$100 million NJ deli linked to shell company E-Waste, whose stock has soared despite having no real business

We’ll have what they’re having.

A mysterious $100 million company that owns just one tiny New Jersey deli is linked in multiple ways to another odd company, E-Waste Corp.

E-Waste’s stock, like that of deli owner Hometown International, has soared in the past year, also giving it market capitalization of more than $100 million earlier this month. This surge happened despite E-Waste having no significant ongoing business, records show.

Filings also indicate that Hometown International lent E-Waste $150,000 late last year. The deli was closed for more than five months last year due to the Covid pandemic.

And like Hometown International’s CEO, who is a New Jersey high school principal and head wrestling coach, E-Waste CEO John Rollo recently had a job that is unusual for the head of a company that on paper is worth tens of millions of dollars. He was a patient transporter at a northern New Jersey hospital and still apparently works in the same health-care system.

The E-Waste CEO’s career history is full of other surprising detours. Rollo, 66, who did not return a call seeking comment, previously won two Grammy awards during his extensive career as a recording engineer and producer on albums by artists such as The Kinks, Joe Cocker, Whitney Houston, Kool & the Gang and Quiet Riot, according to records.

He also spent nearly 18 years as vice president for operations at Comus International, a New Jersey-based switching and sensor manufacturer. Rollo was fired from Comus in 2019, according to a lawsuit he filed that year in connection with his termination.

The connections between E-Waste and Hometown International — whose Your Hometown Deli in Paulsboro had combined sales of only about $35,000 in the past two years — include the same Hong Kong entity being their biggest shareholders, similar consulting contracts with companies controlled by investors and their current use of the same New York law firm.

And, just like early financial filings by Hometown International, E-Waste’s initial regulatory filings show the involvement of a lawyer who later was sued by the Securities and Exchange Commission for allegedly involvement in fraudulent schemes involving the creation of companies.

The lawyer for E-Waste was a different one from the one initially used by Hometown International — Hometown’s previous lawyer, unlike E-Waste’s, was charged and convicted of related federal crimes.

Another similarity between the companies is the fact that no one associated with them has returned calls or emails from CNBC.

A key figure involved in both companies is Peter Coker Sr., a 78-year-old North Carolina businessman whose son, Peter Coker Jr., is chairman of Hometown International.

The younger Coker is executive chairman of South Shore Holdings Ltd., a Hong Kong company that owns a financially troubled hotel in Macau, China: The 13.

That uber-luxurious property’s initial investors included Steve Cohen’s SAC Capital Advisors, Fidelity International, and Omega Advisors. The 13’s website indicates it has been closed since Feb. 15, 2020, due to the coronavirus pandemic.

Records show that Coker Sr. is an investor in Hometown International, as is a company of his, Europa Capital.

The largest shareholders in Hometown International include three separate entities in Hong Kong, which all share the same address, and four separate entities in Macau, which likewise all have the same address there.

Paul Morina, the deli owner’s CEO and the principal and wrestling coach for Paulsboro High School, is also a major shareholder in Hometown.

E-Waste, which has described itself as a shell company in Securities and Exchange Commission filings, had total assets valued at almost $183,000 and liabilities of almost $412,400 as of November, according to its most recent 10-Q filing with the SEC.

The company had a net loss of almost $58,000 for the nine months ended Nov. 30.

The company was incorporated in 2012 in Florida “to develop an e-waste recycling business” but “was not successful in its efforts and discontinued that line of business,” according to SEC filings.

Since then, the company has been a shell company and is looking to “engage in a business combination with a private entity whose business presents an opportunity for its shareholders,” the filing says.

That filing also says there is substantial doubt that E-Waste will be able to stay in business over the next year, noting that the company “has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues” to become profitable.

“There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis,” the filing says.

“If the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations.”

Despite that extremely dire outlook, E-Waste’s stock is doing quite well.

The stock, which appears to have started trading last July at 2 cents per share — with shares selling for well below $1 apiece for weeks after that — has sharply risen since then.

Last week, the stock, of which there are 10 million common shares outstanding, hit a high of $10.25 per share. It gave the company a $100.25 million market capitalization. E-Waste closed at $8.26 per share, down 17.4%, on Wednesday, giving it an $82.6 million market cap.

On April 12, E-Waste entered into what it called a “subscription agreement … with three ‘accredited investors‘”who bought 2.5 million units of the company’s securities at a price of $1 per unit, giving it $2.5 million, according to a company filing with the SEC. Each unit consists of one share of common stock and a warrant to purchase two more shares of common stock at an exercise price of $4.50 per share.

E-Waste said in its filing that it plans to use proceeds from the sale of the units for “working capital, general corporate purposes, and to seek, investigate and, if such investigation warrants, engage in a business combination with a private entity whose business represents an opportunity for our shareholders.”

The stock of E-Waste and Hometown International traded on the over-the-counter market. Trading volume in both companies for the past year has been, as a rule, very thin.

Late Wednesday, Hometown International was delisted from the OTCQB over-the counter market “for not complying with the rules” and slapped with a warning label for would-be buyers, according to a tweet by OTC Markets Group CEO Cromwell Coulson.

