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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Nature of Operations</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">SECTOR 5, INC. (“Sector 5” or the
“Company”) was incorporated in the State of Nevada on April 11, 2012. Sector 5 plans to market its own brand under
the brand name “Urban Street Apparel”. Because of the brand name Urban Street Apparel we plan to take advantage of
the “USA” acronym in its marketing campaign. Sector 5’s intentions are to stay on the cutting edge of the swiftly
changing young woman’s apparel market. Sector 5 plans to position itself deep in the fashion culture by introducing new styles
and designs on an ongoing basis. As Urban Street Apparel will be a new brand coming into the marketplace, we also plan on reselling
current existing popular brands as a draw to attract potential new customers while showcasing our own brand. That combined, with
our innovative “fifth pocket” design and marketing, Urban Street Apparel plans to carve a distinctive niche in this
lucrative, high margin, garment sector.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Development Stage Entity</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is a development stage company,
with no revenues, in accordance with FASB ASC 915 <i>Financial Reporting for Development Stage Entities</i>. The Company plans
to market its own brand of women’s apparel as well as other established women’s apparel. The Company plans to market
other more established brands on its internet site as a way to bring in potential customers and showcase the Sector 5 brand. Sector
5 plans to develop, manufacture, and market its own brand of denim jeans. The Company plans to market its products through its
internet site, direct mailings, and eventually it has plans to establish a direct commissioned sales force.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Activities during the development stage primarily
include related party equity-based and or equity financing transactions. Our efforts to date have been concentrated on financing,
administrative efforts towards public compliance and our product’s development.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management’s plan in regard to the development
of operations, upon adequate funding, is to develop our base software. Work is planned for mapping-out the site structure and workforce
questionnaires. Our overall goal is to complete the software questionnaire base content and link the software to web and mobile
devices for marketplace launch.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Basis of Presentation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company prepares its financial statements
in accordance with accounting principles generally accepted in the United States of America.  The accompanying interim unaudited financial
statements have been prepared in accordance with generally accepted accounting principles for interim financial information in
accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In the Company’s opinion, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three
month period ended March 31, 2013 are not necessarily indicative of the results for the full years. While management of the Company
believes that the disclosures presented herein and adequate and not misleading, these interim financial statements should be read
in conjunction with the audited combined financial statements and the footnotes thereto for the periods ended December 31, 2012
filed in its annual report on Form 10-K.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Use of Estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Financial Statements have been prepared
in conformity with U.S. GAAP, which requires using management’s best estimates and judgments where appropriate. These estimates
and judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses
during the reporting period. Actual results could differ materially from these good faith estimates and judgments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Financial Instruments</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s balance sheet includes
certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because
of the relatively short period of time between the origination of these instruments and their expected realization.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value
as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date..
ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant
assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy
consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy
are described below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 11%; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 89%; text-align: justify"><font style="font-size: 10pt">Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities</font>.</td></tr>
<tr style="vertical-align: top">
<td style="text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify"><font style="font-size: 10pt">Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.</font></td></tr>
<tr style="vertical-align: top">
<td style="text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="text-align: justify"><font style="font-size: 10pt">Level 3 - Inputs that are both significant to the fair value measurement and unobservable.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to management as of March 31, 2013. The respective carrying
value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company applied ASC 820 for all non-financial
assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities
did not have a significant impact on the Company’s financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March 31, 2013 and the fair values of
the Company’s financial instruments approximate their historical carrying amount.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cash and Cash Equivalents</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Cash and cash equivalents includes all cash
deposits and highly liquid financial instruments with a maturity of three months or less. Cash and cash equivalents totaled $33,279
and $48,121 at March 31, 2013 and December 31, 2012, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><u>Share-based Expense</u></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">ASC 718, <i>Compensation – Stock Compensation</i>,
prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired.  Transactions
include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock
ownership plans and stock appreciation rights.  Share-based payments to employees, including grants of employee stock
options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized
over the period during which an employee is required to provide services in exchange for the award, known as the requisite service
period (usually the vesting period).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for stock-based compensation
issued to non-employees and consultants in accordance with the provisions of ASC 505-50, <i>Equity – Based Payments to Non-Employees.</i>
 Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably
measurable:  (a) the goods or services received; or (b) the equity instruments issued.  The fair value of the share-based
payment transaction is determined at the earlier of performance commitment date or performance completion date.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Share-based expense for the period ended March
31, 2013 was $0 and for the year-ended December 31, 2012 was $5,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Income taxes</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for income taxes under
the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 740, Income
Taxes (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Earnings (loss) per share</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company computes basic and diluted earnings
per share amounts in accordance with ASC Topic 260, <i>Earnings per Share</i>. Basic earnings (loss) per share calculations are
determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings
(loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares. The Company
does not have any potentially dilutive instruments and, thus, anti-dilution issues are not applicable.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Recent Accounting Pronouncements</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Except for rules and interpretive releases
of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards
Codification (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the
Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact
on the Company’s present or future financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s financial statements are
prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet emerged from
its development stage, has not established ongoing sources of revenues sufficient to cover its operating costs, and requires additional
capital to commence its operating plan. 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 its ability to continue as a going concern.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In order to continue as a going concern, the
Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company
include: sales of equity instruments; traditional financing, such as loans; and obtaining capital from management and significant
stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company
will be successful in accomplishing any of its plans.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There is no assurance that the Company will
be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory
to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations.
However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company utilizes the liability method of
accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences
between financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and
laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized,
when it is more likely than not, that such tax benefits will not be realized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has not recognized operating losses
generated from operations to date, based on uncertainties concerning its ability to generate taxable income in future periods.
The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from
operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future
periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts
to be more likely than not. As of March 31, 2013, deferred taxes amounted to approximately $8,900, off-set by a 100% valuation
allowance.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company provides for income taxes, for the period ended March
31 as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>2013</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 10pt"><i>Current provision</i></font></td>
<td> </td>
<td colspan="2"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 88%"><font style="font-size: 10pt">Income tax provision (benefit) at statutory rate</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 10pt">(8,900</font></td>
<td style="width: 1%"><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">State income tax expense (benefit), net of federal benefit</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">0</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td><font style="font-size: 10pt">Subtotal</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 10pt">(8,900</font></td>
<td><font style="font-size: 10pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td><font style="font-size: 10pt">Valuation allowance</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 10pt">8,900</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 10pt">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 10pt">---</font></td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Under the Internal Revenue Code of 1986, as
amended, these losses can be carried forward twenty years. As of March 31, 2013 the Company has net operating loss carry forwards
of approximately $8,900, which begin to expire in 2032.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company utilizes space provided by the
majority shareholder without charge. Rent was $0 for all periods presented.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company does not have an employment contract
with its key employee, the sole shareholder who is the Chief Executive and Chief Technical Officer.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The amounts and terms of the above transactions
may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered
into with independent third parties.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The total number of shares of capital stock
which the Company shall have authority to issue is seventy five million (75,000,000) common shares with a par value of $.001, of
which 15,000,000 have been issued to the founder and 5,000,000 have been issued under a Form S1 registration statement at $0.01
per share. The Company intends to issue additional shares in an effort to raise capital to fund its operations. Common shareholders
will have one vote for each share held.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">No holder of shares of stock of any class is
entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock
of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued
for money, for consideration other than money, or by way of dividend.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There are no preferred shares authorized or
outstanding. There have been no warrants or options issued or outstanding.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Some of the officers and directors of the Company
are involved in other business activities and may, in the future, become involved in other business opportunities that become available.
They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy
for the resolution of such conflicts.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">From time to time the Company may become a
party to litigation matters involving claims against the Company. Management believes that there are no current matters that would
have a material effect on the Company’s financial position or results of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management has evaluated subsequent events
through the date the financial statements were issued. Based on our evaluation no events have occurred requiring adjustment or
disclosure.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">SECTOR 5, INC.
(“Sector 5” or the “Company”) was incorporated in the State of Nevada on April 11, 2012. Sector 5 plans
to market its own brand under the brand name “Urban Street Apparel”. Because of the brand name Urban Street Apparel
we plan to take advantage of the “USA” acronym in its marketing campaign. Sector 5’s intentions are to stay on
the cutting edge of the swiftly changing young woman’s apparel market. Sector 5 plans to position itself deep in the fashion
culture by introducing new styles and designs on an ongoing basis. As Urban Street Apparel will be a new brand coming into the
marketplace, we also plan on reselling current existing popular brands as a draw to attract potential new customers while showcasing
our own brand. That combined, with our innovative “fifth pocket” design and marketing, Urban Street Apparel plans to
carve a distinctive niche in this lucrative, high margin, garment sector.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Company
is a development stage company, with no revenues, in accordance with FASB ASC 915 <i>Financial Reporting for Development Stage
Entities</i>. The Company plans to market its own brand of women’s apparel as well as other established women’s apparel.
The Company plans to market other more established brands on its internet site as a way to bring in potential customers and showcase
the Sector 5 brand. Sector 5 plans to develop, manufacture, and market its own brand of denim jeans. The Company plans to market
its products through its internet site, direct mailings, and eventually it has plans to establish a direct commissioned sales force.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Activities
during the development stage primarily include related party equity-based and or equity financing transactions. Our efforts to
date have been concentrated on financing, administrative efforts towards public compliance and our product’s development.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Management’s
plan in regard to the development of operations, upon adequate funding, is to develop our base software. Work is planned for mapping-out
the site structure and workforce questionnaires. Our overall goal is to complete the software questionnaire base content and link
the software to web and mobile devices for marketplace launch.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Company
prepares its financial statements in accordance with accounting principles generally accepted in the United States of America.
 The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting
principles for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the
Company’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month period ended March 31, 2013 are not necessarily indicative of the results
for the full years. While management of the Company believes that the disclosures presented herein and adequate and not misleading,
these interim financial statements should be read in conjunction with the audited combined financial statements and the footnotes
thereto for the periods ended December 31, 2012 filed in its annual report on Form 10-K.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Financial
Statements have been prepared in conformity with U.S. GAAP, which requires using management’s best estimates and judgments
where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts
for certain revenues and expenses during the reporting period. Actual results could differ materially from these good faith estimates
and judgments.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Company’s
balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate
their fair value because of the relatively short period of time between the origination of these instruments and their expected
realization.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820)
defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions
developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions
about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).
The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels
of the fair value hierarchy are described below:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 11%; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">·</font></td>
<td style="width: 89%; text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities</font></td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">·</font></td>
<td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.</font></td></tr>
<tr style="vertical-align: top">
<td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">·</font></td>
<td style="text-align: justify; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Level 3 - Inputs that are both significant to the fair value measurement and unobservable.</font></td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Fair value
estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March
31, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to
the short-term nature of these instruments.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Company
applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption
of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">As of March
31, 2013 and the fair values of the Company’s financial instruments approximate their historical carrying amount.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Cash and cash
equivalents includes all cash deposits and highly liquid financial instruments with a maturity of three months or less. Cash and
cash equivalents totaled $33,279 and $48,121 at March 31, 2013 and December 31, 2012, respectively.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">ASC 718, <i>Compensation
– Stock Compensation</i>, prescribes accounting and reporting standards for all share-based payment transactions in which
employee services are acquired.  Transactions include incurring liabilities, or issuing or offering to issue shares,
options, and other equity instruments such as employee stock ownership plans and stock appreciation rights.  Share-based
payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements
based on their fair values. That expense is recognized over the period during which an employee is required to provide services
in exchange for the award, known as the requisite service period (usually the vesting period).</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Company
accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, <i>Equity
– Based Payments to Non-Employees.</i>  Measurement of share-based payment transactions with non-employees is based
on the fair value of whichever is more reliably measurable:  (a) the goods or services received; or (b) the equity instruments
issued.  The fair value of the share-based payment transaction is determined at the earlier of performance commitment date
or performance completion date.  </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Share-based
expense for the period ended March 31, 2013 was $0 and for the year-ended December 31, 2012 was $5,000.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Company
accounts for income taxes under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) No. 740, Income Taxes (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC
740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Company
computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, <i>Earnings per Share</i>. Basic earnings
(loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding
during the year. Diluted earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average
number of shares. The Company does not have any potentially dilutive instruments and, thus, anti-dilution issues are not applicable.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Except for
rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards,
the FASB Accounting Standards Codification (“ASC”) is the sole source of authoritative GAAP literature recognized by
the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will
not have a material impact on the Company’s present or future financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The Company
provides for income taxes, for the period ended March 31 as follows:</p>
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; background-color: white; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><b>2013</b></font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"><i>Current provision</i></font></td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 88%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Income tax provision (benefit) at statutory rate</font></td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(8,900)</font></td>
<td style="width: 1%; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif"></font></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">State income tax expense (benefit), net of federal benefit</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">0</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Subtotal</font></td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">(8,900)</font></td>
<td style="line-height: 115%"></td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">Valuation allowance</font></td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">8,900</font></td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><font style="font: 10pt Times New Roman, Times, Serif">---</font></td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8.5pt/normal Times New Roman, Times, Serif; margin: 0; background-color: white"> </p>
-8900
0
-8900
8900