UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
AMENDMENT NO. 2
UNDER THE SECURITIES EXCHANGE ACT OF 1934
IT&E INTERNATIONAL GROUP
(Name of Issuer)
COMMON STOCK, PAR VALUE $.001
(Title of Class of Securities)
45032A104
(CUSIP Number)
COMVEST INVESTMENT PARTNERS II LLC
ONE NORTH CLEMATIS STREET, SUITE 300
WEST PALM BEACH, FLORIDA 33401
(561) 868-6074
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Alan I. Annex, Esq.
Greenberg Traurig, LLP
200 Park Avenue
New York, New York 10166
AUGUST 29, 2006
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
[_] box.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
(Page 1 of 9)
CUSIP NO. 45032A104 AMENDED SCHEDULE 13D Page 2 of 9 Pages
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
COMVEST INVESTMENT PARTNERS II LLC (01-0784781)
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF MEMBER OF A GROUP*
(a) [_]
(b) [_]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
264,239,235
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 264,239,235
OWNED BY ------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 264,239,235
PERSON ------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
264,239,235
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
264,239,235
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.4%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
-------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 45032A104 AMENDED SCHEDULE 13D Page 3 of 9 Pages
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
COMVEST II PARTNERS, LLC (01-6228703)
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF MEMBER OF A GROUP*
(a) [_]
(b) [_]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 264,239,235
OWNED BY ------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
264,239,235
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
264,239,235
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.4%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
-------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 45032A104 AMENDED SCHEDULE 13D Page 4 of 9 Pages
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
COMVEST GROUP HOLDINGS LLC (01-0622406)
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF MEMBER OF A GROUP*
(a) [_]
(b) [_]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
-------------------------------------------------------------------------------
6
CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 264,239,235
OWNED BY ------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
264,239,235
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
264,239,235
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.4%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
-------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 45032A104 AMENDED SCHEDULE 13D Page 5 of 9 Pages
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
MICHAEL S. FALK
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF MEMBER OF A GROUP*
(a) [_]
(b) [_]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 264,239,235
OWNED BY ------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
264,239,235
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
264,239,235
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.4%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
-------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 45032A104 AMENDED SCHEDULE 13D Page 6 of 9 Pages
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
ROBERT L. PRIDDY
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF MEMBER OF A GROUP*
(a) [_]
(b) [_]
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 264,239,235
OWNED BY ------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
264,239,235
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
264,239,235
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.4%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
-------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 45032A104 AMENDED SCHEDULE 13D Page 7 of 9 Pages
This Amendment No. 2 amends the Statement of Beneficial Ownership on
Schedule 13D, originally filed with the Securities and Exchange Commission (the
"Commission") on November 21, 2005 and Amendment No. 1 to the Schedule 13D,
filed with the Commission on January 13, 2006 (together, the "Schedule 13D"), by
ComVest Investment Partners II LLC ("ComVest"), with respect to the shares of
common stock, par value $0.01 per share ("Common Stock"), of IT&E International
Group, a Nevada corporation with its principal executive offices located at 505
Lomas Santa Fe Drive, Suite 200, Solana Beach, CA 92075 (the "Issuer"). Unless
specifically amended hereby, the disclosures set forth in the Schedule 13D shall
remain unchanged.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The response to Item 3 is hereby amended and restated in its entirety
as follows as of the date hereof, to update information previously disclosed in
the Schedule 13D:
On November 9, 2005 (the "Initial Closing Date"), the Issuer and
ComVest signed a Securities Purchase Agreement (the "Purchase Agreement") and
consummated the transactions contemplated thereby. Pursuant to the terms and
conditions set forth in the Purchase Agreement, ComVest received (i) a Senior
Secured Convertible Promissory Note in the principal amount of $5,800,000 (the
"Senior Secured Note") and (ii) warrants ("Warrants") to purchase up to
41,428,559 shares of Common Stock. The Issuer also granted ComVest an option to
invest up to an additional $5,000,000 for the purchase of up to 5,000 shares of
Series D Convertible Preferred Stock (the "Series D Preferred Stock")
convertible into 71,428,550 shares of Common Stock and Warrants for the purchase
of up to 35,714,256 shares of Common Stock (the "Option"). In addition, ComVest
and the Issuer entered into a Registration Rights Agreement on November 9, 2005
(the "Registration Rights Agreement").
Pursuant to the Purchase Agreement, on December 22, 2005, ComVest
invested an additional $4,500,000 for the purchase of an additional Senior
Secured Promissory Note in the principal amount of $4,500,000 or up to 4,500
shares of Series D Preferred Stock and Warrants to purchase up to 32,142,847
shares of Common Stock (the "Second Closing").
On March 2, 2006, the Issuer issued 11,500 shares of its Series D
Preferred Stock upon the automatic conversion of outstanding promissory notes in
the principal amount of $11,500,000 to the holders of such notes.
The Series D Preferred Stock has the rights and preferences as set
forth in the certificate of designation for such Series D Preferred Stock (the
"Certificate of Designation"). Each share of Series D Preferred Stock has a
stated value of $1,000 per share and is initially convertible at the option of
ComVest into 14,285.71 shares of the Issuer's Common Stock, subject to customary
antidilution provisions, as set forth in the Certificate of Designation.
On July 31, 2006, in connection with the exercise of the Option, the
Issuer issued 5,000 shares of its Series D Convertible Preferred Stock and
Warrants to purchase up to 32,142,829 shares of the Issuer's Common Stock to
ComVest.
The obligations of the Issuer under the Purchase Agreement are secured
by substantially all of the assets of the Issuer (the "Collateral"), as set
forth in that certain Security Agreement dated as of November 9, 2005 (the
"Security Agreement"). Pursuant to the Security Agreement, ComVest holds a first
priority perfected lien and security interest in the Collateral, which security
interest shall rank senior in lien priority to any other existing or future
indebtedness of the Issuer.
CUSIP NO. 45032A104 AMENDED SCHEDULE 13D Page 8 of 9 Pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The response to Item 5 is hereby amended and restated in its entirety
as follows:
(a) Including the shares of Common Stock and the shares of Series D
Preferred Stock (on an as converted basis) that ComVest acquired on the Initial
Closing Date, on the Second Closing and by exercising the Option, ComVest has
the beneficial ownership of 264,239,235 shares of Common Stock of the Issuer,
representing 71.4% of the Issuer's issued and outstanding Common Stock.
Falk and Priddy, by virtue of their status as managing members of
ComVest II Partners (the managing member of ComVest) and as the principal
members of ComVest and ComVest II Partners, may be deemed to have indirect
beneficial ownership of the Shares owned by ComVest. However, Falk and Priddy
disclaim any beneficial ownership of such Shares.
(b) Falk and Priddy, by virtue of their status as managing members of
ComVest II Partners (the managing member of ComVest) and as the principal
members of ComVest and ComVest II Partners, have the power to vote or to direct
the vote and the power to dispose and to direct the disposition of the Shares
owned by ComVest.
(c) On May 4, 2006, ComVest entered into a transfer agreement whereby a
third party purchased from ComVest, 250 shares of the Issuer's Series D
Convertible Preferred Stock and Warrants to purchase 1,785,714 shares of the
Issuer's Common Stock.
On May 8, 2006, the Issuer amended the Purchase Agreement to
extend the expiration of the Option and to reduce the amount of Warrants
issuable upon exercise of the Option to 32,142,829 shares of the Issuer's Common
Stock.
On July 31, 2006, in connection with the exercise of the
Option, the Issuer issued and sold 5,000 shares of Series D Preferred Stock, in
the aggregate principal amount of $5,000,000 to ComVest.
On July 31, 2006, in connection with the exercise of the
Option, the Issuer issued Warrants to ComVest to purchase up to 32,142,829
shares of the Issuer's Common Stock.
On August 29, 2006, all the Warrants were exercised on a
so-called cashless basis for a total of 49,229,300 shares of the Issuer's Common
Stock.
(d) Not applicable.
(e) Not applicable.
CUSIP NO. 45032A104 AMENDED SCHEDULE 13D Page 9 of 9 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 13, 2006 ComVest Investment Partners II LLC
By: ComVest II Partners, LLC, its
managing member
By:/s/ Michael S. Falk
------------------------------------
Name: Michael S. Falk
Title: Managing Member
Dated: September 13, 2006 ComVest II Partners, LLC
By:/s/ Michael S. Falk
----------------------------------------
Name: Michael S. Falk
Title: Managing Member
Dated: September 13, 2006 ComVest Group Holdings, LLC
By:/s/ Michael S. Falk
----------------------------------------
Name: Michael S. Falk
Title: Chairman and Managing Member
Dated: September 13, 2006 /s/ Michael S. Falk
----------------------------------------
Michael S. Falk, individually
Dated: September 13, 2006 /s/ Robert L. Priddy
----------------------------------------
Robert L. Priddy, individually