10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 333-181742

SECTOR 5, INC.

(Exact name of registrant as specified in its charter)

Nevada	45-5042353
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

200 Duke Street, Suite 110

Alexandria, Virginia 22314

(Address of principal executive offices)

(517) 348-1005

(Issuer’s telephone number, including area code)

______________________________________________________

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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 for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerate filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company”, in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
(Do not check if smaller reporting company)		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

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

Class	Outstanding at January 30, 2018
Common Stock, par value $.001 per share	18,000,000 shares

SECTOR 5, INC.

TABLE OF CONTENTS

		PAGE
PART I FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)		3
	Balance Sheets		3
	Statements of Operations		4
	Statements of Cash Flows		5
	Notes to Unaudited Interim Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		14
Item 4.	Controls and Procedures		14
PART II OTHER INFORMATION
Item 1.	Legal Proceedings		15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		15
Item 3.	Defaults Upon Senior Securities		15
Item 4.	Mine Safety Disclosures		15
Item 5.	Other Information		15
Item 6.	Exhibits		15
Signatures			16

2

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

SECTOR 5, INC. CONDENSED BALANCE SHEETS
	June 30, 2017			December 31, 2016
	(unaudited)
ASSETS
Current Assets:
Cash	$	6,538		$	865
Accounts receivable		-			413
Inventory		1,125			57,743
Prepaid expenses		-			30,117
Total Current Assets		7,663			89,138
Total Assets	$	7,663		$	89,138
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	33,479		$	22,791
Accrued interest, related party		7,134			4,557
Loans payable, related party		323,750			293,528
Total Current Liabilities		364,363			320,876
Total Liabilities		364,363			320,876
Commitments and Contingencies		-			-
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding, respectively		1,000			1,000
Common stock, $0.001 par value, 245,000,000 shares authorized; 18,000,000 and 18,000,000 shares issued and outstanding, respectively		18,000			18,000
Additional paid-in capital		62,650			62,650
Accumulated deficit		(438,350	)		(313,388	)
Total stockholders' deficit		(356,700	)		(231,738	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	7,663		$	89,138

The accompanying notes are an integral part of these unaudited condensed financial statements.

 3

SECTOR 5, INC. CONDENSED STATEMENTS OF OPERATIONS (unaudited)
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	275,594		$	23,159		$	365,078		$	23,159
Cost of goods sold		269,685			14,506			361,221			14,506
Gross Margin		5,909			8,653			3,857			8,653
Operating Expenses:
Research and development		35			33,010			8,482			33,010
Advertising and promotion		-			-			2,695			-
Professional fees		47,618			46,479			86,870			48,354
General and administrative		6,297			21,919			28,195			22,014
Total operating expenses		53,950			101,408			126,242			103,378
Loss from operations		(48,041	)		(92,755	)		(122,385	)		(94,725	)
Other Expense:
Interest expense		(1,281	)		-			(2,577	)		-
Total other expense		(1,281	)		-			(2,577	)
Net loss before provision for income taxes		(49,322	)		(92,755	)		(124,962	)		(94,725	)
Provision for income taxes		-			-			-			-
Net Loss	$	(49,322	)	$	(92,755	)	$	(124,962	)	$	(94,725	)
Weighted Average Shares Outstanding, Basic & Diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Loss per Share, Basic & Diluted		18,000,000			20,000,000			18,000,000			20,000,000

The accompanying notes are an integral part of these unaudited condensed financial statements.

