SEC Filing Document

Company: Ambitious Entertainment, Inc.
Ticker: 
CIK: 1900851
Filing Type: S-1
Document Type: S-1
Date Filed: 2026-05-15
Accession Number: 0001493152-26-023581
Exchange: 
SIC Code: 7812
SIC Description: Services-Motion Picture & Video Tape Production
URL: https://www.sec.gov/Archives/edgar/data/1900851/000149315226023581/forms-1.htm

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any film related obligations as of December 31, 2025. 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 NOTE 9 – 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.

of December 31, 2025, the Company had convertible promissory notes with an aggregate outstanding principal balance of $2,092,762. The Company is not
currently in default under the terms of these notes.

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 2025,
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
related to the conversion feature was recorded at its fair value of $1.9M and $1.6M as of December 31, 2025, and 2024, 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, 2025:

●	Expected
IPO offering price: $4.00.

●	Expected
volatility: 53%.

●	Risk-free
interest rate: 3.48%.

●	Expected
term of conversion feature: .16 – 5 years.

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 – 4.94 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 2025, 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, 2023 $	1,893,229

Issuance in 2024 137,500

Less: discount (114,948	)

Balance as of December 31, 2024 $	1,915,781

Convertible notes payable

Balance as of December 31, 2024 $	1,915,781

Issuance in 2025 220,000

Less: discount (43,019	)

Balance as of December 31, 2025 $	2,092,762

During
the years ended December 31, 2025, and 2024, the Company recorded interest expense of $150,937 and $137,240 along with amortization of
debt discount and original issue discount of $196,981 and $247,271, respectively. As of December 31, 2025, and 2024, the Company recorded
accrued interest of $553,444 and $402,506, 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
gross proceeds in the amount of $442,461 from the issuance of the convertible notes.

During
the year ended December 31, 2023, the Company also converted a loan payable in the amount of $75,000 to a convertible note with a principal
balance of $83,333, debt discount of $12,918, derivative liability of $500 and additional paid in capital of $4,085. The maturity date
of convertible notes issued in 2023 is one year from issuance date. 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, 2024, the Company issued five convertible debt instruments with principal balances of $25,000. Each debt
instrument had the following terms (i) a two-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 $125,000 from the issuance of the convertible notes.

During
the year ended December 31, 2025, the Company issued seven convertible debt instruments with principal balances of $25,000. 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 gross proceeds
in the amount of $200,000 from the issuance of the convertible notes.

NOTE
10 - WARRANT

Series
A Warrants