied for  registrants  who file under  Regulation SX in periods  ending
      after March 31, 2004, and for registrants who file under Regulation SB, in
      periods  ending after  December 15, 2004.  The Company does not expect the
      adoption to have a material impact on the Company's  financial position or
      results of operations.

      In  December  2003,  the FASB issued a revised  SFAS No. 132,  "Employers'
      Disclosures  about  Pensions  and  Other  Postretirement  Benefits"  which
      replaces the previously issued Statement.  The revised Statement increases
      the  existing  disclosures  for defined  benefit  pension  plans and other
      defined  benefit  postretirement  plans.  However,  it does not change the
      measurement  or  recognition of those plans as required under SFAS No. 87,
      "Employers'  Accounting for Pensions," SFAS No. 88, "Employers' Accounting
      for Settlements and  Curtailments of Defined Benefit Pension Plans and for
      Termination  Benefits,"  and  SFAS No.  106,  "Employers'  Accounting  for
      Postretirement  Benefits Other Than Pensions."  Specifically,  the revised
      Statement  requires  companies  to provide  additional  disclosures  about
      pension plan assets, benefit obligations, cash flows, and benefit costs of
      defined  benefit  pension plans and other defined  benefit  postretirement
      plans. Also,  companies are required to provide a breakdown of plan assets
      by category,  such as debt, equity and real estate, and to provide certain
      expected rates of return and target allocation percentages for these asset
      categories.  The  Company  has  implemented  this  pronouncement  and  has
      concluded  that the  adoption  has no  material  impact  to the  financial
      statements.


                                      F-14
<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 2 - INVENTORY

      Inventory at December 31, 2003 consisted of the following:

          Raw materials                                     $ 129,318
          Finished goods                                       99,818
                                                            ---------
                                                              229,136
          Less allowance for obsolete inventory               (50,000)
                                                            ---------
                                                            $ 179,136
                                                            =========

      During the year ended December 31, 2002, the Company wrote off slow-moving
      and obsolete inventory amounting to $214,547.

NOTE 3 - PROPERTY AND EQUIPMENT

      The cost of property and  equipment at December 31, 2003  consisted of the
      following:

          Computer equipment                                   $ 219,713
          Office furniture and equipment                          17,926
          Leasehold improvements                                  84,849
          Machinery and equipment                                140,691
                                                               ---------

                                                                 463,179
          Less accumulated depreciation and amortization        (328,847)
                                                               ---------

                                                               $ 134,332
                                                               =========

      Depreciation  expense for the years ended  December  31, 2003 and 2002 was
      $95,300 and $90,039, respectively.

NOTE 4 - DUE TO RELATED PARTIES

      Due to related  parties at December 31, 2003 consists of amounts  advanced
      to the Company by certain  related  parties.  These advances bear interest
      ranging  from prime plus 3% to 12% per annum and are payable  upon demand.
      During the year ended  December 31, 2003,  $600,000 of these advances were
      converted  into  380,215  shares of common stock and $55,000 was repaid in
      cash.


                                      F-15
<PAGE>


                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 5 - CONVERTIBLE NOTE PAYABLE

      On May 14, 2003, the Company entered into a convertible promissory note in
      the amount of $125,000. The note bears interest at 8% per annum and is due
      on May 14, 2004.  The note can be converted,  at the option of the holder,
      to shares of the  Company's  common  stock at $1.58 per share,  the market
      value of the  Company's  common stock on May 14, 2003.  In addition to the
      convertible  note  payable,  the  lender  was issued  79,211  warrants  to
      purchase  shares of the  Company's  common  stock for $0.03 per share.  In
      accordance with EITF 00-27, the Company first determined the fair value of
      the  loan  and  the  fair  value  of the  detachable  warrants  issued  in
      connection with this convertible note payable.  The estimated value of the
      warrants of $124,995 was determined using the Black-Scholes option pricing
      model  and the  following  assumptions:  term  of 10  years,  a risk  free
      interest rate of 3.5%, a dividend  yield of 0% and volatility of 223%. The
      face   amount  of  the   convertible   note   payable  of   $125,000   was
      proportionately allocated to the convertible note payable and the warrants
      in the amount of $62,501 and $62,499,  respectively.  The amount allocated
      to the warrants of $62,499 was  recorded as a discount on the  convertible
      note  payable  and  as  additional  paid-in  capital.  The  value  of  the
      convertible  note payable was then allocated  between the convertible note
      payable and the preferential  conversion feature, which amounted to $2 and
      $62,499, respectively. The amount allocated to the preferential conversion
      feature of $62,499  was  recorded as a discount  on the  convertible  note
      payable  and  as  additional   paid-in  capital.   The  discounts  on  the
      convertible  note payable will be amortized  over the one year term of the
      convertible  note payable.  For the year ended December 31, 2003,  $78,892
      was amortized to expense.


