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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contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates are contained in the accompanying consolidated financial statements for the valuation of derivatives, warrants, and other financial instruments. Cash and Cash Equivalents

The
Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. The
Company’s cash is primarily maintained in checking accounts. These balances may, at times, exceed the U.S. Federal Deposit Insurance
Corporation insurance limits. As of December 31, 2024, the Company had cash and cash equivalents of $12,156, including cash reserves
of $8,735. The Company has not experienced any losses on deposits of cash and cash equivalents.

Accounts
Receivable

Accounts
receivable, net represent the amounts that the Company has an unconditional right to consideration, which are stated at the original
amount less an allowance for doubtful accounts. The Company reviews the accounts receivable on a periodic basis and makes general and
specific allowances when there is doubt as to the collectability of individual balances. The Company usually determines the adequacy
of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision
for doubtful accounts when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based
on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements
of operations and comprehensive income (loss). Delinquent account balances are written off against the allowance for doubtful accounts
after management has determined that the likelihood of collection is remote. In circumstances in which the Company receives payment for
accounts receivable that have previously been written off, the Company reverses the allowance and bad debt.

Prepaid
Expenses and Other Current Assets

Prepaid
expenses and other current assets consist of various payments that the Company has made in advance for deposits, and goods or services
to be received in the future. Prepaid expenses include consulting, advertising, insurance, and service or other contracts requiring up-front
payments.

Fair
Value Measurements

The
Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as
for certain assets and liabilities that are initially recorded at their estimated fair values. Fair value is defined as the exit price,
or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
as of the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes
the use of unobservable inputs to value its financial instruments:

●	Level
1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.

●	Level
2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.

●	Level
3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values
are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which
the determination of fair value requires a significant judgment or estimation.

Financial
instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair
value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety
requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or
estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial
amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market
exchange.

The
carrying amounts of the Company’s financial instruments including cash and cash equivalents, prepaid expenses, accounts payable
and accrued liabilities approximate fair value due to the short-term maturities of these instruments.

Set
out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their
fair value hierarchy as of December 31, 2024, and 2023:

December 31, 2024 Level 1 Level 2 Level 3 Carrying Value

Liabilities

Derivative Liability - Warrants $	- $	- $	6,921,846 $	6,921,846

Derivative Liability – conversion feature - - 1,552,327 1,552,327

Total Liabilities $	- $	- $	8,474,173 $	8,474,173

December 31, 2023 Level 1 Level 2 Level 3 Carrying Value

Liabilities

Derivative Liability - Warrants $	- $	- $	6,602,804 $	6,602,804

Derivative Liability – conversion feature - - 1,305,626 1,305,626

Total Liabilities $	- $	- $	7,908,430 $	7,908,430

Stock-based
Compensation

The
Company accounts for share-based payment awards exchanged for services at the estimated grant date fair value of the award.

Content
Assets

The
Company sources intellectual property (“IP”) to create and develop new films for sale to third parties. Content assets related
to original productions include the unamortized costs of both completed and in-process video content produced by the Company. Capitalized
costs include all direct production and financing costs, capitalized interest when applicable, and production overhead. Content assets
are monetized individually and therefore are reviewed at the individual level when an event or change in circumstance indicates a change
in the expected usefulness of the content or the fair value may be less than the unamortized cost.

Impairment
of Long-lived Assets

The
Company reviews its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset might
not be recoverable. An impairment loss would be recognized when projected undiscounted future cash flows are less than its carrying amount.
The expected cash flows are based on assumptions regarding the Company’s future business outlook. Actual results could differ from
these assumptions. The Company did not record any impairment losses during the year ended December 31, 2024, and 2023.

Revenue
recognition

The
Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration
which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are
within the scope of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606), the Company
performs the following five steps:

(i) identify the contract(s) with a customer;

identify the performance obligations in the contract;
(iii) determine the transaction price;

allocate the transaction price to the performance obligations in the contract; and

recognize revenue when (or as) the entity satisfies a performance obligation.

The
Company applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to
in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within
the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance
obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the
transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Disaggregation
of Revenue

For
the years ended December 31, 2024, and December 31, 2023, 100% of the Company’s revenue was derived from production services. Revenue
related to production service agreements is recognized on a percentage-of-completion basis, as described below. The Company did not generate
revenue from feature films or other licensing activities during these periods.

Production
Services Revenue

For
production service agreements, revenue is recognized over time on a percentage-of-completion basis as the Company satisfies its performance
obligations. The percentage of completion is determined based on actual costs incurred relative to total estimated costs, and related
costs are expensed as incurred in proportion to the percentage of completion.

Contract
Balances

The
Company’s contract balances include the following:

●	Deferred
Revenue: Represents payments received in advance of the performance obligations being
satisfied.