UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 1998       Commission File No. 0-21084


                     -------------------------------------


                           CHAMPION INDUSTRIES, INC.

             (Exact name of Registrant as specified in its charter)


         West Virginia                                     55-0717455

(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                        Identification No.)

                       2450 First Avenue, P.O. Box 2968
                        Huntington, West Virginia 25728

                   (Address of principal executives offices)
                                   (Zip Code)

                                 (304) 528-2791

                        (Registrant's telephone number,
                              including area code)

                     -------------------------------------


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13or 15(d) of the Securities  Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes _X_ No ___.

9,556,160 shares of common stock of the Registrant were outstanding at April 30,
1998.


<PAGE>


                           Champion Industries, Inc.

                                     INDEX

                                                                        Page No.

Part I.    Financial Information

      Item 1.    Financial Statements

           Consolidated Balance Sheets......................................2

           Consolidated Income Statements...................................4

           Consolidated Statements of Cash Flows............................5

           Notes to Consolidated Financial Statements.......................6

      Item 2.    Management's Discussion and Analysis of Financial
                 Condition and Results of Operations .......................9

Part II.   Other Information

      Item 2.    Changes in Securities.....................................16

      Item 4.    Submission of Matters to a Vote of Security Holders.......16

      Item 6.    Exhibits and Reports on Form 8-K..........................16

Signatures.................................................................17

Exhibit Index..............................................................18


                                       1
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)



<TABLE>
<CAPTION>

<S>                                                                                             <C>                   <C>
ASSETS                                                                                             April 30,            October 31,
                                                                                                     1998                  1997

                                                                                               ------------------------------------
Current assets:
   Cash and cash equivalents                                                                     $ 13,042,598          $    912,290
   Accounts receivable, net of allowance of $1,298,000 and $1,140,000                              18,151,571            19,075,180
   Inventories                                                                                     13,041,364            11,576,651
   Property held for sale                                                                                --                 300,000
   Other current assets                                                                               479,081               283,642
   Deferred income tax assets                                                                         981,619               981,619
                                                                                                -------------           -----------
       Total current assets                                                                        45,696,233            33,129,382

Property and equipment, at cost:
   Land                                                                                               984,889               784,889
   Buildings and improvements                                                                       5,298,230             4,144,472
   Machinery and equipment                                                                         24,412,354            22,852,103
   Equipment under capital leases                                                                   5,563,294             5,720,594
   Furniture and fixtures                                                                           1,708,720             1,684,275
   Vehicles                                                                                         2,136,690             1,914,362
                                                                                                 ------------          ------------
                                                                                                   40,104,177            37,100,695
         Less accumulated depreciation                                                            (15,379,447)          (13,825,053)
                                                                                                 ------------          ------------
                                                                                                   24,724,730            23,275,642

Cash surrender value of officer's life insurance                                                      972,692               921,213
Goodwill, net of accumulated amortization                                                           3,097,518             2,558,356
Other assets                                                                                          378,377               461,120
                                                                                                 ------------          ------------
                                                                                                    4,448,587             3,940,689
                                                                                                 ------------          ------------
         Total assets                                                                            $ 74,869,550          $ 60,345,713
                                                                                                 ============          ============
</TABLE>



                See notes to consolidated financial statements.


                                       2
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS, CONTINUED
                                   (Unaudited)



<TABLE>
<CAPTION>
<S>                                                                                              <C>                    <C>
LIABILITIES AND SHAREHOLDERS' EQUITY                                                               APRIL 30,            OCTOBER 31,
                                                                                                     1998                  1997

                                                                                               ------------------------------------
Current liabilities:
   Notes payable                                                                                  $      --              $ 2,425,000
   Accounts payable                                                                                 2,606,528              3,657,365
   Accrued payroll                                                                                  1,770,201              2,052,130
   Taxes accrued and withheld                                                                         682,615                571,477
   Accrued income taxes                                                                             1,308,034                450,027
   Accrued expenses                                                                                 1,275,819                793,848
   Current portion of long-term debt:
     Notes payable                                                                                  2,702,520              2,842,844
     Capital lease obligations                                                                      1,653,247              1,401,519
                                                                                                  -----------            -----------
         Total current liabilities                                                                 11,998,964             14,194,210

Long-term debt, net of current portion:
   Notes payable                                                                                   11,294,365             11,328,588
   Capital lease obligations                                                                        3,763,434              3,827,368
Deferred income tax liability                                                                       3,779,731              3,589,889
Other liabilities                                                                                     773,838                555,886
                                                                                                  -----------            -----------
         Total liabilities                                                                         31,610,332             33,495,941


Shareholders' equity:
   Common stock, $1 par value, 20,000,000 shares authorized;
      9,556,160 and  8,384,930 shares issued and outstanding                                        9,556,160              8,384,930
   Additional paid-in capital                                                                      21,712,759              7,450,328
   Retained earnings                                                                               11,990,299             11,014,514
                                                                                                  -----------            -----------
Total shareholders' equity                                                                         43,259,218             26,849,772
                                                                                                  -----------            -----------
         Total liabilities and shareholders' equity                                               $74,869,550            $60,345,713
                                                                                                  ===========            ===========

</TABLE>


                See notes to consolidated financial statements.

