2. Discontinued Operations of TS segment

On July 31, 2018, CSPi LTD, a wholly owned indirect subsidiary of the Company, completed its sale of all of the outstanding stock of Modcomp GmbH, to Reply AG, an affiliate of Reply SpA, a holding company for a worldwide group of companies, pursuant to the terms of a Share Purchase and Assignment Agreement dated June 27, 2018. Modcomp GmbH, dba CSPI GmbH, through itself and its wholly owned subsidiaries, provided managed security services to customers primarily in Germany.

Upon the closing of the Share Purchase Agreement, Reply AG paid to CSPI total cash at closing of approximately $14.4 million, which consisted of the original purchase price of $11.7 million plus an adjustment at closing for Net Cash (as defined in the Share Purchase Agreement) of approximately $2.7 million. An additional €400 thousand is included in escrow and will be recorded if and when received by the Company. Accordingly, CSPi determined that the assets and liabilities of this reportable segment met the discontinued operations criteria in U.S. GAAP in the year ended September 30, 2018. The gain recorded due to the sale of all the stock of Modcomp GmbH was approximately $16.8 million. No income taxes were provided as the transaction was a tax-free exchange in the U.K. As such, Modcomp GmbH’s results have been recorded as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations for all periods presented.

Summarized Discontinued Operations Financial Information

As the sale of the subsidiary occurred prior to September 30, 2018 there were no assets or liabilities of discontinued operations in the accompanying consolidated balance sheets for the years ended September 30, 2019 and 2018.

The following table summarizes the results of discontinued operations for the years ended September 30, 2019, and 2018.


	For the year ended
	September 30,		September 30,
	2019		2018

Sales	$	—	$	18,365
Cost of sales		—		15,843
Gross profit		—		2,522
Selling, general and administrative expenses		—		2,837
Operating loss		—		(315)
Other expenses		—		(95)
Loss before income taxes		—		(410)
Income tax expense		—		—
Loss from discontinued operations	$	—	$	(410)
Gain from sale of discontinued operations		—		16,838
Total income from discontinued operations	$	—	$	16,428