UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

Commission File Number: 333-149857

TEXAS GULF ENERGY, INCORPORATED

(Exact name of registrant as specified in its charter)

1602 Old Underwood Road, La Porte, TX 77571

(Address, including zip code, of principal executive offices)

281.867.8500

(Registrants’ telephone number, including area code)

Securities Registered Under Section 12(b) of the Exchange Act: None

Name of exchange on which registered: N/A

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.00001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes  ¨ No x

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 and (2) has been subject to such filing requirements for the past 90 days. Yes  x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).  Yes   x No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” 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

The aggregate market value of the common stock held by non-affiliates of the registrant as of June 28, 2013, the last business day of the registrant’s most recently completed fiscal year, was $3,572,086, based on the closing sale price for the registrant’s common stock on that date. For purposes of determining this number, all officers and directors of the registrant are considered to be affiliates of the registrant. This number is provided only for the purpose of this report on Form 10-K and does not represent an admission by either the registrant or any such person as to the status of such person.

The number of outstanding shares of the registrant’s Common Stock on April 14, 2014 was 56,470,070.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for its 2014 Annual Meeting of stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K. 

Texas Gulf Energy, Incorporated

FORM 10-K

INDEX

Texas Gulf Energy, Incorporated

FORM 10-K

PART I

ITEM 1. Business

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “ Annual Report ”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Annual Report which address activities, events or developments which we expect, believe or anticipate will or may occur in the future are forward-looking statements. The word “believes,” “intends,” “expects,” “anticipates,” “projects,” “estimates,” “predicts” and similar expressions are also intended to identify forward-looking statements.

These forward-looking statements include, among others, such things as:

These statements are based on certain assumptions and analyses we made in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from our expectations, including:

Consequently, all of the forward-looking statements made in this Annual Report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business operations. We assume no obligation to update publicly, except as required by law, any such forward-looking statements, whether as a result of new information, future events or otherwise.

The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report, particularly in the section entitled "Risk Factors". Our audited financial statements are prepared in accordance with United States Generally Accepted Accounting Principles.

BACKGROUND

Texas Gulf Energy, Incorporated, a Nevada corporation (the “ Company ,” “ we ,” “ us ,” “ our ”), was incorporated as Nature of Beauty, Inc. under the laws of the State of Nevada on May 22, 2007. Initially, the Company was engaged in the business of purchasing and distributing all-natural and organic everyday skin care products from Russia. In October 2009, the Company changed the focus of its business to developing "green" products and technologies, including unique cleaning and environmental remediation products and changed its name to “Bio-Clean, Inc.” Subsequently, on October 8, 2010, the Company changed its name to “Global NuTech, Inc.” and executed two different joint venture agreements and provided the sales and marketing operations for the sale of various products. In December 2011 the Company acquired International Plant Services, L.L.P. (“ IPS ”) and changed its focus to providing construction services to the downstream energy business. Subsequently, in the first quarter of 2012 the Company changed its name to “Texas Gulf Energy, Incorporated” to better reflect its new focus in the market. Since the acquisition of IPS, the Company has completed several acquisitions and divestitures as well as organically established other business units.

BUSINESS ENVIRONMENT

We have seen what we consider to be a strong recovery from the global recession in the underlying business environment in which the Company operates.. Recent divestitures have reduced the Company’s operating assets and headcount such that future growth will come from acquisitions or organic growth.

OPERATING SEGMENTS

As of the fiscal year December 31, 2013, we had two (2) reportable segments, the “International Plant Services, L.L.C.,” and “Texas Gulf Specialty Services, Inc.” segments. The sale of all of the assets of our Texas Gulf Energy Industrial Services segment and our subsidiary Fishbone Solutions, Inc. reduced the number of our operating segments.

International Plant Services, L.L.C.

Our wholly owned subsidiary International Plant Services L.L.C. or “Construction Services” segment provides turnkey and specialty construction services to a wide range of industrial and energy sector clients. Our scope of services includes project planners, engineers, welders, fitters, millwrights and other craft and supervisory personnel. These services are provided for projects of varying complexities, schedule durations, and budgets. Our project experience includes retrofits, modifications and expansions to existing facilities as well as the construction of new facilities.

Texas Gulf Specialty Services, Inc.

Texas Gulf Specialty Services, Inc. has been created to provide specialty construction services to a wide range of industry and energy sector clients. These services are provided for projects of varying complexities, schedule durations and budgets.

OTHER BUSINESS MATTERS

Customers and Marketing

The Company derives a significant portion of its revenues from performing services for engineering firms, general contractors, and petrochemical and industrial gas companies and ultimately the integrated oil companies, independent petroleum refiners, and pipeline, terminal and oil and gas marketing companies. The loss of significant work from any of these classes of customers or an overall decline in the petroleum industry could have a material adverse effect on the Company. The Company provided services to approximately forty (40) customers in 2013 with approximately twenty (20) being served by the continuing operations.

Three (3) customers represented 21%, 19% and 14% of the Company’s gross sales for the year ended December 31, 2013. Three (3) companies represented 23%, 17% and 12% of outstanding accounts receivable at December 31, 2013. Two (2) customers represented 15% and 14% of the Company’s gross sales for the year ended December 31, 2012. Two (2) companies represented 25% and 12% of outstanding accounts receivable at December 31, 2012.

The Company markets its services and products primarily through its marketing and business development personnel, senior professional staff and its operating management. The business development personnel concentrate on developing new customers and assisting management with existing customers. We competitively bid most of our projects. However, we have a number of preferred provider relationships with customers who award us work through long-term agreements. Our projects have durations of a few days to multiple years.

Competition

We compete with local, regional, national and international contractors in the Construction Services segment. Competitors generally vary within the markets we serve with few competitors competing in all of the markets we serve or for all of the services we provide. Contracts are generally awarded based on price, reputation for quality, customer satisfaction, safety record and programs, and schedule. We believe that our turnkey capabilities, expertise, experience and reputation for providing safe, timely, and quality services allow us to compete effectively in the markets that we serve.

Seasonality

Planned maintenance projects at customer facilities are typically scheduled in the spring and the fall when the demand for gasoline is lower. As a result, quarterly operating results in our Construction Services segment can fluctuate materially. Our business can also be affected by seasonal weather conditions including hurricanes, snowstorms, abnormally low or high temperatures or other inclement weather, which can result in reduced activities.

Insurance

The Company maintains insurance coverage for various aspects of its operations. However, exposure to potential losses is retained through the use of deductibles, coverage limits and self-insured retentions.

Employees

As of December 31, 2013, we had thirty-two (32) employees, eight (8) of which were employed in non-field positions and twenty-four (24) of which were employed in field or shop positions. The number of employees varies significantly throughout the year because of the number, type and size of projects we have in process at any particular time.

Regulation

Health and Safety Regulations

Our operations are subject to the requirements of the United States Occupational Safety and Health Act (“ OSHA ”), and comparable state laws. Regulations promulgated by this agency require employers and independent contractors to implement work practices, medical surveillance systems and personnel protection programs to protect employees from workplace hazards and exposure to hazardous chemicals and materials. In recognition of the potential for accidents within various scopes of work, these agencies have enacted strict and comprehensive safety regulations. The Company has established comprehensive programs for complying with health and safety regulations to protect the safety of its workers, subcontractors and customers. While the Company believes that it operates safely and prudently, there can be no assurance that accidents will not occur or that the Company will not incur substantial liability in connection with the operation of its business.

Environmental

The Company’s operations are subject to extensive and changing environmental laws and regulations. These laws and regulations relate primarily to air and water pollutants and the management and disposal of hazardous materials. The Company is exposed to potential liability for personal injury or property damage caused by any release, spill, exposure or other accident involving such pollutants, substances or hazardous materials.

The Company believes that it is currently in compliance, in all material aspects, with all applicable environmental laws and regulations. The Company does not expect any material charges in subsequent periods relating to environmental conditions that currently exist and does not foresee any significant future capital spending relating to environmental matters.

Recent Developments

On November 22, 2013, the Company closed a transaction involving an Asset Purchase Agreement by and among the Company and two of its subsidiaries, Fishbone Solutions, Inc., a Texas corporation (“FSI”), and Texas Gulf Industrial Services, Inc., a Texas corporation (“TGIS”), and TGE Industrial Services, LLC, a Texas limited liability company (the “Buyer”). Pursuant to the terms of the Agreement, the Company sold substantially all of the assets of FSI, TGIS and TGE Electrical and Instrumentation (“TGEI”), an operating division of the Company, to the Buyer. As consideration for the transaction, the Buyer agreed to pay to the Company an aggregate purchase price of $4,137,335, consisting of (i) the assumption of $1,597,000 in certain promissory note obligations of the Company and FSI, including certain convertible promissory notes issued to John Sloan and a promissory note in favor of David Mathews , and (ii) cash in the amount of $2,540,335.

ITEM 1A. Risk Factors

The following risk factors should be considered with the other information included in this Annual Report on Form 10-K. As we operate in a continuously changing environment, other risk factors may emerge which could have material adverse effects on our results of operations, financial condition and cash flow.

Risk Factors Related to Our Business

Unsatisfactory safety performance may subject us to penalties, can affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover.

Workplace safety is important to the Company, our employees, and our customers. As a result, we maintain comprehensive safety programs and training for all applicable employees throughout our organization. While we focus on protecting people and property, our work is performed at construction sites and in industrial facilities and our workers are subject to the normal hazards associated with providing these services. Even with proper safety precautions, these hazards can lead to personal injury, loss of life, damage to or destruction of property, plant and equipment, and environmental damage. We are intensely focused on maintaining a strong safety environment and reducing the risk of accidents to the lowest possible level.

