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, 2017 and December 31, 2016. Costs capitalized at June 30, 2017 and December 31, 2016 relate to HOTSHOT finished goods, as well as raw materials available to be used for future production runs.

The following table presents inventory:



	June 30, 2017		December 31, 2016
Raw materials	$	10,441	$	19,888
Finished goods	677,744		434,244
Total inventory	$	688,185	$	454,132

In the second quarter of 2017, the Company completed a production run of HOTSHOT, and wrote off raw materials purchased for the production run that are not expected to be used in future production runs. In the prior year, the Company wrote off raw materials purchased for production runs of HOTSHOT that were not expected to be used in future production runs, as well as finished goods not expected to be sold based upon projected sales, estimated product shelf life, the number of units produced and production level requirements.

Write-offs totaled $17,767 for the three and six months ended June 30, 2017, and $40,652 and $225,950 for the three and six months ended June 30, 2016, respectively, and were included in cost of product revenue in the accompanying condensed consolidated statement of operations.

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