10-K 1 v307494_10k.htm FORM 10-K

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 2011

Commission file Number 0-4186

THE SAGEMARK COMPANIES LTD.

(Name of small business issuer as specified in its charter)

New York	13-1948169
(State of incorporation)	(IRS Employer Identification Number)

1221 Avenue of the Americas, Suite 4200
New York, NY 10020
(Address of principal executive offices)

Issuer’s telephone number, including area code: 212.921.5733

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, par value $0.01 per share

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act ¨

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 þ No ¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. 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 þ

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

The issuer’s revenue for the fiscal year ended December 31, 2011 was $0.

The aggregate market value of the common equity held by non-affiliates of the issuer as of March 23, 2012 was approximately $191,500 computed on the basis of a closing price of $0.025 per share on such date of the issuer’s common stock as reported on the National Association of Securities Dealers, Inc.’s Over the Counter Bulletin Board.

As of March 30, 2012 there were 8,008,261 shares of the Company’s par value $0.01 common stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes þ No ¨

TABLE OF CONTENTS

The Sagemark Companies Ltd. ∙ Form 10K

PART I		3

Item 1.	Description of Business.	3
Item 1a	Risk Factors	4
Item 1B.	Unresolved Staff Comments	9
Item 2.	Description of Property.	9
Item 3.	Legal Proceedings.	9
Item 4.	Submission of Matters to a Vote of Security Holders.	9

PART II		10

Item 5	Market For Common Equity And Related Stockholder Matters	10
Item 6.	selected financial information.	10
Item 8.	Financial Information.	13
	- Report of Independent Registered Public Accounting Firm
	- Audited Financial Statements:
	- Consolidated Balance Sheets at December 31, 2011 and 2010
	- Consolidated Statements of Operations for the years ended December 31, 2011 and 2010
	- Consolidated Statements of Shareholders' Deficiency for the years ended December 31, 2011 and 2010
	- Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010
	- Notes to Consolidated Financial Statements
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.	26
Item 9A.	Controls and Procedures.	26
Item 9B.	Other Information.	27

PART III		28

Item 10.	Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(A) Of The Exch ange Act	28
Item 11.	Executive Compensation.	31
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	30
Item 13.	Certain Relationships and Related Transactions	31
Item 14.	Principal Accountant Fees and Services	32

PART IV		32

Item 15.	Exhibits	32

SIGNATURES		33

PART I

Item 1. Description of Business

Description of the Company

As of December 31, 2011, the Sagemark Companies Ltd. did not have any business operations other than administrative operations related to shareholder, creditor and tax matters.

As used in this report, unless otherwise required by the context, The Sagemark Companies Ltd. and its subsidiaries are sometimes collectively referred to as the "Company" or "Sagemark", or are implicit in the terms "we", "us" and "our".

Discontinued Operations

In 2008 we sold or discontinued the operations of all of our out-patient medical diagnostic imaging centers that offered positron emission tomography (“PET”) and PET and computed tomography (“CT”) imaging (“PET/CT”) services. Such operations consisted of eight such facilities located in New York, New Jersey, Florida and Kansas.

Employees

We have no employees.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, 59 Maiden Lane, New York, New York 10038.

Additional Information

Reports Filed with the Securities and Exchange Commission

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, in accordance therewith, file reports, proxy and information statements and other information with the Securities and Exchange Commission (the “SEC”).

All reports filed by us with the SEC are available free of charge via EDGAR through the SEC web site at www.sec.gov. In addition, the public may read and copy materials we file with the SEC at the public reference facilities maintained by the SEC at its public reference room located at 100 F Street, N.E. Washington, D.C. 20549. We will also provide copies of such material to investors upon written request.

No person has been authorized to give any information or to make any representation other than as contained or incorporated by reference in this Annual Report and, if given or made, such information or representation must not be relied upon as having been authorized by us.

Risk Factors

You should carefully review and consider the following risks, as well as all other information contained in this Annual Report or incorporated herein by reference, including our consolidated financial statements and the notes to those statements, before you decide to purchase any shares of our common stock. The following risks and uncertainties are not the only ones facing us. Additional risks and uncertainties of which we are currently unaware or which we believe are not material could also nevertheless materially adversely affect our business, financial condition, results of operations, or cash flows. In any case, the value of the shares of our common stock could decline and you could lose all or a portion of your investment in such shares. To the extent any of the information contained in this Annual Report constitutes forward-looking statements or information, the risk factors set forth below must be considered cautionary statements identifying important factors that could cause our actual results for various financial reporting periods to differ materially from those expressed in any forward-looking statements made by or on our behalf and could materially adversely affect our financial condition, results of operations or cash flows. See also, “Statement Regarding Forward-Looking Statements” in Item 7.

Item 1A. Risks Related to Our Current Financial Condition

We have discontinued substantially all of our operating activities.

Our limited operations in 2011 consisted of administrative tasks related to shareholder and creditor issues relating to our discontinued operations. During 2008 we sold or closed all our PET imaging centers and sold or terminated our radiation therapy projects that were in development. We do not currently have a plan for any future operations. Until such time as we develop a new business, if ever, our revenues, if any, will not be significant. The capital requirements associated with developing a new business will be substantial and will require additional outside financing. There can be no assurance that we will be able to continue as an active corporation.

We have a history of losses from continuing operations and do not have sufficient working capital, are in default on all of our debt obligations, and may seek protection under available bankruptcy laws.

Our liabilities at December 31, 2011 approximate $4.3 million, as compared to approximately $3.6 million at December 31, 2010. We do not have sufficient capital to satisfy any such debt or obligations.

Our financial distress and significant obligations raise substantial doubt about our ability to continue our operations and our efforts to restructure our business. If we are unable to resolve outstanding creditor claims, we may have no other alternative than to seek protection under available bankruptcy laws.

The loss of our executive officers or key personnel would adversely affect our business.

Our ability to restructure our business will be dependent on the services of our current executive officers. If we are unable to compensate our existing or future executives, we may lack the required leadership to restructure our business.

A successful liability claim against us would harm our business.

Prior to the discontinuation of the operation of our PET imaging centers, we maintained commercial general liability insurance in the amount of $1 million per incident and $2 million in the aggregate, excess liability insurance in the amount of $5 million per incident and in the aggregate, and medical professional liability insurance in the amount of $3 million per incident and $10 million in the aggregate. At an annual cost of approximately $473,000 we were unable to maintain such coverage, and all of such coverage was cancelled when we terminated our PET imaging operations in 2008.

While we have not been subjected to any claims to date, we do not know if any claims may be asserted against us in the future arising from the use of the PET imaging systems at our PET imaging centers. We will be unable to defend any such claim and a successful claim against could materially harm us.

Risks Related to our Securities and Capital Structure

We are not in compliance with rules requiring the adoption of certain corporate governance measures. This may result in shareholders having limited protections against interested director transactions, conflicts of interest and similar matters.

The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC and the NASDAQ Stock Market as a result of Sarbanes-Oxley requires the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets. Some of these new requirements are reflected in the NASDAQ listing requirements some of which we have not yet adopted due to limited personnel and funds. As we only have one member of our Board of Directors, we are not in compliance with the requirement relating to maintain an audit committee consisting of all independent Board members and the requirement to have independent members on the Board of Directors. We have not established a Compensation Committee. We are not yet in compliance with requirements relating to the distribution to shareholders of annual and interim reports, solicitation of proxies, the holding of shareholders meetings, quorum requirements for such meetings and the rights of shareholders to vote on certain matters. Furthermore, until we comply with such corporate governance measures, the absence of such standards of corporate governance may leave our shareholders without protections against interested director transactions, conflicts of interest and similar matters.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results. In addition, current and potential shareholders could lose confidence in our financial reporting, which could have a material adverse effect on our stock price.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed.

We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires increased control over financial reporting requirements, including annual management assessments of the effectiveness of such internal controls. If we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Failure to achieve and maintain an effective internal control environment could also cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price.

We do not intend to pay any dividends on our common stock in the foreseeable future.

We currently intend to retain all future earnings, if any, to finance our business activities and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Although there are only a small number of shares of our preferred stock outstanding, the holders of our preferred stock have rights senior to the holders of our common stock with respect to any dividends.

The liability of our officers and directors is limited.

The applicable provisions of the New York Business Corporation Law and our Certificate of Incorporation limit the liability of our officers and directors to the Company and our shareholders for monetary damages for breaches of their fiduciary duties, with certain exceptions, and for other specified acts or omissions of such persons. In addition, the applicable provisions of the New York Business Corporation Law and of our Certificate of Incorporation and By-Laws provide for indemnification of such persons under certain circumstances. In addition, we entered into an indemnification agreement with our Chief Executive Officer which provides for expanded indemnification rights for her. As a result of the foregoing, shareholders may be unable to recover damages against our officers and directors for actions taken by them which constitute negligence, gross negligence or a violation of their fiduciary duties and may otherwise discourage or deter our shareholders from suing our officers or directors even though such actions, if successful, might otherwise benefit us and our shareholders. Notwithstanding the foregoing, insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions or agreement, or otherwise, we have been advised that, in the opinion of the SEC, any such indemnification is against public policy as expressed in the securities laws and is, therefore, unenforceable.

The limited public trading market may cause volatility in the price of our common stock.

Our common stock is currently traded on the Over the Counter Bulletin Board (“OTCBB”) under the symbol SKCO. The quotation of our common stock on the OTCBB does not assure that a meaningful, consistent and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like ours. Our common stock is thus subject to this volatility. Sales of substantial amounts of our common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock. Approximately 99% of our outstanding shares of common stock are freely tradable securities and trading volumes for our shares of common stock is limited.

During 2011 the shares of our common stock traded on the OTCBB at prices ranging from a low of $0.015 per share to a high of $0.03 per share, and in 2010 the shares of our common stock traded at prices ranging from a low of $0.014 per share to a high of $0.05 per share. The market price of the shares of our common stock, like the securities of many other over-the-counter publicly traded companies, may be highly volatile. Factors such as changes in applicable laws and governmental regulations, loss of key company executives, sales of large numbers of shares of our common stock by existing shareholders and general market and economic conditions may have a significant effect on the market price of our common stock. In addition, U.S. stock markets have experienced extreme price and volume fluctuations in the past. This volatility has significantly affected the market prices of securities of many medical diagnostic imaging and other health care companies, for reasons frequently unrelated or disproportionate to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.

The OTCBB is an inter-dealer, over-the-counter market that provides significantly less liquidity than NASDAQ, and quotes for stocks included on the OTCBB are not listed in the financial sections of newspapers, as are those for the NASDAQ Stock Market. The trading price of our common stock is expected to be subject to significant fluctuations in response to variations in quarterly operating results, changes in analysts’ earnings estimates, general conditions in the industry in which we operate, our distressed financial condition, and other factors. These fluctuations, as well as general economic and market conditions, may have a material or adverse effect on the market price of our common stock.

Trading in our common stock is limited, so investors may not be able to sell as many of their shares as they want at prevailing prices.

Shares of our common stock are traded on the OTCBB on a very limited basis with approximately 87,000 shares traded in 2011 and approximately 353,000 shares traded during the year 2010, or an average of approximately 7,250 shares per month in 2011 and an average of 29,000 shares per month in 2010. If limited trading in our common stock continues, it may be difficult for investors who purchase shares of our common stock to sell such shares in the public market at any given time at prevailing prices. Also, the sale of a large block of our common stock could depress the market price of our common stock to a greater degree than a company that typically has a higher volume of trading of its securities.

We cannot predict whether an active market for our common stock will develop in the future. In the absence of an active trading market:

Investors may have difficulty buying and selling or obtaining market quotations;

Market visibility for our common stock may be limited; and

Lack of visibility for our common stock may have a depressive effect on its market price.

Penny stock regulations may impose certain restrictions on marketability of the Company’s securities.

The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our common stock is subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our securities and may affect the ability of investors to sell our securities in the secondary market and the price at which such purchasers can sell any such securities.

Shareholders should be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Purchasers of penny stocks may have certain legal remedies available to them in the event the obligations of the broker-dealer from whom the penny stock was purchased violates or fails to comply with the above obligations or in the event that other state or federal securities laws are violated in connection with the purchase and sale of such securities. Such rights include the right to rescind the purchase of such securities and recover the purchase price paid for them.

Additional authorized shares of our common stock available for issuance may adversely affect the market.

We are authorized to issue 25,000,000 shares of common stock. As of December 31, 2011, there are 8,008,261 shares issued and outstanding. The total number of shares of our common stock issued and outstanding does not include shares reserved for issuance upon the exercise of outstanding options or warrants or shares reserved for issuance under the Company’s 1999 Long-Term Incentive Stock Option Plan (the “Stock Option Plan”).