NOTE 6 - BRIDGE LOAN PAYABLE

      Bridge loan payable at December 31, 2003 consisted of the following:

         Loan payable issued on March 15, 2002, interest
              rate 10%, unsecured, principal payments and
              accrued interest was due on September 9, 2002.
              This loan is in default                           $   150,000
                                                                ===========

      On August 25,  2001,  the Company  entered  into a bridge  loan  agreement
      bearing  interest at 10% per annum, in the amount of $1,000,000,  with the
      right to convert the loan into common  stock at the most recent  price per
      share for which the Company sold shares of its common  stock.  In addition
      to the bridge  loan,  the lender was issued  56,579  warrants  to purchase
      shares of the  Company's  common stock for $4.42 per share.  In accordance
      with EITF 00-27,  the Company first  determined the fair value of the loan
      and the fair value of the detachable  warrants  issued in connection  with
      this bridge  loan.  The  estimated  value of the  warrants of $224,322 was
      determined using the Black-Scholes  option pricing model and the following
      assumptions:  term of 5  years,  a risk  free  interest  rate of  3.5%,  a
      dividend yield of 0% and volatility of 196%. The face amount of the bridge
      loan of $1,000,000  was  proportionately  allocated to the bridge loan and
      the warrants in the amount of $816,779  and  $183,221,  respectively.  The
      amount allocated to the warrants of $183,221 was recorded as a discount on
      the bridge loan and as additional paid-in capital. The value of the bridge
      loan was then  allocated  between  the  bridge  loan and the  preferential
      conversion feature, which amounted to $633,558 and $183,221, respectively.
      The amount  allocated to the preferential  conversion  feature of $183,221
      was  recorded as a discount on the bridge loan and as  additional  paid-in
      capital.  The  discounts  on the bridge loan were  amortized  over the six
      month term of the loan. For the year ended December 31, 2001, $336,442 was
      amortized to interest expense.


                                      F-16
<PAGE>


                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

      On March 15, 2002, the Company  entered into seven bridge loan  agreements
      bearing  interest at 10% per annum,  in the aggregate  amount of $500,000,
      with the right to convert the loans into  common  stock at the most recent
      price per share for which the Company sold shares of its common stock.  In
      addition to the bridge loans,  the lenders were issued 211,232 warrants to
      purchase  shares of the  Company's  common  stock for $2.37 per share.  In
      accordance with EITF 00-27, the Company first determined the fair value of
      the  loans  and the  fair  value  of the  detachable  warrants  issued  in
      connection with these bridge loans. The estimated value of the warrants of
      $465,393 was determined using the  Black-Scholes  option pricing model and
      the following  assumptions:  term of 5 years, a risk free interest rate of
      3.5%, a dividend  yield of 0% and  volatility of 223%.  The face amount of
      the bridge loans of $500,000 was  proportionately  allocated to the bridge
      loans  and  the  warrants  in  the  amount  of  $258,962   and   $241,038,
      respectively.  The  amount  allocated  to the  warrants  of  $241,038  was
      recorded  as a discount  on the  bridge  loans and as  additional  paid-in
      capital.  The value of the bridge  loans was then  allocated  between  the
      bridge loans and the preferential  conversion  feature,  which amounted to
      $17,924  and  $241,038,   respectively.   The  amount   allocated  to  the
      preferential  conversion feature of $241,038 was recorded as a discount on
      the bridge loans and as additional  paid-in capital.  The discounts on the
      bridge loans were amortized over the six month term of the loans.  For the
      year ended December 31, 2002, $482,076 was amortized to interest expense.

      On June 4, 2002, the Company entered into a bridge loan agreement  bearing
      interest  at 10% per annum,  in the amount of  $50,000,  with the right to
      convert the loan into common  stock at the most recent price per share for
      which the  Company  sold  shares of its common  stock.  In addition to the
      bridge loan, the lender was issued 15,842  warrants to purchase  shares of
      the Company's  common stock for $2.37 per share.  In accordance  with EITF
      00-27,  the Company  first  determined  the fair value of the loan and the
      fair  value of the  detachable  warrants  issued in  connection  with this
      bridge loan. The estimated value of the warrants of $34,904 was determined
      using  the   Black-Scholes   option   pricing   model  and  the  following
      assumptions:  term of 5  years,  a risk  free  interest  rate of  3.5%,  a
      dividend yield of 0% and volatility of 223%. The face amount of the bridge
      loan of $50,000 was  proportionately  allocated to the bridge loan and the
      warrants in the amount of $29,445 and  $20,555,  respectively.  The amount
      allocated  to the  warrants of $20,555  was  recorded as a discount on the
      bridge loan and as  additional  paid-in  capital.  The value of the bridge
      loan was then  allocated  between  the  bridge  loan and the  preferential
      conversion  feature,  which amounted to $8,890 and $20,555,  respectively.
      The amount allocated to the preferential conversion feature of $20,555 was
      recorded  as a  discount  on the  bridge  loan and as  additional  paid-in
      capital.  The  discounts  on the bridge loan were  amortized  over the six
      month term of the loan. For the year ended December 31, 2002,  $41,110 was
      amortized to interest expense.

      In 2003,  $1,400,000 of these bridge loans described above and $259,849 of
      related  accrued  interest  were  converted  into  789,938  shares  of the
      Company's common stock.


                                      F-17
<PAGE>


                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 7 - 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 this corporation  shall not be liable to any
      further call or assessment.

      Preferred Stock of uWink California

      The  Company  has  authorized  10,000,000  shares  of  $0.0001  par  value
      Preferred  Stock,  of which  3,000,000  shares are  designated as Series A
      Convertible   Preferred  Stock  ("Series  A")  and  3,000,000  shares  are
      designated as Series B Convertible Preferred Stock ("Series B").

      In the event of  voluntary  or  involuntary  liquidation,  dissolution  or
      winding-up of the Company, the Series A stockholders will be entitled to a
      distribution  of $1.00 per  shares.  The  Series A can be  converted  into
      shares of common stock on a one-for-one basis at the option of the holder,
      but will  automatically be converted to common stock upon the consummation
      of an initial  public  offering of  securities  of the  Company  under the
      Securities Act of 1933, as amended.

      In the event of  voluntary  or  involuntary  liquidation,  dissolution  or
      winding-up of the Company, the Series B stockholders will be entitled to a
      distribution  of $2.00 per  shares.  The  Series B can be  converted  into
      shares of common stock on a one-for-one basis at the option of the holder,
      but will  automatically be converted to common stock upon the consummation
      of an initial  public  offering of  securities  of the  Company  under the
      Securities Act of 1933, as amended.

