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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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 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 June 30, 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, 2024 $ 2,030,729 Issuance in 2025 110,000 Less: discount (13,749 ) Balance as of June 30, 2025 $ 2,126,980

Related
to convertible notes payable, during the six months ended June 30, 2025, and the year ended December 31, 2024, the Company
recorded interest expense of $72,000 and $137,340 along with amortization of debt discount of $5,209 and $215,761,
respectively. As of June 30, 2025, and December 31, 2024, the Company recorded accrued interest of $474,506 and $402,506,
respectively.

During
the year ended December 31, 2024, the Company issued five convertible debt instruments with principal balances of $25,000 each.
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 $125,000 from the issuance of the convertible notes.

During
the six months ended June 30, 2025, the Company issued four convertible debt instruments with principal balances
of $25,000 each. The four debt instruments 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 $100,000 from the issuance of the convertible notes.

NOTE
9 - WARRANT

Series
A Warrants

of June 30, 2025, and December 31, 2024, the Company has 4,000,000 Series A warrants outstanding.

The
Series A Warrants are five-year warrants that are immediately vested and exercisable at a nominal exercise price of $0.001 per share.
These warrants may also be exercised on a cashless basis.

Series
B Warrants (Units)

During
the six months ended June 30, 2025, and the year ended December 31, 2024, the Company issued 4 and 76 Series B Warrants,
respectively. The 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 June 30, 2025, and December 31, 2024, the Company has 80 and 76 Series B warrants outstanding, respectively.

Series
C Warrants (Units)

During
the six months ended June 30, 2025, and the year ended December 31, 2024, the Company issued 4 and 76 Series C Warrants,
respectively. The 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 June 30, 2025, and December 31, 2024, the Company has 80 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 six months ended June 30, 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 8 0.001 -

Expired / cancelled - - -

Exercised - - -

Outstanding, June 30, 2025 4,000,160 $	0.001 0.67

The
intrinsic value of the warrants as of June 30, 2025, and December 31, 2024, is $0. All of the outstanding warrants are exercisable
as of June 30, 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 June 30,
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
$2,400 and $30,000 as of June 30, 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 $7,200 and $8,400 as of June 30, 2025, and December
31, 2024, respectively.

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

Six Months ended Year ended

June 30, December 31,

Stock price $	0.79 - 2.50 $	0.79 - 2.50

Expected term 0.16 -2.93 0.26 - 3.17

Expected average volatility 50	% 66	%

Expected dividend yield - -

Risk-free interest rate 3.83

The
following table summarizes the changes in the derivative liabilities during the period of December 31, 2024, through June 30,

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

Addition of new derivatives recognized as warrants 222,064

Addition of new derivatives recognized as conversion feature 69,394

Loss on change in fair value of the derivative (1,885,521	)

Balance – June 30, 2025 $	6,880,110

The
aggregate (gain) loss on derivatives during the six months ended June 30, 2025, and the year ended December 31, 2024, was
as follows.

Six Months ended Year ended

June 30, December 31,

Change in fair value of the derivative $	(1,885,521	) $	211,422

Day 1 loss due to derivative liabilities 291,458 354,321

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 voluntary conversion rights.

Series
A Preferred Stock is redeemable upon the occurrence of a Liquidity Event. In such event, the Company is
required to repurchase all outstanding shares of Series A Preferred Stock at a price of $3.00 per share.