Games2Learn Parent Firm Files for Bankruptcy
In yet another casualty of the turmoil in Internet retailing, the Costa Mesa-based operator of online educational toy seller Games2Learn has filed for bankruptcy protection.
The company, A Better Way of Learning Inc., was formed five years ago. It debuted as an electronic-commerce enterprise last August, specializing in CD-ROMs, video and audio technology that encouraged children to read through the use of phonics.
In an abbreviated Chapter 11 petition, filed Friday in federal Bankruptcy Court in Santa Ana and signed by owner Blair Armstrong, the company reported between $10 million and $50 million in assets and $1 million to $10 million in liabilities.
The bulk of the assets, however, did not come from revenue but were based on the company’s intellectual property, said attorney Marc Winthrop of Winthrop Couchot PC, the Newport Beach law firm handling the bankruptcy.
“We’ve got some very good technology here, but it was not selling right now,†he said.
In recent weeks, a growing number of Web-based retailers have reported serious financial troubles. Earlier this week it was reported that Toysmart.com, a 2-year-old seller of educational toys controlled by Walt Disney Co., had shuttered its operations after a sharp falloff in online visitors.
Games2Learn decided to throw in the towel after struggling for months to keep sales going while lacking the resources to reach consumers through advertising, Winthrop explained.
“The problem is that the dot-coms have so much money that they have driven the price of advertising beyond the ability of companies like Games2Learn to buy media time,†he said.
Winthrop said he did not have information about the company’s revenue and other financials. Games2Learn executives did not return phone calls.
Winthrop said Games2Learn apparently had been working on a deal to be acquired for $14 million by a school supplies company looking to enter the competitive electronic retailing arena. But the deal fell apart about two weeks ago, he said, and that left the company with no alternative but to file for bankruptcy.
