Inventory

The Company began capitalizing inventory as of March 31, 2016, when it was determined that the inventory had a probable future economic benefit. Inventory has been recorded at cost as of June 30, 2016. Costs capitalized at June 30, 2016 relate to the initial production run of HOTSHOT. The Company held no inventory at December 31, 2015.

The following table presents inventory:



	June 30, 2016		December 31, 2015
Raw materials	$	38,904	$	—
Finished goods	235,398		—
Total inventory	$	274,302	$	—

In the first quarter of 2016, the Company wrote off materials purchased for the initial production run of HOTSHOT finished goods that, upon completion, were not expected to be sold based upon projected sales, a 12 month product shelf life, the number of units produced and production level requirements. The initial production run of HOTSHOT finished goods was completed in the second quarter of 2016, at which time the Company wrote-off production costs incurred for those finished goods that were not expected to be sold. Write-offs totaled $40,652 and $225,950 for the three and six months ended June 30, 2016, respectively, and are included in cost of revenue in the accompanying condensed consolidated statement of operations.

The cost of revenue related to deferred revenue is capitalized and recorded as cost of revenue at the time the revenue is recognized.