4

SECTOR 5, INC. CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
	For the Six Months Ended June 30,
	2017			2016
CASH FLOW FROM OPERATING ACTIVITES:
Net Loss	$	(124,962	)	$	(94,725	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		-			104
Changes in Operating Assets and Liabilities:
Accounts receivable		413			-
Prepaids & other assets		30,117			(36,366	)
Inventory		45,698			(105,536	)
Accounts payable		10,688			(14,462	)
Accrued interest, related party		2,577			-
Net Cash Used in Operating Activities		(35,469	)		(250,985	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		-			(5,010	)
Net cash used in investing activities		-			(5,010	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party loans		185,974			266,056
Repayment of related party loans		(144,832	)		-
Net Cash Provided by Financing Activities		41,142			266,056
Net Increase in Cash		5,673			10,061
Cash at Beginning of Period		865			62
Cash at End of Period	$	6,538		$	10,123
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	-		$	-
Income taxes	$	-		$	-

The accompanying notes are an integral part of these unaudited condensed financial statements.

5

SECTOR 5, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2017

(Unaudited)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

SECTOR 5, INC. ("Sector 5" or the "Company") was incorporated in the State of Nevada on April 11, 2012. On March 18, 2016 there was a change in control of the Company as a result of a private sale of the Company’s common stock. The change in control includes plans to relaunch the Company to sell branded electronic products targeting the educational and consumer electronics markets.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2017. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the six months ended June 30, 2017.

Revenue and cost recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. Any allowance for uncollectible amounts is evaluated quarterly.

Recently issued accounting pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02—Leases (Topic 842). The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its financial statements.

In June 2016, the FASB issued ASU 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB’s Emerging Issues Task Force). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on its cash flows.

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In May 2014, August 2015, April 2016 and May 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016- from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10 (ASC Topic 10 (ASC Topic 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in these ASUs are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for annual periods beginning after December 15, 2016. This standard may be applied process of assessing the impact, if any, on its consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 – GOING CONCERN

As reflected in the accompanying financial statements, the Company has an accumulated deficit of $438,350 at June 30, 2017 and had a net loss of $124,962 for the six months ended month ended June 30, 2017. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that the Company will continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

While the Company is attempting to increase operations and revenues, our cash position may not be significant enough to support our daily operations. Management intends to raise additional funds by way of debt and equity financing. Management believes that the actions presently being taken to further implement our business plan and generate increased revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate increased revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to further implement its business plan and generate increased revenues. The financial statements do not include any adjustments that might be necessary if the Company was unable to continue as a going concern.

NOTE 4 – INVENTORY

As of June 30, 2017, and December 31, 2016, the Company has $1,125 and $57,743, respectively of finished goods inventory. Inventory consists of Chromebooks and charging carts. Inventory is carried at the lower of cost or market.

NOTE 5 - RELATED PARTY TRANSACTIONS

On March 22, 2016, Company executed a promissory note with Sector Five, Inc., a privately held Delaware corporation, for the purchase of inventory in the amount of $120,006. The note is due in one year and bears interest at 5%. The balance of the note was subsequently reduced by $34,840 for $17,160 of inventory that was returned to the lender and $7,260 that was determined to be obsolete. As of June 30, 2017, there is $85,166 and $7,134 of principal and interest, respectively, due on this note. This note is currently past due.

Since the change in control, the Company’s CEO and Chairman has loaned funds to the Company in support of its operations by providing payments to the Company's vendors and advances for operations. These amounts are considered due on demand and are non-interest bearing. As of June 30, 2017, and December 31, 2016, the balance due for these advances is $186,747 and $185,011, respectively.

7

Since the change in control, Kirkland Holdings, Inc., a company with common management, has advanced funds to the Company for operations. The advances are unsecured, non-interest bearing and due on demand. As of June 30, 2017, and December 31, 2016, the balance due for these advances is $51,837 and $12,431, respectively.

NOTE 6 – PREFERRED STOCK

Preferred Stock

The company has 5,000,000 shares of preferred stock authorized, 1,000,000 of which have been designed Series A. Shares of Series A Preferred Stock may be converted at the holder’s election into shares of common stock, at the conversion rate of fifty shares of fully paid and nonassessable common stock for one share of Series A Preferred Stock. Series A is entitled to votes equal to the number of common shares into which the preferred could be converted into and has liquidation preferences of $2.00 per share.