Although we have taken what we believe are appropriate precautions to adequately train and equip our employees, we may experience accidents in the future. Serious accidents may subject us to penalties, civil litigation or criminal prosecution. Claims for damages to persons, including claims for bodily injury or loss of life, could result in costs and liabilities, which could materially and adversely affect our financial condition, results of operations or cash flows.

Demand for our products and services is cyclical and is vulnerable to the level of capital and maintenance spending of our customers and to downturns in the industries and markets we serve as well as conditions in the general economy.

The demand for our products and services depends upon the existence of construction and repair and maintenance projects in the downstream petroleum, power and other heavy industries in the United States and Canada. Therefore, it is likely that our business will continue to be cyclical in nature and vulnerable to general downturns in the United States, Canadian and world economies and declines in commodity prices, which could adversely affect the demand for our products and services.

International Plant Services, LLC revenue and cash flow are dependent upon engineering and construction projects. The availability of these projects is dependent upon the economic condition in the oil, gas, and power industries, specifically, the level of capital expenditures on energy infrastructure. A prolonged period of sluggish economic conditions in North America has had and may continue to have an adverse impact on the level of capital expenditures of our customers and/or their ability to finance these expenditures. Our failure to obtain projects, the delay of project awards, the cancellation of projects or delays in the completion of contracts are factors that may result in under-utilization of our resources, which would adversely impact our revenue, operating results and cash flow. There are numerous factors beyond our control that influence the level of capital expenditures of oil, gas and power companies, including:

Our results of operations depend upon the award of new contracts and the timing of those awards.

Our revenues are derived primarily from contracts awarded on a project-by-project basis. Generally, it is difficult to predict whether and when we will be awarded a new contract due to lengthy and complex bidding and selection processes, changes in existing or forecasted market conditions, access to financing, governmental regulations, permitting and environmental matters. Because our revenues are derived from contract awards, our results of operations and cash flows can fluctuate materially from period to period.

The uncertainty associated with the timing of contract awards may reduce our short-term profitability as we balance our current capacity with expectations of future contract awards. If an expected contract award is delayed or not received, we could incur costs to maintain an idle workforce that may have a material adverse effect on our results of operations. Alternatively, we may decide that our long-term interests are best served by reducing our workforce and incurring increased costs associated with severance and termination benefits which also could have a material adverse effect on our results of operations for the period when incurred. Reducing our workforce could also impact our results of operations if we are unable to adequately staff projects that are awarded subsequent to a workforce reduction.

We face substantial competition in each of our business segments, which may have a material adverse effect on our business.

We face competition in all areas of our business from regional, national and international competitors. Our competitors range from small family owned businesses to well-established, well-financed entities, both privately and publicly held, including many major equipment manufacturers, large engineering and construction companies and specialty contractors. We compete primarily on the basis of price, customer satisfaction, safety performance and programs, quality of our products and services, and schedule. As a result of the continuing effects of the economic slowdown on capital and maintenance spending, we may continue to experience pressure on our operating margins.

The loss of one or more of our significant customers could adversely affect us.

One or more customers have in the past and may in the future contribute a material portion of our revenues in any one year. Because these significant customers generally contract with us for specific projects or for specific periods of time, we may lose these customers from year to year as the projects or maintenance contracts are completed. The loss of business from any one of these customers could have a material adverse effect on our business or results of operations.

Our profitability could be negatively impacted if we are not able to maintain appropriate utilization of our workforce.

The extent to which we utilize our workforce affects our profitability. If we under utilize our workforce, our project gross margins and overall profitability suffer in the short-term. If we over utilize our workforce, we may negatively impact safety, employee satisfaction and project execution, which could result in a decline of future project awards. The utilization of our workforce is impacted by numerous factors including:

We are exposed to credit risk from customers. If we experience delays and/or defaults in customer payments, we could suffer liquidity problems or we could be unable to recover amounts owed to us.

Under the terms of our contracts, at times we commit resources to customer projects prior to receiving payments from customers in amounts sufficient to cover expenditures on these projects as they are incurred. Delays in customer payments require an investment in working capital. If customers default in making payments on projects, it could have an adverse effect on our financial position, results of operations and cash flows.

Actual results could differ from the estimates and assumptions that we use to prepare our financial statements.

To prepare financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions, as of the date of the financial statements, which affect the reported values of assets, liabilities, revenues and expenses and disclosures of contingent assets and liabilities. Areas requiring significant estimation by our management include:

Our actual results could materially differ from these estimates.

An inability to attract and retain qualified personnel, and in particular, engineers, project managers and skilled craft workers, could impact our ability to perform on our contracts, which could harm our business and impair our future revenues and profitability.

Our ability to attract and retain qualified engineers, project managers, skilled craftsmen and other experienced professionals in accordance with our needs is an important factor in our ability to maintain profitability and grow our business. The market for these professionals is competitive, particularly during periods of economic growth when the supply is limited. We cannot provide any assurance that we will be successful in our efforts to retain or attract qualified personnel when needed. Therefore, when we anticipate or experience growing demand for our services, we may incur additional cost to maintain a professional staff in excess of our current contract needs in an effort to have sufficient qualified personnel available to address this anticipated demand. If we do incur additional compensation and benefit costs, our customer contracts may not allow us to pass through these costs.

Competent and experienced engineers, project managers, and craft workers are especially critical to the profitable performance of our contracts, particularly on our fixed-price contracts where superior design and execution of the project can result in profits greater than originally estimated or where inferior design and project execution can reduce or eliminate estimated profits or even result in a loss.

Our project managers are involved in most aspects of contracting and contract execution including:

Future events, including those associated with our growth strategy, could negatively affect our liquidity position.

We can provide no assurance that we will have sufficient cash from operations or the credit capacity to meet all of our future cash needs should we encounter significant working capital requirements or incur significant acquisition costs. Additionally, recent divestitures will lead to reduced revenue and profits which will likely impact the Company’s cash position negatively. Insufficient cash from operations, significant working capital requirements, and contract disputes have in the past, and could in the future, reduce availability under our credit facility.

There are integration and consolidation risks associated with our acquisition and divestiture strategy. Future acquisitions and divestitures may result in significant transaction expenses, unexpected liabilities and risks associated with entering new markets, and we may be unable to profitably operate these businesses.

An aspect of our business strategy is to make strategic acquisitions and divestitures in markets where we currently operate as well as in markets in which we have not previously operated.

We may lack sufficient management, financial and other resources to successfully integrate future acquisitions. Any future acquisitions may result in significant transaction expenses, unexpected liabilities and risks associated with entering new markets in addition to the integration and consolidation risks.

Recent and future divestitures will have an impact on the Company’s resources and may impact the ability of the Company to provide all of the services previously offered.

If we make any future acquisitions, we likely will have exposure to third parties for liabilities of the acquired business or assets that may or may not be adequately covered by insurance or by indemnification, if any, from the former owners of the acquired business or assets. Any of these unexpected liabilities could have a material adverse effect on our business.

We are involved, and are likely to continue to be involved in legal proceedings, which will increase our costs and, if adversely determined, could have a material effect on our financial condition and results of operations.

We are currently a defendant in legal proceedings arising from the operation of our business and it is reasonable to expect that we would be named in future actions. Many of the actions against us arise out of the normal course of performing services on project sites, and include claims for workers’ compensation, personal injury and property damage. From time to time, we are also named as a defendant for actions involving the violation of federal and state labor laws related to employment practices and wages and benefits and in contract disputes with customers.

We maintain insurance against operating hazards in amounts that we believe are customary in our industry. However, our insurance has deductibles and coverage exclusions so we cannot provide assurance that we are adequately insured against all types of risks that are associated with the conduct of our business. A successful claim brought against us in excess of, or outside of, our insurance coverage could have a material adverse effect on our financial condition and results of operations.

Litigation, regardless of its outcome, is expensive, typically diverts the efforts of our management away from operations for varying periods of time, and can disrupt or otherwise adversely impact our relationships with current or potential customers and suppliers. Payment and claim disputes with customers may also cause us to incur increased interest costs resulting from incurring indebtedness under our revolving line of credit or receiving less interest income resulting from fewer funds invested due to the failure to receive payment for disputed claims and accounts.

International Plant Services, LLC (IPS) depends on the Foreign Guest Worker Visa Program for a significant portion of its revenue. We have been unable to obtain new Visas since 2011. If the current policies of the United States Department of Labor and the U.S. Department of Homeland Security regarding the Guest Worker Visa Program do not change, IPS will continue to see a decline in available workers which will likely have an adverse effect on our revenues.

IPS continues to process Visas for guest workers but has not had a new visa or renewal approved since 2011. While we continue to deploy American workers, IPS will lose most of its current foreign workers by the 3 ^rd quarter of 2014 if there is no change in US Policy. This will reduce revenue and earnings from IPS to near zero, if we are not successful in deploying American Workers or winning approval of new Visas.

Our projects expose us to potential professional liability, product liability, warranty and other claims, which could be expensive, damage our reputation and harm our business. We may not be able to obtain or maintain adequate insurance to cover these claims.

We perform construction services at large industrial facilities where accidents or system failures can be disastrous and costly. Any catastrophic occurrence in excess of our insurance limits at locations engineered or constructed by us or where our products are installed or services performed could result in significant professional liability, product liability, warranty and other claims against us by our customers, including claims for cost overruns and the failure of the project to meet contractually specified milestones or performance standards. Further, the rendering of our services on these projects could expose us to risks and claims by third parties and governmental agencies for personal injuries, property damage and environmental matters, among others. Any claim, regardless of its merit or eventual outcome, could result in substantial costs, divert management’s attention and create negative publicity, particularly for claims relating to environmental matters where the amount of the claim could be extremely large. We may not be able to or may choose not to obtain or maintain insurance coverage for the types of claims described above. If we are unable to obtain insurance at an acceptable cost or otherwise protect against the claims described above, we will be exposed to significant liabilities, which may materially and adversely affect our financial condition and results of operations.

