SEC Filing Document

Company: Ambitious Entertainment, Inc.
Ticker: 
CIK: 1900851
Filing Type: DRS
Document Type: DRS
Date Filed: 2025-07-17
Accession Number: 0001493152-25-011282
Exchange: 
SIC Code: 7812
SIC Description: Services-Motion Picture & Video Tape Production
URL: https://www.sec.gov/Archives/edgar/data/1900851/000149315225011282/filename1.htm

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Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. Segment Reporting ASC 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s chief operating decision maker organizes segments within the Company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Management determined the Company’s operations constitute a single reportable segment in accordance with ASC 280. Tax credits and tax credit receivable

The
Company receives tax incentives from U.S. (state and local) and foreign government agencies to encourage the production of film, episodic
and streaming content. Regarding the accounting treatment for tax credits, GAAP provides limited guidance on the accounting for government
grants received by for-profit companies. In accordance with ASC Topic 832, Government Assistance, as adopted January 1, 2022, we will
disclose certain types of government assistance received in the notes to the unaudited condensed consolidated financial statements that
includes: a) the nature of the transaction including the nature of the assistance being given, b) the accounting policies being used
to account for the transaction and c) other provisions of relevance, where required. Depending on the type of grant or contract, we understand
there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred credit to be amortized,
revenue or other income. The Company has concluded that reimbursements received for tax credits incurred, are more akin to a reduction
of capitalized productions costs and applies reimbursements against our content assets. For the three months ended March 31, 2025 and
the year ended December 31, 2024, the company has recorded a tax credit receivable of $0.

Recent
Accounting Pronouncements

Segment
Reporting – Improvements to Reportable Segment Disclosures

November 2023, the Financial Accounting Standards Board (“FASB”) issued a new standard to improve reportable segment disclosures.
The guidance expands the disclosures required for reportable segments in our annual and interim unaudited condensed consolidated financial
statements, primarily through enhanced disclosures about significant segment expenses. The standard will be effective for us beginning
with our annual reporting for fiscal year 2025 and interim periods thereafter, with early adoption permitted. We are currently evaluating
the impact of this standard on our segment disclosures.

Income
Taxes – Improvements to Income Tax Disclosures

December 2023, the FASB issued a new standard to improve income tax disclosures. The guidance requires disclosure of disaggregated income
taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income
tax-related disclosures. The standard will be effective for us beginning with our annual reporting for fiscal year 2026, with early adoption
permitted. We are currently evaluating the impact of this standard on our income tax disclosures.

Recently
Adopted Accounting Pronouncements

The
Company on January 1, 2022, adopted the provisions of ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging – Contracts in Entity’s’ Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity). The modified retrospective adoption of the new accounting principle did not have
a material effect on the Company’s financial statements. As a result of the adoption of this new accounting principle, the Company
did not have to separate any embedded conversion feature in the Company’s newly issued convertible debt.

The
Company on January 1, 2022, early adopted ASU 2021-04: Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments
(Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts in
Entity’s Own Equity (Subtopic 815-40) on a prospective basis. The new standard was issued in April 2021 with one aspect being
the intent of standardizing the application of accounting for modification of warrants. The adoption of this ASU did not have material
impact on the Company’s financial statements.

The
Company on January 1, 2022, adopted the provisions of ASU 2021-07,
Determining the Current Price of an Underlying Share for Equity-Classified Share-Based Awards, which provides private companies
the option to elect a practical expedient to determine the current price input of equity-classified share-based awards issued as compensation
using the reasonable application of a reasonable valuation method. The characteristics of this method are the same as the characteristics
used in the regulations of the U.S. Department of the Treasury related to Section 409A of the U.S. Internal Revenue Code (the Treasury
Regulations) to describe the reasonable application of a reasonable valuation method for income tax purposes. The adoption of this ASU
did not have material impact on the Company’s financial statements.

June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic
326), Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 was further amended in November 2020 by ASU No. 2020-10,
Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). As a result, ASC
Topic 326, Financial Instruments – Credit Losses is effective for public companies for annual reporting periods, and interim periods
within those years beginning after December 15, 2020. For all other entities, it is effective for fiscal years beginning after December
15, 2022, including interim periods within those fiscal years. As the Company is an “emerging growth company” and elects
to apply for the new and revised accounting standards at the effective date for a private company, the Company adopted ASU No. 2016-13.
on January 1, 2023, and the adoption did not have a material impact on the Company’s unaudited condensed consolidated financial
statements.

NOTE
3 - ACCOUNTS RECEIVABLE

of March 31, 2025, and December 31, 2024, accounts receivable totaled $55,060 and $290,597, respectively. The amounts as of March 31,
2025, and December 31, 2024, represents funds due to the Company under the terms of the film production service agreements.

NOTE
4 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid
expenses and other current assets are assets and payments previously made, that benefit future periods. The balance as of March 31, 2025,
and December 31, 2024, respectively includes prepaid operating expenses and production related deposits.

Prepaid
and other current assets comprised of the following:

March 31, December 31,

Prepaid expenses $	5,000 $	7,083

Deposits - 109,659

NOTE
5 - INVESTMENTS

The
Company invests in various film projects produced by other entities. These investments represent financial contributions to third-party
film projects in exchange for participation rights in revenue generated by the completed films. The investments are classified as current
assets on the balance sheet and are stated at cost, unless there is evidence of impairment.

of March 31, 2025, and December 31, 2024, the Company had investments in film projects produced by other entities totaling $128,650.

Revenue
Participation

These
investments provide the Company with participation rights in revenue streams generated from the exploitation of the films, including
theatrical releases, streaming, and other distribution channels. The timing and amount of returns from these investments depend on the
performance of the respective film projects and market conditions.

Impairment
Testing

The
Company evaluates its film investments for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable.
Impairment testing is conducted using a discounted cash flow (DCF) model, which incorporates significant assumptions about future revenue
streams, market demand, and other economic factors. If the recoverable amount, calculated as the present value of expected future cash
flows, is less than the carrying value, an impairment loss is recognized in the period of determination.

The
Company did not recognize an impairment loss for the three months ended March 31, 2025. During the year ended December 31, 2024, an impairment
loss of $85,837 was recognized related to the Company’s investments in third-party films.

Fair
Value Hierarchy Classification

Although
the investments are carried at cost, the Company estimates their fair value for impairment testing purposes using unobservable inputs,
including projections of future cash flows and discount rates reflective of project-specific risks. As such, these investments fall within
Level 3 of the fair value hierarchy under Accounting Standards Codification (ASC) 820.

Credit
Risk

The
Company’s investments in third-party film projects are subject to credit risk, as returns depend on the financial and operational
performance of external producers and distributors. The Company actively monitors the creditworthiness of its partners and evaluates
the recoverability of its investments based on current and anticipated market conditions. Management believes that any credit risks associated
with these investments are appropriately reflected in their carrying amounts.

NOTE
6 - ACCRUED EXPENSES

Accrued
expenses were as follows:

December 31, December 31,

Legal and other service $	227,128 $	137,128

Accrued interest 574,518 519,290

NOTE
7 - PRODUCTION FINANCING