All Magic Leap Patents Have Apparently Been Assigned To J.P. Chase Morgan As Collateral

Just A Quick Note Today on Magic Leap 2+ Month Old News

Things have been very quiet lately with respect to Magic Leap. So quiet, that apparently the assignment of all of Magic Leap patents over 2 months ago went unnoticed. Except for a few users trying to keep it alive, the Sub-Reddit on Magic Leap pretty dead for many months. The initial source of information for this article came from a post the AR_MR_XR Sub-Reddit. Reddit user, u/LegendOfHiddnTempl found that USPTO is now showing all Magic Leap patents to be assigned to J.P. Morgan Chase as collateral. The patents include the former Osterhaut Design Group (ODG) patents Magic Leap acquired via Magic Leap’s shell company Mentor Acquisitions earlier this year.

I checked on the official USPTO website and sure enough, the assignment as collateral document was executed on August 20th, 2019 and is publicly available (copied here). I have cut and pasted a few key parts of the 451-page document listing all the patents and applications that have been assigned. I have not checked every patent, but it appears to be all of Magic Leap’s I.P. including the former ODG patents.

Apparently Magic Leap needed to put up their I.P. as collateral for a loan. As recent as April 2019, it was announced that NTT Docomo had invested $280 Million on top of deals with AT&T and SK Telecomm. Magic Leap is estimated to have over 1,800 employees and 19 office sites.

Employees of high-tech companies doing work like Magic Leap typically run about $250,000 or more of salary, benefits, office/facilities/equipment per employee per year. Senior R&D people can cost even more, but even if technicians are paid much less, the equipment they run is often very expensive. Then you have the SG&A on which Magic Leap appears to be heavily spending with a lot of marketing and facilities. When you total it all up, most people I talk to think Magic Leap is spending somewhere between $600M and $800M per year and that they have burned through all of their initial $2.4 Billion. The $280M from NTT Docomo only funds about 5 months of Magic Leap’s burn rate. It is sad to me that multiple startups could have been funded with all that money, but big companies often only get a thrill out of big investments.

There are no well-document estimates for how many units Magic Leap has shipped to date, but most educated guesses are that Magic Leap has shipped between 5,000 and 8,000. This works out to over $300 thousand of investment per unit or over 100 times the selling price. Its also unlikely that Magic Leap is making much if any per-unit profit. One would expect that any sales have stalled as the unit is now about 1 year old and Microsoft’s Hololens 2, Magic Leap’s most direct competitor, was announced earlier this year.

Apparently Magic Leap is running out of Saudi Princes and high ego Telco executives and has had to put up the “silverware” (I.P.) as collateral. I have not been able to find how much money J.P. Morgan Chase loaned to Magic Leap, but I would guess that it is under $1 billion. Unless Magic Leap has also raised money from other sources, one would expect that Magic Leap should have been taking actions, including major layoffs, long ago, maybe they already have done so quietly.

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