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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bank charges, professional fees, and accounting fees remained relatively consistent or increased modestly due to the administrative demands of 2025. Other Income other income was recorded for the six months ended June 30, 2025, compared to approximately $20 thousand for the same period in 2024. The other income in 2024 primarily consisted of miscellaneous non-operating income comprised of reimbursements related to prior projects. The absence of such income in 2025 reflects the Company’s focus on audit and pre-production activities, which did not generate similar miscellaneous income. Interest Expense Interest expense decreased to approximately $120 thousand for the six months ended June 30, 2025, from approximately $474 thousand for the same period in 2024. The reduction in interest expense was primarily due to the production financing related to project in 2024 that the Company did not incur in the comparable period in 2025. Gain on Transfer of Corporate and Member Interest

For
the six months ended June 30, 2025, the Company recorded a gain of approximately $1 million on the transfer of corporate and member interest,
compared to a loss of approximately $791 thousand for the same period in 2024. The gain in 2025 resulted from a strategic restructuring
transaction involving the transfer of certain corporate or member interests at a favorable valuation, reflecting improved market conditions
or negotiated terms. In contrast, the loss in 2024 was due to a transfer executed under less favorable terms, potentially driven by the
need to raise capital or settle obligations during a period of active production.

Change
in Fair Value of Derivative Liability

The
Company recorded a gain of approximately $1.9 million from the change in fair value of derivative liability for the six months ended
June 30, 2025, compared to a loss of approximately $143 thousand for the same period in 2024. The significant gain in 2025 was driven
by favorable changes in the valuation of derivative instruments, likely due to fluctuations in market conditions, such as interest rates
or the Company’s credit profile, which positively impacted the fair value of these liabilities. In 2024, the loss reflected adverse
changes in the valuation of similar instruments, possibly due to market volatility or changes in the underlying assumptions used in the
valuation model.

Loss
on Impairment of Investment

The
Company recorded a loss on impairment loss of approximately $129 thousand during the six months ended June 30, 2025, compared to no impairment
loss during the comparable period in 2024.

Non-GAAP
Financial Measure – Adjusted EBITDA

use Adjusted EBITDA to evaluate our operating performance and to facilitate period-to-period comparisons. Adjusted EBITDA is defined
as net income (loss) before interest, income taxes, depreciation and amortization, and further adjusted to exclude stock-based compensation,
changes in fair value of derivative liabilities, and certain other non-cash or non-recurring items. We believe this measure is useful
to investors because it provides insight into our operating results, independent of the impact of non-cash charges. A reconciliation
of net loss to Adjusted EBITDA is included below.

Reconciliation
of Net Loss to Adjusted EBITDA

For the Six Months Ended

June 30, 2025 June 30, 2024

Net income (loss) per GAAP $	163,059 $	(469,473	)

Additions:

Interest 119,600 473,934

Taxes - -

Depreciation - -

Amortization - -

Stock-Based Compensation 1,847,750 399,000

Change in Fair Value of Derivative Liabilities (1,885,519	) 142,972

Adjusted EBITDA (Non-GAAP) $	244,890 $	546,433

Fiscal
year ended December 31, 2024 compared to the fiscal year ended December 31, 2023

The
following analysis on results of operations was based primarily on the consolidated financial statements, footnotes and related information
for the period identified below and should be read in conjunction with the audited consolidated financial statements and the notes to
those statements for the years ended December 31, 2024, and 2023, which are included elsewhere in this annual report on Form 10-K. The
results discussed below are for the years ended December 31, 2024, and 2023.

The
following table presents our results of operations for the fiscal years ended December 31, 2024 and December 31, 2023:

For the Years Ended

December 31,

Total revenue $	9,289,445 $	7,028,441

Cost of revenue (11,232,576	) (2,629,827	)

Gross profit (1,943,131	) 4,398,614

Operating expenses (1,052,166	) (3,116,940	)

Other income 23,099 15,491

Interest expense (921,653	) (1,364,645	)

Gain on transfer of corporate and member interest 1,933,261 -

Change in fair value of derivative liability (201,422	) (3,066,579	)

Loss on impairment of investments (85,837	) -

Net loss $	(2,247,849	) $	(3,134,059	)

Revenue

the years ended December 31, 2024, and 2023, the Company engaged in the development and production of IP-based movies and recognized
revenue of $9,289,445 and $7,028,441, respectively.