      On June 10, 2001,  in  connection  with the issuance of 247,500  shares of
      Series B, the Company  issued  78,419  warrants to purchase  shares of the
      Company's common stock for $6.31 per share. In accordance with EITF 00-27,
      the Company first  determined the value of the Series B and the fair value
      of the  detachable  warrants  issued in connection  with the Series B. The
      estimated  value of the  warrants of  $357,936  was  determined  using the
      Black-Scholes option pricing model and the following assumptions:  term of
      3 years,  a risk free  interest  rate of 3.5%, a dividend  yield of 0% and
      volatility of 196%. The amount raised through the issuance of the Series B
      of $495,000 was proportionately allocated to the Series B and the warrants
      in the amount of $287,272 and $207,728, respectively. The amount allocated
      to the warrants of $207,728 was recorded as a discount on the Series B and
      amortized  directly to retained  earnings  over the three year life of the
      warrants.  The carrying amount of the Series B was then allocated  between
      the Series B and the preferential  conversion  feature,  which amounted to
      $79,544  and  $207,728,   respectively.   The  amount   allocated  to  the
      preferential  conversion feature of $207,728 was recorded as a discount on
      Series B and amortized over three years directly to retained earnings. The
      amortization  of these Series B discounts for the years ended December 31,
      2003 and 2002 amounted to $199,768 and $138,358, respectively.


                                      F-18
<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


      Common Stock

      During the year ended December 31, 2002, the Company:

            o     issued  30,984  shares of common stock in exchange for $73,341
                  of  accounts  payable.  The price of the common  stock used to
                  calculate  the number of shares to issue in this  exchange was
                  $2.37  per  shares  which was the  price  negotiated  with the
                  vendors; and

            o     issued 193,276 shares of common stock in exchange for services
                  valued at $305,000. The price of the common stock to calculate
                  the number of shares to issue in this  exchange  for  services
                  was  $1.58  per  shares  which  represented  the  price of the
                  Company's stock based on recent private placement offerings.

      During the year ended December 31, 2003, the Company:

            o     issued   789,938  shares  of  common  stock  in  exchange  for
                  $1,400,000  of bridge  loans and  $259,849 of related  accrued
                  interest.  The  price of the  common  stock to  calculate  the
                  number of  shares to issue was based on the price  established
                  in the respective bridge loan agreements;

            o     issued 380,215 shares of common stock in exchange for $600,000
                  of an advance  from a related  party.  The price of the common
                  stock to calculate  the number of shares of $1.58 was to issue
                  was  based  on  the  price  negotiated  with  the  lender  and
                  approximates the fair value of the Company's stock;

            o     sold  1,930,730  shares  of common  stock for cash in  private
                  placement  offerings  for gross  proceeds of  $3,727,756.  The
                  Company  paid  $455,002  in  offering  costs to the  placement
                  agent. In addition,  the Company issued to the placement agent
                  161,394  warrants to purchase  shares of the Company's  common
                  stock for $2.00 per share;

            o     issued  365,107 shares of common stock in exchange for accrued
                  payroll of $862,179;

            o     exchanged  2,950,000  and  2,131,395  shares  of  Series A and
                  Series B preferred stock for 1,610,122 shares of common stock;
                  and


NOTE 8 - STOCK OPTIONS AND WARRANTS

      Stock Options

      In 2000, the Company's  Board of Directors  approved the Stock Option Plan
      (the   "Plan").   The  Plan  provides  for  the  grant  of  incentive  and
      non-qualified  stock options to certain  employees,  officers,  directors,
      consultants,  and agents of the Company.  Under the Plan,  the Company may
      grant  options with respect to shares of common stock to be granted at not
      less than fair market value. Options granted under the Plan generally vest
      in equal annual  installments  over three years and may be exercised for a
      period of one to 10 years as determined by the Board of Directors.


                                      F-19
<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


      Transactions  under the Plans during the years ended December 31, 2002 and
      2003 are summarized as follows:

      The following table summarizes the options outstanding:

                                                                     Weighted
                                                    Stock             Average
                                                   Option            Exercise
                                                    Plan               Price
                                                ----------         ------------
           Balance, December 31, 2001              522,954         $   3.53
               Granted                             597,571         $   0.79
               Canceled                           (326,193)        $   3.53
                                                ----------
           Balance, December 31, 2002              794,332         $  1.48
               Granted                                   -         $   -
               Canceled                           (180,919)        $   3.22
                                                ----------
           Balance, December 31, 2003              613,413         $  0.98
                                                ==========

           Exercisable at December 31, 2003        326,222         $  1.45
                                                ==========


      The weighted average  remaining  contractual  life of options  outstanding
      issued  under the Plan is 8.34 year at December  31,  2003.  The  exercise
      price for the  options  outstanding  under the Plan at  December  31, 2002
      ranged from $0.32 to $6.31.

      For  options  granted  during the year ended  December  31, 2002 where the
      exercise  price  equaled  the stock  price at the date of the  grant,  the
      weighted-average   fair   value  of  such   options   was  $2.34  and  the
      weighted-average  exercise  price of such  options was $2.37.  For options
      granted  during the year ended  December 31, 2002 where the exercise price
      was  less  than  the  stock   price  at  the  date  of  the   grant,   the
      weighted-average   fair   value  of  such   options   was  $1.58  and  the
      weighted-average  exercise  price of such  options was $0.32.  The Company
      recognized an expense of $193,333 and $46,027 for the years ended December
      31,  2003 and  2002,  respectively,  related  to these  options  that were
      granted where the exercise price was less than the stock price at the date
      of grant.  No options were granted during the year ended December 31, 2002
      where the  exercise  price was greater than the stock price at the date of
      grant.  There were no options  granted  during the year ended December 31,
      2003.

