UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 10-Q
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended January 31, 2016
 
OR
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________to_________
Commission File No. 000-21084
 
Champion Industries, Inc.
 
(Exact name of Registrant as specified in its charter)
West Virginia
  
55-0717455
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
 
2450-90 1st Avenue
P.O. Box 2968
Huntington, WV 25728
(Address of principal executive offices)
(Zip Code)
 
(304) 528-2700
(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 13 or 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 ü No _____.
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ü No _____.
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
 Smaller reporting company þ
   
(Do not check if a smaller reporting company)
  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes _____ No ü .
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
  
Outstanding at January 31, 2016
Common stock, $1.00 par value per share
  
11,299,528 shares
Champion Industries, Inc.
INDEX
 
Page
Part I. Financial Information
  
Item 1. Financial Statements
  
Consolidated Balance Sheets (Unaudited)
3
Consolidated Statements of Operations (Unaudited)
4
Consolidated Statements of Cash Flows (Unaudited)
5
Notes to Consolidated Financial Statements
6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
15
Item 3. Quantitative and Qualitative Disclosure About Market Risk
20
Item 4. Controls and Procedures
20
Part II. Other Information
  
Item 1. Legal Proceedings 21
Item 1A. Risk Factors 21
Item 3. Defaults upon Senior Securities 21
Item 4. Mine Safety Disclosure 21
Item 5. Other Information
21
Item 6. Exhibits
21
Signatures
22
 
 
 
 
 
2
 
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Champion Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
 
ASSETS  January 31,      October 31,  
    2016      2015  
   (Unaudited)        
Current assets:
          
Cash and cash equivalents $ 39,381     $ 540,909  
Accounts receivable, net of allowance of $548,000 and $531,000
   9,255,926       8,651,745  
Inventories
   3,533,084       3,568,665  
Other current assets
  
1,057,153
       890,165  
Current portion assets held for sale   256,832       256,832  
Total current assets
   14,142,376       13,908,316  
               
Property and equipment, at cost:
              
Land
   1,254,195       1,254,195  
Buildings and improvements
   4,683,225       4,676,290  
Machinery and equipment
   34,208,104       34,130,233  
Equipment under capital lease   72,528       72,528  
Furniture and fixtures
   3,739,161       3,734,959  
Vehicles
   2,696,061       2,756,086  
    46,653,274       46,624,291  
Less accumulated depreciation
   (40,175,916 )     (39,911,447
)
    6,477,358       6,712,844  
               
Goodwill
   1,230,485       1,230,485  
Other intangibles, net of accumulated amortization
   1,027,320       1,057,845  
Deferred financing costs
   7,720       3,040  
Other assets
   13,315       13,996  
    2,278,840       2,305,366  
Total assets
 $ 22,898,574    
$
 22,926,526  
   
LIABILITIES AND SHAREHOLDERS’ EQUITY
  
Current liabilities:
  
Accounts payable
 $ 4,963,189     $ 4,730,286  
Accrued payroll and commissions
   441,508       528,855  
Taxes accrued and withheld
   655,317       635,131  
Accrued expenses
   1,857,392       1,763,929  
Debt Discount (Note 5)   -          
Notes payable (Note 5)
   2,140,323       1,929,358  
Notes payable - related party (Note 5)   2,500,000       2,500,000  
Capital lease obligations (Note 5)   16,091       15,852  
Total current liabilities
   12,573,820       12,103,411  
               
Long-term debt, net of current portion:
              
Notes payable (Note 5)
   8,572,667       8,796,542  
Capital lease obligations (Note 5)   8,414       12,528  
Total liabilities
   21,154,901       20,912,481  
               
Shareholders’ equity:
              
Common stock, $1 par value, 20,000,000 Class A voting shares authorized;
11,299,528 shares issued and outstanding
   11,299,528       11,299,528  
Common Stock, Class B nonvoting stock, $1 par value, 5,000,000 shares authorized,
-0- shares issued and outstanding
   -       -  
Additional paid-in capital
   24,279,179       24,279,179  
Retained deficit
   (33,835,034 )    
(33,564,662
 )
Total shareholders' equity
   1,743,673      
2,014,045
  
Total liabilities and shareholders’ equity
 $ 22,898,574    
$
 22,926,526  
  
See notes to consolidated financial statements.
 
3
 
Champion Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
 
  Three Months Ended January 31,
    2016  
2015
  
Revenues:
            
Printing
 $ 9,045,731  
$
 9,388,522  
Office products and office furniture
   6,877,641     5,411,738  
Total revenues
   15,923,372     14,800,260  
             
Cost of sales:
            
Printing
   7,110,675     7,096,505  
Office products and office furniture
   5,181,525     3,954,772  
Total cost of sales
   12,292,200     11,051,277  
             
Gross profit
   3,631,172     3,748,983  
             
Selling, general and administrative expenses
   3,745,002     3,952,923  
             
Loss from operations
   (113,830 )   (203,940 )
             
Interest expense - related party   (21,563 )   (20,764 )
Interest expense
   (148,744 )   (263,977
)
Other
    13,765     20,863  
     (156,542 )   (263,878
)
             
Loss before income taxes
   (270,372 )   (467,818 )
Income tax (benefit) expense
   -     -  
Net loss  $  (270,372 )  $ (467,818 )
             
Loss per share:
            
Basic and diluted loss
$ (0.02 )
$
 (0.04 )
             
Weighted average shares outstanding:
            
Basic and diluted
    11,300,000     11,300,000  
 
See notes to consolidated financial statements.
 
