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Inventory

12 Months Ended

Dec. 31, 2021

Note 8 — Inventory

Inventories are stated at the lower of cost or net realizable value with cost principally determined by the weighted average cost method on a first in first out basis. Such costs include the acquisition cost for raw materials and operating supplies. The Company’s standard payment terms with suppliers may require making payments in advance of delivery of the Company’s products. The prepaid inventory is short-term, non-bearing interest that is applied to the purchase of products once it is delivered. The Company reserves for slow-moving inventory and inventory that is being evaluated under the Company’s quality control process. The reserves are based upon management’s expected method of disposition.

Inventory consisted of the following as of December 31, 2021 and December 31, 2020:

(Dollar Amounts in Thousands)	December 31, 2021			December 31, 2020
Raw materials	$	6,393		$	4,337
Prepaid inventory		2,237			833
Finished goods		12,810			—
Gross inventory		21,440			5,170
Inventory reserves		(942	)		—
Total inventory, net	$	20,498		$	5,170

Inventory Reserves

The Company establishes inventory reserves for obsolete, slow moving and defective items. Inventory reserves for obsolete, slow moving or defective items are calculated as the difference between the cost of inventory and its estimated net realizable value. Changes in inventory reserve are as follows:

(Dollar Amounts in Thousands)	December 31, 2021		December 31, 2020
Inventory reserves – beginning of the year	$	—	$	—
Increase in inventory reserves		942		—
Inventory write-offs		—		—
Inventory reserves – end of year	$	942	$	—