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 September 30, 2016. Costs capitalized at September 30, 2016 relate to finished goods from the initial production run of HOTSHOT, as well as raw materials to be used in the second production run, planned for the fourth quarter of 2016. The Company held no inventory at December 31, 2015.

The following table presents inventory:



	September 30, 2016		December 31, 2015
Raw materials	$	158,239	$	—
Finished goods	72,539		—
Total inventory	$	230,778	$	—

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, estimated 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. During the third quarter of 2016, the Company wrote off additional finished goods that are not expected to be sold based on shelf life requirements and the Company's next production run, which is planned to take place during the fourth quarter of 2016. Write-offs totaled $32,734 and $258,684 for the three and nine months ended September 30, 2016, respectively, and are 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.