On November 2, 2016, the Board approved the exchange of 14,000,000 shares of common stock for the issuance of 1,000,000 shares of Series A Preferred Stock. In addition, the Board approved a three for one forward stock split immediately following the surrender of the 14,000,000 common shares.

The above designation and forward split were approved by FINRA on February 14, 2017, and have been retroactively presented in these financial statements.

NOTE 7 – COMMON STOCK

On November 2, 2016, the Board approved the exchange of 14,000,000 shares of common stock for the issuance of 1,000,000 shares of Series A Preferred Stock.

NOTE 8 – SUBSEQUENT EVENTS

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statement were available to be issued, and has determined that there are no additional material subsequent events exist that require disclosure in these financial statements.

8

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

The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing in this report and are hereby referenced. 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 report. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. We believe it is important to communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology, including words such as “may”, “will”, “believes”, “anticipates”, “estimates”, “expects”, “continues”, “should”, “seeks”, “intends”, “plans”, and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: our sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to maintain and develop relationship with our existing and potential future customers; and, our ability to maintain a level of investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: variability of our revenues and financial performance; risks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption of operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates; and, the continued employment of our key personnel and other risks associated with competition.

Plan of Operation

Sector 5 sells branded electronic products targeting the educational and consumer electronics markets.

Sector 5 intends to take advantage of the educational market to initiate targeting the retail consumer electronics market using a supply-chain methodology involving Open Innovation. Sector 5 has relationships with Chinese suppliers employing American ingenuity that allows us to create products with latest technology, matching market expectations at the best pricing. We plan to accomplish this through the involvement of a talented staff, including designers and innovators, coupled with strong relationships with “best in class” suppliers.

Sector 5's distribution channel strategy includes both B2B (especially schools) as well as utilization of existing relationships with distributors that have retail channels looking for new innovative products. Furthermore, we intend to use mobile carriers as sales channels on some unique new 4G LTE products which employ mobile data networks. Building and maintaining good distribution relationships will be an essential element of our business. In our product planning efforts, we expect to both listen to these sales channels for what opportunity they have as well as provide them new product opportunities we are planning. The latter will become increasingly important as we intend to grow a portfolio of products uniquely ours.

Sector 5's foundation for success and promise to the world is defined by a pursuit of simplicity and a commitment to innovation. Quality, reliability and excellent customer support is an integral component of that commitment.

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Products

Our initial phase will focus on the education markets utilizing Chrome and Android Operating Systems. As we ramp up a sales staff, we intend to broadly target general consumer retail channels and possibly other B2B opportunities (e.g. hospitals). In this phase we will need to carefully and continuously balance growth in width (number of sales channels and product sku’s) versus depth (quality of service and support).

We are currently negotiating contracts with established sales and marketing individuals and companies who can get Sector 5 branded products placed in the major retail channels. Google is assisting in opening up relationships with major distributors for the US markets.

During the second phase, we plan to launch a number of products aimed at the educational market:

· Chromebooks optimized for education 11.6” and 13”

· Charging carts for bulk charging and storage of Chromebooks (various models)

· Electronic whiteboard (1 model)

· Large touch screen (2 models)

· Classroom speakers (2 models)

· Classroom microphone (1 model)

· Chromebook HDMI connected monitor 24”

Our third phase includes plans to launch the following products, integrating our intellectual property:

· Chromebox with camera (our own patented design)

· Possibly Chromebooks with 4G LTE, to be distributed B2B and through wireless carriers

· Smart Pico Projector with 4G LTE

· Bedroom Smart Pico Projector/speaker/wall mount kit bundle

· Action camera with 4K resolution utilizing 4G LTE for connectivity

We plan to continuously explore business opportunities, possibly expanding these product categories. Using the strength of our current partners manufacturing capabilities, Sector 5 has identified new product categories in which our key suppliers will assist in the development of new products accommodating our ideas and requirements. Our unique relationships with the leading electronics suppliers in China will enable us to gain advantages of not only low cost manufacturing but also achieving the best of the Open Innovation partnership making it possible for us to realize first-in-market, unique and affordable products. Our Chinese office is located in Shenzhen (called High Tech Zone) as it is a hub of Chinese innovation where many of the major Chinese electronics firms are located. Shenzhen is rapidly becoming the Chinese version of Silicon Valley. Late in our third phase we plan to create our first Android 5 portfolio of Smart TV solutions:

· Smart TV box (possibly similar hardware as Chromebox)

· Smart TVs (larger sizes)

· Android tablets for education

· Premium speakers (Bluetooth, WiFi, Surround)

· Headsets & headphones

Who We Sell To

Sector 5 plans to hire a sales staff with long standing relationships with the buyers of “Big Box” retailers. Sector 5 also plans on hiring staff that have relationship with reps in the educational market. Sector 5 has relationships with large companies who are currently dominating the online sales channels. Our target customers are anyone in need of consumer, education or business electronics seeking the best combination of value, simplicity, usability and reliability. Our customers are intelligent and informed decision makers who will not only judge us from our marketing messages but also seek objective input from independent reviews e.g. CNET, Engadget and others. For this reason we plan a budget that covers the traditional marketing efforts as well as efforts on performing critical product Quality Assurance and engagement with reviewers in enabling the best reviews. Getting good reviews is important for our brand reputation to get the best start.

Our planned marketing staffs will include members solely focused on the educational computing market and members solely focused on the consumer retail market. However, we plan to have a unified R&D effort that will aim at maximizing synergies in an effort to reduce R&D costs. On the education side, we plan to send out samples to the school with RFP’s that we have identified that currently have the resources to start buying our products now. Geographically we plan to target both the USA and Canada. Most of the business with the schools involves a bidding process and we plan on being the best priced on the market, coupled with superior features/performance. Features we plan to emphasize include better graphical processing and more school optimized enclosure with easy carry handles. We believe that we can be highly successful in the educational bidding process. Our supply chain allows nearly unlimited growth potential as it includes a very extensive list of product categories covering involving excellent engineering teams. We will continuously aim at enabling growth through presenting new business opportunities to buyers from within our vendor partner capabilities.

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Our goal is Educating America’s Children utilizing the power of Google and the Chromebook proven technology. We plan to achieve our goal by delivering the latest generation of technology, creating a new market expectation together with unique value added differentiation and introducing the latest Chromebook defined by Speed, Security and Simplicity at the best possible price.

Results of Operations for the Three Months Ended June 30, 2017 Compared to the Three Months Ended June 30, 2016

Revenues. Sales revenue for the three months ended June 30, 2017 were $275,594 as compared to $23,159 for the three months ended June 30, 2016. The increase in sales for 2017 is the result of a sale of $269,000 to one of our major customers.

Cost of Goods Sold. Cost of goods sold for the three months ended June 30, 2017 were $269,685 as compared to $14,506 for the three months ended June 30, 2016. The increase in cost of goods sold is the result of the Company’s sales revenue during the three months ended June 30, 2017.

Research and Development Expenses. Research and development expenses for the three months ended June 30, 2017 were $35 as compared to $33,010 for the three months ended June 30, 2016. The decrease is due to an attempt to cut costs while in the process of implementing our new business model.

Advertising and Promotion. We had no advertising and promotion expenses for the three months ended June 30, 2017 or for the three months ended June 30, 2016.

Professional Fees. Professional fees for the three months ended June 30, 2017 were $47,618 as compared to $46,479 for the three months ended June 30, 2016. Professional fees consists of accounting, audit, legal and consulting expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended June 30, 2017 were $6,297 as compared to $21,919 for the three months ended June 30, 2016. The decrease in selling, general and administrative expenses is due to an attempt to cut costs while in the process of implementing our new business model.

Results of Operations for the Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016

Revenues. Sales revenue for the six months ended June 30, 2017 were $365,078 as compared to $23,159 for the six months ended June 30, 2016. The increase in sales for 2017 is the result of the Company’s change in business model to sell branded electronic products. In addition, we had a sale of $269,000 to one of our major customers.

Cost of Goods Sold. Cost of goods sold for the six months ended June 30, 2017 were $361,221 as compared to $14,506 for the six months ended June 30, 2016. The increase in cost of goods sold is the result of the Company’s sales revenue during the six months ended June 30, 2017. In addition, we had to sell some of our TV units below cost and we wrote off $520 for damaged units.

Research and Development Expenses. Research and development expenses for the six months ended June 30, 2017 were $8,482 as compared to $33,010 for the six months ended June 30, 2016. The decrease is due to an attempt to cut costs while in the process of implementing our new business model.

Advertising and Promotion. Advertising and promotion expenses for the six months ended June 30, 2017 were $2,695 as compared to $0 for the six months ended June 30, 2016. We have been keeping certain costs low while in the process of implementing our new business model.

Professional Fees. Professional fees for the six months ended June 30, 2017 were $86,870 as compared to $48,354 for the six months ended June 30, 2016. The increase in professional fees is due to consulting expenses related to the new plan of operations to sell branded electronic products.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the six months ended June 30, 2017 were $28,195 as compared to $22,014 for the six months ended June 30, 2016. The increase in selling, general and administrative expenses is due to the change of control of the Company during March 2016 and establishing a new plan of operations to sell branded electronic products.

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Liquidity and Capital Resources

We measure our liquidity in a number of ways, including the following:

	As of June 30, 2017			As of December 31, 2016
Cash	$	6,538		$	865
Working Capital		(356,700	)		(231,738	)
Debt (current)		(364,363	)		(320,876	)

The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

In order to continue as a going concern, the Company will need, among other things, additional capital resources.

Net Cash Used in Operating Activities

We used $35,469 of cash from operating activities for the six months ended June 30, 2017. The cash used in operating activities during this period was used to fund the net loss of $124,962. We experienced negative cash flow from operating activities for the six months ended June 30, 2016 in the amount of $250,985.

Net Cash Used in Investing Activities

The cash used in investing activities during the six months ended June 30, 2017 and 2016 was $0 and $5,010, respectively.

Net Cash Provided by Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2017 was $41,142. Cash flow from financing activities consists of related party loans and repayments of those loans. Net cash provided by financing activities was $266,056 during the six months ended June 30, 2016.

Availability of Additional Funds

Based on our working capital as of June 30, 2017, we will need additional equity and/or debt financing to continue our operations during the next 12 months. We have limited funds to continue our operating activities. Future operating activities are expected to be funded by loans from officers, directors and major shareholders.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

12

We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.

Off Balance Sheet Arrangements

We have not entered into 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 and would be considered material to investors.

Material Commitments

There were no material commitments during the six months ended June 30, 2017.

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02—Leases (Topic 842). The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its financial statements.

In June 2016, the FASB issued ASU 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB’s Emerging Issues Task Force). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on its cash flows.

In May 2014, August 2015, April 2016 and May 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016- from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10 (ASC Topic 10 (ASC Topic 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in these ASUs are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for annual periods beginning after December 15, 2016. This standard may be applied process of assessing the impact, if any, on its consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

13

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Disclosure under this section is not required for a smaller reporting company.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in the reports that we file under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Treasurer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our President and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of our first fiscal quarter covered by this report. Based on the foregoing, our President and Treasurer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2017. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Management's Remediation Initiatives

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate the following series of measures once we have the financial resources to do so:

● We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to an audit committee resulting in a fully functioning audit committee, which will undertake the oversight in the establishment and monitoring of required internal controls and procedures, such as reviewing and approving estimates and assumptions made by management when funds are available to us.