4
 
Champion Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 
    Three Months Ended January 31,
    2016  
2015
  
Cash flows from operating activities:
          
Net loss
 $  (270,372 ) 
$
 (467,818 )
             
Adjustments to reconcile net loss to cash (used in)
provided by operating activities:
            
Depreciation and amortization
   411,443     402,002  
(Gain) on sale of assets
   (13,375 )   -
 
Allowance for doubtful accounts
   -     3,843  
Deferred financing costs / debt discount   5,200     127,262  
Changes in assets and liabilities:            
Accounts receivable
   (604,181 )   443,871  
Inventories
   35,581     (344,616 )
Other current assets
    (166,988 )    (252,044 )
Accounts payable
   232,902     711,283  
Accrued payroll and commissions
   (87,347 )    (1,633
)
Taxes accrued and withheld
    20,186     59,325  
Accrued expenses
    93,463     71,907
 
Other liabilities
    -     -
 
 Net cash (used in) provided by operating activities   (343,488 )   753,382  
             
Cash flows from investing activities:
            
Purchase of property and equipment
    (166,796 )   (447,495 )
Proceeds from sale of fixed assets
    34,740     -  
Change in other assets   (9,199 )   -  
Net cash used in investing activities
   (141,255 )   (447,495 )
             
Cash flows from financing activities:
            
Proceeds from term debt
    1,045,928     244,744  
Principal payments on term debt
    (1,062,713 )   (1,014,063 )
Net cash used in financing activities
    (16,785 )   (769,319 )
             
Net decrease in cash and cash equivalents
   (501,528 )   (463,432 )
Cash and cash equivalents at beginning of period
    540,909     818,438  
Cash and cash equivalents at end of period
  $  39,381    $
355,006
  
 
See notes to consolidated financial statements.
 
5
 
 
 
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
 
 
Note 1. Basis of Presentation, Business Operations and Recent Accounting Pronouncements
 
The foregoing financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the Securities and Exchange Commission for interim financial reporting. The preparation of the financial statements in accordance with GAAP 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 GAAP. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended October 31, 2015, and related notes thereto contained in Champion Industries, Inc.’s Form 10-K filed January 29, 2016. The accompanying interim financial information is unaudited. The results of operations for the period are not necessarily indicative of the results to be expected for the full year. The balance sheet information as of October 31, 2015 was derived from our audited financial statements.
 
Reclassifications and Revisions
 
Certain prior-year amounts have been reclassified to conform to the current year financial statement presentation.
 
Newly Issued Accounting Standards
 
Effective July 1, 2009, changes to the ASC are communicated through an ASU. As of January 31, 2016, the FASB has issued ASU’s 2009-01 through 2016-01. The Company reviewed each ASU and determined that they will not have a material impact on the Company’s financial position, results of operations or cash flows, other than related disclosures to the extent applicable.
 
In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items. The Company adopted ASU 2015-01 in December 2015. This amendment did not have a material impact on the Company's financial position, results of operation, or cash flows, but will have an impact on related presentation and disclosure to the extent applicable in future periods.

In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 provides guidance on simplifying the measurement of inventory. The current standard is to measure inventory at lower of cost or market; where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 updates this guidance to measure inventory at the lower of cost or net realizable value; where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. The Company adopted ASU 2015-11 in December 2015. This amendment did not have and is not expected to have a material impact on the Company's financial position, results of operation, or cash flows given the nature of the Company’s business and its relatively short inventory holding period.
 
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). ASU 2015-17 updates guidance on classifying deferred tax assets and liabilities from current and noncurrent to all noncurrent when a classified balance sheet is presented. The netting of deferred tax assets and liabilities to present a single amount will remain with this update. The Company will adopt ASU 2015-17 in December 2016. This amendment is not expected to have a material impact on the Company's financial position, results of operation, or cash flows, but will impact presentation of such deferred tax assets and liabilities to the extent applicable.
 
 
6
 
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) (continued)
 
 
Note 2. Earnings per Share
 
Basic earnings per share is computed by dividing net income by the weighted average shares of common stock outstanding for the period and excludes any dilutive effects of stock options and warrants. 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 and warrants using the treasury stock method. There was no dilutive effect for the three months ended January 31, 2016 and 2015.
 
 
Note 3. Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition
 
Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable are stated at the amount billed to customers. Accounts receivable are ordinarily due 30 days from the invoice date. The Company encounters risks associated with sales and the collection of the associated accounts receivable. As such, the Company records a provision for accounts receivable that are considered to be uncollectible and performs a comprehensive assessment periodically utilizing a variety of historical information and specific account review. The allowance for doubtful accounts is assessed periodically based on events that may change the rate such as a significant increase or decrease in collection performance and timing of payments as well as the calculated total exposure in relation to the allowance. Periodically, the Company compares the identified credit risks with the allowance that has been established using historical experience and adjusts the allowance accordingly.
 
Revenue Recognition: Revenues are recognized when products are shipped or ownership is transferred and when services are rendered to customers. The Company acts as a principal party in sales transactions, assumes title to products and assumes the risks and rewards of ownership including risk of loss for collection, delivery or returns. The Company typically recognizes revenue for the majority of its products upon shipment to the customer and transfer of title. Under agreements with certain customers, custom forms may be stored by the Company for future delivery. In these situations, the Company may receive a logistics and warehouse management fee for the services provided. In these cases, delivery and bill schedules are outlined with the customer and product revenue is recognized when manufacturing is complete and the product is received into the warehouse, title transfers to the customer, the order is invoiced and there is reasonable assurance of collectability. Since the majority of products are customized, product returns are not significant. Therefore, the Company records sales on a gross basis. Revenue generally is recognized net of any taxes collected from customers and subsequently remitted to government authorities.

 
 
Note 4. Inventories
 
Inventories are stated at the lower of first-in, first-out cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Manufactured finished goods and work in process inventories include material, direct labor and overhead based on standard costs, which approximate actual costs.

At the dates indicated, inventories consisted of the following:

   
January 31,
2016
    
October 31,
2015
  
Printing:
            
Raw materials
  
$
  1,190,701    
$
1,111,203
  
Work in process
      647,042      
599,289
  
Finished goods
      871,252      
824,689
  
Office products and office furniture
     824,089       1,033,484  
   
$
 3,533,084    
$
3,568,665
  
 
 
 
7
 
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) (continued)
 
Note 5. Debt
 
At the dates indicated, debt consisted of the following:
 
