<PAGE>

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

                                   FORM 10-KSB/A
                                  Amendment No. 1

(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, 2005

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

          For the transition period from _________________ to _______________.


                         Commission File Number 0-27689


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

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

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

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


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

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

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

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

                                 Yes [X] No [_]

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

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

The issuer's revenue for the fiscal year ended December 31, 2005 was
$682,604.

The market value of the voting stock held by non-affiliates of the
issuer as of November 24, 2006 was approximately $36,530,642.

The number of shares of the common stock outstanding as of November 27,
2006 was 24,984,179.

                       DOCUMENTS INCORPORATED BY REFERENCE

Not applicable.

Transitional Small Business Disclosure Format (check one)

                                 Yes [_] No [X]




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uWink, Inc. (referred to in this discussion as "we", "us" or "our") is amending
its Annual Report on Form 10-KSB for the year ended December 31, 2005 (the
"Original Report") to revise certain information presented in the Original
Report. We have revised our disclosure in Items 1, 5, 6, 9, 10, and 12 of this
report. In addition, we have revised the statement of cash flows for the year
ended December 31, 2005 presented in the financial statements included in the
Original Report to present separately proceeds from the issuance of related
party and non-related party debt and repayment of related party and non-related
party debt. We have also revised our disclosure in Notes 1, 3, 6, 7, 8, 12, 13
and 16 to the financial statements presented in the Original Report.

The disclosures in this Form 10-KSB/A continue to speak as of the date of the
Original Report, and do not reflect events occurring after the filing of the
Original Report. Accordingly, this Form 10-KSB/A should be read in conjunction
with our other filings made with the Securities and Exchange Commission
subsequent to the filing of the Original Report, including any amendments to
those filings. The filing of this Form 10-KSB/A shall not be deemed an admission
that the Original Report when made included any untrue statement of a material
fact or omitted to state a material fact necessary to make a statement not
misleading.






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                                TABLE OF CONTENTS

PART I

ITEM NUMBER AND CAPTION                                                    PAGE
                                                                          NUMBER

ITEM 1.  DESCRIPTION OF BUSINESS                                           2

ITEM 2.  DESCRIPTION OF PROPERTY                                           9

ITEM 3.  LEGAL PROCEEDINGS                                                 9

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               9

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS          10

ITEM 6.  PLAN OF OPERATION AND MANAGEMENT'S DISCUSSION AND ANALYSIS        15

ITEM 7.  FINANCIAL STATEMENTS                                              28

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE                                          29

ITEM 8A. CONTROLS AND PROCEDURES                                           29

ITEM 8B. OTHER INFORMATION                                                 30

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT                 30

ITEM 10. EXECUTIVE COMPENSATION                                            32

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                    35

ITEM 13. EXHIBITS                                                          37

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                            38





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                    NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

    o    the accuracy of our estimates and projections;

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

    o    changes in our business plan and corporate strategies; and

    o    other risks and uncertainties discussed in greater detail in the
         sections of this report, including those captioned "RISK FACTORS" and
         "PLAN OF OPERATION AND MANAGEMENT'S DISCUSSION AND ANALYSIS ".

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


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<PAGE>

                                     PART 1

ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

         uWink, Inc. ("uWink", "we", "us", or the "Company") is a digital
entertainment company, based in Los Angeles, California, that designs and
develops interactive entertainment software and platforms for restaurants, bars,
and mobile devices.

         Over several years of operation, we have invested substantial time and
capital in the development of a uniform development platform. We have used this
platform to develop over 70 short-form video games (the "uWink Game Library")
and interactive entertainment and vending products.

         For the past two years we have derived our revenue from the sale of our
SNAP! countertop game platforms (and its predecessor platforms) and the Bear
Shop (aka Boxter Bear, hereinafter "Bear Shop") entertainment vending platform,
products the entertainment vending platform dispenses, such as plush bears and
related clothing, and software licensing fees.

         SNAP!, our countertop video game terminal, enables customers to play
over 70 short form video games from the uWink Game Library.

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

         We have made a strategic decision to reposition the Company as an
entertainment restaurant company, as more fully described in this report. As a
result, we are winding down our SNAP! and Bear Shop manufacturing and sales
operations and we have decided not to enter the 2006 marketing cycle of
tradeshows and advertising for SNAP! and Bear Shop. This decision also allowed
us to reduce staff and liquidate inventory and product-related receivables.
Given our perception of the market opportunity in combining dining with short
form, social video gaming/entertainment and our management team's experience in
the digital entertainment and restaurant industries (our CEO, Nolan Bushnell,
founded both Atari and Chuck E. Cheese and our Director of Restaurant Operations
(on a consulting basis), John Kaufman, is the former Vice President of
Operations for California Pizza Kitchen), we believe that the restaurant project
is the most cost effective way to monetize our investment in technology. We are
currently seeking to license our SNAP! and the Bear Shop intellectual property
to 3rd party manufacturers in exchange for licensing fees.

         Going forward, our strategy is to leverage our network and
entertainment software assets, including the uWink Game Library, to develop an
interactive entertainment restaurant concept, the uWink Bistro. As described
more fully in this report, the uWink Bistro is designed to allow customers to
order food, drinks, and games/media at the table through touch screen terminals.
This concept integrates food and our interactive entertainment software to
provide what we believe to be a new entertainment dining experience. We are
currently planning on opening our first uWink Bistro in the Los Angeles,
California area in the summer of 2006. We have not yet generated any revenue
from the uWink Bistro.

         On March 3, 2006, we raised gross proceeds of $1,500,000 via the
private placement of 5,000,000 shares of common stock to 22 investors. The
investors in the transaction also received immediately exercisable, three-year
warrants to purchase an aggregate of 2,500,000 shares of common stock priced at
$0.345 per share. Merriman Curhan Ford & Co. acted as sole placement agent for
this transaction. We paid to Merriman Curhan Ford & Co, as placement agent, a
commission of $75,000 (equal to 5% of the aggregate offering price) plus $5,000
in expenses. Merriman also received an additional 450,000 immediately
exercisable, three-year warrants to purchase common stock at $0.345 per share as
part of this fee arrangement.

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         As more fully described under Plan of Operations below, we plan to use
the net proceeds from this private placement to fund the capital expenditures,
and provide the operating capital, required to open our first uWink Bistro.

CORPORATE HISTORY AND 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. Our wholly-owned subsidiary, uWink California, Inc.
was organized as a Delaware corporation on June 10, 1999.

         Prior to the acquisition of uWink California, Inc. described below, we
had not generated significant revenues and were considered a development stage
company as defined in Statement of Financial Accounting Standards No. 7. We were
seeking business opportunities or potential business acquisitions.

         Pursuant to a Securities Purchase Agreement and Plan of Reorganization
dated November 21, 2003 among Prologue, uWink, Inc., a Delaware corporation
("uWink-DE") and its stockholders, Prologue received all the issued and
outstanding shares of uWink-DE's capital stock. Prologue issued 1 share of its
common stock for every 3.15611 shares of uWink-DE capital stock. The uWink-DE
management team and board of directors became the management team and board of
directors of Prologue; Prologue changed its name to uWink, Inc.; and uWink-DE
changed its name to uWink California, Inc. ("uWink Calfornia").

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

OUR PRODUCTS AND SERVICES -  THE UWINK BISTRO

         We are currently developing an entertainment restaurant concept called
the uWink Bistro. uWink Bistro is designed to allow customers to order food,
drinks, and games/media at the table through touch screen terminals. We plan an
interior with computer generated images projected on the walls that will provide
the flexibility to modify the decor and the experience as the day progresses.
The uWink Bistro concept is designed to integrate high quality food and uWink's
interactive entertainment software to provide what we believe is a new
entertainment dining experience that encourages social interaction, group play,
and fun.

         Prominent features of our concept are expected to include:

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

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

         DISTINCTIVE CASUAL DINING EXPERIENCE AND VALUE PROPOSITION. We are
         aiming our concept to compete in the "casual dining" segment of the
         restaurant market. We believe our concept will combine some of the
         best elements of the casual dining market, including freshly prepared
         food with generous portions at attractive price points and quick
         turnaround times, with innovative at-the-table ordering and
         entertainment to create a new experience for casual dining patrons. We
         are targeting our average check to be $10 to $15 per guest, excluding
         alcoholic beverages; at this price point we believe that we will
         provide an attractive and entertaining value proposition for casual
         diners.


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         Led by Nolan Bushnell, our Chairman and Chief Executive officer and the
founder of both Atari and Chuck E. Cheese, and our Director of Restaurant
Operations (on a consulting basis), John Kaufman, former Vice President of
Operations at California Pizza Kitchen, we believe we have assembled a
management team with the vision and experience to successfully execute on the
uWink Bistro concept.

OUR BUSINESS AND GROWTH STRATEGY

         We plan to open our first restaurant in Woodland Hills, California (Los
Angeles area) at the Westfield Promenade Shopping Center in the summer of 2006.
This location is approximately 5300 square feet and has seating for
approximately 160 guests, excluding patio seats. As described in more detail
under Description of Properties below, effective as of April 10, 2006, we have
secured an approximately 10 year lease on this location.

         Our near term strategy is to prove our concept at the Woodland Hills
location and subsequently seek to open 2 to 3 additional company-owned and/or
managed restaurants within the next 12 to 18 months. We are currently in
discussions with a number of potential joint venture partners that would provide
the capital and real estate for additional restaurants that would be managed,
but not owned, by the Company.

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

         We are targeting 5,000 - 10,000 square foot locations in high traffic
shopping centers as the sites for future restaurants.

UNIT ECONOMICS

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

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

OUR MENU

         We expect that our menu will feature a selection of appetizers, pizzas,
burgers, salads, pastas, and desserts. We are targeting menu prices from $3.95
to $8.95 for appetizers and soups, $5.95 to $9.95 for salads, $6.95 to $9.95 for
sandwiches and lunch entrees and $6.95 to $10.95 for dinner entrees. We believe
our average guest check for lunch will be $10.00 to $12.00, and for dinner will
be $12.00 to $15.00, excluding alcoholic beverages.

DECOR AND ATMOSPHERE

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


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MARKETING AND ADVERTISING

         We expect that our ongoing marketing strategy will consists of various
public relations activities, direct mail, and word-of-mouth recommendations. We
believe that public relations and word-of-mouth recommendations will likely be a
key component in driving guest trial and usage.

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

RESTAURANT OPERATIONS

         John Kaufman, our Director of Restaurant Operations on a consulting
basis, helped build California Pizza Kitchen from a single restaurant into one
of the country's leading restaurant chains. Mr. Kaufman also served as Chief
Operating Officer of Rosti restaurants and President and Chief Operating Officer
of the Koo Koo Roo restaurant chain.

         Mr. Kaufman will be responsible for all facets of restaurant operations
and food and menu development for the uWink Bistro.

COMPETITION

         The restaurant industry is highly competitive. Key competitive factors
in the industry include the taste, quality, and price of the food products
offered, quality and speed of guest service, brand name identification,
attractiveness of facilities, restaurant location, and overall dining
experience.

         While we believe that there are no significant competitors offering
at-the-table touchscreen ordering and entertainment in the manner that we expect
to, there are restaurant companies, such as Dave and Busters, that offer
away-from-the-table electronic games as part of the experience. In addition,
many bars and restaurants offer some form of trivia game or another (both
electronic and paper and pencil) and some quick service restaurants have
experimented with electronic kiosk ordering.

         Although we believe we will compete favorably with respect to each of
these factors, there are a substantial number of restaurant operations that will
compete directly and indirectly with us, virtually all of which have
significantly greater financial resources, higher revenue, and greater economies
of scale. Additionally, there is competition for highly qualified restaurant
management employees and for attractive locations suitable for upscale, high
volume restaurants.

OUR PRODUCTS AND SERVICES -   SNAP! AND BEAR SHOP

         Snap! is a web-enabled, network-capable, coin-operated touch-screen
entertainment terminal that delivers over 70 proprietary and customizable
short-form video games. Approximately two feet high by two feet wide, Snap!
features 360 degree rotation, a high-resolution liquid crystal display screen,
and a currency reader able to identify and process coins, bills, and credit
cards.

         Typical locations for Snap! include traditional amusement venues such
as bars and arcades, as well as non-traditional public spaces, such as airport
lounges, chain restaurants, coffee houses, and hotels. The Snap! video games are
all short-form (less than five minutes in duration) games of skill, which
include trivia, sports contests, strategy, card games and other hand-eye
challenges.

         Bear Shop is a vending machine that allows purchasers to design their
own "stuffed toy bear" characters with unique colors, clothing, and accessories.
Bear Shop offers a unique packaging solution that allows the user to see the
stuffed animal grow right before his or her own eyes. Bear Shop is an
approximate seven-foot by three-foot cabinet-style machine with an embedded

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high-resolution liquid crystal display touch-screen that interfaces with the end
user for functional commands. Typical locations for Bear Shop include
traditional amusement venues, such as arcades and amusement parks, as well as
shopping centers and supermarkets.

         As discussed above, we have made a strategic decision to reposition the
Company as an entertainment restaurant company. As a result, we are winding down
our SNAP! and Bear Shop manufacturing and sales operations and we have decided
not enter to the 2006 marketing cycle of tradeshows and advertising for SNAP!
and Bear Shop. We are currently seeking to license our SNAP! and Bear Shop
intellectual property to 3rd party manufacturers in exchange for licensing fees.

DISTRIBUTION AND MARKETING

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

         Prior to our decision to wind down our Bear Shop operations, we
distributed and marketed Bear Shop to the amusement market through established
coin operated industry distributors and dealers, and licensed the product to
manufacturing and marketing partners in certain territories. On February 3,
2005, we signed a three-year manufacturing and exclusive distribution agreement
with Bell-Fruit Games, Ltd., the leading designer and manufacturer of gaming and
amusement machines in the United Kingdom. Bell-Fruit Games is a subsidiary of
Danoptra Holdings Ltd., formerly known as Kunick PLC. Under the terms of the
agreement, we granted Bell-Fruit Games a license to manufacture our Bear Shop
machine. In addition, the agreement awards exclusive marketing and distribution
rights for Bear Shop to Bell-Fruit Games in the United Kingdom, Germany, Italy
and Spain. The agreement provides that we are to receive per-unit royalties for
each machine sold, and we have retained exclusive rights to supply the bears,
clothing and accessory "consumables" to Bell-Fruit Games' customers. We believe
that this agreement is no longer in effect as of December 31, 2005. We have
recorded no revenue under this agreement through the date of this report.

COMPETITION

         Our primary markets for SNAP! and Bear Shop involve end users who play
games and make impulse purchases of novelty items in public amusement places.
Both Snap! and Bear Shop products serve the coin-operated entertainment
amusement market, approximately a $6 billion marketplace according to "Vending
Times" January 2005. 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! 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

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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
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 Bear Shop product, there is no direct competition as far we are
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.

MANUFACTURING RELATIONSHIPS

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

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

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

CUSTOMERS

         We depended on a small group of customers to generate the majority of
our SNAP! and Bear Shop sales. For the year ended December 31, 2005, we had
approximately 24 active customers. Our single largest customer represented 45%
of our revenue for 2005. Our 5 largest customers comprised 70% of our revenue
for 2005. Our 10 largest customers comprised 78% of our revenue for 2005.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

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

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


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GOVERNMENT REGULATION

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

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

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

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

RESEARCH AND DEVELOPMENT

         During the years ended December 31, 2005 and 2004, we spent $151,542
and $351,332, respectively, on research and development activities related to
the uWink Bistro, new games, kiosks and amusement products in general. None of
the costs associated with these activities are borne directly by our customers.

EMPLOYEES

         As of April 17, 2006, we employ eight people on a full-time
basis, four of whom are corporate management and staff, one of whom is
engineering staff and three of whom are operations staff. In addition, John
Kaufman, our Director of Restaurant Operations, is currently a paid monthly
consultant. We are currently outsourcing, and plan to continue to outsource,
certain software engineering personnel.

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


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AVAILABLE INFORMATION

         We are not currently required to deliver an annual report to security
holders, and due to our limited resources we have elected to not voluntarily
send an annual report to our security holders. Our investor relations website is
www.uwink.com. We make available on this website, under "Investor Relations",
free of charge, our annual reports on Form 10-KSB, quarterly reports on Form
10-QSB, current reports on Form 8-K, and amendments to those reports as soon as
reasonably practicable after we electronically file or furnish such materials to
the U.S. Securities and Exchange Commission ("SEC").

ITEM 2. DESCRIPTION OF PROPERTIES

         Our offices are located at 12536 Beatrice Street, Los Angeles,
California 90066, and consist of 8,500 square feet of office and warehouse space
at the rate of $10,200 per month. The term of this lease, which commenced May 1,
2005, is three years. We are currently attempting to sublease all or part of the
space, and relocate to approximately 2,500 square feet. We incurred rent expense
of $115,057 and $112,225 for the years ended December 31, 2005 and 2004,
respectively.

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

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

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

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

         Our obligation to pay rent under this lease commences on the earlier of
the date we open for business and October 5, 2006.

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

         There have been no matters submitted to a vote of security holders.

                                       9




<PAGE>

                                     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 bid information for our
common stock on the OTC Bulletin Board, as reported by the OTC Bulletin Board,
for each calendar quarter of 2004 and 2005. These quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions. We consider our common stock to be thinly traded
and, accordingly, reported sale prices may not be a true market-based valuation
of our common stock.


         Quarter Ended                     High                      Low

         March 31, 2004                   $5.00                     $1.05
         June 30, 2004                    $2.45                     $1.60
         September 30, 2004               $3.15                     $1.85
         December 31, 2004                $2.75                     $1.15


         Quarter Ended                     High                     Low

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

         As of March 31, 2006, there were approximately 650 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.

         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             2,969,225                $1.35             1,480,807
      approved by security holders (1)

            Total                               2,969,225                $1.35             1,480,807
</TABLE>


                                       10




<PAGE>

    (1)  In connection with our acquisition of uWink California, we assumed the
         uWink.com, Inc. 2000 Employee Stock Option Plan (the "2000 Plan") and
         584,917 options previously issued under the 2000 Plan. The 2000 Plan
         provides for the issuance of up to 681,218 (after giving effect to a
         3.15611 reverse stock split in connection with the uWink California
         acquisition) incentive and non-qualified stock options to employees,
         officers, directors and consultants of the Company. Options granted
         under the 2000 Plan vest as determined by the board of directors,
         provided that any unexercised options will automatically terminate on
         the tenth anniversary of the date of grant. On June 24, 2004, the
         Company filed a registration statement of Form S-8 to register 584,917
         of these shares.

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

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

RECENT SALES OF UNREGISTERED SECURITIES.

DURING 2006

         On January 10, 2006, we issued 500,012 shares of common stock valued at
$150,003 to 4 accredited, individual investors on conversion of $125,003
principal amount of convertible notes plus $25,000 of accrued interest. These
issuances were made pursuant to the exemption from registration provided by SEC
Rule 506 promulgated under Regulation D of the Securities Act of 1933.

         On March 3, 2006, we sold 5,000,000 shares of common stock to 22
investors (one accredited institutional investor and 21 accredited individual
investors)for gross proceeds of $1,500,000. The investors in the transaction
also received immediately exercisable, three-year warrants to purchase an
aggregate of 2,500,000 shares of common stock priced at $0.345 per share.
Merriman Curhan Ford & Co. acted as sole placement agent for this transaction.
We paid to Merriman Curhan Ford & Co, as placement agent, a commission of
$75,000 (equal to 5% of the aggregate offering price) plus $5,000 in expenses.
Merriman also received an additional 450,000 immediately exercisable, three-year
warrants to purchase common stock at $0.345 per share as part of this fee
arrangement. These issuances were made pursuant to the exemption from
registration provided by SEC Rule 506 promulgated under Regulation D of the
Securities Act of 1933.

         On March 31, 2006, we issued 115,000 shares of common stock, valued at
$65,550 based on the closing price of the common stock on the date of the
agreement, to Ms. Alissa Bushnell, daughter of our CEO Nolan Bushnell, in
payment for public relations services provided to the Company during 2005. This
issuance was made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.

         On March 31, 2006, we issued 50,000 shares of common stock valued at
$21,000, based on the closing price of the common stock on the date of the
agreement, to the holder of a $120,000 convertible note, an accredited investor,
in consideration for the holder extending the maturity date of the note from
November 2005 to March 2006. This issuance was made pursuant to the exemption
from registration provided by SEC Rule 506 promulgated under Regulation D of the
Securities Act of 1933.

DURING 2005

         On January 1, 2005, we issued 50,000 shares of common stock to Mr. Paul
Abramowitz in exchange for financial consulting services valued at $127,500.
This issuance was made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.

         On January 14, 2005, we issued 60,000 shares of common stock to Mr.
Jack McConnaughy in exchange for business development services valued at
$90,000. This issuance was made pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act of 1933.

                                       11



<PAGE>

         On January 19, 2005, we issued 12,500 shares of common stock to Falcon
Capital for financial consulting services valued at $21,875. This issuance was
made pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.

         On March 8, 2005, we issued 40,000 shares of common stock to CCRI, Inc.
in exchange for public relations services valued at $38,000. This issuance was
made pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.

         On March 8, 2005, we issued 400,000 shares of common stock to Redwood
Consultants, Inc. in exchange for investor relations services valued at
$444,000. This issuance was made pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act of 1933.

         On March 14, 2005, we sold 100,000 shares of common stock for cash to
Mr. James Stepanian, an accredited investor, in a private placement offering for
gross proceeds of $75,000. Pursuant to this transaction, we agreed with Mr.
Stepanian that, if we did not register these shares, we would issue to Mr.
Stepanian an additional aggregate of 40,000 shares of our common stock as a
penalty. We did not register Mr. Stepanian's shares and subsequently issued to
him the additional 40,000 shares, as described below. This issuance was made
pursuant to the exemption from registration provided by SEC Rule 506 promulgated
under Regulation D of the Securities Act of 1933.

         On April 1, 2005, we issued 2,600 shares of common stock to Mr. Gerry
Berg in exchange for financial consulting service valued at $2,737. This
issuance was made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.

         On April 1, 2005, we issued 13,500 shares of common stock to Mr.
Lawrence C. Early in exchange for consulting services valued at $13,750. This
issuance was made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.

         On April 1, 2005, we issued 7,500 shares of common stock to New Capital
Advisors, Inc. in exchange for financial consulting services valued at $7,895.
This issuance was made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.

         On April 1, 2005, we issued 20,000 shares to Mr. James Stepanian, an
accredited investor, valued at $17,000 as a financial penalty for failing to
register common stock held by Mr. Stepanian. On March 14, 2005 we agreed with
Mr. Stepanian that we would issue to him these additional shares if we did not
register the shares of common stock purchased by Mr. Stepanian on March 14,
2005. This issuance was made pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act of 1933.

       On April 12, 2005, we issued 50,000 shares to Burt Martin Arnold in
exchange for financial consulting services valued at $46,500. This issuance was
made pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.

         On May 15, 2005, we sold 533,458 shares of common stock for cash to 6
accredited, individual investors for $293,402. In addition, we issued these
investors warrants to purchase 533,458 shares of our common stock at $1.50 per
share. There are no registration rights associated with these warrants. These
warrants are immediately exercisable and expire on May 15, 2010. These issuances
were made pursuant to the exemption from registration provided by SEC Rule 506
promulgated under Regulation D of the Securities Act of 1933.

         On May 25, 2005, we issued 121,986 shares of common stock to Mr.
Scottie Pippen upon conversion of $150,000 in principal and $42,500 in accrued
interest outstanding on a convertible note issued in 2002. This issuance was
made pursuant to the exemption from registration provided by SEC Rule 506
promulgated under Regulation D of the Securities Act of 1933.

         On August 3, 2005, we issued 10,000 shares to Mr. James Stepanian, an
accredited investor, valued at $5,500 as a financial penalty for failing to
register common stock held by Mr. Stepanian. On March 14, 2005, we agreed with
Mr. Stepanian that we would issue to him these additional shares if we did not
register the shares of common stock purchased by Mr. Stepanian on March 14,
2005. This issuance was made pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act of 1933.

       On September 12, 2005, we issued 50,000 shares to Friedland Capital in
exchange for consulting services valued at $22,500. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.

         On October 7, 2005, we issued 10,000 shares to Mr. James Stepanian, an
accredited investor, valued at $6,000 as a financial penalty for failing to
register common stock held by Mr. Stepanian. On March 14, 2005 we agreed with
Mr. Stepanian that we would issue to him these additional shares if we did not
register the shares of common stock purchased by Mr. Stepanian on March 14,
2005. This issuance was made pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act of 1933.

                                       12



<PAGE>

DURING 2004

         From January 16, 2004 to March 19, 2004 we sold 719,521 shares of
common stock for gross proceeds of $1,439,050 to 23 accredited, individual
investors. The Company paid $190,865 in commissions, issued 43,850 shares of the
Company's common stock valued at $87,700 and issued 245,000 warrants to purchase
the Company's common stock at an exercise price of $2.00 per share valued at
$443,039 to Falcon Capital in payment for services related to the sales of the
Company's securities. The warrants are immediately exercisable and are
exercisable for 5 years. There are no registration rights associated with the
warrants. The fair value of the warrants was calculated using the Black Scholes
option pricing model using the following assumptions: risk free rate of return
of 4%, volatility of 84%; expected life of 5 years and dividend yield of 0%. The
fair value of the warrants and the placement agent's commission and expenses
were accounted for as cost of raising equity with a corresponding amount debited
to additional paid-in capital. These issuances were made pursuant to the
exemption from registration provided by SEC Rule 506 promulgated under
Regulation D of the Securities Act of 1933.

         On November 15, 2002, uWink California entered into agreements with its
employees allowing them to convert their accrued compensation into equity
(collectively, the "Employee Notes"). We assumed the Employee Notes in
connection with our acquisition of uWink California. During the three months
ended March 31, 2004, we issued 48,584 shares of common stock in exchange for
accrued compensation of $108,709 pursuant to the terms and conditions set forth
in the Employee Notes. These issuances were made pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act and Rule 506 of
Regulation D.

         On April 1, 2004, we issued 30,000 shares of common stock to CCRI, Inc.
in exchange for investor relation services valued at $150,000 rendered on behalf
of the Company. The issuance was made pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act.

         On April 1, 2004, we issued 5,000 shares of common stock to Jaffoni &
Collins for public relations services valued at $10,000 rendered on behalf of
the Company. The issuance was made pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act.

         On April 1, 2004, we issued 43,850 shares of common stock valued at
$87,700 to Falcon Capital for selling shares of common stock in the Company's
private placement offering in the first quarter of 2004. These shares are
reflected as shares to be issued on the March 31, 2004 balance sheet. The
issuance was made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act.

         On April 1, 2004, we issued 150,000 immediately exercisable 5-year
warrants to CCRI, Inc. at exercise prices ranging from $5-$9 for financial
consulting services rendered. The Company recognized expense equal to the fair
value of the warrants of $474,216. The fair value of the warrants was calculated
using the Black Scholes option pricing model using the following assumptions:
risk free rate of return of 4%, volatility of 84%; expected life of 5 years and
dividend yield of 0%. The issuances were made pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act.

         On May 19, 2004, we issued 79,211 warrants to purchase the Company's
common stock at an exercise price of $0.03 to Scientific Games in connection
with the conversion by Scientific Games of a prepaid licensing fee into common
stock. The Company recognized expense of $125,000 for the three month period
ended June 30, 2004 in connection with the issuance of the 79,211 warrants due
to Scientific Games. Scientific Games exercised these warrants on May 19, 2004
These issuances were made pursuant to the exemption from registration provided
by SEC Rule 506 promulgated under Regulation D of the Securities Act of 1933.

         Beginning on May 11, 2004 and ending on October 21, 2004, we sold
890,992 shares of common stock for gross proceeds of $1,559,124 to 58
accredited, individual investors. Each investor also received a warrant to
purchase one share of our common stock at an exercise price of $3.50 per share
for every share of common stock purchased in the offering. The warrants are
immediately exercisable, and will remain exercisable for five years. There are
no registration rights associated with the warrants. These warrants were issued
on October 1, 2004. Falcon Capital acted as a placement agent for this offering
and received a finder's fee of $191,777 and also received 43,850 shares of the
Company's common stock in payment for services related to the sales of the
Company's securities. In addition, the Company issued 85,000 warrants to
purchase one share of our common stock to Falcon Capital at an exercise price of
$1.75 per share valued at $198,013 as compensation for arranging this
transaction. The warrants are immediately exercisable and are exercisable for 5
years. There are no registration rights associated with the warrants. The fair
value of the warrants was calculated using the Black Scholes option pricing
model using the following assumptions: risk free rate of return of 5%,
volatility of 84%; expected life of 5 years and dividend yield of 0%. The fair
value of the warrants and the placement agent's commission and expenses were
accounted for as cost of raising equity with a corresponding amount debited to
additional paid-in capital. The offer and sale of the common stock and warrants
to the investors was exempt from the registration requirements of the Securities
Act insofar as these issuances were made only to persons who are not "U.S.
Persons" as defined in Regulation S and were not sold in the United States.

                                       13



<PAGE>

         On July 1, 2004, we issued 10,000 shares of common stock to Mr. Nimish
Patel in exchange for serving on our Board of Directors valued at $25,000. This
issuance was made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act.

         On July 19, 2004, we issued 10,000 shares of common stock to Mr. Gary
Ramirez in exchange for the services of an employee valued at $25,000. This
issuance was made pursuant to the exemption from registration provided by
Section 4(2) of the Securities Act.

         On July 19, 2004, we issued 50,000 shares of its common stock valued at
$125,000 to New Capital Advisors for financial consulting services rendered on
behalf of the Company. This issuance was made pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act.

         On August 11, 2004, we issued 323,288 shares valued at $254,760 to
Scientific Games Corporation in connection with the conversion by Scientific
Games on May 19, 2004 of a $125,000 convertible note and a $125,000 prepaid
licensing fee and the exercise by Scientific Games on May 19, 2004 of warrants
to purchase 158,650 shares of common stock at $0.03 per share. 317,299 of these
shares were reflected as shares to be issued on the balance sheet at June 30,
2004. These issuances were made pursuant to the exemption from registration
provided by SEC Rule 506 promulgated under Regulation D of the Securities Act of
1933.

         On October 1, 2004, we issued 87,500 shares of common stock to Falcon
Capital for investor relations services valued at $153,125. This issuance was
made pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act.

         Between November 2, 2004 and December 6, 2004, we issued $225,003 in
principal amount of one-year convertible notes to 5 accredited individual
investors. The notes were convertible at the option of the holder into shares of
common stock at a conversion price of $1.75 per share. Falcon Capital acted as a
placement agent for this offering and received a finder's fee of $29,250. These
issuances were made only to persons who are not "U.S. Persons" pursuant to the
exemption from registration provided by Regulation S of the Securities Act of
1933. The compensation paid to Falcon Capital was treated in accordance with
generally accepted accounting principles as a reduction to shareholders' equity.

DURING 2003

         Between August 31, 2003 and December 31, 2003, we sold 1,613,884 shares
of common stock to 66 accredited, individual investors for gross proceeds of
$3,227,756. These issuances were made pursuant to the exemption from
registration provided by SEC Rule 506 promulgated under Regulation D of the
Securities Act of 1933.

         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. These issuances
were made pursuant to the exemption from registration provided by SEC Rule 506
promulgated under Regulation D of the Securities Act of 1933.

         In November 2003, we issued 267,240 shares of our common stock valued
at $534,480 to Keating Securities LLC 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 issuances were made pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act and Rule 506 of
Regulation D.

         In November 2003, we issued 82,500 shares of our common stock valued at
$165,000 to Falcon Capital in consideration of services rendered to us in
connection with our acquisition of uWink California. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

         In November 2003, we issued 58,448 shares of our common stock valued at
$116,896 to New Capital Advisors in consideration of services rendered to us in
connection with our acquisition of uWink California. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

         In November 2003, we issued 7,500 shares of our common stock valued at
$15,000 to Kevin R. Keating in consideration of services rendered to us in
connection with our acquisition of uWink California. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

       In November 2003, we issued 2,500 shares of our common stock valued at
$5,000 to Spencer Browne in consideration of services rendered to us in
connection with our acquisition of uWink California. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

                                       14



<PAGE>

       In November 2003, we issued 3,000 shares of our common stock valued at
$6,000 to Thomas Baulch in consideration of services rendered to us in
connection with our acquisition of uWink California. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

         In November 2003, we issued 4,500 shares of our common stock valued at
$9,000 to Margie Blackwell in consideration of services rendered to us in
connection with our acquisition of uWink California. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

         In November 2003, we issued 2,500 shares of our common stock valued at
$5,000 to Bertrand Unger in consideration of services rendered to us in
connection with our acquisition of uWink California. This issuance was made
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

         On various dates during the fourth quarter of 2003, we converted
$862,179 of accrued payroll and related benefits due to employees into 365,107
shares of our common stock. The issuances were made pursuant to the exemption
from registration provided by Section 4(2) of the Securities Act.

