**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 April 30, 2006 |
|------------------------------------------------------------------|--------|--------------------------------------------------------|
|  Common                    stock, $1.00 par value per share |   |  9,745,913                    shares              |

**Champion        Industries, Inc.**

**INDEX**

|                                                                                                                                                                       |  **Page                  No.** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|  Part I.   Financial                Information                                                                                                        |                                |
|       Item                1.    Financial Statements                                                                     |                                |
|          Consolidated                Balance Sheets (Unaudited)                                                               |  3                             |
|          Consolidated                Statements of Operations (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 4. Submission                of Matters to a Vote of Security Holders                                        |  20                            |
|      Item                  6. Exhibits                                                                                                       | 20                                  |
|  Signatures                                                                                                                                                           | 21                                  |

----

**PART        I - FINANCIAL INFORMATION**

**Item        1. Financial Statements**

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Balance Sheets**

| **ASSETS**                                                                                               |   | **April                    30,**    |   |   |   | **October                    31,** |        |
|----------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|--------|------------------------------------|--------|
|                                                                                                     |   | **2006****(Unaudited)**             |   |   |   | **2005****(Audited)**              |   |
| Current                    assets:                                                                       |   |                                |   |   |   |                               |        |
| Cash                    and cash equivalents                                                             |   | **$                    1,699,245**  |   |   |   | $                    3,661,622     |        |
| Accounts                    receivable, net of allowance of $1,353,000                    and $1,410,000 |   | **22,451,112**                      |   |   |   | 19,300,453                         |        |
| Inventories                                                                                              |   | **10,625,183**                      |   |   |   | 11,079,726                         |        |
| Other                    current assets                                                                  |   | **1,047,848**                       |   |   |   | 629,381                            |        |
| Deferred                    income tax assets                                                            |   | **1,168,526**                       |   |   |   | 1,168,526                          |        |
| Total                    current assets                                                                  |   | **36,991,914**                      |   |   |   | 35,839,708                         |        |
|                                                                                                     |   |                                |   |   |   |                               |        |
|                                                                                                     |   |                                |   |   |   |                               |        |
| Property                    and equipment, at cost:                                                      |   |                                |   |   |   |                               |        |
| Land                                                                                                     |   | **2,023,375**                       |   |   |   | 2,006,375                          |        |
| Buildings                    and improvements                                                            |   | **8,464,316**                       |   |   |   | 8,368,720                          |        |
| Machinery                    and equipment                                                               |   | **44,822,232**                      |   |   |   | 43,668,900                         |        |
| Equipment                    under capital leases                                                        |   | **-**                               |   |   |   | 426,732                            |        |
| Furniture                    and fixtures                                                                |   | **3,560,895**                       |   |   |   | 3,492,535                          |        |
| Vehicles                                                                                                 |   | **3,460,446**                       |   |   |   | 3,629,268                          |   |
|                                                                                                     |   | **62,331,264**                      |   |   |   | 61,592,530                         |        |
| Less                    accumulated depreciation                                                         |   | **(44,486,614**                     | **)**  |   |   | (42,894,910                        | )      |
|                                                                                                     |   | **17,844,650**                      |   |   |   | 18,697,620                         |        |
|                                                                                                     |   |                                |   |   |   |                               |   |
| Cash                    surrender value of officers’ life insurance                                |   | **1,117,484**                       |   |   |   | 1,117,484                          |        |
| Goodwill                                                                                                 |   | **2,060,786**                       |   |   |   | 2,060,786                          |   |
| Other                    intangibles, net of accumulated amortization                                    |   | **3,516,799**                       |   |   |   | 3,697,368                          |   |
| Other                    assets                                                                          |   | **282,940**                         |   |   |   | 232,204                            |   |
|                                                                                                     |   | **6,978,009**                       |   |   |   | 7,107,842                          |   |
| Total                    assets                                                                          |   | **$                    61,814,573** |   |   |   | $                    61,645,170    |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Balance Sheets (continued)**

| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                                                                    | **April                  30,** |                              | **October                  31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-----------------------------------|----------------------------------|--------|
|                                                                                                                               | **2006****(Unaudited)**        |                              | **2005****(Audited)**            |   |
| Current                  liabilities:                                                                                              |                           |                              |                             |   |   |   |
| Accounts                  payable                                                                                                  |                           | **$                  3,694,822**  |                             |   | $                  3,584,323 |   |
| Accrued                  payroll                                                                                                   |                           | **1,502,254**                     |                             |   | 1,714,078 |   |
| Taxes                  accrued and withheld                                                                                        |                           | **1,459,248**                     |                             |   | 1,106,910 |   |
| Accrued                  income taxes                                                                                              |                           | **785,595**                       |                             |   | 681,763 |   |
| Accrued                  expenses                                                                                                  |                           | **1,104,254**                     |                             |   | 987,228 |   |
| Current                  portion of long-term debt:                                                                                |                           |                              |                             |   |   |   |
| Notes                  payable                                                                                                     |                           | **1,743,974**                     |                             |   | 1,667,797 |   |
| Capital                  lease obligations                                                                                         |                           | **-**                             |                             |   | 16,483 |   |
| Total                  current liabilities                                                                                         |                           | **10,290,147**                    |                             |   | 9,758,582 |   |
|                                                                                                                               |                           |                              |                             |   |   |   |
| Long-term                  debt, net of current portion:                                                                           |                           |                              |                             |   |   |   |
| Notes                  payable, line of credit                                                                                     |                           | **1,024,000**                     |                             |   | 1,612,000 |   |
| Notes                  payable, term                                                                                               |                           | **3,895,686**                     |                             |   | 5,148,503 |   |
| Other                  liabilities                                                                                                 |                           | **388,665**                       |                             |   | 388,930 |   |
| Deferred                  income tax liabilities                                                                                   |                           | **3,714,351**                     |                             |   | 3,984,934 |   |
| Total                  liabilities                                                                                                 |                           | **19,312,849**                    |                             |   | 20,892,949 |   |
| Shareholders’                  equity:                                                                                       |                           |                              |                             |   |   |   |
| Common                  stock, $1 par value, 20,000,000 shares authorized;9,745,913                  shares issued and outstanding |                           | **9,745,913**                     |                             |   | 9,745,913 |   |
| Additional                  paid-in capital                                                                                        |                           | **22,297,670**                    |                             |   | 22,297,670 |   |
| Retained                  earnings                                                                                                 |                           | **10,458,141**                    |                             |   | 8,708,638 |   |
| Total                  shareholders’ equity                                                                                  |                           | **42,501,724**                    |                             |   | 40,752,221 |   |
| Total                  liabilities and shareholders’ equity                                                                  |                           | **$                  61,814,573** |                             |   | $                  61,645,170 |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Statements of Operations **

|                                                            |   | **Three                    Months Ended****April                    30,** | **Six                    Months Ended****April                      30,** |
|----------------------------------------------------------------------|--------|---------------------------------------------------------------------------|---------------------------------------------------------------------------|
|                                                                 |   |                                                                      | **2006**                                                                  |   |   | **2005** |   |   | **2006** |   |   | **2005** |   |
| Revenues:                                                            |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Printing                                                             |   | **$**                                                                     | **27,841,677**                                                            |   | **$** | **24,384,970** |   | **$** | **54,007,326** |   | **$** | **48,821,591** |   |
| Office                    products and office furniture              |   |                                                                      | **9,578,892**                                                             |   |   | **9,167,312** |   |   | **19,704,951** |   |   | **19,170,682** |   |
| Total                    revenues                                    |   |                                                                      | **37,420,569**                                                            |   |   | **33,552,282** |   |   | **73,712,277** |   |   | **67,992,273** |   |
|                                                                 |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Cost                    of sales:                                    |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Printing                                                             |   |                                                                      | **19,155,034**                                                            |   |   | **17,866,111** |   |   | **37,705,574** |   |   | **35,637,374** |   |
| Office                    products and office furniture              |   |                                                                      | **6,753,428**                                                             |   |   | **6,478,517** |   |   | **13,897,176** |   |   | **13,636,473** |   |
| Total                    cost of sales                               |   |                                                                      | **25,908,462**                                                            |   |   | **24,344,628** |   |   | **51,602,750** |   |   | **49,273,847** |   |
| Gross                    profit                                      |   |                                                                      | **11,512,107**                                                            |   |   | **9,207,654** |   |   | **22,109,527** |   |   | **18,718,426** |   |
|                                                                 |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Selling,                    general and administrative expenses      |   |                                                                      | **8,727,944**                                                             |   |   | **9,260,093** |   |   | **17,441,611** |   |   | **18,237,773** |   |
| Hurricane                    and relocation costs, net of recoveries |   |                                                                      | **(43,733**                                                               | **)** |   | **-** |   |   | **(301,693** | **)**  |   | **-** |   |
|                                                                 |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                    (loss) from operations                     |   |                                                                      | **2,827,896**                                                             |   |   |  **(52,439** | **)**  |   |  **4,969,609** |   |   | **480,653** |   |
|                                                                 |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Other                    income (expense):                           |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Interest                    income                                   |   |                                                                      | **7,383**                                                                 |   |   | **4,574** |   |   | **14,125** |   |   | **9,640** |   |
| Interest                    expense                                  |   |                                                                      | **(168,828**                                                              | **)** |   | **(133,938** | **)** |   | **(340,570** | **)** |   | **(271,303** | **)** |
| Other                                                                |   |                                                                      | **3,042**                                                                 |   |   | **13,011** |   |   | **2,928** |   |   | **75,685** |   |
|                                                                 |   |                                                                      | **(158,403**                                                              | **)** |   | **(116,353** | **)** |   | **(323,517** | **)** |   | **(185,978** | **)** |
|                                                                 |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                    (loss) before income taxes                 |   |                                                                      | **2,669,493**                                                             |   |   | **(168,792** | **)**  |   | **4,646,092** |   |   | **294,675** |   |
| Income                    tax (expense) benefit                      |   |                                                                      | **(1,091,079**                                                            | **)**  |   | **71,493** |   |   | **(1,922,000** | **)** |   | **(128,848** | **)** |
| Net                    income (loss)                                 |   | **$**                                                                     | **1,578,414**                                                             |   | **$** | **(97,299** | **)** | **$** | **2,724,092** |   | **$** | **165,827** |   |
|                                                                 |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Earnings                    (loss) per share                         |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                |   | **$**                                                                     | **0.16**                                                                  |   | **$** | **(0.01** | **)**  | **$** | **0.28** |   | **$** | **0.02** |   |
| Diluted                                                              |   | **$**                                                                     | **0.16**                                                                  |   | **$** | **(0.01** | **)**  | **$** | **0.28** |   | **$** | **0.02** |   |
|                                                                 |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Weighted                    average shares outstanding:              |   |                                                                      |                                                                      |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                |   |                                                                      | **9,746,000**                                                             |   |   | **9,734,000** |   |   | **9,746,000** |   |   | **9,734,000** |   |
| Diluted                                                              |   |                                                                      | **9,947,000**                                                             |   |   | **9,734,000** |   |   | **9,889,000** |   |   | **9,803,000** |   |
| Dividends                    per share                               |   | **$**                                                                     | **0.05**                                                                  |   | **$** | **0.05** |   | **$** | **0.10** |   | **$** | **0.10** |   |

----

**Champion        Industries, Inc. and Subsidiaries**

**Consolidated        Statements of Cash Flows**

|                                                                                                            |   | **Six                  Months Ended April 30,** |             |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|------------------|
|                                                                                                            |   | **2006**                                        |             | **2005** |   |
| **Cash                  flows from operating activities:**                                                      |   |                                            |             |   |   |
| Net                  income                                                                                     |   | **$**                                           | **2,724,092**    |   | $ | 165,827 |   |
| Adjustments                  to reconcile net income to cash provided                  by operating activities: |   |                                            |             |   |   |   |   |
| Depreciation                  and amortization                                                                  |   |                                            | **2,069,677**    |   |   | 2,359,886 |   |
| Loss (gain)                  on sale of assets                                                             |   |                                            | **11,686**       |   |   | (3,997 | ) |
|                        Deferred income taxes                                 |   |                                            | **(270,583**     | **)**  |   | (120,674 | )  |
| Increase                  in deferred compensation                                                              |   |                                            | **1,787**        |   |   | 3,575 |   |
| Bad                  debt expense                                                                               |   |                                            | **357,269**      |   |   | 296,381 |   |
|        Hurricane                and relocation costs, net of recoveries      |   |                                            | (301,693         | ) |   | -  |   |
| Changes                  in assets and liabilities:                                                             |   |                                            |                  |   |   |   |   |
| Accounts                  receivable                                                                            |   |                                            | **(3,430,251**   | **)** |   | 2,417,600 |   |
| Inventories                                                                                                     |   |                                            | **260,370**      |   |   | 410,147 |   |
| Other                  current assets                                                                           |   |                                            | **(418,467**     | **)** |   | (210,920 | ) |
| Accounts                  payable                                                                               |   |                                            | **528,686**      |   |   | (855,526 | ) |
| Accrued                  payroll                                                                                |   |                                            | **(211,824**     | **)** |   | (456,886 | ) |
| Taxes                  accrued and withheld                                                                     |   |                                            | **352,338**      |   |   | 173,719 |   |
| Income                  taxes                                                                                   |   |                                            | **103,832**      |   |   | (62,840 | ) |
| Accrued                  expenses                                                                               |   |                                            | **117,026**      |   |   | 666,365 |   |
| Other                  liabilities                                                                              |   |                                            | **(2,052**       | **)** |   | (16,110 | ) |
| Net                  cash provided by operating activities                                                      |   |                                            | **1,891,893**    |   |   | 4,766,547 |   |
|                                                                                                            |   |                                            |             |   |   |   |   |
| **Cash                  flows from investing activities:**                                                      |   |                                            |             |   |   |   |   |
| Purchases                  of property and equipment                                                            |   |                                            | **(1,109,538**   | **)** |   | (1,588,388 | ) |
| Proceeds                  from sales of property                                                                |   |                                            | **67,713**       |   |   | 51,174 |   |
| Other                  assets                                                                                   |   |                                            | **(56,735**      | **)**  |   | 76,830 |   |
| Net                  cash used in investing activities                                                          |   |                                            | **(1,098,560**   | **)** |   | (1,460,384 | ) |
|                                                                                                            |   |                                            |             |   |   |   |   |
| **Cash                  flows from financing activities:**                                                      |   |                                            |             |   |   |   |   |
| Borrowings                  on line of credit                                                                   |   |                                            | **7,517,000**    |   |   | 2,217,000 |   |
| Payments                  on line of credit                                                                     |   |                                            | **(8,105,000**   | **)** |   | (2,717,000 | ) |
| Proceeds                from term debt                                                                          |   |                                            | **80,010**  |   |   | -  |   |
| Principal                  payments on long-term debt                                                           |   |                                            | **(1,273,132**   | **)** |   | (855,400 | ) |
| Dividends                  paid                                                                                 |   |                                            | **(974,588**     | **)** |   | (973,391 | ) |
| Net                  cash used in financing activities                                                          |   |                                            | **(2,755,710**   | **)** |   | (2,328,791 | ) |
| Net                  (decrease) increase in cash and cash equivalents                                           |   |                                            | **(1,962,377**   | **)**  |   | 977,372 |   |
| Cash                  and cash equivalents, beginning of period                                                 |   |                                            | **3,661,622**    |   |   | 1,745,457 |   |
| Cash                  and cash equivalents, end of period                                                       |   | **$**                                           | **1,699,245**    |   | $ | 2,722,829 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

**April              30, 2006**

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

**2.        Earnings per Share**

**3.        Inventories**

|                                                  |   | **April                  30,** |           | **October                  31,** |   |
|-------------------------------------------------------|--------|--------------------------------|----------------|----------------------------------|--------|
|                                                  |   | **2006**                       |           | **2005**                         |   |
| Printing:                                             |   |                           |           |                             |   |
| Raw                  materials                        |   | **$**                          | **2,239,937**  |                             | $      | 2,198,882 |   |
| Work                  in process                      |   |                           | **1,799,851**  |                             |   | 1,766,862 |   |
| Finished                  goods                       |   |                           | **4,087,969**  |                             |   | 4,013,041 |   |
| Office                  products and office furniture |   |                           | **2,497,426**  |                             |   | 3,100,941 |   |
|                                                  |   | **$**                          | **10,625,183** |                             | $      | 11,079,726 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

**4.        Long-Term Debt**

|                                                                                           |   | **April                  30,** |                                                              | **October                  31,** |    |
|------------------------------------------------------------------------------------------------|--------|--------------------------------|-------------------------------------------------------------------|----------------------------------|---------|
|                                                                                           |   | **2006**                       |                                                              | **2005**                         |    |
|      Secured                term note                payable          |   |  **$**                    | **                      2,154,978** |                             |  $ | 3,024,861 |   |
|                          Installment notes payable to banks |   |                           | **3,484,682**                                                     |                             |    | 3,791,439 |   |
| Capital                  lease obligations                                                     |   |                           | **-**                                                             |                             |    | 16,483 |   |
|                                                                                           |   |                           | **5,639,660**                                                     |                             |    | 6,832,783 |   |
| Less                  current portion                                                          |   |                           | **1,743,974**                                                     |                             |    | 1,684,280 |   |
| Long-term                  debt, net of current portion                                        |   | **$**                          | **3,895,686**                                                     |                             | $       | 5,148,503 |   |

**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**        |   | **2006**                                         |                  | **2007** |   | **2008** |   | **2009** |   | **2010** |   | **Residual** |   | **Total** |   |
|                                                |   |                                             |                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-cancelable                  operating leases    |   | $                                                | 529,048               |   | $ | 977,046 |   | $ | 786,387 |   | $ | 402,503 |   | $ | 149,163 |   | $ | 89,303 |   | $ | 2,933,450 |   |
|                                                |   |                                             |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revolving                  line of credit           |   |                                             | -                     |   |   | - |   |   | 1,024,000 |   |   | -  |   |   | - |   |   | - |   |   | 1,024,000 |   |
|                                                |   |                                             |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Term                  debt                          |   |                                             | 791,294               |   |   | 1,773,052 |   |   | 1,566,066 |   |   | 484,598 |   |   | 1,024,650 |   |   | -  |   |   | 5,639,660 |   |
|                                                |   |                                             |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equipment                purchase obligations |   |                                             |   1,515,150 |   |   | -  |   |   | -  |   |   | -  |   |   |  - |   |   | -  |   |   | 1,515,150 |   |
|                                                |   |                                             |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   | $                                                | 2,835,492             |   | $ | 2,750,098 |   | $ | 3,376,453 |   | $ | 887,101 |   | $ | 1,173,813 |   | $ | 89,303 |   | $ | 11,112,260 |   |

**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****April                    30** | **Six                    Months Ended****April                    30** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|------------------------------------------------------------------------|
|                                                                                                                                                                                           |   |                                                                           | **2006**                                                               |   |   | **2005** |   |   | **2006** |   |   | **2005** |   |
|                                                                                                                                                                                           |   |                                                                           |                                                                   |   |   |   |   |   |   |   |   |   |   |
| Net                    income (loss), as reported                                                                                                                                              |   | $                                                                              | 1,578,414                                                              |   | $ | (97,299 | )  | $ | 2,724,092 |   | $ | 165,827 |   |
| Deduct:                    Total stock-based employee compensation expense determined under                    fair                    value method for all awards, net of related tax effects |   |                                                                           | **—**                                                            |   |   | **—** |   |   | **—** |   |   | — |   |
|                                                                                                                                                                                           |   |                                                                           |                                                                   |   |   |   |   |   |   |   |   |   |   |
| Pro                    forma net income (loss)                                                                                                                                                 |   | $                                                                              | 1,578,414                                                              |   | $ | (97,299 | ) | $ | 2,724,092 |   | $ | 165,827 |   |
|                                                                                                                                                                                           |   |                                                                           |                                                                   |   |   |   |   |   |   |   |   |   |   |
| Earnings                    (loss) per share:                                                                                                                                                  |   |                                                                           |                                                                   |   |   |   |   |   |   |   |   |   |   |
| Basic,                    as reported                                                                                                                                                          |   | $                                                                              | 0.16                                                                   |   | $ | (0.01 | )  | $ | 0.28 |   | $ | 0.02 |   |
| Basic,                    pro forma                                                                                                                                                            |   |                                                                           | 0.16                                                                   |   |   | (0.01 | )  |   | 0.28 |   |   | 0.02 |   |
|                                                                                                                                                                                           |   |                                                                           |                                                                   |  |   |   |   |   |   |   |   |   |   |
| Diluted,                    as reported                                                                                                                                                        |   | $                                                                              | 0.16                                                                   |   | $ | (0.01 | )  | $ | 0.28 |   | $ | 0.02 |   |
| Diluted,                    pro forma                                                                                                                                                          |   |                                                                           | 0.16                                                                   |   |   | (0.01 | )  |   | 0.28 |   |   | 0.02 |   |

**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 |   |
|                                                             |   |   |           |   |
| Insurance                      recoveries                        |   |   | 577,677   |   |
|                                                             |   |   |           |   |
| Cumulative                      impact of Hurricane Katrina, net |   | $      | 719,306   |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

**10.        Industry Segment Information**

|                                                 |   |  **Office                  Products** |       |
|------------------------------------------------------|--------|--------------------------------------------|------------|
| **2006                  Quarter 2**                  |   | **Printing**                               |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |
| Revenues                                             |   | $                                          | 32,014,163 |   | $ | 11,838,155 |   | $ | 43,852,318 |   |
| Elimination                  of intersegment revenue |   |                                       | (4,172,486 | ) |   | (2,259,263 | ) |   | (6,431,749 | ) |
| Consolidated                  revenues               |   | $                                          | 27,841,677 |   | $ | 9,578,892 |   | $ | 37,420,569 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 2,220,966  |   |   | 606,930 |   |   | 2,827,896 |   |
| Depreciation                  & amortization     |   |                                       | 979,864    |   |   | 39,672 |   |   | 1,019,536 |   |
| Capital                  expenditures                |   |                                       | 793,197    |   |   | 81,920 |   |   | 875,117 |   |
| Identifiable                  assets                 |   |                                       | 51,534,191 |   |   | 10,280,382 |   |   | 61,814,573 |   |
| Goodwill                                             |   |                                       | 1,774,344  |   |   | 286,442 |   |   | 2,060,786 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
|                                                 |   |  **Office                  Products** |       |
| **2005                  Quarter 2**                  |   |  **Printing**                         |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Revenues                                             |   | $                                          | 27,812,058 |   | $ | 11,276,457 |   | $ | 39,088,515 |   |
| Elimination                  of intersegment revenue |   |                                       | (3,427,088 | ) |   | (2,109,145 | ) |   | (5,536,233 | ) |
| Consolidated                  revenues               |   | $                                          | 24,384,970 |   | $ | 9,167,312 |   | $ | 33,552,282 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income (loss)             |   |                                       | (508,299   | )  |   | 455,860 |   |   | (52,439 | )  |
| Depreciation                  & amortization     |   |                                       | 1,132,788  |   |   | 74,987 |   |   | 1,207,775 |   |
| Capital                  expenditures                |   |                                       | 684,085    |   |   | 48,768 |   |   | 732,853 |   |
| Identifiable                  assets                 |   |                                       | 51,415,546 |   |   | 9,933,810 |   |   | 61,349,356 |   |
| Goodwill                                             |   |                                       | 1,774,344  |   |   | 286,442 |   |   | 2,060,786 |   |

|                                                 |   |                                       |       |
|------------------------------------------------------|--------|--------------------------------------------|------------|
|                                                 |   |  **Office                  Products** |       |
| **2006                  Year to Date**               |   |  **Printing**                         |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Revenues                                             |   | $                                          | 61,702,192 |   | $ | 24,300,439 |   | $ | 86,002,631 |   |
| Elimination                  of intersegment revenue |   |                                       | (7,694,866 | ) |   | (4,595,488 | ) |   | (12,290,354 | ) |
| Consolidated                  revenues               |   | $                                          | 54,007,326 |   | $ | 19,704,951 |   | $ | 73,712,277 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income                    |   |                                       | 3,668,714  |   |   | 1,300,895 |   |   | 4,969,609 |   |
| Depreciation                  & amortization     |   |                                       | 1,994,962  |   |   | 74,715 |   |   | 2,069,677 |   |
| Capital                  expenditures                |   |                                       | 1,005,440  |   |   | 104,098 |   |   | 1,109,538 |   |
| Identifiable                  assets                 |   |                                       | 51,534,191 |   |   | 10,280,382 |   |   | 61,814,573 |   |
| Goodwill                                             |   |                                       | 1,774,344  |   |   | 286,442 |   |   | 2,060,786 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

|                                                 |   |  **Office                  Products** |       |
|------------------------------------------------------|--------|--------------------------------------------|------------|
| **2005                  Year to Date**               |   |  **Printing**                         |       | **&                  Furniture** |   | **Total** |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Revenues                                             |   | $                                          | 55,898,035 |   | $ | 22,805,226 |   | $ | 78,703,261 |   |
| Elimination                  of intersegment revenue |   |                                       | (7,076,444 | ) |   | (3,634,544 | ) |   | (10,710,988 | ) |
| Consolidated                  revenues               |   | $                                          | 48,821,591 |   | $ | 19,170,682 |   | $ | 67,992,273 |   |
|                                                 |   |                                       |       |   |   |   |   |   |   |   |
| Operating                  income (loss)             |   |                                       | (666,646   | )  |   | 1,147,299 |   |   | 480,653 |   |
| Depreciation                  & amortization     |   |                                       | 2,205,242  |   |   | 154,644 |   |   | 2,359,886 |   |
| Capital                  expenditures                |   |                                       | 1,466,833  |   |   | 121,555 |   |   | 1,588,388 |   |
| Identifiable                  assets                 |   |                                       | 51,415,546 |   |   | 9,933,810 |   |   | 61,349,356 |   |
| Goodwill                                             |   |                                       | 1,774,344  |   |   | 286,442 |   |   | 2,060,786 |   |

|                                                               |   | **Three                      months** | **Six                    months** |
|--------------------------------------------------------------------|--------|---------------------------------------|-----------------------------------|
|                                                               |   |                                  | **2006**                          |   |   | **2005** |   |   | **2006** |   |   | **2005** |   |
| Revenues:                                                          |   |                                  |                              |   |   |   |   |   |   |   |   |   |   |
| Total                    segment revenues                          |   | **$**                                 | **43,852,318**                    |   | **$** | **39,088,515** |   | **$** | **86,002,631** |   | **$** | **78,703,261** |   |
| Elimination                    of intersegment revenue             |   |                                  | **(6,431,749**                    | **)** |   | **(5,536,233** | **)** |   | **(12,290,354** | **)** |   | **(10,710,988** | **)** |
| Consolidated                    revenue                            |   | **$**                                 | **37,420,569**                    |   | **$** | **33,552,282** |   | **$** | **73,712,277** |   | **$** | **67,992,273** |   |
|                                                               |   |                                  |                              |   |   |   |   |   |   |   |   |   |   |
| Operating                    income (loss):                        |   |                                  |                              |   |   |   |   |   |   |   |   |   |   |
| ** **Total                    segment operating income (loss) |   | **$**                                 | **2,827,896**                     |   | **$** | **(52,439** | **)**  | **$** | **4,969,609** |   | **$** | **480,653** |   |
| ** **Interest                    income                       |   |                                  | **7,383**                         |   |   | **4,574** |   |   | **14,125** |   |   | **9,640** |   |
| Interest                    expense                                |   |                                  | **(168,828**                      | **)** |   | **(133,938** | **)** |   | **(340,570** | **)** |   | **(271,303** | **)** |
| Other                    income                                    |   |                                  | **3,042**                         |   |   | **13,011** |   |   | **2,928** |   |   | **75,685** |   |
| Consolidated                    income (loss) before income taxes  |   | **$**                                 | **2,669,493**                     |   | **$** | **(168,792** | **)**  | **$** | **4,646,092** |   | **$** | **294,675** |   |
|                                                               |   |                                  |                              |   |   |   |   |   |   |   |   |   |   |
| Identifiable                    assets:                            |   |                                  |                              |   |   |   |   |   |   |   |   |   |   |
| Total                    segment identifiable assets               |   | **$**                                 | **61,814,573**                    |   | **$** | **61,349,356** |   | **$** | **61,814,573** |   | **$** | **61,349,356** |   |
| Elimination                    of intersegment assets              |   |                                  | —                           |   |   | — |   |   | — |   |   | — |   |
| Total                    consolidated assets                       |   | **$**                                 | **61,814,573**                    |   | **$** | **61,349,356** |   | **$** | **61,814,573** |   | **$** | **61,349,356** |   |

**11.        Subsequent Event**

----

**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****April                    30,** | **Six                    Months Ended****April                    30,** |
|                                                                     |   |                                                                            | **2006** |   |   | **2005** |   |   | **2006** |   |   | **2005** |   |
| Revenues:                                                                |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |
| Printing                                                                 |   |                                                                            | **74.4** | **%** |   | **72.7** | **%** |   | **73.3** | **%** |   | **71.8** | **%** |
| Office                    products and office furniture                  |   |                                                                            | **25.6** |   |   | **27.3** |   |   | **26.7** |   |   | **28.2** |   |
| Total                    revenues                                        |   |                                                                            | **100.0** |   |   | **100.0** |   |   | **100.0** |   |   | **100.0** |   |
|                                                                     |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |
| Cost                    of sales:                                        |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |
| Printing                                                                 |   |                                                                            | **51.2** |   |   | **53.3** |   |   | **51.2** |   |   | **52.4** |   |
| Office                    products and office furniture                  |   |                                                                            | **18.0** |   |   | **19.3** |   |   | **18.8** |   |   | **20.1** |   |
| Total                    cost of sales                                   |   |                                                                            | **69.2** |   |   | **72.6** |   |   | **70.0** |   |   | **72.5** |   |
| Gross                    profit                                          |   |                                                                            | **30.8** |   |   | **27.4** |   |   | **30.0** |   |   | **27.5** |   |
| Selling,                    general and administrative expenses          |   |                                                                            | **23.3** |   |   | **27.6** |   |   | **23.7** |   |   | **26.8** |   |
| Hurricane                  and relocation costs, net of recoveries  |   |                                                                            | ** (0.1** | **) ** | ** ** | **- ** | ** ** | ** ** | **(0.4** | **) ** | ** ** | **- ** |   |
| Income                    (loss) from operations                         |   |                                                                            | **7.6** |   |   | **(0.2** | **)**  |   | **6.7** |   |   | **0.7** |   |
| Interest                    income                                       |   |                                                                            | **0.0** |   |   | **0.0** |   |   | **0.0** |   |   | **0.0** |   |
| Interest                    expense                                      |   |                                                                            | **(0.5** | **)** |   | **(0.4** | **)** |   | **(0.4** | **)** |   | **(0.4** | **)** |
| Other                    income                                          |   |                                                                            | **0.0** |   |   | **0.1** |   |   | **0.0** |   |   | **0.1** |   |
| Income                    (loss) before taxes                            |   |                                                                            | **7.1** |   |   | **(0.5** | **) ** |   | **6.3** |   |   | **0.4** |   |
| Income                    tax (expense) benefit                          |   |                                                                            | **(2.9** | **)**  |   | **0.2** |   |   | **(2.6** | **)** |   | **(0.2** | **)** |
| Net                    income (loss)                                     |   |                                                                            | **4.2** | **%** |   | **(0.3** | **)%** |   | **3.7** | **%** |   | **0.2** | **%** |