Employee, subcontractor or partner misconduct or our overall failure to comply with laws or regulations could harm our reputation, damage our relationships with customers, reduce our revenues and profits, and subject us to criminal and civil enforcement actions.

Misconduct, fraud, non-compliance with applicable laws and regulations, or other improper activities by one of our employees, subcontractors or partners could have a significant negative impact on our business and reputation. Such misconduct could include the failure to comply with safety standards, laws and regulations, customer requirements, regulations pertaining to the internal controls over financial reporting, environmental laws and any other applicable laws or regulations. The precautions we take to prevent and detect these activities may not be effective, since our internal controls are subject to inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud.

Our failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines and penalties, harm our reputation, damage our relationships with customers, reduce our revenues and profits and subject us to criminal and civil enforcement actions.

We rely on internally and externally developed software applications and systems to support critical functions including project management, estimating, human resources, accounting, and financial reporting. Any sudden loss, disruption or unexpected costs to maintain these systems could significantly increase our operational expense as well as disrupt the management of our business operations.

We rely on various software systems to operate our critical operating and administrative functions. We depend on our software vendors to provide long-term software maintenance support for our information systems. Software vendors may decide to discontinue further development, integration or long-term software maintenance support for our information systems, in which case we may need to abandon one or more of our current information systems and migrate some or all of our project management, human resources, estimating, accounting and financial information to other systems, thus increasing our operational expense as well as disrupting the management of our business operations.

Our business may be affected by difficult work sites and environments, which may adversely affect our overall business.

We perform our work under a variety of conditions, including, but not limited to, difficult terrain, difficult site conditions and busy urban centers where delivery of materials and availability of labor may be impacted. Performing work under these conditions can slow our progress, potentially causing us to incur contractual liability to our customers. These difficult conditions may also cause us to incur additional, unanticipated costs that we might not be able to pass on to our customers.

We are susceptible to adverse weather conditions, which may harm our business and financial results.

Our business may be adversely affected by severe weather in areas where we have significant operations. Repercussions of severe weather conditions may include:

Environmental factors and changes in laws and regulations could increase our costs and liabilities.

Our operations are subject to environmental laws and regulations, including those concerning emissions into the air; discharges into waterways; generation, storage, handling, treatment and disposal of hazardous material and wastes; and health and safety.

We are subject to numerous other laws and regulations including those related to the business registrations and licenses, environment, workplace, employment, health and safety. These laws and regulations are complex, change frequently and could become more stringent in the future. It is impossible to predict the effect on us of any future changes to these laws and regulations. We can provide no absolute assurance that our operations will continue to comply with future laws and regulations or that the costs to comply with these laws and regulations and/or a failure to comply with these laws will not significantly adversely affect our business, financial condition and results of operations.

International operations are subject to a number of risks that could negatively affect future operating results or subject us to criminal and civil enforcement actions.

We are seeking to expand our business internationally. International business is subject to a variety of risks, including:

International risks and violations of international regulations may negatively affect future operating results or subject us to criminal or civil enforcement actions. Although we have policies and procedures to monitor legal and regulatory compliance, our employees, subcontractors and agents could take actions that violate these requirements. As a result, our international risk exposure may be more or less than the percentage of revenues attributed to our international operations.

We may need to raise additional capital in the future for working capital, capital expenditures and/or acquisitions, and we may not be able to do so on favorable terms or at all, which would impair our ability to operate our business or achieve our growth objectives.

To the extent that cash flow from operations are insufficient to make future investments, make acquisitions or provide needed additional working capital, we may require additional financing from other sources. Our ability to obtain such additional financing in the future will depend in part upon prevailing capital market conditions, as well as conditions in our business and our operating results; and those factors may affect our efforts to arrange additional financing on terms that are satisfactory to us. If adequate funds are not available, or are not available on acceptable terms, we may not be able to make future investments, take advantage of acquisitions or other opportunities, or respond to competitive challenges.

We have experienced an absence of significant revenues, recurring losses from operations and need additional financing, which raise substantial doubt about our ability to continue as a going concern.

As discussed in Note 1 to the financial statements included in this Annual Report on Form 10-K, the Company’s absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2014 raise substantial doubt about its ability to continue as a going concern.

Risk Factors Related to Our Common Stock

Our common stock, which is quoted on the Over the Counter Market, has from time-to-time experienced significant price and volume fluctuations. These fluctuations are likely to continue in the future, and our stockholders may not be able to resell their shares of common stock at or above the purchase price paid.

The market price of our common stock may change significantly in response to various factors and events beyond our control, including the following:

Some companies that have volatile market prices for their securities have been subject to security class action suits filed against them. If a suit were to be filed against us, regardless of the outcome, it could result in substantial costs and a diversion of our management’s attention and resources. This could have a material adverse effect on our business, results of operations and financial condition.

Future sales of our common stock may depress our stock price.

Sales of a substantial number of shares of our common stock in the public market or otherwise, either by us, a member of management or a major stockholder, or the perception that these sales could occur, could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

We may issue additional equity securities, which would lead to dilution of our issued and outstanding stock.

The issuance of additional common stock or securities convertible into our common stock would result in dilution of the ownership interest in us held by existing stockholders. We are authorized to issue, without stockholder approval 100,000,000 shares of preferred stock, par value $0.00001 per share, in one or more series, which may give other stockholders dividend, conversion, voting, and liquidation rights, among other rights, which may be superior to the rights of holders of our common stock. In addition, we are authorized to issue, without stockholder approval, a significant number of additional shares of our common stock and securities convertible into either common stock or preferred stock.

ITEM 1B. Unresolved Staff Comments

None.

ITEM 2. Properties

The principal properties of the Company and its subsidiaries are as follows:

ITEM 3. Legal Proceedings

Various legal actions, claims, and other contingencies arise in the normal course of our business. Contingencies are recorded in the consolidated financial statements, or are otherwise disclosed, in accordance with ASC 450-20, “Loss Contingencies”. Specific reserves are provided for loss contingencies to the extent we conclude that a loss is both probable and estimable. We use a case-by-case evaluation of the underlying data and update our evaluation as further information becomes known, and the known claims as of this date are as follows:

Civil Action 4:12-CV-00055; Renato Acain et al vs. International Plant Services LLC et al.

International Plant Services, L.L.C. (IPS) is a subsidiary of the Company. IPS has been sued in a matter presently pending in United States District Court, Southern District of Texas, Houston Division by fifty-five (55) Filipino workers alleging violations of RICO and other fiduciary errors. The suit was initially instituted on May 27, 2011 and removed to U.S. District Court on January 6, 2012. The plaintiff is seeking relief in the form of unspecified monetary relief. The United States District Court remanded the ACAIN case to the 113 ^th District Court on September 15, 2012. Subsequently, Judge Patricia J. Kerrigan, 113 ^th District Court, State of Texas, dismissed the case. While the Company continues to believe this lawsuit is without merit, the ACAIN plaintiffs have appealed the dismissal to the Texas Court of Appeals, First District. The matter is to be submitted on April 29, 2014, there will be no oral argument permitted.  

Cause No. 2012-23084; Ardent Services, LLC vs. David D. Mathews and Larry J. Laqua.

The Company has settled all matters related to the Company in the Ardent matter and will not continue providing the defense of its employees, Mr. Mathews (former President and CEO of the Company) and Mr. Laqua (Vice President of a Company business unit), in a matter involving their former employer, Ardent. Ardent is suing Mr. Mathews and Mr. Laqua in the 234th District Court, Harris County, Houston, Texas for breach of confidentiality and non-solicitation clauses in certain employment agreements, along with other breaches of duties allegedly owed. The Company intends to discontinue its sponsorship and no longer assist in the defense of Mr. Mathews and Mr. Laqua. The suit was initially instituted on April 20, 2012. The plaintiff is seeking relief in the form of injunctive and unspecified monetary relief. On October 24, 2013, the Company and the plaintiff entered into a Settlement Agreement whereby the plaintiff released the Company from all claims arising of this lawsuit.  In exchange therefore, the Company agreed (i) to pay plaintiff the sum of $10,000 for attorney’s fees and (ii) through December 31, 2014 to not directly or indirectly solicit any electrical and instrumentation business from 11 facilities in the State of Texas.

Cause No. 4:13-cv-00505, Michael Rushing, Stephanie Rushing, Penn Rushing and Florence Rushing v. Texas Gulf Energy, Inc. on behalf of CS Bankers V, LLC, Texas Gulf Fabricators, Inc., David Mathews, Craig Crawford and Timothy Connolly, United States District Court for the Southern District.

The Company had originally filed against the Rushings for a Declaratory Judgment alleging they had failed to perform relative to a letter of intent with Texas Gulf Fabricators, Inc., or alternatively, that the letter of intent was not enforceable.  The Company also filed a conversion action against the Rushings for removing property from a fabrication facility.  The Rushing Family filed two separate counterclaims in the underlying state court actions before removing both actions to federal court in March 2013.  On April 13, 2013, the federal court denied jurisdiction and remanded the matter back to the Texas State Court in the proceedings known as: (i) Cause No. 2013-00543; Texas Gulf Energy, Inc. on behalf of CS Bankers V, LLC and Texas Gulf Fabricators, Inc. vs. Penn Rushing, et al, in the 270 ^th Judicial District Court of Harris County and (ii) Cause No. 2013-004690; Texas Gulf Energy, Inc. vs. Penn Rushing, et al, in the 270 ^th Judicial District Court of Harris County.  The Rushings' allegations include fraudulent inducement, negligent misrepresentation, breach of fiduciary duty, conversion, equitable estoppel and securities violations.  

These claims relate to a letter of intent and foreclosure proceeding on a shop property in Baytown, Texas.  The Rushings have not disclosed an amount of damages sought. The Company is required to pay for the defense of Mr. Mathews, Mr. Crawford and Mr. Connolly.  The Company opposes the removal to federal court.  The Company believes the Rushing's claims are without merit and intends to pursue its claims and defenses vigorously.

Based on our knowledge as of the date of this filing, we believe that any amounts exceeding our recorded accruals should not materially affect our financial position, results of operations or liquidity. It is the opinion of management that the eventual resolution of the above claims is unlikely to have a material effect on our financial position or operating results. However, the results of litigation are inherently unpredictable and the possibility exists that the ultimate resolution of one or more of these matters could result in a material effect on our financial position, results of operations or liquidity.

The Company has received notification that a legal action has been initiated with the Republic of the Philippines, Department of Labor and Employment, National Labor Relations Commission by Benjamin A. Villego against International Plant Services, L.L.C. (“IPS”), a wholly owned subsidiary of the Company, MBC Human Resources Corporation (“MBC”), a Philippines corporation, and Nida P. Sarmiento, President of MBC. The action alleges that wages and food allowances are owed to Mr. Villego. MBC is majority owned and controlled by Noureddine Ayed and Karim Ayed, who are majority shareholders of the Company. IPS and the Company have agreements with MBC to provide the training and processing of guest workers from the Philippines and to pay MBC a fee based upon hours worked by the guest workers. The Company believes that Mr. Villego's claim is without merit and intends to vigorously defend IPS.

ITEM 4. Mine Safety Disclosures

Not applicable.

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common shares are quoted on the Over-The-Counter Bulletin Board (“ OTCBB ”) and the OTC Markets-OTCQB (“ OTCQB ”) under the symbol “TXGE.”

The following table summarizes the high and low bid information of the common stock for the periods indicated:

All historical data above was obtained from OTC Markets Group, Inc.

Performance Graph

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide this information.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

The Company did not sell any securities during the period covered by this Report which were not registered under the Act and not previously reported on a quarterly report on Form 10-Q or a current report on Form 8-K.

Holders

On April 11, 2014, the closing price of our common stock as reported on the OTCQB was $.022 per share and there were approximately seventy (70) shareholders of record. The number of record holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.

Dividends

We have not declared any dividends on our common stock since our inception. Any future dividend payments will depend on our financial condition, capital requirements and earnings as well as other factors the Board of Directors may deem relevant. There are no dividend restrictions that limit our ability to pay dividends on our common stock in our Articles of Incorporation or Bylaws. Our governing statute, Chapter 78 of the Nevada Revised Statutes (the “ NRS ”), does provide limitations on our ability to declare dividends. Section 78.288 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

(a) we would not be able to pay our debts as they become due in the usual course of business; or

(b) our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution (except as otherwise specifically allowed by our Articles of Incorporation).

ITEM 6. Selected Financial Data

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide this information.

[continued on next page]

ITEM 7. Management‘s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management. This Annual Report includes forward-looking statements. Generally, the words “believes ”, “anticipates”, “ may ”, “ will ”, “ should ”, “ expect ”, “ intend ”, “estimate”, “continue” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this Annual Report or other reports or documents we file with the SEC from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be place on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements. The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this Annual Report.

Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“ GAAP ”). GAAP represents a comprehensive set of accounting and disclosure rules and requirements, the application of which requires management judgments and estimates including, in certain circumstances, choices between acceptable GAAP alternatives. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. Note 2 of the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, contains a comprehensive summary of our significant accounting policies. The following is a discussion of our most critical accounting policies, estimates, judgments and uncertainties that are inherent in our application of GAAP.

CRITICAL ACCOUNTING ESTIMATES

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, services are performed, sales price is determinable, and collection is reasonably assured. Services performed and not yet billed are included in accounts receivable as unbilled revenue. Mobilization fees are recognized upon the mobilization of the labor and the labor revenue is recognized at the unit price of labor hours worked. Per diem revenue is recorded in a similar fashion for meals, travel and lodging.

Contract costs include all labor costs, mobilization costs, travel, per diem for travel meals and lodging, and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. General and administrative costs are charged to expense as incurred.

Loss Contingencies

Various legal actions, claims, and other contingencies arise in the normal course of our business. Contingencies are recorded in the consolidated financial statements, or are otherwise disclosed, in accordance with ASC 450-20, “Loss Contingencies”. Specific reserves are provided for loss contingencies to the extent we conclude that a loss is both probable and estimable. We use a case-by-case evaluation of the underlying data and update our evaluation as further information becomes known. We believe that any amounts exceeding our recorded accruals should not materially affect our financial position, results of operations or liquidity. However, the results of litigation are inherently unpredictable and the possibility exists that the ultimate resolution of one or more of these matters could result in a material effect on our financial position, results of operations or liquidity.

Legal costs are expensed as incurred.

RESULTS OF OPERATIONS

Overview

The Company currently has two (2) reportable segments, International Plant Services, LLC, and Texas Gulf Specialty Services. The other previously reported segments were disposed during 2013.

International Plant Services, LLC

Our International Plant Services, L.L.C. segment provides turnkey and specialty construction services to a wide range of industrial and energy sector clients. Our scope of services includes managing and executing major capital and turnaround projects, the provision of project management personnel, and other construction resources, like project planners/schedulers, engineers, welders, fitters and millwrights. A portion of the engineers and skilled craftsmen (welders, fitters, millwrights and electricians) are guest workers working with visas in the United States. These services are provided for projects of varying complexities, schedule durations, and budgets. Our project experience and expertise includes turnarounds, retrofits, modifications and expansions to existing facilities as well as the construction of new facilities in the refinery, petrochemical, mining and power industries.

Texas Gulf Specialty Services

Texas Gulf Specialty Services provides specialty construction services to a wide range of industry and energy sector clients. These services are provided for projects of varying complexities, schedule durations and budgets.

Results of Divestiture

On November 22, 2013 (the “Closing Date”) The Company, closed a transaction (the “Transaction”) involving an Asset Purchase Agreement dated the Closing Date (the “Agreement”) by and among the Company and three of its subsidiaries, Fishbone Solutions, Inc., a Texas corporation (“FSI”), Texas Gulf Industrial Services, Inc,, a Texas corporation (“TGIS”), and TGE Industrial Services, LLC, a Texas limited liability company (the “Buyer”). Pursuant to the terms of the Agreement, the Company sold substantially all of the assets of FSI, TGIS and TGE Electrical and Instrumentation (“TGEI”), an operating division of the Company, to the Buyer. As consideration for the transaction, the Buyer agreed to pay to the Company an aggregate purchase price of $4,137,335, consisting of (i) the assumption of $1,597,000 in certain promissory note obligations of the Company and FSI, including certain convertible promissory notes issued to John Sloan (“Sloan”) and a promissory note in favor of David Mathews (“Mathews”), as further described below, and (ii) cash in the amount of $2,540,335.

Also as of Closing Date, pursuant to the Agreement, the Company and the Buyer entered into a Transition Agreement (the “Transition Agreement”) whereby the Company agreed to provide certain services related to the continuing operation of FSI, TGIS and TGEI for a period of sixty (60) days, which by written notice of the Buyer may be extended for an additional thirty (30) days thereafter. As consideration for these services be rendered pursuant to the Transition Agreement, on the Closing Date the Buyer pre-paid the sum of $150,000 to the Company.

In conjunction and concurrent with the closing of the Transaction, the Company entered into and closed two (2) other agreements, as follows: (i) a Redemption Agreement with Sloan whereby Sloan surrendered conversion rights under two (2) Convertible Promissory Notes issued by the Company to Sloan, both dated February 3, 2013, in the original principal amounts of $493,506and $100,000, respectively, (the “Sloan Notes”), in exchange for the Company's release of Sloan from his obligations under an employment agreement with the Company, and (ii) a Stock Redemption Agreement with Mathews, an officer of certain of the Company's subsidiaries and the Company's former Chief Executive Officer, whereby the Company redeemed certain capital stock in the Company, in amounts consisting of 15,667,806 shares of Common Stock and 966,666 shares of Series A Convertible Preferred Stock, in exchange for the Company’s issuance to Mathews of a promissory note in the amount of $1,000,000.00 (the “Mathews Note”). As a part of the Transaction, the Sloan Notes and the Mathews Note were assumed by the Buyer, and the Company has no further obligations under the Sloan Notes and the Mathews Note.

In connection with the Transaction, Mathews and Sloan each resigned from all employee and official or appointed positions with the Company and its subsidiaries and affiliates, including but limited to Fishbone Solutions, Inc. and Texas Gulf Industrial Services, Inc.

Following the closing of the Transaction, on November 25, 2013 the Company entered into and closed (i) a Stock Redemption Agreement with Karim Ayed, the Company's Chairman of the Board, whereby the Company redeemed 966,667 shares of Series A Convertible Preferred Stock in exchange for cash in the amount of $1,000,000and (ii) a Stock Redemption Agreement with Mohamed Noureddine Ayed, the Company's former Chairman of the Board, whereby the Company redeemed 966,667 shares of Series A Convertible Preferred Stock in exchange for cash in the amount of $1,000,000. As a result of the redemptions of the Series A Convertible Preferred Stock previously owned by Mathews, Karim Ayed and Mohamed Noureddine Ayed, all previously issued and outstanding shares of the Series A Convertible Preferred Stock have been redeemed and retired.

