SEC Filing Document

Company: Ambitious Entertainment, Inc.
Ticker: 
CIK: 1900851
Filing Type: DRS/A
Document Type: DRS/A
Date Filed: 2025-10-08
Accession Number: 0001493152-25-017387
Exchange: 
SIC Code: 7812
SIC Description: Services-Motion Picture & Video Tape Production
URL: https://www.sec.gov/Archives/edgar/data/1900851/000149315225017387/filename1.htm

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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 $ 137,128 $ 200,696 Accrued interest 519,290 586,748 NOTE 7 - PRODUCTION FINANCING Film related obligations were as follows as of December 31, 2024: December 31, Production financing Maturity Default Interest Collateral 2024

Note issued on May 22, 2024 The Credit Facility shall be repayable on demand. Without limiting the generality of the foregoing, the Credit Facility shall be repaid to Lender not later than sixteen (16) months from the Closing Date (the “Maturity Date”). Canadian Prime Rate plus 1.50% per annum From Borrower, a first ranking General Security Agreement on all of Borrower’s personal property, movable property, present and future, tangible and intangible, corporeal and incorporeal, including, without limitation, the income receivable from the worldwide sale, licensing commercialization or other exploitation of the Project in all distribution territories and media worldwide to be registered by Lender’s counsel in all applicable jurisdictions $	775,761

Film
related obligations were as follows as of December 31, 2023:

December 31,

Production financing Maturity Default Interest Collateral 2023

Note issued on September 30, 2022 The loan shall be due on the later to occur of: (a) ten (10) Business Days after the date on which the Distributor has received a completed W-9 and vendor application form from Producer and (b) either (i) Distributor has delivered or is deemed to have delivered an Acceptance Notice of Mandatory Delivery or (ii) Mandatory Delivery has otherwise been deemed effected. 12% per annum Tax credit and File copy right $	750,000

Note issued on September 15, 2022 The Loan Amount shall be immediately due and payable on the date which is the earlier of (i) December 31, 2023, or (ii) receipt of the final payment of Tax Credit Proceeds. 19.5% per annum Tax credit and all copy rights and contract rights 1,089,023

Note issued on October 10, 2022 The Loan Amount shall be due the earlier of (i) the date the funds are received by DMH Productions, LLC and (ii) April 15, 2023. 19.5% per annum Tax credits 303,482

Note issued on December 21, 2023 February 29, 2024 Fixed amount UBCP Bond 168,395

Note issued on December 31, 2023 December 31, 2025 5% per annum N/A 76,074

Note issued on August 25, 2023 December 31, 2024 Fixed amount Tax credits 374,470

NOTE
8 – DEBT

Convertible
Debt and Embedded Derivative Liabilities

The
Company adopted Accounting Standards Update (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), on January 1, 2022, using the modified retrospective
method. This adoption was aimed at simplifying the accounting for convertible instruments and contracts in an entity’s own equity.

ASU
2020-06 introduced key changes to accounting guidance for convertible debt instruments, including the following:

1.	Elimination
of Beneficial Conversion Features (BCF):

Under
ASU 2020-06, the need to separately recognize a beneficial conversion feature (BCF) has been removed. In the case of the Company’s
convertible debt issued in 2021 through 2024, the conversion price is tied to 50% of the Initial Public Offering (IPO) offering price,
which inherently introduces variability. Due to this variability, the conversion feature does not trigger the requirements for a
BCF under the new standard.

2.	Bifurcation
of Embedded Derivatives:

The
Company evaluated whether the conversion feature met the criteria for bifurcation as an embedded derivative under ASC 815-40 (Derivatives
and Hedging). The analysis determined that:

○	Indexation
Criterion: The conversion price is variable and tied to 50% of the IPO offering price. This variability fails the “fixed-for-fixed”
requirement, which would allow the feature to be considered indexed to the Company’s equity.

○	Settlement
Criterion: While settlement in equity is possible, the variability in conversion terms introduces exposure to equity market risk
and does not qualify as “clearly and closely related” to the debt host.