      The  Black-Scholes  option  valuation  model  was  developed  for  use  in
      estimating  the  fair  value  of  traded  options  which  have no  vesting
      restrictions  and are fully  transferable.  In addition,  option valuation
      models require the input of highly  subjective  assumptions  including the
      expected  stock price  volatility.  Because the Company's  employee  stock
      options have characteristics  significantly different from those of traded
      options,  and because  changes in the  subjective  input  assumptions  can
      materially affect the fair value estimate,  in management's  opinion,  the
      existing  models do not  necessarily  provide a reliable single measure of
      the fair value of employee stock options.


                                      F-20
<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


      Warrants

      The Company has issued  warrants to  consultants  and finders for services
      rendered and in  connection  with raising  capital.  The  following  table
      summarizes the warrants outstanding:

                                                                   Weighted-
                                                                   Average
                                                                   Exercise
                                                      Warrants      Price
                                                      --------    ---------
          Balance, December 31, 2001                  335,404     $  5.78
              Granted                                 306,285     $  2.21
                                                      --------
          Balance, December 31, 2002                  641,689     $  4.07
              Granted                                 240,606     $  1.36
              Canceled                                (39,606)    $  4.92
                                                      --------
          Balance, December 31, 2003                  842,689     $  3.25
                                                      ========

          Exercisable at December 31, 2003            842,689     $  3.25
                                                      ========


      The fair value for these warrants was estimated at the date of grant using
      a Black-Scholes  option pricing model with the following  weighted-average
      assumptions for 2003 and 2002:  risk-free interest rate of 3.5% and 3.5 %;
      dividend  yields of 0% and 0%;  volatility  factors of the expected market
      price of the  Company's  common  stock of 223% and  223%;  and a  weighted
      average expected life of the option of 10 and 5 years, respectively.

      The weighted average remaining contractual life of warrants outstanding is
      4.24 years at December  31,  2003.  The  exercise  price for the  warrants
      outstanding  at December  31, 2003 ranged from $0.03 to $6.31.  During the
      year ended December 31, 2002, the Company recognized an expense of $91,429
      related to the issuance of 225,000 warrants for services.

NOTE 9 - 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 December 31, 2003 are as follows:

<TABLE>
<CAPTION>
                  Deferred tax assets:

<S>                                                                              <C>
                        Federal net operating loss                               $  4,997,000
                        State net operating loss                                      444,000
                        Equity instruments issued for compensation/services           503,000
                        Accounts receivable reserves                                   20,000
                                                                                 ------------
                                                                                    5,964,000
                  Total deferred tax assets
                        Less valuation allowance                                   (5,964,000)
                                                                                 ------------
                                                                                 $         --
                                                                                 ============
</TABLE>

         During  the year ended  December  31,  2003,  the  valuation  allowance
         increased by $540,000.

         At December 31, 2003,  the Company had federal and state net  operating
         loss ("NOL") carryforwards of approximately $14,787,000 and $7,404,000,
         respectively.  Federal NOLs could, if unused, expire in varying amounts
         in the years 2015 through 2018. State NOLs, if unused,  could expire in
         varying amounts from 2005 through 2008.


                                      F-21
<PAGE>

         The  reconciliation  of the  effective  income tax rate to the  federal
statutory rate for the years ended December 31, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
                                                                2003               2002
                                                              -------            -------
<S>                                                            <C>               <C>
              Federal income tax rate                          (34.0%)           (34.0%)
              State tax, net of federal benefit                 (6.0%)            (6.0%)
              Non-deductible items                               4.8%              0.5%
              Reserves for accounts receivable
                 and inventory                                  (2.9%)             1.9%
              Equity instruments issued for
                 Compensation/services                          21.4%              4.4%
              Increase in valuation allowance                   16.7%             33.2%
                                                              -------            -------
              Effective income tax rate                          0.0%              0.0%
                                                              =======            =======
</TABLE>

         Utilization of the net operating loss and tax credit  carryforwards  is
         subject  to  significant  limitations  imposed by the change in control
         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. See Notes 7 and 11.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

      Other Litigation

      In the ordinary  course of business,  the Company is generally  subject to
      claims,  complaints,  and legal actions. At December 31, 2003,  management
      believes  that the Company is not a party to any action which would have a
      material impact on its financial condition, operations, or cash flows.

      Leases

      The Company  leases a 10,000  square foot office  building in Los Angeles,
      California  under an  operating  lease  agreement  that expires in January
      2005. The lease provides for current monthly lease payments of $10,000.

      Future  minimum  lease  payments  applicable to  non-cancelable  operating
      leases as of December 31, 2003, are as follows:

                                                        Operating
                                                         Leases
                                                        ---------
                   Year ending December 31,
                        2004                            $  120,000
                        2005                                10,000
                                                        ---------

                   Net Minimum Lease Payments           $  130,000
                                                        ==========


                                      F-22
<PAGE>


                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


      The  Company  incurred  rent  expense of $85,110 and $88,593 for the years
      ended December 31, 2003 and 2002, respectively.

NOTE 11 - SUBSEQUENT EVENTS

      Subsequent  to December  31,  2003,  the  Company  has sold an  additional
      713,025  shares of its common stock through a private  placement  offering
      for gross proceeds of $1,426,050.  In addition,  the Company has converted
      $108,710 of accrued  payroll and related  benefits  into 48,584  shares of
      common stock.


