Johnson left to start the company this year after spending three years developing and testing drawing recognition technology called "Living Ink."

The technology is used in Sabi's first game, called "ItzaBitza," to animate drawings that children make on their computer using a mouse. The $19.99 game is designed to help children ages 4 and older learn to read, and it draws on research Microsoft did with educators and child development specialists.

Microsoft's licensing the technology and taking a stake in Sabi through its IP Ventures program, which licenses intellectual property from the Microsoft Research Group. The same program led to the creation of Seattle mobile marketing company Zumobi.

Johnson, who is funding Sabi herself, was inspired to develop children's games after seeing the sort of games available to her daughters on the Xbox 360 and the amount of time children spend just watching TV after school.

The game was pitched internally at Microsoft but it ended up making more sense to spin it off as a separate company.

"We didn't see how it would fit in with the game studios given their target auience and their strategy for their current roadmap, so it made win-win sense for us to .... take the material that we worked on and bring this out as a company,'' she said.

Sabi also plans to develop additional games and extend its titles beyond the PC to different platforms, including Nintendo's Wii and DS.