Sales jumped nearly a whopping 50% in the first quarter of 2021 at that mystery $100 million New Jersey deli company — but that amounted to only a measly $5,305 worth of sandwiches, sodas and chips, a new financial filing revealed Monday.
Losses also jumped big-time at deli owner Hometown International, rising to $173,658 for the first three months of this year. That's about $97,000 more in losses than in the same period last year.
Hometown International's latest filing also shows a series of previously unreported developments at that odd corporation, whose deli in Paulsboro, New Jersey, sits across the Delaware River from Philadelphia.
The moves, like other recent ones, seem designed to clean house and make the company an attractive takeover candidate by a private company. That seems to be the real reason that investors in Hong Kong and Macao last year took big stakes in Hometown International, as opposed to a love of selling cheesesteaks.
Those developments include the decision not to renew a $25,000-per-month consulting agreement with a Macao-based entity that is a major investor in Hometown International, the company's 10-Q quarterly filing with the Securities and Exchange Commission revealed.
They also include the full repayment to the deli owner of two curious $150,000 loans it made to shell companies closely linked to the father of Hometown International's chairman and new president, Peter Coker Jr., the 10-Q shows.
Hometown International began drawing public attention in mid-April when hedge-fund manager David Einhorn noted in a client letter that the company had recently had a stock market capitalization of more than $100 million despite having combined sales of less than $37,000 in 2019 and 2020 combined at its Paulsboro eatery.
CNBC since then has detailed the criminal histories and regulatory sanctions of a number of individuals linked to the company and other curious details about the deli owner.
On the heels of those articles, Hometown International's controlling shareholders terminated a $15,000-per-month consulting deal the company had with Tryon Capital Ventures, a North Carolina firm controlled by Peter Coker Sr., who is a major investor in the deli owner.
Hometown International then fired its president, Paul Morina, who by day is principal and head wrestling coach at Paulsboro High School, which is located near the deli. The company also canned its only other executive officer, Christine Lindenmuth, who is an administrator at that same high school.
Peter Coker Jr. replaced Morina as president.
However, the company still leases the deli space from an entity linked to Morina.
Both Hometown International and a related shell company, E-Waste, have disavowed their sky-high market capitalizations, saying their share prices on the over-the-counter market are unjustified by any financial rationale.
The 10-Q, whose filing was delayed for about a week, like other filings by the deli owner, contains details that are incongruous for most companies that have almost 8 million common shares outstanding.
The company's stock closed at $12.10 per share on Monday, down 40 cents per share, with just 423 shares changing hands. On paper, at least, Hometown International's market capitalization based on common shares alone is more than $97 million, while its intrinsic value when factoring in tens of millions of shares available through share warrants is a whopping $1.8 billion.
Among the odd details in the new filing is the fact the deli had labor costs of $126 for the first quarter.
During the same period a year ago, it reported no labor costs at all.
Sales, which were just $3,577 for the first quarter in 2020, skyrocketed to $5,305.
"The increase in revenue is mainly attributed to an increase in customer's [sic] visits following the re-opening of our delicatessen as a result of the easing of restrictions related to the COVID-19 pandemic," the 10-Q filing states.
The company said that as of March 31, "we had current assets of $1,412,432, consisting of $1,100,957 in cash."
That filing also shows that on April 30, Hometown International's consulting agreement with VCH Limited, an investor in the company, expired and was "not renewed."
That deal had been paying VCH Limited $25,000 per month under the consulting deal, which had a term of one year, and which began May 1, 2020. Filings say that VCH Limited "was engaged as a consultant to the Company, to, among other things, create and build a presence with high net worth and institutional investors."
VCH Limited is one of four entities that are among Hometown International's biggest shareholders, whose mailing addresses are in Macao, a special administrative region of China.
The 10-Q filing notes that $120,000 of the $178,963 in operating expenses for the first quarter were chewed up by the consulting agreements Hometown International had with VCH Limited and Tryon Capital.
Tryon Capital, under its own consulting agreement, was supposed to offer, "among other things, support in the research, development, and analysis of product, financial and strategic matters," filings say.
The filing reveals that as of April 14, Hometown International had received the full principal payments and more than $1,000 in accrued interest for a $150,000 loan to the shell company E-Waste, which is closely linked to Coker Sr. The loan was only issued in November.
E-Waste repaid the loan a day before the Einhorn letter became public and raised questions about Hometown International and the related shell companies.
In a move that mirrored the firing of Molina, E-Waste's president, John Rollo, recently resigned from the company on the heels of CNBC articles about E-Waste, which has no operating business but does have a market capitalization that tops $112 million.
Hometown International in February lent $150,000 to another company connected to Coker Sr. — Med Spa Vacations Inc. — of which Rollo remains the president, treasurer and secretary, according to its own recent quarterly filing with the SEC.
The deli owner's 10-Q filing shows that on May 12 "the full principal of the note receivable and $2,250 of related accrued interest receivable were fully paid by the noteholder," Med Spa Vacations.
Hometown International's loans to E-Waste and Med Spa Vacations both had an interest rate of 6%.
E-Waste and Med Spa Vacations share a mailing address, which is also that of an office for a Coker Sr. company in North Carolina.
A source familiar with the situation, who declined to be named, when asked about the loans being repaid so quickly the deli owner corporation was "rationalizing the capital structure, getting the loans off the books to improve working capital at the firm."
"This is something they were doing anyway, regardless of the media around the Einhorn letter, which explains why it was repaid a day before the [client] letter was issued," the source said.
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That $100 million New Jersey deli sold just $5,305 worth of food in first quarter of 2021 - CNBC
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