 
January 31,
2016
    
October 31,
2015
 
Term Note A dated October 7, 2013, due in monthly installments of $50,000
plus interest payments equal to the prime rate of interest plus 2% maturing
April 1, 2017, collateralized by substantially all of the assets of the Company.
 $  8,600,000     $ 8,750,000  
Installment notes payable to banks, due in monthly installments plus interest at
rates approximating the bank’s prime rate or the prime rate subject to various floors
maturing in various periods ranging from February 2016 - January 2018, collateralized
by equipment and vehicles.
   563,444       634,998  
Notes payable to shareholders. The shareholder note of $2.5 million plus all accrued
interest was initially due in one balloon payment in September 2014; pursuant to Term
Note A, the maturity was adjusted to April 2015. The interest is accrued at a rate of 3.50%.
See discussion on next page for more details. (1)
   2,500,000       2,500,000  
Note payable to a bank, due April 2016, including interest accrued at 5.25%,
collateralized by specific accounts receivable of the Company. (2)
   980,000        750,000  
Capital lease obligation for printing equipment at an imputed interest rate of 6.02% per annum    24,505       28,380  
Note, payable to a bank in monthly installment of $8,441 including interest at 5.00%
collateralized by equipment
   430,057       443,208  
Note, payable to a bank in monthly installments of $4,197 including an imputed
interest rate of 0.0% collateralized by equipment
   139,489        147,694  
     13,237,495       13,254,280  
               
Less current portion long-term debt   1,160,323       1,179,358  
Less short-term notes payable to related party (1)   2,500,000       2,500,000  
Less current portion obligation under capital lease    16,091       15,852  
Less short-term debt (2)    980,000        750,000  
Long-term debt, net of current portion and capital lease obligation $ 8,581,081     $ 8,809,070  
               
               
Long-term debt, net of current portion $ 8,572,667     $ 8,796,542  
Long-term capital lease obligation    8,414       12,528  
Current portion of long-term debt    1,160,323       1,179,358  
Short-term notes payable to related party (1)    2,500,000       2,500,000  
Short-term debt (2)    980,000        750,000  
Current portion of capital lease obligation    16,091       15,852  
Total indebtedness $  13,237,495     $ 13,254,280  
 
(1) On June 15, 2015 the Company’s Board of Directors approved the conversion of the Company’s $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company’s income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%.

This conversion will reduce the Company’s liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company’s annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company’s annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved.

This conversion is pending a shareholder vote to amend the Company’s Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.
 
 
(2) These notes are short-term borrowings associated with large furniture projects that are on terms of 120 days or less. A portion of these borrowings were subsequently paid upon collection of the collateral in February 2016.
 
 
 
8
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) (continued)
 
Note 6. Income taxes
 
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers a multitude of factors in assessing the utilization of its deferred tax assets including the reversal of deferred tax liabilities, projected future taxable income and other assessments, which may have an impact on financial results.

The Company reassessed its previous determination regarding its valuation allowance and although the Company has had positive operating trends, it was determined that a full valuation allowance was still warranted at January 31, 2016. The amount of deferred tax asset considered realizable could be adjusted in future periods and such adjustments may be material to the Consolidated Financial Statements.

The Company’s effective tax rate for the three months ended January 31, 2016 and 2015 was 0.0%. The effective income tax rate approximates the combined federal and state, net of federal benefit, statutory income tax rate, impacted by increases or decreases in the valuation allowance for deferred tax assets.

 
Note 7. Commitments and Contingencies
 
The nature of the Company’s business results in a certain amount of claims, litigation, investigations, and other legal and administrative cases and proceedings, all of which are considered incidental to the normal conduct of business. When the Company determines it has meritorious defenses to the claims asserted, it vigorously defends itself. The Company will consider settlement of cases when, in Management’s judgment, it is in the best interests of both the Company and its shareholders to do so.

The Company periodically assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. The Company would accrue a loss on legal contingencies in the event the loss is deemed probable and reasonably estimable. The accrual is adjusted as appropriate to reflect any relevant developments regarding the legal contingency. In the event of a legal contingency where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established.

In certain cases, exposure to loss may exist in excess of the accrual to the extent such loss is reasonably possible, but not probable. Management believes an estimate of the aggregate of reasonably possible losses, in excess of amounts accrued, for current legal proceedings not covered by insurance is not greater than $0.4 million at January 31, 2016 and may be substantially lower than this amount. Any estimate involves significant judgment, given the varying stages of the proceedings (including cases in preliminary stages), as well as numerous unresolved issues that may impact the outcome of a proceeding. Accordingly, Management’s estimate will change from time-to-time, and actual losses may be more or less than the current estimate. The current loss estimate excludes legal and professional fees associated with defending such proceedings. These fees are expensed as incurred and may be material to the Company's Consolidated Financial Statements in a particular period.

While the final outcome of legal proceedings is inherently uncertain, based on information currently available, advice of counsel, and available insurance coverage, Management believes that there is no accrual for legal contingencies required at this time. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these matters, if unfavorable, may be greater than the current range of estimates discussed above and may be material to the Company’s Consolidated Financial Statements in a particular period.

 
9
 
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) (continued)
 
In accordance with the provisions of the Restated Credit Agreement, the Company issued $0.001 per share warrants issued for up to 30% (on a post-exercise basis) of the outstanding common stock of the Company in the form of non-voting Class B common stock and associated Investor Rights Agreement for the benefit of the Previous Secured Lenders under the Restated Credit Agreement. The warrants expire after October 19, 2017.
 
The Warrants entitle the Holders thereof to purchase that number of shares of Company Class B Common Stock equal to thirty percent (30%) of the then issued and outstanding Common Stock of the Company, on a fully diluted, post-exercise basis. Based on the 11,299,528 shares of Company Common Stock currently issued and outstanding, exercise in full of the Warrants would result in the Company’s issuance of an additional 4,842,654 shares to the Warrant Holders. In the event a greater number of issued and outstanding common shares exist at the time of option exercise, a greater number of options of shares of Class B Common Stock would be issuable. The Previous Secured Lenders assigned the warrants to Marshall T. Reynolds in consideration for his personal guaranty and stock pledge and security agreement to assist in facilitating the consummation of the October 2013 Credit Agreement. The Previous Secured Lenders, as Warrant Holders, were subject to the ownership limitations of the Bank Holding Company Act of 1956, as amended and regulations promulgated thereunder (the "Bank Holding Company Act") which placed limitations on their ability to control other companies. The Previous Secured Lenders/Warrant Holders requested, and the Company agreed to create a non-voting class of Common Stock, to be designated as "Class B Common Stock". The Warrants constitute the right to purchase Class B Common Stock. The warrants are exercisable solely for shares of Class B Common Stock. However, because any Class B Common Stock issuable pursuant to the Warrants may be sold by the Warrant Holders to entities not subject to the Bank Holding Company Act, or because one or more Warrant Holders may be permitted to own a limited number of voting shares of Company Class A Common Stock, the articles of amendment provide that those shares of Class B Common Stock are convertible into shares of Class A Common Stock, and vice versa, without charge. Marshall T. Reynolds, as the current Warrant Holder is entitled to convert Class B Common Shares into shares of Class A Common Stock.
 
