Casino operations, which comprised Dreamworld Pailin, contributed $907,000 to total gaming revenue in the second quarter of 2013, down from $1.1 million in the first quarter of 2013. The decline was due to lower player traffic levels. Operating expense for Dreamworld Pailin was $1.2 million for the second quarter of 2013, down from $1.3 million in the first quarter of 2013 due to the lower player traffic and cost reduction initiatives.
Revenue from gaming products, which comprised the manufacture and sale of gaming chips and plaques, was $162,000 in the second quarter of 2013, down from $978,000 in the second quarter of 2012. The decrease was mainly the result of the short production period given the strategic relocation of the manufacturing facilities from Australia to Hong Kong during the quarter. The relocation commenced in March and was completed in May 2013. However, final set-up including new personnel training, consultants and equipment testing resulted in approximately $166,000 in non-recurring operating costs and lower production efficiencies. As a result, the Company incurred a gross margin loss of $384,000 for these operations during the second quarter.
Entertainment Gaming Asia reported adjusted EBITDA of $1.9 million in the second quarter of 2013 compared to $2.8 million in the prior year period.
The Company reported a net loss from continuing operations of $385,000, or $0.01 per share, on a weighted average diluted share count of approximately 30.0 million in the second quarter of 2013. This compared to net income of $429,000, or $0.02 per share, on a weighted average diluted share count of approximately 31.3 million for the second quarter of 2012.The decrease in adjusted EBITDA and the increase in net loss from continuing operations were primarily the result of the gross margin loss for the casino operations, lower revenue and high non-recurring costs for the gaming products division and foreign currency losses of approximately $292,000 compared to gains of approximately $25,000 in the prior year period. This negative differential in foreign exchange of approximately $317,000 was due to the strengthening of the U.S. dollar compared to foreign currencies in the markets in which the Company operates. The decrease in adjusted EBITDA and the increase in net loss from continuing operations were partially offset by lower operating expenses, including selling, general and administrative expenses, which were $1.4 million in the second quarter of 2013 compared to $1.6 million in the prior year period.
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