                                      F-23

<PAGE>

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

         On January 16, 2004,  our board of directors  approved the dismissal of
Pritchett Siler & Hardy PC ("Pritchett Siler & Hardy") as our independent public
accountants   and  the  selection  of  Stonefield   Josephson,   Inc.  as  their
replacement.

         Pritchett  Siler  &  Hardy's  reports  on  our  consolidated  financial
statements  for the two fiscal  years ended  December  31, 2002 and 2001 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,  2002 and 2001 and the
subsequent  interim period through January 16, 2004, there were no disagreements
between us and Pritchett Siler & Hardy on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Pritchett Siler & Hardy'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 Pritchett Siler & Hardy with a copy of the foregoing
disclosures.  A copy of Pritchett  Siler and Hardy's  letter,  dated January 20,
2004,  stating its agreement with such statements was filed as an exhibit to our
current report on Form 8-K dated January 16, 2004.

         In addition,  during our two fiscal  years ended  December 31, 2002 and
2001 and the  subsequent  interim  periods,  we did not consult with  Stonefield
Josephson,  Inc. 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 January 16, 2004. Our 2002 and 2003 financial  statements  were audited by
Stonefield Josephson, Inc.

ITEM 8A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         Our  disclosure  controls  and  procedures  are designed to ensure that
information required to be disclosed in reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed,  summarized and reported
within the time periods  specified in the rules and forms of the  Securities and
Exchange Commission and that such information is accumulated and communicated to
our management,  as appropriate,  to allow timely decisions  regarding  required
disclosure. Our Chief Executive Officer and Chief Financial Officer has reviewed
the  effectiveness  of our disclosure  controls and procedures and has concluded
that the  disclosure  controls and procedures are effective as of the end of the
period covered by this report. There were no significant changes in our internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to the last day they were evaluated.

         It should be noted that any system of controls,  however well  designed
and operated, can provide only reasonable, and not absolute,  assurance that the
objectives of the system are met. In addition,  the design of any control system
is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there can be
no assurance  that any design will  succeed in achieving  its stated goals under
all potential future conditions.  As a small organization,  the effectiveness of
our controls  heavily  depends on the direct  involvement of our Chief Executive
Officer and Chief Financial Officer.


                                       12
<PAGE>



                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The  following  table sets forth the name and age of our  directors and
executive officers and their position(s).
<TABLE>
<CAPTION>

                    Name                           Age                            Position

<S>                                                <C>       <C>
Nolan K. Bushnell                                  61        Chairman   of  the   Board  of   Directors,   Chief
                                                             Executive  Officer,  President and Chief  Financial
                                                             Officer

Andrew Rifkin                                      48        Chief Technology Officer

Raymond Hibarger                                   61        Executive Vice President of Sales and Marketing

Bruce P. Kelly                                     59        Director

Peter J. Sprague                                   64        Director

</TABLE>

         Mr.  Bushnell  has been the chairman of our board of  directors,  chief
executive  officer and chief financial  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).

         Mr. Rifkin has been our Chief Technology Officer since December 4, 2003
following  our  acquisition  of  uWink  California.   Mr.  Rifkin  joined  uWink
California as its Chief  Technology  Officer on November 6, 2002. Mr. Rifkin has
developed interactive  multimedia products for education and entertainment,  has
been responsible for the real time systems to support  business-to-business  and
business  to  consumer  transactions,  as well as  developing  video  games  and
cable/Internet  delivery systems,  critical monitoring equipment for the medical
industry  and low cost award  winning  concepts for the toy  industry.  Prior to
joining uWink  California,  Mr. Rifkin  consulted  with a number of companies on
broadband and software applications from 1999 until 2002. From 1994 to 1999, Mr.
Rifkin  worked for Mattel,  Inc.  serving as Senior Vice  President  of Design &
Development  for Mattel Media and Senior Vice President of Creative  Technology.
In this  capacity,  Mr.  Rifkin  created a division  of Mattel  that  became the
leading publisher of children's software.

         Mr.  Hibarger  has been  our  Executive  Vice  President  of Sales  and
Marketing since December 4, 2003 following our acquisition of uWink  California.
Mr.  Hibarger  joined uWink  California as its Executive Vice President of Sales
and Marketing on July 1, 2002.  Immediately  prior to joining uWink  California,
Mr.  Hibarger was the Chief  Financial  Officer and Executive Vice President for
Medalist  Marketing  Corp.,  where he  created a  thriving  market  for  coin-op
electronic  dartboards in Japan. Mr. Hibarger has held top management  positions
in the coin-op  amusement and gaming industry for more than 30 years. As founder
and CEO, he grew Hanson Distributing  Company into a major regional  distributor
of  pay-for-play  amusement and gaming  devices.  He personally  negotiated  and
consummated  the first sale of slot machines under the Indian Gaming  Regulatory
Act of 1988.  As Vice  President  of  Operations  for  Australian  slot  machine
manufacturer,  Aristocrat Inc., he was responsible for sales in regulated gaming
venues  throughout  North and South  America.  He received  his B.S. in Chemical
Engineering  from  U.C.  Berkeley  and  achieved  Ph.D.  Candidacy  in  Chemical
Engineering from the University of Minnesota.

         Mr.  Kelly has been a director  since  December 4, 2003  following  our
acquisition of uWink  California.  Mr. Kelly has been President and CEO of Nolan
Securities,  an  investment  banking  firm  since  1998,  and  prior to that was
Managing  Director since 1995.  Prior to 1995 Mr. Kelly was founder and Chairman
of  Newgrange  Financial,  an  investment  banking  firm  with  a  broker-dealer
subsidiary,  as well as a Baird Patrick  investment banker focusing on insurance
and  technology.  He is presently a Trustee of Shakespeare  and Company  (Lenox,
MA). He received his B.A. with honors and his M.A. from NYU.

