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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warrants are five-year warrants that are immediately vested and exercisable at an exercise price equal to 110% of the Conversion Price of the Convertible Notes with an aggregate purchase price of $25,000 per Unit. These warrants can be exercised on a cashless basis. of March 31, 2025, and December 31, 2024, the Company has 78 and 76 Series C warrants outstanding, respectively. The Series A, B and C Warrants have been accounted for as a derivative liability, in accordance with ASC 815. summary of activity of the warrants during the three months ended March 31, 2025, and the year ended December 31, 2024, are as follows: Warrants Outstanding Weighted Average Number of Weighted Average Remaining life Warrants Exercise Price (years) Outstanding, December 31, 2023 4,000,142 $ 0.001 2.17 Granted 10 0.001 - Expired / cancelled - - - Exercised - - - Outstanding, December 31, 2024 4,000,152 $ 0.001 1.16

Granted 4 0.001 -

Expired / cancelled - - -

Exercised - - -

Outstanding, March 31, 2025 4,000,156 $	0.001 0.16

The
intrinsic value of the warrants as of March 31, 2025, and December 31, 2024, is $0. All of the outstanding warrants are exercisable as
of March 31, 2025.

NOTE
10 – DERIVATIVE LIABILITY

Fair
Value Assumptions Used in Accounting for Derivative Liabilities

ASC
815 requires the Company to assess the fair market value of derivative liabilities at the end of each reporting period and recognize
any change in fair market value as other income or expense. The Company determined that our derivative liabilities are classified as
Level 3 fair value measurements and used the Black-Scholes pricing model to calculate the fair value as of issuance and at March 31,
2025, and December 31, 2024.

The
Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the
current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could
produce significantly higher or lower fair value measurements.

Key
assumptions and methodologies used are as follows:

●	Stock
Price : Based on historical issuances.

●	Expected
Volatility : Estimated using historical stock price volatility of comparable companies,
as our stock does not have sufficient historical trading activity.

●	Risk-Free
Interest Rate : Derived from U.S. Treasury rates for the applicable periods.

Sensitivity
Analysis

The
fair value of derivative liabilities is sensitive to changes in key inputs:

●	Volatility :
A 5% increase (decrease) in volatility would increase (decrease) the fair value by approximately
$14,000 and $30,000 as of March 31, 2025, and December 31, 2024, respectively.

●	Risk-Free
Rate : A 50-basis point increase (decrease) in the risk-free interest rate would increase
(decrease) the fair value by approximately $13,600 and $8,400 as of March 31, 2025, and December
31, 2024, respectively.

The
inputs used to calculate the derivative values are as follows:

Three Months ended Year ended

March 31, December 31,

Stock price $	0.79

Expected term 0.16

Expected average volatility 47	% 66	%

Expected dividend yield - -

Risk-free interest rate 3.98

The
following table summarizes the changes in the derivative liabilities during the period of December 31, 2024, through March 31, 2025:

Balance - December 31, 2024 $	8,474,173

Addition of new derivatives recognized as warrants 111,032

Addition of new derivatives recognized as conversion
feature 34,697

Loss on change in fair
value of the derivative (1,482,175	)

Balance – March 31, 2025 $	7,137,727

The
aggregate (gain) loss on derivatives during the three months ended March 31, 2025, and the year ended December 31, 2024, was as follows.

Three Months ended Year ended

March 31, December 31,

Change in fair value of the derivative $	(1,482,174	) $	211,422

Day 1 loss due to derivative
liabilities 145,729 354,321

NOTE
11 – EQUITY

Authorized
Capital Stock

Effective
October 2020, the Company filed a Certificate of Amendment to the Articles of Incorporation for authorized capital stock to authorize
the Company to issue 151,000,000 shares. The Company has authorized 150,000,000 shares of common stock with a par value of $0.0001 per
share and 1,000,000 shares of Preferred Stock with a par value of $0.0001 per share. The
Company shall have the authority to issue the shares of Preferred Stock in one or more series with such rights, preferences and designations
as determined by the Board of Directors of the Company.

