E-016 was found reoccuring in what seemed to be nightmares from E-011 from older iterations of the second timeline. We aren't completely sure if E-006 existed in these iterations, but if not, then this is simply just from a nightmare.
E-016 is a figure with identical appearance to Wario, with the only main difference is that he has no head, but keeps his eyes, nose, moustache and teeth. It's unknown how exactly this is possible, but it may be a result of nightmares not following logic like reality does.