The warrants issued by the Company are classified as equity. The fair value of the warrants was recorded as additional-paid-in-capital, and no further adjustments are made.

For stock warrants paid in consideration of services rendered by non-employees, the Company recognizes consulting expense in accordance with the requirements of FASB ASC 505-50, Equity-Based Payments to Non-Employees.

On March 20, 2018, the Company entered into a one-year consulting agreement with Shilong Film Investment, Inc. for business development and marketing services to the Company (the General Counsel of Moregain Capital Group is married to the President of Shilong Film Investment, Inc., who is also a director of Moregain Capital Group). In consideration for the services, the Company agreed to issue warrants to purchase an aggregate of 3,000,000 shares of Company’s common stock, exercisable for five years from the date of issuance at an exercise price of $0.15 per share (the “Warrants”). The Company classified the Warrants as equity. Using the Black-Scholes-Merton pricing model, the Company determined the aggregate value of the Warrants to be approximately $600,000. This amount will be recognized over the one-year term of the consulting agreement. The warrants have a cashless exercise feature. For the quarter ended March 31, 2018, the Company recognized approximately $16,000 in marketing expenses as a result of the consulting agreement.

A summary of the Company’s warrant activity and related information for the nine months ended March 31, 2018 are shown below: