TENNANT CO

13. Equity Method Investments

On February 21, 2024, the Company acquired certain investment securities of Brain Corp, as further described in Note 12 - Fair Value Measurements. The investment consists of $12.2 million of non-redeemable convertible preferred stock and $7.8 million of warrants to purchase common shares.

Prior to the vesting of all warrants on December 9, 2025, the Company accounted for the investment as an equity security under the measurement alternative. Upon vesting of the warrants, the Company’s voting interest in Brain Corp increased to approximately 18% and it's overall ownership interest increased to approximately 12%. Based on the voting interest, together with the board representation obtained in connection with the investment, the Company concluded that it has the ability to exercise significant influence over Brain Corp’s operating and financial policies, but does not have a controlling financial interest. Accordingly, beginning on December 9, 2025, the Company accounts for its investment in Brain Corp under the equity method of accounting.

Due to the timing and availability of Brain Corp’s financial information, the Company recognizes its share of Brain Corp’s earnings or losses on a three-month reporting lag, based on the investee’s most recently available financial statements. As a result of the adoption of the equity method late in the fiscal year and the application of this reporting lag, the Company did not recognize any equity method earnings or losses related to Brain Corp in the Consolidated Statements of Income for the year ended December 31, 2025. The Company’s share of earnings or losses from Brain Corp will be presented as a separate line item in the Consolidated Statements of Income in future periods.

As of December 31, 2025, the carrying amount of the Company’s equity method investment in Brain Corp was $20.0 million and is included in Other Assets in the consolidated balance sheets.