As of January 31, 2016 the Company had contractual obligations in the form of leases and debt as follows:
 
 
Payments Due by Fiscal Year
Contractual Obligations:
2016
  
2017
  
2018
  
2019
   2020  
Residual
     Total  
                             
Non-cancelable operating leases
$
377,271
  
$
423,949
  
$
334,642
  
$
 230,098   $ 77,010  
$
32,673
  
$
1,475,643
  
                                           
Term debt
   2,029,884    
8,344,299
     138,654    
97,644
     98,352    
4,157
     10,712,990  
                                           
Obligations under capital lease   11,977     12,528     -     -     -     -     24,505  
                                           
Notes payable - related party (1)   2,500,000     -     -     -     -     -     2,500,000  
                                           
 
$
4,919,132
  
$
8,780,776
  
$
473,296
  
$
327,742
   $ 175,362  
$
36,830
  
$
14,713,138
  
 
(1) On June 15, 2015 the Company’s Board of Directors approved the conversion of the Company’s $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company’s income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%.
 
This conversion will reduce the Company’s liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company’s annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company’s annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved.
 
This conversion is pending a shareholder vote to amend the Company’s Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.
 

 
10
 
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) (continued)
 
 
Note 8. Industry Segment Information
 
The Company operates principally in two industry segments organized on the basis of product lines: the production, printing and sale, principally to commercial customers, of printed materials (including brochures, pamphlets, reports, tags, continuous and other forms) and the sale of office products and office furniture including interior design services.

The Company reports segment information in a manner consistent with the way that our management, including our chief operating decision maker, the Company’s Chief Executive Officer, assesses performance and makes decisions regarding allocation of resources in accordance with the Segment Disclosures Topic of the ASC.

Our Financial Reporting systems present various data, which is used to operate and measure our operating performance. Our chief operating decision maker utilizes various measures of a segment’s profit or loss including historical internal reporting measures and reporting measures based on product lines with operating income or loss as the key profitability measure within the segment. Product line reporting is the basis for the organization of our segments and is the most consistent measure used by the chief operating decision maker and conforms with the use of segment operating income or loss that is the most consistent with those used in measuring like amounts in the Consolidated Financial Statements.

The identifiable assets are reflective of non-GAAP assets reported on the Company's internal balance sheets and are typically adjusted for taxes and other items excluded for segment reporting. The assets are classified based on the primary functional segment category as reported on the internal balance sheets. Therefore the actual segment assets may not directly correspond with the segment operating loss reported herein. The Company had certain assets classified as held for sale at January 31, 2016 and 2015 of $256,832. These assets were part of the printing segment prior to the reclassification as assets held for sale. The total assets reported on the Company's balance sheets as of January 31, 2016 and January 31, 2015 were $22,898,574 and $23,695,441, respectively. The identifiable assets reported below represent $22,641,742 and $23,438,609 at January 31, 2016 and 2015, respectively.

The table below presents information about reported segments for the three months ended January 31:
 
2016 Quarter 1
  
Printing
  
Office Products & Furniture
  
Total
  
               
Revenues
 
$
  9,549,752  
$
  7,511,474  
$
  17,061,226  
Elimination of intersegment revenue
      (504,021
)
    (633,833
)
    (1,137,854
)
Consolidated revenues
 
$
  9,045,731  
$
  6,877,641  
$
  15,923,372  
                     
Operating (loss) income
      (218,669 )    104,839      (113,830 )
Depreciation & amortization
      389,804      21,639      411,443  
Capital expenditures
      151,235      15,561      166,796  
Identifiable assets
     15,596,719      7,045,023     22,641,742  
Goodwill
     -      1,230,485      1,230,485  
                     

2015 Quarter 1
  
Printing
  
Office Products & Furniture
  
Total
  
               
Revenues
  
$
9,916,899
  
$
6,212,973
  
$
16,129,872
  
Elimination of intersegment revenue
    
(528,377
)
  
(801,235
)
  
(1,329,612
)
Consolidated revenues
  
$
9,388,522
  
$
5,411,738
  
$
14,800,260
  
                     
Operating loss
    
(93,197
)
  
(110,743
 )  
(203,940
 )
Depreciation & amortization
    
379,643
    
22,359
    
402,002
  
Capital expenditures
    
377,301
    
70,194
    
447,495
  
Identifiable assets
    
16,633,275
    
6,805,334
    
23,438,609
  
Goodwill
    
-
    
1,230,485
    
1,230,485
  
                     
 
 
 
11
 
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) (continued)
 
A reconciliation of total segment revenue, assets and operating loss to consolidated loss before income taxes for and at the three months ended January 31, 2016 and 2015 is as follows:
 
 
Three months ended January 31,
  
    2016       2015  
Revenues:
              
Total segment revenues
$
  17,061,226    
$
16,129,872
  
Elimination of intersegment revenue
    (1,137,854
)
    
(1,329,612
)
Consolidated revenue
$
  15,923,372    
$
14,800,260
  
               
Operating loss:
              
Total segment operating loss
$
  (113,830 )  
$
(203,940
 )
Interest expense - related party
    (21,563
)
    
(20,764
)
Interest expense
    (148,744
)
    
(263,977
)
Other income
    13,765      
20,863
  
Consolidated loss before income taxes
$
  (270,372
)
  
$
(467,818
 )
               
Identifiable assets:
              
Total segment identifiable assets
$
 22,641,742    
$
23,438,609
  
Elimination of intersegment assets and assets held for sale
  
256,832
      
256,832
  
Total consolidated assets
$
 22,898,574    
$
23,695,441
  
 
 
 
12
 
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) (continued)
 

Note 9. Fair Value Measurements
 
There is a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 - Quoted market prices in active markets for identical assets or liabilities

Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3 - Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use.

