SEC 10-K — MD&A and Financial Statement Notes Drafter

Example Conversation

You: We need to draft the MD&A and key footnotes for our FY2025 10-K. Our fiscal year ended December 31, 2025. We have the prior-year 10-K, current trial balance, and consolidated financials uploaded. We use two non-GAAP measures (Adjusted EBITDA and non-GAAP operating income).

Agent: I’ll work through the full 11-step workflow. Starting with the executive overview and results of operations using your financials to compute year-over-year variances. Since you have non-GAAP measures, I’ll include the Reg G / Item 10(e) reconciliation step with GAAP-first presentation.

You: For critical accounting estimates, our main ones are goodwill impairment (we have three reporting units) and the allowance for credit losses under CECL.

Agent: I’ll draft the critical estimates section for both. For goodwill, I’ll include the single-step quantitative impairment test per ASU 2017-04, fair value methodology, and sensitivity analysis for each reporting unit. For CECL, I’ll cover the methodology, key assumptions, portfolio segments, and period-over-period comparison of how our loss rate assumptions changed. Item 303(b)(3) requires this comparison even when dollar amounts haven’t changed.

Agent: I’ve drafted the full MD&A and footnotes in mda-draft.md. Running mda_completeness_checker with fiscal_year_end: "2025-12-31" and has_non_gaap: true…

Agent: The checker returned FAIL on one item: the Item 106 cybersecurity section is missing third-party service provider oversight language. I’ll add a paragraph describing your vendor cybersecurity assessment process and re-run.

Agent: Re-ran the checker — PASS across all 10 validation categories. The draft is ready for review by your financial reporting team and securities counsel before filing.

Sample Output Excerpt

Excerpt from a generated MD&A draft showing key sections.

Executive Overview

For the fiscal year ended December 31, 2025, Acme Corp delivered total revenue of $4.2 billion, an increase of 14% compared to $3.7 billion in fiscal 2024. The increase was primarily driven by $340 million in growth from our Cloud Services segment and $180 million from expanded enterprise licensing. Operating income improved to $890 million from $720 million, reflecting operating leverage and disciplined cost management despite continued investment in AI infrastructure.

Results of Operations

Revenue

Total revenue for the year ended December 31, 2025 was $4,210 million, an increase of $530 million, or 14%, compared to $3,680 million in fiscal 2024. The increase was primarily attributable to:

• Cloud Services — revenue increased $340 million, or 22%, to $1,890 million, driven by net new customer additions (approximately 2,400 enterprise accounts) and average contract value expansion of 9% among existing customers.
• Enterprise Licensing — revenue increased $180 million, or 11%, to $1,810 million, reflecting multi-year renewal cycles and price increases effective July 1, 2025.
• Professional Services — revenue increased $10 million, or 2%, to $510 million, as higher utilization rates were partially offset by a shift toward fixed-fee engagements with lower average billing rates.

Cost of revenue was $2,190 million, an increase of $230 million, or 12%, compared to $1,960 million in fiscal 2024. Gross margin expanded to 48.0% from 46.7%, as cloud infrastructure efficiencies and licensing scale more than offset $65 million in incremental data center depreciation.

Known Trends and Uncertainties

We anticipate continued growth in Cloud Services revenue driven by enterprise migration to hybrid cloud architectures; however, macroeconomic conditions, including elevated interest rates, are expected to impact customer purchasing timelines in the first half of fiscal 2026. We are also monitoring the impact of recent tariff changes on our hardware procurement costs, which could increase capital expenditures by an estimated 8-12% in fiscal 2026 if current rates remain in effect.

Critical Accounting Estimates

Goodwill — Reporting Unit Fair Value

We test goodwill for impairment annually as of October 1, or more frequently if triggering events occur, using a quantitative single-step impairment test comparing each reporting unit’s estimated fair value to its carrying amount. We estimate fair value using a combination of the income approach (discounted cash flow) and the market approach (guideline public company multiples), weighted 60%/40%.

Change from prior period: In fiscal 2024, we applied a 50%/50% weighting. The shift to 60%/40% reflects improved comparability of our discounted cash flow projections following the completion of our strategic restructuring.

Sensitivity: For our Enterprise Solutions reporting unit (carrying value: $1.2 billion; estimated fair value: $1.5 billion; excess: 25%), a 100 basis point increase in the discount rate would reduce estimated fair value by approximately $140 million, narrowing the excess to approximately 5%. A simultaneous 100 basis point increase in the discount rate and 200 basis point reduction in the terminal growth rate would result in an estimated fair value approximately equal to carrying value.

Item 106 — Cybersecurity Risk Management and Governance

Risk Management and Strategy

We maintain a cybersecurity risk management program integrated into our enterprise risk management framework. The program includes regular vulnerability assessments, penetration testing by both internal and external teams, and continuous monitoring through our Security Operations Center. We engage third-party cybersecurity assessment firms annually to evaluate the effectiveness of our controls and benchmark our posture against industry standards (NIST CSF). Our third-party vendor management program requires cybersecurity due diligence assessments for all vendors with access to sensitive data or critical systems.

No cybersecurity incidents have materially affected or are reasonably likely to materially affect the Company’s business strategy, results of operations, or financial condition during fiscal 2025.

Governance

Our Board’s Audit Committee oversees cybersecurity risk as part of its broader risk oversight responsibilities and receives quarterly briefings from the Chief Information Security Officer (CISO). Our CISO, who has over 15 years of experience in information security and holds CISSP and CISM certifications, leads day-to-day cybersecurity risk management and reports directly to the Chief Technology Officer.

Extension Tools

mda_completeness_checker validates your draft against 10 categories of SEC disclosure requirements. It accepts the document path, an optional fiscal year end date (to determine whether Item 106 is required), and an optional non-GAAP flag.

What It Checks

Parameters

• path (required) — Path to the MD&A or 10-K section document
• fiscal_year_end (optional) — Date in YYYY-MM-DD format. Determines whether Item 106 is required (mandatory for fiscal years ending on or after 2023-12-15). If omitted, Item 106 issues are reported as warnings
• has_non_gaap (optional) — Set to true if the filing includes non-GAAP measures to enforce Reg G / Item 10(e) compliance checks

How to Read Results

The checker outputs PASS or FAIL with a line-by-line breakdown of each category. FAIL means at least one required element is missing — fix the flagged gaps and re-run until the check passes. The checker validates structural completeness and key-phrase presence only; qualitative review by a financial reporting professional remains required.

Getting Started

Upload your source materials to the project workspace:

• Prior-year 10-K — for comparative period data and disclosure language baseline
• Current-year consolidated financials — income statement, balance sheet, cash flow statement, and trial balance
• Risk factor drafts — existing Item 1A risk factors for update and prioritization
• Non-GAAP schedules (if applicable) — current non-GAAP measures and reconciliation tables
• Cybersecurity program documentation — risk management framework, governance structure, incident history

Then activate the SEC 10-K — MD&A and Financial Statement Notes Drafter skill. The agent walks through each of the 11 workflow steps — from executive overview through footnotes — and runs mda_completeness_checker to validate the draft before you hand it off for professional review.