10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

for the Quarterly Period Ended

September 30, 2009

Commission File Number: 0-4186

THE SAGEMARK COMPANIES LTD.

(Exact name of registrant as specified in its charter)

13-1948169

(I.R.S. Employer Identification No.)

New York

(State or other jurisdiction of incorporation or organization)

1285 Avenue of the Americas, 35th Floor

New York, New York 10019

(Address of principal executive offices)

212.554.4219

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x  No  ¨

Indicate by checkmark whether the registrant has submitted electronically and posted on its Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).  Yes ¨  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨   Accelerated filer ¨   Non-accelerated filer   ¨  Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 13, 2009
Common Stock, $0.01 par value per share	8,008,261 shares

THE SAGEMARK COMPANIES LTD

TABLE OF CONTENTS

QUARTERLY REPORT FOR PERIOD ENDED SEPTEMBER 30, 2009

PART I-FINANCIAL INFORMATION	3
Item 1. Financial Statements.	3
Consolidated Balance Sheet at September 30, 2009 (Unaudited)	4
Consolidated Statements of Operations for the Nine Months Ended September 30, 2009 and 2008 (Unaudited)	5
Consolidated Statements of Operations for the Three Months Ended September 30, 2009 and 2008 (Unaudited)	6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008 (Unaudited)	7
Notes To Consolidated Financial Statements (Unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	18
Item 4T. Controls and Procedures.	19
PART II-OTHER INFORMATION	21
Item 1. Legal Proceedings.	21
Item 1A. Risk Factors.	21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	21
Item 3. Defaults Upon Senior Securities.	21
Item 4. Submission of Matters to a Vote of Security Holders.	21
Item 5. Other Information.	21
Item 6. Exhibits.	21
SIGNATURES	22

2

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated Financial Statements

As of September 30, 2009

3

Sagemark Companies Ltd. ∙ Form 10-Q

CONSOLIDATED BALANCE SHEETS

	September 30, 2009			December 31, 2008 (A)
ASSETS	(unaudited)			(audited)
Current Assets:
Cash	$	6,000		$	45,000
Other current assets		3,000			3,000
Assets of discontinued operations		-			92,000
TOTAL ASSETS	$	9,000		$	140,000
LIABILITIES AND SHAREHOLDERS DEFICIENCY
Current Liabilities
Accounts payable	$	204,000		$	126,000
Accrued consulting fee - related party		97,000			-
Notes payable and interest  – related parties		297,000			272,000
Liabilities of discontinued operations		3,013,000			2,795,000
Total Current Liabilities		3,611,000			3,193,000
Commitments and Contingencies
Shareholders’ Deficiency:
Preferred stock, par value $1.00 per share (2,962 authorized and outstanding at September 30, 2009 and December 31, 2008)		3,000			3,000
Common stock, par value $0.01 per share (25,000,000 authorized; 8,008,261 shares issued; 8,008,261 and 7,661,503 shares outstanding at September 30, 2009 and December 31, 2008, respectively)		80,000			80,000
Additional paid in capital		71,339,000			73,006,000
Accumulated deficit		(75,164,000	)		(74,598,000	)
Less common stock in Treasury (346,585 shares) at cost		-			(1,686,000	)
Total Company Shareholder’s Deficiency		(3,742,000	)		(3,195,000	)
Noncontrolling Interests		140,000			142,000
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY	$	9,000		$	140,000

The accompanying notes are an integral part of the consolidated financial statements.

(A) Derived from audited financial statements for the year ended December 31, 2008 (see Form 10-K Annual Report filed on April 15, 2009 with the Securities and Exchange Commission).

4

Sagemark Companies Ltd. ∙ Form 10-Q

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

NINE MONTHS ENDED SEPTEMBER 30,	2009			2008
Revenues
Sublease income	$	-		$	80,000
Operating Expenses
General and administrative expenses		263,000			1,326,000
Legal fees – related party		140,000			130,000
Total Operating Expenses		403,000			1,456,000
Loss from Operations		(403,000	)		(1,376,000	)
Gain (loss) on sale of unconsolidated affiliate		-			102,000
Other expense, net		(22,000	)		(39,000	)
Loss from continuing operations		(425,000	)		(1,313,000	)
Loss from discontinued operations		(141,000	)		(5,337,000	)
Gain on disposal of discontinued operations		-			4,274,000
Net Loss		(566,000	)		(2,376,000	)
Less: Net Loss attributable to noncontrolling interest		(2,000	)		(127,000	)
Net Loss attributable to the Company	$	(564,000	)	$	(2,223,000	)
Basic and Diluted Loss Per Common Share
Loss from continuing operations	$	(0.05	)	$	(0.17	)
Loss from discontinued operations		(0.02	)		(0.70	)
Gain on disposal of discontinued operations		-			0.56
Loss Per Common Share	$	(0.07	)	$	(0.31	)
Weighted Average Number of Common Shares		7,877,433			7,661,503

The accompanying notes are an integral part of the consolidated financial statements.

5

Sagemark Companies Ltd. ∙ Form 10-Q

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

THREE MONTHS ENDED SEPTEMBER 30,	2009			2008
Revenues:
Sublease income		-		$	9,000
Operating Expenses
General and administrative expenses	$	95,000		$	300,000
Legal fees – related party		96,000			39,000
Total Operating Expenses		191,000			339,000
Loss from Operations		(191,000	)		(330,000	)
Other expense, net		(6,000	)		(10,000	)
Loss from continuing operations		(197,000	)		(340,000	)
Loss from discontinued operations		(45,000	)		(858,000	)
Gain on disposal of discontinued operations		-			1,169,000
Net Loss		(242,000	)		(29,000	)
Less: Net Loss attributable to noncontrolling interest		-			(2,000	)
Net Loss attributable to the Company	$	(242,000	)	$	(27,000	)
Basic and Diluted Loss Per Common Share
Loss from continuing operations	$	(0.02	)	$	(0.04	)
Loss from discontinued operations		(0.01	)		(0.11	)
Gain on disposal of discontinued operations		-			0.15
Loss Per Common Share	$	(0.03	)	$	-
Weighted Average Number of Common Shares		8,008,261			7,661,503

The accompanying notes are an integral part of the consolidated financial statements

6

Sagemark Companies Ltd. ∙ Form 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

FOR THE NINE MONTHS ENDED SEPTEMBER 30	2009			2008
Cash Flows - Operating Activities
Loss from continuing operations attributable to the Company	$	(425,000	)	$	(1,131,000	)
Adjustments to reconcile net loss to net cash - Operating Activities:
Depreciation and amortization		-			11,000
Stock-based compensation (officer, directors and employees)		19,000			158,000
Loss on sale of marketable securities		2,000			(2,000	)
Share of loss of unconsolidated affiliates		-			(29,000	)
Gain on sale of unconsolidated affiliate		-			(102,000	)
Loss on disposal of fixed assets		-			35,000
Change in assets and liabilities:
Other current assets		-			(12,000	)
Accounts payable		78,000			7,000
Accrued consulting fee – related party		97,000			-
Accrued Interest, note payable		20,000			-
Net Cash - Operating Activities		(209,000	)		(1,189,000	)
Cash Flows - Investing Activities
Net proceeds from disposal of segments		-			1,445,468
Proceeds from sale of unconsolidated affiliate		-			3,000
Refund (payment of equipment deposits)		-			105,000
Change in net assets of discontinued operations		165,000			(509,468	)
Net Cash - Investing Activities		165,000			(1,044,000	)
Cash Flows - Financing Activities
Distributions to minority interest investors		-			(39,000	)
Proceeds from notes payable – related party		5,000			-
Net Cash - Financing Activities		5,000			(39,000	)
Net (decrease) in Cash		(39,000	)		(184,000	)
Cash - Beginning of Period		45,000			202,000
Cash - End of Period	$	6,000		$	18,000
Supplemental Disclosure of Cash Flow Information
Interest Paid	$	-		$	-
Taxes Paid	$	-		$	2,000

The accompanying notes are an integral part of the consolidated financial statements.

7

Sagemark Companies Ltd. ∙ Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation SX. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the interim financial information not misleading have been included and all such adjustments are of a normal recurring nature. The operating results for the three and nine months ended September 30, 2009 are not necessarily indicative of the results that can be expected for the year ending December 31, 2009.

The balance sheet as of December 31, 2008 has been derived from the audited financial statements at such date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The accounting policies followed by The Sagemark Companies Ltd. (the “Company”) are set forth in Note 2 to the Company’s consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2008.

For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

Note 2 – Going Concern

The accompanying consolidated interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern.

From 2001 to 2008, we owned, operated and/or managed out-patient medical diagnostic imaging centers that offered positron emission tomography (“PET”) and/or PET and computed tomography (“CT”) imaging equipment, collectively referred to as PET/CT.  At the end of the first quarter of 2008 we discontinued operations of all but one of our PET imaging centers and as of the end of the second quarter of 2008 had discontinued all of such operations and thereafter addressed all of our efforts toward resolution of our significant debt and obligations.

As of September 30, 2009, we have no operations that generate revenue, over $3,600,000 of liabilities, and insufficient assets to satisfy any of such obligations.  We do not have sufficient working capital to satisfy our obligations to any of our creditors.  These factors raise substantial doubt about our ability to continue as a going concern.

8

Potential Bankruptcy

We are continuing to seek relief from our secured and unsecured creditors and relief of our obligations under two remaining premises leases; however, there can be no assurance that we will be successful in our efforts. If we are unable to obtain relief on our remaining secured and unsecured obligations and remaining lease obligations, we may be required to seek protection under available bankruptcy laws. The consolidated interim financial statements do not include any adjustments relating to the amounts and classification of assets and liabilities that might be necessary in the event we cannot continue in existence and/or are liquidated.

Note 3 – Significant Accounting Policies

The preparation of the consolidated interim financial statements in conformity with accounting principles generally accepted in the United States requires us to make assumptions, estimates and judgments that affect the amounts reported in these consolidated interim financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any.  We rely on historical experience and on other assumptions believed to be reasonable under the circumstances in making required judgments and estimates.  Actual results could differ materially from those estimates.  The significant accounting policies which we believe are most critical to aid in fully understanding or evaluating our reported financial results are set forth in Note 2 included in our Annual Report for 2008.

Reclassification of Prior Period Financial Information

As a result of discontinuation of our business operations in 2008, the consolidated financial statements and other financial information presented for all reporting periods were reclassified to report such discontinued operations.

Note 4 – Basic and Diluted Loss Per Share

Basic loss per share reflects the amount of loss for the period available to each share of common stock outstanding during the reporting period. Diluted loss per share reflects the basic loss per share, while giving effect to all dilutive potential common shares that were outstanding during the period, such as common shares that could result from the potential exercise or conversion of securities (options or warrants) into common stock.

The computation of diluted loss per share does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on loss per share (i.e. reducing loss per share). The dilutive effect of outstanding options and warrants and their equivalents are reflected in dilutive earnings per share by the application of the treasury stock method which recognizes the use of proceeds that could be obtained upon the exercise of options and warrants in computing diluted earnings per share. It assumes that any proceeds would be used to purchase common stock at the average market price of the common stock during the period.

As of September 30, 2009, we have reserved 5,860,625 shares of common stock for issuance pursuant to outstanding options and warrants comprised of: (i) options and warrants issued pursuant to our 1999 long-term incentive plan to purchase up to an aggregate of 1,315,000 shares of our common stock at exercise prices ranging from $.14 to $3.91 per share; (ii) warrants issued to private placement investors to purchase up to 1,940,625 shares of common stock for $4 per share; (iii) warrants issued to a placement agent to purchase up to 945,000 shares of common stock for $2.00 per share; (iv) a warrant issued to a consultant to purchase 60,000 shares of common stock for $4.00 per share; and two warrants issued to two officers of the Company to purchase up to 1,600,000 shares of common stock at an exercise price of $0.01 per share. These outstanding options and warrants may dilute earnings per share in the future.

9

Note 5 – Stock-Based Compensation

We recognize the expense of options or similar instruments issued to employees using the fair-value-based method of accounting for stock-based payments in compliance with ASC 718 Compensation – Stock Compensation.  The Company’s stock-based compensation amounted to $19,000 and $158,000 for the nine months ended September 30, 2009 and 2008, respectively.  There was no such expense in the three month periods ended September 30, 2009 and 2008, respectively.  As of September 30, 2009, there was no unrecognized compensation cost related to non-vested stock-based compensation arrangements granted to employees.

Note 6 – Concentration of Credit Risk

As of September 30, 2009, all of our cash is placed with high credit, quality financial institutions and we had no cash balances in excess of federally insured limits.

Note 7 – Investments in Unconsolidated Affiliates

Through Premier Oncology, Inc., our wholly-owned subsidiary, in 2007 we acquired a 24.5% ownership interest in Premier Oncology Management of Nassau, LLC, an entity that was developing a radiation therapy cancer treatment center in Great Neck, New York. We disposed of such asset in April 2008 and since such date we have had no investments related to an unconsolidated affiliate.

Note 8 – Commitments and Contingencies

Legal Proceedings

In the normal course of business, we may become subject to lawsuits and other claims and proceedings. Such matters are subject to uncertainty and outcomes are not predictable with assurance. Management is not aware of any pending or threatened lawsuits or proceedings which would have a material effect on our financial position, liquidity, or results of operations other than as follows:

On September 26, 2008, we commenced an action against Azad K. Anand, MD and a number of entities owned and/or controlled by him (collectively, the “Anand Defendants”) in the Supreme Court, State of New York, County of New York (the “Action”). The Action seeks damages against the Anand Defendants for various breaches and defaults of a number of different agreements between the parties relating to the operations of our PET imaging center in East Setauket, New York, as well as certain allegedly improper actions and omissions of the Anand Defendants in connection therewith.  We are currently in the discovery phase of the Action. There can be no assurance as to the outcome of the Action.

Default on Limited Guarantee

On April 1, 2009 we received a notice advising the Company that the purchaser of our interest in P.E.T. Management of Queens, LLC failed to make certain payments to a secured equipment lender when due, that the current amount past due thereunder was $122,454 and that unless such default was cured by April 15, 2009, the lender would exercise its rights to accelerate the balance due of a maximum amount of approximately $1,600,000 and seek to recover from the Company the $1,000,000 due under the Limited Guaranty.  Upon receipt thereof, we advised the lender that we did not have the ability to cure such default, nor satisfy the Limited Guaranty if such Limited Guaranty was pursued by the lender.

10

Although the default was not cured by April 15, 2009, nor has it been cured as of the date of this Report, we have not received any further notice from the lender in connection with this matter.  However, we have become aware that in an action brought by the lender against the purchaser of our interest in P.E.T. Management of Queens, LLC, a court order was signed on July 20, 2009 granting the secured equipment lender authority to seize the secured collateral.  The Company was not named as a defendant in such action.

Although the purchaser of our interest in P.E.T. Management of Queens, LLC agreed to indemnify the Company for the amount of our Limited Guaranty as a condition of the February 2008 sale transaction, as such instrument remains in default as of the date of this Report, the full amount of the Limited Guaranty ($1,000,000) has been included on the Company’s consolidated balance sheet under liabilities of discontinued operations.

Note 9 – Transactions with Related Parties

General Counsel

We incur legal fees for services provided to us by Robert L. Blessey, Esq.  Mr. Blessey is our General Counsel, our Secretary and served on our Board of Directors from May 1, 2001 until July 2, 2007. As of September 30, 2009 we owe Mr. Blessey approximately $376,000, which includes a $272,000 promissory note we issued to him in July 2007 for prior legal services rendered by him to the Company.

In 2008, we defaulted on our obligations under the note, and in consideration for his continued forbearance, in 2008 we granted Mr. Blessey a security interest in our assets and the assets of Premier P.E.T. Imaging International, Inc., our wholly-owned subsidiary.

We have remained in default of such note since 2008, and on April 10, 2009, in further consideration of, among other things, Mr. Blessey’s agreement to defer payment due and his agreement to extend the maturity date of his promissory note, we issued Mr. Blessey a warrant to purchase up to 1,000,000 shares of the Company’s common stock, which vested upon issuance and which was immediately exercisable.  The warrant has a term of five years and an exercise price of $0.01 per share, such price representing the price per share of our common stock on the date the warrant was issued.  The warrant contains certain anti-dilution and piggy-back registration rights.  The Company assigned these warrants a fair market value of $10,000 and recorded such amount as stock-based compensation during the second quarter 2009.

Additionally, on May 22, 2009, in further consideration of Mr. Blessey’s agreement to forbear from enforcing his rights under such note, we entered into a forbearance agreement with Mr. Blessey that provides for, among other things, confirmation of the Company’s obligation to pay the amounts due to him under the note, and an agreement to accrue interest on such note at a rate of 10% per annum beginning as of January 1, 2009 and, to the extent that funds are available, pay such interest as incurred.  In the nine month period ended September 30, 2009, we accrued approximately $20,000 of interest on such note.

11

Chief Executive Officer

On April 10, 2009 we issued to Cathy Bergman, our Chief Executive Officer, a warrant to purchase up to 600,000 shares of the Company’s common stock at $0.01 per share, such exercise price representing the market price per share of our common stock on the date the warrant was issued.  The warrant has a term of five years and contains certain anti-dilution and piggy-back registration rights.  The warrant vests and is exercisable as follows:  the right to purchase up to 250,000 shares of the Company’s common stock at issuance; the right to purchase up to 250,000 shares of the Company’s common stock when the Company resolves certain debt, and the right to purchase up to 100,000 share of the Company’s common stock when the Company’s outstanding indebtedness has been reduced to an aggregate of $500,000 or less.  The Company assigned these warrants a fair market value of $5,500 and recorded such amount as stock-based compensation during the second quarter 2009.

Additionally, on April 10, 2009, in connection with certain administrative tasks and responsibilities performed for the Company by Taggart Resource Group, Ltd., an entity owned by Ms. Bergman (Taggart), we entered into an agreement with Taggart, pursuant to which we agreed to pay Taggart a monthly fee of $15,000, beginning as of December 1, 2008. To the extent that funds are available, $5,000 of such fee is to be paid each month, and $10,000 is to be accrued until such time, if ever, that the Company has such available funds, and, regardless, the Company agreed that such fee will become due and payable in full if there is a change in control of the Company or if Ms. Bergman is removed as Chief Executive Officer or is no longer the Company’s sole Director, as well as other terms and conditions related to the termination of the agreement.  As of September 30, 2009, we have accrued $97,000 of unpaid fees related to such agreement.

On April 13, 2009, the Company issued the 346,585 shares of its common stock in its treasury to Ms. Bergman at $0.01 per share, the then market price per share of our common stock.  The issuance of these shares offset a portion of the outstanding amount due to Ms. Bergman.

During the three month period ended September 30, 2009, the Company borrowed $5,000 from Ms. Bergman to meet on-going operational expenses.  Such amount bears interest at a rate of 5% and is due on demand.

Note 10 – Disclosure of Discontinued Operations

In 2008 we discontinued all of our PET and PET/CT imaging operations. The following tables provide information regarding such former operations as of September 30, 2009 and December 31, 2008 and the related summary of discontinued operations for the three and nine months ended September 30, 2009 and 2008.

Net Liabilities of Discontinued Operations

	September 30, 2009			December 31, 2008
Assets:
Cash	$	-		$	17,000
Management fees receivable - related parties		-			75,000
Assets to be disposed		-			92,000
Liabilities:
Accounts payable		264,000			179,000
Judgments and liens		1,749,000			1,616,000
Limited Guaranty Default		1,000,000			1,000,000
Liabilities to be disposed		3,013,000			2,795,000
Net liabilities to be disposed	$	(3,013,000	)	$	(2,703,000	)

12

	2009			2008
For the nine months ended September 30
Revenues:
Management fee revenues - related parties	$	63,000		$	1,037,000
Net patient service revenue		-			136,000
Lease revenue		-			198,000
Total revenues		63,000			1,371,000
Operating expenses:
Patient service costs and expenses		-			341,000
Equipment maintenance		-			208,000
Salaries, payroll taxes and fringe benefits		-			274,000
Professional fees		-			206,000
General and administrative expenses		97,000			1,207,000
Liability for judgments		-			1,526,000
Impairment of fixed assets		-			1,688,000
Depreciation and amortization		-			673,000
Total operating expenses		97,000			6,123,000
Loss from operations		(34,000	)		(4,752,000	)
Interest expense		(132,000	)		(586,000	)
Other income (expense), net		25,000			1,000
Net Loss		(141,000	)		(5,337,000	)
Less: net income attributable to noncontrolling interest		(2,000	)		(163,000	)
Loss from discontinued operations attributable to the Company	$	(139,000	)	$	(5,174,000	)

13

	2009			2008
For the three months ended September 30
Revenues:
Management fee revenues (adjustments)	$	2,000		$	-
Net patient service revenue (contractual adjustments)		-			(18,000	)
Total revenues		2,000			(18,000	)
Operating expenses:
Salaries, payroll taxes and fringe benefits		-			7,000
Professional fees		-			57,000
General and administrative expenses		8,000			606,000
Depreciation and amortization		-			1,000
Total operating expenses		-8,000			671,000
Income (Loss) from operations		(8,000	)		(689,000	)
Interest expense		(44,000	)		(174,000	)
Other income (expense), net		7,000			5,000
Net Loss		(45,000	)		(858,000	)
Less: net income attributable to noncontrolling interest		-			(36,000	)
Loss from discontinued operations attributable to the Company	$	(45,000	)	$	(858,000	)

Note 11 – New Accounting Updates

On June 29, 2009, the FASB issued an accounting pronouncement establishing the FASB Accounting Standards Codification (the “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities.  This pronouncement was effective for financial statements issued for interim and annual periods ending after September 15, 2009, for most entities.  On the effective date, all non-SEC accounting and reporting standards will be  superseded.  The Company adopted this new accounting pronouncement for the three month period ended September 30, 2009, as required, the adoption of which did not have a material impact on our financial statements taken as a whole.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS 165), which was subsequently incorporated into FASB ASC topic 855 “Subsequent Events.”  This ASC establishes accounting standards for recognition and disclosure of events that occur after the balance sheet date but before financial statements are issued. These standards are essentially similar to current accounting principles with few exceptions that do not result in a change in general practice. This SFAS is effective on a prospective basis for interim or annual financial periods ending after June 15, 2009. We adopted this pronouncement effective June 30, 2009, the adoption of which did not have a material effect on our consolidated financial position, results of operations or cash flows. We have evaluated subsequent events through November 13, 2009, the date the consolidated financial statements were issued, and do not believe that there were any material subsequent events that required disclosure.

14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Description of the Company

As of September 30, 2009, The Sagemark Companies Ltd. does not have any business operations other than administrative operations related to shareholder, creditor and tax matters.

From 2001 to 2008, we owned, operated and/or managed out-patient medical diagnostic imaging centers that offered positron emission tomography (PET) and PET and computed tomography (CT) imaging (PET/CT), a medical imaging procedure used by physicians in the diagnosis, staging and treatment of cancers and other illness and disease.  As of January 2008 we owned or operated eight PET imaging centers.  However, as more fully described below, we were unable to financially sustain such operations and all of such operations ceased on or before June 30, 2008.

Additionally, from 2006 to 2008, we had been involved in the development of a number of radiation therapy facilities, prior to discontinuing all of such efforts in early 2008.

Background of Discontinued Operations

Beginning in 2001 we focused our efforts on the development of out-patient medical diagnostic imaging centers that offered PET and PET/CT imaging services.  Although we had developed and were operating eight such facilities as of January 2008, we continued to incur significant operating losses from such operations.  With the adoption of the Deficit Reduction Act (DRA) that significantly reduced insurance reimbursement rates for PET, PET/CT and CT procedures performed at our imaging centers, related legislation against self-referral for stand alone imaging centers, the increased scrutiny of third party insurers in the preauthorization processes, loss of market share to competitors with more advanced equipment in a number of markets, among other issues, our ability to generate revenue from our PET imaging centers was not sufficient to support our debt obligations, on-going operations and corporate overhead.

Additionally, our significant debt obligations from the development of our PET imaging centers and continued operating losses from these facilities were an impediment to efforts to obtain the capital required to support our on-going PET imaging center operations and further our radiation therapy ventures that we had embarked upon in 2006.

In July 2007 we restructured our management in connection with our attempt to raise much needed capital to continue operations.  However by January 2008, after review of our deteriorating financial condition and meetings and discussions with senior management and independent counsel, our Board of Directors determined that it was in our best interest and that of our shareholders and creditors to seek a divestiture of our PET imaging centers and our radiation therapy ventures in an attempt to satisfy our significant debt obligations.  Such decision was ratified by our Board on February 6, 2008.   At such time, secured debt and guarantees were $17,400,000, $12,900,000 of which related to our PET imaging operations and $4,500,000 of which were guarantees of debt related to our radiation therapy ventures.

We immediately commenced negotiations with various parties, some related, regarding the divestiture of our PET imaging centers.  In February 2008 we sold our equity interests in two management companies that managed PET imaging centers located in Rockville Centre and Forest Hills, New York to two entities owned or controlled by an individual who was a former employee and marketing consultant.

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We were unable to find buyers for our remaining six PET imaging centers and PET imaging management companies and, unable to continue to support on-going operations, in the first quarter 2008, we began the process of terminating the operations of all of our remaining PET imaging centers, five of which we closed on or before March 31, 2008 and the remaining one we closed on June 30, 2008.  The PET imaging equipment at the six remaining centers were either repossessed by secured equipment lenders or sold in connection with foreclosure actions.

Additionally, we discontinued our efforts to develop radiation therapy operations and disposed of our two radiation therapy ventures in April 2008.

In April 2008, our Board of Directors and our President and Chief Executive Officer that had been installed in July 2007, resigned.  At such time, our Chief Financial Officer agreed to also serve as the Chief Executive Officer and sole member of the Board of Directors.  Corporate support staff was reduced significantly to a core of a few individuals key to the settlement of the Company’s debts and termination of its obligations.

Although during 2008 the Company significantly reduced its debt and its operating expenses, by mid-November 2008 the Company no longer had the financial resources to continue to operate its corporate headquarters in Boca Raton, Florida, or pay its limited staff.  Management determined that it was in the best interest of its shareholders and its creditors to close its corporate operations, other than limited administrative activities.  At that time, the individual serving as the Company’s Chief Executive Officer, Chief Financial Officer and sole member of the Board of Directors resigned, the remaining staff was terminated and we closed our corporate offices in Boca Raton, Florida at the end of November 2008.  The majority of our books and records were placed in long term storage and a former consultant agreed to serve as our Chief Executive Officer and sole member of the Board of Directors to continue to address our various creditor issues and administer limited corporate and shareholder matters.

As of the date of this Report we have no employees. We have one member of the Board of Directors who also serves as the Company’s Chief Executive Officer and interim Chief Financial Officer, and a corporate Secretary, neither of whom receive a salary for their service in such capacities.

Financial Condition – Liquidity and Capital Resources

As detailed elsewhere in this Report, during 2008 we terminated our PET imaging operations as well as the development of our radiation therapy initiatives.  All of our medical diagnostic imaging equipment was either sold or repossessed by the equipment lenders.  In November 2008, unable to pay our continuing operating expenses, we closed our corporate office in Boca Raton, Florida and terminated all of our employees.

At September 30, 2009, we have approximately $3,600,000 of current liabilities and no current operations that generate revenue.  We do not have sufficient working capital to satisfy our obligations to any of our creditors.  These factors, among others, raise substantial doubt about our ability to continue as a going concern.

Results of Operations

As of September 30, 2009 we do not have any significant operations, other than administrative operations related to shareholder and creditor related issues.

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The following discusses and compares the results of our operations for the three and nine month periods ended September 30, 2009 as compared to the three and nine month periods ended September 30, 2008.

For the three months ended September 30, 2009, we incurred a net loss attributable to the Company of $242,000, as compared to a net loss of $27,000 in the same period in 2008.   For the nine months ended September 30, 2009, we incurred a net loss attributable to the Company of $564,000, as compared to a net loss of $2,223,000 in the same period in 2008.  The significant difference in the comparative periods is the result of the sale or termination of our PET imaging center operations during the course of the first and second quarters of 2008.

Revenues

Our prior revenue sources were net patient service revenue from the PET imaging centers which we owned, management fees from the PET imaging centers which we managed pursuant to services agreements, and lease revenue from PET imaging centers where we leased time on the PET/CT equipment to physician groups.  All of such operations were discontinued on or before June 2008.  We currently do not have any operations that generate revenue.

Total revenue from discontinued operations in the three and nine months ended September 30, 2009 was $2,000 and $63,000 respectively.  Revenue from discontinued operations is the result of collection of management fees from prior periods which were previously written-off and not the result of any current management activities.

Comparatively, in 2008, total revenue from discontinued operations was $18,000 and $1,037,000 for the three and nine month period ended September 30, 2008, respectively.  We ceased operations of all but one of our PET imaging centers as of March 31, 2008, and our last remaining center closed as of June 30, 2008.  Revenue from discontinued operations is the result of collection of patient service revenue and management fees generated in the prior periods of operation.

The significant difference in the 2009 and 2008 comparative periods is the result of the sale or termination of our PET imaging center operations in 2008.

Operating Expenses

Total operating expenses in the three and nine month periods ended September 30, 2009 was $191,000, and $403,000 respectively.  Of such amounts, all but $97,000 of the operating expenses in the three  months ended September 30, 2009 were from general and administrative expenses relating to continuing operations and all but $8,000 of such expenses in the nine month period were from general and administrative expenses relating to continuing operations.

Comparatively, in the three and nine month periods ended September 30, 2008, total operating expenses were $339,000 and $1,456,000, respectively.   Expenses decreased significantly in 2009 as all of our PET imaging operations were terminated during the first half of 2008.

Interest Expense

Total interest expense in the three and nine months ended September 30, 2009 was $52,000 and $157,000 respectively.  Of such amount, $8,000 was attributable to continuing operations in the three month period ended September 30, 2009 and $20,000 was attributable to continuing operations in the nine month period ended September 30, 2009.  The interest related to continuing operations is interest accruing on a promissory note in the amount of $272,000 due to a related party on which we have defaulted and with whom we entered into a forbearance agreement on May 22, 2009.

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The interest of discontinued operations is interest accruing on a default judgment that was granted in July 2008 relating to a premise lease for space in a building that we never occupied and was $44,000 and $132,000 respectively in the three and nine months ended September 30, 2009.

In the comparative periods in 2008, interest expense was $174,000 in the three month period ended September 30, 2008 and $586,000 in the nine month period, all of which related to discontinued operations, and almost all of which was attributable to interest on capitalized lease obligations on our PET and PET/CT imaging equipment.  The reduction in interest costs in the current period were principally due to the termination and settlement of all of the Company’s capitalized leases for its PET and PET/CT imaging equipment, and the termination of other various debt instruments that were related to its PET imaging operations, all of which previously accrued interest.

Other

Our two radiation therapy ventures, both of which were disposed of in 2008, had not become operational at the time of our disposal and had not generated any revenue.

