Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Hamed Khorsand - BWS Financial.
Hamed Khorsand - BWS Financial
Regarding the Medical Products division, it’s been a year and it looks like you’ve had good turn from an inventory standpoint, but you continue to incur losses. How will that affect your pricing power going forward, if you are selling at basically a loss?
Roberta Lipson
We are not selling at a loss on a gross profit perspective, and the platform that we’ve invested in and the expenses relating to our sales force are based on being able to have our full product portfolio available for sales. And as we mentioned, there are several products for which we are waiting for the final market entry registration and haven’t had the benefit of being able to reap revenues from that part of our product portfolio. And so it’s not a matter of losses. The losses will be absorbed as the volume of sales increase through those channels for which the expenses are already in place.
Hamed Khorsand - BWS Financial
The U.S. Import-Export contracts that you have gone through specifically this past quarter, what have you believe that it will lead to a more expedited turnaround in getting new contracts?
Roberta Lipson
Well, there are specifically issues with duty exemption from the Chinese government, which are based on U.S Ex-Im guarantees, which are also based on country of origin. And because some of the goods turned out came from Europe, we needed to set up a mechanism for cross guarantees between the European policy banks and the U.S Ex-Im banks.
And during the quarter those provisions were put in place so that we can call on them on an ongoing basis. That’s one thing that’s going to help going forward and smoothes the shipping cycle time for those projects. The other thing is part of the revenues that were delayed were also due to product registration issues. So there were products that the registration should have been finished, but because of delays in SFDA we weren’t able to ship.
Operator
Your next question comes from Julie Chen - CRT Capital Group.
Julie Chen - CRT Capital Group
On the healthcare product distribution side in terms of moving forward, are you looking at improving your Medical Products business, the gross margin aspect of it? Right now, we are seeing a decline in certain trends. Are you looking at improving it down the line or is there a scale factor? Where is the breakeven point for that business? Is the company looking at improving the gross margin for the business itself? If we look at the past fiscal year gross margin declined starting from the second.
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