Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 1394

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 8
Chunk 1394
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 the financial statement values of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment date. We estimate a valuation allowance against that portion of the deferred tax asset
whose utilization in future periods is not more than likely.

     F-14 

CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Purchases of Company Stock

We record purchases of our own common stock at
cost and treat the shares as retired.

Stock Option Plan

The Company accounts for stock-based compensation
in accordance with FASB ASC Topic 718, Compensation—Stock Compensation, that generally requires entities to recognize the
cost of employee services received in exchange for awards of stock options, restricted stock or other equity instruments, based on the
grant date fair value of those awards. Compensation cost is recognized for awards issued to employees based on the fair value of these
awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options. This cost is recognized over
the period which an employee is required to provide services in exchange for the award, generally the vesting period.

Use of Estimates

The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the
reported amounts of income and expenses during the reported periods. These are material estimates that could be susceptible to changes
in the near term and, accordingly, actual results could differ from those estimates.

Reclassification

Certain amounts for the prior
year have been reclassified to conform to the current year’s presentation with no effect on previously reported earnings or shareholders’
equity.

Financial Covenants 

Certain of our securitization
transactions, our warehouse credit facilities and our residual interest financing contain various financial covenants requiring minimum
financial ratios and results. Such covenants include maintaining minimum levels of liquidity and net worth and not exceeding maximum leverage
levels. As of December 31, 2024, we were in compliance with all such covenants. In addition, certain of our