                                       3
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                         CONSOLIDATED INCOME STATEMENTS
                                   (Unaudited)



<TABLE>
<CAPTION>

<S>                                                          <C>                <C>                <C>                <C>         
                                                                     THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                                          APRIL 30,                             APRIL 30,

                                                                  1998               1997               1998               1997
                                                          -------------------------------------------------------------------------
Revenues:

   Printing                                                   $ 24,292,336       $ 24,086,990       $ 48,248,299       $ 40,224,356
   Office products and office furniture                          6,889,070          5,173,271         12,567,585         10,151,741
                                                          -------------------------------------------------------------------------
         Total revenues                                         31,181,406         29,260,261         60,815,884         50,376,097

Cost of sales:
   Printing                                                     16,755,577         16,021,131         34,264,048         27,964,560
   Office products and office furniture                          4,670,561          3,230,329          8,429,698          6,562,627
                                                          -------------------------------------------------------------------------
         Total cost of sales                                    21,426,138         19,251,460         42,693,746         34,527,187
                                                          -------------------------------------------------------------------------
Gross profit                                                     9,755,268         10,008,801         18,122,138         15,848,910

Selling, general and administrative
  expenses                                                       7,665,052          8,033,592         14,327,804         12,467,409
                                                          -------------------------------------------------------------------------
Income from operations                                           2,090,216          1,975,209          3,794,334          3,381,501

Other income (expense):
   Interest income                                                  41,769              5,815             41,926             13,212
   Interest expense                                               (436,075)          (451,646)          (863,490)          (689,716)
   Other                                                            50,784            115,325            160,992            474,171
                                                          -------------------------------------------------------------------------
                                                                  (343,522)          (330,506)          (660,572)          (202,333)
                                                          -------------------------------------------------------------------------
Income before income taxes                                       1,746,694          1,644,703          3,133,762          3,179,168
   Income taxes                                                   (725,831)          (673,538)        (1,315,522)        (1,339,004)
                                                          -------------------------------------------------------------------------
Net income                                                    $  1,020,863       $    971,165       $  1,818,240       $  1,840,164
                                                          =========================================================================

Earnings per share
   Basic                                                           $0.12              $0.12              $0.21              $0.22
                                                          =========================================================================
   Diluted                                                          0.12               0.12               0.21               0.22
                                                          =========================================================================

Weighted average shares outstanding:
   Basic                                                         8,819,000          8,382,000          8,599,000          8,382,000
                                                          =========================================================================
   Diluted                                                       8,856,000          8,442,000          8,643,000          8,441,000
                                                          =========================================================================

Dividends per share:                                               $0.05              $0.05              $0.10              $0.10
                                                          =========================================================================
</TABLE>




                See notes to consolidated financial statements.


                                       4
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

<S>                                                                                          <C>                       <C>
                                                                                                   SIX MONTHS ENDED APRIL 30,
                                                                                                  1998                     1997

                                                                                             ---------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                                    $  1,818,240              $ 1,840,164
Adjustments to reconcile net income to cash
   provided by operating activities:

     Depreciation, amortization and accretion                                                    1,755,649                2,046,428
     Gain on sales of assets                                                                        (7,396)                    --
     Deferred gain on sale of assets                                                                  --                   (330,443)
     Other                                                                                          42,270                  108,521
     Changes in assets and liabilities:
       Accounts receivable                                                                       1,901,477               (1,628,663)
       Inventories                                                                              (1,143,351)                (621,702)
       Other current assets                                                                       (174,471)                (316,154)
       Accounts payable                                                                         (1,191,019)                 190,344
       Accrued payroll                                                                            (305,102)               1,107,195
       Taxes accrued and withheld                                                                   61,321                   (1,692)
       Accrued income taxes                                                                        858,007                 (739,851)
       Accrued expenses                                                                           (608,122)              (2,087,378)
                                                                                             ---------------------------------------
Net cash provided by (used in) operations                                                        3,007,503                 (433,231)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                                              (1,640,548)              (1,187,858)
Proceeds from sale of property                                                                     339,000                     --
Business acquisitions, net of cash received                                                        985,123                  305,000
Other assets                                                                                        47,545                  180,684
                                                                                             ---------------------------------------
Net cash used in investing activities                                                             (268,880)                (702,174)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings of notes payable                                                      (2,425,000)                 700,000
Proceeds from term debt and leases                                                               1,781,507                1,614,355
Principal payments on long-term debt                                                            (3,306,028)                (608,390)
Proceeds from stock offering, net of issuance expenses                                          14,134,544                     --
Proceeds from exercise of stock options                                                             49,117                     --
Dividends paid                                                                                    (842,455)                (733,109)
                                                                                             ---------------------------------------
Net cash provided by financing activities                                                        9,391,685                  972,856
                                                                                             ---------------------------------------
Net increase (decrease) in cash                                                                 12,130,308                 (162,549)

Cash and cash equivalents, beginning of period                                                     912,290                2,460,879
                                                                                             ---------------------------------------
Cash and cash equivalents, end of period                                                      $ 13,042,598              $ 2,298,330
                                                                                             =======================================

</TABLE>



                See notes to consolidated financial statements.


                                       5
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



1.  BASIS OF PRESENTATION AND BUSINESS OPERATIONS

The  foregoing  financial  information  has been  prepared  in  accordance  with
generally  accepted  accounting  principles  and  rules and  regulations  of the
Securities  and  Exchange  Commission  for  interim  financial  reporting.   The
preparation of the financial  statements in accordance  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from these estimates.  In the opinion of management,
the financial  information  reflects all  adjustments  (consisting of items of a
normal  recurring  nature)  necessary  for  a  fair  presentation  of  financial
position,  results of  operations  and cash flows in conformity  with  generally
accepted  accounting  principles.  These interim financial  statements should be
read in  conjunction  with the  consolidated  financial  statements for the year
ended  October 31, 1997,  and related  notes  thereto  contained in the Champion
Industries,  Inc.'s Form 10-K dated January 29, 1998. The  accompanying  interim
financial information is unaudited.

The accompanying  consolidated  financial  statements of the Company include the
accounts  of The Chapman  Printing  Company,  Inc.,  Stationers,  Inc.,  Bourque
Printing,  Inc., Dallas Printing Company,  Inc., Carolina Cut Sheets, Inc., U.S.
Tag & Ticket Company,  Inc., Donihe Graphics,  Inc., The Merten Company, Smith &
Butterfield Co., Inc., Interform Corporation, and Rose City Press.

2.  INVENTORIES

Inventories are principally  stated at the lower of first-in,  first-out cost or
market.  Manufactured  finished  goods and work in process  inventories  include
material,  direct labor and overhead based on standard costs,  which approximate
actual  costs.  The  Company  utilizes  an  estimated  gross  profit  method for
determining cost of sales in interim periods.

Inventories consisted of the following:

                                                APRIL 30,           OCTOBER 31,
                                                  1998                 1997
                                             --------------       --------------
     Printing:
       Raw materials                          $  3,335,630         $  3,030,425
       Work in process                           3,156,043            2,867,270
       Finished goods                            3,089,125            2,806,475
     Office products and office furniture        3,460,566            2,872,481
                                             -------------        --------------
                                              $ 13,041,364         $ 11,576,651
                                             =============        ==============

3.  EARNINGS PER SHARE

In 1997, the Financial  Accounting  Standards Board (FASB) issued  Statement No.
128,  Earnings  per Share,  which  requires  the  reporting of basic and diluted
earnings per share. The Company adopted Statement 128 in 1998 as required. Basic
earnings  per share  excludes  any  dilutive  effects  of stock  options  and is
computed by dividing net income by the 


                                       6
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), continued

 

weighted  average  shares of common stock  outstanding  for the period.  Diluted
earnings per share is computed by dividing  net income by the  weighted  average
shares of common stock  outstanding for the period plus the shares that would be
outstanding  assuming  the  exercise of dilutive  stock  options.  The effect of
dilutive stock options increased  weighted average shares  outstanding by 37,000
and 60,000 for the three  months  ended April 30, 1998 and 1997,  and 44,000 and
59,000 for the six months ended April 30, 1998 and 1997.

4. SHAREHOLDERS' EQUITY

In April 1998, the Company  completed a secondary  offering of 1,091,993  common
shares. The shares were sold at $14.50 per share before  underwriting  discounts
and  commissions  of $1.015 per share.  The net  proceeds  (net of  underwriting
discounts, commissions and offering expenses) to the Company from this secondary
offering  approximated $14.1 million. The net proceeds from the offering will be
used by the Company for debt reduction,  working  capital and general  corporate
purposes, including the continuation of the Company's acquisition program.

The  Company  declared a dividend of five cents per share to be paid on June 26,
1998, to stockholders of record on June 5, 1998.

5.  ACQUISITIONS

On December 31, 1996, the Company acquired all the issued and outstanding common
shares of Interform Corporation ("Interform"),  a business forms printer located
in Bridgeville,  Pennsylvania,  for $2.5 million. Champion utilized the proceeds
of a loan from a bank to provide the cash  consideration  and to  refinance  the
existing  long-term debt of Interform.  The  transaction was accounted for under
the purchase  method.  As of September  30, 1996,  Interform had total assets of
$14.9 million and total liabilities of $9.6 million.

The  following  summarizes  the  unaudited  consolidated  pro forma  results  of
operations  for the six months  ended April 30,  1997,  assuming  the  Interform
acquisition had been consummated at the beginning of the period.

                                                            SIX MONTHS ENDED
                                                             APRIL 30, 1997
                                                            ----------------

     Revenues                                                  $55,701,000
     Net income                                                $ 1,734,000
     Diluted earnings per share                                $      0.21
     Weighted average shares outstanding (Diluted)               8,441,000

On February  2, 1998,  the Company  acquired  all of the issued and  outstanding
common stock of Rose City Press of Charleston, West Virginia, an office products
company,  in exchange for 75,722  shares of its common stock with a market value
at the time of  acquisition  of $1,250,000.  The  transaction  was accounted for
under the  purchase  method.  Pro forma  financial  information  related to this
acquisition  has not  been  presented  because  such  information  would  not be
material to the Company's consolidated financial statements reported herein.


                                       7
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), continued

 

5.  ACQUISITIONS (continued)

On May 18, 1998, the Company  acquired all of the issued and outstanding  common
shares of Capitol  Business  Equipment,  Inc.  ("Capitol"),  doing  business  as
Capitol Business Interiors of Charleston,  West Virginia, in exchange for 72,202
shares of its common  stock with a market  value at the time of  acquisition  of
$1,000,000.

On May 29, 1998, the Company  acquired all of the issued and outstanding  common
stock of Thompson's of Morgantown,  Inc. and Thompson's of Barbour County,  Inc.
(collectively  referred to as  "Thompson"),  both  companies  doing  business as
Thompson's  Office  Furniture  and Supplies of  Morgantown  and  Philippi,  West
Virginia,  in exchange for 45,473 shares of its common stock with a market value
at the time of  acquisition  of  $600,000.

The information  contained in these consolidated  financial  statements does not
include the Capitol and  Thompson  transactions  since these  acquisitions  were
completed  after  April  30,  1998,  the  date of these  consolidated  financial
statements.  The Capitol and Thompson  transactions are expected to be accounted
for under the pooling of  interests  method.  However,  prior  period  financial
statements  will not be  restated  due to the  immaterial  effect on  Champion's
financial statements.

6.  NEW ACCOUNTING PRONOUNCEMENTS

In June 1997,  the FASB  issued  Statement  No.  130,  "Reporting  Comprehensive
Income," and Statement No. 131, "Disclosures About Segments of an Enterprise and
Related  Information."  The  Company  does  not  expect  the  adoption  of these
statements to have a material impact on the consolidated financial statements.


                                       8
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS


OVERVIEW

The Company is a commercial  printer,  business  forms  manufacturer  and office
products  and  office  furniture  supplier  in  regional  markets  east  of  the
Mississippi.  The Company has grown through acquisitions and internal growth. As
a result  of this  growth,  the  Company  has  realized  economies  of scale and
operational efficiencies.

The Company's  largest  acquisition  since its initial public  offering in early
1993 was the purchase of  Interform  Corporation  ("Interform")  on December 31,
1996.  The  addition  of  Interform's  business  forms sales has  increased  the
printing   component  of  the  revenue  mix.   Through   sales  to   independent
distributors,   and   through   its  own   distributor,   Consolidated   Graphic
Communications,  Interform also provides the Company's printing divisions access
to the large northeastern markets of Pennsylvania, New Jersey, and New York.

The Company  intends to continue its  strategy of  aggressively  increasing  its
market share in areas it currently serves and expanding  intonew markets through
acquisitions.  The Company believes the printing and office products  industries
are  highly  fragmented  and that it is well  positioned  to  acquire  desirable
businesses in existing market areas,  contiguous  geographical  regions, and new
geographical markets.

The  Company's  revenues  consist  primarily  of sales of  commercial  printing,
business forms, tags, other printed products, office supplies, office furniture,
data products,  and office design services.  The Company recognizes revenue when
products  are shipped or services are rendered to the  customer.  The  Company's
revenues are subject to quarterly  fluctuations  caused by  variations in demand
for its products.

The Company's cost of sales primarily consist of raw materials, including paper,
ink, pre-press and purchased office supplies,  furniture and data products,  and
manufacturing  costs  including  direct  labor,  indirect  labor,  and overhead.
Significant  factors  affecting  cost of sales include the cost of paper in both
printing and office supplies, labor costs and other raw materials.

The Company's  operating  costs consist of selling,  general and  administrative
expenses.  These costs include salaries and wages for sales,  customer  service,
accounting,  administrative,  and executive personnel,  employee benefits, sales
commissions, rent, utilities, and equipment maintenance.


                                       9
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)


RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated,  information  derived
from the Consolidated Income Statements as a percentage of total revenues.

<TABLE>
<CAPTION>

<S>                                                                     <C>               <C>               <C>             <C>
                                                                            THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                                         1998              1997              1998             1997
                                                                       -------------------------------------------------------------

Revenues:
  Printing                                                                77.9%             82.3%             79.3%            79.9%
  Office products and office furniture                                    22.1              17.7              20.7             20.1
                                                                       -------------------------------------------------------------
        Total revenues                                                   100.0             100.0             100.0            100.0

Cost of sales:

  Printing                                                                53.7              54.8              56.3             55.5
  Office products and office furniture                                    15.0              11.0              13.9             13.0
                                                                       -------------------------------------------------------------
        Total cost of sales                                               68.7              65.8              70.2             68.5
                                                                       -------------------------------------------------------------
Gross profit                                                              31.3              34.2              29.8             31.5
Selling, general and administrative
  expenses                                                                24.6              27.5              23.6             24.8
                                                                       -------------------------------------------------------------
Income from operations                                                     6.7               6.7               6.2              6.7
   Interest income                                                         0.1               0.0               0.1              0.0
   Interest (expense)                                                     (1.4)             (1.5)             (1.4)            (1.4)
   Other income                                                             .2                .4                .3              1.0
                                                                       -------------------------------------------------------------
Income before taxes                                                        5.6               5.6               5.2              6.3
   Income tax expense                                                     (2.3)             (2.3)             (2.2)            (2.7)
                                                                       -------------------------------------------------------------
Net income                                                                 3.3%              3.3%              3.0%             3.6%
                                                                       =============================================================
</TABLE>

THREE MONTHS ENDED APRIL 30, 1998 COMPARED TO THREE MONTHS ENDED APRIL 30, 1997

Revenues

Total  revenues  increased 6.6% in the second quarter 1998 to $31.2 million from
$29.3 in the second quarter 1997.  Printing revenue increased 0.9% in the second
quarter 1998 to $24.3  million from $24.1  million in the second  quarter  1997.
Office  products and office  furniture  revenue  increased  33.2 % in the second
quarter 1998 to $6.9 million from $5.2 million in the second  quarter 1997.  The
growth in office products and office furniture  revenue was primarily due to the
acquisition  of Rose City Press of  Charleston,  West  Virginia in February 1998
(impact on revenues of  approximately  $1  million),  and  continued  efforts to
cross-sell our broader product lines in the markets we serve.  In addition,  the
Company's office products and office furniture  division  (Stationers)  recently
introduced an electronic  catalog called "Champ." This tool allows Stationers to
compete more effectively by giving our customers  another choice of how they can
shop and order products.  In the very near future, this catalog


                                      10
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)


will also reside on the Company's website, which is under development, making it
even easier to order office products and office furniture.

Cost of Sales

Total cost of sales  increased 11.3% in the second quarter 1998 to $21.4 million
from $19.3 million in the second quarter 1997.  Printing cost of sales increased
4.6% in the second  quarter  1998 to $16.8  million  from  $16.0  million in the
second  quarter 1997,  due  primarily to  maintaining  or increasing  production
capacity at certain printing divisions in anticipation of revenue growth,  which
did not materialize.  Management has taken the appropriate actions to streamline
these  operations.  Office products and office furniture cost of sales increased
44.6% in the second quarter 1998 to $4.7 million from $3.2 million in the second
quarter  1997,  primarily  due to the  above  noted  Rose City  acquisition  and
internally generated sales volume.

Operating Expenses

In the second  quarter of 1998,  selling,  general and  administrative  expenses
decreased  as a percentage  of sales to 24.6% from 27.5%  reported in the second
quarter  1997 due to the  Company's  continuing  effort  to  leverage  operating
expenses against a growing revenue base.