As of December 31, 2011, the Company had outstanding stock options and warrants to purchase an aggregate of 1,842,500 shares of our common stock. We have reserved shares of our common stock for issuance in connection with the potential exercise of such options and warrants. To the extent additional shares of our common stock are issued or options and warrants are exercised, investors will experience further dilution. In addition, in the event that any future financing should be in the form of, or be convertible into or exchangeable for, equity securities, upon the issuance of such equity securities, our shareholders will experience additional dilution. There are many circumstances, including equity financings, acquisitions or other business combinations, and other transactions between the Company and its vendors, suppliers, employees, consultants, and others, in which our management can approve the issuance of additional shares of our common stock without obtaining shareholder approval for such issuances.

Shares eligible for future sale may adversely affect the market.

From time to time, certain of our shareholders may be eligible to sell all or some of their shares of our common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, subject to certain limitations. All of the 8,008,261 shares of our common stock outstanding at December 31, 2011 have been issued for more than six months.

In general, pursuant to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied a six-month holding period may, under certain circumstances, sell within any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading volume of the class during the four calendar weeks prior to such sale. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitation, by a non-affiliate of the Company that has satisfied a six-month holding period. Any substantial sale of our common stock pursuant to Rule 144 may have an adverse effect on the market price of our publicly traded securities.

There are certain provisions in our Certificate of Incorporation and By-Laws that may entrench management and make their removal from office more difficult.

Our Articles of Incorporation authorize the Board of Directors to issue preferred stock in classes or series, and to determine voting, redemption and conversion rights and other rights related to such class or series of preferred stock that, in some circumstances, if approved by our Board, could have the effect of preventing a merger, tender offer or other takeover attempt which the Board of Directors opposes. Such provisions could also exert a negative influence on the value of the shares of our common stock and of a shareholder’s ability to receive the highest price for the shares of our common stock owned by them in a transaction that may be hindered by the operation of these provisions. In the event of the issuance of any shares of our preferred stock which contain any of the above features, such features may serve to entrench management and make their removal more difficult.

Item 1B. Unresolved Staff Comments

None.

Item 2. Description of Property

Our office address is 1221 Avenue of the Americas, Suite 4200, New York, New York 10020 and is leased on a month to month basis pursuant to a Service Agreement with Rockefeller Group Business Centers, an unaffiliated landlord, at an annual all-inclusive lease arrangement of approximately $2,000.

Item 3. 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. We are not aware of any pending or threatened lawsuits or proceedings which would have a material effect on the Company’s 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. A counter-claim was filed against us in such Action, but we believe it to be without merit and have contested such claim. Such Action is on-going and there can be no assurance as to its outcome.

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

No matters were submitted during the fiscal year covered by this Annual Report to a vote of security holders, through the solicitation of proxies, or otherwise.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Market Information

Our common stock is traded in the over-the-counter market on the NASDAQ Over The Counter Bulletin Board (“OTCBB”) under the symbol SKCO. The following table sets forth, for the periods indicated, the quarterly range of the high and low closing bid prices per share of our common stock as reported by the OTCBB. The limited and sporadic trading does not constitute, nor should it be considered, an established public trading market for our common stock. Such quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.

Quarter Ended	High Bid		Low Bid

March 31, 2011	$	0.02	$	0.022
June 30, 2011	$	0.03	$	0.025
September 30 2011	$	0.02	$	0.025
December 31, 2011	$	0.025	$	0.015

March 31, 2010	$	0.05	$	0.014
June 30, 2010	$	0.04	$	0.014
September 30, 2010	$	0.03	$	0.015
December 31, 2010	$	0.02	$	0.017

Holders of Record

As of the date of this report, there are approximately 2,200 holders of record of our common stock.

Dividends

We have never paid any dividends on our common stock and we do not anticipate paying or declaring any stock or cash dividends on our common stock in the foreseeable future.

Item 6. Selected Financial Data

We did not have any operations in year 2011 or in 2010 that generated revenues.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company currently does not have any operations other than administrative operations related to shareholder, creditor and tax matters.

Discontinued Operations

Prior to the discontinuation of such operations by the second quarter 2008, the Company owned, operated and/or managed eight out-patient medical diagnostic imaging centers that offered positron emission tomography (“PET”) and PET and computed tomography (“CT”) imaging (“PET/CT”) services.

Results of Operations

The following discusses and compares the results of our business operations for the years 2011 and 2010.

Revenues

We did not generate any revenues in 2011 or in 2010.

Operating Expenses

Consolidated operating expenses in year 2011 were approximately $441,000 of which $440,000 related to continuing operations, and $1,000 of which related to discontinued operations. Comparatively, in 2010, consolidated operating expenses were approximately $620,000 of which $605,000 related to continuing operations, and $15,000 of which related to discontinued operations.

Interest Expense

Interest expense in 2011 was $269,000, of which $37,000 related to continuing operations and $232,000 of which related to discontinued operations. Comparatively, interest expense in 2010 was $243,000, of which $31,000 related to continuing operations and $212,000 of which related to discontinued operations.

Interest expense of continuing operations arises from a promissory note due to a related party in the principal amount of $272,000 which bears interest at a rate of 10% per annum. Interest expense of discontinued operations is the result of accrued interest under two default judgments that were granted in July 2008 associated with a premise lease for space in a building that we never occupied.

Minority (Noncontrolling) Interests

During 2011 and 2010 minority interests owned 49% of Suffolk PET Management LLC which is involved in certain legal proceedings (see Item 3).

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements.

Financial Condition – Liquidity and Capital Resources

As of December 31, 2011 we do not have any operations other than basic administrative, shareholder and creditor related activities and we have no operations that generate revenues. At December 31, 2011 our cash balance was approximately $3,000 which is not sufficient to fund our operating expenses for the foreseeable future.

Since January 2010, we have funded our operating expenses from loans provided by our Chief Executive Officer and our shareholders. We are dependent upon these loans to fund our future operating expenses. None of our officers, directors or shareholders are under any obligation to provide us with any future loans or advances. However, if they do not loan us funds at a time when funds are necessary, we may be forced to suspend our operations.

We have approximately $4.3 million of liabilities and we do not have sufficient working capital to satisfy our obligations to any of our creditors. Our financial distress, along with our history of significant net losses, raises substantial doubt about our ability to continue as a going concern.

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.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates we make include income taxes and assumptions used to calculate stock-based compensation. Actual results could differ from those estimates.

Special Note Regarding Forward Looking Statements

Certain statements contained in this Annual Report, including, without limitation, statements containing the words “believes,” “anticipates,” “estimates,” “expects,” “projections,” and words of similar import, constitute “forward-looking statements.” You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including risks faced by us which are described in this Report and the other documents we file with the SEC. 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 8. Financial Information.

$Z:\TQData\VINEYARD\Live Jobs\2012\03 Mar\28 Mar\Shift I\v307494 - THE SAGEMARK COMPANIES LTD\Draft\03-Production$

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

The Sagemark Companies Ltd.

We have audited the accompanying consolidated balance sheets of The Sagemark Companies Ltd. and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, shareholders’ deficiency and cash flows for each of the years in the two-year period ended December 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting, accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company does not have any operations that generate revenue and has a shareholder’s deficiency of approximately $4.3 million at December 31, 2011. In addition, the Company is in default on substantially all of its outstanding debt and without sufficient working capital at December 31, 2011 to satisfy any of the remaining debts or obligations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

/s/ MSPC
MSPC Certified Public Accountants and Advisors, A Professional Corporation

Cranford, New Jersey
March 29, 2012

Sagemark Companies Ltd.

CONSOLIDATED BALANCE SHEETS

As of December 31,	2011			2010

ASSETS

Current Assets:
Cash	$	3,000		$	8,000

TOTAL ASSETS	$	3,000		$	8,000

LIABILITIES AND SHAREHOLDERS’ DEFICIENCY

Current Liabilities:
Accounts payable	$	734,000		$	555,000
Accrued consulting fee – related party		505,000			325,000
Shareholder loans		170,000			108,000
Notes payable – related parties		407,000			356,000
Liabilities of discontinued operations		2,512,000			2,279,000
Total Current Liabilities		4,328,000			3,623,000

Commitments and Contingencies		-			-

Shareholders’ Deficiency:
Preferred stock, par value $1.00 per share; authorized and outstanding 2,962		3,000			3,000
Common stock, par value $0.01 per share; 25,000,000 authorized; 8,008,261 shares issued and outstanding		80,000			80,000
Additional paid in capital		71,339,000			71,339,000
Accumulated deficit		(75,887,000	)		(75,177,000	)
Shareholders’ Deficiency		(4,465,000	)		(3,755,000	)

Noncontrolling Interests		140,000			140,000

Total Shareholder’s Deficiency		(4,325,000	)		(3,615,000	)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY	$	3,000		$	8,000

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

Sagemark Companies Ltd.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31,	2011			2010

OPERATING EXPENSES
General and administrative expenses	$	417,000		$	532,000
Legal fees – related party		23,000			73,000
Total Operating Expenses		440,000			605,000

Loss from Operations		(440,000	)		(605,000	)

Interest expense		(37,000	)		(31,000	)

Loss from continuing operations		(477,000	)		(636,000	)
Income (loss) from discontinued operations		(233,000	)		773,000

Net Income (Loss)	$	(710,000	)	$	137,000

Basic Income (Loss) Per Common Share
Loss from continuing operations	$	(0.06	)	$	(0.08	)
Income (Loss) from discontinued operations		(0.03	)		0.10

Basic Income (Loss) Per Common Share	$	(0.09	)	$	0.02

Diluted Income (Loss) Per Common Share
Loss from continuing operations	$	(0.06	)	$	(0.07	)
Income (Loss) from discontinued operations		(0.03	)		0.09

Diluted Income (Loss) Per Common Share	$	(0.09	)	$	0.02

Weighted Average Common Shares Outstanding
Basic		8,008,261			8,008,261
Diluted		8,008,261			8,807,705

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

Sagemark Companies Ltd.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S DEFICIENCY

	Preferred Shares		Preferred Share Par Value		Common Shares		Common Shares Par Value		Additional Paid-In Capital Common Stock		Accumulated Deficit			Shareholder’s Deficiency
BALANCE JANUARY 1, 2010		2,962	$	3,000		8,008,261	$	80,000	$	71,339,000	$	(75,314,000	)	$	(3,892,000	)
Net Income												137,000			137,000
BALANCE DECEMBER 31, 2010		2,962	$	3,000		8,008,261	$	80,000	$	71,339,000	$	(75,177,000	)	$	(3,755,000	)

Net Loss												(710,000	)		(710,000	)
BALANCE DECEMBER 31, 2011		2,962	$	3,000		8,008,261	$	80,000	$	71,339,000	$	(75,887,000	)	$	(4,465,000	)

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

Sagemark Companies Ltd.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,	2011			2010

Cash Flow – Operating Activities
Loss from continuing operations attributable to the Company	$	(477,000	)	$	(636,000	)
Adjustment to reconcile Net Loss to Net Cash – Operating Activities:
Change in assets and liabilities:
Accounts payable		179,000			311,000
Accrued consulting fee – related party		180,000			181,000
Accrued interest payable – related party		34,000			31,000
Other – net		-			(8,000	)
Net Cash – Operating Activities		(84,000	)		(121,000	)

Cash Flows – Financing Activities
Proceeds from note payable - related party		17,000			18,000
Proceeds from shareholder loans		62,000			108,000
Net Cash – Financing activities		79,000			126,000

Net Change in Cash		(5,000	)		5,000
Cash – Beginning of Year		8,000			3,000

Cash – End of Year	$	3,000		$	8,000

Supplemental disclosure of cash flow information:
Income taxes paid	$	-			-
Interest paid	$	-			-

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

Sagemark Companies Ltd.

Notes to Consolidated Financial Statements

December 31, 2011 and 2010

Note 1 - Description of Business and Basis of Presentation

Organization and Nature of Operations

At December 31, 2011, the Sagemark Companies Ltd. (the “Company” or “We” or “Our”) does not have any operations other than administrative operations related to shareholder, creditor and tax matters. We do not currently have a plan for any future operations.

Discontinued Operations

Prior to discontinuing all such operations as of the second quarter 2008, the Company owned, operated and/or managed eight 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 to assist in the diagnosis, staging and treatment of cancers and other illness and disease.

Going Concern

The accompanying consolidated 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. The Company did not generate any revenue in year 2011, and has no current operations that generate revenue. Further, as of December 31, 2011, the Company has a negative working capital and shareholder’s deficiency of approximately $4.3 million.

These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company intends to continue to conduct limited administrative activities in connection with its efforts to resolve outstanding creditor claims and other contractual obligations as long as it is able to do so. However, there can be no assurance that we will be successful and, if we are unable to resolve outstanding creditor claims, we may seek protection under available bankruptcy laws.

NOTE 2 - Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include our accounts and accounts of our majority owned subsidiaries after eliminating all significant intercompany balances and transactions.

For our subsidiaries that are not wholly-owned, we eliminate the minority interest portion of their profits and losses.

Cash and Cash Equivalents

We consider all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. As of December 31, 2011 and 2010, all of our cash represents bank deposits and we do not have any cash equivalents.

Revenue Recognition

Management fee revenues from discontinued operations were derived from agreements with contracted radiology practice group’s PET imaging centers. All operations that generated management fees were discontinued as of June 1, 2008. We had no management fee revenue in either 2011 or 2010.

At December 31, 2011 we have management fees due to us from our discontinued operations in East Setauket, New York which are the subject of an ongoing legal action, the amount of which is in dispute and is unknown as of the date of this Annual Report (See Note 5).

Income Taxes

We account for income taxes in accordance with ASC Topic 740, Income Taxes. Under ASC 740, deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. If it becomes more likely than not that a deferred tax asset will be used, the related valuation allowance on such assets would be reversed. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Earnings Per Share

Basic net earnings per common share are computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding each period. When applicable, diluted earnings per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the diluted effect of common stock equivalents, consisting of shares that might be adjusted upon exercise of common stock options and warrants.

Potential common shares issued are calculated using the treasury stock method, which recognizes the use of proceeds that could be obtained upon the exercise of option 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.

The Company had 205,000 options outstanding as of December 31, 2011, which are anti-dilutive and were excluded in the diluted earnings calculation in the year ended December 31, 2011. These options may dilute the earnings per share calculation in future periods.

Fair Value Measurements

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash, payables to related parties, shareholder’s loans and accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

Concentration of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk include cash. As of December 31, 2011, all of our cash is placed with high credit, quality financial institutions. As of December 31, 2011 we had no cash balances in excess of federally insured limits.

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. We had no stock based compensation in 2011 or in 2010. As of December 31, 2011, there was no unrecognized compensation cost related to non-vested stock-based compensation arrangements granted to employees.

Stock Options and Warrants

The following table summarizes our stock purchase options under our 1999 Long Term Incentive Plan for each of the years ended December 31, 2011 and 2010:

			Weighted Average				Weighted Average
	Shares		Exercise Price		Shares		Exercise Price
	2011		2011		2010		2010

Outstanding at beginning of year		205,000	$	0.10		205,000	$	0.10
Outstanding at end of year		205,000	$	0.10		205,000	$	0.10

Exercisable at year end		205,000	$	0.10		205,000	$	0.10

Options subject to Long Term Incentive Plan		1,600,000				1,600,000
Options issued pursuant to Long Term Incentive Plan		-				-		-
Options available under Long Term Incentive Plan		35,000				35,000

Outstanding and Exercisable

Weighted Average

Total Intrinsic

at 12/31/11

Exercise Price

Remaining Life

Value

205,000

0.10

2 years

We have issued and outstanding warrants to purchase up to 1,637,500 shares of our common stock, 25,000 of which have an exercise price of $0.83 per share and an expiration date of July 2, 2012, 12,500 of which have an exercise price of $0.02 per share and an expiration date of November 13, 2012 and the balance of which have an exercise price of $0.01 per share and expire January 14, 2014, none of which had an intrinsic value at December 31, 2011. At December 31, 2011, 1,287,000 of the total 1,637,500 warrants were exercisable.

Use of Estimates

Subsequent Events

The Company evaluated all events or transactions that occurred subsequent to December 31, 2011 up to the date these financial statements were issued and has determined that there is no material subsequent events or transactions which would require recognition or disclosure in the financial statements.

NOTE 3 – Notes Payable

At December 31, 2011 we have a note payable of $272,000 to Robert L. Blessey, for legal services provided to the Company in prior years. Such note accrues interest at 10% per annum as of January 1, 2009 and is currently in default. At December 31, 2011 the note payable, plus accrued interest, is approximately $366,000. (See Note 7.)

At December 31, 2011, we have a note payable of approximately $41,000 to Cathy Bergman, our Chief Executive Officer, for funds loaned to the Company.

Additionally, during the course of 2011, we borrowed a total of $62,000 from shareholders to fund continuing operations. As of December 31, 2011, we have borrowed $170,000 from our shareholders. The loans vary in amounts ranging from $3,000 to $20,000 and are each secured by non-interest bearing promissory notes with a term of one year. Payment of the promissory notes issued to our shareholders in 2010 totaling $108,000, were past due at December 31, 2011. However, the shareholders have agreed to an extension on such promissory notes (without penalty or interest) until the Company has sufficient working capital.

NOTE 4 – Income Taxes

For the years ended December 31, 2011 and 2010 the Company recorded a full tax valuation allowance due to the uncertain utilization of deferred tax assets related to available net operating loss forwards.

As of December 31, 2011, we have net operating loss carryforwards approximating $50 million. The loss carryforwards will expire at various dates from 2012 through 2028. The issuance of shares of our common stock for the acquisition of certain assets limits the utilization of our tax net operating loss carryover for losses incurred prior to the issuance of such shares, per Section 382 of the Internal Revenue Code.

NOTE 5 – Commitments and Contingencies

Premise Lease Obligations

We previously leased office space for our corporate offices and our PET imaging center operations. In concert with the termination of our PET imaging operations, in 2008 we negotiated the premature termination of all of such leases, with the exception of the premise lease for our former operations in Forest Hills, New York and Jacksonville, Florida, both of which were assigned in 2008 to third parties that operated medical imaging centers at such facilities and who paid the landlord directly. As of the date of this report we have not been notified of any default under such leases.

Limited Guaranty

In February 2008, we sold our 80% equity interest in P.E.T. Management of Queens LLC (“Queens LLC”), which managed a PET Imaging center in Forest Hills, New York (the “Queens Center”). In connection with that sale, Queens LLC assumed the Company’s obligations under the capital lease financing documents (the “Financing Documents”), between the Company and General Electric Capital Corp. (“GECC”) pursuant to which GECC financed the PET/CT imaging equipment, ancillary medical equipment and leasehold improvements at the Queens Center.

As a condition of such sale, GECC required the Company to execute a limited guaranty in favor of GECC (the “Limited Guaranty”) pursuant to which we guaranteed $1,000,000 of the approximately $1,700,000 indebtedness remaining under the Financing Documents. The purchaser of Queens LLC indemnified us against any losses incurred under the Limited Guaranty and assumed our obligations under the premise lease for the Queens Center.

Subsequently, in the first quarter of 2009, the purchaser of the Queens LLC defaulted on its payments due to GECC and thereafter GECC brought a legal action against Queens LLC in an attempt to recover the amount due to it under the Financing Documents. We were not named as a party to such action. However, as a result of the default, we recorded the Limited Guaranty obligation on our consolidated balance sheet under liabilities of discontinued operations as of the first quarter of 2009.

In March 2010, GECC repossessed the PET/CT imaging equipment from Queens LLC and entered into a stipulation of settlement with it in full and final satisfaction of all obligations under the Financing Documents. As a result thereof, there is no further liability of the Company under the Limited Guaranty. Accordingly, we recorded a gain of $1,000,000 for the year ended December 31, 2010 pursuant to the termination of the Company’s obligation under the Limited Guaranty as part of income (loss) from discontinued operations.

The Queens Center ceased operations in March 2010 and Queens LLC abandoned the premises in Forest Hills, New York as of March 31, 2010. As of the date of this report, we have not been notified of any default under the premise lease which, subsequent to the sale of the Queens LLC in February 2008, had been paid by the Queens LLC purchaser directly to the landlord.

Long-term Employment Commitments and Severance Compensation

Ms. Bergman has served as our Chief Executive Officer and the sole member of our Board of Directors since November 25, 2008 for which she does not receive an annual salary.

As the Company has no employees or support staff, in connection with certain administrative tasks and responsibilities performed by Taggart Resource Group, Ltd., an entity owned by Ms. Bergman (“Taggart”), the Company 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. The Company also agreed to pay Taggart a lump sum severance payment in an amount equal to $15,000 times the number of months of service by it, commencing in November 2008 (with a minimum of $90,000 and a maximum of $180,000) if there is a change in control of the Company or if Ms. Bergman is removed as the Chief Executive Officer or is no longer the sole Director of the Company. Further, Taggart will also be entitled to an annual bonus as determined by a compensation committee of the Board of Directors or, if none, by an independent outside qualified third party. Regardless of our contractual obligations, we have been unable to pay Taggart the $5,000 monthly minimum since 2009 and as of December 31, 2011 we owe Taggart $505,000 of unpaid fees in connection with such agreement.

Legal Proceedings

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 also seeking an inspection of books and records and an accounting in the Action. A counter-claim was filed against us in such Action, but we believe it to be without merit and have contested such claim. Such Action is on-going and there can be no assurance as to its outcome.

NOTE 6 – Capital Stock

Common Stock

As of December 31, 2011 and 2010, the authorized number of shares of common stock, par value $0.01, is 25,000,000 shares of which 8,008,261 shares were issued and outstanding as of December 31, 2011 and 2010.

Preferred Stock

As of December 31, 2011 and 2010, the authorized number of shares of undesignated preferred stock, par value $1.00 per share, is 2,000,000 shares of which 2,962 shares are issued and outstanding. The following provides information about each series of designated preferred stock.

Series B (170 shares issued and outstanding) - The Series B subordinated preferred stock is redeemable at our option at the issue price of $87.50 per share. Each share is entitled to a $3.50 annual dividend, which is contingent upon after tax earnings in excess of $200,000. In the event of involuntary liquidation, the holders are entitled to $87.50 per share and all accrued dividends. No dividends were declared for the years ended December 31, 2011 and 2010 due to the earnings threshold not being met.

Series E (92 shares issued and outstanding) - The Series E preferred stock is entitled to an annual dividend of $.10 per share contingent upon after tax earnings in excess of $200,000. No dividends were declared for the years ended December 31, 2011 and 2010 due to the earnings threshold not being met.

Series F (2,700 shares issued and outstanding) - In 1984, in consideration for certain creditors granting extensions on our former debts, we issued 2,700 shares of preferred stock at $1.00 per share. The nonvoting preferred stock, designated Series F, with a dividend rate of $8.00 per share, is redeemable at our option after July 1993 for $1.00 per share. The dividend is non-cumulative and is payable within 100 days from the close of any year in which net income after tax exceeds $500,000, and all dividends due on the Series B preferred stock are paid or provided for. No dividends were declared for the years ended December 31, 2011 and 2010 due to the earnings threshold not being met.

NOTE 7 – Transactions with Related Parties

The balance sheet effect of transactions with related parties is as follows.

Our Chief Executive Officer

As more detailed in Note 5 Commitments and Contingencies, we incur fees for services rendered to us by Taggart Resource Group, Ltd., a consulting firm owned by Cathy Bergman, our Chief Executive Officer pursuant to a consulting agreement we entered into with Taggart. We have been unable to meet our contractual obligations under such agreement and as of December 31, 2011 we owe Taggart $505,000 in connection therewith.

Additionally, the Company borrowed approximately $17,000 from Ms. Bergman in 2011 and approximately $18,000 in 2010 to pay certain operating expenses. As of December 31, 2011, we have borrowed approximately $41,000 from Ms. Bergman. Such amounts are due on demand and are included within Notes Payable – Related Parties on our Balance Sheet at December 31, 2011.

Our Secretary

We incur fees for legal services provided by Robert L. Blessey who serves as our Secretary and General Counsel and who served on our Board of Directors from May 1, 2001 until July 2, 2007.

We incurred legal fees due to Mr. Blessey of approximately $23,000 in 2011 and approximately $73,000 in 2010, none of which we were able to pay. We also owe Mr. Blessey approximately $89,000 for fees incurred in prior years, for a total of approximately $185,000 due and outstanding, which is included in accounts payable on our Balance Sheet at December 31, 2011.

Shareholders Loans

We did not generate or receive any revenue in 2011 or in 2010. To meet our limited operating expenses, we borrowed $62,000 from our shareholders during the course of 2011 and $108,000 during 2010. All of such loans are secured by promissory notes, which do not bear interest.

Management Fees (Discontinued Operations)

Our subsidiary Suffolk PET Management, LLC earned fees from the management of Advanced PET Imaging, a medical imaging facility located in East Setauket, New York. Anna Associates LLC owns 49% of Suffolk PET Management, LLC. Both Advanced PET Imaging and Anna Associates LLC are owned or controlled by Azad K. Anand, M.D., a radiologist. Operations at such facility were discontinued in March 2008. In September 2008 we commenced a legal action against Dr. Anand, and related entities, in connection with certain management fees due to us, among other claims. As the amount due is unknown, and an accurate projection is not possible due to the complexity of the litigation, we cannot be certain of the balance due to us as of December 31, 2011. The legal action is on-going and there can be no assurance as to its outcome.

NOTE 8 – Discontinued Operations

In 2008 we discontinued all of our PET and PET/CT imaging operations. The following table provides information regarding the net liabilities of our discontinued operations as of December 31, 2011 and December 31, 2010.

As of December 31,	2011			2010

Liabilities:
Accounts payable	$	272,000		$	266,000
Judgments and liens		2,240,000			2,013,000
Liabilities to be disposed		2,512,000			2,279,000

Net liabilities to be disposed	$	(2,512,000	)	$	(2,279,000	)

Years Ended December 31,		2011			2010

Revenues	$	-		$	-

Operating expenses:
General and administrative expenses		1,000			15,000
Total operating expenses		1,000			15,000

Loss from operations		(1,000	)		(15,000	)
Interest expense		(232,000	)		(212,000	)
Settlement of Limited Guaranty (Note 5)		-			1,000,000

Income (Loss) from discontinued operations	$	(233,000	)	$	773,000

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. 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 SEC, and that such information is accumulated and communicated to our management, including the individual who is both our Chief Executive Officer and 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 Annual Report, we carried out an evaluation, under the supervision and with the participation of our management, including the individual who is both our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon the foregoing, the individual who is both our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2011, a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) existed in our internal control over financial reporting regarding a lack of adequate segregation of duties. Accordingly, based on that evaluation of our disclosure controls and procedures as of December 31, 2011, we have concluded that, as of that date, our controls and procedures were not effective for the purposes described above. Due to the inherent limitations of the effectiveness of any established disclosure controls and procedures, even on those systems determined to be effective, the individual who is both our Chief Executive Officer and Chief Financial Officer cannot provide absolute assurance that the objectives of their respective disclosure controls and procedures will be met.

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. 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:

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

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

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. 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.

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.

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There were no changes in internal controls over financial reporting that occurred during the fourth quarter ended December 31, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None

PART III

Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(A) Of The Exchange Act

Directors and Executive Officers

The following table presents information regarding our directors, executive officers and other significant employees as of December 31, 2011.

Name	Age	Position

Cathy Bergman	52	Director, Chief Executive Officer
Robert L. Blessey	66	Secretary

Cathy Bergman has been our Chief Executive Officer and sole member of our Board of Directors since November 2008. Prior to serving in such capacity, Ms. Bergman was an employee and/or consultant to the Company since 2001 and for the past two decades has served as a management consultant for a number of private and public companies.

Robert L. Blessey has served as our Secretary since May 2001 and as a member of our Board of Directors from May 2001 through July 2007. For more than thirty-five years, Mr. Blessey has practiced law, and is of counsel to the New York based law firm of Gusrae, Kaplan, Bruno & Nusbaum, PLLC.

Board of Directors

All Directors serve for one year or such longer period until their successors are elected and qualify. The Board of Directors appoints our officers and their terms of office are, unless otherwise provided in employment contracts, at the discretion of the Board of Directors. There are no family relationships between or among any of our directors or executive officers.

Certain Corporate Governance Matters

The Board of Directors established an Audit Committee to assist in our governance. The Audit Committee was established to function under a Charter empowering it to, among other things, appoint the independent auditors, approve the auditor’s fees, evaluate performance of the auditors, review financial statements and management’s discussion and analysis thereof, review all Securities and Exchange Commission reports and press releases of a financial nature, oversee internal audit processes, oversee new audit reviews performed by the auditors, and receive management and other reports from the auditors. However, in July 2007 the sole member of the audit committee resigned from the Board of Directors. We have not reconstituted our audit committee since such time.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 as amended (the "Exchange Act") requires our officers and directors, and persons who own more than ten percent of our common stock to file reports of ownership and changes of ownership with the SEC. These persons are also required to furnish us with copies of all forms filed under Section 16(a). Based solely on our review of the copies of those forms received by us, or written representations from such persons we are not aware of any noncompliance with regards to Section 16(a).

Item 11. Executive Compensation

We do not have a compensation committee. Our Board of Directors and/or our Chief Executive Officer approves and establishes the terms of employment for our executives whether written or unwritten. Since November 2008, neither of our officers have received a salary in connection with such service.

The table below sets forth certain compensation for officers and directors serving as of December 31, 2011.

Summary Compensation Table

			Annual Compensation					Long Term Compensation
								AWARDS
					Other Annual			Securities Underlying		All Other
Name & Principal Position	Year		Salary		Compensation			Options/ Warrants		Compensation

Cathy Bergman		2011		-	$	180,000	(a)		-		-
Chief Executive Officer		2010		-	$	180,000	(a)		-		-
Director

Robert L. Blessey		2011		-		-			-	$	23,000	(b)
Secretary		2010		-		-			-	$	73,000	(b)

_____________________________________

(a) Ms. Bergman serves as our Chief Executive Officer and our sole director for which she does not receive a salary. Other Annual Compensation represents fees earned by Taggart Resource Group, Ltd., a consulting firm in which Ms. Bergman is a principal, in connection with consulting services rendered to the Company and its subsidiaries, all of which are accrued and remain unpaid as of the date of this Report.

(b) Mr. Blessey serves as our Secretary and also serves as our general counsel. Mr. Blessey does not receive compensation for service as the Company’s Secretary. Fees for legal services rendered to us are included as other compensation. At December 31, 2011, all of such fees are accrued and remain unpaid as of the date of this Report.

Stock Option Plan

Our stock option plan provides for the grant of options to purchase shares of our common stock to eligible employees, officers and directors, and other persons who we believe may have made a valuable contribution to us. Our stock option plan covers a maximum of 1,600,000 shares of common stock and provides for the granting of both incentive stock options (as defined in Section 422 of the Internal Revenue Code of 1986) and nonqualified stock options (options which do not meet the requirements of Section 422). Under our stock option plan, the exercise price of shares of common stock subject to options granted thereunder may not be less than the fair market value of the common stock on the date of the grant of the option.

Currently, our Board of Directors administers and interprets our stock option plan and is authorized to grant options to any of our eligible employees, including our officers. The Board of Directors designates the optionees, the number of shares subject to the options, and the terms and conditions of each option. Each option granted under our stock option plan must be exercised, if at all, during a period established in the grant which may not exceed 10 years from the later of the date of the grant or the date the option first becomes exercisable. An optionee may not transfer or assign any option granted, and may not exercise any options after a specified period subsequent to the termination of the optionee’s employment with us.

Director Compensation

Our sole director in years 2011 and 2010 did not receive any compensation for serving in such capacity.

Indemnification of Our Officers and Directors

Our Articles of Incorporation provide for the indemnification of all persons who serve as our directors, officers, employees or agents to the fullest extent permitted under New York law. In addition, we entered into an indemnification agreement with our Chief Executive Officer pursuant to which we granted her certain additional indemnification rights. We do not maintain officer and director liability insurance. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions or agreement, or otherwise, we have been advised that, in the opinion of the SEC, any such indemnification is against public policy as expressed in the securities laws and is, therefore, unenforceable.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information regarding the ownership of our common stock as of December 31, 2011 by our officers and directors and all those known by us to be beneficial owners of more than five percent of our common stock.

Name of Beneficial Owner	Ownership			Percentage of Class (a)

Cathy Bergman		1,033,381	(b)		10.49	%
1221 Avenue of the Americas, Suite 4200
New York, NY 10020

Robert L. Blessey		1,321,811	(c)		13.41	%
1221 Avenue of the Americas, Suite 4200
New York, NY 10020

Marton Grossman		736,473			7.46	%
1461 53^rd Street
Brooklyn, New York 11219

All Executive Officers and Directors as a group (2 persons)		2,355,192	(d)

(a) Based on a total of 9,850,761 shares of common stock, which includes: (i) 8,008,261 shares of common stock issued and outstanding as of December 31, 2011; (ii) options to purchase 205,000 shares of our common stock; and, (iii) warrants to purchase 1,637,500 shares of our common stock.

(b) Includes 85,000 shares underlying two options that are fully vested and exercisable and 600,000 shares underlying a warrant of which 250,000 shares have vested and are exercisable as of December 31, 2011.

(c) Includes 1,012,500 shares underlying two warrants that are fully vested and exercisable and 275,977 shares owned by Bocara Corp. in which Mr. Blessey owns a 25% interest and his spouse owns a 75% interest.

(d) Includes Ms. Bergman and Mr. Blessey.

The forgoing table is based upon information supplied by the officers, directors and principal stockholders, our transfer agent, and Forms 5 and Schedules 13D and 13G filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.

We are not aware of any arrangement that might result in a change of control in the future.

Item 13. Certain Relationships and Related Transactions

The following table summarizes related party transactions.

Our Chief Executive Officer

We incur fees for services rendered by Taggart Resource Group, Ltd., a consulting firm owned by Cathy Bergman, our Chief Executive Officer, and as of December 31, 2011, we owe Taggart $505,000 in connection therewith. Additionally, we owe Ms. Bergman approximately $41,000 for funds loaned by her to the Company from 2009 through 2011 to pay certain operating expenses.

Our Secretary

We incur fees for legal services provided by Robert L. Blessey who serves as our Secretary and General Counsel and who served on our Board of Directors from May 1, 2001 until July 2, 2007.

We incurred legal fees due to Mr. Blessey of approximately $23,000 in 2011 and $73,000 in 2010, none of which we were able to pay. We also owe Mr. Blessey approximately $89,000 for fees incurred in prior years, for a total of $185,000 due and outstanding at December 31, 2011.

Additionally, we owe Mr. Blessey $272,000 for legal services rendered prior to June 30, 2007 and in July 2007 issued to him a non-interest bearing promissory note in such amount that was due June 30, 2008 on which we defaulted. In consideration of Mr. Blessey’s agreement to forebear from enforcing his rights thereunder, we agreed to begin to accrue interest on such note at a rate of 10% per annum, beginning as of January 1, 2009, and as and to the extent that funds are available, pay such interest as incurred. As of December 31, 2011 the promissory note remains in default and we have been unable to make any payment toward the approximately $94,000 of accrued interest due thereon.

Our Shareholders

We did not generate or receive any revenue in 2011 or 2010. To meet our limited operating expenses, we borrowed $62,000 and $108,000 from our shareholders during 2011 and 2010 respectively. Such loans are secured by promissory notes each with a one-year term, which do not bear interest. Payment of the promissory notes issued to our shareholders in 2010 totaling $108,000, were past due at December 31, 2011. The shareholders have agreed to an extension on such promissory notes (without penalty or interest) until the Company has sufficient working capital.

Management Fees (Discontinued Operations)

Item 14. Principal Accountant Fees and Services

MSPC Certified Public Accountants and Advisors (“MSPC”), serves as our principal accountant. The following table presents fees billed to us by MSPC for services performed in 2011 and 2000:

For the year ended December 31	2011		2010
Audit and review fees	$	20,500	$	26,000
Tax fees		8,000		8,000
Other fees		-		-
	$	28,500	$	34,000

The Board of Directors approves the engagement of an accountant to render all audit and non-audit services prior to the engagement of the accountant based upon a proposal by the accountant of estimated fees and scope of the engagement. Our Board of Director’s has received the written disclosure and the letter from MSPC required by Independence Standards Board Standard No. 1, as currently in effect, and has discussed with MSPC their independence.

PART IV

Item 15. Exhibits

No.		Description

21		List of Subsidiaries

23		Consent of Independent Registered Public Accounting Firm

31		Principal Executive Officer and Financial and Accounting Officer Certification

32		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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.
Dated: March 30, 2012
	By:	/s/ Cathy Bergman
		Cathy Bergman
		Chief Executive Officer

In accordance with the Exchange Act, this Report has been signed below by the following person on behalf of the registrant on March 30, 2012 in the capacities indicated below.

Signature		Title

/s/ Cathy Bergman		Chief Executive Officer, interim Chief Financial Officer and Director
Cathy Bergman		(Principal Executive Officer)