○	Derivative
Criterion: The conversion feature exposes the holder to equity market risk, resembling the characteristics of a derivative. Therefore,
bifurcation is required under ASC 815.

a result, the conversion feature was bifurcated from the host debt and classified as a derivative liability. The derivative liability
was recorded at its fair value of $1.55M and $1.31M as of December 31, 2024, and 2023, respectively.

3.	Single-Instrument
Accounting (No Separation):

While
ASU 2020-06 encourages a single-instrument approach, the embedded conversion feature did not qualify for this treatment because it
failed to meet the criteria for being indexed to the Company’s equity and “clearly and closely related” to the
debt host.

Valuation
of Derivative Liability:

The
derivative liability was valued using a Black-Scholes model with the following key assumptions as of December 31, 2024:

●	Expected
IPO offering price: $4.00.

●	Expected
volatility: 84%.

●	Risk-free
interest rate: 4.16%.

●	Expected
term of conversion feature: 1.16 – 3.93 years.

The
derivative liability was valued using a Black-Scholes model with the following key assumptions as of December 31, 2023:

●	Expected
IPO offering price: $4.00.

●	Expected
volatility: 64%.

●	Risk-free
interest rate: 4.79%.

●	Expected
term of conversion feature: 2.17 – 2.93 years.

The
Company continues to monitor changes in assumptions and market conditions that may impact the valuation of the derivative liability.

Key
Accounting Impact:

The
adoption of ASU 2020-06 did not have a material impact on the Company’s financial statements at the time of implementation. However,
for convertible instruments issued in the period of 2021 through 2024, the variability in the conversion price tied to IPO terms necessitated
the bifurcation and recognition of the embedded conversion feature as a derivative liability under ASC 815-40.

Convertible
notes payable

Convertible notes payable

Balance as of December 31, 2022 $	1,264,379

Issuance in 2023 628,850

Less: discount (212,219	)

Balance as of December 31, 2023 $	1,681,010

Convertible notes payable

Balance as of December 31, 2023 $	1,893,229

Issuance in 2024 137,500

Less: discount (8,958	)

Balance as of December 31, 2024 $	2,021,771

During
the years ended December 31, 2024, and 2023, the Company recorded interest expense of $137,240 and $116,406 along with amortization of
debt discount of $215,761 and $496,894, respectively. As of December 31, 2024, and 2023, the Company recorded accrued interest of $402,506
and $265,166, respectively.

During
March 2021 to April 2022, the Company sold units at a price of $25,000 per unit (the “Units”), consisting of (i) a one-year,
7% senior secured convertible promissory note in the aggregate amount of $25,000 per Unit purchased (the “Convertible Notes”)
subject to an original issue discount of 10% (the “OID”), (ii) a five-year Series B warrant at an aggregate exercise price
of $25,000 per Unit purchased, and (iii) a five-year Series C warrant at an aggregate exercise price of $25,000 per Unit purchased. Each
Unit was immediately separable upon issuance. The Company received gross proceeds in the amount of $40,000 and $1,069,435, respectively,
from the sale of Units, for the year ended December 31, 2022, and 2021.

The
maturity date of convertible notes issued in 2022 and 2021 is one and two years from issuance date, respectively. As defined in the agreement,
the conversion price is the 50% of offering price per share of common stock paid in Initial Public Offering (“IPO”). The
Company determined our conversion feature for the convertible notes is not clearly and closely related to the host and accounted for
it as a bifurcated derivative liability in accordance with ASC 815.

During
the year ended December 31, 2023, the Company issued convertible debt with principal balances ranging from approximately $25,000 to $111,000.
Each debt instrument had the following terms (i) a one-year, 7% senior secured convertible promissory note in the aggregate amount of
$25,000 per Unit purchased (the “Convertible Notes”) subject to an original issue discount of 10% (the “OID”),
(ii) a five-year Series B warrant at an aggregate exercise price of $25,000 per Unit purchased, and (iii) a five-year Series C warrant
at an aggregate exercise price of $25,000 per Unit purchased. Each Unit was immediately separable upon issuance. The Company received
proceeds in the amount of $442,461 from the issuance of the convertible notes.