The Company does not believe it is practicable to estimate the fair value of its variable interest-bearing debt with a private lender and its subordinated debt to a related party due primarily to the fact that an active market for the Company’s debt does not exist.

The term debt not discussed herein had a carrying value of approximately $2.1 million and the Company believes carrying value approximates fair value for this debt based on recent market conditions, collateral support, recent borrowings and other factors.
Cash consists principally of cash on deposit with banks. The Company's cash deposits in excess of federally insured amounts, to the extent applicable, are primarily maintained at a large well-known financial institution.

The carrying amounts of the Company's accounts receivable, accounts payable, accrued payrolls and commissions, taxes accrued and withheld and accrued expenses approximates fair value due to their short-term nature.

Goodwill and other intangible assets are measured on a non-recurring basis using Level 3 inputs. Goodwill is also subject to an annual impairment test. (see Note 10)
 
  
Note 10. Acquired Intangible Assets and Goodwill
 
The details of the Company's acquired intangible assets and goodwill, at the dates indicated, are as follows:
 
 
January 31, 2016
    
October 31, 2015
  
 
Gross
          
Gross
        
 
Carrying
    
Accumulated
    
Carrying
    
Accumulated
  
 
Amount
    
Amortization
    
Amount
    
Amortization
  
Amortizable intangible assets:
                      
Non-compete agreement
$
 1,000,000    
$
  1,000,000    
$
1,000,000
    
$
1,000,000
  
Customer relationships
    2,451,073        1,423,753      
2,451,073
      
1,393,228
  
Other
    564,946        564,946      
564,946
      
564,946
  
     4,016,019        2,988,699      
4,016,019
      
2,958,174
  
                               
Unamortizable intangible assets:
                              
Goodwill
    1,737,763        507,278      
1,737,763
      
507,278
  
    1,737,763        507,278       1,737,763       507,278  
                               
Total goodwill and other intangibles
$
  5,753,782    
$
  3,495,977    
$
5,753,782
    
$
3,465,452
  
                               
 
 
 
13
 
Champion Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) (continued)
 
Amortization expense for the three months ended January 31, 2016 and 2015 was $31,000. Customer relationships are being amortized over a period of 20 years, related to the acquisition of Syscan in 2004. The weighted average remaining life of the Company's amortizable intangible assets was approximately 4 years.
 
Estimated amortization expense for each of the following years is:
 
2016
   $
91,573
  
2017
    
122,098
  
2018
    
122,098
  
2019     122,098  
2020     122,098  
 Thereafter     447,355  
   
$
1,027,320
  
 
 
The changes in the carrying amount of goodwill and other amortizing intangibles for the three months ended January 31, 2016 were as follows:
 
Goodwill:
 
 
Printing
  
Office Products and Furniture
  
Total
  
             
Balance at October 31, 2015            
Goodwill $ 2,226,837   $ 1,230,485   $ 3,457,322  
Accumulated impairment losses   (2,226,837 )   -     (2,226,837 )
    -     1,230,485     1,230,485  
                   
Goodwill acquired three months ended January 31, 2016   -     -     -  
Impairment losses three months ended January 31, 2016   -     -     -  
                   
Balance at January 31, 2016                  
Goodwill   2,226,837     1,230,485     3,457,322  
Accumulated impairment losses   (2,226,837 )   -     (2,226,837 )
  $ -   $ 1,230,485   $ 1,230,485  
 
 
Amortizing Intangible Assets (net of amortization expense):
 
  Printing   Office Products and Furniture   Total  
             
Balance at October 31, 2015:
            
Amortizing intangible assets
 $ 354,303   $ 703,542   $ 1,057,845  
Accumulated impairment losses
   -     -     -  
    354,303     703,542     1,057,845  
                   
Amortizing intangible assets acquired three months ended January 31, 2016   -     -     -  
Impairment losses three months ended January 31, 2016   -     -     -  
Amortization expense   10,226     20,299     30,525  
                   
Balance at January 31, 2016:                  
Amortizing intangible assets
   344,077      683,243      1,027,320  
Accumulated impairment losses
   -     -     -  
  $  344,077   $  683,243   $ 1,027,320  
 
 
 
14
 
Champion Industries, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Results of Operations
 
The following table sets forth, for the periods indicated, information derived from the Consolidated Statements of Operations as a percentage of total revenues.
 
 
Three Months Ended January 31,
    2016     2015  
Revenues:
                
Printing
 $ 9,045,731      56.8
%
 $
9,388,522
    
63.4
%
Office products and office furniture
    6,877,641      43.2     5,411,738     36.6  
Total revenues
    15,923,372      100.0    
14,800,260
    
100.0
  
                         
Cost of sales:
                        
Printing
    7,110,675      44.7    
7,096,505
    
48.0
  
Office products and office furniture
    5,181,525      32.5    
3,954,772
     26.7  
Total cost of sales
   12,292,200      77.2    
11,051,277
    
74.7
  
                         
G Gross profit
   3,631,172      22.8    
3,748,983
    
25.3
  
                         
Selling, general and administrative expenses
    3,745,002      23.5    
3,952,923
    
26.7
  
                         
Loss from operations
    (113,830 )    (0.7 )  
(203,940
 )  
(1.4
 )
                         
Interest expense - related party    (21,563 )    (0.1 )   (20,764 )   (0.1 )
Interest expense    (148,744 )    (1.0 )  
(263,977
 )   (1.8 )
Other income
    13,765      0.1    
20,863
     0.1  
                         
Loss before taxes
   (270,372 )    (1.7 )  
(467,818
 )   (3.2 )
Income tax (expense) benefit
   -      -    
-
    
-
  
Net loss
 $  (270,372
)
    (1.7
)%
 $
(467,818
 )   (3.2
)%
 

 
15
 
Champion Industries, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
 
 
Three Months Ended January 31, 2015 Compared to Three Months Ended January 31, 2014
 
 
Revenues
 
Total revenues increased 7.6% in the first quarter of fiscal 2016 compared to the same period in 2015, to $15.9 million from $14.8 million.

Printing revenue for the first quarter of fiscal 2016 decreased 3.7% to $9.0 million when compared to the first quarter of fiscal 2015 total printing sales of $9.4 million; the decreases in printing revenue was principally due to decreased demand for sheet products across all of the Company’s markets and divisions. Through implementation of Management’s plan of action, we anticipate printing sales for fiscal 2016 to be in line with fiscal 2015, at a minimum.