Series
A Preferred Stock

The
Company has designated 1,000,000 preferred shares, par value $0.0001, as Series A Preferred Stock. Holders of Series A Preferred Stock
would have the right to vote with 1 vote per common share on any matters brought before the stockholders of the Company.

The
Series A Preferred Stockholders are not entitled to any dividends, mandatory conversion right, or liquidation preference, however, they
do have a voluntary conversion right.

Series
A Preferred stock is redemption shares upon the occurrence of Liquidity event. The Company shall purchase all shares of Series A preferred
stock at a price of $3.00 per share.

Holders
of the Company’s Series A Preferred Stock shall have the right to convert at a ratio of 1 (one) share of the Company’s common
stock for 1 (one) share of the Company’s Series A Convertible Preferred Stock (subject to adjustments relating to stock splits,
distributions, mergers, consolidation, exchange of shares, recapitalization, reorganization, or other similar event).

of March 31, 2025, and December 31, 2024, the Company has 237,340 shares of Series A Convertible Preferred Stock issued and outstanding.

Preferred
Stock

Each
share of Preferred Stock entitles the holder to one vote, in person or proxy, on any matter on which an action of the stockholders of
the Company is sought.

Common
Stock

Each
share of Common Stock entitles the holder to one vote, in person or proxy, on any matter on which an action of the stockholders of the
Company is sought.

During
the year ended December 31, 2024, the Company issued 640,000
shares of common stock for services rendered in connection with stock-based compensation expense of $1,216,000.

During
the three months ended year ended March 31, 2025, the Company issued 630,000
shares of common stock for services rendered in connection with stock-based compensation expense of $1,197,000.

of March 31, 2025, and December 31, 2024, the Company had 8,070,000 and 7,440,000 shares of common stock issued and outstanding, respectively.

NOTE
12 - RELATED PARTY TRANSACTIONS

Transactions

During
the year ended December 31, 2024, the Company received $216,805 in advances from related parties, the Company made repayments of $101,572
and the Company transferred $376,890 of related party obligations as a result of corporate and membership transfer interest agreements
(see Note 13).

During
the three months ended March 31, 2025, the Company received $130,591 in advances from related parties, the Company made repayments of

of March 31, 2025, and December 31, 2024, the Company has a liability of $740,222 and $633,332 due to related parties, respectively.

NOTE
13 – TRANSFER OF INTEREST

Nature
of the Transaction

During
the three months ended March 31, 2025, the Company executed an Instrument of Transfer of Limited Liability Company Interest, pursuant
to which it sold, assigned, conveyed, and transferred 100% of its ownership interest in FATE USA, LLC, to a third-party transferee for
a total consideration of $10. In Instrument of Transfer of Limited Liability Company Interest agreement, the transferee accepted all
Company contractual obligations, and the Company has no further responsibility or obligations related to FATE. The transferred subsidiary
owned the film rights to FATE.

During
the three months ended March 31, 2024, the Company transferred its 100% interest in AMFAD and CD, to Press Play Productions, LLC, a related
party for a total consideration of $20, (see Note 12). The transferred subsidiaries owned the film rights to All My Friends are Dead
and Cold Deck.

Additionally,
during the three months ended March 31, 2024, the Company transferred its 100% interest in Viper to an unrelated third party for total
consideration of $10. The transferred subsidiary owned the film rights to Viper.

Related
Party Disclosure

Press
Play Productions, LLC, is a related party. The president of Press Play Productions is the son of the Company’s CEO. The transfer
of AMFAD and CD included provisions stipulating that the transferee assumes all contractual obligations and liabilities of the transferred
subsidiaries, and the transferor retains no further responsibility for these obligations.

Reason
for the Transfer

The
transfers were part of the Company’s strategy to divest film projects once all anticipated revenue had been realized and the Company
determined that there would be no further significant benefit derived from retaining the films. This strategy aligns with the Company’s
focus on producing new film projects rather than managing completed ones.

Accounting
Treatment

The
transfers of interest were accounted for as deconsolidation of a subsidiaries. As a result: