Item 3.02 Unregistered Sales of Equity Securities.

On October 28, 2009, Appalachian Bancshares, Inc. (the "Company") executed an agreement to issue 5,999,994 shares of its common stock, $.01 par value per share (the "Shares"), to Alan S. Dover, Charles A. Edmondson, Joseph C. Hensley, Frank E. Jones, J. Ronald Knight, Tracy R. Newton, and Kenneth D. Warren (collectively, the "Purchasers") in exchange for $3.0 million aggregate principal amount of Appalachian Community Bank Fixed Rate Subordinated Notes, due September 30, 2015 (the "Notes"). The Purchasers are each existing shareholders and members of the Company's board of directors.

The Shares will be issued to the Purchasers in a private placement pursuant to exchange agreements by and between the Company and each purchaser. The exchange agreements provide for the issuance of shares of the Company's common stock in exchange for each $.50 principal amount of the Notes held prior to delivery to the Company for exchange. The issuance of the shares of common stock to the Purchasers is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). Such shares to be issued to the Purchasers have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent such registration or an applicable exemption from such registration requirements.

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