● Management believes that the appointment of outside directors to a fully functioning audit committee, would remedy the lack of a functioning audit committee.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

14

PART II OTHER INFORMATION

Item 1. Legal Proceedings

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

ITEM 6. EXHIBITS

Part I Exhibits

No.	Description
31.1	Chief Executive Officer Section 302 Certification
31.2	Chief Financial Officer Section 302 Certification
32.1	Section 1350 Certification

Part II Exhibits

No.	Description
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

15

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SECTOR 5, INC.
Date: February 14, 2018	By:	/s/ Erick Kuvshinikov
		Erick Kuvshinikov
		Chairman, President, Chief Executive Officer and Treasurer (Principal Accounting Officer and Authorized Officer)

16 

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Erick Kuvshinikov, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Sector 5, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 14, 2018	By:	/s/ Erick Kuvshinikov
		Erick Kuvshinikov
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to their knowledge, the Quarterly Report on Form 10-Q for the period ended June 30, 2017 of Sector 5, Inc. (the “Company”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in such periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such report.

/s/ Erick Kuvshinikov

Erick Kuvshinikov

Chief Executive Officer

/s/ Erick Kuvshinikov

Erick Kuvshinikov

Chief Financial Officer

Date: February 14, 2018

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jan. 30, 2018
Document And Entity Information
Entity Registrant Name	Sector 5, Inc.
Entity Central Index Key	0001550737
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		18,000,000
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2017

XML

CONDENSED BALANCE SHEETS - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current Assets:
Cash	$ 6,538	$ 865
Accounts receivable		413
Inventory	1,125	57,743
Prepaid expenses		30,117
Total Current Assets	7,663	89,138
Total Assets	7,663	89,138
Current Liabilities:
Accounts payable	33,479	22,791
Accrued interest, related party	7,134	4,557
Loans payable, related party	323,750	293,528
Total Current Liabilities	364,363	320,876
Total Liabilities	364,363	320,876
Commitments and Contingencies
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 1,000,000 and 1,000,000 shares issued and outstanding, respectively	1,000	1,000
Common stock, $0.001 par value, 245,000,000 shares authorized; 18,000,000 and 18,000,000 shares issued and outstanding, respectively	18,000	18,000
Additional paid-in capital	62,650	62,650
Accumulated deficit	(438,350)	(313,388)
Total stockholders' deficit	(356,700)	(231,738)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 7,663	$ 89,138

XML

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
STOCKHOLDERS' EQUITY
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	1,000,000	1,000,000
Preferred stock, shares outstanding	1,000,000	1,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock shares, authorized	245,000,000	245,000,000
Common stock shares, issued	18,000,000	18,000,000
Common stock shares, outstanding	18,000,000	18,000,000

XML

CONDENSED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Condensed Statements Of Operations
Revenue	$ 275,594	$ 23,159	$ 365,078	$ 23,159
Cost of goods sold	269,685	14,506	361,221	14,506
Gross Margin	5,909	8,653	3,857	8,653
Operating Expenses:
Research and development	35	33,010	8,482	33,010
Advertising and promotion			2,695
Professional fees	47,618	46,479	86,870	48,354
General and administrative	6,297	21,919	28,195	22,014
Total operating expenses	53,950	101,408	126,242	103,378
Loss from operations	(48,041)	(92,755)	(122,385)	(94,725)
Other Expense:
Interest expense	(1,281)		(2,577)
Total other expense	(1,281)		(2,577)
Net loss before provision for income taxes	(49,322)	(92,755)	(124,962)	(94,725)
Provision for income taxes
Net Loss	$ (49,322)	$ (92,755)	$ (124,962)	$ (94,725)
Weighted Average Shares Outstanding, Basic & Diluted	(0.00)	(0.00)	(0.01)	(0.00)
Loss per Share, Basic & Diluted	$ 18,000,000	$ 20,000,000	$ 18,000,000	$ 20,000,000

XML

CONDENSED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOW FROM OPERATING ACTIVITES:
Net Loss	$ (124,962)	$ (94,725)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		104
Changes in Operating Assets and Liabilities:
Accounts receivable	413
Prepaids & other assets	30,117	(36,366)
Inventory	45,698	(105,536)
Accounts payable	10,688	(14,462)
Accrued interest, related party	2,577
Net Cash Used in Operating Activities	(35,469)	(250,985)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(5,010)
Net cash used in investing activities		(5,010)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party loans	185,974	266,056
Repayment of related party loans	(144,832)
Net Cash Provided by Financing Activities	41,142	266,056
Net Increase in Cash	5,673	10,061
Cash at Beginning of Period	865	62
Cash at End of Period	6,538	10,123
Cash paid during the year for:
Interest
Income taxes

XML

ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

SECTOR 5, INC. ("Sector 5" or the "Company") was incorporated in the State of Nevada on April 11, 2012. On March 18, 2016 there was a change in control of the Company as a result of a private sale of the Company’s common stock. The change in control includes plans to relaunch the Company to sell branded electronic products targeting the educational and consumer electronics markets.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2017. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the six months ended June 30, 2017.

Revenue and cost recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. Any allowance for uncollectible amounts is evaluated quarterly.

Recently issued accounting pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02—Leases (Topic 842). The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its financial statements.

In June 2016, the FASB issued ASU 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB’s Emerging Issues Task Force). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on its cash flows.

In May 2014, August 2015, April 2016 and May 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016- from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10 (ASC Topic 10 (ASC Topic 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in these ASUs are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for annual periods beginning after December 15, 2016. This standard may be applied process of assessing the impact, if any, on its consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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GOING CONCERN

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 3 - GOING CONCERN

As reflected in the accompanying financial statements, the Company has an accumulated deficit of $438,350 at June 30, 2017 and had a net loss of $124,962 for the six months ended month ended June 30, 2017. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that the Company will continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

While the Company is attempting to increase operations and revenues, our cash position may not be significant enough to support our daily operations. Management intends to raise additional funds by way of debt and equity financing. Management believes that the actions presently being taken to further implement our business plan and generate increased revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate increased revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to further implement its business plan and generate increased revenues. The financial statements do not include any adjustments that might be necessary if the Company was unable to continue as a going concern.

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INVENTORY

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 4 - INVENTORY

As of June 30, 2017, and December 31, 2016, the Company has $1,125 and $57,743, respectively of finished goods inventory. Inventory consists of Chromebooks and charging carts. Inventory is carried at the lower of cost or market.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 5 - RELATED PARTY TRANSACTIONS

On March 22, 2016, Company executed a promissory note with Sector Five, Inc., a privately held Delaware corporation, for the purchase of inventory in the amount of $120,006. The note is due in one year and bears interest at 5%. The balance of the note was subsequently reduced by $34,840 for $17,160 of inventory that was returned to the lender and $7,260 that was determined to be obsolete. As of June 30, 2017, there is $85,166 and $7,134 of principal and interest, respectively, due on this note. This note is currently past due.

Since the change in control, the Company’s CEO and Chairman has loaned funds to the Company in support of its operations by providing payments to the Company's vendors and advances for operations. These amounts are considered due on demand and are non-interest bearing. As of June 30, 2017, and December 31, 2016, the balance due for these advances is $186,747 and $185,011, respectively.

Since the change in control, Kirkland Holdings, Inc., a company with common management, has advanced funds to the Company for operations. The advances are unsecured, non-interest bearing and due on demand. As of June 30, 2017, and December 31, 2016, the balance due for these advances is $51,837 and $12,431, respectively.

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PREFERRED STOCK

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 6 - PREFERRED STOCK

Preferred Stock

The company has 5,000,000 shares of preferred stock authorized, 1,000,000 of which have been designed Series A. Shares of Series A Preferred Stock may be converted at the holder’s election into shares of common stock, at the conversion rate of fifty shares of fully paid and nonassessable common stock for one share of Series A Preferred Stock. Series A is entitled to votes equal to the number of common shares into which the preferred could be converted into and has liquidation preferences of $2.00 per share.

On November 2, 2016, the Board approved the exchange of 14,000,000 shares of common stock for the issuance of 1,000,000 shares of Series A Preferred Stock. In addition, the Board approved a three for one forward stock split immediately following the surrender of the 14,000,000 common shares.

The above designation and forward split were approved by FINRA on February 14, 2017, and have been retroactively presented in these financial statements.

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COMMON STOCK

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 7 - COMMON STOCK

On November 2, 2016, the Board approved the exchange of 14,000,000 shares of common stock for the issuance of 1,000,000 shares of Series A Preferred Stock.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 8 - SUBSEQUENT EVENTS

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statement were available to be issued, and has determined that there are no additional material subsequent events exist that require disclosure in these financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2017

Summary Of Significant Accounting Policies Policies

Basis of Presentation

The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2017. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the six months ended June 30, 2017.

Revenue and cost recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

Accounts Receivable

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value. Any allowance for uncollectible amounts is evaluated quarterly.

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02—Leases (Topic 842). The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC 840, Leases (FAS 13). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its financial statements.

In June 2016, the FASB issued ASU 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB’s Emerging Issues Task Force). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The ASU is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The Company is currently evaluating the effects, if any, that the adoption of this guidance will have on its cash flows.

In May 2014, August 2015, April 2016 and May 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016- from Contracts with Customers, ASU 2015-14 (ASC Topic 606) Revenue from Contracts with Customers, Deferral of the Effective Date, ASU 2016-10 (ASC Topic 10 (ASC Topic 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with 606) Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-12 (ASC Topic 606) Revenue from Contracts with accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in these ASUs are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for annual periods beginning after December 15, 2016. This standard may be applied process of assessing the impact, if any, on its consolidated financial statements.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative)	6 Months Ended
	Jun. 30, 2017
Organization And Description Of Business Details Narrative
State of incorporation	Nevada
Date of incorporation	Apr. 11, 2012

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GOING CONCERN (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Going Concern Details Narrative
Net loss	$ (49,322)	$ (92,755)	$ (124,962)	$ (94,725)
Accumulated deficit	$ (438,350)		$ (438,350)		$ (313,388)

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INVENTORY (Details Narrative) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Inventory Details Narrative
Finished goods inventory	$ 1,125	$ 57,743

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended	12 Months Ended
	Mar. 22, 2016	Jun. 30, 2017	Dec. 31, 2016
Balance due for advances in other payable, related party		$ 186,747	$ 185,011
Sector Five, Inc. [Member]
Promissory note payable	$ 120,006	85,166
Interest rate	5.00%
Balance of notes reduced	$ 34,840
Inventory returned to lender	17,160
Inventory obsolete	$ 7,260
Accrued interest		7,134
Kirkland Holdings, Inc [Member]
Due to related party		$ 51,837	$ 12,431

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PREFERRED STOCK (Details Narrative) - $ / shares	Nov. 02, 2016	Jun. 30, 2017	Dec. 31, 2016
Preferred stock, authorized		5,000,000	5,000,000
Stockholders equity note stock split, description	the Board approved a three for one forward stock split immediately following the surrender of the 14,000,000 common shares.
Series A Preferred Stock [Member]
Preferred stock designed			1,000,000
Preferred stock, liquidation preference			$ 2.00
Stock exchange, Shares	1,000,000
Common Stock
Stock exchange, Shares	14,000,000

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COMMON STOCK (Details Narrative)	Nov. 02, 2016 shares
Series A Preferred Stock
Stock exchange, Shares	1,000,000
Common Stock
Stock exchange, Shares	14,000,000