FISCAL YEAR ENDED DECEMBER 31, 2013 COMPARED TO FISCAL YEAR ENDED DECEMBER 31, 2012.

Revenues .. Consolidated revenues were $9,503,019 in 2013, down from consolidated revenues of $26,814,839 in 2012. The decrease in consolidated revenues was a result the lack of available visas and the resulting decrease in headcount related to the divestiture of the subsidiaries.

Cost of Sales. During fiscal year ended December 31, 2013, we incurred Cost of Sales of $7,770,184 compared to $20,626,859 incurred during the fiscal year ended December 31, 2012. A substantial portion of this decrease was related to decreased business activity related to International Plant Services.

Gross Profits .. Consolidated gross profit decreased from $6,187,980 in 2012 to $1,732,835 in 2013. The decrease is related to the decline in the overall business and lower rates on the services provided due to worsening mix associated with the lack of foreign workers. The gross margin was 18% in 2013 down from 23% in 2012.

General/Administrative .. During fiscal year ended December 31, 2013, we incurred General and Administrative expenses of $5,867,272 compared to $7,616,826 incurred during the fiscal year ended December 31, 2012 (General and administrative expenses include corporate overhead, financial and administrative contracted services, marketing, and consulting costs.) The decrease was primarily due to legal representation expenses and reduction of staff. SG&A expense as a percentage of revenue in 2013 were 62% and 28% in 2012.

Interest Expense .. Net interest expense was $211,741 in 2013 and $166,746 in 2012. The increase in net interest expense in 2013 was due to an increase of amortization of debt costs associated with factoring our receivables.

Other Income .. Other income in 2013 and 2012 was $221,223 and $44,699, respectively. Approximately $398, 000 of the other income in 2012 is the gain on the sale of ninety-one percent (91%) of the stock of our subsidiary, Texas Gulf Oil and Gas, Inc.

Taxes. The effective tax rates for the fiscal years ended December 31, 2013 and December 31, 2012 was thirty-four percent (34%) each respective year. The effective negative tax rate was due to a net operating loss in that was carried back to prior tax years.

Income. Our net loss for the fiscal year ended December 31, 2013 was $289,334 compared to a net loss of $343,492 during the fiscal year ended December 31, 2012. This increase in net income is primarily a result of litigation expenses related to the disclosures in Item 3. The Company did experience a decrease in salaries and wages related to the reduction of staff during 2013.

LIQUIDITY AND CAPITAL RESOURCES

Overview

We define liquidity as the ability to pay our liabilities as they become due, fund business operations and meet all monetary contractual obligations. Our primary sources of liquidity in 2013 was cash on hand at the beginning of the year, cash generated from operations and the divestiture of two operating segments. Cash on hand at December 31, 2013 totaled $339,685.

Factors that routinely impact our short-term liquidity and that may impact our long-term liquidity include, but are not limited to:

Other factors that may impact both short and long-term liquidity include, but are not limited to:

In the future we may elect to raise additional capital by issuing common or preferred stock, convertible notes, term debt or future revolving credit facilities as necessary to fund our operations or to fund the acquisition of other businesses. We will continue to evaluate our working capital requirements and other factors to maintain sufficient liquidity.

Assets. As of the fiscal year ended December 31, 2013, our total assets were $3,901,334 and our total liabilities were $2,943,785. As of the fiscal year ended December 31, 2013, total assets were comprised of $339,685 in cash and cash equivalents, $2,245,358 in trade accounts receivable, $329,686 of prepaid expenses, $370,216 of property and equipment, net of depreciation, $257,437 in other assets and $358,952 in deferred tax assets. As of the fiscal year ended December 31, 2013, total liabilities were comprised of $917,351 in trade accounts payable, $171,945 of accrued expenses, an aggregate of $25,657 due to related parties, $714,959 on lines of credit, $393,604 in notes payable, $585,971 for convertible debt, and $0 in deferred tax liabilities, and $134,298 in federal tax payable. As of the end of the fiscal year ended December 31, 2012, our total assets were $10,457,629 and our total liabilities were $7,194,104. As of the fiscal year ended December 31, 2012, total assets were comprised of a $394,306 in cash and cash equivalents, $6,506,920 in trade accounts receivable, $762,211 of prepaid expenses, $290,224 in federal income tax receivable, $1,431,741 of property and equipment, net of depreciation and $130,000 in deferred tax assets. As of the fiscal year ended December 31, 2012, total liabilities were comprised of a $1,292,686 in trade accounts payable, $1,353,044 of accrued expenses, an aggregate of $204,561 due to related parties, $2,623,552 on lines of credit, $233,135 in notes payable, $1,283,126 for convertible debt, $29,000 in deferred tax liabilities, and $175,000 federal tax payable.

Equity. Stockholders’ equity decreased from $3,263,525 for the fiscal year ended December 31, 2012 to $957,549 for the fiscal year ended December 31, 2013, a difference of $2,305,976.

CASH FLOWS FROM OPERATING ACTIVITIES

We have not generated positive cash flows from operating activities; and we did not have positive net income for the fiscal year ended December 31, 2013. For the fiscal year ended December 31, 2013, net cash used in operating activities was $1,249,708 consisting of decreases in accrued expenses of $1,001,060, accounts payable of $375,335, related party payable of $178,904, and federal income taxes receivable of $0. This is offset by increases from accounts receivable of $3,179,353, prepaid and other assets of $240,512. For the fiscal year ended December 31, 2012, net cash used in operating activities was $3,105,733. Major components of cash flows from operating activities are as follows:

Cash Flows Provided by Operating Activities

(In thousands)

The cash effect of significant changes in operating assets and liabilities include the following:

CASH FLOWS FROM INVESTING ACTIVITIES

We have cash received from investing activities during the fiscal year ended December 31, 2013 of $2,443,794 consisting primarily of proceeds from the disposal of business compared to cash used in investing activities of $1,178,953 as of the fiscal year ended December 31, 2012.

CASH FLOWS FROM FINANCING ACTIVITIES

We have historically financed our operations primarily from the issuance of debt. For the fiscal year ended December 31, 2013, cash flows used in financing activities is $3,748,123. This amount consists of $2,000,000 cash used in the repurchase of Series A convertible preferred shares, cash used of $1,908,593 for repayment of lines of credit, net, and $160,470 proceeds from loans, net. In the fiscal year ended December 31, 2012 we had cash flow from financing activities of $1,931,112 which was from lines of credit, net for $2,234,553 off-set by the for repayment of loans of $303,441.

Our working capital requirements are expected to increase in line with the growth of our business. We currently anticipate that working capital requirements may not be satisfied without the addition of financing based on our future growth prospects.

PLAN OF OPERATION AND FUNDING

Existing working capital, further advances and debt instruments, and anticipated cash flow are not expected to be adequate to fund our operations over the next twelve (12) months. We are currently negotiating lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to funding working capital. We intend to finance these expenses with further debt availability. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

MATERIAL COMMITMENTS

During 2012, The Company entered into an agreement to acquire all the equity of Fishbone Solutions, Inc. As a result of this transaction the Company issued a debt instrument of $1,283,126. The company fully expects the holders of this note to convert this into equity at the earliest opportunity. The note contains provisions limiting the conversion rights to 4.99% of ownership. As of December 31, 2013, $597,000 of the convertible debt has been assumed by the buyer in relation to the disposition described in Note 10. In addition as of year end, $103,649 was converted into common shares at $0.12 per share by a holder. As of December 31, 2013, the convertible debt balance is $585,971.

PURCHASE OF SIGNIFICANT EQUIPMENT

With the exception of small tools and equipment, we do not intend to purchase any significant equipment during the next twelve (12) months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors .

Contractual obligations, contingent liabilities and commitments

Contractual obligations at December 31, 2013 are summarized below:

Non-GAAP Financial Measure

EBITDA is a supplemental, non-GAAP financial measure. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We have presented EBITDA because it is used by the financial community as a method of measuring our performance and of evaluating the market value of companies considered to be in similar businesses. We believe that the line item on our Consolidated Statements of Income entitled “Net income” is the most directly comparable GAAP measure to EBITDA. Since EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance. EBITDA, as we calculate it, may not be comparable to similarly titled measures employed by other companies. In addition, this measure is not necessarily a measure of our ability to fund our cash needs. As EBITDA excludes certain financial information compared with net income, the most directly comparable GAAP financial measure, users of this financial information should consider the type of events and transactions, which are excluded. Our non-GAAP performance measure, EBITDA, has certain material limitations as follows:

(In thousands, except percentages and per share data)

Outlook

We have seen improvement in Construction Services in 2013 and believe that growing in this market continues to be in the best interest of the Company. Apart from the limited construction opportunities in portions of our Downstream Petroleum market, we believe that the overall outlook for our core markets is positive. However our reliance on foreign temporary workers as a primary revenue driver needs to change. We have also experienced a slow down in the payment of accounts receivable and revenue generation, thus we raise concerns about our ability to continue as a going concern without additional investment or borrowings which may not be available.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide this information.

ITEM 8.    Financial Statements

Reference is made to the “F” pages herein comprising a portion of this Annual Report on Form 10-K.

ITEM 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.

Item 9A. Controls and Procedures

(a)        Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2013 . Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2013, our disclosure controls and procedures were (1) effective in that they were designed to ensure that material information relating to us, and information required to be disclosed in our reports to the Commission, including our consolidated subsidiaries, is made known to our Chief Executive Officer and Chief Financial Officer by others within those entities, particularly during the period in which this report was being prepared, as appropriate to allow timely discussions and decisions regarding required disclosure therein and (2) effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

(b)        Management’s Report on Internal Control Over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officer and effected by the Company’s board of directors, management and other personnel, 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 and includes those policies and procedures (1) that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company, provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, however, internal control over financial reporting may not prevent or detect misstatements. 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. Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 Framework). Based on our assessment, management, with the participation of our Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2013, our internal control over financial reporting was effective based on those criteria at the reasonable assurance level.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting, as management’s report was not subject to attestation by our registered public accounting firm pursuant the permanent exemption of the SEC that require us to provide only management’s report in this Annual Report.

(d) Changes in Internal Control Over Financial Reporting

We did not effect any change in our internal controls over financial reporting during the period covered by this report that materially affected, or that would reasonably be likely to affect materially, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this Item will appear in the Company’s Proxy Statement for its 2014 Annual Meeting of Stockholders, and the information therein is incorporated herein by reference.

Item 11. Executive Compensation.

The information required by this Item will appear in the Company’s Proxy Statement for its 2014 Annual Meeting of Stockholders, and the information therein is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

 The information required by this Item will appear in the Company’s Proxy Statement for its 2014 Annual Meeting of Stockholders, and the information therein is incorporated herein by reference.

Item13. Certain Relationships and Related Transactions and Director Independence.

 The information required by this Item will appear in the Company’s Proxy Statement for its 2014 Annual Meeting of Stockholders, and the information therein is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services.

The following table presents fees for audit services provided by LBB & Associates Ltd., LLP and other services provided by LBB & Associates Ltd., LLP and Hammack CPAs for the fiscal years 2013 and 2012. The Company does not have an Audit Committee. The Company’s Board approved all audit related fees.

PART IV

ITEM 15.   Exhibits and Financial Statement Schedules

(a) Financial Statements and Schedules

See Index to Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K.

(b)     Exhibits

SIGNATURES

In accordance the requirements of Section 13 or 15(d) 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 the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 28, 2014.

Texas Gulf Energy, Inc.

Consolidated Financial Statements

December 31, 2013 and 2012

Texas Gulf Energy, Inc .

Table of Contents

LBB & ASSOCIATES LTD., LLP

10260 Westheimer Road, Suite 310

Houston, TX 77042

Phone: (713) 800-4343 Fax: (713) 456-2408

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of

Texas Gulf Energy, Inc.

La Porte, Texas

We have audited the accompanying consolidated balance sheets of Texas Gulf Energy, Inc. (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years then ended. 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 were free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that were 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, 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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Texas Gulf Energy, Inc. as of December 31, 2013 and 2012, and the results of its operations and cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2014 raise substantial doubt about its ability to continue as a going concern. The 2013 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

As described in Note 1, the accompanying consolidated financial statements for 2012 have been restated.

/s/ LBB & Associates Ltd., LLP

LBB & Associates Ltd., LLP

Houston, Texas

April 11, 2014

Texas Gulf Energy, Inc.

Consolidated Balance Sheets

December 31, 2013 and 2012

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

Texas Gulf Energy, Inc.

Consolidated Statements of Operations

Years ended December 31, 2013 and 2012

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

Texas Gulf Energy, Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

Years ended December 31, 2013 and 2012

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

Texas Gulf Energy, Inc.

Consolidated Statements of Cash Flows

Years ended December 31, 2013 and 2012

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

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Texas Gulf Energy, Incorporated (“Company”) has restated its consolidated financial statements for the year ended December 31, 2012 to correct its accounting for errors that occurred during this reporting period. This restatement is necessary due to material weaknesses in the Company’s internal controls that resulted in accounting errors that occurred when the Company failed to reconcile certain accounts. An account analysis was not adequately performed and not properly verified and there was an insufficient review by supervisory personnel during the accounting closing process. The effected accounts were “Prepaid Expenses - Credit Cards,” “Accrued Revenue,” “Advance to Global NuTech, Inc.,” and “Accrued Expenses.” As part of the restatement process resulting from our review of such errors, we assessed which items should be corrected in our previously issued financial statements. The aggregate adjustments in our financial statements decreased net income by $472,409 for the year ended December 31, 2012. Additionally, total assets and total liabilities decreased by $609,786 and $137,377 respectively.

Nature of Business – Texas Gulf Energy, Inc. (a Nevada corporation) (“TGE” or “the Company”) is located in La Porte, Texas and is in the business of providing craftsmen, architects and engineers in the energy construction sector. Approximately seventy percent of the revenue is from new construction and the remainder is from repair and maintenance services. The work is generally performed under time and material priced contracts, based on hours worked plus mobilization fees at the outset of the projects. The lengths of the Company’s contracts vary but are typically less than one year.

On December 30, 2011, International Plant Services, LLC (“IPS”) entered into a merger with Global NuTech, Inc.(”Global NuTech”), a Nevada corporation, pursuant to which IPS and Global NuTech have set forth certain terms relating to a merger transaction between the parties with IPS becoming a wholly-owned subsidiary of Global NuTech. The transaction was recorded as a reverse merger whereby IPS was considered to be the accounting acquirer as its shareholders retained control of Global NuTech after the exchange, although Global NuTech is the legal parent company. The share exchange was treated as a recapitalization of IPS, and IPS (and its historical financial statements) is the continuing entity for financial reporting purposes. In the first quarter of 2012, Global NuTech changed its name to Texas Gulf Energy, Inc.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries International Plant Services, L.L.C., NuTech Energy, Inc., and Texas Gulf Specialty Services, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

On November 22, 2013, the Company closed a transaction involving an Asset Purchase Agreement by and among the Company and three of its subsidiaries, Fishbone Solutions, Inc. (“FSI”), Texas Gulf Industrial Services, Inc (“TGIS”), and TGE Electrical and Instrumentation (“TGEI”). Pursuant to the terms of the Agreement, the Company sold substantially all of the assets of FSI, TGIS and TGEI, operating divisions of the Company as described in Note 10.

Going Concern

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company has incurred losses since inception resulting in an accumulated deficit of $247,620 as of December 31, 2013 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern.  The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock.

Cash and Cash Equivalents – The Company considers all highly liquid short-term instruments with an original maturity of three months or less at the date of purchase to be cash equivalents.

Goodwill

Goodwill represents the excess of the cost of businesses acquired over the fair value of their net assets at the dates of acquisition. Goodwill is reviewed at least annually to assess the carrying value of goodwill associated with each of its distinct business units that comprise its business segments of the company to determine if impairment in value has occurred.

Revenue Recognition – Revenue is recognized when persuasive evidence of an arrangement exists, services are performed, sales price is determinable, and collection is reasonably assured. Services performed and not yet billed are included in accounts receivable as unbilled revenue. Mobilization fees are recognized upon the mobilization of the labor and the labor revenue is recognized at the unit price of labor hours worked. Per diem revenue is recorded in a similar fashion for meals, travel and lodging.

Contract costs include all labor costs, mobilization costs, travel, per diem for travel meals and lodging, and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. General and administrative costs are charged to expense as incurred. Costs and estimated earnings in excess of billings are recorded as current assets and billings in excess of costs and estimated earnings are recorded as a liability.

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Accounts Receivable – The Company extends unsecured credit to its customers, which is non- interest bearing. Accounts receivable are recorded when invoices are issued and are presented in the balance sheet net of allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts to ensure accounts receivable are not overstated due to accounts that are not collectible. The Company maintains a bad debt reserve based on a variety of factors, including the age of the receivable, payment history, trends and financial condition of customers, macroeconomic conditions, and significant one-time events.

The Company determines the allowance based upon a review of outstanding receivables, historical write-off experience and existing economic conditions. Normal contract retainers are not typically used by the Company. Receivables past due over 90 days are considered delinquent and reviewed individually for collectability. After all means of collection have been exhausted delinquent, receivables are written off. Management has determined that the allowance for doubtful accounts as of December 31, 2013 and 2012 is $692,664 and $388,227, respectively. Bad debt expense for the years ended December 31, 2013 and 2012 is $500,282 and $-, respectively.

Property and Equipment – Property and equipment are recorded at cost. Improvements or betterments of a permanent nature are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal. Gains or losses resulting from property disposals are credited or charged to operations in the year of disposal.

The Company provides for depreciation using the straight-line method over the following estimated useful lives of assets:

Impairment of Long-Lived Assets – In accordance with Financial Standards Board Accounting Standards Codification (“FASB ASC”) 360, Property, Plant and Equipment , long-lived assets to be held and used are reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of such asset may not be recoverable. The determination of recoverability of long-lived assets is based on an estimate of undiscounted future cash flows resulting from the use of the asset or its disposition. Measurement of an impairment loss for long-lived assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or net realizable value.

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Fair Value of Financial Instruments – Under FASB ASC 820, Fair Value Measurements and Disclosures , we are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option. Consistent with the Fair Value Measurement Topic of the FASB ASC 820, we implemented guidelines relating to the disclosure of our methodology for periodic measurement of our assets and liabilities recorded at fair market value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

Our Level 1 assets primarily include our cash and cash equivalents (including our money market accounts). Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. The carrying amount of accounts receivable, accounts payable, accrued liabilities, lines of credit, and convertible debt approximate their fair value due to the immediate or short-term maturities of these financial instruments.

Advertising Charges – The Company charges advertising costs to expense as incurred. Advertising costs amounted to $56,802 and $73,517 for the years ended December 31, 2013 and 2012, respectively, and are included with general and administrative expenses in the accompanying financial statements.

