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Inventory

3 Months Ended

Mar. 31, 2022

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 Company’s prepaid inventory is a short-term, non-interest-bearing asset that is applied to the purchase of products once they are delivered.

Inventory consisted of the following as of March 31, 2022 and December 31, 2021:

(In thousands)	March 31, 2022			December 31, 2021
Raw materials	$	7,211		$	6,393
Prepaid inventory		10,745			2,237
Finished goods		21,975			12,810
Inventory, gross		39,931			21,440
Inventory reserves		(942	)		(942	)
Total inventory, net	$	38,989		$	20,498

Inventory Reserves

The Company establishes an inventory reserve for obsolete, slow moving, and defective inventory. The Company calculates inventory reserves for obsolete, slow moving, or defective items as the difference between the cost of inventory and its estimated net realizable value. The reserves are based upon management’s expected method of disposition.

Changes in the Company’s inventory reserve are as follows:

(In thousands)	Three Months ended March 31, 2022		Year ended December 31, 2021
Inventory reserves – beginning of period	$	942	$	—
Increase in inventory reserves		—		942
Inventory write-offs		—		—
Inventory reserves – end of period	$	942	$	942