Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 459

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1C
Chunk 459
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 primarily
of commission-based compensation paid to our employee sales representatives. Our sales representatives earn a salary plus commissions
based on volume of contract purchases and sales of ancillary products and services that we offer our dealers. Sales expense increased
by $1.5 million to $22.8 million during the year ended December 31, 2024 and represented 6.2% of total operating expenses. We purchased
$1,681.9 million of new contracts during the year ended December 31, 2024 compared to $1,357.8 million in the prior year period.

Occupancy expenses were $5.6
million in 2024 which is down from $6.4 million in 2023.

Depreciation and amortization
expenses increased to $862,000 compared to $847,000 in the prior year.

For the year ended December
31, 2024, we recorded income tax expense of $8.2 million, representing a 30% effective tax rate. In the prior period, our income tax expense
was $15.6 million, also representing a 26% effective tax rate.

 44 

Liquidity and Capital Resources

Liquidity

Our business requires substantial
cash to support our purchases of automobile contracts and other operating activities. Our primary sources of cash have been cash flows
from the proceeds from term securitization transactions and other sales of automobile contracts, amounts borrowed under various revolving
credit facilities (also sometimes known as warehouse credit facilities), customer payments of principal and interest on finance receivables,
fees for origination of automobile contracts, and releases of cash from securitization transactions and their related spread accounts.
Our primary uses of cash have been the purchases of automobile contracts, repayment of amounts borrowed under lines of credit, securitization
transactions and otherwise, operating expenses such as employee, interest, occupancy expenses and other general and administrative expenses,
the establishment of spread accounts and initial overcollateralization, if any, the increase of credit enhancement to required levels
in securitization transactions, and income taxes. There can be no assurance that internally generated cash will be sufficient to meet
our cash demands. The sufficiency of internally generated cash will depend on the performance of securitized pools (which determines the
level of releases from those pools and their related spread accounts), the rate of expansion or contraction in our managed portfolio,
and the terms upon which we are able to acquire and borrow against automobile contracts.

Net cash