Note 3. Inventory

HTG Edge or HTG EdgeSeq instruments at customer locations under evaluation agreements are included in finished goods inventory. Equipment that is under evaluation for purchase remains in inventory as the Company maintains title to the equipment throughout the evaluation period. The period of time customers use to evaluate the Company’s equipment generally ranges from 90 to 180 days, and in certain circumstances the evaluation period may be extended beyond 180 days. If the customer has not completed the purchase of the instrument by the end of the initial evaluation period, the Company will determine whether to extend the evaluation period or have the equipment returned to the Company. If the customer has not purchased the equipment or entered into a reagent agreement with the Company after evaluating for one year, the equipment is returned to the Company or the customer is allowed to continue use of the equipment in which case the cost of the equipment is written off to selling, general and administrative expense.

Inventory, net of allowance, consisted of the following as of the date indicated:

	June 30,			December 31,
	2016			2015
Raw materials	$	1,557,253		$	1,274,840
Work in process		24,901			—
Finished goods		1,006,815			1,210,780
Total gross inventory		2,588,969			2,485,620
Less inventory allowance		(375,861	)		(284,319	)
	$	2,213,108		$	2,201,301

During the six months ended June 30, 2016 and 2015, the Company wrote off obsolete inventory of $58,221 and $42,408, respectively, against the inventory allowance. Adjustments to the reserve for obsolescence for estimated shrinkage and obsolescence and excess inventory are recognized within cost of revenue in the condensed statements of operations.