CHMS SUPPLEMENT FEB 13 2007
Filed
Pursuant to Rule 424(b)(3)
Registration
Statement No. 333-128323
SUPPLEMENT
TO PROSPECTUS DATED AUGUST 7, 2006
AS
PREVIOUSLY SUPPLEMENTED ON DECEMBER 14, 2006
CHINA
MOBILITY SOLUTIONS, INC.
29,214,458
Shares of Common Stock
On
January 26, 2007, China Mobility Solutions, Inc. (the “Company”) entered into a
Term Sheet with Meyers Associates L.P. (“Meyers”) as Placement Agent for the
Company's issuance of Senior Convertible Debentures (the “Debentures”) on August
15, 2005. In consideration of the Company's inability to repay the Debentures,
because of the need to obtain regulatory approval from the banking
authorities in the People's Republic of China, the Company agreed to lower
the
Conversion Price (as defined) of the Debentures, subject to certain
conditions.
The
conversion/settlement agreements (the “Conversion Agreements”) dated February 2,
2007, provide that the conversion price (the “Conversion Price”) of the
Debentures, as set forth in paragraph 7(d) of the Debentures shall be reduced
to
$.05 per share of Common Stock (“Underlying Common Stock") issuable upon
conversion (the “Conversion”), provided that at least fifty (50%) percent in
principal amount (or $1,675,000) of the initial $3,350,000 of Debentures (the
“Minimum Conversion”) agree to the Conversion. The closing of the Conversion
(the “Closing”) occurred on February 12, 2007. Those Debentureholders who agree
to the Conversion shall also agree to convert all accrued but unpaid penalties
and interest owed by the Company into Common Stock at $.05 per share. Pursuant
to the terms of the May 4, 2006 Waiver/Settlement Agreement entered into between
the Company and Debentureholders the Conversion Price of the Debentures was
reduced to its current price of $.30 per share.
The
Conversion Agreement provides for the Debentureholders who signed such agreement
to: (i) terminate any and all pending litigation with the Company to which
they
are a party, without prejudice to reinstatement if and only if the Minimum
Conversion is not completed, and/or the Company defaults in its obligations
under the Conversion Agreement; (ii) in any vote of shareholders not vote
against any nominee to the Board of Directors of the Company and any proposal
designated by current management of the Company which does not effect the
Conversion, and (iii) release and hold harmless the Company and its officers,
directors, employees, representatives and affiliates following the
Closing.
The
Company agreed to make whatever filings are necessary with the SEC, whether
by
way of supplement or post-effective amendment to this registration statement
concerning the Underlying Common Stock, to permit the issuance of common
stock
at the reduced Conversion Price of $.05 per share. Notwithstanding the
foregoing, only the original 214,287 shares of Common Stock issuable underlying
each $25,000 Unit, including 71,429 Shares of Common Stock underlying each
Debenture, are registered on this Registration Statement. Accordingly, at
the
reduced Conversion Price of $.05 per share an aggregate of 500,000 shares
of
Common Stock
would be issuable upon conversion of the Debentures and an additional 166,666
shares of Common Stock issuable upon exercise of warrants included in the
Units.
All additional shares of Common Stock not included in this Registration
Statement, as well as those issuable in exchange for any interest and penalties
due under the Debentures at the time of the Closing, have been included in
a
second registration statement filed by the Company on February 12,
2007.
The
Company shall also provide the Debentureholders with “most favored nation”
status and reduce the Conversion Price to the per share price of any equity
offering made by the Company within 18 months of the Closing Date. The Company
shall issue such number of additional shares to the Debentureholders to reduce
their Conversion Price to that of such subsequent offering.
Date:
February 13, 2007