12. Subsequent Events

 

Australia expansion

 

On April 1, 2016, the Company began working directly with home automation integrators in Australia in order to capitalize on the growth of the smart home category in that country. As part of the shift from its distribution model in Australia, Control4 Corporation, through its wholly owned subsidiary, Control4 Australia Holdings Pty., Ltd, acquired customer lists and inventory from the Company’s Australian distributor for $0.9 million. Additionally, due to this development, the Company added in-country staff to handle all sales, technical support and training activities. The Company will also leverage its current operations and employees from its January 2015 acquisition of Nexus. This transition will allow integrators in Australia that become certified dealers to order products directly from the Company and, in most instances, to receive delivery within three business days. Dealers will also have access to extensive libraries of product training materials, marketing collateral and tools, as well as regional technical support.

 

The Company will account for this transaction in accordance with the applicable accounting guidance for business combinations and is in the process of determining the fair values of the assets acquired and liabilities assumed. Due to the timing of the acquisition, it is not currently practicable to include any preliminary disclosures of estimated fair values.

 

Lease amendments

 

In conjunction with integration activities related to Pakedge, on April 18, 2016, the Company entered into an amended lease agreement increasing the square footage of its warehouse space in Salt Lake City, Utah, from 45,000 square feet to 60,000 square feet, as well as extending the term of the lease to March 31, 2019, which was set to expire on March 31, 2017.  The additional space will allow the Company to centralize warehousing activities for the products acquired as part of the Pakedge acquisition. The new terms of the lease result in an increase to the Company’s total future lease obligations of approximately $0.7 million over the next three years.

 

Legal proceedings

 

Subsequent to March 31, 2016, the Company paid $0.4 million to resolve certain legal matters. The Company had accrued for these legal expenses as of March 31, 2016.