|                                                                   |   | **Three                              Months Ended April                              30, **  | ****Six                              Months Ended April 30,**** |
|------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|
|                                                                   |   |                                                                                                   | **2006**                                                        |   |   | **2005** |   |   | **2006** |   |   | **2005** |   |
| Net                              income (loss)                         |   | **$**                                                                                                  | 1,578,000                                                       |   | **$** | (97,000 | )  | **$** | 2,724,000 |   | **$** | 166,000 |   |
| Insurance                            recoveries, net of expenses  |   |                                                                                                   | 26,000                                                          |   |   | - |   |   | 176,000 |   |   | - |   |
| Core                            net income (loss)                      |   | **$**                                                                                                  | 1,552,000                                                       |   | **$** | (97,000 | )  | **$** | 2,548,000 |   | **$** | 166,000 |   |

----

**Champion              Industries, Inc. and Subsidiaries**

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

**and              Results of Operations (continued)**

**Three          Months Ended April 30, 2006 Compared to Three Months Ended April 30,          2005**

*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*

**Six          Months Ended April 30, 2006 Compared to Six Months Ended April 30,          2005**

*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          4. Submission of Matters to a Vote of Security Holders**

| a)   | Fixing                  the number of directors at seven (7) and election of the following                  nominees as directors, with votes “for” and “withheld,” as well as broker                  non-votes, as follows: |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Director**                             | **Votes                    “For”** | **Votes                    “Withheld”** | **Broker                    Non-votes** |
|------------------------------------------|------------------------------------------------|-----------------------------------------------------|-----------------------------------------|
| Louis                    J. Akers        | 9,152,764                                      | 182,108                                             | -0-                                     |
| Philip                    E. Cline       | 9,295,014                                      |                      39,858                    | -0-                                     |
| Harley                    F. Mooney, Jr. | 9,315,607                                      |                      19,265                    | -0-                                     |
| A.                    Michael Perry      | 9,320,407                                      |                      14,465                    | -0-                                     |
| Marshall                    T. Reynolds  | 9,321,807                                      |                      13,065                    | -0-                                     |
| Neal                    W. Scaggs        | 9,295,054                                      |                      39,818                    | -0-                                     |
| Glenn                    W. Wilcox, Sr.  | 9,320,407                                      |                      14,465                    | -0-                                     |

**Item        6. Exhibits **

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

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

|  (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:                  June 2,                  2006 | /s/                  Marshall T. Reynolds                                           |
|------------------------------------------------------|-------------------------------------------------------------------------------------|
|                                                 | Marshall                  T. Reynolds                                               |
|                                                 | Chief                  Executive Officer                                            |
|                                                 |                                                                                |
|                                                 |                                                                                |
| Date:                  June 2,                  2006 | /s/                  Toney K. Adkins                                                |
|                                                 | Toney                  K. Adkins                                                    |
|                                                 | President                  and Chief Operating Officer                              |
|                                                 |                                                                                |
|                                                 |                                                                                |
| Date:                  June 2,                  2006 | /s/                  Todd R. Fry                                                    |
|                                                 | Todd                  R. Fry                                                        |
|                                                 | Senior                  Vice President and Chief Financial                  Officer |