Income Taxes – The Company is taxed as a corporation effective January 1, 2007. The company uses the liability method in accounting for income taxes, whereby tax rates are applied to cumulative temporary differences based on when and how they are expected to affect future tax returns. Deferred tax assets and liabilities are adjusted for tax rate changes in the year the changes are enacted. The realizability of the deferred assets are evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits in the company’s tax returns.

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

As part of the process of preparing its financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process requires the Company to estimate its actual current tax liability and to assess temporary differences resulting from differing book versus tax treatment of items, such as deferred revenue, compensation and benefits expense and depreciation. These temporary differences result in deferred tax assets and liabilities, which are included within the Company’s statements of financial condition. Significant management judgment is required in determining the Company’s provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against its net deferred tax assets. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized and, when necessary, valuation allowances are established. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the level of historical taxable income, scheduled reversals of deferred taxes, projected future taxable income and tax planning strategies that can be implemented by the Company in making this assessment. If actual results differ from these estimates or the Company adjusts these estimates in future periods, the Company may need to adjust its valuation allowance, which could materially impact the Company’s consolidated financial position and results of operations.

Tax contingencies can involve complex issues and may require an extended period of time to resolve. Changes in the level of annual pre-tax income can affect the Company’s overall effective tax rate. Significant management judgment is required in determining the Company’s provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against its net deferred tax assets. Furthermore, the Company’s interpretation of complex tax laws may impact its recognition and measurement of current and deferred income taxes.

Dividends – Cash distributions are made to stockholders in the form of dividends, net of federal withholding. The Company can pay dividends to its shareholders at its own discretion upon approval by the Board of Directors.

Use of Estimates – The preparation of the financial statements in conformity with accounting principles

generally accepted in the United States of America requires management to make estimates and assumptions that affect certain 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. Actual results could differ from those estimates. Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the financial statements.

Foreign Currency - Transaction gains and losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are included in the consolidated statements of operations. The financial statements of foreign subsidiaries whose functional currency is the local currency are translated into United States dollars using period-end rates of exchange for assets and liabilities and average rates of exchange for the period for revenues and expenses.

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Stock based compensation

The Company accounts for share-based expense and activity in accordance with FASB ASC Topic 718, which establishes accounting for equity instruments exchanged for services. Under this provision, share-based compensation costs are measured at the grant date, based on the calculated fair value of the award, and are recognized as an expense over both the employee and non-employee’s requisite service period, generally the vesting period of the equity grant.

The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, expected option term, expected volatility of the stock over the option’s expected term, risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The Company believes that the valuation technique and approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the stock options granted.

Earnings per share

The Company has adopted FASB ASC Topic 260, which provides for the calculation of basic and diluted earnings per share. Basic and diluted loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.

Reclassifications

Certain amounts previously reported in our annual report on Form 10-K for the year ended December 31, 2012 has been reclassified to conform to the 2013 presentation. These reclassifications have no impact on net income.

Recent Pronouncements - The Company is not aware of any new accounting pronouncements that would have a material impact on its consolidated financial statements.

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 2 – Property and Equipment, net

Property and equipment consist of the following at December 31, 2013 and 2012:

Depreciation for the year ended December 31, 2013 and 2012 amounted to $588,003 and $520,944 respectively, and is included with administrative and general expenses in the accompanying financial statements.

NOTE 3 – Goodwill

At December 31, 2013 and 2012, goodwill totaled $0 and $862,889, respectively. The increase in goodwill during 2012 is attributable to the acquisition of Fishbone Solutions LTD (as described in Note 9). The excess purchase price over the value of the net tangible assets of Fishbone Solutions LTD was recorded to goodwill. The goodwill has been written off as of December 31, 2013 in relation to the discontinued operations as described in Note 10.

NOTE 4 – Convertible Notes and Notes Payable

Fishbone Notes

On February 3, 2012 the Company issued convertible notes totaling $1,283,126 and promissory notes totaling $216,874 associated with the purchase of Fishbone Solutions, Inc. (“Fishbone”), for an aggregate amount of $1,500,000, promissory notes (also referred to herein as the “Notes”), together with interest thereon at the rate of .19% per annum, the principal and accrued interest thereon being convertible into shares of our common stock, par value $0.00001 per share (“Common Stock”), at $0.12 per share, with the issue and registration of such restricted Common Stock being subject to Rule 144 of the Securities Act of 1933 and any other pertinent rules of law regarding restricted securities.

Such equity-holders will be limited to selling stock converted from the Notes as follows:

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

Notwithstanding, the equity-holders must commence any conversion process of any remaining balance on the Notes no later than the third year anniversary (February 3, 2015). The Notes may also become due and subject to rights of conversion in the event of a liquidation event or change of control. During the year, convertible note amounts of $597,000 was assumed by the buyer in relation to the discontinued operations as described in Note 10 and $103,649 principal and accrued interest of $2,087 was converted into common shares at $0.12 per share by the holder. As of December 31, 2013, the convertible note balance was $585,971.

Notes Payable

The Company assumed a loan with a financial institution of $114,047 that was paid off during 2012.

The Company assumed a loan due to a former shareholder of Fishbone that matures in June 2013. The amount assumed was $422,529 and is guaranteed by Fishbone and has a 4.58% interest annum (10% annum upon default). The balance outstanding at December 31, 2013 is $34,308.

On November 22, 2013, the Company entered into an agreement with Dave Matthew’s, the Company's former Chief Executive Officer, whereby the Company redeemed and retired certain capital stock in the Company, in amounts consisting of 15,667,806 shares of Common Stock and 966,666 shares of Series A Convertible Preferred Stock, in exchange for the Company’s issuance to Mathews of a Promissory Note in the amount of $1,000,000, which was assumed by the buyer in the relations to the disposition as described in Note 10.

On January 1, 2012, pursuant to a 3 year consulting agreement terminated by the consultant, the consultant is entitled to compensation of $12,000 per month for the remainder of the term of the agreement from January 1, 2014 through December 31, 2014, for total of $144,000. As a result the Company has recorded a note payable for $144,000 as of December 31, 2013.

NOTE 5 - Lines of Credit

On February 29, 2012, the Company entered into a $3 million receivables purchase agreement with a merchant bank. Under the agreement, the Company can sell all rights, title and interests in their accounts receivables for the total amount of the receivable invoices, less a discounting factor of 15% to the factoring company. The factoring company will remit a rebate to the Company of an amount between 14.30% and 10% of the receivable invoice amounts depending on how long it takes the factoring company to collect the receivable. The sooner the amount is collected, the greater the rebate received by the Company. If after 90 days it isn’t collected, the Company agreed to repurchase the receivables for $.90 for each $1.00 invoiced. The Company retains the right to repurchase any of its invoices at any time from the merchant bank. The balance on the purchase agreement was $182,075 at December 31, 2013 and $2,817,925 was available at December 31, 2013. This agreement can be terminated at any time by the Company.

On September 14, 2012, the Company entered into a $1 million receivable purchase agreement with a merchant bank. Under the agreement, the Company can sell all rights, title and interests in their accounts receivables for the total amount of the receivable invoices, less a discounting factor of 15% to the factoring company. The factoring company will remit a rebate to the Company of an amount between 10% and 14.30% of the receivable invoice amounts depending on how long it takes the factoring company to collect the receivable. The sooner the amount is collected, the greater the rebate received by the Company. If after 90 days it isn’t collected, the Company agreed to repurchase the receivables for $.90 for each $1.00 invoiced. The Company retains the right to repurchase any of its invoices at any time from the merchant bank. The balance on the purchase agreement was $56,883 and $943,117 was available at December 31, 2013. This agreement can be terminated at any time by the Company.

On September 18, 2013, the Company entered into a $1.5 million receivable purchase agreement with merchant bank. Under the agreement, the Company can sell all rights, title and interests in their accounts receivables for the total amount of the receivable invoices, less a discounting factor of 15% to the factoring company. The factoring company will remit a rebate to the Company of an amount between 10% and 14.30% of the receivable invoice amounts depending on how long it takes the factoring company to collect the receivable. The sooner the amount is collected, the greater the rebate received by the Company. If after 90 days it isn’t collected, the Company agreed to repurchase the receivables for $.90 for each $1.00 invoiced. The Company retains the right to repurchase any of its invoices at any time from the merchant bank. The balance on the purchase agreement was $476,001 and $1,023,999 was available at December 31, 2013. This agreement can be terminated at any time by the Company.

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 6 - Stock Based Compensation

The stock based compensation cost that has been charged against income by the Company was $699,670 and $1,087,452 for the years ended December 31, 2013 and 2012, respectively, for common stock awarded by the Company. In 2012 the Company entered into employment agreements with the chief executive officer, chief financial officer, and other key employees and granted 28,477,806 restricted shares vesting over 36 months. The fair value of the common stock on the date of grant was $0.09 per share or $2,563,002.

During 2013, the Company issued 7,857,385 common shares per the vesting of the 28,477,806 restricted shares vesting over 36 months to the chief executive officer, chief financial officer, and other key employees for total stock compensation expense of $699,670. On November 22, 2013, the Company, for a $1,000,000 note payable redeemed and retired 10,009,987 common shares vested and issued to David Matthews the Company’s former CEO, the remaining 5,657,819 common shares owed and not yet vested have been canceled.

As of year end there remains 3,070,000 unvested commons shares and stock compensation expense of $276,300 to be recorded.

