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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Company’s financial statements at the time of implementation. However, for convertible instruments issued in the period of 2021 through 2024, 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, 2022 $ 1,264,379 Issuance in 2023 628,850 Less: discount (212,219 ) Balance as of December 31, 2023 $ 1,681,010 Convertible notes payable Balance as of December 31, 2023 $ 1,893,229 Issuance in 2024 137,500 Less: discount (8,958 ) Balance as of December 31, 2024 $ 2,021,771 During the years ended December 31, 2024, and 2023, the Company recorded interest expense of $137,240 and $116,406 along with amortization of debt discount of $215,761 and $496,894, respectively. As of December 31, 2024, and 2023, the Company recorded accrued interest of $402,506 and $265,166, 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

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 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 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 proceeds
in the amount of $125,000 from the issuance of the convertible notes.

NOTE
9 - WARRANT

Series
A Warrants

During
the year ended December 31, 2021, the Company issued 5,600,000 Series A warrants for $56,000. Subsequent to their issuance, these warrants
were amended to prefunded warrants. As part of the amendment, the number of warrants was reduced to 4,000,000, and the exercise terms
were revised. 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.

of December 31, 2024, and 2023, the Company has 4,000,000 Series A warrants outstanding.

Series
B Warrants (Units)

The
Series B 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 December 31, 2024, and 2023, the Company has 76 and 71 Series B warrants outstanding, respectively.

Series
C Warrants (Units)

The
Series C 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 December 31, 2024, and 2023, the Company has 76 and 71 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 year ended December 31, 2024, and 2023, are as follows:

Warrants Outstanding Weighted Average

Number of Weighted Average Remaining life

Warrants Exercise Price (years)

Outstanding, December 31, 2022 4,000,098 $	0.001 3.17

Granted 44 0.001 -

Expired / cancelled - - -

Exercised - - -

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 December 31, 2024, is $0. All of the outstanding warrants are exercisable as of December 31, 2024.

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 December 31,
2024, and 2023.

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

●	Risk-Free
Rate : A 50-basis point increase (decrease) in the risk-free interest rate would increase
(decrease) the fair value by approximately $8,400.

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

Years ended

December 31,

Stock price $	0.79 - 2.50 $	0.61 - 2.50

Expected term 0.26 - 3.17 0.26 - 3.17

Expected average volatility 66	% 64	%

Expected dividend yield - -

Risk-free interest rate 3.88

The following table summarizes the changes in the derivative liabilities during the year ended December 31, 2024, and 2023:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Balance – January 1, 2023 $	4,349,390

Addition of new derivatives recognized as warrants 1,101,262

Addition of new derivatives recognized as conversion feature 344,145

Loss on change in fair value of the derivative 2,113,633

Balance - December 31, 2023 $	7,908,430

Addition of new derivatives recognized as warrants 277,578

Addition of new derivatives recognized as conversion feature 86,743

Loss on change in fair value of the derivative 201,422

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

The
aggregate loss on derivatives during the years ended December 31, 2024, and 2023 was as follows.

December 31,

Change in fair value of the derivative $	211,422 $	2,606,094