This excerpt taken from the BIDZ 10-K filed Mar 16, 2007.
Postponed Initial Public Offering and Rescission Offer
On March 17, 2006, we filed a registration statement in connection with a planned initial public offering of our common stock. We planned to conduct a rescission offer following the initial public offering in order to address sales of certain of our securities made in violation of certain provisions of federal and state securities laws. See, Risk Factors Holders of common stock issued by us in prior offerings are entitled to rescind their purchases. In June, 2006, our underwriters informed us that they were unable to complete the offering, primarily because we did not obtain a sufficient number of 180-day lock-up agreements from our existing stockholders. Our underwriters have advised us that they are unable to take our company public in the foreseeable future, unless we obtain a sufficient number of these lock-up agreements. Accordingly, we postponed our plans to conduct the initial public offering and the rescission offer, and requested for withdrawal of the registration statement that was filed.
If we do not have the financial resources for a rescission offer, any assertion by our stockholders of their legal claims against us could have a material and adverse effect on our liquidity, our financial position, results of operations, and cash flows. Moreover, even if we are successful in obtaining the financing necessary to conduct a rescission offer and make such offer to our stockholders, if, prior to the rescission offer, any stockholders who acquired their common stock in our offerings sell their common stock for less than the price at which they purchased their shares, they will be entitled to recover from us damages equal to the difference between their investment amount plus interest from the date of issuance and the value or price of the security at the time of its sale. Because these stockholders will no longer own our common stock, we will not be able to extinguish these damage claims by offering to rescind the stockholders purchase of our common stock.
The probability that stockholders would assert a claim against us and the extent of the our liability, if any, are contingent on a number of factors, including a stockholders desire to rescind his or her purchase based on the price of our rescission offer and the key purchase price of the tender for shares, applicable legal precedent, and statutes of limitation. As of the date of this filing, two of our shareholders have filed actions seeking a rescission of their investment in our common stock, which was in the aggregate $60,000, and unspecified damages. Based on current facts known to management at this time, management does not believe that assertion of any such claims by the Companys shareholders in a material amount is probable. Accordingly, no accruals for either potential amounts payable or reserves have been made at this time.