UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2018

OR

For the transition period from ___________ to ___________

Commission file number 333-181742

200 Duke Street, Suite 110

Alexandria, Virginia 22314

(Address of principal executive offices)

(517) 348-1005

(Issuer’s telephone number, including area code)

___________________________________________________________

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

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

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

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

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

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

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

SECTOR 5, INC.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

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

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

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

SECTOR 5, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2018

(Unaudited)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2018. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Use of Estimates

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

Revenue and cost recognition

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

Accounts Receivable

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

Recently issued accounting pronouncements

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

NOTE 3 – GOING CONCERN

As reflected in the accompanying financial statements, the Company has an accumulated deficit of $710,218 at March 31, 2018 and had a net loss of $194,191 for the three months ended March 31, 2018. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements have been prepared assuming that the Company will continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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

NOTE 4 - COMMITMENTS

On March 29, 2018, the Company received a purchase order for 10,000 Chromebooks for expected revenue of $1,345,000. As of March 31, 2018, no shipments have yet been made as the Company was still in the process of fulfilling the order.

NOTE 5 – INVENTORY

As of March 31, 2018, and December 31, 2017, the Company has $7,021 and $5,396, respectively of finished goods inventory. Inventory consists of Chromebooks and charging carts. Inventory is carried at the lower of cost or market.

NOTE 6 - RELATED PARTY TRANSACTIONS

On March 22, 2016, Company executed a promissory note with Sector Five, Inc., a privately held Delaware corporation, for the purchase of inventory in the amount of $120,006. The note is due in one year and bears interest at 5%. The balance of the note was subsequently reduced by $34,840 for $17,160 of inventory that was returned to the lender and $7,260 that was determined to be obsolete. As of December 31, 2017, there was $85,166 and $9,335 of principal and interest, respectively, due on this note. As of March 31, 2018, there is $85,166 and $10,385 of principal and interest, respectively, due on this note. This note is currently past due.

Since the change in control, the Company’s CEO and Chairman has loaned funds to the Company in support of its operations by providing payments to the Company’s vendors and advances for operations. These amounts are considered due on demand and are non-interest bearing. As of March 31, 2018 and December 31, 2017, the balance due for these advances is $212,750 and $211,175, respectively.

Since the change in control, Kirkland Holdings, Inc., a company with common management, has advanced funds to the Company for operations. The advances are unsecured, non-interest bearing and due on demand. As of March 31, 2018 and December 31, 2017, the balance due for these advances is $64,917 and $59,267, respectively.

Per the terms of a consulting agreement, dated January 4, 2018, with Sector Five, Inc., a privately held Delaware corporation the company will pay $5,000 a month for services to be rendered. As of March 31, 2018, there is $15,000 outstanding per the agreement.

Pursuant to the terms of the employment agreement with Erick Kuvshinikov, CEO, effective February 13, 2018, the Company granted Mr. Kuvshinikov 1,000,000 shares of common stock, 50% of the which vested as of February 15, 2018. The other 50% will vest sixty days after the effective date of the employment agreement. In addition, Mr. Kuvshinikov will also receive a salary of $2,500 a month for six months.

NOTE 7 – PREFERRED STOCK

Preferred Stock

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

NOTE 8 – COMMON STOCK

Pursuant to the terms of the employment agreement with Erick Kuvshinikov, CEO, effective February 13, 2018, the Company granted Mr. Kuvshinikov 1,000,000 shares of common stock, 50% of the which vested as of February 15, 2018. The 500,000 shares of common stock were valued at $0.30, the closing stock price on the date of grant, for total non-cash expense of $150,000.

NOTE 9 – SUBSEQUENT EVENTS

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

On April 16, 2018 the Board approved the issuance of 500,000 shares of common stock to the CEO for services rendered. The shares were valued at $0.30, the closing stock price on the date of issue, for total non-cash expense of $150,000.