Outlook

As of September 30, 2009 we do not have any operations other than limited administrative, shareholder and creditor related activities.  We have no operations that generate revenue.

Until such time, if ever, that we resolve our remaining obligations to our secured and unsecured creditors, substantially all of our efforts will be spent addressing such matters. If we are able to continue as an active company after we resolve our obligations with our creditors we anticipate that we would seek a new business venture. Our plans could change significantly in the near term as new events transpire. There can be no assurances that we will be able to accomplish any of our objectives or that we will be able to continue in existence as an active corporation and we may be required to seek protection under available bankruptcy laws.

Special Note Regarding Forward Looking Statements

Certain matters discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other sections of this Quarterly Report, contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. This section is qualified in its entirety by the more detailed information, including our financial statements and the notes thereto, which appear elsewhere in this Report. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

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Item 4T. Controls and Procedures.

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management, including the individual who is both our Chief Executive Officer and interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 15d-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

At the end of the period covered by this quarterly Report, we carried out, under the supervision and with the participation of our management, including the individual who is both our Chief Executive Officer and interim Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures to insure that information required to be disclosed by us in this Report was recorded, processed, summarized and reported within the required time periods. In carrying out that evaluation, management identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our internal control over financial reporting regarding a lack of adequate segregation of duties.  Accordingly, based on evaluation of our disclosure controls and procedures as of September 30, 2009, we have concluded that, as of that date, our controls and procedures were not effective for the purposes described above.

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the period ended September 30, 2009 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. We have assessed the effectiveness of those internal controls as of September 30, 2009, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – Integrated Framework as a basis for our assessment.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that are intended to:

1.           Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

2.           Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

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3.           Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect all misstatements, no matter how well designed.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or detected.  In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified a material weakness in our internal control over financial reporting.  This material weakness consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of our company.  The relatively small number of individuals who have bookkeeping and accounting functions prevents us from segregating duties within our internal control system.  The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.

As we are not aware of any instance in which we failed to identify or resolve a disclosure matter or failed to perform a timely and effective review, we determined that the addition of personnel to our bookkeeping and accounting operations is not an efficient use of our very limited resources at this time and not in the interest of our shareholders.  If at some time in the future the Company has the financial resources to do so, it will remedy this material weakness.

This Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Report.

The foregoing Report shall not be deemed to be filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.

Changes in Internal Control Over Financial Reporting

There were no changes in internal controls over financial reporting that occurred during the quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

In the normal course of business, we may become subject to lawsuits and other claims and proceedings. Such matters are subject to uncertainty and outcomes are not predictable with assurance. Management is not aware of any pending or threatened lawsuits or proceedings which would have a material effect on our financial position, liquidity, or results of operations other than as follows:

On September 26, 2008, we commenced an action (the “Action”) against Azad K. Anand, MD and a number of entities owned and/or controlled by him (collectively, the “Anand Defendants”). The Action seeks damages against the Anand Defendants for various breaches and defaults of a number of different agreements between the parties relating to the operations of the PET imaging center we managed in East Setauket, New York, as well as certain allegedly improper actions and omissions of the Anand Defendants in connection therewith.  As of the date of this Report we are currently in the discovery phase of the Action.  There can be no assurance as to the outcome of the Action.

Item 1A. Risk Factors.

For information regarding factors that could affect the Company’s results of operations, financial condition or liquidity, see the risk factors discussed under “Description of Business” in Item 1 of the Company’s most recent Annual Report on Form 10-K. There have been no material changes from the risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the period ended September 30, 2009.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

We did not submit any matter to a vote of our stockholders during the period ended September 30, 2009.

Item 5. Other Information.

None.

Item 6. Exhibits.

31.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE SAGEMARK COMPANIES LTD.
Date		Signature
November 16, 2009		/S/ CATHY BERGMAN
		Cathy Bergman, Chief Executive Officer,
		Interim Chief Financial Officer
		(principal executive and financial officer) and Director

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Cathy Bergman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Sagemark Companies Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 16, 2009

/S/ CATHY BERGMAN

Cathy Bergman, Chief Executive Officer

and interim Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of The Sagemark Companies Ltd., a New York corporation (the “Company”), on Form 10-Q for the quarter ended September 30, 2009, as filed with the Securities and Exchange Commission (the “Report”), Cathy Bergman, Chief Executive Officer and interim Chief Financial Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and result of operations of the Company.

November 16, 2009

/S/ CATHY BERGMAN

Cathy Bergman, Chief Executive Officer

and interim Chief Financial Officer

[A signed original of this written statement required by Section 906 has been provided to The Sagemark Companies Ltd. and will be retained by The Sagemark Companies Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.]