                                       14
<PAGE>

         Mr.  Sprague has been a director  since  December 4, 2003 following our
acquisition  of uWink  California.  Mr.  Sprague  served as Chairman of National
Semiconductor  from 1965 to 1995. He founded Wave Systems Corp.,  developer of a
[patented  process for tracking and billing for  information  from any source to
any  platform],  in 1988 and served as its Chairman  until 2003.  Mr. Sprague is
currently  Chairman of WavXpress,  a  majority-owned  subsidiary of Wave Systems
Corp.  WavXpress  enables  secure  broadband  distribution  of  premium  digital
content. The company delivers  full-screen,  DVD-quality video, games, music and
software.   WavXpress   supports  a  variety  of  business   models,   including
subscription,  pay-per-view,  and advertising  services.  He graduated from Yale
University  with a B.A. in Political  Science,  followed by graduate work at MIT
and Columbia.

AUDIT COMMITTEE FINANCIAL EXPERT

         We do not have an audit committee  financial  expert,  as defined under
Section  228.401,  because  we do not  have an  audit  committee  and we are not
required  to have an audit  committee  because we are not a listed  security  as
defined in Section 240.10A-3.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires our officers and directors and those persons who  beneficially own more
than 10% of our outstanding shares of common stock to file reports of securities
ownership  and  changes  in such  ownership  with the  Securities  and  Exchange
Commission.  Officers, directors and greater than 10% beneficial owners are also
required  by rules  promulgated  by the SEC to  furnish  us with  copies  of all
Section 16(a) forms they file.

         Based solely upon a review of the copies of such forms furnished to us,
we believe that during 2003 Nolan Bushnell,  Bruce Kelly, Peter Sprague,  Andrew
Rifkin and Raymond Hibarger failed to timely file their Form 3 Initial Statement
of Beneficial  Ownership as required by Section 16(a) of the Securities Exchange
Act of 1934,  as amended.  The failure to timely file these Forms has since been
remedied.

CODE OF ETHICS

         We have  adopted a code of ethics that  applies to our chief  executive
officer  and chief  financial  officer.  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  5443  Beethoven  Street,  Los  Angeles,
California 90066.


                                       15
<PAGE>





ITEM 10.  EXECUTIVE COMPENSATION.

         CASH COMPENSATION OF EXECUTIVE OFFICERS. The following table sets forth
the  total  compensation  earned by the Chief  Executive  Officer  and all other
executive  officers who earned in excess of $100,000 per annum during any of our
last three fiscal years.
<TABLE>
<CAPTION>

                          Annual Compensation                                         Long-Term
                                                                                     Compensation
                          ----------------------------------------------------------------------------

                                                                     Other            Securities
                                                                     Awards           Underlying           All Other
    Name and Position      Year     Salary ($)     Bonus ($)    Compensation ($)   Options/SARs (#)     Compensation ($)
---------------------------------------------------------------------------------------------------------------------------
<S>               <C>      <C>       <C>               <C>             <C>                 <C>                 <C>
Nolan K. Bushnell (1)      2003      $159,773         -0-             -0-                 -0-                 -0-
President, CEO and CFO     2002      $135,000(2)      -0-         $50,000 (3)             -0-                 -0-
                           2001      $162,500(2)      -0-             -0-                 -0-                 -0-

Andrew Rifkin (4)          2003       $35,572         -0-             -0-                 -0-                 -0-
Chief Technology Officer   2002       $41,120(5)      -0-             -0-             158,423 (6)             -0-


Raymond Hibarger (7)       2003       $85,350         -0-             -0-                 -0-                 -0-
Executive Vice President   2002      $60,000(8)       -0-             -0-             126,739 (9)             -0-
</TABLE>

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

(1)      Mr.  Bushnell  became  our  President  and  CEO  on  December  4,  2003
         immediately  following our  acquisition of uWink  California.  Prior to
         becoming  an  executive  officer  of  our  company,  Mr.  Bushnell  was
         President and CEO of uWink California.  Compensation  reported for 2002
         and 2001  relates to uWink  California.  Compensation  reported in 2003
         includes  amounts  prior to our  acquisition  of uWink  California  and
         subsequent to the acquisition.

(2)      Included in 2002 and 2001 is $135,000  and  $87,500,  respectively,  of
         deferred  compensation that was paid in 2003 as follows:  1) $35,000 in
         cash; 2) $119,156  converted to 72,181 shares of our common stock under
         an agreement  dated  November  15, 2002 between Mr.  Bushnell and uWink
         California  which was assumed by our  company and 3) $68,344  which was
         forgiven.

(3)      As  consideration  for services  rendered in 2002,  uWink  California's
         board  of  directors  granted  Mr. Bushnell  common  stock  with a fair
         market value (as  determined by their board of  directors) of  $50,000.
         In connection  with our  acquisition of uWink  California, these shares
         were  transferred to us in  exchange for  158,423 shares  of our common
         stock.

(4)      Mr.  Rifkin  became our Chief  Technology  Officer on December 4, 2003,
         immediately  following our  acquisition of uWink  California.  Prior to
         becoming an executive officer of our company,  Mr. Rifkin was the Chief
         Technology Officer of uWink California  beginning November 6, 2002. The
         information reported for 2002 reflects  compensation paid to Mr. Rifkin
         by  uWink  California.  The  information  reported  for  2003  reflects
         compensation paid by uWink California prior to our acquisition of uWink
         California and compensation paid by us following such acquisition.

