When Waldencast went public in 2021, its founders shrugged off mounting fears that a recession was on the horizon, stressing that they were confident that the corporate would turn into a world best-in-class beauty and wellness player.

What they perhaps didn’t bear in mind was how much of a stickler Nasdaq execs are about filing company reports on time.

Earlier this week, Waldencast, which has just two brands on its roster — Milk Makeup and Obagi Skincare — revealed that it was at risk of being delisted from the Nasdaq, after joining in summer 2022 through a special purpose acquisition company (also known as a SPAC).

The corporate received a written notice from Nasdaq indicating that it was subject to delisting resulting from it not having filed its annual report with the Securities and Exchange Commission.

Waldencast, founded by former L’Oréal executives Michel Brousset and Hind Sebti, alongside Felipe Dutra, said it plans to request a hearing with Nasdaq over the matter. 

In line with a slew of regulatory filings, the problem appears to stem from Obagi Skincare, which Waldencast purchased from Haitong International Zhonghua Finance Acquisition Fund in 2021. Prior to that, the brand of medical grade skincare products was owned by Valeant Pharmaceuticals International Inc. 

The last time Waldencast released quarterly earnings was Nov. 10, 2022, only to fifteen days later issue a correction. It had said the corporate had a net lack of $16.8 million, however it was actually $14 million, the corporate said.

During that quarter, Obagi recorded net sales of $60.4 million, a rise of three.2 percent from the identical period within the prior 12 months. Milk Makeup recorded net sales of $18.5 million, up 41.7 percent.

The corporate was resulting from report fourth-quarter earnings and an annual report on March 15, but on April 25, it said it was delaying filing due to an ongoing review of its year-end 2022 financial statements and related issues, namely with Obagi. 

“The corporate is conducting an evaluation pertaining to, amongst other things, certain accounting issues in reference to the sale of certain Obagi products for the Vietnam market,” it said in a release on the time. “The corporate’s audit committee is conducting an independent review, with the help of out of doors counsel, of the circumstances surrounding these issues to find out, amongst other things, whether certain accounting adjustments are obligatory.”

It further explained that the review arose from “concerns regarding the lapse in renewing the importation licenses in Vietnam, that are still pending, and related effects, triggering, amongst other things, the necessity for further evaluation.”

A separate filing detailed that as of April 25, Waldencast was still awaiting a payment related to its acquisition of a 60 percent stake in its Southeast Asia distributor.

The corporate didn’t reply to a request to comment further on the problem. Earlier this week it said: “We’re working diligently with our advisers to present our plan of compliance to Nasdaq and look ahead to presenting it to the Nasdaq listing board. The receipt of the notice doesn’t affect the corporate’s business or operations and we proceed to be excited concerning the prospects of our brands.”

What this implies for buzzy Gen Z brand Milk Makeup, whose founders include Mazdack Rassi and Zanna Roberts Rassi, stays to be seen.

On the time of the merger with Waldencast, Milk Makeup’s CEO lauded going public as a chance to speed up Milk’s reach and impact.

Regulatory filings when Waldencast went public showed that Milk’s net revenue was around $47 million in 2021, up from $40 million in 2020. Waldencast had said it was more likely to are available in at around $66 million in 2022, while the hope for 2023 is that net sales will top $100 million.

But without that fourth-quarter report, it’s hard to inform.