Income from Operations and Other Income and Expenses

Income from operations increased 5.8% in the second quarter 1998 to $2.1 million
from $2.0 million in the second  quarter  1997.  This  increase is primarily the
result of the Company controlling selling,  general and administrative expenses.
Interest income is up $36,000 as a result of investing the net proceeds from the
Company's April 1998 common stock offering in a money market  account.  Interest
expense on a  comparative  basis  decreased  $16,000 as a result of normal  debt
repayments  and the use of a  portion  of the  stock  proceeds  to  pay-off  all
short-term  notes payable and some of the higher cost  long-term debt assumed in
acquisitions.

Income Taxes

The Company's  effective  income tax rate was 41.6% for the second quarter 1998,
up slightly from 41.0% in the second quarter 1997.

Net Income

Net income for the second quarter 1998 increased 5.1% to $1.02 million from $.97
million in the second quarter 1997. Basic and diluted earnings per share for the
three months ended April 30, 1998 and 1997, were $0.12.

SIX MONTHS ENDED APRIL 30, 1998 COMPARED TO SIX MONTHS ENDED APRIL 30, 1997

Revenues

Total  revenues  increased  20.7% in the first half 1998 to $60.8  million  from
$50.4 million in the first quarter 1997. Printing revenue increased 19.9% in the
first half 1998 to $48.2 million from $40.2 million 

                                      11
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)


in the first half 1997. This growth in printing  revenue is primarily due to the
acquisition  of  Interform  Corporation  that  occurred  on December  31,  1996.
Interform  has been included in the  Company's  results of operations  since the
acquisition  date.  Accordingly,  the results of  operations  for the six months
ended April 30, 1997, included only four months of Interform activity. Interform
contributed  $5.2 million to the increase in revenue.  The  remaining  growth in
printing  revenue is due to  increased  sales  efforts  coupled  with  increased
printing capabilities at various locations. Office products and office furniture
revenue  increased  23.8% in the first  half 1998 to $12.6  million  from  $10.2
million in the first half 1997.  The revenue  increases  in office  products and
office  furniture were achieved through the Rose City acquisition and additional
efforts to cross-sell product lines.

Cost of Sales

Total cost of sales increased 23.7% in the first half 1998 to $42.7 million from
$34.5 million in the first half 1997.  Printing cost of sales increased 22.5% in
the first half 1998 to $34.3  million from $28.0 million in the first half 1997,
primarily due to the increase in sales volume.  Printing cost of sales increased
as a percent of printing  revenue from 69.5% in the first half 1997, to 71.0% in
the first half 1998, as a result of the sales  strategy to capture new customers
in certain geographical areas by lowering margins.  Management anticipates that,
long-term,  these  relationships  will result in higher profit  margins.  Office
products and office  furniture cost of sales  increased  28.5% in the first half
1998 to $8.4 million from $6.6 million in the first half 1997,  due primarily to
the  acquisition  of Rose City and  internally  generated  sales volume.  Office
products and office  furniture cost of sales as a percent of office products and
office furniture revenue increased from 64.6% in the first half 1997 to 67.1% in
the first half 1998,  primarily as a result of the lower margins  contributed by
Rose City.

Operating Expenses

Selling,  general and administrative expenses as a percentage of sales decreased
in  first  half  1998 to 23.6%  from  24.8% in the  first  half  1997 due to the
Company's  continued effort to leverage the operating expenses against a growing
revenue base.

Income from Operations and Other Income and Expenses

Income from  operations  increased  12.2% in the first half 1998 to $3.8 million
from $3.4  million in the first half 1997.  Interest  income was up $29,000 as a
result of investing the net proceeds  from the stock  offering in a money market
account during the month of April 1998.  Interest expense on a comparative basis
increased  $174,000 or 25.2% as a result of the additional debt required to fund
operations and acquire equipment during the first half 1998. As noted earlier in
this  discussion,  a portion of the proceeds from the stock offering was used to
repay debt in April 1998. Other income decreased $300,000 in the first half 1998
compared  to the  same  period  in  1997 as a  result  of the  recognition  of a
nonrecurring deferred gain of $330,000 in the first half of 1997.

Income Taxes

The Company's effective income tax rate of 42% in 1998 and 1997 approximated the
combined federal and state, net of federal income tax benefit,  statutory income
tax rate.


                                      12
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)


Net Income

Net income for the first half 1998  decreased  1.2% to $1.82  million from $1.84
million in the first half 1997. After adjusting for the nonrecurring gain in the
first  half of 1997,  net core  earnings  increased  by  $166,000  or 10.1% from
$1,652,000  in the first half 1997 to  $1,818,000  for the same  period in 1998.
Basic and diluted  earnings  per share for the six months  ended April 30, 1998,
were $0.21 compared to $0.22 for the same period in 1997.

