Replies to post #16858 on uWink Inc. (UWKI)

[bige2533]

Let me cut out the quote I am referring to from that same document.

"Moreover, the Company has, at present, determined not to pursue a renegotiation of the terms of this lease because the Company intends to focus on less capital intensive real estate opportunities as it executes on the growth plan for its uWink branded restaurants."

[Greenband]

General Comment around Strategy

From August 2007 10Q
Our growth strategy is to open three to six additional company-owned and/or managed restaurants within the next six to twelve months and to franchise our concept, focusing on multiple-unit area development agreements. We are targeting a mix of one-third company-owned restaurants and two-thirds franchised restaurants. We expect we will also seek to generate additional revenue through the sale of media equipment to franchisees. In addition, we believe that our concept is well suited for specialized locations, including airports and schools, and we are pursuing opportunities in these areas.

On May 1, 2007, we announced the signing of a letter of intent to open a new restaurant location at the Promenade at Howard Hughes Center in Los Angeles, California. On June 7, 2007, we reached agreement in principle with the landlord on the terms of a lease agreement relating to this location.

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

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

The exact execution of the business plan has changed several times as shown above. Promenade at Howard Hughes Center and the Galleria locations were canceled, although in most cases uWink could have renegotiated letters of intent.

The original plan has changed in several ways:
* Instead of 3-6 new restaurants, it will be only 2 new in the 6-12 month period
* The mix of 1/3 company owned to 2/3 franchised has changed.

The execution of several items has been less stellar. Permitting delays are an expected event when opening a new restaurant, just like inspection/weather delays are expected when building a new house. uWink has also done several things better than I expected.

However, this is all part of investing in a start-up. I can promise you the opening of the first Starbucks or McDonald's went a lot rougher.

This is a new concept that has never been done before. I'm glad that uWink is making smart adjustments to their business strategy and learning form their mistakes. If uWink is successful, I'm sure we will see other changes to the business strategy.

I would not rule out additional financing. If uWink determines they need more company owned stores and cannot obtain debt financing then a stock offering may be the best choice. uWink management doesn't want to issue more stock since most of their compensation is stock based - what hurts us hurts them.

The stock price is irrelevant now. What is important:
* H&H show good numbers in the Q4 10-Q (full quarter of operation)
* Mountain View get opened by September
* The 3 locations exhibit some type of network effect
* Evidence that full quarter pro-rated cash flow break even or better with 3 stores
* Strong franchise announcements

I think the software licensing revenue (Volante, etc.) will not be consequential this year. I think the restaurants have to succeed first.

Just my attempt to be an objective as possible with the caveat that I own a sizable number of shares and warrants.