Office products and office furniture revenue increased 27.1% in the first quarter of fiscal 2016 to $6.9 million from $5.4 million in the first quarter of fiscal 2015. The increase in the office products and office furniture revenues were mainly attributable to increases in sales at our Capitol Business Interiors (“CBI”) divisions. This unit sells office furniture and design services associated with office design projects of both private and governmental entities. This unit’s jobs are typically few in quantity but high in dollar sales volume. The CBI division does have a significant backlog and we do anticipate sales growth for fiscal 2016 when compared to the prior year. The increases in the Office Supply and Office Furniture segment from our CBI divisions were partially offset by decreases in office supply sales. While we do anticipate sales increases for this segment as a whole for fiscal 2016 when compared to 2015, the office supply sales within this segment are expected to have year over year decreases. Management is developing plans to stabilize office supply sales and reverse the declining trend.
 
 
Cost of Sales
 
Cost of sales increased 11.2% in the first quarter of fiscal 2016 to $12.3 million from $11.1 million in the same period of 2015. Cost of sales increased to 77.2% as a percentage of sales in the fiscal first quarter of 2016 compared to 74.7% during the same period last year.

Printing cost of sales in the first quarter of fiscal 2016 increased over the prior year and as a percentage of printing sales from 75.6% in 2015 to 78.6% in 2016. This increase in cost represents several factors including a larger mix of high volume lower margin printing accounts, pricing pressure from competition, a larger mix of sublet work, and relatively flat manufacturing costs allocated to cost of goods sold.

Office products and office furniture cost of sales increased $1.2 million in the first quarter of fiscal 2016 when compared to the same period in 2015. As a percentage of office products and furniture sales, cost of sales increased to 75.3% in 2016 from 73.1% in 2015. This increase in cost of goods sold for the Office Products and Office Furniture segment was due to higher sales and a larger portion of sales derived from our CBI divisions which typically have lower gross profit margins than other business lines within this segment.
 
 
Operating Expenses
 
In the first quarter of 2016, selling, general and administrative (“SG&A”) expenses decreased to $3.7 million from $4.0 million in 2015, a decrease of $0.2 million or 5.3%. As a percentage of total sales, SG&A decreased on a quarter to quarter basis to 23.5% in 2016 from 26.7% in 2015. The decrease in SG&A was mainly from decreased SG&A within the printing segment and higher total sales overall. The decrease in cost was due to decreases in several SG&A items including payroll, insurance, and other miscellaneous costs.
 
 
16
 
Champion Industries, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
 
Segment Operating (Loss) Income
 
The printing segment reported an operating loss in the first quarter of 2016 of $0.2 million compared to an operating loss of $0.1 million in the first quarter of 2015. The increase in operating loss for the first quarter compared to 2015 was from lower printing revenue and gross profit margins. The decrease in segment profitability was attributable to factors discussed in the revenue, costs of sales, and SG&A sections.

The office products and office furniture segment reported operating income of $0.1 million in the first quarter of 2016 compared to an operating loss of $0.1 million in the first quarter of 2015. The increase in profitability for this segment was due to increased furniture and design sales at our CBI divisions. This increase in profitability from our CBI divisions was partially offset by a decrease in profitability from other divisions within this segment.

Loss from Operations
 
The loss from operations in the first quarter of 2016 was $0.1 million compared to a loss from operations of $0.2 million in the first quarter of 2015. The decrease in operating loss is the result of the factors previously discussed.

Other Income (Expense)
 
Other expense decreased $0.1 million to $0.2 million in the fiscal first quarter of 2016 from $0.3 million in the same period of 2015. This line item is mainly comprised of interest expense and other income. The $0.1 million decrease is principally due to the Company no longer amortizing a $0.5 million premium associated with its October 2013 Credit Agreement into interest expense. This premium was paid at maturity in April 2015.
 
Income Taxes
 
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers a multitude of factors in assessing the utilization of its deferred tax assets including the reversal of deferred tax liabilities, projected future taxable income and other assessments, which may have an impact on financial results.

The Company reassessed its previous determination regarding its valuation allowance and although the Company has had positive operating trends, it was determined that a full valuation allowance was still warranted at January 31, 2016. The amount of deferred tax asset considered realizable could be adjusted in future periods and such adjustments may be material to the Consolidated Financial Statements.

The Company’s effective tax rate for the three months ended January 31, 2016 and 2015 was 0.0%. The effective income tax rate approximates the combined federal and state, net of federal benefit, statutory income tax rate, impacted by increases or decreases in the valuation allowance for deferred tax assets.
 
Net Loss
 
The net loss for the first quarter of 2016 was $0.3 million compared to a net loss of $0.5 million in the first quarter of 2015. Basic and diluted loss per share for the three months ended January 31, 2016 and 2015 were a loss of $0.02 and of $0.04 per common share, respectively.
 
 
17
 
Champion Industries, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
 
 
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 contracts; therefore, to the extent permitted by competition, it has the ability to pass through to its customers most cost increases resulting from inflation, if any. In addition, the Company is not particularly energy dependent; therefore, an increase in energy costs should not have a significant impact on the Company.

Our operating results depend on the relative strength of the economy on both a regional and national basis.
 
 
Seasonality
 
Historically, the Company has experienced a greater portion of its profitability 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
 
 
Statement of Cash Flows
 
Net cash used in operations for the three months ended January 31, 2016, was $0.3 million compared to net cash provided by operations of $0.8 million during the same period in 2015. This change in net cash from operations is due primarily to changes in assets and liabilities, principally timing of collection of accounts receivable and payment of accounts payable. We monitor our working capital closely and take measures to ensure we are collecting accounts in a reasonable amount of time and paying our payables likewise.

Net cash used in investing activities for the three months ended January 31, 2016 was $0.1 million compared to $0.4 million during the same period in 2015. The net cash used in investing activities during the first three months of 2016 and 2015 were primarily related to the purchases of equipment and vehicles. The Company replaces, repairs, or extends the life of its equipment as needed and as funds are available.