INFLATION AND ECONOMIC CONDITIONS

Management believes that the effect of inflation on the Company's operations has
not been material and will continue to be immaterial for the foreseeable future.
The Company does not have long-term sales and purchase contracts;  therefore, to
the extent  permitted by competition,  it has the ability to pass through to the
customer most cost increases resulting from inflation, if any.

SEASONALITY

Historically,  the Company has experienced a greater portion of its annual sales
and net income in the second  and  fourth  quarters  than in the first and third
quarters. The second quarter generally reflects increased orders for printing of
corporate  annual  reports and proxy  statements.  A post-Labor  Day increase in
demand for printing  services and office  products  coincides with the Company's
fourth quarter.

LIQUIDITY AND CAPITAL RESOURCES

Net cash  provided by  operations  for the six months ended April 30, 1998,  was
$3.0 million  compared to net cash used in operations  during the same period in
1997 of $400,000.  This improvement in net cash from operations is due primarily
to a  decrease  in  accounts  receivable,  timing of income  tax  payments,  and
increase in accrued expenses, partially offset by an increase in inventories and
a decrease in accounts payable and accrued payroll.

Net cash used in investing  activities  for the six months ended April 30, 1998,
was $300,000  compared to $700,000  during the same period in 1997. The decrease
in net cash used in investing  activities during the first half 1998 compared to
1997 is primarily the result of proceeds from sale of property and cash received
in business acquisitions, partially offset by additional equipment purchases.

Net cash  provided by  financing  activities  for the six months ended April 30,
1998, was $9.4 million  compared to $1.0 million during the same period in 1997.
The increase in net cash  provided by financing  came from the proceeds from the
stock offering,  net of issuance expenses,  partially offset by the repayment of
notes payable and long-term debt.

Working  capital on April 30,  1998,  was $33.7  million,  an  increase of $14.8
million from October 31, 1997. The increase in working capital is primarily from
the proceeds of the stock  offering.  The proceeds  from the stock  offering are
invested in a money  market  account  with an  unaffiliated  national  financial
institution.  It is  management's  intention to maintain these funds in a highly
liquid  money market  account for use for debt  reduction,  working  capital and
general  purposes,  including  the  continuation  of the  Company's  acquisition
program.


                                      13
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)


The Company has short-term  credit  facilities with banks  permitting  aggregate
borrowings of $3.8 million. The entire credit facilities were available at April
30, 1998.

The  Company  expects  that the  combination  of funds  available  from  working
capital,  borrowings available under the Company's credit facilities  (including
leases as required)  and  anticipated  cash flows from  operations  will provide
sufficient  capital  resources  for the  foreseeable  future.  In the  event the
Company seeks to accelerate  internal growth or make  acquisitions  beyond these
sources, additional financing would be necessary.

ENVIRONMENTAL REGULATION

The Company is subject to the  environmental  laws and regulations of the United
States, and the states in which it operates,  concerning emissions into the air,
discharges into the waterways and the generation, handling and disposal of waste
materials.  The Company's past expenditures relating to environmental compliance
have not had a material  effect on the Company.  These laws and  regulations are
constantly evolving,  and it is impossible to predict accurately the effect they
may have upon the capital  expenditures,  earnings,  and competitive position of
the  Company  in  the  future.  Based  upon  information   currently  available,
management believes that expenditures relating to environmental  compliance will
not have a material impact on the financial position of the Company.

YEAR 2000 ASSESSMENT

Management has initiated a Company-wide  program to assess the need to modify or
replace portions of its information  systems  enabling the proper  processing of
transactions  relating  to the  Year  2000 and  beyond.  The  Company  primarily
utilizes  purchased  software and  management  believes  that there are adequate
sources of Year 2000  compliant  software  available from vendors that will meet
its needs.  Management  continues to evaluate  appropriate courses of corrective
action,  including  the  cost/benefit  of  modifying  existing  software  versus
purchasing  new software and hardware.  However,  until a complete  cost/benefit
analysis of the various alternatives  available to the Company is completed,  an
estimate of the total cost of its Year 2000 project cannot be made at this time.
Management does not expect the Year 2000 project to materially impact results of
operations based on the current status of the analysis.

The Year 2000  project is  expected  to be  completed  by  mid-1999.  Management
believes that with  modifications to existing software and/or conversions to new
software,  the Year 2000 problem will not pose significant  operational problems
to the Company.  However, if such modifications and/or conversions are not made,
or are not  completed  timely,  this issue  could have a material  impact on the
Company's operations. The Company has initiated discussions with its significant
suppliers,  large  customers,  and financial  institutions  to ensure that those
parties  have  appropriate  plans to remediate  their  computer  systems.  While
management  believes its planning  efforts are adequate to address its Year 2000
concerns, there can be no guarantee that the systems of other companies on which
the Company's  systems and  operations  rely will be converted on a timely basis
and will not have a material effect on the Company.