NOTE 7 - Earnings (Loss) Per Share

Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the periods presented. The calculation of basic earnings per share for the year ended December 31, 2013 includes the weighted average of common shares outstanding. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity, such as convertible preferred stock or convertible debt. Dilutive securities existed for the year ended December 31, 2013 in the form of 10,000,000 series B preferred stock convertible at $0.17 per share into 58,823,529 common shares and a convertible note of $585,971 convertible at $0.12 per share into 4,883,092 common shares outstanding that could have a dilutive effect on loss per share. However in periods where losses are reported, the weighted-average number of shares outstanding excludes equivalents, because their inclusion would be anti-dilutive.

NOTE 8 – Segment Information

The Company has two reportable segments, Texas Gulf Specialty Services and International Plant Services, LLC as of December 31, 2013. The sale of all of the assets of Texas Gulf Energy Industrial Services and Fishbone Solutions, Inc. account for the reduction in our operating segments.

Texas Gulf Specialty Services

Texas Gulf Specialty Services provides specialty construction services to a wide range of industry and energy sector clients. These services are provided for projects of varying complexities, schedule durations and budgets.

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

International Plant Services, LLC

Our International Plant Services, LLC segment provides turnkey and specialty construction services to a wide range of industrial and energy sector clients. Our scope of services includes managing and executing major capital and turnaround projects, the provision of project management personnel, and other construction resources, like project planners/schedulers, engineers, welders, fitters and millwrights. A portion of the engineers and skilled craftsmen (welders, fitters, millwrights and electricians) are guest workers working with visas in the United States. These services are provided for projects of varying complexities, schedule durations, and budgets. Our project experience and expertise includes turnarounds, retrofits, modifications and expansions to existing facilities as well as the construction of new facilities in the refinery, petrochemical, mining and power industries.

Segment revenue is as follows: (in $000’s)

Year ended December 31, 2013:

Year ended December 31, 2012 (restated)

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 9 – Acquisitions

On January 27, 2012, the Company entered into a share exchange agreement with Texas Gulf Oil & Gas, Inc., a Nevada corporation (“TGOG”), and the equity-holders of TGOG. Pursuant to the terms of the agreement, the Company acquired all of the common stock of TGOG from its equity-holders, representing one hundred percent (100%) of the issued and outstanding shares of capital stock of TGOG, in exchange for 4,000,000 newly-issued shares of Common Stock, of which 2,200,000 shares are being issued to seven (7) of the equity-holders and 1,800,000 shares are to be issued to one other equity-holder at a later date, which shall occur not later than 180 days following the closing date and is subject to certain conditions. As a result of the transaction, TGOG became a wholly-owned subsidiary of the Company.

The Company’s acquisition of TGOG did not have a material impact on the Company’s consolidated financial statements, and therefore pro forma disclosures are not presented.

On February 3, 2012, the Company completed the acquisition of Fishbone Solutions LTD. The consideration paid was approximately $1,921,000 for 100% of the company. The consideration consisted of approximately $421,000 cash and a convertible note with restrictions for the amount of $1,500,000.

The allocation of the purchase price to the assets acquired and liabilities assumed based on the fair values was as follows:

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

NOTE 10 – Dispositions

On November 22, 2013 (the “ Closing Date ”), Texas Gulf Energy, Incorporated, a Nevada corporation (the “ Company ”), closed a transaction (the “ Transaction ”) involving an Asset Purchase Agreement dated the Closing Date (the “ Agreement ”) by and among the Company andtwo of its subsidiaries, Fishbone Solutions, Inc., a Texas corporation (“ FSI ”), and Texas Gulf Industrial Services, Inc,, a Texas corporation (“ TGIS ”), and TGE Industrial Services, LLC (“TGEI”), a Texas limited liability company (the “ Buyer ”). Pursuant to the terms of the Agreement, the Company sold substantially all of the assets of FSI, TGIS and TGEI, operating divisions of the Company, to the Buyer. As consideration for the transaction, the Buyer agreed to pay to the Company an aggregate purchase price of $4,137,335, consisting of (i) the assumption of certain promissory note obligations of the Company, which consist of a certain convertible promissory notes issued to John Sloan (“Sloan ”) of $597,000 and a promissory note in favor of David Mathews (“ Mathews ”) of $1,000,000 and (ii) cash in the amount of $2,540,335. The transaction resulted in discontinued operations classification and presentation. Also as of Closing Date, pursuant to the Agreement, the Company and the Buyer entered into a Transition Agreement (the “Transition Agreement”) whereby the Company agreed to provide certain services related to the continuing operation of FSI, TGIS and TGEI for a period of sixty (60) days, which by written notice of the Buyer may be extended for an additional thirty (30) days thereafter. As consideration for these services rendered pursuant to the Transition Agreement, on the Closing Date the Buyer pre-paid the sum of $150,000 to the Company.

NOTE 11 – Contingencies

Various legal actions, claims, and other contingencies arise in the normal course of our business. Contingencies are recorded in the consolidated financial statements, or are otherwise disclosed, in accordance with ASC 450-20, “Loss Contingencies”. Specific reserves are provided for loss contingencies to the extent we conclude that a loss is both probable and estimable. We use a case-by-case evaluation of the underlying data and update our evaluation as further information becomes known, and the known claims as of this date are as follows:

Civil Action 4:12-CV-00055; Renato Acain et al vs. International Plant Services LLC et al.

International Plant Services, LLC (IPS) is a subsidiary of the Company. IPS has been sued in a matter presently pending in United States District Court, Southern District of Texas, Houston Division by fifty-five (55) Filipino workers alleging violations of RICO and other fiduciary errors. The suit was initially instituted on May 27, 2011 and removed to U.S. District Court on January 6, 2012. The plaintiff is seeking relief in the form of unspecified monetary relief. The United States District Court remanded the ACAIN case to the 113 ^th District Court on September 15, 2012. Subsequently, Judge Patricia J. Kerrigan, 113 ^th District Court, State of Texas, dismissed the case. While the Company continues to believe this lawsuit is without merit, the ACAIN plaintiffs have appealed the dismissal to the Texas Court of Appeals, First District. The matter is to be submitted on April 29, 2014, there will be no oral argument permitted. .

Texas Gulf Energy, Inc.

Notes to Consolidated Financial Statements

December 31, 2013 and 2012

Cause No. 2012-23084; Ardent Services, LLC vs. David D. Mathews and Larry J. Laqua.

The Company has settled all matters related to the Company in the Ardent matter and will not continue providing the defense of its employees, Mr. Mathews (former President and CEO of the Company) and Mr. Laqua (Vice President of a Company business unit), in a matter involving their former employer, Ardent. Ardent is suing Mr. Mathews and Mr. Laqua in the 234th District Court, Harris County, Houston, Texas for breach of confidentiality and non-solicitation clauses in certain employment agreements, along with other breaches of duties allegedly owed. The Company intends to discontinue its sponsorship and no longer assist in the defense of Mr. Mathews and Mr. Laqua. The suit was initially instituted on April 20, 2012. The plaintiff is seeking relief in the form of injunctive and unspecified monetary relief. On October 24, 2013, the Company and the plaintiff entered into a Settlement Agreement whereby the plaintiff released the Company from all claims arising of this lawsuit.  In exchange therefore, the Company agreed (i) to pay plaintiff the sum of $10,000 for attorney’s fees and (ii) through December 31, 2014 to not directly or indirectly solicit any electrical and instrumentation business from 11 facilities in the State of Texas 

Cause No. 4:13-cv-00505, Michael Rushing, Stephanie Rushing, Penn Rushing and Florence Rushing v. Texas Gulf Energy, Inc. on behalf of CS Bankers V, LLC, Texas Gulf Fabricators, Inc., David Mathews, Craig Crawford and Timothy Connolly, United States District Court for the Southern District.

The Company had originally filed against the Rushings for a Declaratory Judgment alleging they had failed to perform relative to a letter of intent with Texas Gulf Fabricators, Inc., or alternatively, that the letter of intent was not enforceable.  The Company also filed a conversion action against the Rushings for removing property from a fabrication facility.  The Rushing Family filed two separate counterclaims in the underlying state court actions before removing both actions to federal court in March 2013.  On April 13, 2013, the federal court denied jurisdiction and remanded the matter back to the Texas State Court in the proceedings known as: (i) Cause No. 2013-00543; Texas Gulf Energy, Inc. on behalf of CS Bankers V, LLC and Texas Gulf Fabricators, Inc. VS. Penn Rushing, et al, in the 270 ^th Judicial District Court of Harris County and (ii) Cause No. 2013-004690; Texas Gulf Energy, Inc. vs. Penn Rushing, et al, in the 270 ^th Judicial District Court of Harris County.  The Rushings' allegations include fraudulent inducement, negligent misrepresentation, breach of fiduciary duty, conversion, equitable estoppel and securities violations.  

These claims relate to a letter of intent and foreclosure proceeding on a shop property in Baytown, Texas.  The Rushings have not disclosed an amount of damages sought. The Company is required to pay for the defense of Mr. Mathews, Mr. Crawford and Mr. Connolly.  The Company opposes the removal to federal court.  The Company believes the Rushing's claims are without merit and intends to pursue its claims and defenses vigorously.

Based on our knowledge as of the date of this filing, we believe that any amounts exceeding our recorded accruals should not materially affect our financial position, results of operations or liquidity. It is the opinion of management that the eventual resolution of the above claims is unlikely to have a material adverse effect on our financial position or operating results. However, the results of litigation are inherently unpredictable and the possibility exists that the ultimate resolution of one or more of these matters could result in a negative material effect on our financial position, results of operations or liquidity.

NOTE 12 – RELATED PARTY TRANSACTIONS

The Company’s two majority owners as of December 31, 2013 maintain a 74.8% voting control of the Company. The Company utilizes corporations owed by the two majority shareholders that provide certain services to the company, which include the following: