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<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 June 30, 2013, deferred taxes amounted to approximately $14,700, off-set by a 100% valuation
allowance.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company provides for income taxes, for
the periods ended June 30, is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>2013</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 10pt"><i>Current provision</i></font></td>
<td> </td>
<td colspan="2"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 89%"><font style="font-size: 10pt">Income tax provision (benefit) at statutory rate</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 8%; text-align: right"><font style="font-size: 10pt">(14,700</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">(14,700</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">14,700</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 June 30, 2013 the Company has net operating loss carry forwards
of approximately $14,700, which begin to expire in 2032.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Loans from Shareholder</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In support of the Company’s efforts
and cash requirements, it is relying on advances from related parties until such time that the Company can support its operations
or attains adequate financing through sales of its equity or traditional debt financing. Amounts represent advances or amounts
paid in satisfaction of certain liabilities as they come due. The advances are considered temporary in nature and have not been
formalized by a promissory note. Notes are considered payable on demand and is non-interest bearing. The majority shareholder
has pledged her support to fund continuing operations; however there is no written commitment to this effect. The Company is dependent
upon the continued support of this member.</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 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; text-indent: 0.5in"> </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="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company provides for income taxes, for
the periods ended June 30, is 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: 89%"><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: 8%; text-align: right"><font style="font-size: 10pt">(14,700</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">(14,700</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">14,700</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="margin: 0pt"></p>
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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">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">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">The Financial Statements and related disclosures
have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial
Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles
(“GAAP”) of the United States.</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>Use of Estimates</i></b></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">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-align: justify; 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: 5%; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 95%; 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 June 30, 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 June 30, 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"> </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">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 $27,246 and $48,121 at June 30, 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><i>Accounts Receivable, Credit</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company currently has not generated any
revenue from operations. The Company will be charging for referral fees at the time a referral is placed. Fee for referral will
be based on a negotiation between third parties. There is no subscription base for belonging to the group. Billings will occur
at the point of referral transmission and collection on customer accounts through credit cards or direct payments. The Company
does not issue credit on services provided, therefore there will be no accounts receivable. No allowance for doubtful accounts
is considered necessary to be established for amounts that may not be recoverable, since there has been no credit issued.</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>Software Development Costs and Capital
Technology</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for software development
costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development, FASB ASC 350-40,
Internal-Use Software, FASB 985-20, Costs of Computer Software to be Sold, Leased, or Marketed and FASB ASC 350-50, Website Development
Costs. The Company has capitalized the cost of the proprietary website technology, purchased from unrelated third party developers.
Additional costs to customize, modify and betterment to the existing product was charged to expense as it was incurred.</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">Capitalized software costs are stated at cost.
The estimated useful life of costs capitalized is currently being amortized over five years. Amortization is computed on a straight
line basis. The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the amortization
period or the unamortized balance is warranted.</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>Long-lived assets and intangible property:</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Long-lived assets such as property, equipment
and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may
not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the
asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent
appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an
impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are
not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the
risk associated with the recovery of the assets. The Company did not recognize any impairment losses for any 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"><b><i>Share-based payments</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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,
in accordance with FASB ASC Topic 718. 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). The Company had no common
stock options or common stock equivalents granted or outstanding for all periods presented. The company may issue shares as compensation
in the future periods for employee services.</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 may issue restricted stock to consultants
for various services. Cost for these transactions will be measured at the fair value of the consideration received or the fair
value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is to be measured
at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is
reached or (ii) the date at which the counterparty's performance is complete. The company has not issue shares during the periods
presented, however it anticipates that shares may be issued in the future.</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>Revenue recognition</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenue on arrangements
in accordance with FASB ASC No. 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed or determinable,
persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured.</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 issued guarantees or other
warrantees on the success or results of references paid. The Company has no history and has not experienced any refund requests
or committed to any adjustments for failed references. The Company does not believe that there is any required liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Advertising</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The costs of advertising are expensed as incurred. Advertising
expense was $0 for the period from inception (April 11, 2012) through June 30, 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Research and Development</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company expenses research and development
costs when incurred. Research and development costs include engineering and testing of product and outputs. Indirect costs related
to research and developments are allocated based on percentage usage to the research and development. To current date, there have
been no research and development expenses.</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>Income taxes</i></b></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">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"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recent Accounting Pronouncements</i> </b></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 an ongoing source of revenues sufficient to cover its operating cost, 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">There are no intangible assets of record as
of June 30, 2013.</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">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">The Financial Statements and related disclosures
have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial
Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles
(“GAAP”) of the United States.</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; 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-align: justify; 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: 5%; text-align: center"><font style="font: 10pt Symbol">·</font></td>
<td style="width: 95%; 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 June 30, 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 June 30, 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">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 $27,246 and $48,121 at June 30, 2013 and December 31, 2012, respectively.</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">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">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">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,
in accordance with FASB ASC Topic 718. 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). The Company had no common
stock options or common stock equivalents granted or outstanding for all periods presented. The company may issue shares as compensation
in the future periods for employee services.</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 may issue restricted stock to consultants
for various services. Cost for these transactions will be measured at the fair value of the consideration received or the fair
value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is to be measured
at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is
reached or (ii) the date at which the counterparty's performance is complete. The company has not issue shares during the periods
presented, however it anticipates that shares may be issued in the future.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company expenses research and development
costs when incurred. Research and development costs include engineering and testing of product and outputs. Indirect costs related
to research and developments are allocated based on percentage usage to the research and development. To current date, there have
been no research and development expenses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The costs of advertising are expensed as incurred. Advertising expense
was $0 for the period from inception (April 11, 2012) through June 30, 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenue on arrangements
in accordance with FASB ASC No. 605, Revenue Recognition. In all cases, revenue is recognized only when the price is fixed or determinable,
persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured.</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 issued guarantees or other
warrantees on the success or results of references paid. The Company has no history and has not experienced any refund requests
or committed to any adjustments for failed references. The Company does not believe that there is any required liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Long-lived assets such as property, equipment
and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may
not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the
asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent
appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an
impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are
not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the
risk associated with the recovery of the assets. The Company did not recognize any impairment losses for any periods presented.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company currently has not generated any
revenue from operations. The Company will be charging for referral fees at the time a referral is placed. Fee for referral will
be based on a negotiation between third parties. There is no subscription base for belonging to the group. Billings will occur
at the point of referral transmission and collection on customer accounts through credit cards or direct payments. The Company
does not issue credit on services provided, therefore there will be no accounts receivable. No allowance for doubtful accounts
is considered necessary to be established for amounts that may not be recoverable, since there has been no credit issued.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for software development
costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development, FASB ASC 350-40,
Internal-Use Software, FASB 985-20, Costs of Computer Software to be Sold, Leased, or Marketed and FASB ASC 350-50, Website Development
Costs. The Company has capitalized the cost of the proprietary website technology, purchased from unrelated third party developers.
Additional costs to customize, modify and betterment to the existing product was charged to expense as it was incurred.</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">Capitalized software costs are stated at cost.
The estimated useful life of costs capitalized is currently being amortized over five years. Amortization is computed on a straight
line basis. The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the amortization
period or the unamortized balance is warranted.</p>
2012-04-11
State of Nevada
27246
48121
0
0
-14700
0
-14700
-14700
14700
1.00
14700
2032
0