                                      14
<PAGE>


                   CHAMPION INDUSTRIES, INC. AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain  statements  contained in this Form 10-Q,  including without  limitation
statements including the word "believes," "anticipates," "intends," "expects" or
words of similar  import,  constitute  "forward-looking  statements"  within the
meaning  of  section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"),  and section 21E of the Securities  Exchange Act of 1934, as
amended (the "Exchange Act"). Such forward-looking  statements involve known and
unknown  risks,  uncertainties  and other  factors  that may  cause  the  actual
results,  performance or achievements of the Company to be materially  different
from any future results, performance or achievements of the Company expressed or
implied by such forward-looking  statements. Such factors include, among others,
general economic conditions,  changes in business strategy or development plans,
and other  factors  referenced  in this Form 10-Q.  Given  these  uncertainties,
readers  are  cautioned  not to place  undue  reliance  on such  forward-looking
statements.  The Company  disclaims any obligation to update any such factors or
to publicly announce the results of any revisions to any of the  forward-looking
statements contained herein to reflect future events or developments.

                                      15
<PAGE>



                           PART II - OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

On February 2, 1998, the Company acquired all the issued and outstanding  common
shares of Rose City Press,  a West  Virginia  corporation  of  Charleston,  West
Virginia,  in exchange for 75,722 shares of the Company's common stock valued at
$1,250,000.  The  Company  issued  the  shares  without  registration  under the
Securities Act of 1933 based on exemption from registration  pursuant to Section
4(2) of said Act and Rule 505 promulgated thereunder, there being nine Rose City
Press  shareholders/purchasers,  and all other  provisions  of said  Rule  being
satisfied.

On May 18,  1998,  the Company  acquired all the issued and  outstanding  common
shares of Capitol  Business  Equipment,  Inc., a West Virginia  corporation,  of
Charleston, West Virginia, in exchange for 72,202 shares of the Company's Common
Stock valued at $1,000,000.  The Company issued the shares without  registration
under the Securities Act of 1933 based on exemption from  registration  pursuant
to Section 4(2) of said Act and Rule 505 promulgated thereunder, there being one
Capitol Business Equipment, Inc. shareholder/purchaser, and all other provisions
of said Rule being satisfied.

On May 29,  1998,  the Company  acquired all the issued and  outstanding  common
shares of Thompson's of Morgantown, Inc. and Thompson's of Barbour County, Inc.,
both West Virginia corporations,  of Morgantown,  West Virginia, in exchange for
45,473  shares of the  Company's  common stock  valued at $600,000.  The Company
issued the shares without registration under the Securities Act of 1933 based on
exemption  from  registration  pursuant to Section 4(2) of said Act and Rule 505
promulgated  thereunder,  there  being a total  of  three  shareholders  of both
corporations, and all other provisions of said Rule being satisfied.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the annual meeting of shareholders held March 16, 1998, the following matters
were voted upon:

   a.  Fixing  the  number  of  directors  at eight  (8) 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
       Robert H. Beymer        7,797,809          8,211             - 0 -
       Philip E. Cline         7,799,754          6,266             - 0 -
       Harley F. Mooney, Jr.   7,791,469         14,551             - 0 -
       Todd L. Parchman        7,799,664          6,356             - 0 -
       A. Michael Perry        7,798,243          7,777             - 0 -
       Marshall T. Reynolds    7,799,754          6,266             - 0 -
       Neal W. Scaggs          7,799,754          6,266             - 0 -
       Glenn W. Wilcox, Sr.    7,799,754          6,266             - 0 -


                                      16
<PAGE>



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     a) The  exhibits  listed on the Exhibit  Index on page 18 of this Form 10-Q
        are filed herewith.

     b) The  following  reports on Form 8-K were filed  during the  quarter  for
        which this report is filed:

         None.

                                   SIGNATURES

Pursuant  to the  requirement  of the  Securities  Exchange  Act  of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                    CHAMPION INDUSTRIES, INC.



Date:  June 12, 1998                 /s/ Marshall T. Reynolds
                                    --------------------------------------------
                                     Marshall T. Reynolds
                                     President and Chief Executive Officer

Date:  June 12, 1998                 /s/ David B. McClure
                                    --------------------------------------------
                                     David B. McClure
                                     Vice President and Chief Financial Officer


                                      17
<PAGE>


                   CHAMPION IN
DUSTRIES, INC. AND SUBSIDIARIES

                                  EXHIBIT INDEX

EXHIBIT         PAGE          TITLE

  27         electronic       Financial Data Schedule



                                      18
<PAGE>