**FORM          10-Q**

**x**

**Champion          Industries, Inc.**

| West                    Virginia                                                  |   | 55-0717455                                              |
|-----------------------------------------------------------------------------------|--------|---------------------------------------------------------|
| (State                    or other jurisdiction of incorporation or organization) |   | (I.R.S.                    Employer Identification No.) |

|  Large                      accelerated filer o |  Accelerated                      filer o   |  Non-accelerated                      filer x |
|------------------------------------------------------|------------------------------------------------------------|----------------------------------------------------|

|  Class                                                      |   |  Outstanding                    at July 31, 2007 |
|------------------------------------------------------------------|--------|------------------------------------------------------------|
|  Common                    stock, $1.00 par value per share |   |  9,962,913                    shares                  |

**Champion        Industries, Inc.**

**INDEX**

|                                                                                                                                                                       |  **Page                  No.** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|  Part I.   Financial                Information                                                                                                        |                                |
|       Item                1.    Financial Statements                                                                     |                                |
|          Consolidated                Balance Sheets (Unaudited)                                                               |  3                             |
|          Consolidated                Statements of Income (Unaudited)                                                    |  5                             |
|          Consolidated                Statements of Cash Flows (Unaudited)                                                     |  6                             |
|          Notes                to Consolidated Financial Statements                                                            |  7                             |
|      Item                2.  Management’s Discussion and Analysis of Financial                Condition and Results of Operations | 14                                  |
|      Item                3.  Quantitative                and Qualitative Disclosure About Market Risk                                        |  19                            |
|      Item                4. Controls                and Procedures                                                                           | 19                                  |
|  Part                II. Other                Information                                                                                                        |                                |
|      Item                1A.  Risk Factors                                                                                                   |  20                            |
|     Item                  6. Exhibits                                                                                                             | 20                                  |
|  Signatures                                                                                                                                                           | 21                                  |

----

**PART        I - FINANCIAL INFORMATION**

**Item        1. Financial Statements**

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Balance Sheets**

| **ASSETS**                                                                                                    |   | **July 31,**                   |   |   |   | **October                    31,** |        |
|---------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|--------|------------------------------------|--------|
|                                                                                                          |   | **2007****(Unaudited)**             |   |   |   | **2006****(Audited)**              |   |
| Current                    assets:                                                                            |   |                                |   |   |   |                               |        |
| Cash                    and cash equivalents                                                                  |   | **$                    4,929,140**  |   |   |   | $                    5,486,577     |        |
| Accounts                    receivable, net of allowance of $1,653,000                    and $1,558,000 |   | **20,526,826**                      |   |   |   | 20,638,823                         |        |
| Inventories                                                                                                   |   | **10,587,379**                      |   |   |   | 10,986,590                         |        |
| Other                    current assets                                                                       |   | **972,580**                         |   |   |   | 618,549                            |        |
| Deferred                    income tax assets                                                                 |   | **1,235,599**                       |   |   |   | 1,200,037                          |        |
| Total                    current assets                                                                       |   | **38,251,524**                      |   |   |   | 38,930,576                         |        |
|                                                                                                          |   |                                |   |   |   |                               |        |
|                                                                                                          |   |                                |   |   |   |                               |        |
| Property                    and equipment, at cost:                                                           |   |                                |   |   |   |                               |        |
| Land                                                                                                          |   | **2,023,375**                       |   |   |   | 2,023,375                          |        |
| Buildings                    and improvements                                                                 |   | **9,089,385**                       |   |   |   | 8,731,280                          |        |
| Machinery                    and equipment                                                                    |   | **50,016,932**                      |   |   |   | 46,757,859                         |        |
| Furniture                    and fixtures                                                                     |   | **3,728,709**                       |   |   |   | 3,620,783                          |        |
| Vehicles                                                                                                      |   | **3,543,308**                       |   |   |   | 3,453,415                          |   |
|                                                                                                          |   | **68,401,709**                      |   |   |   | 64,586,712                         |        |
| Less                    accumulated depreciation                                                              |   | **(47,665,186**                     | **)**  |   |   | (45,541,027                        | )      |
|                                                                                                          |   | **20,736,523**                      |   |   |   | 19,045,685                    |        |
|                                                                                                          |   |                                |   |   |   |                               |   |
| Cash                    surrender value of officers’ life insurance                                     |   | **1,202,696**                       |   |   |   | 1,202,696                          |        |
| Goodwill                                                                                                      |   | **3,487,342**                       |   |   |   | 3,411,511                          |   |
| Other                    intangibles, net of accumulated amortization                                         |   | **2,895,994**                       |   |   |   | 3,125,691                          |   |
| Other                    assets                                                                               |   | **267,734**                         |   |   |   | 272,567                            |   |
|                                                                                                          |   | **7,853,766**                       |   |   |   | 8,012,465                          |   |
| Total                    assets                                                                               |   | **$                    66,841,813** |   |   |   | $                    65,988,726    |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Balance Sheets (continued)**

| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                                                                                  | **July                  31,** |                              | **October                  31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|-----------------------------------|----------------------------------|--------|
|                                                                                                                                             | **2007****(Unaudited)**       |                              | **2006****(Audited)**            |   |
| Current                  liabilities:                                                                                                            |                          |                              |                             |   |   |   |
| Accounts                  payable                                                                                                                |                          | **$                  4,114,362**  |                             |   | $                  5,763,928 |   |
| Accrued                  payroll                                                                                                                 |                          | **2,193,871**                     |                             |   | 2,169,878 |   |
| Taxes                  accrued and withheld                                                                                                      |                          | **1,406,696**                     |                             |   | 1,394,345 |   |
| Accrued                  income taxes                                                                                                            |                          | **127,123**                       |                             |   | 1,107,837 |   |
| Accrued                  expenses                                                                                                                |                          | **972,445**                       |                             |   | 925,070 |   |
| Current                  portion of long-term debt:                                                                                              |                          |                              |                             |   |   |   |
| Notes                  payable                                                                                                                   |                          | **1,715,951**                     |                             |   | 1,614,861 |   |
| Total                  current liabilities                                                                                                       |                          | **10,530,448**                    |                             |   | 12,975,919 |   |
|                                                                                                                                             |                          |                              |                             |   |   |   |
| Long-term                  debt, net of current portion:                                                                                         |                          |                              |                             |   |   |   |
| Notes                  payable, term                                                                                                             |                          | **5,654,691**                     |                             |   | 4,219,724 |   |
| Other                  liabilities                                                                                                               |                          | **388,044**                       |                             |   | 388,384 |   |
| Deferred                  income tax liabilities                                                                                                 |                          | **3,468,136**                     |                             |   | 3,628,014 |   |
| Total                  liabilities                                                                                                               |                          | **20,041,319**                    |                             |   | 21,212,041 |   |
| Shareholders’                  equity:                                                                                                     |                          |                              |                             |   |   |   |
| Common                  stock, $1 par value, 20,000,000 shares authorized;9,962,913                  and 9,922,913 shares issued and outstanding |                          | **9,962,913**                     |                             |   | 9,922,913 |   |
| Additional                  paid-in capital                                                                                                      |                          | **22,722,680**                    |                             |   | 22,636,620 |   |
| Retained                  earnings                                                                                                               |                          | **14,114,901**                    |                             |   | 12,217,152 |   |
| Total                  shareholders’ equity                                                                                                |                          | **46,800,494**                    |                             |   | 44,776,685 |   |
| Total                  liabilities and shareholders’ equity                                                                                |                          | **$                  66,841,813** |                             |   | $                  65,988,726 |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Statements of Income**

|                                                            |   | **Three                    Months Ended****July                    31,** | **Nine                    Months Ended****July                      31,** |
|----------------------------------------------------------------------|--------|--------------------------------------------------------------------------|---------------------------------------------------------------------------|
|                                                                 |   |                                                                     | **2007**                                                                  |   |   | 2006 |   |   | **2007** |   |   | 2006 |   |
| Revenues:                                                            |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Printing                                                             |   | **$**                                                                    | **24,667,108**                                                            |   | **$** | **25,152,367** |   | **$** | **75,824,770** |   | **$** | **79,159,693** |   |
| Office                    products and office furniture              |   |                                                                     | **10,924,751**                                                            |   |   | **9,357,973** |   |   | **28,520,299** |   |   | **29,062,924** |   |
| Total                    revenues                                    |   |                                                                     | **35,591,859**                                                            |   |   | **34,510,340** |   |   | **104,345,069** |   |   | **108,222,617** |   |
|                                                                 |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Cost                    of sales:                                    |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Printing                                                             |   |                                                                     | **17,998,427**                                                            |   |   | **18,259,210** |   |   | **53,989,332** |   |   | **55,964,784** |   |
| Office                    products and office furniture              |   |                                                                     | **7,841,171**                                                             |   |   | **6,493,508** |   |   | **20,061,128** |   |   | **20,390,685** |   |
| Total                    cost of sales                               |   |                                                                     | **25,839,598**                                                            |   |   | **24,752,718** |   |   | **74,050,460** |   |   | **76,355,469** |   |
| Gross                    profit                                      |   |                                                                     | **9,752,261**                                                             |   |   | **9,757,622** |   |   | **30,294,609** |   |   | **31,867,148** |   |
|                                                                 |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Selling,                    general and administrative expenses      |   |                                                                     | **7,930,683**                                                             |   |   | **8,341,628** |   |   | **23,830,326** |   |   | **25,783,239** |   |
| Hurricane                    and relocation costs, net of recoveries |   |                                                                     | **-**                                                                     |   |   | **-** |   |   | **-** |   |   | **(301,693** | **)**   |
|                                                                 |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                    from operations                            |   |                                                                     | **1,821,578**                                                             |   |   |  **1,415,994** |   |   |  **6,464,283** |   |   |  **6,385,602** |   |
|                                                                 |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Other                    income (expense):                           |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Interest                    income                                   |   |                                                                     | **13,751**                                                                |   |   | **10,074** |   |   | **31,825** |   |   | **24,200** |   |
| Interest                    expense                                  |   |                                                                     | **(137,232**                                                              | **)** |   | **(153,057** | **)** |   | **(423,298** | **)** |   | **(493,627** | **)** |
| Other                                                                |   |                                                                     | **12,745**                                                                |   |   | **23,129** | ** ** |   | **31,625** |   |   | **26,057** |   |
|                                                                 |   |                                                                     | **(110,736**                                                              | **)** |   | **(119,854** | **)** |   | **(359,848** | **)** |   | **(443,370** | **)** |
|                                                                 |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                    before income taxes                        |   |                                                                     | **1,710,842**                                                             |   |   | **1,296,140** |   |   | **6,104,435** |   |   | **5,942,232** |   |
| Income                    tax (expense)                              |   |                                                                     | **(679,350**                                                              | **)**  |   | **(519,398** | **)** |   | **(2,415,041** | **)** |   | **(2,441,398** | **)** |
| Net                    income                                        |   | **$**                                                                    | **1,031,492**                                                             |   | **$** | **776,742** |   | **$** | **3,689,394** |   | **$** | **3,500,834** |   |
|                                                                 |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Earnings                    per share                                |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                |   | **$**                                                                    | **0.10**                                                                  |   | **$** | **0.08** |   | **$** | **0.37** |   | **$** | **0.36** |   |
| Diluted                                                              |   | **$**                                                                    | **0.10**                                                                  |   | **$** | **0.08** |   | **$** | **0.36** |   | **$** | **0.35** |   |
|                                                                 |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Weighted                    average shares outstanding:              |   |                                                                     |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                |   |                                                                     | **9,963,000**                                                             |   |   | **9,865,000** |   |   | **9,954,000** |   |   | **9,786,000** |   |
| Diluted                                                              |   |                                                                     | **10,106,000**                                                            |  |   | **10,089,000** |   |   | **10,116,000** |   |   | **9,956,000** |   |
| Dividends                    per share                               |   | **$**                                                                    | **0.06**                                                                  |   | **$** | **0.05** |   | **$** | **0.18** |   | **$** | **0.15** |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Statements of Cash Flows**

|                                                                                                            |   | **Nine                  Months Ended July 31,** |           |
|-----------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|----------------|
|                                                                                                            |   | **2007**                                             |           | **2006** |   |
| **Cash                  flows from operating activities:**                                                      |   |                                                 |           |   |   |
| Net                  income                                                                                     |   | **$**                                                | **3,689,394**  |   | $ | 3,500,834 |   |
| Adjustments                  to reconcile net income to cash provided                  by operating activities: |   |                                                 |           |   |   |   |   |
| Depreciation                  and amortization                                                                  |   |                                                 | **2,803,589**  |   |   | 3,104,526 |   |
| (Gain)                  loss on sale of assets                                                             |   |                                                 | **(11,303**    | **)** |   | 5,274 |   |
|                        Deferred income taxes                                 |   |                                                 | **(195,440**   | **)**  |   | (270,583 | )  |
| Increase                  in deferred compensation                                                              |   |                                                 | **1,340**      |   |   | 2,681 |   |
| Bad                  debt expense                                                                               |   |                                                 | **437,645**    |   |   | 512,429 |   |
|        Hurricane                and relocation costs, net of recoveries      |   |                                                 | -              |   |   | (301,693 | ) |
| Changes                  in assets and liabilities:                                                             |   |                                                 |                |   |   |   |   |
| Accounts                  receivable                                                                            |   |                                                 | **(325,648**   | **)** |   | (2,148,997 | )  |
| Inventories                                                                                                     |   |                                                 | **399,211**    |   |   | (115,496 | )  |
| Other                  current assets                                                                           |   |                                                 | **(354,031**   | **)** |   | (126,892 | ) |
| Accounts                  payable                                                                               |   |                                                 | **(298,841**   | **)**  |   | (400,853 | ) |
| Accrued                  payroll                                                                                |   |                                                 | **23,993**     |   |   | 272,444 |   |
| Taxes                  accrued and withheld                                                                     |   |                                                 | **12,351**     |   |   | 340,409 |   |
| Income                  taxes                                                                                   |   |                                                 | **(980,714**   | )  |   | (200,471 | ) |
| Accrued                  expenses                                                                               |   |                                                 | **47,375**     |   |   | (38,930 | ) |
| Other                  liabilities                                                                              |   |                                                 | **(1,680**     | **)** |   | (3,086 | ) |
| Net                  cash provided by operating activities                                                      |   |                                                 | **5,247,241**  |   |   | 4,131,596 |   |
|                                                                                                            |   |                                                 |           |   |   |   |   |
| **Cash                  flows from investing activities:**                                                      |   |                                                 |           |   |   |   |   |
| Purchases                  of property and equipment                                                            |   |                                                 | **(2,578,221** | **)** |   | (1,397,118 | ) |
| Proceeds                  from sales of property                                                                |   |                                                 | **126,659**    |   |   | 95,146 |   |
| Goodwill                additions                                                                               |   |                                                 | **(1,481,556** | **)**  |   | - |   |
| Other                  assets                                                                                   |   |                                                 | **(4,168**     | **)**  |   | (47,916 | )  |
| Net                  cash used in investing activities                                                          |   |                                                 | **(3,937,286** | **)** |   | (1,349,888 | ) |
|                                                                                                            |   |                                                 |           |   |   |   |   |
| **Cash                  flows from financing activities:**                                                      |   |                                                 |           |   |   |   |   |
| Borrowings                  on line of credit                                                                   |   |                                                 | **9,311,000**  |   |   | 9,097,000 |   |
| Payments                  on line of credit                                                                     |   |                                                 | **(9,311,000** | **)** |   | (10,709,000 | ) |
| Proceeds                from term debt                                                                          |   |                                                 | **2,654,254**  |   |   | 80,010 |   |
| Principal                  payments on long-term debt                                                           |   |                                                 | **(2,856,061** | **)** |   | (2,299,133 | ) |
| Proceeds                  from exercise of stock options                                                        |   |                                                 | **126,060**    |   |   | 475,270 |   |
| Dividends                  paid                                                                                 |   |                                                 | **(1,791,645** | **)** |   | (1,469,535 | ) |
| Net                  cash used in financing activities                                                          |   |                                                 | **(1,867,392** | **)** |   | (4,825,388 | ) |
| Net                  decrease in cash and cash equivalents                                                      |   |                                                 | **(557,437**   | **)**  |   | (2,043,680 | )  |
| Cash                  and cash equivalents, beginning of period                                                 |   |                                                 | **5,486,577**  |   |   | 3,661,622 |   |
| Cash                  and cash equivalents, end of period                                                       |   | **$**                                                | **4,929,140**  |   | $ | 1,617,942 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)**

**July              31, 2007**

**1.        Basis of Presentation and Business Operations**

*How Sales        Taxes Collected from Customers and Remitted to Government Authorities Should        be        Presented in the Income Statement” *

**2.        Earnings per Share**

**3.        Inventories**

|                                                  |   | **July                  31,** |           | **October                  31,** |   |
|-------------------------------------------------------|--------|-------------------------------|----------------|----------------------------------|--------|
|                                                  |   | **2007**                      |           | **2006**                         |   |
| Printing:                                             |   |                          |           |                             |   |
| Raw                  materials                        |   | **$**                         | **2,027,805**  |                             | $      | 2,121,843 |   |
| Work                  in process                      |   |                          | **1,720,719**  |                             |   | 1,800,517 |   |
| Finished                  goods                       |   |                          | **4,208,973**  |                             |   | 4,404,162 |   |
| Office                  products and office furniture |   |                          | **2,629,882**  |                             |   | 2,660,068 |   |
|                                                  |   | **$**                         | **10,587,379** |                             | $      | 10,986,590 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

**4.        Long-Term Debt**

|                                                                                           |   | **July                  31,** |                                                              | **October                  31,** |    |
|------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------------------------------------------------------------|----------------------------------|---------|
|                                                                                           |   | **2007**                      |                                                              | **2006**                         |    |
|      Secured                term note                payable          |   |  **$**                   | **                      1,726,232** |                             |  $ | 452,386 |   |
|                          Installment notes payable to banks |   |                          | **5,644,410**                                                     |                             |    | 5,382,199 |   |
|                                                                                           |   |                          | **7,370,642**                                                     |                             |    | 5,834,585 |   |
| Less                  current portion                                                          |   |                          | **1,715,951**                                                     |                             |    | 1,614,861 |   |
| Long-term                  debt, net of current portion                                        |   | **$**                         | **5,654,691**                                                     |                             | $       | 4,219,724 |   |

**5.        Shareholders’ Equity**

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

**6.          **
**Commitments          and Contingencies**

|                                                |   | **Payments                  Due by Fiscal Year** |          |
|-----------------------------------------------------|--------|--------------------------------------------------|---------------|
| **Contractual                  Obligations**        |   | **2007**                                         |          | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **Residual** |   | **Total** |   |
|                                                |   |                                             |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-cancelable                  operating leases    |   | $                                                | 273,264       |   | $ | 930,247 |   | $ | 532,666 |   | $ | 255,056 |   | $ | 157,042 |   | $ | - |   | $ | 2,148,275 |   |
|                                                |   |                                             |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Term                  debt                          |   |                                             | 408,860       |   |   | 1,736,037 |   |   | 1,580,982 |   |   | 2,382,138 |   |   | 992,316 |   |   | 270,309 |   |   | 7,370,642 |   |
|                                                |   |                                             |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equipment                purchase obligations |   |                                             |  276,346 |   |   | -  |   |   | -  |   |   | -  |   |   |  - |   |   | -  |   |   | 276,346 |   |
|                                                |   |                                             |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   | $                                                | 958,470       |   | $ | 2,666,284 |   | $ | 2,113,648 |   | $ | 2,637,194 |   | $ | 1,149,358 |   | $ | 270,309 |   | $ | 9,795,263 |   |

**7.          **
**Accounting          for Stock-Based Compensation**

*Share-Based          Payment*
*Accounting          for Stock-Based Compensation*

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

|                                                                                                                                                                                           |   |  **Three                    Months Ended****July                    31,** | **Nine                    Months Ended****July                    31,** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|-------------------------------------------------------------------------|
|                                                                                                                                                                                           |   |                                                                           | **2007**                                                                |   |   | **2006** |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                           |   |                                                                           |                                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                    income, as reported                                                                                                                                                     |   | $                                                                              | 1,031,492                                                               |   | $ | 776,742 |   | $ | 3,689,394 |   | $ | 3,500,834 |   |
| Deduct:                    Total stock-based employee compensation expense determined under                    fair                    value method for all awards, net of related tax effects |   |                                                                           | **—**                                                             |   |   | **—** |   |   | **—** |   |   | — |   |
|                                                                                                                                                                                           |   |                                                                           |                                                                    |   |   |   |   |   |   |   |   |   |   |
| Pro                    forma net income                                                                                                                                                        |   | $                                                                              | 1,031,492                                                               |   | $ | 776,742 |   | $ | 3,689,394 |   | $ | 3,500,834 |   |
|                                                                                                                                                                                           |   |                                                                           |                                                                    |   |   |   |   |   |   |   |   |   |   |
| Earnings                    per share:                                                                                                                                                         |   |                                                                           |                                                                    |   |   |   |   |   |   |   |   |   |   |
| Basic,                    as reported                                                                                                                                                          |   | $                                                                              | 0.10                                                                    |   | $ | 0.08 |   | $ | 0.37 |   | $ | 0.36 |   |
| Basic,                    pro forma                                                                                                                                                            |   |                                                                           | 0.10                                                                    |   |   | 0.08 |   |   | 0.37 |   |   | 0.36 |   |
|                                                                                                                                                                                           |   |                                                                           |                                                                    |  |   |   |   |   |   |   |   |   |   |
| Diluted,                    as reported                                                                                                                                                        |   | $                                                                              | 0.10                                                                    |   | $ | 0.08 |   | $ | 0.36 |   | $ | 0.35 |   |
| Diluted,                    pro forma                                                                                                                                                          |   |                                                                           | 0.10                                                                    |   |   | 0.08 |   |   | 0.36 |   |   | 0.35 |   |

**8.        Acquisitions**

**9.        Accounting for Costs Associated with        Exit or Disposal Activities and Impact of Hurricane        Katrina**

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

| Personnel                                                        |   | $      | 88,423    |   |
|------------------------------------------------------------------|--------|--------|-----------|--------|
| Plant                                                            |   |   | 745,035   |   |
| Allowance                      for doubtful accounts             |   |   | 208,310   |   |
| Moving                      and relocation costs                 |   |   | 255,215   |   |
| Total                      pre-tax hurricane expense             |   |   | 1,296,983 |   |
|                                                             |   |   |      |   |
| Lease                      settlement recovery                   |   |   | 75,583    |   |
| Insurance                      recoveries                        |   |   | 577,677   |   |
| Total                      recoveries                            |   |   | 653,260   |   |
| Cumulative                      impact of Hurricane Katrina, net |   | $      | 643,723   |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

**10.        Industry Segment Information**

|                                                 |   |  **Office                  Products** |       |
|------------------------------------------------------|--------|--------------------------------------------|------------|
| **2007                  Quarter 3**                  |   | **Printing**                               |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |
| Revenues                                             |   | $                                          | 27,833,445 |   | $ | 12,896,219 |   | $ | 40,729,664 |   |
| Elimination                  of intersegment revenue |   |                                       | (3,166,337 | ) |   | (1,971,468 | ) |   | (5,137,805 | ) |
| Consolidated                  revenues               |   | $                                          | 24,667,108 |   | $ | 10,924,751 |   | $ | 35,591,859 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 951,913    |   |   | 869,665 |   |   | 1,821,578 |   |
| Depreciation                  & amortization     |   |                                       | 896,511    |   |   | 53,096 |   |   | 949,607 |   |
| Capital                  expenditures                |   |                                       | 2,199,598  |   |   | 50,454 |   |   | 2,250,052 |   |
| Identifiable                  assets                 |   |                                       | 55,578,236 |   |   | 11,263,577 |   |   | 66,841,813 |   |
| Goodwill                                             |   |                                       | 2,302,668  |   |   | 1,184,674 |   |   | 3,487,342 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
|                                                 |   |  **Office                  Products** |       |
| **2006                  Quarter 3**                  |   |  **Printing**                         |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Revenues                                             |   | $                                          | 28,430,713 |   | $ | 11,523,272 |   | $ | 39,953,985 |   |
| Elimination                  of intersegment revenue |   |                                       | (3,278,346 | ) |   | (2,165,299 | ) |   | (5,443,645 | ) |
| Consolidated                  revenues               |   | $                                          | 25,152,367 |   | $ | 9,357,973 |   | $ | 34,510,340 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 775,321    |   |   | 640,673 |   |   | 1,415,994 |   |
| Depreciation                  & amortization     |   |                                       | 986,691    |   |   | 48,158 |   |   | 1,034,849 |   |
| Capital                  expenditures                |   |                                       | 1,416,391  |   |   | 71,189 |   |   | 1,487,580 |   |
| Identifiable                  assets                 |   |                                       | 50,608,573 |   |   | 10,195,463 |   |   | 60,804,036 |   |
| Goodwill                                             |   |                                       | 1,774,344  |   |   | 286,442 |   |   | 2,060,786 |   |

|                                                 |   |                                       |       |
|------------------------------------------------------|--------|--------------------------------------------|------------|
|                                                 |   |  **Office                  Products** |       |
| **2007                  Year to Date**               |   |  **Printing**                         |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Revenues                                             |   | $                                          | 85,358,358 |   | $ | 34,720,171 |   | $ | 120,078,529 |   |
| Elimination                  of intersegment revenue |   |                                       | (9,533,588 | ) |   | (6,199,872 | ) |   | (15,733,460 | ) |
| Consolidated                  revenues               |   | $                                          | 75,824,770 |   | $ | 28,520,299 |   | $ | 104,345,069 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 4,684,803  |   |   | 1,779,480 |   |   | 6,464,283 |   |
| Depreciation                  & amortization     |   |                                       | 2,646,115  |   |   | 157,474 |   |   | 2,803,589 |   |
| Capital                  expenditures                |   |                                       | 4,221,201  |   |   | 94,884 |  |   | 4,316,085 |   |
| Identifiable                  assets                 |   |                                       | 55,578,236 |   |   | 11,263,577 |   |   | 66,841,813 |   |
| Goodwill                                             |   |                                       | 2,302,668  |   |   | 1,184,674 |   |   | 3,487,342 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Notes              to Consolidated Financial Statements (Unaudited)              (continued)**

|                                                 |   |  **Office                  Products** |        |
|------------------------------------------------------|--------|--------------------------------------------|-------------|
| **2006                  Year to Date**               |   |  **Printing**                         |        | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |        |   |   |   |   |   |   |   |
| Revenues                                             |   | $                                          | 90,132,905  |   | $ | 35,823,711 |   | $ | 125,956,616 |   |
| Elimination                  of intersegment revenue |   |                                       | (10,973,212 | ) |   | (6,760,787 | ) |   | (17,733,999 | ) |
| Consolidated                  revenues               |   | $                                          | 79,159,693  |   | $ | 29,062,924 |   | $ | 108,222,617 |   |
|                                                 |   |                                       |        |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 4,444,034   |   |   | 1,941,568 |   |   | 6,385,602 |   |
| Depreciation                  & amortization     |   |                                       | 2,981,653   |   |   | 122,873 |   |   | 3,104,526 |   |
| Capital                  expenditures                |   |                                       | 2,421,831   |   |   | 175,287 |   |   | 2,597,118 |   |
| Identifiable                  assets                 |   |                                       | 50,608,573  |   |   | 10,195,463 |   |   | 60,804,036 |   |
| Goodwill                                             |   |                                       | 1,774,344   |   |   | 286,442 |   |   | 2,060,786 |   |

|                                                        |   | **Three                      months** | **Nine                    months** |
|-------------------------------------------------------------|--------|---------------------------------------|------------------------------------|
|                                                        |   |                                  | **2007**                           |   |   | 2006 |   |   | **2007** |   |   | 2006 |   |
| Revenues:                                                   |   |                                  |                               |   |   |   |   |   |   |   |   |   |   |
| Total                    segment revenues                   |   | **$**                                 | **40,729,664**                     |   | **$** | **39,953,985** |   | **$** | **120,078,529** |   | **$** | **125,956,616** |   |
| Elimination                    of intersegment revenue      |   |                                  | **(5,137,805**                     | **)** |   | **(5,443,645** | **)** |   | **(15,733,460** | **)** |   | **(17,733,999** | **)** |
| Consolidated                    revenue                     |   | **$**                                 | **35,591,859**                     |   | **$** | **34,510,340** |   | **$** | **104,345,069** |   | **$** | **108,222,617** |   |
|                                                        |   |                                  |                               |   |   |   |   |   |   |   |   |   |   |
| Operating                    income:                        |   |                                  |                               |   |   |   |   |   |   |   |   |   |   |
| ** **Total                    segment operating income |   | **$**                                 | **1,821,578**                      |   | **$** | **1,415,994** |   | **$** | **6,464,283** |   | **$** | **6,385,602** |   |
| ** **Interest                    income                |   |                                  | **13,751**                         |   |   | **10,074** |   |   | **31,825** |   |   | **24,200** |   |
| Interest                    expense                         |   |                                  | **(137,232**                       | **)** |   | **(153,057** | **)** |   | **(423,298** | **)** |   | **(493,627** | **)** |
| Other                    income                             |   |                                  | **12,745**                         |   |   | **23,129** |   |   | **31,625** |   |   | **26,057** |   |
| Consolidated                    income before income taxes  |   | **$**                                 | **1,710,842**                      |   | **$** | **1,296,140** |   | **$** | **6,104,435** |   | **$** | **5,942,232** |   |
|                                                        |   |                                  |                               |   |   |   |   |   |   |   |   |   |   |
| Identifiable                    assets:                     |   |                                  |                               |   |   |   |   |   |   |   |   |   |   |
| Total                    segment identifiable assets        |   | **$**                                 | **66,841,813**                     |   | **$** | **60,804,036** |   | **$** | **66,841,813** |   | **$** | **60,804,036** |   |
| Elimination                    of intersegment assets       |   |                                  | —                            |   |   | — |   |   | — |   |   | — |   |
| Total                    consolidated assets                |   | **$**                                 | **66,841,813**                     |   | **$** | **60,804,036** |   | **$** | **66,841,813** |   | **$** | **60,804,036** |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Item          2. **
**Management’s          Discussion and Analysis of Financial Condition and Results of          Operations**

**Results        of Operations**

|                                                                     |   |  **Percentage                    of Total Revenues**                      |
|--------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|
|                                                                     |   |  **Three                    Months Ended****July                    31,** | **Nine                    Months Ended****July                    31,** |
|                                                                     |   |                                                                           | **2007** |   |   | 2006 |   |   | **2007** |   |   | 2006 |   |
| Revenues:                                                                |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Printing                                                                 |   |                                                                           | **69.3** | **%** |   | **72.9** | **%** |   | **72.7** | **%** |   | **73.1** | **%** |
| Office                    products and office furniture                  |   |                                                                           | **30.7** |   |   | **27.1** |   |   | **27.3** |   |   | **26.9** |   |
| Total                    revenues                                        |   |                                                                           | **100.0** |   |   | **100.0** |   |   | **100.0** |   |   | **100.0** |   |
|                                                                     |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Cost                    of sales:                                        |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Printing                                                                 |   |                                                                           | **50.6** |   |   | **52.9** |   |   | **51.8** |   |   | **51.7** |   |
| Office                    products and office furniture                  |   |                                                                           | **22.0** |   |   | **18.8** |   |   | **19.2** |   |   | **18.9** |   |
| Total                    cost of sales                                   |   |                                                                           | **72.6** |   |   | **71.7** |   |   | **71.0** |   |   | **70.6** |   |
| Gross                    profit                                          |   |                                                                           | **27.4** |   |   | **28.3** |   |   | **29.0** |   |   | **29.4** |   |
| Selling,                    general and administrative expenses          |   |                                                                           | **22.3** |   |   | **24.2** |   |   | **22.8** |   |   | **23.8** |   |
| Hurricane                  and relocation costs, net of recoveries  |   |                                                                           | **-** | ** ** | ** ** | **-** | ** ** | ** ** | **-** | ** ** | ** ** | **(0.3** | **) ** |
| Income                    from operations                                |   |                                                                           | **5.1** |   |   | **4.1** |   |   | **6.2** |   |   | **5.9** |   |
| Interest                    income                                       |   |                                                                           | **0.0** |   |   | **0.0** |   |   | **0.0** |   |   | **0.0** |   |
| Interest                    expense                                      |   |                                                                           | **(0.4** | **)** |   | **(0.4** | **)** |   | **(0.4** | **)** |   | **(0.4** | **)** |
| Other                    income                                          |   |                                                                           | **0.1** |   |   | **0.1** |   |   | **0.0** |   |   | **0.0** |   |
| Income                    before taxes                                   |   |                                                                           | **4.8** |   |   | **3.8** | ** ** |   | **5.8** |   |   | **5.5** |   |
| Income                    tax (expense)                                  |   |                                                                           | **(1.9** | **)**  |   | **(1.5** | ) |   | **(2.3** | **)** |   | **(2.3** | **)** |
| Net                    income                                            |   |                                                                           | **2.9** | **%** |   | **2.3** | **%** |   | **3.5** | **%** |   | **3.2** | **%** |

|                                                                   |   | **Three                              Months Ended July                              31, **  | ****Nine                              Months Ended July 31,**** |
|------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|
|                                                                   |   |                                                                                                  | **2007**                                                        |   |   | 2006 |   |   | **2007** |   |   | 2006 |   |
| Net                              income                                |   | **$**                                                                                                 | 1,031,000                                                       |   | **$** | 777,000 |   | **$** | 3,689,000 |   | **$** | 3,501,000 |   |
| Insurance                            recoveries, net of expenses  |   |                                                                                                  | -                                                               |   |   | - |   |   | -  |   |   | 176,000 |   |
| Core                            net income                             |   | **$**                                                                                                 | 1,031,000                                                       |   | **$** | 777,000 |   | **$** | 3,689,000 |   | **$** | 3,325,000 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

