WATERLOO REGION - Kik Interactive is working on a deal that could see the Kitchener-based tech company transfer the majority of its local workforce and its office space to another tech firm.

In an interview with The Record on Friday, Kik CEO Ted Livingston said the firm has signed a letter of intent with an unidentified company to complete the transition. Roughly 75 local workers impacted by recent cuts will remain employed by Kik until that deal can be formalized, he said.

Livingston would not reveal the name of the tech company or say what it develops, only that it's based in Silicon Valley.

"That company will take over the team, take over the office, and quickly grow their presence in Waterloo beyond that," he said.

The unnamed company would assume Kik's office space inside the Catalyst137 building in Kitchener as part of the proposed deal. Livingston is optimistic the agreement will close in a matter of "weeks, not months."

The precise number of employees to be transferred has not yet been finalized, he added, but the intent is for it to include the "vast majority" of workers.

Earlier this week, Kik announced it will shut down its popular messaging app and reduce staff from approximately 150 to an "elite" 19 to focus on its digital cryptocurrency, Kin. The exact shutdown date is still unknown.

The 32-year-old founder said he hopes to sign a similar transfer agreement with another tech company for the approximately 75 employees in Kik's Tel Aviv office, but it has had a harder time making those arrangements.

"The competition for tech talent is fierce, so people are very interested to meet those employees."

News of the cuts first leaked out Monday, sooner than the company intended, Livingston acknowledged. He wanted to tell staff in the Tel Aviv office in person on Monday, then fly back to Waterloo Region to inform local employees.

"In Waterloo we had the letter of intent ... and we didn't have that in Tel Aviv, so we thought it would be fair to tell Tel Aviv first."

By the time he reached the airport for the return flight home, the news had already leaked. Livingston had to inform the Waterloo team over a video call while still inside the airport.

He then wrote a blog post Monday evening outlining the company's plan.

"This has been brutal," he said Friday. "To go from 150 employees to 19 has been difficult ... and to turn off a service used and loved by millions has been difficult."

The 19 remaining staff will be placed in teams of four or five people and work remotely from around the world, Livingston said.

Kik was once a rising star in the messaging app world, with an estimated 300 million registered users as recently as 2017 and a $1-billion valuation in 2015 following a $50-million investment from China's Tencent Holdings Ltd.

But the company never found a way to reliably monetize its service and in 2017 Kik began selling its cryptocurrency after years of development and experimentation.

A cryptocurrency is a digital asset similar to PayPal or an online debit card that allows users to purchase or exchange goods online, except it is not issued by a central government or bank.

The company sold one trillion Kin tokens that first year, raising about $49 million in a presale and another $50 million in a public sale.

However, earlier this year the U.S. Securities and Exchange Commission sued Kik, alleging the sale violated U.S. securities laws and came at a time when the tech company was losing money on its messenger service. The agency is seeking an undisclosed penalty.

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Securities require a "registration statement" that provides public investors with financial and managerial information about the issuer of the securities, details about the terms of the securities offering, the proposed use of investor proceeds, and an analysis of the risks and material trends that would affect the enterprise.

Livingston has said that requirement would make cryptocurrencies unusable. Kik set aside $5 million to fight the U.S. regulator on top of the more than $6 million the company has spent thus far.

The SEC alleges Kik faced a crisis at the same time it started selling Kin, and that fewer and fewer people were using the messenger service. It says the company expected to run out of cash by the end of 2017, and executives had no plan to increase revenues through existing operations.

At the Elevate tech conference in Toronto on Wednesday, Livingston said he'd continue the fight with the SEC down to the company's last dollar.

Shutting down the app and cutting staff was done to reduce expenses and save company resources for that fight. The free app cost the company $1.5 million per month to operate, Livingston told The Record.

"We basically came to the realization that we could no longer afford to run Kik," he said. "This crypto business model is incredibly promising ... but it's not yet at the maturity point where it could support an app like Kik from a financial perspective."

Kin has more than two million monthly active earners, and 600,000 monthly active spenders, he said. The company's challenge will be turning those users who currently earn Kin by watching videos or completing online quizzes and polls into actual Kin purchasers, Livingston said.

One thing that isn't clear, however, is whether or not Kik's decision to cease operating the app and cut staff will hurt the company in its court case with the SEC.

"I don't think so," said Livingston. "They did throw a lot into their narrative about how Kin was a last-minute, opportunistic Hail Mary, and I find that ridiculous."

jjackson@therecord.com

Twitter: @JamesDEJ