A first version of The Mall Plus website was launched earlier this year, but disappeared from the Internet last month to be replaced by a "reopening soon" notice on its homepage.
The notice remained the site's only presence yesterday.
The website was among several projects being developed by start-up company The Street.
The venture was supported by the Dunedin City Council, which in 2006 bought 1.2 million shares in The Street for $700,000 through its holdings company Dunedin City Holdings Ltd (DCHL).
The Street director Geoff Thomas last month denied The Mall Plus had collapsed, and said the project was "still going well".
Contacted again yesterday, however, he confirmed The Mall Plus website had been sold "earlier this year" to another Dunedin software developer, whom he declined to name, and conceded there was no target date for the project's completion.
"I don't know. I wish I knew," Mr Thomas said.
The Otago Daily Times yesterday tracked down The Mall Plus' developer, Dunedin man Mike Hodges, who insisted the project's future was promising.
He declined to discuss the site's development in detail, but said work on the third version of the virtual shopping site was continuing.
It was hoped The Mall Plus would be online by Christmas and the software could be marketed worldwide, he said.
"The next one is going to be bigger, busier and better."
The purchase of The Mall Plus website from The Street included a royalties agreement guaranteeing a share of any revenue for The Street, he said.
Asked why The Street had decided to sell the website, Mr Thomas said the decision simply "made much more sense".
"There's only so many things we can do at the same time with limited resources. The company that's working on it has in-house expertise."
DCHL chief executive Bevan Dodds said ratepayers could still expect a return on their investment, as the council's shareholding was in The Street - not The Mall Plus website - and work was continuing on several other projects involving The Street.
"The return on the original investment will depend on the return on The Street as a whole," he said.
Asked why The Mall Plus site had been singled out for sale, Mr Dodds said: "We saw more future in doing other things than we were doing."
