American Youth Hostels Inc

“Ayh has adopted investment and spending policies for donor-restricted endowment assets that attempt to generate a series of cash withdrawals that grow with inflation to programs supported by its endowment while seeking to maintain the purchasing power of the donor-restricted endowment assets. Donor-restricted endowment assets include those assets of donor-restricted funds that ayh must hold in perpetuity or for donor-specified periods. The purpose of the ayh board-designated endowment fund is to generate long-term appreciation that can be used to fund future programs and to provide a reserve of money to ayh in the event of unforeseen economic conditions. Under both policies, ayh accepts a moderate level of risk in investment return comparable to the risk associated with the s&p 500 equity index. Four percent (4%) of the asset value of the donor-restricted endowment funds at the end of the fiscal year may be withdrawn each year for operating purposes, first from dividends and interest earned, and the remainder from liquidation of principal, leaving the remaining asset value to appreciate over time to increase the donor-restricted fund for future years.”

“American youth hostels, inc., hi chicago, and hi boston have applied for and have received determination letters from the internal revenue service ("irs") to be treated as tax-exempt entities pursuant to section 501(c)(3) of the internal revenue code ("irc"). American youth hostels, inc., hi chicago, and hi boston are subject to income taxes on revenue generated from other sources unrelated to their exempt purpose. Due to their tax-exempt status, these entities are not subject to income taxes on revenue that are generated related to their exempt purpose. American youth hostels, inc., hi chicago, and hi boston are required to file and do file tax returns with the irs and other taxing authorities. Accordingly, these consolidated financial statements reflect provisions for unrelated business income taxes in note 15. Income tax returns are subject to examination by the irs for a period of three years. While no other tax returns are currently being examined by the irs, tax years since 2020 remain open. During the years ended march 31, 2025 and 2024, ayh did not have any unrelated business taxable income and no income tax expense was incurred. Due to its tax-exempt status, ayh is required to file and does file tax returns with the irs and other taxing authorities. Ayh has adopted the accounting guidance from the accounting standards codification for accounting for uncertainty in income taxes. As of march 31, 2025 and 2024, no material unrecognized tax provision or benefit exists. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely-than-not recognition threshold are measured as the largest amount of a tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized tax benefits in the accompanying consolidated statement of financial position, along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Management believes there are no positions that would result in additional tax assets or liabilities.”