Hometown Deli, Paulsboro, NJ
Mike Calia | CNBC
On Monday, shell company E-Waste Corp. disowned his own exorbitant market valuation $ 106 million, three days after an identical move from the mysterious company that owns only one small New Jersey delicatessen.
The deli company, Hometown International, has multiple connections with E-Waste, which has no real business activity.
At best, both companies are lightly traded in the over-the-counter market.
The consecutive disavowals of their respective market caps in Securities and Exchange Commission filings came after more than two weeks of CNBC articles detailing legal and regulatory issues surrounding people and entities related to Hometown International and E-Waste.
They also come in as Hong Kong-based company Maso Capital continues to try to position the two companies as vehicles for acquisition by private companies to become publicly traded on the US stock markets.
In his Monday filing with the SEC, E-Waste management said it “disclaims the price of its publicly traded shares in the over-the-counter markets under the symbol ‘EWST’.”
“Management is not aware of any basis to support the company’s stock price, based on its income or assets,” the filing said in language that mirrored that of the Hometown International filing. last Friday.
Last week, Hometown International and E-Waste on the same day killed consulting deals with a North Carolina company controlled by the father of the president of Hometown.
The measures, which cited “recent negative press”, were praised by Maso Capital founder Manoj Jain, who said: “We look forward to the two public companies implementing their announced acquisition plans.”
Last month, E-Waste raised $ 2.5 million from several institutional investors in a private placement offering, according to Monday’s filing.
“Management has disclosed that the proceeds of this private placement will be used for working capital and general corporate purposes, and to research, investigate and, if such an investigation warrants, engage in a business combination. companies with a private entity whose activity represents an opportunity for the company. shareholders ”, indicates the file.
The case was signed by E-Waste chairman John Rollo, whose company in November reported a net loss of nearly $ 58,000 for the previous nine months.
Grammy-winning sound engineer Rollo, 66, last year worked as a patient transporter at a New Jersey hospital, according to another recent financial from E-Waste.
E-Waste’s share price closed at $ 8.50 per share on Monday, with no transactions recorded in the pink market, according to OTC Markets Group.
With 12.5 million shares outstanding, E-Waste has a market capitalization of $ 106.25 million.
Hometown International stock, which also trades on the Pink Market, closed at $ 13.40 a share, with just 2,866 of the approximately 7.8 million outstanding common shares changing hands in trading.
This stock price gives the company a market cap of $ 97.85 million. That’s far more than the $ 35,000 in sales from his own grocery store in Paulsboro, New Jersey, over the past two years combined.
On April 21, OTC Markets Group demoted Hometown International in its pink market from the more prestigious OTCQB platform due to “irregularities” in its public disclosures. The stock also had a “Buyer, beware” label slapped on it by over-the-counter markets, who told CNBC at the time that he was also reviewing E-Waste’s financial deposits.
It’s still unclear why anyone – close to both companies or not – would have paid a lot for either stock over the past year, let alone increased them in value from their current valuations. , taking into account the absence of any significant activity.
Both companies, in their public disclosures, have said bluntly that there is no guarantee that they will be able to survive in their current state.
E-Waste was ostensibly created to develop an e-waste recycling business in 2012, but it halted those efforts and has not reported any income for years.
A key figure linked to the two companies is Peter Coker Sr., the father of the president of Hometown International, Peter Coker Jr. The elder Coker is an investor in Hometown International.
Last year, after a Macau, China-based entity called Global Equity Limited bought 6 million restricted shares in E-Waste, a controlling stake, E’s registration and phone number. -Waste were changed to Coker Sr.’s office in Carrboro, NC, and began paying $ 250 per month for a one-year lease there.
Global Equity is also the main shareholder of Hometown International.
E-Waste also began paying Coker Sr.’s Tryon Capital $ 2,500 per month as part of a consulting agreement last year.
And Coker Sr. has personally loaned E-Waste $ 255,000 at an annual interest rate of 8%, according to financial documents. Tryon Capital was also raising an additional $ 15,000 per month under a consulting agreement with Hometown International.
Those consulting agreements were terminated last week after CNBC’s review of the arrangements.
In late November, E-Waste issued a promissory note to Hometown International for $ 150,000 at an interest rate of at least 6% per annum, according to an SEC filing. This note indicates that Hometown International loaned this amount to the shell company.
The promissory note was recognized by the CEO of Hometown International, Paul Morina, who is the principal of Paulsboro High School, where he also coaches the famous wrestling team.
Hometown Deli, Paulsboro, NJ
Mike Calia | CNBC