         On December 5, 2003, we issued 789,938 shares of common stock to
accredited investors in conversion of $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. These issuances were made pursuant to the exemption from
registration provided by SEC Rule 506 promulgated under Regulation D of the
Securities Act of 1933.

         On December 5, 2003, we issued 380,215 shares of common stock in
conversion of $600,000 of an advance from a related party, an accredited
investor. The price of the common stock to calculate the number of shares of
$1.58 was based on the price negotiated with the lender and approximates the
fair value of the Company's stock. These issuances were made pursuant to the
exemption from registration provided by SEC Rule 506 promulgated under
Regulation D of the Securities Act of 1933.

         Between December 5, 2003 and January 25, 2004, we exchanged with
accredited investors 2,950,000 and 2,131,395 shares of Series A and Series B
preferred stock, respectively, for 1,610,122 shares of common stock. These
issuances were made pursuant to the exemption from registration provided by SEC
Rule 506 promulgated under Regulation D of the Securities Act of 1933.

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

         Below is a discussion of our plan of operation for the uWink Bistro for
the next twelve months. Following that is our Management's Discussion and
Analysis of our financial condition and results of operations for the years
ended December 31, 2005 and December 31, 2004.

PLAN OF OPERATION - UWINK BISTRO

         As set forth in the description of our business above, we are currently
developing an entertainment restaurant concept called the uWink Bistro. We have
not yet generated any revenue from the uWink Bistro.

         We are currently planning to open our first uWink Bistro in the
Westfield Promenade Shopping Center in Woodland Hills, California (Los Angeles
area) in the summer of 2006. As described in more detail under Description of
Properties above, effective as of April 10, 2006, we have secured an
approximately 10 year lease on this location.

         On March 3, 2006, we raised net proceeds of $1,425,000 via the private
placement of our equity securities. We plan to use the net proceeds from this
private placement to fund the capital expenditures, and provide the operating
capital, required to open our first uWink Bistro.

         We currently expect that we will be required to spend approximately
$500,000 to build out and equip the Woodland Hills location, consisting of
approximately $300,000 for design/interior changes, furniture, fixtures and
equipment and licenses; and approximately $200,000 for media equipment. We will
seek to lease furniture and media equipment, to the extent possible and cost
effective. In addition, we expect we will require another $100,000 to $150,000
for pre-opening costs and working capital to operate the restaurant.

         To staff the restaurant we expect to hire, in the next 2 to 3 months,
an executive chef, 3 managers and 35-50 full time and part time non-managerial
restaurant staff.

                                       15



<PAGE>


         We expect to be able to satisfy our cash requirements for the next 6 to
9 months. We expect to need to raise additional amounts of capital through the
sale of our equity or debt securities within the next 6 to 9 months because we
do not expect the cash flow from the Woodland Hills location to be sufficient to
cover our corporate overhead and expenses. As of the date of this report, we
have no commitments for the sale of our securities nor can we assure you that
such funds will be available on commercially reasonable terms, if at all. Should
we be unable to raise the required funds, our ability to finance our operations
and growth will be materially adversely affected.

         Our strategy is to prove our concept as the Woodland Hills location
within the next 6 to 9 months and then raise additional capital necessary to
fund our operations and to open 2 to 3 additional company-owned and/or managed
restaurants within the next 12 to 18 months. We are currently in discussions
with a number of potential joint venture partners that would provide the capital
and real estate for additional restaurants that would be managed, but not owned,
by the Company.

MANAGEMENT'S DISCUSSION AND ANALYSIS

         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
report.

OVERVIEW

         Our primary sources of revenue are from the sale of our Snap! game
terminals, sale of our Bear Shop units, licensing fees on our software library,
and the sale of inventory refills of our Bear Shop machines.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Software Development Costs

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

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

                                       16



<PAGE>

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

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


BASIS OF PRESENTATION

         The accompanying consolidated financial statements, included in this
report, have been prepared in conformity with accounting principles generally
accepted in the United States of America, which contemplate continuation as a
going concern. We have incurred net losses of $3,239,557 and $4,761,682 for the
years ended December 31, 2005 and 2004, respectively, and had a net working
capital deficiency of $1,248,178 and $633,276 as of December 31, 2005 and 2004,
respectively.

         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, 2005 decreased by $714,811
(51%) from $1,397,415 for the year ended December 31, 2004 to $682,604 for the
year ended December 31, 2005. The decrease in revenue is largely attributable to
our decision to wind down our SNAP! and Bear Shop manufacturing and sales
operations and reposition the Company as an entertainment restaurant company.
For the year ended December 31, 2005, we sold approximately 200 Snap! units and
11 Bear Shop units, as compared to the year ended December 31, 2004 when we sold
approximately 500 Snap! units and 100 Bear Shop units. For the year ended
December 31, 2005, Snap! sales comprised 78% of our total sales and Bear Shop
units 9%. In addition, in 2005 we recorded $100,000 of software licensing
revenue as compared to $30,556 of licensing revenue in 2004. In 2005, we
generated $100,000 from the licensing of some of our games to Bluetorch Games.
This agreement had a one year term and, accordingly, we recorded licensing
revenue of $25,000 per quarter in 2005. The licensing revenue in 2004 related to
a licensing transaction with 360 Wireless.


         Cost of sales for the year ended December 31, 2005 decreased by
$593,757 (52%) from $1,134,731 for the year ended December 31, 2004 to $540,974
for the year ended December 31, 2005. The decrease in cost of sales is
attributable lower SNAP! and Bear Shop sales volume resulting from our decision
to wind down our SNAP! and Bear shop operations.

         The decrease in sales in 2005 resulted in a drop in gross profit to
$141,630 in 2005 from $262,284 in 2004. Our gross profit percentage was 20.7%
for the year ended December 31, 2005 compared to 18.8% for the year ended
December 31, 2004. The increase in the gross profit percentage is primarily
attributable to an increase of $69,444 in licensing revenue in 2005.

         Selling, general and administrative expenses for the year ended
December 31, 2005 decreased by $2,009,191 (42%) from $4,832,235 for the year
ended December 31, 2004 to $2,823,044 for the year ended December 31, 2005. The
decrease was primarily attributable to: (1) a $1,043,444 reduction in
compensation expense resulting from a reduction in headcount; (2) a $176,087
reduction in sales expense; and (3) a $165,007 reduction in trade show and
promotional expenses, in each case related to our decision to wind down our
SNAP! and Bear Shop operations. In addition, nominal stock option issuance
expense for the year ended December 31, 2005 decreased by $110,758 (53%) from
$208,425 in the year ended December 31, 2004 to $97,667 in the year ended
December 31, 2005. The decrease is primarily the result of cancellation at the
end of 2004 of options issued in 2002 and reduced levels of cashless option
exercises by employees in 2005.

                                       17



<PAGE>

         Research and development expense for the year ended December 31, 2005
decreased by $199,790 (57%) from $351,332 for the year ended December 31, 2004
to $151,542 for the year ended December 31, 2005. Research and development
expense decreased as a result of our decision to halt SNAP! and Bear Shop
related research and development in the second half of 2005, partially offset by
$53,400 of uWink Bistro related research and development expense in 2005.

         Impairment loss increased to $203,125 in 2005 from $0 in 2004. In 2005,
we amortized $84,403 and impaired $116,794 in capitalized software development
costs and we depreciated $23,928 and impaired $86,332 in Snap! tooling, moulds
and dyes, as a result of our decision to wind down our Snap! and Bear Shop
operations.

         Amortization of debt discounts for the year ended December 31, 2005
dropped by $84,434 (58%) from $144,672 for the year ended December 31, 2004 to
$60,238 for the year ended December 31, 2005. 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
discount on this note of $124,998 was amortized during 2004. In December 2004,
we issued $175,003 in convertible notes on which we booked a debt discount of
$42,859 to be amortized over the twelve month term of the notes; $5,954 of this
debt discount was amortized in 2004 and $36,905 of this debt discount was
amortized in 2005. During 2005, we issued a total of $300,000 in notes on which
we booked debt discount of $60,000 to be amortized over the term of the notes;
$23,333 of this debt discount was amortized in 2005.

         Gain on the settlement of debt for the year ended December 31, 2005
decreased by $338,139 (94%) from $358,295 for the year ended December 31, 2004
to $20,156 for the year ended December 31, 2005. In 2004, we settled obligations
owing to MCI Worldcom at a gain of $127,023, relating to amounts billed in error
with respect to trade payables; DeAmertek Corporation at a gain of $137,500,
relating to amounts originally due under a supply contract that was later
abandoned by mutual consent; and Stonefield Josephson, Inc. at a gain of
$34,395, relating to over-billed amounts with respect to trade payables.

         Interest expense for the year ended December 31, 2005 increased by
$80,434 (109%) from $73,892 for the year ended December 31, 2004 to $154,326 for
the year ended December 31, 2005, largely as a result of the interest expense in
2005 on the $615,000 borrowed at the end of 2004 to support our pursuit of the
assets of Sega Gameworks out of bankruptcy, as well as an above market interest
rate of 20% on the $225,003 of convertible notes issued at the end of 2004. In
December 2004, we made a bid to acquire the assets of Sega Gameworks out of
bankruptcy. In connection with that bid, we borrowed $615,000 to fund the
payment of an earnest money deposit required by the bankruptcy court. After SS
Entertainment USA, a subsidiary, of Sega Corporation, was determined to be the
winning bidder, this deposit was returned to us in the first quarter of 2005 and
we used those funds to repay the $615,000 in loans.


LIQUIDITY AND CAPITAL RESOURCES

         During the year ended December 31, 2005 we raised $368,399 in gross
proceeds from the sale of 633,458 shares of our common stock compared to
$2,998,170 in gross proceeds from the sale of 1,610,513 shares of our common
stock (including 108,915 shares still to be issued at December 31, 2004) during
the year ended December 31, 2004. The decrease is primarily attributable to
adverse market conditions for the private sale of the Company's equity
securities during 2005, against the backdrop of our decision to reposition the
Company as an entertainment restaurant company.

         At December 31, 2005, we had negative working capital of $1,248,178.
Working capital represents our current assets minus our current liabilities and
is related to our ability to pay short term debt as it becomes due.

         In 2005, we made net cash repayment of $646,295 of our non-related
party debt as compared to net cash borrowings of $790,000 in 2004. This is
primarily due to the full repayment in 2005 of $615,000 in short term debt
instruments issued in 2004 relating to the Company's pursuit of the assets of
Sega Gameworks out of bankruptcy, and the repayment in cash of $131,295 of debt
from our former Vice President of Operations used in 2004 to fund Snap!
production, partially offset by the issuance of a $100,000, 2 year convertible
note in September 2005. In May 2005, in a non-cash transaction, we also
converted a $150,000 note, plus $42,500 in accrued interest, into 121,986 shares
of common stock. In December 2005, in a non-cash transaction, we converted
$75,003 of convertible notes, plus $15,000 in accrued interest, into 300,012
shares of common stock. The notes were convertible into common stock at the
option of the holders at $1.75 per share. At the time of the maturity of the
notes, our stock was trading in the $0.30 per share range and, rather than repay
the note in cash, we negotiated a conversion of $75,003 in principal amount of
these notes with the holders at $0.30 per share. These shares were issued on
January 10, 2006.

                                       18



<PAGE>

         In 2005, we made net cash borrowings of $146,000 from related parties
as compared to net borrowings of $409,727 in 2004. This is primarily
attributable to the issuance of a $200,000, 6 month convertible note to Mr.
Bradley Rotter, a member of our board of directors, in October 2005, partially
offset by the repayment in 2005 of advances received from related parties for
the production of Snap! units in China in 2004. In addition, in December 2005,
in a non-cash transaction, we converted a $50,000 convertible note due to Kevin
McLeod, a member of our board of directors, plus accrued interest of $10,000,
into 200,000 shares of common stock. The note was convertible into common stock
at the option of the holder at $1.75 per share. At the time of the maturity of
the note, our stock was trading in the $0.30 per share range and, rather than
repay the note in cash, we negotiated a conversion with the holder at $0.30 per
share. These shares were issued on January 10, 2006.

         On March 3, 2006, we raised gross proceeds of $1,500,000 via the
private placement of 5,000,000 shares of common stock plus warrants to purchase
2,500,000 shares of common stock at $0.345 per share. We plan to use the net
proceeds of $1,425,000 from this private placement to fund the capital
expenditures, and provide the operating capital, required to open our first
uWink Bistro.

         Our debt outstanding at December 31, 2005 consisted of the following:

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

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

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

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

         A $120,000 20% convertible promissory note due March 2006. The note,
plus accrued interest from November 24, 2005, was repaid in cash in full in
March 2006.

         A $100,000 convertible note issued on September 8, 2005. The note is
due September 8, 2007, accrues interest at 10%, and is mandatorily convertible
into the same securities issued by the Company in (and on the same terms and
conditions pari passu with the investors in) any offering of its securities that
results in gross proceeds to the Company of at least $3,000,000. Upon
conversion, the holder will receive as a conversion bonus additional securities
equal to 20% of the aggregate principal value plus accrued interest converted.

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

         We expect to be able to satisfy our cash requirements for the next 6 to
9 months. We expect to need to raise additional amounts of capital through the
sale of our equity or debt securities within the next 6 to 9 months because we
do not expect the cash flow from the Woodland Hills location to be sufficient to
cover our corporate overhead and expenses. As of the date of this report, we
have no commitments for the sale of our securities nor can we assure you that
such funds will be available on commercially reasonable terms, if at all. Should
we be unable to raise the required funds, our ability to finance our operations
and growth will be materially adversely affected.

SOURCES OF CASH

         Since January 1, 2005, we have financed our operations principally by
issuing common stock for services, liquidating accounts receivable and inventory
and through the private sale of our common stock for gross proceeds of $368,399.

CASH POSITION AND SOURCES AND USES OF CASH

         Our cash and cash equivalents position as of December 31, 2005 was
$23,759. At March 31, 2006 our cash position was approximately $1,043,984.

                                       19



<PAGE>


         During the year ended December 31, 2005, we used $514,087 in cash in
our operating activities, as compared to $3,963,874 for the year ended December
31, 2004, a decrease of $3,449,787 (87%).

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

         For the year ended December 31, 2004, we used $3,963,874 in cash for
operations. Our major uses of cash in operations were to pay cash employee
compensation of approximately $1,300,000; to fund a $660,000 increase in
inventory; to fund a $395,000 increase in accounts receivable; and to fund a
$333,000 increase in inventory deposits.

         During the year ended December 31, 2005, we generated $612,400 in cash
from our investing activities, as compared to using cash of $950,211 for the
year ended December 31, 2004. In 2004, we invested $615,000 in a deposit related
to our pursuit of Sega Gameworks out of bankruptcy. We liquidated this deposit
in 2005, resulting in net positive cash from investing activities of $612,400.
In December 2004, we made a bid to acquire the assets of Sega Gameworks out of
bankruptcy. In connection with that bid, we borrowed $615,000 to fund the
payment of an earnest money deposit required by the bankruptcy court. After SS
Entertainment USA, a subsidiary, of Sega Corporation, was determined to be the
winning bidder, this deposit was returned to us in the first quarter of 2005 and
we used those funds to repay the $615,000 in loans. We made only a negligible
investment of $2,600 in additional property and equipment in 2005 as a result of
our strategic decision to reposition the Company as an entertainment restaurant
company. As described in Plan of Operation above, we expect to spend
approximately $500,000 in 2006 to build out and equip our first uWink Bistro.

