6. Convertible Preferred Stock Warrants

In connection with the IPO on October 25, 3019, the convertible preferred warrants converted to common stock warrants. Therefore, as of March 31, 2020 and December 31, 2019 the Company had no outstanding convertible preferred warrants. Prior to the conversion, the convertible preferred stock warrants were valued using the price as of the IPO date of $13 less the exercise price of $1.73 per common share. During the three months ended December 31, 2019, 482,661 common stock warrants were exercised for 441,307 shares of common stock at a weighted average exercise price of $1.59.

The Company recognized the warrants at fair value at the time of issuance and remeasured the warrants at their fair value on a recurring basis thereafter. Given the deemed liquidation provisions of the underlying convertible preferred stock, the convertible preferred stock warrant liabilities are recorded at fair value and are subject to remeasurement at each balance sheet date. The Company calculates the warrants’ fair value as follows:

The Company’s equity value is estimated using the market approach.

The Company’s equity value is then allocated among classes of its capital structure, including Series B convertible preferred shares. The allocation is performed using the Option Pricing Methodology. This method treats securities as options with the Company. The allocation is used to determine the value of Series B convertible preferred shares, as well as the Series B convertible preferred stock warrants. The Company assumes that any exercise of the warrants would be to purchase Series B convertible preferred shares, and assumes scenarios where the warrants will not be exercised.