Paulsboro’s famous Hometown Deli merges with Calif. firm that makes hemp-based plastics

The parent company of Your Hometown Deli, the Paulsboro, N.J., eatery that made headlines last year with a $100 million value, is merging with a tiny private company that makes hemp-based plastics.

Los Angeles-based Makamer Holdings is the new name, according to filings with regulators, and the operating business is biodegradable plastics.

Neither company has a moneymaking business. The end result is the merger of two odd businesses that mom and pop investors should probably avoid, finance experts said. Makamer didn’t respond to emails or calls for comment.

» READ MORE: SEC questioned Paulsboro’s Hometown deli as it lined up stock sale

Hometown International, (symbol: HWIN) has claimed the deli in working-class Paulsboro as its main business, collecting some $25,000 in sales last year.

For those not familiar with Your Hometown Deli, or its parent Hometown International, a group of Hong Kong investors apparently aimed to use the public company as an informal SPAC. These special purpose acquisition companies are the blank check firms that bring another company onto the public markets through a merger or acquisition, a process that circumvents the traditional IPO process and cost.

SPACs became wildly popular in 2020 and 2021 when they accounted for the majority of U.S. initial public offerings, including 59% of all new listings in 2021 according to Nasdaq.

Hometown Deli appeared to be an attempt by its biggest shareholders to access the public markets without the fees, fuss, or regulatory oversight of an IPO or even a SPAC. In an interview with the Financial Times, Manoj Jain, co-chief investment officer of Maso Capital Investments Ltd., a Hong Kong fund that was among Hometown’s largest investors, explained that the idea was to merge a Chinese company with the deli.

» READ MORE: Paulsboro’s Your Hometown Deli’s stock gains may resemble GameStop

Hometown Deli attracted the spotlight when its stock price skyrocketed from $1.25 in Nov 2019 to $14.50 two years later, earning the company its outsized valuation on paper. Regulators have not taken any public enforcement actions against the company.

Hometown’s shocking $100 million valuation “was just part of a new wave of stock manipulation,” contended accounting expert Francine McKenna, who writes TheDig, an investigative newsletter and is slated to teach accounting at the Wharton School this year.

Among those listed as executives was Paulsboro High School wrestling coach Paul Morina, known for winning state championships, and the owner of the deli.

Reached by phone at the deli, Morina said “I’m not really involved with it anymore,” and wouldn’t confirm whether he was still a shareholder. Then he hung up.

With Morina out as CEO of the shell company, Makamer CEO Alex Mond, is taking over, according to filings last month with the Securities and Exchange Commission. Morina is still listed as a shareholder, according to the latest annual report.

And in an only-in-Philly twist, Makamer has a three-member board of advisers that includes Najee Goode, a former linebacker for the Philadelphia Eagles.

In a press release last year announcing the winning of a grant from another company, Makamer said it has “developed a proprietary modification of hemp that enables the fibers to be more resistant to heat and humidity.” The company adds that it “specializes in creating 100% biodegradable plastics using hemp-polymers that are fully compostable within days to months leaving no trace toxins or microplastics behind.”

Hometown International lost money in 2021 after accounting for all the fees and expenses paid to its advisers. It generated revenue of $25,004 and $13,976 for the years ended Dec. 31, 2021 and 2020, respectively, but lost $486,219 and $624,438 for those years, according to SEC filings.

“The tactics are the same that we’ve seen used by promoters of penny stock companies,” McKenna maintained. “These are shell companies that morph from one business to the next, chasing trends.”

The company has “used the press to gain notoriety as a small business struggling under the constraints of COVID-19 that somehow has a $100 million market capitalization,” McKenna said. “Now it says it’s going to merge with a bioplastics company and change its name.”