(5)      Mr.  Rifkin's  salary  in  2002  was  accrued  but not  paid  by  uWink
         California.  On November 13,  2002,  uWink  California  entered into an
         agreement allowing Mr. Rifkin to convert his accrued  compensation into
         equity. We assumed this agreement in connection with the acquisition of
         uWink California and Mr. Rifkin subsequently  converted on December 20,
         2003,  $21,000  of accrued  2002  salary  and  $20,000  in  independent
         consulting fees into 20,560 shares of our common stock.

(6)      This  option  to  purchase  158,423  shares  of our  common  stock  was
         originally  granted by uWink California on November 6, 2002. We assumed
         the option in connection with the acquisition of uWink California.

                                       16

<PAGE>

(7)      Mr.  Hibarger  became our Executive Vice President on December 4, 2003,
         immediately  following our  acquisition of uWink  California.  Prior to
         becoming an  executive  officer of our  company,  Mr.  Hibarger was the
         Executive  Vice  President  Sales  and  Marketing  of uWink  California
         beginning  July 1, 2002.  The  information  reported for 2002  reflects
         compensation paid to Mr. Hibarger by uWink California.  The information
         reported for 2003 reflects  compensation paid by uWink California prior
         to our  acquisition  of uWink  California and  compensation  paid by us
         following such acquisition.

(8)      Mr.  Hibarger's  salary  in 2002  was  accrued  but not  paid by  uWink
         California.  On November 15,  2002,  uWink  California  entered into an
         agreement  allowing  Mr.  Hibarger to convert his accrued  compensation
         into  equity.   We  assumed  this  agreement  in  connection  with  the
         acquisition of uWink California and Mr. Hibarger subsequently converted
         on December 16, 2003, $56,823 of accrued 2002 salary into 36,008 shares
         of our common stock. The remaining amount was forgiven by Mr. Hibarger.

(9)      This  option  to  purchase  126,739  shares  of our  common  stock  was
         originally  granted by uWink California on July 1, 2002. We assumed the
         option in connection with the acquisition of uWink California.

         Kevin B.  Keating,  Steve  Cuthbert and Allen  Avery,  our former chief
executive officers during 2003 prior to the acquisition of uWink California, did
not receive any compensation or remuneration during their employment with us.

<TABLE>
<CAPTION>
                        OPTION GRANTS IN LAST FISCAL YEAR

                                INDIVIDUAL GRANTS

 ---------------------------------------------------------------------------------------------------------------------
            NAME               NUMBER OF SECURITIES       % OF TOTAL OPTIONS     EXERCISE OR BASE    EXPIRATION DATE
                                UNDERLYING OPTIONS       GRANTED TO EMPLOYEES
                       GRANTED IN FISCAL YEAR PRICE ($/SH)
 --------------------------- -------------------------- ------------------------ ------------------ ------------------
<S>                                 <C>     <C>                  <C>                   <C>              <C>   <C>
 Andrew Rifkin                      158,423 (1)                  27.1%                 $0.32            11/06/12

 Raymond S. Hibarger                126,739 (2)                  21.7%                 $0.32            07/01/12
</TABLE>
____________________________

(1)      This  option  to  purchase  158,423  shares  of our  common  stock  was
         originally  granted by uWink California on November 6, 2002 at the fair
         market value of the uWink California  common stock on the date of grant
         (as  determined  by the board of  directors  of uWink  California).  We
         assumed  the  option  in  connection  with  the  acquisition  of  uWink
         California  on  December  4,  2003.  The option is subject to a vesting
         schedule  consisting  of an initial  6-month cliff and 30 equal monthly
         installments  thereafter.  As of March 31, 2004, the option to purchase
         70,411 shares was fully vested.

(2)      This  option  to  purchase  126,739  shares  of our  common  stock  was
         originally  granted  by uWink  California  on July 1,  2002 at the fair
         market value of the uWink California  common stock on the date of grant
         (as determined by their board of  directors).  We assumed the option in
         connection  with the  acquisition  of uWink  California  on December 4,
         2003.  The  option is subject to a vesting  schedule  consisting  of an
         initial 6-month cliff and 30 equal monthly installments thereafter.  As
         of March 31,  2004,  the  option  to  purchase  70,411shares  was fully
         vested.

DIRECTOR COMPENSATION

         At the present time,  directors  receive no compensation for serving as
directors of our company;  however, we may in the future begin to compensate our
non-officer  directors.  All directors  receive  reimbursement for out-of-pocket
expenses in attending  Board of Directors  meetings.  From time to time,  we may
engage  certain  members of our Board of  Directors  to perform  services on our
behalf and will compensate such persons for the services which they perform.

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

         At the  present  time,  we do not have  any  employment  agreements  or
change-in-control arrangements with any of our executive officers.


                                       17
<PAGE>



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

         The  following  table shows the  beneficial  ownership of our shares of
common  stock as of March 31,  2004 by (i) each  person who is known by us to be
the  beneficial  owner of more than five percent (5%) of our common stock,  (ii)
each of our  directors  and  executive  officers  and  (iii) all  directors  and
executive  officers as a group.  Except as otherwise  indicated,  the beneficial
owners  listed in the table  have sole  voting  and  investment  powers of their
shares.
<TABLE>
<CAPTION>

NAME AND ADDRESS OF BENEFICIAL OWNER                       NUMBER OF SHARES      PERCENT OF CLASS
------------------------------------------------------ ------------------------- ------------------
<S>               <C> <C>                                     <C>                      <C>
Nolan K. Bushnell (1) (2)                                     1,769,359                20.0

Peter J. Sprague (1) (3)                                       698,383                  7.8