         During the year ended December 31, 2005, our financing activities used
cash in the amount of $131,896, as compared to providing cash of $3,815,255 for
the year ended December 31, 2004. The decrease is attributable to the net
repayment of debt of $646,295, due to the cash repayment in 2005 of $615,000 of
short-term debt instruments issued in 2004 to support our pursuit of the assets
of Sega Gameworks out of bankruptcy and the cash repayment of $131,295 of debt
from our former Vice President of Operations used in 2004 to fund Snap!
production, partially offset by net cash proceeds from the issuance of debt to
related parties in 2005 of $146,000. This is primarily attributable to the
issuance of a $200,000, 6 month convertible note to Mr. Bradley Rotter, a member
of our board of directors, in October 2005, partially offset by the repayment in
2005 of advances received from related parties for the production of Snap! units
in China in 2004. In addition, net proceeds from equity issuances fell to
$368,399 in 2005 from $2,615,528 in 2004.

         On March 3, 2006, we raised gross proceeds of $1,500,000 via the
private placement of 5,000,000 shares of common stock plus warrants to purchase
2,500,000 shares of common stock at $0.345 per share. We plan to use the net
proceeds of $1,425,000 from this private placement to fund the capital
expenditures, and provide the operating capital, required to open our first
uWink Bistro.

OFF-BALANCE SHEET ARRANGEMENTS

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

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


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

                                       20



<PAGE>

RISKS RELATING TO OUR BUSINESS

WE HAVE ACCUMULATED LOSSES SINCE OUR INCEPTION, AND WE ARE CURRENTLY WINDING
DOWN OUR SNAP! AND BEAR SHOP MANUFACTURING OPERATIONS, WHICH HAD BEEN THE SOURCE
OF OUR REVENUES FOR THE LAST 2 YEARS. OUR INABILITY TO GENERATE REVENUES AND
PROFITS FROM OUR PLANNED RESTAURANT CONCEPT COULD CAUSE US TO GO OUT OF BUSINESS
AND FOR YOU TO LOSE YOUR ENTIRE INVESTMENT.

We have incurred cumulative losses in the amount of $24,772,550 from our
inception through December 31, 2005. We are currently winding down are SNAP! and
Bear Shop manufacturing operations, which have been the source of our revenues
for the last two years. Going forward, our strategy is to develop and operate an
entertainment restaurant concept. We do not believe that we will be cash flow
positive based solely on projected revenues less operating and other costs for
the restaurant concept for the foreseeable future. Our failure to generate
meaningful revenues and ultimately profits from the restaurant concept could
force us to reduce or suspend our operations and ultimately go out of business.
We cannot give you any assurance that our projections relating to revenues or
cash flow will materialize as projected.

WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO OPEN OUR FIRST RESTAURANT IN A
TIMELY MANNER OR THAT WE WILL BE ABLE TO OPERATE OUR FIRST RESTAURANT
PROFITABLY.

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


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

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

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

We will most likely need to raise cash and additional working capital to cover
the anticipated shortfall in our cash and working capital until such time as we
become cash flow positive based solely on our projections for the sales of our
planned restaurant concept less operating and other costs. We raised gross
proceeds of $1,500,000 from the sale of our equity securities in March 2006, but
currently do not have any binding commitments for, or readily available sources
of, additional financing. We will seek to raise additional cash and working
capital should it become necessary through the public or private sales of debt
or equity securities, the procurement of advances on contracts or licenses,
funding from joint-venture or strategic partners, debt financing or short-term
loans, or a combination of the foregoing. We may also seek to satisfy
indebtedness without any cash outlay through the private issuance of debt or
equity securities. We cannot give you any assurance that we will be able to
secure any additional cash or working capital we may require to continue our
operations.


Our independent auditors stated in their report accompanying our financial
statements for our fiscal year ended December 31, 2005 that we had incurred net
losses since our inception and had a working capital deficit, and stated that
those conditions raised substantial doubt about our ability to continue as a
going concern. As of December 31, 2005, our accumulated deficit is $24,772,550.
We cannot assure you that our business plans will be successful in addressing
these issues. If we cannot successfully continue as a going concern, our
shareholders may lose their entire investment.


                                       21



<PAGE>

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

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

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

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

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

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

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

We will need to significantly expand our operations to implement our longer-term
business plan and growth strategies. We will also be required to identify,
develop and manage relationships with franchisees as part of our growth plans.
This expansion and these expanded relationships will require us to significantly
improve or replace our existing managerial, operational and financial systems,
procedures and controls; to improve the coordination between our various
corporate functions; and to manage, train, motivate and maintain a growing
employee base. The time and costs to effectuate these steps may place a
significant strain on our management personnel, systems and resources,
particularly given the limited amount of financial resources and skilled

                                       22



<PAGE>

employees that may be available at the time. We cannot assure you that we will
institute, in a timely manner or at all, the improvements to our managerial,
operational and financial systems, procedures and controls necessary to support
our anticipated increased levels of operations and to coordinate our various
corporate functions, or that we will be able to properly manage, train, motivate
and retain our anticipated increased employee base.

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

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

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

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

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

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

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

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

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

    o    construction and development costs;

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

    o    unforeseen engineering or environmental problems with the leased
         premises.


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

Our restaurant operations will be dependent on distributors or suppliers for
food and beverage products. We have not yet entered into any arrangements with
any such distributors or suppliers and we cannot give you any assurances that we
will be able to do so. In addition, once we find appropriate distributors or
suppliers, if those distributors or suppliers cease doing business with us, we
could experience short-term supply shortages in some or all of our restaurants

                                       23



<PAGE>

and could be required to purchase food and beverage products at higher prices
until we are able to secure an alternative supply source. In addition, any delay
in replacing our suppliers or distributors on acceptable terms could, in extreme
cases, require us to remove temporarily items from the menus of one or more of
our restaurants.

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

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

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

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

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

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



RISKS RELATING TO THE RESTAURANT INDUSTRY

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

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

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

We must obtain licenses from regulatory authorities allowing us to sell liquor,
beer, and wine, and we must obtain a food service license from local health
authorities for our restaurant. We currently do not have a liquor license for
our first planned restaurant. Once we obtain such a liquor license, it must be
renewed annually and may be revoked at any time for cause, including violation
by us or our employees of any laws and regulations relating to the minimum
drinking age, advertising, wholesale purchasing, and inventory control. In
California, where we are planning our first restaurant, the number of liquor
licenses available is limited and licenses are traded at market prices. We
expect that liquor, beer, and wine sales will comprise a significant portion of
our sales. Therefore, obtaining and maintaining licenses will be an important
component of our restaurant's operations, and the failure to obtain or maintain
food and liquor licenses and other required licenses, permits, and approvals
would adversely impact our first planned restaurant and our growth strategy.

                                       24



<PAGE>

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

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

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

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

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



RISKS RELATING TO AN INVESTMENT IN OUR SECURITIES

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

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

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

As of March 31, 2006, our executive officers and directors beneficially owned
approximately 17.9% of the issued and outstanding shares of our common stock, as
calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934. As a
result, these persons have the ability to exert significant control over matters
that could include the election of directors, changes in the size and
composition of the board of directors, mergers and other business combinations
involving our company, and operating decisions affecting the Company. In
addition, through control of the board of directors and voting power, they may
be able to control certain decisions, including decisions regarding the
qualification and appointment of officers, dividend policy, access to capital
(including borrowing from third-party lenders and the issuance of additional
equity securities), and the acquisition or disposition of our assets. In
addition, the concentration of voting power in the hands of those individuals
could have the effect of delaying or preventing a change in control of our
company, even if the change in control would benefit our stockholders. A
perception in the investment community of an anti-takeover environment at our
company could cause investors to value our stock lower than in the absence of
such a perception.


                                       25



<PAGE>

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

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

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

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

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

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


As long as the trading price of our common shares is below $5 per share, the
open-market trading of our common shares will be subject to the "penny stock"
rules. From March 1, 2006 to March 31, 2006, the closing price of our common
stock ranged between $0.27 and $0.32 per share. The "penny stock" rules impose
additional sales practice requirements on broker-dealers who sell securities to
persons other than established customers and accredited investors (generally
those with assets in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with their spouse). For transactions covered by these rules,
the broker-dealer must make a special suitability determination for the purchase
of securities and have received the purchaser's written consent to the
transaction before the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the broker-dealer must deliver, before the

                                       26



<PAGE>

transaction, a disclosure schedule prescribed by the SEC relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative and current quotations
for the securities. Finally, monthly statements must be sent disclosing recent
price information on the limited market in penny stocks. These additional
burdens imposed on broker-dealers may restrict the ability or decrease the
willingness of broker-dealers to sell the common shares, and may result in
decreased liquidity for our common shares and increased transaction costs for
sales and purchases of +our common shares as compared to other securities.


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

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

At December 31, 2005 we had outstanding 2,400,411 options to purchase common
shares at a weighted average exercise price of $0.88 per share, and warrants to
purchase 2,435,337 common shares at a weighted average exercise price of $3.09.
In addition on March 3, 2006, we issued additional immediately exercisable,
three-year warrants to purchase 2,500,000 common shares at $0.345 per share. In
the event of the exercise of these securities, you could suffer substantial
dilution of your investment in terms of your percentage ownership in the Company
as well as the book value of your common shares.


                                       27




<PAGE>

ITEM 7. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                           UWINK, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

                                    CONTENTS


                                                                                                        Page
                                                                                                        ----
<S>                                                                                                     <C>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Report of Independent Registered Public Accounting Firm                                                  F-1

FINANCIAL STATEMENTS:
Consolidated Balance Sheets for the years ended December 31, 2005 and 2004                               F-2
Consolidated Statements of Operations for the years ended December 31, 2005 and 2004                     F-3
Consolidated Statement of Stockholders' Equity (Deficit) for the years ended December 31, 2005 and 2004  F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2005 and 2004                     F-5
Notes to Consolidated Financial Statements                                                               F-6
</TABLE>


                                       28




<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of uWink, Inc. and
subsidiary as of December 31, 2005 and 2004, and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for each
of the two years in the period 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 the standards of the Public Company
Accounting Oversight Board. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statements presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of uWink, Inc. and
subsidiary as of December 31, 2005 and 2004, and the results of its operations
and its cash flows for each of the two years period then ended, in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1, the
Company has incurred significant losses and negative cash flow from operations
since its inception, 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 consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


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

Los Angeles, California
March 7, 2006

                                      F-1



<PAGE>

<TABLE>
<CAPTION>
                                   uWink, Inc. and Subsidiary
                                   Consolidated Balance Sheets

                                                                         As on December 31,
                                                                    ----------------------------
                                                                        2005            2004
                                                                                     (RESTATED)
                                                                    ------------    ------------
                                             ASSETS

<S>                                                                 <C>             <C>
CURRENT ASSETS
    Cash and cash equivalents                                       $     23,759    $     57,342
    Account receivable,
      net of allowance for doubtful accounts of
      $75,993 and $95,782, respectively                                       --         282,010
    Inventory, net                                                       255,345         519,670
    Deposits - inventory                                                  66,398         353,193
    Deposits - Sega Gameworks                                                 --         615,000
    Prepaid expenses and other current assets                             41,182          50,391
                                                                    ------------    ------------
TOTAL CURRENT ASSETS                                                     386,684       1,877,606

PROPERTY AND EQUIPMENT, net of accumulated
    depreciation of $286,462 and $400,478, respectively                   19,080         150,956

CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net of
    accumulated amortization of $910,773 and
    $826,370, respectively                                                    --         201,197

                                                                    ------------    ------------
TOTAL ASSETS                                                        $    405,764    $  2,229,759
                                                                    ============    ============


                             LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
    Accounts payable                                                $    902,490    $    824,617
    Accrued expenses                                                     195,146         135,608
    Accrued payroll and related benefits                                  92,246          80,420
    Due to related parties, net of discount of $20,000 in 2005           300,000         467,139
    Bridge loan payable                                                       --         615,000
    Convertible note payable, net of discounts of $36,905 in 2004        120,000         288,098
    Advance from Customers                                                24,980         100,000

                                                                    ------------    ------------
TOTAL CURRENT LIABILITIES                                              1,634,862       2,510,882
                                                                    ------------    ------------

LONG TERM LIABILITIES
    Convertible note payable, net of discount of $16,667 in 2005          83,333              --
    Note Payable                                                         111,844              --

                                                                    ------------    ------------
TOTAL LONG TERM LIABILITIES                                              195,177              --
                                                                    ------------    ------------

STOCKHOLDERS' DEFICIT
    Common stock, $0.001 par value; 50,000,000 shares
      authorized; 12,475,288 and 10,615,664 shares
      issued and outstanding, respectively                                12,480          10,616
    Additional paid-in capital                                        23,031,098      21,064,324
    Accumulated deficit                                              (24,772,550)    (21,532,993)
    Shares to be Issued                                                  304,697         176,930

                                                                    ------------    ------------
TOTAL STOCKHOLDERS' DEFICIT                                           (1,424,275)       (281,123)
                                                                    ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                         $    405,764    $  2,229,759
                                                                    ============    ============

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



                                              F-2



<PAGE>

                           uWink, Inc. and Subsidiary
                      Consolidated Statements of Operations


                                                        FOR THE YEARS ENDED
                                                           DECEMBER 31,
                                                    ----------------------------
                                                        2005            2004
                                                                     (RESTATED)
                                                    ------------    ------------

NET SALES                                           $    682,604    $  1,397,415

COST OF SALES                                            540,974       1,134,731

                                                    ------------    ------------
GROSS PROFIT                                             141,630         262,684
                                                    ------------    ------------

OPERATING EXPENSES
     Selling, general and administrative expenses      2,823,044       4,832,235
     Research and development                            151,542         351,332
     Impairment loss                                     203,125              --
                                                    ------------    ------------
TOTAL OPERATING EXPENSES                               3,177,711       5,183,567
                                                    ------------    ------------

LOSS FROM OPERATIONS                                  (3,036,081)     (4,920,883)
                                                    ------------    ------------

OTHER INCOME (EXPENSE)
     Other income                                            651          22,593
     Debt discount expense                               (60,238)       (144,672)
     Gain on settlement of debt                           20,156         358,295
     Interest expense                                   (154,326)        (73,892)
     Equipment stolen                                     (8,117)             --

                                                    ------------    ------------
TOTAL OTHER INCOME (EXPENSE)                            (201,874)        162,324
                                                    ------------    ------------

LOSS BEFORE PROVISION FOR INCOME TAXES                (3,237,955)     (4,758,559)

PROVISION FOR INCOME TAXES                                 1,602           3,123
                                                    ------------    ------------

NET LOSS                                            $ (3,239,557)   $ (4,761,682)
                                                    ============    ============

NET LOSS PER COMMON SHARE - BASIC AND DILUTED       $      (0.28)   $      (0.52)
                                                    ============    ============

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - BASIC                              11,737,329       9,074,345
                                                    ============    ============

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


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

                                      F-3




<PAGE>

                                                   uWink, Inc. and Subsidiary
                                    Consolidated Statement of Stockholders' Equity (deficit)
                                    For the Years Ended December 31, 2005 and 2004 (RESTATED)


                              PREFERRED     PREFERRED
                                STOCK         STOCK                              ADDITIONAL    SHARES
                               SERIES A     SERIES B        COMMON STOCK          PAID-IN      TO BE     ACCUMULATED
                            SHARES AMOUNT SHARES AMOUNT   SHARES      AMOUNT      CAPITAL      ISSUED      DEFICIT         TOTAL
                             ----   ----   ---   ----  ------------  --------   ------------  ---------  ------------  ------------
Balance, December 31, 2003     --   $ --    --   $ --     8,444,049  $  8,444   $ 16,888,831  $      --  $(16,771,311) $    125,964

Issuance of common stock
   for conversion loan,
   accrued interest and
   prepaid licensing fee       --     --    --     --       323,288       323        264,915         --            --       265,239
Issuance of common stock
   for cash, net               --     --    --     --     1,501,598     1,502      2,458,972    155,055            --     2,615,528
Issuance of common stock
   for services                --     --    --     --       248,850       249        490,989     21,875            --       513,113
Issuance of common stock
   to employees
   for accrued payroll         --     --    --     --        48,584        49        108,661         --            --       108,710
Issuance of common stock
   to employees for
   exercise of options         --     --    --     --        49,295        49         36,216         --            --        36,265
Beneficial conversion
   feature related to
   convertible note            --     --    --     --            --        --        167,858         --            --       167,858
Value of options issued
   at below market price       --     --    --     --            --        --        173,665         --            --       173,665
Value of warrants issued
   for services                --     --    --     --            --        --        474,216         --            --       474,216
Net loss                       --     --    --     --            --        --             --         --    (4,761,682)   (4,761,682)