**Management’s              Discussion and Analysis of Financial Condition **

**and              Results of Operations (continued)**

**Three          Months Ended July 31, 2007 Compared to Three Months Ended July 31,          2006**

*Revenues*

*Cost        of Sales*

*Operating        Expenses*

----

**Champion              Industries, Inc. and Subsidiaries**

**Management’s              Discussion and Analysis of Financial Condition **

**and              Results of Operations (continued)**

*Income            from Operations and Other Income and Expenses*

*Income          Taxes*

*Net          Income*

**Nine          Months Ended July 31, 2007 Compared to Nine Months Ended July 31,          2006**

*Revenues*

*Cost          of Sales*

*Operating          Expenses*

----

**Champion                Industries, Inc. and Subsidiaries**

**Management’s                Discussion and Analysis of Financial Condition **

**and                Results of Operations (continued)**

*Income            from Operations and Other Income and Expenses*

*Income          Taxes*

*Net          Income*

**Inflation          and Economic Conditions**

----

**Champion              Industries, Inc. and Subsidiaries**

**Management’s              Discussion and Analysis of Financial Condition **

**and              Results of Operations (continued)**

**Seasonality**

**Liquidity            and Capital Resources**

----

**Champion              Industries, Inc. and Subsidiaries**

**Management’s              Discussion and Analysis of Financial Condition **

**and              Results of Operations (continued)**

**Environmental            Regulation**

**Special          Note Regarding Forward-Looking Statements**

**ITEM          3. Quantitative and Qualitative Disclosure About Market          Risk**

**ITEM          4. Controls and Procedures**

----

**PART        II - OTHER INFORMATION**

**Item          1A. Risk Factors**

**Item        6. Exhibits **

|   | a) | Exhibits: |
|--------|----|-----------|

|   |   |   |
|--------|--------|--------|

| (2.1) | Asset                    Purchase Agreement by and among Gatehouse Media, Inc., Gatehouse                    Media                    West Virginia Holdings, Inc., Gatehouse Media Illinois Holdings,                    Inc.,                    Champion Publishing, Inc. and Champion Industries, Inc. dated                    June 28,                    2007  |                        Exhibit 2.1 Page Exhibit                    2.1-p1 |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|

|  (10.1)       | $262,013                      Master Loan Agreement between Champion Industries, Inc. and                      U.S. Bancorp                      Equipment Finance, Inc. dates as of May 30, 2007                                                                               |                      Exhibit 10.1 Page Exhibit 10.1-p1 |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------|
|  (10.2)       | $1,750,000                  term promissory note with commercial security agreement and business                  loan                  agreement between Champion Industries, Inc. and Community Trust                  Bank, Inc.                  dated as of June 12, 2007  |                    Exhibit 10.2 Page Exhibit 10.2-p1   |
|  (31.1)  | Principal                  Executive Officer Certification Pursuant to Section 302 of the                  Sarbanes-Oxley act of 2002 - Marshall T. Reynolds                                                                                                                    | Exhibit                    31.1 Page Exhibit 31.1-p1                  |
|  (31.2)       | Principal                  Financial Officer Certification Pursuant to Section 302 of the                  Sarbanes-Oxley act of 2002 - Todd R. Fry                                                                                                                             | Exhibit                  31.2 Page Exhibit 31.2-p1                    |
|  (31.3)       | Principal                  Operating Officer Certification Pursuant to Section 302 of the                  Sarbanes-Oxley act of 2002 - Toney K. Adkins                                                                                                                         | Exhibit                  31.3 Page Exhibit 31.3-p1                    |
|  (32)         | Marshall                  T. Reynolds, Todd R. Fry and Toney K. Adkins Certification Pursuant                  to 18                  U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the                  Sarbanes-Oxley act of 2002                                      | Exhibit                  32 Page Exhibit 32-p1                        |

----

**Signatures**

| Date:                  September 10, 2007 | /s/                  Marshall T. Reynolds                                           |
|-------------------------------------------|-------------------------------------------------------------------------------------|
|                                      | Marshall                  T. Reynolds                                               |
|                                      | Chief                  Executive Officer                                            |
|                                      |                                                                                |
|                                      |                                                                                |
| Date:                  September 10, 2007 | /s/                  Toney K. Adkins                                                |
|                                      | Toney                  K. Adkins                                                    |
|                                      | President                  and Chief Operating Officer                              |
|                                      |                                                                                |
|                                      |                                                                                |
| Date:                  September 10, 2007 | /s/                  Todd R. Fry                                                    |
|                                      | Todd                  R. Fry                                                        |
|                                      | Senior                  Vice President and Chief Financial                  Officer |