Related Party Transactions

9 Months Ended

Sep. 30, 2013

Common Shares Issued to Executive and Non-Executive Officers and Directors

As of September 30, 2013, total 20,400,000 shares were issued to officers and directors were not changed. And the total outstanding shares were 40,104,000; the percentage of common shares issued to executive and non-executive officers and directors have been changed accordingly. Please see the Table below for details:

Name	Title	Share QTY		Amount		Date	% of Common Share*
Zhi Yong Li	Chairman		10,000,000	$	10,000.00	2/19/2008		24.94	%
Wei Wu	President		5,000,000	$	5,000.00	2/19/2008		12.47	%
Hui Tao Zhou	Director		5,000,000	$	5,000.00	2/19/2008		12.47	%
Jian Wu Zhang	Director		100,000	$	3,000.00	3/31/2008		0.25	%
Ming Liu	Director		100,000	$	3,000.00	3/31/2008		0.25	%
Hong Tao Bai	Vice-President		100,000	$	3,000.00	3/31/2008		0.25	%
Nan Su	CTO		100,000	$	3,000.00	3/31/2008		0.25	%
Simon Bai	CFO							0.00	%
Total			20,400,000	$	32,000.00			50.87	%

__________

* The percentage was based on the total outstanding shares of 40,104,000 as of September 30, 2013.

Loans from Shareholders

On March 2, 2008, founder of the Company, Mr. Zhiyong Li opened a bank account at Chicago branch with CitiBank. Mr. Zhiyong Li loaned $500.00 to the Company to open the bank account, and the same amount have returned back to him on March, 2009. In the year of 2009, the Company’s founder and CEO, Mr. Zhiyong Li have loaned $53,631 to Beijing subsidiary, Hyperera Technology (Beijing) Co. Ltd for operating and administrating expenses.

In 2010, the Company repaid the loan balance to Mr. Li Zhiyong. As of December 31, 2010, there was travel related expense of $985 paid by Mr. Li Zhiyong, which was accounted as loans from shareholders.

From January to March 31, 2011, there were no additional loans from Mr. Li Zhiyong. Therefore, as of March 31, 2011, the total balance of Loans from Shareholders was $985.

From April to June 30, 2011, Mr. Zhiyong Li advanced additional amount of $6,901 to the Company. The loans would be repaid as request without interest. As of December 31, 2011, the balance of loan from Shareholder was $7,886.

In 2012, Mr. Zhiyong Li advanced additional $24,867 to the Company. Therefore, as of December 31, 2012, the balance of loan from Shareholder was $32,753. The loans would be repaid as request without interest.

As of September 30, 2013, the balance of loan from Shareholder is $ 20,485. The loans would be repaid as request without interest.

Loans to Related Party Supplier- Beijing Chaoran

From October to December 2010, the Company advanced short-term loans of $995,836 as of December 31, 2010 to related party supplier, Beijing Chaoran. The interest rate was agreed at annual rate of 3.0%, the accrued interest receivables were $3,127. The repayment terms were demanded as request by the Company.

From January to March 31, 2011, the Company advanced additional short-term loans of $747,500 to related party supplier, Beijing Chaoran. The interest rate was estimated at annual rate of 3%, the accrued interest receivables were $9,273.

On April 15, 2011, Beijing Chaoran returned the loan amount of $1,538,462 to the Company; the Company signed a loan agreement with un-related party Greensaver Corporation to advance loan amount of $1,538,462 at annual interest rate of 10%. The loan term is for short-term 6 months.

As of December 31, 2012, the balance of loan amount to Related Party Supplier-Beijing Chaoran was $5,873, and the interest incomes from Beijng Chaoran were based on annual interest rate of 3%.

As of September 30, 2013, the balance of loan amount to Related Party Supplier-Beijing Chaoran is $ 183,707, and the interest incomes from Beijng Chaoran were based on annual interest rate of 3%.

Loans from Others

In order to continually operation and survive the business, the Company loaned money from shareholders relatives and others.

As of September 30, 2013, the balance of loan from others is $ 237,655. The loans would be repaid as request without interest.

Cost of Goods Sold

The Company’s purchase cost is primarily from supplier, Beijing Chaoran Chuangshi Technology Co., Ltd (“Beijing Chaoran”), owned 100% by Mr.Liancheng Li, the father of Mr. Zhiyong Li. The management believes that the purchase price for the parts will be market price.

The products the Company will sell are provided by Beijing Chaoran Chuangshi Technology Co., Ltd. Beijing Chaoran was established in 2002 specializing in management information system applied in power industry. The Company signed a two-year software license and distribution agreement with Beijing Chaoran on March 1, 2009.

Under the terms of the agreement Beijing Chaoran authorizes Hyperera to be its exclusive sales and service agent for suegery anesthesia clinic management software and ICU management system product lines. The product lines shall include the products that Beijing Chaoran developed before the agreement signed and the products that will be developed solely by Beijing Chaoran during the term of the agreement. Beijing Chaoran is the exclusive supplier of the products Hyperera sells. The management of Hyperera, Inc. believes that the purchase price for the system and software from Hyperera will be market price. Hyperera, Inc. and Beijing Chaoran are two totally separated entities, i.e., Hyperara, Inc. is a USA corporation and will fully comply with USA regulations and USA general accepted accounting principles; Beijing Chaoran is a Chinese company and it will comply with Chinese legal systems. Hyperera, Inc. and Beijing Chaoran will operate independently. Beijing Chaoran, as a Chinese local company, will record their software and hardware costs based on the Chinese accounting regulations rulings. But, when Hyperera, Inc. purchases the software and hardware and the services from Beijing Chaoran, Hyperera, Inc. will assume the product and service liabilities with customers, and Hyperera, Inc. record the actual costs paid to Beijing Chaoran as long as the products or services been delivered to Hyperera, Inc. by Beijing Chaoran.

The management of Beijing Chaoran disclosed to Hyperera, Inc. that Beijing Chaoran adopted the cost plus pricing policies with market adjustment, negotiable with customers. Beijing Chaoran adopted the cost plus system for all the products for all customers including the product, surgery anesthesia clinic management software and ICU management system exclusively distributed by Hyperera, Inc. Specifically, the selling price for Beijing Chaoran is determined by total actual cost of direct materials (hardware), direct labor, and allocated overhead, plus 5-10% of total cost.

In March 1, 2009, the Company placed order to purchase the three hardware parts through Beijing Chaoran, the total cost of the hardware purchase is $207,998.00, the amount of $59,998 and $ 148,000 was prepaid on March 9 and 18, 2009 respectively.

And the prepaid amount of $59,998 became cost of good sold as of December 31, 2009, and the prepaid amount of $148,000 became cost of good sold as of March 31, 2010.

For the three months ended September 30, 2013 and 2012, there was no cost of goods sold incurred.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References+ Details

HYPERERA INC 10-Q