On April 16, 2018, the Company executed a convertible promissory note with Auctus Fund, LLC for $350,000. The note bears interest at 10% per annum and matures on January 16, 2019. The holder has the right at any time to convert any portion of the note and/or interest into shares of common stock at a 40% discount to the average of the two lowest trades during the previous twenty-five days of conversion, provided that the conversion price is not less than $0.17 prior to the 180^th day after issue. The Company received $322,250 net of OID and applicable fees.

On April 16, 2018, in connection with and pursuant to the terms of the convertible promissory note dated April 16, 2018, with Auctus Fund, LLC, the Company issued warrants to Auctus Fund to purchase up to 350,000 shares of common stock. The warrants have an exercise price of $0.50 and expire in five years.

On April 19, 2018, the Company repaid $100,000 towards its related party loans.

On April 27, 2018, the Company was approved by Google to make Google’s newest Chromebook and distribute it in the business to business (B2B) enterprise market segment within the United States. This marks the third acceptance by Google of Sector 5’s participation in the Chromebook program under Sector 5’s Google Chrome OS Brand Features and Support Agreement originally entered into with Google in January 2015.

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

The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing in this report and are hereby referenced. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this report. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. We believe it is important to communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

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

Plan of Operation

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

Sector 5 is taking advantage of the United States and Canadian (North America) educational market to target the retail consumer electronics market using a supply-chain methodology involving Open Innovation. Sector 5 has relationships with Chinese suppliers employing American ingenuity that allows us to create products with latest technology, matching market expectations at the best pricing. The Company has accomplished this through the involvement of a talented staff, including designers and innovators, coupled with strong relationships with “best in class” suppliers and a relationship with Google to sell and market Chromebooks.

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

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

Products

The Company has been focusing on the education market utilizing Chrome and Android Operating Systems utilizing a Google approval Chromebook. As we ramp up a sales staff, the Company has designed a 15-watt wireless charging solution for its electronics and is in the process of obtain the proper qualification and testing to commercialize this new product. With this new technology, the Company intendeds toto broadly target general consumer retail channels and possibly other B2B opportunities (e.g. hospitals). The Company is also in the process of filing patents around the charging carts solution and other technologies it’s currently working on. In this phase we will need to carefully and continuously balance growth in width (number of sales channels and product sku’s) versus depth (quality of service and support).

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

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

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

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

Who We Sell To

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

Our planned marketing staffs will include members solely focused on the educational computing market and members solely focused on the consumer retail market. However, we plan to have a unified R&D effort that will aim at maximizing synergies in an effort to reduce R&D costs. On the education side, we have sent out samples to the school with RFP’s that we have identified that currently have the resources to buy. We have also been selling our E1 Chromebook and large screen TV’s. Geographically we have been targeting both the USA and Canada. Most of the business with the schools involves a bidding process and we plan on being the best priced on the market, coupled with superior features/performance. Features we plan to emphasize include better graphical processing and more school optimized enclosure with easy carry handles. We believe that we can be highly successful in the educational bidding process. Our supply chain allows nearly unlimited growth potential as it includes a very extensive list of product categories covering involving excellent engineering teams. We will continuously aim at enabling growth through presenting new business opportunities to buyers from within our vendor partner capabilities and seeking additional financing for growth in the consumer electronics industry.

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

Results of Operations for the Three Months Ended March 31, 2018 Compared to the Three Months Ended March 31, 2017

Revenues. Sales revenue for the three months ended March 31, 2018 were $490 as compared to $89,484 for the three months ended March 31, 2017, a decrease of $88,994 or 99.5%. The decrease in sales for the three months ended March 31, 2018 is due to a temporary slowdown in sales and promotion while we implement our new business model.

Cost of Goods Sold. Cost of goods sold for the three months ended March 31, 2018 were $375 as compared to $91,536 for the three months ended March 31, 2017. The decrease in cost of goods sold is in line with the decrease in sales.

Research and Development Expenses. Research and development expenses for the three months ended March 31, 2018 were $0 as compared to $8,447 for the three months ended March 31, 2017. The decrease is due to an attempt to cut costs while in the process of implementing our new business model.