Bruce P. Kelly (1) (4)                                         126,739                  1.4

Andrew Rifkin (1) (5)                                           99,772                  1.1

Raymond Hibarger (1) (6)                                       153,067                  1.7

Elkron International Holdings S.A. (7) (8)                     595,458                  6.7

All officers and directors as a group                         2,847,320                30.1
(5 persons)
</TABLE>

------------------------------------------------------
 (1)     Address is 5443 Beethoven Street, Los Angeles, California 90066.
 (2)     Includes  1,576,082  shares held by the Bushnell Living Trust,  177,434
         shares held by the Nolan K. Bushnell  Insurance Trust and 15,843 shares
         issuable upon exercise of a stock option held by Nancy  Bushnell,  wife
         of Mr. Bushnell.
(3)      Includes 553,160 shares held by Mr. Sprague and 145,223 shares issuable
         upon exercise of a warrant held by Mr. Sprague.
(4)      Includes  63,369  shares held by Mr.  Kelly as trustee of The  Phillips
         Trust.
(5)      Includes 79,212 shares issuable upon exercise of a stock option held by
         Mr. Rifkin.
(6)      Includes  15,843 shares issuable upon exercise of a warrant and 101,216
         shares issuable upon exercise of a stock option, both of which are held
         by Mr. Hibarger.
(7)      Address is Via Bologna, 188/C 10154 Torino, Italy.
(8)      Includes 523,788 shares held by Elkron  International and 71,670 shares
         issuable upon exercise of a warrant held by Elkron International.

 *       Less than 1%.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Not applicable.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Index to Exhibits

Exhibit No.

3.1      Articles of Incorporation of uWink, Inc. (formerly known as Prologue)*

3.2      Articles of Amendment of uWink, Inc. (formerly known as Prologue)*

3.3      Amended and Restated Bylaws of the uWink, Inc.*

10.1     Securities Purchase Agreement and Plan of Reorganization dated November
         21, 2003 by and among the company, uWink, and the stockholders of uWink
         (1).


                                       19
<PAGE>

16       Letter from Pritchett Siler & Hardy PC, dated January 20, 2004 (2).

21.1     Subsidiaries of the uWink, Inc.*

31.1     Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*

31.2     Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer*

32.1     Certification Pursuant to 18 U.S.C.ss.1350 of Chief Executive Officer*

32.2     Certification Pursuant to 18 U.S.C.ss.1350 of Chief Financial Officer*

(b) Reports on Form 8-K

Form 8-K filed December 8, 2003, reporting the securities purchase agreement and
plan of reorganization. See Item 1, above


*filed herewith

         (1)  Incorporated  by  reference  from our  Report  on Form  8-K  dated
December 8, 2003.

         (2) Incorporated by reference from our Report on Form 8-K dated January
16, 2004.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Stonefield  Josephson,  Inc., is our  independent  auditor.  Stonefield
Josephson  audited our financial  statements  for the fiscal year ended December
31, 2003.  Pritchett  Siler & Hardy PC audited our financial  statements for the
fiscal year ended  December 31, 2002 but was replaced by the company's  board of
directors  effective  January 16, 2004 as reported on the Current Report on Form
8-K on January 20, 2004.

AUDIT AND NON-AUDIT FEES

         Aggregate fees for professional  services  rendered to us by Stonefield
Josephson, LLP and its predecessor firm Pritchett Siler & Hardy PC for the years
ended December 31, 2003 and 2002 were as follows:
<TABLE>
<CAPTION>

<S>                                                           <C>                     <C>
              Services Provided                               2003                    2002
              -----------------                               ----                    ----
              Audit Fees...........................         $  9,090         $        3,515
              Audit Related Fees...................  $  [ _________]         $  [ _________]
              Tax Fees.............................  $  [ _________]         $  [ _________]
              All Other Fees.......................  $  [ _________]         $  [ _________]
                      Total........................  $  [ _________]         $  [ _________]
</TABLE>


         AUDIT FEES.  The aggregate fees billed for the years ended December 31,
2003 and 2002 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
December  31, 2003 and 2002 for the audit or review of our  financial  statement
that are not reported under Audit Fees. [CONFIRM]

         TAX FEES.  There were no fees billed for the years ended  December  31,
2003 and 2002 for  professional  services by  Stonefield  Josephson or Pritchett
Siler & Hardy for tax compliance, tax advice and tax planning. [CONFIRM]

                                       20
<PAGE>

         ALL OTHER FEES.  The aggregate fees billed for the years ended December
31, 2003 and 2002 were for  services  other than the services  described  above.
These services include __________________________. [CONFIRM]

         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 Stonefield  Josephson 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 ___%[CONFIRM]


                                       21
<PAGE>



                                   SIGNATURES

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

                                      uWINK, INC.


Dated April 14, 2004                  By: /s/ Nolan K. Bushnell
                                           -----------------------------------
                                          Nolan K. Bushnell
                                          President, Chief Executive Officer
                                          and Chief Financial Officer



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


<TABLE>
<CAPTION>
                  Signatures                                      Title                             Date
------------------------------------------------ -------------------------------------------------------------------

<S>                                                                                                      <C>
/s/ Nolan K. Bushnell                            President, Chief Executive Officer,           March xx, 2004
----------------------------------------
Nolan K. Bushnell                                Chief Financial Officer and Director
                                                 (principal executive officer and
                                                 principal financial officer)

/s/ Bruce P. Kelly                               Director                                      March xx, 2004
----------------------------------------
Bruce P. Kelly

/s/ Peter J. Sprague                             Director                                      March xx, 2004
----------------------------------------
Peter J. Sprague
</TABLE>








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