Net cash used in financing activities for the three months ended January 31, 2016 was $17,000 compared to $0.8 million during the same period in 2015. In 2016 and 2015 the net cash used in financing activities primarily related to payments of term debt, including repayment short-term loans used to fund large furniture projects. In 2016 the Company saw an increase in furniture projects that it chose to finance which partially offset scheduled principal payments on long-term debt as well as repayment of debt incurred for previous furniture project financing.
 
 
18
 
Champion Industries, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
 
Liquidity and Capital Resources
 
As of January 31, 2016, the Company had cash of $39,000. This is compared to $0.5 million at the Company’s fiscal year end October 31, 2015. This change is strictly timing and is dependent on collection of accounts receivable and subsequent disbursement to vendors. The Company has been able to successfully operate under this condition for almost two years, and during this time has maintained stability in payments to its vendors and thus restored its good credit standing. This has been accomplished by communicating with our vendors and establishing consistency in payment of trade payables as well as monitoring collections of trade receivables. We anticipate being able to continue this so long as we are able to keep operating losses in line with prior years, at a minimum. In the near term we believe we will be able to accomplish this and thus continue our recovery efforts.

At January 31, 2016 the Company had working capital of $1.6 million. This working capital figure includes $2.5 million in debt owed to the Company’s Chairman of the Board of Directors that it anticipates converting to preferred equity in the near term. For more information on this conversion, please see Note 5 to the Consolidated Financial Statements.

The Company's October 2013 Credit Agreement expires April 1, 2017. At that time the Company will be required to repay $7.9 million to its Secured Lender. The Company does not currently have a concrete plan to repay or otherwise refinance this debt as we are focusing on operations for fiscal 2016 before looking for longer term financing solutions. Our intent is to improve operations and refinance this debt on a long-term basis. In the event we are unable to do so, we do have options including asset sales to repay or substantially reduce debt making the debt potentially more attractive for financial institutions.

We believe we have the capacity to continue meeting our obligations and maintain a good credit standing as we continue to rebuild, but there are challenges associated with this in the foreseeable future; including:
 
·  
Continual management of our receipts and disbursements to improve and maintain days sales outstanding for trade receivables and days outstanding for trade payables.
·  
Carefully monitor capital expenditures to assure cash flow is maximized.
·  
Funding necessary capital expenditures to assure the Company remains competitive and positions itself for operations beyond one year.
·  
Operating the company on a working capital basis without a revolving line of credit.
 
The Company has historically used cash generated from operating activities and debt to finance capital expenditures. Management plans to continue making required investments in equipment based on available liquidity.
 
 
 
 
19
Champion Industries, Inc. and Subsidiaries
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (continued)
 

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.
 
 
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, changes in business strategy or development plans and other factors referenced in this Form 10-Q, including without limitations under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” 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.
 
 
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk

The Company's debt is primarily variable rate debt and therefore the interest expense would fluctuate based on interest volatility. The Company is exposed to market risk in interest rates primarily related to our interest bearing debt based on the prime rate. The Company does not currently utilize derivative financial instruments to manage market risk.
 
ITEM 4. Controls and Procedures
 
(a) Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls were effective as of the end of the period covered by this quarterly report.
 
(b) Changes in Internal Controls. There have been no changes in our internal controls over financial reporting that occurred during the first three months of fiscal year 2016 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
 
 
 
20
 
PART II - OTHER INFORMATION
 
 
 
Item 1. Legal Proceedings
 
From time to time, our Company is involved in litigation relating to claims arising out of its operations in the normal course of business. We maintain insurance coverage against certain types of potential claims in an amount which we believe to be adequate, but there is no assurance that such coverage will in fact cover, or be sufficient to cover, all potential claims. The Company is involved in various legal proceedings or claims pending against the Company that if unfavorably resolved may have a material adverse effect on our financial condition or results of operations (see other disclosure herein).
 
 
Item 1A. Risk Factors
 
There were no material changes in risk factors from disclosures previously reported in our annual report on Form 10-K for the fiscal year ended October 31, 2015.
 
 
Item 3. Defaults upon Senior Securities
 
None.
 
Item 4. Mine Safety Disclosures
 
Not applicable.
 
Item 5. Other Information
 
None.
 
Item 6. Exhibits
 
 
 
a)
Exhibits:
     
(31.1)
Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley act of 2002 - Adam M. Reynolds
  
Exhibit 31.1-p1
(31.2)
Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley act of 2002 - Justin T. Evans
  
Exhibit 31.2-p1
(32)
Adam M. Reynolds and Justin T. Evans Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley act of 2002
  
Exhibit 32   -p1
       
     
 
21
 
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: March 16, 2016
/s/ Adam M. Reynolds
 
Adam M. Reynolds
 
Chief Executive Officer
   
   
Date: March 16, 2016
/s/ Justin T. Evans
 
Justin T. Evans
 
Senior Vice President and Chief Financial Officer
 
 
22
 


Exhibit 31.1
 
 
PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
 
 
 
 
I, Adam M. Reynolds, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Champion Industries, Inc.;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) 
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: March 16, 2016
 
/s/ Adam M. Reynolds 
Adam M. Reynolds
Chief Executive Officer


Exhibit 31.2
 
 
PRINCIPAL FINANCIAL OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
 
 
 
 
I, Justin T. Evans, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Champion Industries, Inc.;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: March 16, 2016
 
/s/ Justin T. Evans  
Justin T. Evans
Senior Vice President & Chief Financial Officer


Exhibit 32



CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Champion Industries, Inc. (the “Company”) on Form 10-Q for the period ending January 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Adam M. Reynolds and Justin T. Evans, Chief Executive Officer and Chief Financial Officer, respectively, of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

·  
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

·  
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


By: /s/Adam M. Reynolds    
Adam M. Reynolds
Chief Executive Officer


By: /s/ Justin T. Evans  
       Justin T. Evans
       Senior Vice President and Chief Financial Officer
 