Advertising and Promotion. Advertising and promotion expenses for the three months ended March 31, 2018 was $1,077 and $2,695 for the three months ended March 31, 2017, respectively.

Professional Fees. Professional fees for the three months ended March 31, 2018 were $22,800 as compared to $39,252 for the three months ended March 31, 2017. Professional fees consist of accounting, audit, legal and consulting expense. The decrease in the current period is due to a decrease in consulting expense.

Consulting – Related Party. During the three months ended March 31, 2018 we incurred $15,000 of consulting expense with a related party per the terms of an agreement with Sector Five, Inc., a privately held Delaware corporation, dated January 4, 2018. There was no related party consulting expense in the prior period.

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2018 were $4,379 as compared to $21,898 for the three months ended March 31, 2017. The decrease in general and administrative expenses is due to an attempt to cut costs while in the process of implementing our new business model.

Interest expense. Interest expense for the three months ended March 31, 2018 was $1,050 as compared to $1,296 for the three months ended March 31, 2017. The decrease in interest expense is the result of the lower balance on the promissory note with Sector Five, Inc., (a privately held Delaware corporation), issued for the purchase of inventory in 2016.

Net Loss. Net loss for the three months ended March 31, 2018 was $194,191 compared to $75,640 for the three months ended March 31, 2017. Net loss increased in the current period due to the $150,000 non-cash expense incurred for the issuance of common stock for officer compensation.

Liquidity and Capital Resources

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

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

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

Net Cash Used in Operating Activities

We used $7,301 of cash in operating activities for the three months ended March 31, 2018, compared to $8,009 provided by operating activities for the three months ended March 31, 2017.

Net Cash Used in Investing Activities

The cash used in investing activities during the three months ended March 31, 2018 and 2017 was $0 and $0, respectively.

Net Cash Provided by Financing Activities

Net cash provided by financing activities during the three months ended March 31, 2018 was $7,225. Cash flow from financing activities consists of related party loans and repayments of those loans. Net cash used by financing activities was $7,020 during the three months ended March 31, 2017.

Availability of Additional Funds

On April 16, 2018, the Company executed a convertible promissory note with Auctus Fund, LLC for $350,000. The note bears interest at 10% per annum and matures on January 16, 2019. The holder has the right at any time to convert any portion of the note and/or interest into shares of common stock at a 40% discount to the average of the two lowest trades during the previous twenty-five days of conversion, provided that the conversion price is not less than $0.17 prior to the 180^th day after issue. The Company received $322,250 net of OID and applicable fees.

On April 16, 2018, in connection with and pursuant to the terms of the convertible promissory note dated April 16, 2018, with Auctus Fund, LLC, the Company issued warrants to Auctus Fund to purchase up to 350,000 shares of common stock. The warrants have an exercise price of $0.50 and expire in five years.

Critical Accounting Policies and Estimates

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

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

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

Off Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Material Commitments

On March 29, 2018, the Company received a purchase order for 10,000 Chromebooks for expected revenue of $1,345,000. As of March 31, 2018, no shipments have yet been made as the Company was still in the process of fulfilling the order.

Recent Accounting Pronouncements

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4. Controls and Procedures

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

As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our President and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of our first fiscal quarter covered by this report. Based on the foregoing, our chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2018. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Management's Remediation Initiatives

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

Changes in Internal Control Over Financial Reporting

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

PART II OTHER INFORMATION

Item 1. Legal Proceedings

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

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On April 16, 2018, Sector 5, Inc. (the “Company”) completed a financing transaction with Auctus Fund, LLC (“Auctus”), pursuant to which the Company issued and sold to Auctus (i) a convertible promissory note in the principal amount of $350,000 and (ii) a warrant to purchase 350,000 shares of the Company’s common stock, under the terms of a securities purchase agreement between the parties. The Company filed a Form 8-K on April 20, 2018, disclosing the transaction.

ITEM 6. EXHIBITS

Part I Exhibits

Part II Exhibits

SIGNATURES

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