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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; text-indent: 0.5in"> </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; text-indent: 0.5in"> </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"> </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-align: justify"> </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 September 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 September 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-indent: 0.5in; 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.</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">As of September 30, 2013, there were no capitalized costs.</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-indent: 0.5in; 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-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><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 September 30, 2013.</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>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-indent: 0.5in; 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 September 30, 2013.</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
September 30, 2013, deferred taxes amounted to approximately $14,700, off-set by a 100% valuation allowance.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company provides for income taxes, for the periods ended September
30, is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 10pt"><b>2013</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 10pt"><i>Current provision</i></font></td>
<td> </td>
<td colspan="2"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 89%"><font style="font-size: 10pt">Income tax provision (benefit) at statutory rate</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 10pt">$</font></td>
<td style="width: 8%; text-align: right"><font style="font-size: 10pt">(16,200</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">(16,200</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">16,200</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 September 30, 2013 the Company has net operating loss carry forwards of approximately
$16,200, 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"> </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">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; text-indent: 0.5in"> </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">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">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"> </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"> </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 September 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 September 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.</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"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As of September 30, 2013, there were no capitalized
costs.</font></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">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 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">The costs of advertising are expensed as incurred. Advertising expense
was $0 for the period from inception (April 11, 2012) through September 30, 2013.</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 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">The Company provides for income taxes, for the periods ended September
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">(16,200</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">(16,200</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">16,200</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>