On June 29, 2015, Rainmaker Systems Inc. received a notice of default from investors holding $2,225,000 of the outstanding principal amount of the Company's secured convertible promissory notes and $1,112,500 of the outstanding principal amount of the company's supplemental secured promissory notes. The notice of default stated that an event of default had occurred under the Convertible Notes and Supplemental Notes as a result of the Company's failure to make a required payment on indebtedness in excess of $100,000 to Banc of America Leasing & Capital, LLC, and declared all principal and accrued interest outstanding under the Convertible Notes and Supplemental Notes held by the Majority Investors to be immediately due and payable. On June 29, 2015, the Company received a notification of disposition of collateral from the collateral agent for the holders of the Convertible Notes and Supplemental Notes notifying the Company that a foreclosure sale of all or substantially all of the Company's assets would take place on July 14, 2015.

If the Majority Investors and collateral agent elect to proceed with the foreclosure sale of the Company's assets, upon completion of such sale the Company would no longer be able to continue as a going concern and would immediately cease operations.