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Form 8-K/A for APOLLO RESOURCES INTERNATIONAL INC

20-Jan-2006

Entry into Material Agreement


Item 1.01. Entry ito a Material Definitive Agreement.

Effective November 3, 2005, Apollo Resources International, Inc. (the "Company") announced that it was exercising its contractual right to rescind the March 2005 stock sale transaction with shareholders of JSC Kaliningradneft ("JSC K").

The Company's decision comes after protracted efforts to resolve serious issues that were discovered by the Company post-closing, as well as efforts to resolve the failure of JSC K to provide certain critical financial data that was represented in the March agreement.

Specifically, the agreement had called for the transfer of 90% of the issued and outstanding shares of stock of JSC K to the Company; however, it has become apparent that shareholders of JSC K were never in a position to transfer more than 50.10% of the stock. The Company has been in protracted discussion with the owners of the remaining shares but, so far, has been unable to reach a new agreement with them and has agreed to release any claims it may have had in regard to their shares.

Additionally, JSC K, pursuant to the March agreement, was required to provide the Company with audited statements for fiscal years 2003 and 2004, prepared in accordance with U.S. GAAP accounting principals, which JSC K has failed to do despite repeated efforts on the part of the Company to secure them.

As a result of the above issues, the Company is exercising the contractual right of rescission that was reserved to the Company under the March 2005 stock sale agreement, bill of sale, and $18,500,000 convertible debenture.

The Company remains in contact with the ownership of JSC K and a new agreement may be reached. In the meantime, the convertible debenture issued by the Company is cancelled and the Company has reserved certain rights that it may have had under the March agreement with respect to the rescission of the stock sale transaction.