                             ----   ----   ---   ----  ------------  --------   ------------  ---------  ------------  ------------
BALANCE, DECEMBER 31, 2004     --     --    --     --    10,615,664    10,616     21,064,324    176,930   (21,532,993)     (281,123)

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

                             ----   ----   ---   ----  ------------  --------   ------------  ---------  ------------  ------------
BALANCE, DECEMBER 31, 2005     --   $ --    --   $ --    12,475,288  $ 12,480   $ 23,031,098  $ 304,697  $(24,772,550) $ (1,424,275)
                             ====   ====   ===   ====  ============  ========   ============  =========  ============  ============


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


                                                              F-4



<PAGE>

                                   uWink, Inc. and Subsidiary
                              Consolidated Statements of Cash Flows

                                                                                      FOR THE YEARS ENDED
                                                                                          DECEMBER 31,
                                                                                   --------------------------
                                                                                      2005           2004
                                                                                                  (RESTATED)
                                                                                   -----------    -----------

CASH FLOW FROM OPERATING ACTIVITIES:
   Net loss                                                                        $(3,239,557)   $(4,761,682)
   Adjustment to reconcile net loss to net cash used in operating activities:
       Amortization of debt discount on convertible note payable                        61,714        167,858
       Amortization of options issued below market price                                95,639        173,665
       Depreciation and amortization expense                                           127,082        164,167
       Impairment Loss                                                                 203,125             --
       Bad debt allowance                                                              (19,789)        95,782
       Issuance of warrants for services                                                    --        474,216
       Issuance of common stock for payroll and exercise of options                     51,553        144,975
       Issuance of common stock for services                                         1,155,591        513,113
       Inventory obsolescence reserve                                                 (152,945)       320,400
       Issuance of common stock for accrued interest                                    88,500             --

   Changes in operating assets and liabilities:
     Accounts receivable net of provision for sales returns of $150,000 in 2004        301,799       (245,635)
     Inventory                                                                         417,271       (660,934)
     Deposits - inventory                                                              286,796       (333,193)
     Deposits                                                                           (2,536)          (903)
     Prepaid expenses and other current assets                                          17,214        (27,956)
     Accounts payable                                                                   77,872         52,250
     Accrued expenses                                                                   79,777         66,993
     Accrued payroll and related benefits                                               11,827       (172,268)
     Advances from Customers                                                           (75,020)        65,278

                                                                                   -----------    -----------
Net cash used in operating activities                                                 (514,087)    (3,963,874)
                                                                                   -----------    -----------

CASH FLOW FROM INVESTING ACTIVITIES:
   Payment for property and equipment                                                   (2,600)       (88,256)
   Payment for capitalized product development costs                                        --       (246,955)
   Deposits - Sega Gameworks                                                           615,000       (615,000)

                                                                                   -----------    -----------
Net cash provided by (used in) investing activities                                    612,400       (950,211)
                                                                                   -----------    -----------

CASH FLOW FROM FINANCING ACTIVITIES:
   Proceeds from debt                                                                  100,000        790,000
Repayment of debt                                                                     (746,295)            --
   Proceeds from advances from related parties                                         289,500        409,727
Repayment of advances from related parties                                            (143,500)            --
   Proceeds from issuance of common stock                                              368,399      2,998,170
   Payment of offering costs                                                                --       (382,642)
                                                                                   -----------    -----------
Net cash provided by (used in) financing activities                                   (131,896)     3,815,255
                                                                                   -----------    -----------

NET DECREASE IN CASH AND CASH EQUIVALENT                                               (33,583)    (1,098,830)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                          57,342      1,156,172
                                                                                   -----------    -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $    23,759    $    57,342
                                                                                   ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

   Interest paid                                                                   $     8,225    $    55,231
                                                                                   ===========    ===========
   Income taxes paid                                                               $        --    $       800
                                                                                   ===========    ===========

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES

   Conversion of unearned revenue into shares of common stock                      $        --    $   125,000
                                                                                   ===========    ===========
   Conversion of debt into shares of common stock                                  $   275,003    $   237,133
                                                                                   ===========    ===========
   Issuance of common stock for accrued salaries                                   $    48,000    $   108,661
                                                                                   ===========    ===========
   Issuance of common stock for services                                           $ 1,155,591    $   513,113
                                                                                   ===========    ===========


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

                                              F-5

</TABLE>




<PAGE>

                           UWINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004


NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Line of Business

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

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

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

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

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

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

The Company is currently developing the uWink Bistro, an entertainment
restaurant concept. There were no revenues associated with the uWink Bistro for
the years ended December 31, 2005 and December 31, 2004.

Basis of Presentation

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company incurred
net losses of $3,239,557 and $4,761,682 for the years ended December 31, 2005
and 2004 respectively and had net working capital deficiency of $1,248,178 and
$633,276 as of December 31, 2005 and 2004 respectively.

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

                                      F-6




<PAGE>

The Company believes that its working capital as of the date of this report will
not be sufficient to fund the current level of operations through the end of the
current fiscal year ending December 31, 2006. The Company believes that it will
need additional amounts of working capital to finance future losses from
operations as it endeavors to build revenue and reach a profitable level of
operations. The Company plans to obtain the additional working capital through
the private placement sale of its equity and/or debt securities.

On March 3, 2006, we sold 5,000,000 shares of common stock to 22 investors for
gross proceeds of $1,500,000. The investors in the transaction also received
immediately exercisable, three-year warrants to purchase an aggregate of
2,500,000 shares of common stock priced at $0.345 per share. Merriman Curhan
Ford & Co. acted as sole placement agent for this transaction. We paid to
Merriman Curhan Ford & Co, as placement agent, a commission of $75,000 (equal to
5% of the aggregate offering price) plus $5,000 in expenses. Merriman also
received an additional 450,000 immediately exercisable, three-year warrants to
purchase common stock at $0.345 per share as part of this fee arrangement.

We expect to need to raise additional amounts of capital through the sale of our
equity or debt securities within the next 6 to 9 months. As of the date of this
report, we have no commitments for the sale of our securities nor can we assure
you that such funds will be available on commercially reasonable terms, if at
all. Should we be unable to raise the required funds, our ability to finance our
operations and growth will be materially adversely affected.

Principles of Consolidation

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

Use of Estimates

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

Fair Value of Financial Instruments

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

Cash and Cash Equivalents

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

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk include accounts receivables. 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 and finished goods is stated at the lower
of cost, utilizing the first-in, first-out method, or market. An obsolescence
reserve is estimated for items whose value have been determined to be impaired
or whose future utility appears limited. For the years ended December 31, 2005,
and 2004, the obsolescence reserve was $217,454 and $370,400 respectively.

                                      F-7




<PAGE>

Property and Equipment

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

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

Research and Development

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

Software Development Costs

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

Amortization of capitalized software development costs is provided on a
product-by-product basis on the straight-line method over the estimated economic
life of the products (not to exceed three years). Management periodically
compares estimated net realizable value by product with the amount of software
development costs capitalized for that product to ensure the amount capitalized
is not in excess of the amount to be recovered through revenues. Any such excess
of capitalized software development costs to expected net realizable value is
expensed at that time. Amortization of capitalized software development costs
was $84,403 and $92,535 for the years ended December 31, 2005 and 2004,
respectively. Impairment loss on capitalized software development costs was
$116,794 for the year ended December 31, 2005, as described in Note 5 below.

Revenue Recognition

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

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


Impairment of Long-Lived Assets

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


                                      F-8



<PAGE>

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

Advances from Customers

The Company records advances from customers as a liability and recognizes these
amounts as revenue over the period of the related agreement. In 2004, the
Company recorded a $100,000 Advances from customers liability relating to a one
year licensing agreement. Accordingly, the Company recognized licensing revenue
of $100,000 in 2005 and reduced the Advances from customers liability
accordingly. As of December 31, 2005, Advances from customers relating to
licensing fees amounted to $24,980.

Returns

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

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 increased to the pro forma amounts indicated below for the year
ended December 31, 2005 and 2004:

                                                         2005           2004
                                                      -----------   -----------
            Net loss
               As reported                            $(3,239,557)  $(4,761,682)
            Compensation recognized under APB 25           95,639       173,665
            Compensation recognized under SFAS 123       (392,870)     (460,918)
                                                      -----------   -----------
                       Pro forma                      $(3,536,788)  $(5,048,935)
                                                      ===========   ===========

            Basic and diluted loss per common share
               As reported                            $     (0.28)  $     (0.52)
               Pro forma                              $     (0.30)  $     (0.56)


                                      F-9



<PAGE>

For 2005, 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: risk-free interest rate of 7.25%; dividend yields of 0%; volatility
factors of the expected market price of the Company's common stock of 106%; and
a weighted average expected life of the options of 10 years.

For 2004, 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: risk-free interest rate of 5.25%; dividend yields of 0%; volatility
factors of the expected market price of the Company's common stock of 84%; and a
weighted average expected life of the options of 10 years.

Advertising and Marketing Costs

The Company expenses costs of advertising and marketing as incurred. Advertising
and marketing expense for the years ended December 31, 2005 and 2004 amounted to
$0 and $30,658, respectively.

Income Taxes

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

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, 2005 and 2004 because the effect would have been
anti-dilutive:

                                                            2005          2004
                                                         ---------     ---------

Shares to be issued upon conversion of bridge
                loans/ convertible notes                   500,012       223,627
Stock options issued to employees                        2,400,411     1,401,181
Warrants granted to consultants and finders                568,814       643,272
Warrants granted for financing                           1,866,523     1,333,066
                                                         ---------     ---------
                                                         5,335,760     3,601,146
                                                         =========     =========

                                      F-10



<PAGE>

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, 2005 and 2004, 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 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. These
discounts are accounted for in accordance with Emerging Issues Task Force
("EITF") 00-27 issued by the American Institute of Certified Public Accountants.

Geographic Areas and Major Customers

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

For the year ended December 31, 2004, the Company generated $501,000 in revenue,
amounting to 36% of total revenue, from the sale of SNAP! machines to one
customer located in Japan. For the year ended December 31, 2004, the Company
also generated revenue of $140,145, amounting to 10% of total revenue, from the
sale of SNAP! machines to one customer located in the New Zealand; and revenue
of $147,000, amounting to 10.5% of total revenue, from a distributor of its
machines located in the United States.

Recently Issued Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections." This statement applies to all voluntary changes in accounting
principle and requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless this would be
impracticable. This statement also makes a distinction between "retrospective
application" of an accounting principle and the "restatement" of financial
statements to reflect the correction of an error. This statement is effective
for accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005.

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

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

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

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

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

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

                                      F-11



<PAGE>

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

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

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective beginning in the Company's first quarter of fiscal 2006.

In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the
Amortization Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides
guidance on determining the amortization period for leasehold improvements
acquired in a business combination or acquired subsequent to lease inception.
The guidance in EITF 05-6 will be applied prospectively and is effective for
periods beginning after June 29, 2005. EITF 05-6 is not expected to have a
material effect on its consolidated financial position or results of operations.

The Company believes that the adoption of these standards will have no material
impact on its financial statements.

In September 2006, FASB issued SFAS 157 'Fair Value Measurements'. This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Management is currently
evaluating the effect of this pronouncement on financial statements. In
September 2006, FASB issued SFAS 158 'Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87,
88, 106, and 132(R)' This Statement improves financial reporting by requiring an
employer to recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability
in its statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income of a
business entity or changes in unrestricted net assets of a not-for-profit
organization. This Statement also improves financial reporting by requiring an
employer to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. An employer with
publicly traded equity securities is required to initially recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after December 15, 2006. An
employer without publicly traded equity securities is required to recognize the
funded status of a defined benefit postretirement plan and to provide the
required disclosures as of the end of the fiscal year ending after June 15,
2007. However, an employer without publicly traded equity securities is required
to disclose the following information in the notes to financial statements for a
fiscal year ending after December 15, 2006, but before June 16, 2007, unless it
has applied the recognition provisions of this Statement in preparing those
financial statements: a. A brief description of the provisions of this Statement
b. The date that adoption is required c. The date the employer plans to adopt
the recognition provisions of this Statement, if earlier. The requirement to
measure plan assets and benefit obligations as of the date of the employer's
fiscal year-end statement of financial position is effective for fiscal years
ending after December 15, 2008. Management is currently evaluating the effect of
this pronouncement on financial statements.

NOTE 2 - RESTATEMENT

Subsequent to the issuance of the Company's financial statements as of and for
the year ended December 31, 2004, as reported in the Company's Form 10-KSB filed
on March 31, 2005, the Company decided to reaudit its financial condition and
results of operations as of and for the year ending December 31, 2004. As a
result, the Company has restated its financial statements as of and for the year
ended December 31, 2004 as presented in this report to reflect the results of
this reaudit.

Below is a comparative presentation of the balance sheet and income statement as
of and for the year ended December 31, 2004 as restated in this report and as
originally filed in the Company's report on Form 10-KSB filed on March 31, 2005.


                                      F-12




<PAGE>

<TABLE>
<CAPTION>
                                                      PREVIOUSLY         RESTATED
                                                      REPORTED
                                                     ------------      ------------
                                                        As of December 31, 2004
<S>                                                    <C>             <C>
Balance Sheet

      Cash and cash equivalents                        $     58,307          57,342

      Account receivable, net of allowance for
      doubtful accounts of $140,630 and
      $95,782, respectively                                 659,751         282,010

      Inventory, net of obsolescence reserve
      of $370,400 and $370,400, respectively                480,447         519,670

      Deposits - inventory                                  353,193         353,193

      Deposits - Sega Gameworks                             615,000         615,000

      Prepaid expenses and other current assets              72,890          50,391

TOTAL CURRENT ASSETS                                      2,239,588       1,877,606

PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $400,478 and $400,478, respectively         151,450         150,956

CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net of
accumulated amortization of $830,617 and
$826,370, respectively                                      225,289         201,197


TOTAL ASSETS                                           $  2,616,327       2,229,759

CURRENT LIABILITIES

      Accounts payable                                 $    821,996         824,617

      Accrued expenses                                      128,477         135,608

      Accrued payroll and related benefits                   80,420          80,420

      Due to related parties, net of discount
      of $0 and $20,000,
      respectively                                          417,139         467,139

      Bridge loan payable                                   615,000         615,000

      Convertible note payable, net of discounts
      of $206,253 and $36,905, respectively                 168,750         288,098

      Advance from Customers (Unearned
      Revenue as previously reported)                       100,000         100,000


TOTAL CURRENT LIABILITIES                                 2,331,781       2,510,882

TOTAL LONG TERM LIABILITIES                                      --              --

STOCKHOLDERS' EQUITY (DEFICIT)

      Common stock                                           10,736          10,616

      Additional paid-in capital                         20,814,442      21,064,324

      Accumulated deficit                               (20,540,633)    (21,532,993)

      Shares to be Issued                                        --         176,930
                                                       ------------    ------------

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                        284,545        (281,123)
                                                       ------------    ------------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)   $  2,616,327       2,229,759
                                                       ============    ============


                                      F-13



<PAGE>

                                                        PREVIOUSLY       RESTATED
                                                         REPORTED
                                                       ------------    ------------
                                                          As of December 31, 2004

Statement of Operations

NET SALES                                              $  1,819,978       1,397,415

COST OF SALES                                             1,179,576       1,134,731
                                                       ------------    ------------

GROSS PROFIT                                                640,402         262,684
                                                       ------------    ------------
OPERATING EXPENSES

       Selling, general and administrative expenses       4,027,205       4,832,235

       Research and development                             355,315         351,332
                                                       ------------    ------------

TOTAL OPERATING EXPENSES                                  4,382,520       5,183,567
                                                       ------------    ------------
LOSS FROM OPERATIONS
                                                         (3,742,118)     (4,920,883)
                                                       ------------    ------------
OTHER INCOME (EXPENSE)

       Other income                                          22,593          22,593

       Debt discount expense                               (157,469)       (144,672)

       Nominal Stock Option Expense (restated
       as Selling, general and administrative
       expenses)                                           (221,236)             --

       Gain on settlement of debt                           397,256         358,295

       Interest expense                                     (65,226)        (73,892)
                                                       ------------    ------------

TOTAL OTHER INCOME (EXPENSE)                                (24,082)        162,324
                                                       ------------    ------------
LOSS BEFORE PROVISION FOR INCOME TAXES
                                                         (3,766,200)     (4,758,559)

PROVISION FOR INCOME TAXES                                    3,122           3,123
                                                       ------------    ------------
NET LOSS                                               $ (3,769,322)     (4,761,682)

NET LOSS PER COMMON SHARE - BASIC AND DILUTED          $      (0.35)          (0.52)
                                                       ============    ============

WEIGHTED AVERAGE COMMON SHARES
       OUTSTANDING - BASIC                               10,737,051       9,074,345
</TABLE>

                                      F-14



<PAGE>

NOTE 3- INVENTORY

Inventory has been reviewed for obsolescence and stated at lower of cost or
market as of December 31, 2005 and 2004. During the twelve months ended December
31, 2005, obsolete inventory previously reserved for was written down by
$485,351 and a corresponding reduction was made to the obsolescence reserve. The
remaining inventory was marked down to its net realizable value, as reflected by
an increase in the obsolescence reserve to $217,454 at December 31, 2005. During
2005, the Company made a strategic decision to reposition itself as an
entertainment restaurant company, to wind down its SNAP! and Bear Shop
manufacturing and sales operations and to liquidate its remaining inventory. As
a result, all inventory at December 31, 2005 is treated as finished goods
inventory.


