I think the Mexcor deal keeps the company from bigger problems. Does it make it a buy with a $4 million valuation (roughly)? IMHO, not on fundamentals, but perhaps on speculation.
From a fundamental standpoint, I'm looking for a few things.
What happens to debt and working capital in the 3rd and 4th fiscal quarters? We know they are using shares and we know roughly how many shares are being issued, but we don't know how much debt is falling and the working capital deficit is falling (if at all).
What sort of revenues will the Mexcor deal provide. Greatly reduced costs is great, and if SG&A can get down to $1.6 million as projected, that sets a much lower maximum loss limit. This question has 2 components - how much does DA get per case and how many cases can Mexcor sell? It's unlikely IMHO that you'll know either, let alone both, for at least 6 months when the 1st fiscal quarter is reported.
Can DA get to $400k/quarter in expenses? While relying on Mexcor for everything but the brand management, production deals and icon and related relations may work with a few employees, I'm not sure what effect international deals (if there are any), new product intros like Rheingold, Topless, Dre, etc. and new icon deals will have. $133k/month is not a lot of money for even a pretty small company, let alone one hoping to ultimately be responsible for $10 million in product sales. It's another question I don't think will be answered for at least a couple of quarters.
So yeah, I guess I do think DKAM still has "steam in the pipes", but I don't think the pipes are in danger of bursting. What I'm "waiting for" is the same thing I've been waiting for for 2+ years - an indication in the financials that the balance sheet is strengthening, particularly positive working capital, and that losses are falling with an indication of near term (1-2 quarters) profitability. All MHO.
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