Revenue
Concentration

The
Company’s revenue is derived from production service contracts resulting in a concentration of revenue among a limited number of
customers. The following table summarizes the revenue generated for the years ended December 31, 2024, and 2023:

Film Revenue - 2024 % of Total Revenue (2024) Revenue - 2023 % of Total Revenue (2023)

AMFAD $	396,257 4.27	% $	2,331,015 33.17	%

VPER 1,048,780 11	% 802,096 11.41	%

FATE 4,851,181 52	% - -

GOR 2,278,787 25	% - -

DMH - 0	% 2,250,000 32.01	%

Other 704,000 8	% - -

Total $	9,289,445 100	% $	7,028,441 100	%

For
the year ended December 31, 2024, Customer FATE accounted for 52% of total revenue, representing the largest single customer. Similarly,
in 2023, Customer AMFAD accounted for 33.17% of total revenue. The reliance on a concentrated customer base poses risks to the Company’s
revenue stability, as the loss of or reduced activity from any significant customer could adversely impact financial results.

Cost
of Revenue

Costs
of revenue for the years ended December 31, 2024, and 2023, totaled $11,232,576 and $2,629,827, respectively. The cost of revenue consisted
of expenses incurred related to film production.

Gross
Profit

For
the year ended December 31, 2024, the Company experienced a significant decrease in gross profit, swinging from $4.4 million in 2023
to a gross loss of $1.9 million in 2024. This volatility was primarily driven by the following factors:

1.	Film
Production Cost Overruns

○	Two
of the Company’s productions incurred unexpected cost overruns totaling approximately $1.8 million. These overruns were attributed
to increased labor costs and higher-than-anticipated post-production expenses.

○	The
Company has implemented enhanced budgetary controls and monitoring processes to mitigate the risk of future cost overruns.

2.	Recognition
of Costs Related to Fully Realized Revenue

○	During
2024, the Company recognized costs of goods sold in the amount of $650,000 related to an investment in a film for which all associated
revenue was fully realized during the year. This timing difference significantly impacted gross profit.

3.	Impairment
of Third-Party Film Investment

○	The
Company impaired an investment in a third-party film amounting to $85,837. This impairment reflects management’s evaluation
of the project’s future recoverability and aligns with the Company’s policy for recognizing impairments.

4.	Labor
and Material Inflation

○	The
overall cost environment in the entertainment industry, particularly for labor and materials, saw inflationary pressures in 2024,
contributing to higher production costs.

While
no additional impairments were recognized during the year, the $11.2 million in total production costs for 2024 represents an elevated
risk profile for certain projects. Management remains committed to addressing these challenges through improved cost management strategies
and project-level oversight.

Operating
Expenses

Operating
expenses consisted of selling, general, and administrative costs of $1,052,166 and $2,943,547 and selling, general, and administrative
– related party costs of $0 and $173,393 for the year ended December 31, 2024, and 2023, respectively.

Other
Income

Other
income for the year ended December 31, 2024, totaled $23,099, which primarily consisted of interest income and bond refunds. Other
income for the year ended December 31, 2023, totaled $15,491, respectively, which consisted of film commissions and a bond refund.

Interest
Expense

Interest
expense for the years ended December 31, 2024, and 2023, totaled $921,653 and $1,364,645, respectively, related to production
loans and convertible notes.

Gain
on Transfer of Corporate and Member Interest

For
the year ended December 31, 2024, the Company recognized a gain on transfer of corporate and member interest related to four subsidiaries
totaling $1,933,261.

Change
in Fair Value of Derivative Liability

The
Company recorded a change in fair value derivative of $201,422 and $3,066,579, respectively for the years ended December 31, 2024, and

Reconciliation
of Net Loss to Adjusted EBITDA

For the Years ended

December 31,

Net loss per GAAP $	(2,247,849	) $	(3,134,059	)

Additions:

Interest 921,653 1,364,645

Taxes - -

Depreciation - -

Amortization - -

Stock-Based Compensation 1,216,000 -

Change in Fair Value of Derivative Liabilities 201,422 3,066,579

Adjusted EBITDA (Non-GAAP) $	91,226 $	1,297,165

Liquidity
and Capital Resources

Liquidity

For
the six months ended June 30, 2025 and June 30, 2024