Inventory at December 31, 2005                                        $ 472,799
Less:  obsolescence reserve                                            (217,454)
                                                                      ---------
                                                                      $ 255,345
                                                                      =========
Inventory at December 31`, 2004

Raw materials                                                         $ 279,652
Work in process                                                         259,085
Finished goods                                                          351,333
Less:  obsolescence reserve                                            (370,400)
                                                                      ---------
                                                                      $ 519,670
                                                                      =========

During the twelve months ended December 31, 2004, the Company marked inventory
down to its realizable value, as reflected by an increase in the obsolescence
reserve of $320,400 to $370,400 at December 31, 2004 from $50,000 at December
31, 2003.

NOTE 4 - PROPERTY AND EQUIPMENT

The cost of property and equipment at December 31, 2005 and December 31, 2004
consisted of the following:

                                                            2005         2004
                                                         ----------   ----------
          Computer equipment                             $ 169,285    $ 246,984
          Office furniture and equipment                    17,926       17,926
          Leasehold improvements                            84,849       84,849
          Machinery and equipment                           33,482      201,675
                                                         ----------   ----------
                                                           305,542      551,434
          Less accumulated depreciation                   (286,462)    (400,478)
                                                         ----------   ----------
                                                         $  19,080    $ 150,956
                                                         ==========   ==========

Depreciation expense for the years ended December 31, 2005 and 2004 was $42,679
and $71,631, respectively.

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

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

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

NOTE 6 - COMPONENTS OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

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

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

                                      F-15



<PAGE>

The major components of selling, general and administrative expenses for the
year ended December 31, 2004 consisted of the following:

Financial consulting         $  890,496
Professional fees               417,224
Rent                            112,255
Engineering consulting           58,331
Marketing and trade shows       186,692
Product development             293,000
Salary expense                1,634,057
Employee stock option expense   208,425
Inventory reserve expense       319,149
Bad debt expense                165,097
Other expenses                  547,509
                              ----------
                              $4,832,235
                              ==========


NOTE 7 - DUE TO RELATED PARTIES

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

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

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

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

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

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

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

Total                                                                                   $ 300,000

Due to related parties outstanding at December 31, 2004 consisted of the
following:

Convertible note payable to Kevin McLeod, a director of the Company, issued on
December 6, 2004. The note bears interest at 20% per annum and is due one year
from the date of issuance. The note can be converted immediately from the date
of issuance, at the option of the holder, to shares of the Company's common
stock at $1.75 per share.                                                               $  50,000

Loan payable to the Company's Vice President of Marketing issued on various
dates in 2004, 12% interest
secured by inventory and receivables of the Company, due upon demand;                     243,139

Loan payable to the brother-in-law of the President and CEO issued on December
6, 2004, $5,000 interest, unsecured, principal payments and accrued interest due
upon payment by customer of invoice # 60284B December 15, 2004;                           117,000

                                      F-16



<PAGE>

Loan payable to the wife of the President and CEO issued on various dates in
2004, 8% interest
unsecured, due upon demand;                                                                47,000

Loan payable to the Company's Vice President of Operations issued on various
dates in 2004, 8% interest
unsecured, due upon demand.                                                                10,000
                                                                                        ---------

Total                                                                                   $ 467,139
                                                                                        ---------
</TABLE>


The convertible note payable to the director, together with accrued interest of
$10,000, was converted into 200,000 shares of common stock in December 2005. The
note was convertible into common stock at the option of the holder at $1.75 per
share. At the time of the maturity of the note, the Company's stock was trading
in the $0.30 per share range and, rather than repay the note in cash, the
Company negotiated a conversion with the holder at $0.30 per share. The shares
of common stock issuable upon this conversion were issued in January 2006 and,
as a result, are reflected as Shares to be Issued on the balance sheet as of
December 31, 2005.


The loan payable to the brother-in-law of the Company's CEO was fully repaid in
2005. In addition, $26,500 of the loan payable to the wife of the Company's CEO
was repaid in 2005.


The loan payable to the Company's Vice President of Marketing was reclassified
as Notes Payable on the December 31, 2005 balance sheet following the
termination of the holder's employment with the Company. During 2005, the amount
outstanding under this loan was repaid in cash by $131,296.


NOTE 8 - CONVERTIBLE NOTE PAYABLE

On March 12, 2002, the Company entered into a $150,000 convertible note. The
note bears interest at 10%, was due on September 9, 2002 and was convertible
into common stock at $1.58 per share. As a result of a lack of communication
from the holder of this note, the note was not converted into common stock until
May 24, 2005. On May 24, 2005, we issued 121,986 shares of common stock upon
conversion of the principal amount of this note plus $42,500 in accrued
interest.

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 was 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 the date of issuance. 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 were to 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. The note was converted by the holder on June
30, 2004 and all unamortized discounts were expensed at that time, resulting in
amortization expense of $138,719 for the year ended December 31, 2004.

In addition, on May 19, 2004 the Company converted a prepaid license fee into a
convertible promissory note in the amount of $125,000. The note is convertible
at the option of the holder into the Company's common stock at $1.58 per share
and, upon conversion, the holder was due to receive 79,211 warrants to purchase
common stock at $0.03 per share. The holder immediately converted this note into
79,211 share of common stock. The Company recognized expense of $125,000 in
connection with the issuance of the 79,211 warrants due to the holder upon
conversion of this note.

                                      F-17



<PAGE>


During the fourth quarter of 2004, the Company issued four convertible
promissory notes totaling $175,003. The notes bear interest at 20% per annum and
are due one year from the date of issuance. The notes can be converted
immediately from the date of issuance, at the option of the holder, to shares of
the Company's common stock at $1.75 per share. The market value on the dates of
issuance ranged from $2.00 - $2.55. In accordance with EITF 00-27 "Application
of Issue No. 98-5 to Certain Convertible Instruments", the Company determined
the preferential conversion feature of the convertible promissory notes on the
date of issuance to be equal to $42,859. The amount allocated to the
preferential conversion feature of $42,859 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, 2005, $36,906 was
amortized to expense and for the year ended December 31, 2004 $5,953 was
amortized to expense. The notes payable were convertible into common stock at
the option of the holders at $1.75 per share. At the time of the maturity of the
notes, the Company's stock was trading in the $0.30 per share range and, rather
than repay the note in cash, the Company negotiated a conversion of $75,003 in
principal amount of these notes with the holders at $0.30 per share. $75,003 in
principal amount of the convertible notes plus accrued interest of $15,000 was
converted into 300,012 shares of common stock in December 2005. The shares of
common stock issuable upon this conversion were issued in January 2006 and, as a
result, are reflected as Shares to be Issued on the balance sheet as of December
31, 2005.


Accrued interest of $20,000 was added to the principal amount of the remaining
$100,000 convertible note and the maturity of the note was extended until March
2006. This note is reflected as Convertible Notes of $120,000 on the December
31, 2005 balance sheet. The Company also agreed to issue 50,000 shares of common
stock to the holder of this note in exchange for the holder's extension of the
maturity date. These shares have been recorded at fair value and are reflected
as Shares to be Issued on the December 31, 2005 balance sheet. The note, plus
accrued interest from November 24, 2005, was repaid in full in March 2006.

NOTE 9 - BRIDGE NOTES PAYABLE

Bridge notes payable outstanding at December 31, 2004 consisted of the
following:

<TABLE>
<CAPTION>
<S>                                                                                     <C>
Loan payable issued on December 13, 8% interest unsecured, principal payments
and accrued interest was due upon return of deposit held pursuant to
the Company's participation in the auction of the assets of Sega Gameworks, LLC
held on December 15, 2004.                                                              $ 405,000

Loan payable issued on December 13, 8% interest unsecured, principal payments
and accrued interest was due upon return of deposit held pursuant to the
Company's participation in the auction of the assets of Sega Gameworks, LLC held
on December 15, 2004.                                                                     200,000

Loan payable issued on December 13, 8% interest unsecured, principal payments
and accrued interest was due upon return of deposit held pursuant to the
Company's participation in the auction of the assets of Sega Gameworks, LLC held
on December 15, 2004.                                                                      10,000

Total                                                                                   $ 615,000

Subsequent to the year ended December 31, 2004, these amounts were repaid in
their entirety. As of December 31, 2005, there were no bridge notes payable.

NOTE 10 - LONG TERM CONVERTIBLE NOTES PAYABLE

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

Convertible Note issued on September 8, 2005. The note is due September 8, 2007,
accrues interest at 10%, and is mandatorily convertible into the same securities
issued by the Company in (and on the same terms and conditions pari passu with
the investors in) any offering of its securities that results in gross proceeds
to the Company of at least $3,000,000. Upon conversion, the holder will receive
as a conversion bonus additional securities equal to 20% of the aggregate
principal value plus accrued interest converted. A portion of the value of this
note was recorded as a preferential conversion feature and recorded as discount
of $20,000 to be amortized over the term of the note, 2 years. $3,333 of this
discount as amortized in 2005.
                                                                                          $100,000
Principal Amount                                                                           (16,667)
Less Discount                                                                             $ 83,333


                                      F-18



<PAGE>

NOTE 11 - LONG TERM NOTES PAYABLE

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

Loan payable to the Company's former Vice President of Marketing issued on
various dates in 2004 and 2005, 12% interest secured by inventory and
receivables of the Company, due February 15, 2007. The loan payable to the
Company's Vice President of Marketing was reclassified from Due to Related
Parties to Notes Payable on the December 31, 2005 balance sheet following the
termination of the holder's employment with the Company. Accrued interest of
$70,667 outstanding on this note as of December 31, 2005 is included under
accrued expenses on the balance sheet as of December 31, 2005.                            $111,844
</TABLE>

NOTE 12 - 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.

Common Stock

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

During the year ended December 31, 2004, the Company:

From January 16, 2004 to March 19, 2004, sold 719,521 shares of common stock for
gross proceeds of $1,439,050 to 23 individual investors. The Company paid
$190,865 in commissions, issued 43,850 shares of the Company's common stock
valued at $87,700 and issued 245,000 warrants to purchase the Company's common
stock at an exercise price of $2.00 per share valued at $443,039 to Falcon
Capital in payment for services related to the sales of the Company's
securities. The warrants are immediately exercisable and are exercisable for 5
years. There were no registration rights associated with the warrants. The fair
value of the warrants was calculated using the Black Scholes option pricing
model using the following assumptions: risk free rate of return of 4%,
volatility of 84%; expected life of 5 years and dividend yield of 0%. The fair
value of the warrants and the placement agent's commission and expenses were
accounted for as cost of raising equity with a corresponding amount debited to
additional paid-in capital.

       On November 15, 2002, uWink California entered into agreements with its
employees allowing them to convert their accrued compensation into equity
(collectively, the "Employee Notes"). The Company assumed the Employee Notes in
connection with its acquisition of uWink California. During the year ended
December 31, 2004, the Company issued 48,584 shares of common stock in exchange
for accrued compensation of $108,709 pursuant to the terms and conditions set
forth in the Employee Notes.

       On April 1, 2004, issued 30,000 shares of common stock in exchange for
investor relation services valued at $150,000 rendered on behalf of the Company.

       On April 1, 2004, issued 5,000 shares of common stock for public
relations services valued at $10,000 rendered on behalf of the Company.

       On April 1, 2004, issued 43,850 shares of common stock valued at $87,700
to Falcon Capital for selling shares of common stock in the Company's private
placement offering in the first quarter of 2004.

       On April 1, 2004, issued 150,000 immediately exercisable 5-year warrants
at exercise prices ranging from $5-$9 for financial consulting services
rendered. The Company recognized expense equal to the fair value of the warrants
of $474,216. The fair value of the warrants was calculated using the Black
Scholes option pricing model using the following assumptions: risk free rate of
return of 4%, volatility of 84%; expected life of 5 years and dividend yield of
0%.

       On May 19, 2004, issued 79,211 warrants to purchase the Company's common
stock at an exercise price of $0.03 to Scientific Games in connection with the
conversion by Scientific Games of a prepaid licensing fee into common stock. The
Company recognized expense of $125,000 for the three month period ended June 30,
2004 in connection with the issuance of the 79,211 warrants due to Scientific
Games. Scientific Games exercised these warrants on May 19, 2004.

                                      F-19



<PAGE>

       Beginning on May 11, 2004 and ending on October 21, 2004, sold 890,992
shares of common stock for gross proceeds of $1,559,124 to 58 investors. Each
investor also received a warrant to purchase one share of common stock at an
exercise price of $3.50 per share for every share of common stock purchased in
the offering. The warrants are immediately exercisable, and will remain
exercisable for five years. There were no registration rights associated with
the warrants. These warrants were issued on October 1, 2004. Falcon Capital
acted as a placement agent for this offering and received a finder's fee of
$191,777 and also received 43,850 shares of the Company's common stock in
payment for services related to the sales of the Company's securities. In
addition, the Company issued 85,000 warrants to purchase one share of common
stock to Falcon Capital at an exercise price of $1.75 per share valued at
$198,013 as compensation for arranging this transaction. The warrants are
immediately exercisable and are exercisable for 5 years. There were no
registration rights associated with the warrants. The fair value of the warrants
was calculated using the Black Scholes option pricing model using the following
assumptions: risk free rate of return of 5%, volatility of 84%; expected life of
5 years and dividend yield of 0%. The fair value of the warrants and the
placement agent's commission and expenses were accounted for as cost of raising
equity with a corresponding amount debited to additional paid-in capital.

       On July 1, 2004, issued 10,000 shares of common stock to Mr. Nimish Patel
in exchange for serving on our Board of Directors valued at $25,000.

       On July 19, 2004, issued 10,000 shares of common stock in exchange for
the services of an employee valued at $25,000.

       On July 19, 2004, issued 50,000 shares of common stock valued at $125,000
for financial consulting services rendered on behalf of the Company.

       On August 11, 2004, issued 323,288 shares valued at $254,760 to
Scientific Games Corporation in connection with the conversion by Scientific
Games on May 19, 2004 of a $125,000 convertible note and a $125,000 prepaid
licensing fee and the exercise by Scientific Games on May 19, 2004 of warrants
to purchase 158,650 shares of common stock at $0.03 per share. 317,299 of these
shares were reflected as shares to be issued on the balance sheet at June 30,
2004.

       On October 1, 2004, issued 87,500 shares of common stock for investor
relations services valued at $153,125.

Between November 2, 2004 and December 6, 2004, issued $225,003 in principal
amount of one-year convertible notes to 5 individuals. The notes were
convertible at the option of the holder into shares of common stock at a
conversion price of $1.75 per share.

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      F-20



<PAGE>

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

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

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

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

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

Shares to be Issued

At December 31, 2004, Shares to be Issued consisted of:

    o    12,500 shares valued at $21,875 to be issued for financial consulting
         services rendered during 2004.

    o    21,039 shares valued at $21 still to be issued to original uWink-DE
         (now uWink California) shareholders in connection with the acquisition
         of uWink-DE (now uWink California).

    o    87,876 shares valued at $155,033 to be issued in connection with the
         company's capital raising transactions in 2004. These shares remained
         unissued at December 31, 2004 for ministerial reasons and 77,089 of
         these shares were issued in 2005.