Volume in Hometown International shares had spiked on the heels of a mocking mention of the company’s valuation in a letter last Thursday to clients from hedge-fund manager David Einhorn, who quipped, “The pastrami must be amazing.”

Hometown International’s stock rose from $3.25 per share in late March 2020 — when the Covid-19 pandemic shut down its deli for more than five months — to up to $14 per share earlier this month.

E-Waste’s own surge in the stock market came after a big change in ownership and management at the company, which before fall 2020 was registered at a firm on Park Avenue in Manhattan, GEM Group.

As of early last year, four of the five biggest shareholders of E-Waste were, in order of size of shares held: the Valletta, Malta-based GEM Global Yield Fund LLC SCS, and three individuals whose address was that of something called GEM Advisors, located on Madison Avenue in New York.

At the time, E-Waste’s president, treasurer and secretary was a man named Peter de Svastich, who is a managing director at the GEM Group.

When CNBC called de Svastich on Wednesday, he snapped, “I don’t know who you are, and I don’t speak to reporters” — before hanging up the phone.

GEM, which had been E-Waste’s controlling shareholder, sold 6 million restricted shares of the company’s stock last year for $30,000 to Global Equity Limited — a Macau, China-based entity.

Global Equity Limited is the biggest single shareholder in Hometown International, the deli owner whose chairman is Coker Jr.

De Svastich resigned as part of that sale agreement of E-Waste shares to Global Equity Limited — and Rollo, the music producer and patient transporter, took over as the sole executive at E-Waste.

E-Waste’s registration and phone number also changed to Coker Sr.’s office in Carrboro, North Carolina. The company entered into a one-year lease for the office there at a monthly rate of $250, the company said in its SEC filing.

In the same month, E-Waste received a $255,000 loan from Coker Sr., according to the filing, which says the interest on that loan is 8% annually.

E-Waste pays Coker Sr.’s firm Tryon Capital $2,500 a month in consulting fees, according to an SEC filing.

Hometown International also pays Tryon Capital a monthly consulting fee: $15,000. That deal means Hometown pays more in consulting fees over three months than its underlying deli business made in sales over the past two years.

In late November, E-Waste issued a promissory note to Hometown International for $150,000, a filing says, indicating that Hometown made a loan in that amount to the other company. The interest rate on that debt to Hometown is listed both at 8% and 6% in the filing, in an apparent typo.

The note was signed by Rollo and it was signed as accepted by Morina, the president and CEO of Hometown International.

Morina, 62, is the principal of Paulsboro High School, which is near the deli that Hometown International owns. He is also head coach of the Philadelphia-area school’s renowned wrestling team, which has frequently won state championships under his leadership.

Morina’s 1.5 million common shares of Hometown International are worth, on paper, at least more than $19 million. He has warrants for 30 million more shares, which theoretically are worth nearly $400 million at Hometown International’s current stock price.

The promissory note to Hometown International from E-Waste gave the deli owner’s corporate address as a residence in Woodstown, New Jersey, which is the home of Christine Lindenmuth.

Lindenmuth is vice president and secretary of Hometown International. She also is a math teacher and administrator at Paulsboro High School.

An SEC filing says Rollo has served as a patient transporter for New Jersey-based Atlantic Health Systems since March 2020.

A supervisor in the office of patient transportation at one of that company’s facilities, Morristown Medical Center, told CNBC that Rollo had previously worked in that department but currently is working elsewhere in Atlantic Health Systems.

CNBC has contacted spokesmen for Atlantic Health to ask where Rollo currently works.

SEC filings by E-Waste say that Rollo, from January 2010 to November 2019, also “Served as Chairman of the Board for Switching Technologies Gunther, LTD (‘STG’) in Chennai, India,” a company listed on the BSE, formerly known as the Bombay Stock Exchange.

That time frame overlaps with Rollo’s work at Comus, which bills itself as one of the leading makers of switches.

Records show that Rollo is CEO of another company, Med Spa Vacations, whose mailing address is also Coker Sr.’s Carrboro office.

SEC filings by Med Spa Vacations show that its shareholders include Global Equity Limited.

Global Equity Limited also holds 2 million shares of Hometown International’s common stock, which it bought from Peter Coker Jr., the company’s chairman, in April 2020, according to filings. Global Equity Limited has warrants for another 40 million shares of Hometown International.

The owners of Global Equity Limited are listed as two people, Michael Tyldesley and Ibrahima Thiam.

Filings by Med Spa Vacations say that Tyldesley and Thiam “beneficially own 90% and 10%, respectively, in Global Equity Limited and have joint voting and investment power over the shares directly owned by Global Equity Limited.”

Tyldesley also is listed as the managing director of VCH Limited, another Macau entity, which owns 500,000 common shares of Hometown International and has warrants for another 10 million shares.

Last May, filings show, Hometown International entered into a consulting agreement with VCH Limited, which is being paid $25,000 per month from the deli owner.

That monthly payment is just about $10,000 less in total sales than Hometown International’s deli sold in Italian hoagies, cheesesteaks and french fries in the past two years.