Where Is uWink Headed?

Material deals in the pipeline

It is more than likely, I would say about 90% or higher, that uWink will NOT survive in its current form with the cash that they have on hand. (More below)

That being said, management understands that they need to secure more software licensing deals ASAP in order to improve their financial standing, and make themselves more attractive to a potential suitor/financier.

In the latest 10-Q filing, management went out of their way to explain in detail what’s going on with the pilot programs that are in place and where uWink’s terminals are being tested.

Here’s a brief breakdown of those test/pilot programs and their potential implications on the company going forward:

• Deal with Brinker International: As I wrote about before, uWink has already inked a deal with a Chili’s Too Margarita Grill in the Ft. Lauderdale airport utilizing 13 of their touch screen terminals through the franchisee Delaware North Companies.

This deal came with the approval of Chili’s parent company Brinker International (NYSE: EAT) and as a result, uWink is looking to become Chili’s system-wide approved technology vendor.

This could prove to be a huge deal if successful and if implemented across more Chili’s locations.

• Deals with Quick Service Restaurants (QSR): uWink has been prototyping table and booth-mounted screens with a focus on kid’s entertainment at several “major” QSR in Texas over the last several months.

According to uWink, they have begun the “corporate vendor approval process” with two of the major chains as we speak, and have partnered with several sales executives with prior experience securing deals of this caliber. These sales reps would essentially get a cut of the transaction and perhaps a recurring fee for securing these deals.

uWink wouldn’t say any more about who these mysterious “chains” are, but the 10-Q says that they are “major”, so you can do your own deduction.

• Another Fast Casual Deal: uWink stated that they are awaiting approval to install some of their terminals in a “major” fast casual restaurant chain in an airport in the Southwest U.S.

If this deal is anything like the Chili’s deal mentioned above, this could portent another great synergy with another strong restaurant chain.
uWink will most likely partner with the concession company as they did with the Chili’s Too location at Fort Lauderdale that is run by Delaware North Companies.

These deals generally are better suited for these locations and franchisees as they are usually in a more flexible position to try something new, as well as being in airports where new technology is quicker to catch on, before it migrates to other locations and other restaurant chains.

• Stadium/Arena Deals: uWink stated in their 10-Q as well that they are in advanced talks with two major arenas to install their self-ordering kiosks/terminals in luxury suites and premier seating at these locations.

These installations will be merely a test installation, whereby uWink will look to expand their relationship both with the current arenas/stadiums, in addition to expanding into other sports venues.

If you are curious as to which arenas or stadiums you might find these terminals in, I would start the search with the TD Banknorth Garden that plays host to the world champion Boston Celtics NBA basketball team, as well as the Boston Bruins NHL hockey team, as the concessions operations are run by Delaware North Companies, which already has a deal in place with uWink at their Chili’s Too Margarita Grill in Ft. Lauderdale.

• Advertising Subsidies for Costs of Terminals: uWink is currently in talks to find advertisers that are willing to pay either in full or partially, the cost of the terminals in exchange for sponsorship and advertising either on the exterior of the terminals, and/or in the actual software.

An example of this would be a drink list that was sponsored by Grey Goose Vodka, regardless of where the terminal was located.

What this would essentially do is lower or possibly eliminate the cost of the terminals, and thus a potentially high barrier to entry for many restaurant and hospitality chains, and allow more and more businesses to test and begin implementing uWink’s terminals and only having to pay for the software license, rather than also purchasing the terminal itself and increasing their cash outlay and capital expenditures.

This sounds like a great arrangement to me, and I’ll be looking forward to seeing how this plays out in the future and how uWink will execute this potential strategy.

Why Haven’t We Heard of These Deals?

After reading all these deals and potential deals, you are probably asking yourself, as I was, why the heck we haven’t heard more about these deals until the 10-Q was released in the form of press releases, or other marketing initiatives.

According to management, uWink has not been able to make any formal announcements about these pilot/test projects until they become final, and they gain full approval for installation in more locations.

Apparently, you don’t want to piss off the good folks at one of these major restaurant chains by announcing a deal too soon, or else they can pull the rug right out from under you before a deal is done.

Rest assured, uWink’s management team, as well as their stockholders, are chomping at the bit to put out some good news and press releases related to these items, and I expect to see something concrete and more definitive within the next 6 months.

So what does this all mean for our investment in uWink?

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