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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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, totalled $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
totalling $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 EBITDA

Metric Amount

Net loss per GAAP $	(2,247,849	)

Additions:

Interest 921,653

Taxes -

Depreciation -

Amortization -

Stock-Based Compensation 1,216,000

Change in Fair Value of Derivative Liabilities 201,422

EBITDA (Non-GAAP) $	91,226

Liquidity
and Capital Resources

Liquidity

For
the three months ended March 31, 2025 and March 31, 2024

March 31, 2025, we had negative working capital of $10,723,193, which included cash of $171. We reported a net loss of $907,867 and our
net cash provided by operating expenses totaled $927,040 our cash used in investing totaled $1,071,115, and out cash provided by financing
activities totaled $132,890.

Our
sources and uses of cash were as follows:

Cash
Flows from Operating Activities

experienced positive cash flows from operating activities for the three months ended March 31, 2025, in the amount of $927,040. The net
cash provided by operating activities for the three months ended March 31, 2025, primarily reflected a net income of $959,297 adjusted
for the add-back of non-cash items consisting of amortization of debt discount and debt issuance cost of $1,771, stock based compensation
of $1,197,000, and a decrease in non-cash items related to a change in fair value derivative of $1,482,174, offset with a change operating
assets and liabilities consisting of an increase in accounts payable of $105,918, and an increase in accrued expenses of $145,228.

experienced negative cash flows from operating activities for the three months ended March 31, 2024, in the amount of $762,598. The net
cash used in operating activities for the three months ended March 31, 2024, primarily reflected a net loss of $177,137 adjusted for
the add-back of non-cash items consisting of amortization of debt discount and debt issuance cost of $79,621, stock based compensation
of $332,501, a change in fair value derivative of $29,888, offset with a change operating assets and liabilities consisting of an decrease
in accounts payable of $207,807, a decrease in accrued expenses of $22,358, an increase in accounts receivable of $1,057,619, an decrease
of tax credit receivable of $28,273, a decrease in other receivable of $3,295, and a decrease in prepaid expenses of $228,745.

Cash
Flows from Investing Activities

experienced negative cash flows from investing activities of $1,071,115 for the three months ended March 31, 2025, related to net working
capital changes due to the transfer of a subsidiary. We experienced positive cash flows from investing activities of $230,879 for the
three months ended March 31, 2024, related to net working capital changes due to the transfer of a subsidiaries of $681,829 offset by
investments of $450,950.

Cash
Flows from Financing Activities

experienced positive cash flows from financing activities for the three months ended March 31, 2025, in the amount of $132,090. We received
proceeds notes payable and advances from related parties of $25,000, and $130,591, respectively. We remitted payments to related ted
parties of $23,591.

experienced positive cash flows from financing activities for the three months ended March 31, 2024, in the amount of $455,896. We received
proceeds from production financing, and issuance of convertible notes payable of $481,825, and $50,000, respectively. We remitted repayments
to related parties of $75,929.

Non-Cash
Transfers of Interest

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. The transferred subsidiaries owned the film rights to All My Friends are Dead and Cold
Deck (See Note 13).

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 (See Note 13).