NOTE 4. REDEEMABLE CONVERTIBLE PREFERRED STOCK

As of March 31, 2017 and December 31, 2016, the holders of Series B preferred stock had a liquidation preference over the holders of Series A preferred stock and common stock in the amount of approximately $5.98 and $5.86 per share, respectively. As of March 31, 2017 and December 31, 2016, the holders of Series A preferred stock had a liquidation preference over the holders of common stock in the amount of approximately $2.17 and $2.14 per share, respectively.

As of March 31, 2017, the Company had recorded the amount of the beneficial conversion feature of the Series B and Series A preferred stock amounting to $226 and $328, respectively, as the respective conversion prices for such shares were less than the fair market value of the underlying preferred stock. The beneficial conversion feature had been accumulated since the last anniversary date of the issuance of the Series B and Series A preferred stock. The beneficial conversion feature resulted in the recording of a discount against the preferred stock and a corresponding credit to the Company’s additional paid in capital. The amortization of the discount for the Series B and Series A preferred stock during the three months ended March 31, 2017 was $57 and $82, respectively, and was presented as an addition to accretion of redeemable convertible preferred stock in the Company’s statement of operations for that period. The amount of the beneficial conversion feature and the related accretion of redeemable convertible preferred stock were not material to the Company’s financial statements as of and for the year ended December 31, 2016, respectively.

The redeemable convertible preferred stock is convertible into shares of the Company’s common stock at the option of the holders but will automatically convert into shares of the Company’s common stock upon the closing of an IPO with gross proceeds to the Company of at least $15,000. In the event of a conversion to common stock, the holders of the redeemable convertible preferred stock will receive one share of the Company’s common stock for each share of redeemable convertible preferred stock converted, multiplied by (i) the share’s original issuance price plus the liquidation preference of such share divided by (ii) the share’s original issue price, with cash paid for any fractional shares. As of March 31, 2017 and December 31, 2016, each share of Series B and Series A preferred stock was convertible into approximately 0.74 and 0.73 shares of common stock, respectively.