Hometown deli, Paulsboro, NJ
Mike Calia | CNBC
Shell company E-Waste Corp. rejected its own sky-high market valuation of $ 106 million on Monday, three days after an identical move by the mysterious company that owns only one small deli in New Jersey.
The deli company Hometown International has multiple links with E-Waste, which has no actual business operations.
Both companies are thinly traded on the over-the-counter market at best.
The successive denials of their respective market capitalizations in filings with the Securities and Exchange Commission came after more than two weeks of articles from CNBC setting out legal and regulatory issues relating to individuals and organizations related to Hometown International and E-Waste.
Maso Capital, a Hong Kong-based company, continues to seek to position both companies as vehicles for acquisition by privately held companies in order to be publicly traded in the US stock markets.
In its filing with the SEC on Monday, E-Waste’s management stated that it “is opposed to the price of its publicly listed shares in the OTC markets under the symbol” EWST. “
“Management has no basis for basing the company’s stock price on its earnings or assets,” it says in a language consistent with the filing made by Hometown International last Friday.
Last week, both Hometown International and E-Waste entered into advisory agreements on the same day with a North Carolina company controlled by the Hometown chairman’s father.
The moves quoting the “recent negative press” were praised by Maso Capital founder Manoj Jain, who said, “We look forward to both public companies moving forward with their stated acquisition plans.”
E-Waste raised $ 2.5 million last month from several institutional investors in a private placement offering, according to the announcement filed on Monday.
“Management announced that the proceeds from this private placement would be used for working capital and general corporate purposes to seek, investigate, and, if appropriate, operate a business combination with a private company whose business presents an opportunity for the company’s shareholders,” said the filing.
The filing was signed by E-Waste President John Rollo, whose company reported a net loss of nearly $ 58,000 for the past nine months in November.
66-year-old Rollo, a Grammy-awarded sound engineer, worked as a patient truck in a New Jersey hospital last year.
According to the OTC Markets Group, E-Waste’s share price closed at $ 8.50 per share on Monday with no business in the pink market.
With 12.5 million shares outstanding, E-Waste has a market capitalization of $ 106.25 million.
Hometown International’s stock, also traded on the Pink Market, closed at $ 13.40 per share, with just 2,866 of the nearly 7.8 million outstanding common shares trading in trading.
This share price gives the company a market capitalization of $ 97.85 million. That’s many times the combined sales of its Hometown Deli in Paulsboro, New Jersey, of only about $ 35,000 in the past two years.
On April 21, OTC Markets Group downgraded Hometown International from the more prestigious OTCQB platform to its pink market due to “irregularities” in its public announcements. The stock also had a “buyers watch out” label affixed to it by OTC Markets, which CNBC told CNBC at the time that it was also reviewing E-Waste’s financial reports.
It remains unclear why anyone – either close to either company or not – would have paid a lot for both stocks in the past year, let alone updated them from their current valuations, given that they didn’t have any significant business.
Both companies have stated bluntly in their public statements that there is no guarantee that they can survive in their current condition.
E-waste was supposedly created to start an e-waste recycling business in 2012, but has stopped those efforts and has not reported any revenue for years.
A key figure associated with both companies is Peter Coker Sr., the father of Hometown International Chairman Peter Coker Jr. The elder Coker is an investor in Hometown International.
Last year after a Macau, China-based company called Global Equity Limited bought 6 million restricted shares in E-Waste, a controlling interest, E-Waste’s registration and phone number were moved to Coker Sr.’s Carrboro office , North Carolina. and started paying $ 250 a month for a one-year lease there.
Global Equity is also the largest shareholder in Hometown International.
E-Waste began paying $ 2,500 per month to Tryon Capital from Coker Sr. under an advisory agreement last year.
And Coker Sr. has personally loaned E-Waste $ 255,000 at an annual rate of 8%, according to financial reports. Tryon Capital also raised an additional $ 15,000 per month from an advisory agreement with Hometown International.
These consultancy contracts were terminated last week after CNBC reviewed the agreements.
In late November, E-Waste Hometown International issued a $ 150,000 bond at a rate of at least 6% per annum. This emerges from an SEC filing. This notice indicates that Hometown International loaned this amount to the Shell company.
The promissory note was recognized by Paul Morina, CEO of Hometown International, who is the director of Paulsboro High School, whose prestigious wrestling team he also coaches.
Hometown deli, Paulsboro, NJ
Mike Calia | CNBC