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

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

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

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

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

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


NOTE 13 - STOCK OPTIONS AND WARRANTS

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

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

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

                                      F-21



<PAGE>

Transactions under the Plans during the years ended December 31, 2005 and 2004
are summarized as follows:

The following table summarizes the options outstanding:

                                                                     Weighted
                                                    Stock             Average
                                                   Option            Exercise
                                                    Plan               Price
                                                ----------         ------------
           Balance, December 31, 2003              613,413          $  0.96
               Granted                             888,208          $  2.36
               Exercised                           (58,775)         $  1.50
               Canceled                            (41,665)         $  1.61
                                                -----------
           Balance, December 31, 2004            1,401,181          $  1.81

               Granted                           1,645,000          $  0.44
               Exercised                           (19,010)         $  0.32
               Canceled                           (626,760)         $  1.83
                                                -----------
           Balance, December 31, 2005            2,400,411          $  0.88


           Exercisable at December 31, 2005        532,956          $  1.58
                                                ===========
The weighted average remaining contractual life of options outstanding issued
under the plans is 9.0 year at December 31, 2005. The exercise price for the
options outstanding under the plans at December 31, 2005 ranged from $0.32 to
$4.73.

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 expense of $95,639 and $173,665 for the years ended
December 31, 2005 and 2004, respectively, related to options that were granted
where the exercise price was less than the stock price at the date of grant.

In addition, the Company recognized expense of $2,028 and $34,760 for the years
ended December 31, 2005 and 2004, respectively, related to the cashless exercise
of options by employees.

There were no options granted during the year ended December 31, 2003.

During the year ended December 31, 2004 the Company granted 33,944 options where
the exercise price was less than the stock price at the date of grant. The
exercise price of 23,944 of those options is $1.25 and the exercise price of
10,000 of those options is $1.38; the stock price on the date of grant was
$1.45. The weighted average fair value of those options was $1.26. The Company
recognized expense of $4,017 related to these options for the year ended
December 31, 2004.

Warrants

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


                                                                 Weighted-
                                                                  Average
                                                                  Exercise
                                                     Warrants      Price
                                                    ---------     --------

          Balance, December 31, 2003                  785,160     $  3.46
              Granted                               1,370,988     $  3.51
              Exercised                               (79,211)    $  0.03
              Canceled                               (100,599)    $  7.35
                                                    ---------
          Balance, December 31, 2004                1,976,338     $  3.48

              Granted                                 533,458     $  1.50
              Exercised                                    --     $    --
              Canceled                                (74,459)    $  1.83
                                                    ---------
          Balance, December 31, 2005                2,435,337     $  3.09
                                                    =========

          Exercisable at December 31, 2005          2,435,337     $  3.09
                                                    =========

                                      F-22



<PAGE>

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: risk-free interest rate of 7.25% and 5.0%; dividend yields of 0%
and 0%; volatility factors of the expected market price of the Company's common
stock of 106% and 84%, for the years ended December 31, 2005 and 2004,
respectively; and a weighted average expected life of the warrant of 5 and 5
years, respectively.

The weighted average remaining contractual life of warrants outstanding is 3.09
years at December 31, 2005. The exercise price for the warrants outstanding at
December 31, 2005 ranged from $1.50 to $6.31.

During the year ended December 31, 2004, the Company issued 150,000 immediately
exercisable 5-year warrants at exercise prices ranging between $5-$9 for
financial consulting services rendered. The Company recognized expense in 2004
equal to the fair value of the warrants of $474,216. In addition, on May 19,
2004, the Company converted a prepaid license fee into a convertible promissory
note in the amount of $125,000. The note was convertible at the option of the
holder into the Company's common stock at $1.58 per share and, upon conversion,
the holder was due to receive 79,211 warrants to purchase common stock at $0.03
per share. The holder immediately converted this note into 79,211 share of
common stock. The Company recognized expense of $125,000 in connection with the
issuance of the 79,211 warrants due to the holder upon conversion of this note.
As a result, total expense recognized in the statement of operations for
warrants issued during 2004 was $599,216.

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

NOTE 14 - 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, 2005 are as follows:


         Deferred tax assets:

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

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

At December 31, 2005, the Company had federal and state net operating loss
("NOL") carryforwards of approximately $19,486,303 and $19,107,268,
respectively. Federal NOLs could, if unused, expire in varying amounts in the
years 2017 through 2012. State NOLs, if unused, could expire in varying amounts
from 2006 through 2009.

Significant components of the Company's deferred tax liabilities and assets as
of December 31, 2004 are as follows:

          Deferred tax assets:

               Federal net operating loss                          $  5,253,995
               State net operating loss                               1,461,751
                                                                   ------------

               Total deferred tax assets                              6,715,746
               Less valuation allowance                              (6,715,746)
                                                                   ------------
                                                                   $         --
                                                                   ============

At December 31, 2004, the Company had federal and state net operating loss
("NOL") carryforwards of approximately $16,914,678 and $16,535,643,
respectively. Federal NOLs could, if unused, expire in varying amounts in the
years 2016 through 2019. State NOLs, if unused, could expire in varying amounts
from 2005 through 2008.


                                      F-23



<PAGE>

The reconciliation of the effective income tax rate to the federal statutory
rate for the years ended December 31, 2005 and 2004 is as follows:

                                                        2005               2004
                                                      -------            -------
              Federal income tax rate                   (34%)              (34%)
              State tax, net of federal benefit          (6%)               (6%)
              Increase in valuation allowance            40%                40%
                                                      -------            -------
              Effective income tax rate                 0.0%               0.0%
                                                      =======            =======

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

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Other Litigation

In the ordinary course of business, the Company is generally subject to claims,
complaints, and legal actions. As of December 31, 2005 and 2004, 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's offices are located in Los Angeles, California and consist of
8,500 square feet of office and warehouse space leased at the rate of $10,200
per month. The term of this lease, which commenced May 1, 2005, is three years.
The Company is currently attempting to sublease all or part of the space, and
relocate to approximately 2,500 square feet. The Company incurred rent expense
of $115,057 and $112,225 for the years ended December 31, 2005 and 2004,
respectively.

NOTE 16 - SUBSEQUENT EVENTS

On January 10, 2006, we issued 500,012 shares of common stock valued at
$150,003, based on the closing price of the common stock on the date of the
agreement, on conversion of $125,003 principal amount of convertible notes plus
$25,000 of accrued interest.

On March 3, 2006, we sold 5,000,000 shares of common stock to 22 investors for
gross proceeds of $1,500,000. The investors in the transaction also received
immediately exercisable, three-year warrants to purchase an aggregate of
2,500,000 shares of common stock priced at $0.345 per share. Merriman Curhan
Ford & Co. acted as sole placement agent for this transaction. We paid to
Merriman Curhan Ford & Co, as placement agent, a commission of $75,000 (equal to
5% of the aggregate offering price) plus $5,000 in expenses. Merriman also
received an additional 450,000 immediately exercisable, three-year warrants to
purchase common stock at $0.345 per share as part of this fee arrangement. The
proceeds from the issuance of these shares were recorded net of the fair value
of the warrants and the placement agent's commission and expenses. The fair
value of the warrants was calculated using the Black Scholes option pricing
model using the following assumptions: risk free rate of return of 7.5%,
volatility of 109%, dividend yield of 0% and expected life of 3 years.

On March 3, 2006, Mr. Nimish Patel resigned from our Board of Directors.

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

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

On March 16, 2006, we repaid in cash a $120,000 convertible note, together with
$7,000 in accrued interest.


                                      F-24



<PAGE>

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

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

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

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

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

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

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Failure to timely file the financial statements and proforma financial
information in connection with our acquisition of uWink Calfornia. This filing
was due on February 19, 2004 and was not made until May 18, 2004.

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

Failure to file a report on Form 8-K regarding the appointment of Bradley Rotter
to our Board of Directors effect November 11, 2005. In October 2005, the Company
received cash proceeds (net of transaction fees) of $195,000 from the issuance
of a $200,000 Convertible Note to Mr. Bradley Rotter. This Convertible Note has
a six month term, accrues interest at 10%, and is convertible, at the option of
Mr. Rotter, into the same securities issued by the Company in (and on the same
terms and conditions pari passu with the investors in) any offering of its
securities that results in gross proceeds to the Company of at least $3,000,000.
Upon conversion, Mr. Rotter will receive as a conversion bonus additional
securities equal to 20% of the aggregate principal value plus accrued interest
converted. The Convertible Note is mandatorily repayable immediately following
the consummation of any offering of securities that results in gross proceeds to
the Company of at least $3,000,000. Upon such repayment, or upon repayment at
maturity, Mr. Rotter will receive warrants to purchase 200,000 shares of common
stock of the Company at an exercise price of $0.59.

Changes in Internal Control Over Financial Reporting

The Company intends to address the ineffective controls and procedures, and to
take appropriate action to correct the deficiencies identified. The Board of
Directors is performing oversight of the implementation of enhancements and
improvements to its internal controls.

                                      29



<PAGE>

Limitations on Controls

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

ITEM 8B

On October 10, 2005, the Company received cash proceeds (net of transaction
fees) of $195,000 from the issuance of a $200,000 Convertible Note to Mr.
Bradley Rotter. This Convertible Note has a six month term, accrues interest at
10%, and is convertible, at the option of Mr. Rotter, into the same securities
issued by the Company in (and on the same terms and conditions pari passu with
the investors in) any offering of its securities that results in gross proceeds
to the Company of at least $3,000,000. Upon conversion, Mr. Rotter will receive
as a conversion bonus additional securities equal to 20% of the aggregate
principal value plus accrued interest converted. The Convertible Note is
mandatorily repayable immediately following the consummation of any offering of
securities that results in gross proceeds to the Company of at least $3,000,000.
Upon such repayment, or upon repayment at maturity, Mr. Rotter will receive
warrants to purchase 200,000 shares of common stock of the Company at an
exercise price of $0.59.

Effective as of November 11, 2005, Mr. Bradley Rotter was appointed as a member
of our Board of Directors.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

The following table sets forth the names and ages of all directors and executive
officers of the Company as of March 31, 2006. The Board of Directors is
comprised of only one class. All of the directors will serve until the next
annual meeting of stockholders and until their successors are elected and
qualified, or until their earlier death, retirement, resignation or removal.
There are no family relationships among directors or executive officers. There
are no arrangements or understandings between any two or more of the Company's
directors or executive officers. There is no arrangement or understanding any of
the Company's directors or executive officers and any other person pursuant to
which any director or officer was or is to be selected as a director or officer,
and there is no arrangement, plan or understanding as to whether non-management
shareholders will exercise their voting rights to continue to elect the current
board of directors. There are also no arrangements, agreements or understandings
between non-management shareholders that may directly or indirectly participate
in or influence the management of the Company's affairs. Also provided herein is
a brief description of the business experience of each director and executive
officer during the past five years and an indication of directorships held by
each director in other companies subject to the reporting requirements under the
Federal securities laws.

Additionally, set forth below is certain information, as of March 31, 2006,
concerning each of the directors and executive officers of the Company. Each of
the individuals listed as a director below shall serve as a director of the
Company until the Company's next annual meeting of shareholders and until their
successors have been elected and qualified, or until their resignation, death or
removal. Each of the individuals listed below as executive officers shall serve
in such offices until removed by the Board of Directors, subject to applicable
employment agreements.

                 Name              Age                  Position

           Nolan K. Bushnell       62       Chief Executive Officer, Chairman of
                                                 the Board of Directors

           Peter F. Wilkniss       40      Chief Financial Officer and Secretary

            Bruce P. Kelly         59                   Director

             Kevin McLeod          49                   Director

            Bradley Rotter         50                   Director

                                      30



<PAGE>


Mr. Bushnell has been the Chairman of our Board of Directors, and Chief
Executive Officer since December 4, 2004 following our acquisition of uWink
California. Mr. Bushnell founded uWink California and has acted as its Chairman,
Chief Executive Officer and President since 1999. Mr. Bushnell is best known as
the creator of Atari Corporation and Chuck E. Cheese's Pizza Time Theater. In
1980, Mr. Bushnell founded Catalyst Technologies, an incubator which spawned
more than 20 companies, including Etak, ACTV, Androbot, Axlon, Magnum Microwave,
Irata and ByVideo. Mr. Bushnell holds several patents on some of the basic
technologies for many of the early video games developed and is also the
inventor or co-inventor of numerous patents in various other fields and
industries. Mr. Bushnell received his B.S. in Electrical Engineering from the
University of Utah, where he is a "Distinguished Fellow", and later attended
Stanford University Graduate School. Mr. Bushnell is also currently a director
of Wave Systems Corp. (NASDAQ: WAVX), an SEC reporting company.


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

Mr. Kelly has been a director since December 4, 2004. Since 1998, Mr. Kelly has
been President and CEO of Nolan Securities, a registered broker-dealer in
securities and investment banking firm.

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


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


SIGNIFICANT EMPLOYEES AND CONSULTANTS


                 Name              Age                  Position

            John S. Kaufman         44     Director of Restaurant Operations

              Paul Dumais           42         Chief Technology Officer


Mr. Kaufman is currently acting as Director of Restaurant Operations on a
consulting basis. Mr. Kaufman has over 20 years of restaurant experience,
specializing in operations. For the past 4 years, Mr. Kaufman has been principal
of JSK Management, LLC, a restaurant operations and strategic planning
consultancy. From 1999 to 2002, Mr. Kaufman was principal of Concepts Etc.,
Inc., a restaurant management and consultancy specializing in join ventures,
franchise and operating contracts with new and existing restaurants. From 1996
to 1998, Mr. Kaufman was president and chief operation officer of Koo Ko Roo,
Inc., where he was responsible for reversing company losses into gains, opening
34 new locations in multiple states, and assisted in a merger with Family
Restaurants. From 1995 to 1996, Mr. Kaufman was chief operating officer of
Rosti, where he helped develop the prototype restaurant concept, participated in
raising $5,000,000 for expansion, and managed the opening of three new
restaurants in the Los Angeles market. In 1986, Mr. Kaufman joined California
Pizza Kitchen, where he stayed until 1994, as he helped build the company from a
single location to more than 68 locations. At California Pizza Kitchen, Mr.
Kaufman eventually supervised more than 3,000 employees including 250 managers
and 12 area supervisors and two regional vice-presidents of operations.

                                      31



<PAGE>


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


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 and Exchange Act of 1934 requires any person who
is a director or executive officer of our company, or who beneficially holds
more than 10% of any class of our securities which have been registered with the
SEC, to file reports of initial ownership and changes in ownership with the SEC.
These persons are also required under SEC regulations to furnish us with copies
of all Section 16(a) reports they file. To our knowledge based solely on our
review of the copies of the Section 16(a) reports furnished to us and
representations to us that no other reports were required, the following
directors and executive officers were late or deficient with respect to the
following filings under Section 16(a) during the years ended December 31, 2004
and December 31, 2005 and to date in 2006:

Mr. Bushnell failed to file form 4's with respect the grants to him of: (1)
150,000 options to purchase common stock at $2.64 per share on July 15, 2004;
(2) 10,000 options to purchase common stock at $1.60 per share on December 16,
2004; and (3) 10,000 options to purchase common stock at $1.38 on December 31,
2004.

Mr. McLeod failed to file a form 3 with respect to his appointment to our board
of directors. In addition, Mr. McLeod failed to file form 4's with respect to
his acquisition of (1) 199,961 shares of common stock on March 5, 2004; (2)
49,986 shares of common stock on October 1, 2004; (3) 333,333 shares of common
stock on March 3, 2006; (4) warrants to acquire 49,987 shares of common stock at
an exercise price of $3.50 on October 1, 2004; and (5) warrants to acquire
166,667 shares of common stock at an exercise price of $0.345 on March 3, 2006.
In addition, Mr. McLeod failed to file a form 4 with respect to the granting to
him of options to purchase 100,000 shares of common stock at $0.36 on July 25,
2005.

Mr. Rotter failed to timely file a form 3 with respect to his appointment to our
board of directors and the granting to him of options to purchase 100,000 shares
of common stock at $0.45 on November 11, 2005.

Mr. Wilkniss failed to timely file a form 3 with respect to his appointment as
our Chief Financial Officer and the granting to him of options to purchase
200,000 shares of common stock at $0.43 per share on August 29, 2005.

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 12536 Beatrice Street, Los Angeles, California 90066.

ITEM 10. EXECUTIVE COMPENSATION.


The following table addresses all compensation awarded to, earned by, or paid to
the Company's Chief Executive Officer and the other most highly compensated
executive officers of the Company whose annual compensation exceeded $100,000
during the fiscal year ended December 31, 2005 (the "Named Executive Officers"),
for the fiscal years 2003 through 2005.


                                      32



<PAGE>

<TABLE>
<CAPTION>
                          Annual Compensation                                         Long-Term
                                                                                     Compensation
                      ----------------------------------------------------------------------------

                                                                     Other            Securities
                                                                     Awards           Underlying
    Name and Position      Year     Salary ($)     Bonus ($)    Compensation ($)   Options/SARs (#)
---------------------------------------------------------------------------------------------------
<S>                        <C>       <C>              <C>             <C>             <C>
Nolan K. Bushnell (1)(2)   2005        $9,000         -0-             -0-             -0-
President and CEO          2004      $156,535         -0-             -0-             170,000
                           2003      $159,773         -0-             -0-             -0-
________________

(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 2003
          relates to uWink California.

(2)       As consideration for services rendered in 2003, 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.


                                  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      PRICE($/SH)
                           GRANTED IN FISCAL YEAR
------------------------- -------------------------- ------------------------ ------------------ ------------------
Peter F. Wilkniss                200,000                       12%                 $0.43              8/29/15

Peter F. Wilkniss                200,000                       12%                 $0.57              9/15/15
</TABLE>

DIRECTOR COMPENSATION

On July 25, 2005, Mr. McLeod was granted options to purchase 100,000 shares of
common stock at $0.36 per share. On November 11, 2005, Mr. Rotter was granted
options to purchase 100,000 shares of common stock at $0.45 per share. We do not
currently have any standard or annual arrangements regarding director
compensation. All directors receive reimbursement for out-of-pocket expenses in
attending board of directors meetings.

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

EMPLOYMENT AGREEMENT WITH NOLAN K. BUSHNELL

On March 3, 2006, we entered into an employment agreement with our Chairman and
Chief Executive Officer, Nolan Bushnell. Prior to March 3, 2006, the Company did
not have an employment agreement with Mr. Bushnell.

Pursuant to the terms of Mr. Bushnell's employment agreement, the Company will
pay Mr. Bushnell an initial base salary of $120,000. Mr. Bushnell will also be
eligible to participate in a bonus program to be established by the board of
directors.

Mr. Bushnell will be granted options to purchase 500,000 shares of Company
common stock at an exercise price of $0.33 per share. These options will vest
over a 3-year period.

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

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

                                      33



<PAGE>

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

EMPLOYMENT AGREEMENT WITH PETER F. WILKNISS

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

Mr. Wilkniss was granted options to purchase 200,000 shares of Company common
stock at an exercise price of $0.43 and options to purchase an additional
200,000 shares of Company common stock at an exercise price equal to the closing
price of the Company's common stock on September 9, 2005. These options will
vest over a 3-year period.

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

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

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

CONSULTING AGREEMENT WITH JOHN S. KAUFMAN

We currently employ our Director of Restaurant Operations, John S. Kaufman, on a
consulting basis. Under a consulting agreement with Mr. Kaufman's company, JSK
Management, dated February 17, 2006, we pay JSK Management at a rate of $250 per
hour, up to half of which is payable in common stock at the option of the
Company, plus reimbursement of reasonable out of pocket expenses. The agreement
has an initial term of 6 months and is terminable by either party on 30 days
notice.

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

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

As of March 31, 2006, the Company had a total of 18,140,300 shares of common
stock issued and outstanding, which is the only issued and outstanding voting
equity security of the Company.

                                      34



<PAGE>

The following table sets forth, as of March 31, 2006; (a) the names of each
beneficial owner of more than five percent (5%) of the Company's common stock
known to the Company, the number of shares of common stock beneficially owned by
each such person, and the percent of the Company's common stock so owned; and
(b) the names of each director and executive officer, the number of shares of
common stock beneficially owned and the percentage of the Company's common stock
so owned, by each such person, and by all directors and executive officers as a
group. Each person has sole voting and investment power with respect to the
shares of Common Stock, except as otherwise indicated.

NAME AND ADDRESS OF
BENEFICIAL OWNER*                       NUMBER OF SHARES      PERCENT OF CLASS
--------------------------------------------------------------------------------
Nolan K. Bushnell (1) (2)                  1,957,490               10.6%

Peter Wilkniss (1)(3)                        244,444                1.3%

Kevin McLeod (4) (5)                       1,027,713                5.5%

Tallac Corp.(6)(7)                         2,634,100               13.7%

Bradley Rotter (1) (8)                        16,667                 **

Bruce Kelly (1)                              130,000                 **


All officers and directors as a group      3,376,314               17.9%
(5 persons)
------------------------------------------------------
*   Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership
    includes any shares as to which a shareholder has sole or shared voting
    power or investment power, and also any shares which the shareholder has the
    right to acquire within 60 days, including upon exercise of options or
    warrants or other convertible securities.

**Less than one percent

(1)     Address is 12536 Beatrice Street, Los Angeles, California 90066.
(2)     Includes 1,557,448 shares held by the Bushnell Living Trust, 177,434
        shares held by the Nolan K. Bushnell Insurance Trust, 101,112 shares
        issuable upon exercise of stock options held by Mr. Bushnell, and
        121,496 shares issuable upon exercise of stock options held by Nancy
        Bushnell, wife of Mr. Bushnell.
(3)     Includes 100,000 shares held by Mr. Wilkniss, 50,000 shares issuable
        upon exercise of warrants held by Mr. Wilkniss, and 94,444 shares
        issuable upon exercise of stock options held by Mr. Wilkniss.
(4)     Address is Aneurin House, Astonbury Farm, Aston Herts SG2 7EG United
        Kingdom
(5)     Includes 783,281 shares held by Mr. McLeod, 216,654 shares issuable upon
        exercise of warrants held by Mr. McLeod, and 27,778 shares issuable upon
        exercise of stock options held by Mr. McLeod .
(6)     Address is 555 Montgomery St. #603, San Francisco, CA 94111.

(7)     Includes 1,800,767 shares held by Tallac Corp. and 833,333 shares
        issuable upon exercise of a warrant held Tallac Corporation. There is no
        relationship
        between Tallac Corp and/or John E. Lee and the Company other than as a
        shareholder.

(8)     Includes 16,667 shares issuable upon exercise of stock options held by
        Mr. Rotter.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

At various dates throughout 2004, S. Raymond Hibarger, Vice President of
Marketing, extended amounts under a promissory note totaling $243,139, to fund
the production of Snap! units in China. The note bears interest at 12% and is
secured by all inventory and receivables of the Company. The note was
reclassified as Notes Payable on the December 31, 2005 balance sheet following
the termination of Mr. Hibarger's employment with the Company. During 2005, the
amount outstanding under this loan was reduced by $131,296.

In December 2004, Mr. Dennis Nino, the brother-in-law of our CEO, Nolan
Bushnell, loaned the Company $117,000 related to the manufacture of Snap! units
in China. In consideration for the extension of the note Mr. Nino will be
compensated $5,000 upon final payment of the note. The note is due upon receipt
of full and final payment from Medalist Japan of invoice number 60248B. This
note was fully repaid in 2005.

On April 19, 2005, Mr. Nino extended an additional $39,000 to be used for
operations. This loan bears interest at 6% and is due on demand.

At various dates in 2004, Nancy Bushnell, the wife of our CEO, Nolan Bushnell,
extended loans under a promissory note totaling $47,000 to be used for
operations. This note bears interest at 8% and is due on demand. $26,500 of this
note was repaid in 2005.

                                      35



<PAGE>

At various dates in 2004 and 2005, Dan Lindquist, Vice President of Operations,
extended loans under a promissory note totaling $60,500 at December 31, 2005, to
be used for operations. The note bears interest at 8% and is due on demand.

On December 6, 2004, the Company issued a convertible note to Mr. Kevin McLeod,
a director of the Company, in the amount of $50,000. The proceeds of this note
were used to fund operations. The note accrued interest at 20%. The principal
amount of the note, together with accrued interest of $10,000, was converted
into 200,000 shares of common stock in December 2005, with the shares due on
conversion being issued on January 10, 2006.

On October 10, 2005, the Company issued a convertible note payable to Mr.
Bradley Rotter, a member of the Company's board of directors. The proceeds of
this note were used to fund operations. This note is due April 10, 2006, accrues
interest at 10%, and is convertible, at the option of Mr. Rotter, into the same
securities issued by the Company in (and on the same terms and conditions pari
passu with the investors in) any offering of its securities that results in
gross proceeds to the Company of at least $3,000,000. Upon conversion, Mr.
Rotter will receive as a conversion bonus additional securities equal to 20% of
the aggregate principal value plus accrued interest converted. The Convertible
Note is mandatorily repayable immediately following the consummation of any
offering of securities that results in gross proceeds to the Company of at least
$3,000,000. Upon such repayment, or upon repayment at maturity, Mr. Rotter will
receive warrants to purchase 200,000 shares of common stock of the Company at an
exercise price of $0.59.

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


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


As described more full in Description of Properties above, effective as of April
10, 2006, we secured an approximately 10 year lease on the planned location for
our first uWink Bistro in Woodland Hills, California. The underlying lease
agreement between Nolan Bushnell, our CEO, in his personal capacity, and
Promenade LP, the landlord, is as of February 3, 2006. Effective as of April 10,
2006, the Company, Mr. Bushnell and Promenade LP entered into an assignment
agreement pursuant to which Mr. Bushnell assigned his rights under the lease to
the Company (but without relieving Mr. Bushnell of his liability for the
performance of the lease). In connection with this assignment, we agreed with
Mr. Bushnell that, should we fail to perform under the lease and Mr. Bushnell
become obligated under the lease as a result, Mr. Bushnell will have the right
to operate the leased premises in order to satisfy his obligations under the
lease.


                                      36



<PAGE>

ITEM 13. EXHIBITS.

Index to Exhibits

Exhibit No.

2.1       Securities Purchase Agreement and Plan of Reorganization among
          Prologue, uWink, Inc. and the stockholders of uWink listed on the
          signature pages thereto, dated as of November 21, 2003 (incorporated
          by reference to the Company's Current Report on Form 8-K filed
          December 18, 2003).

3.1       Restated Certificate of Incorporation of the Company (incorporated by
          reference to the Company's Quarterly Report on Form 10-KSB for the
          Year ended December 31, 2003).

3.2       Restated Bylaws of the Company (incorporated by reference to the
          Company's Annual Report on Form 10-QSB for the Quarter ended June 30,
          2004).

4.1       Form of uWink, Inc. Warrant, dated March 3, 2006 (incorporated by
          reference to the Company's Current Report on Form 8-K filed on March
          9, 2006).

4.2       Form of uWink, Inc. Warrant, dated May 15, 2005 (incorporated by
          reference to Exhibit 4.2 to the Company's Annual Report on Form 10-KSB
          filed on April 17, 2006).

4.3       Form of uWink, Inc. Warrant, dated 2004 (incorporated by reference to
          Exhibit 4.3 to the Company's Annual Report on Form 10-KSB filed on
          April 17, 2006).*

4.4       Convertible Promissory Note, dated September 8, 2005 (incorporated by
          reference to Exhibit 4.4 to the Company's Annual Report on Form 10-KSB
          filed on April 17, 2006).

4.5       Convertible Promissory Note, dated October 10, 2005 (incorporated by
          reference to Exhibit 4.5 to the Company's Annual Report on Form 10-KSB
          filed on April 17, 2006).

4.6       Promissory Note in favor of S. Raymond and Victoria Hibarger and
          related Financing Agreement, dated July 23, 2001, as amended as of
          February 15, 2006 (incorporated by reference to Exhibit 4.6 to the
          Company's Annual Report on Form 10-KSB filed on April 17, 2006).

4.7       Form of Convertible Promissory Note, dated November 2004 (incorporated
          by reference to Exhibit 4.7 to the Company's Annual Report on Form
          10-KSB filed on April 17, 2006).

4.8       Line of Credit between the Company and Nancy Bushnell dated December
          23, 2004 (incorporated by reference to Exhibit 4.8 to the Company's
          Annual Report on Form 10-KSB filed on April 17, 2006).

4.9       Line of Credit between the Company and Dan Lindquist dated December
          23, 2004 (incorporated by reference to Exhibit 4.9 to the Company's
          Annual Report on Form 10-KSB filed on April 17, 2006).

4.10      Demand Note, dated August 10, 2005, in favor of Dennis Nino
          (incorporated by reference to Exhibit 4.10 to the Company's Annual
          Report on Form 10-KSB filed on April 17, 2006).

10.1      2005 Stock Incentive Plan (incorporated by reference to the Company's
          Current Report on Form 8-K filed on September 15, 2005).

10.2      2004 Stock Incentive Plan (incorporated by reference to Exhibit 10.2
          to the Company's Annual Report on Form 10-KSB filed on April 17,
          2006).

10.3      2000 Stock Incentive Plan (incorporated by reference to Exhibit 10.3
          to the Company's Annual Report on Form 10-KSB filed on April 17,
          2006).

10.4      Employment Agreement between the Company and Nolan Bushnell
          (incorporated by reference to the Company's Current Report on Form 8-K
          filed on March 9, 2006).

10.5      Employment Agreement between the Company and Peter F. Wilkniss
          (incorporated by reference to the Company's Current Report on Form
          10-QSB for the Quarter ended September 30, 2005).

10.6      Consulting Agreement between the Company and JSK Management
          (incorporated by reference to Exhibit 10.6 to the Company's Annual
          Report on Form 10-KSB filed on April 17, 2006).

10.7      Lease Agreement between the Company and Patco Properties, L.P., dated
          April 21, 2005 (incorporated by reference to Exhibit 10.7 to the
          Company's Annual Report on Form 10-KSB filed on April 17, 2006).

                                      37



<PAGE>

10.8      Lease Agreement between Nolan Bushnell and Promenade LP, dated
          February 3, 2006 (incorporated by reference to Exhibit 10.8 to the
          Company's Annual Report on Form 10-KSB filed on April 17, 2006).

10.9      Assignment, Assumption and Consent Agreement among Nolan Bushnell, the
          Company and Promenade LP, dated April 10, 2006 (incorporated by
          reference to Exhibit 10.9 to the Company's Annual Report on Form
          10-KSB filed on April 17, 2006).

10.10     Letter Agreement between the Company and Nolan Bushnell, dated April
          10, 2006 (incorporated by reference to Exhibit 10.10 to the Company's
          Annual Report on Form 10-KSB filed on April 17, 2006).

14.1      uWink, Inc. Code of Ethics (incorporated by reference to Exhibit 14.1
          to the Company's Annual Report on Form 10-KSB filed on April 17,
          2006).

16.1      Letter from Stonefield Josephson, Inc., dated September 1, 2005
          (incorporated by reference to the Company's Current Report on Form 8-K
          filed September 9, 2005).

21.1      Subsidiaries of uWink, Inc. (incorporated by reference to Exhibit 21.1
          to the Company's Annual Report on Form 10-KSB filed on April 17,
          2006).

23.1      Consent of Kabani & Company, 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.*

*Filed herewith.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

AUDIT AND NON-AUDIT FEES

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


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


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


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



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

                                      38



<PAGE>

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

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

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

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

                                       39




<PAGE>

                                   SIGNATURES

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

                                     uWINK, INC.

Dated November 29, 2006             By: /s/ Nolan K. Bushnell
                                     ---------------------------------------
                                     Nolan K. Bushnell
                                     President, Chief Executive Officer

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

<TABLE>

Signatures                Title                                   Date
--------------------------------------------------------------------------------

                     <C>
/s/ Nolan K. Bushnell     President, Chief Executive Officer      November 29, 2006
-----------------------
Nolan K. Bushnell

/s/ Peter F. Wilkniss     Chief Financial Officer,
-----------------------   Chief Accounting Officer and Secretary  November 29, 2006
Peter F. Wilkniss

/s/ Bruce P. Kelly        Director                                November 29, 2006
-----------------------
Bruce P. Kelly

/s/ Bradley N. Rotter     Director                                November 29, 2006
-----------------------
Bradley N. Rotter

/s/ Kevin McLeod          Director                                November 29, 2006
-----------------------
Kevin McLeod

                                       40

</TABLE>