A signed copy of this written statement required by section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: March 16, 2016



v3.3.1.900
Document and Entity Information
 3 Months Ended
Jan. 31, 2016
shares
Document and Entity Information [Abstract]  
Entity Registrant Name CHAMPION INDUSTRIES INC
Entity Central Index Key 0000019149
Current Fiscal Year End Date --10-31
Entity Well-known Seasoned Issuer No
Entity Voluntary Filers No
Entity Current Reporting Status Yes
Entity Filer Category Smaller Reporting Company
Entity Common Stock, Shares Outstanding 11,299,528
Document Fiscal Year Focus 2016
Document Fiscal Period Focus Q1
Document Type 10-Q
Amendment Flag false
Document Period End Date Jan. 31, 2016


v3.3.1.900
Consolidated Balance Sheets (Unaudited) - USD ($)
Jan. 31, 2016
Oct. 31, 2015
Current assets:    
Cash and cash equivalents $ 39,381 $ 540,909
Accounts receivable, net of allowance of $548,000 and $531,000 9,255,926 8,651,745
Inventories 3,533,084 3,568,665
Other current assets 1,057,153 890,165
Current portion assets held for sale 256,832 256,832
Total current assets 14,142,376 13,908,316
Property and equipment, at cost:    
Land 1,254,195 1,254,195
Buildings and improvements 4,683,225 4,676,290
Machinery and equipment 34,208,104 34,130,233
Equipment under capital lease 72,528 72,528
Furniture and fixtures 3,739,161 3,734,959
Vehicles 2,696,061 2,756,086
Property and equipment, gross 46,653,274 46,624,291
Less accumulated depreciation (40,175,916) (39,911,447)
Property and equipment, net 6,477,358 6,712,844
Goodwill 1,230,485 1,230,485
Other intangibles, net of accumulated amortization 1,027,320 1,057,845
Deferred financing costs 7,720 3,040
Other assets 13,315 13,996
Total noncurrent assets 2,278,840 2,305,366
Total assets 22,898,574 22,926,526
Current liabilities:    
Accounts payable 4,963,189 4,730,286
Accrued payroll and commissions 441,508 528,855
Taxes accrued and withheld 655,317 635,131
Accrued expenses 1,857,392 1,763,929
Debt discount (Note 5) 0 0
Notes payable (Note 5) 2,140,323 1,929,358
Notes payable - related party (Note 5) [1] 2,500,000 2,500,000
Capital lease obligations (Note 5) 16,091 15,852
Total current liabilities 12,573,820 12,103,411
Long-term debt, net of current portion:    
Notes payable (Note 5) 8,572,667 8,796,542
Capital lease obligations (Note 5) 8,414 12,528
Total liabilities 21,154,901 20,912,481
Shareholders' equity:    
Additional paid-in capital 24,279,179 24,279,179
Retained deficit (33,835,034) (33,564,662)
Total shareholders' equity 1,743,673 2,014,045
Total liabilities and shareholders' equity 22,898,574 22,926,526
Class A Voting Shares [Member]    
Shareholders' equity:    
Common stock 11,299,528 11,299,528
Class B Nonvoting stock [Member]    
Shareholders' equity:    
Common stock $ 0 $ 0
[1] On June 15, 2015 the Company's Board of Directors approved the conversion of the Company's $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company's income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%. This conversion will reduce the Company's liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company's annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company's annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved. This conversion is pending a shareholder vote to amend the Company's Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.


v3.3.1.900
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
Jan. 31, 2016
Oct. 31, 2015
Current assets:    
Accounts receivable, allowance $ 548,000 $ 531,000
Class A voting shares [Member]    
Shareholders' equity:    
Common stock, par value (in dollars per share) $ 1 $ 1
Common stock, shares authorized (in shares) 20,000,000 20,000,000
Common stock, shares issued (in shares) 11,299,528 11,299,528
Common stock, shares outstanding (in shares) 11,299,528 11,299,528
Class B Nonvoting stock [Member]    
Shareholders' equity:    
Common stock, par value (in dollars per share) $ 1 $ 1
Common stock, shares authorized (in shares) 5,000,000 5,000,000
Common stock, shares issued (in shares) 0 0
Common stock, shares outstanding (in shares) 0 0


v3.3.1.900
Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Revenues:    
Printing $ 9,045,731 $ 9,388,522
Office products and office furniture 6,877,641 5,411,738
Total revenues 15,923,372 14,800,260
Cost of sales:    
Printing 7,110,675 7,096,505
Office products and office furniture 5,181,525 3,954,772
Total cost of sales 12,292,200 11,051,277
Gross profit 3,631,172 3,748,983
Selling, general and administrative expenses 3,745,002 3,952,923
Loss from operations (113,830) (203,940)
Interest expense - related party (21,563) (20,764)
Interest expense (148,744) (263,977)
Other 13,765 20,863
Total other income (expenses) (156,542) (263,878)
Loss before income taxes (270,372) (467,818)
Income tax (benefit) expense 0 0
Net loss $ (270,372) $ (467,818)
Loss per share:    
Basic and diluted loss (in dollars per share) $ (0.02) $ (0.04)
Weighted average shares outstanding:    
Basic and diluted (in shares) 11,300,000 11,300,000


v3.3.1.900
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Cash flows from operating activities:    
Net loss $ (270,372) $ (467,818)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:    
Depreciation and amortization 411,443 402,002
(Gain) on sale of assets (13,375) 0
Allowance for doubtful accounts 0 3,843
Deferred financing costs / debt discount 5,200 127,262
Changes in assets and liabilities:    
Accounts receivable (604,181) 443,871
Inventories 35,581 (344,616)
Other current assets (166,988) (252,044)
Accounts payable 232,902 711,283
Accrued payroll and commissions (87,347) (1,633)
Taxes accrued and withheld 20,186 59,325
Accrued expenses 93,463 71,907
Other liabilities 0 0
Net cash (used in) provided by operating activities (343,488) 753,382
Cash flows from investing activities:    
Purchase of property and equipment (166,796) (447,495)
Proceeds from sale of fixed assets 34,740 0
Change in other assets (9,199) 0
Net cash used in investing activities (141,255) (447,495)
Cash flows from financing activities:    
Proceeds from term debt 1,045,928 244,744
Principal payments on term debt (1,062,713) (1,014,063)
Net cash used in financing activities (16,785) (769,319)
Net decrease in cash and cash equivalents (501,528) (463,432)
Cash and cash equivalents at beginning of period 540,909 818,438
Cash and cash equivalents at end of period $ 39,381 $ 355,006


v3.3.1.900
Basis of Presentation, Business Operations and Recent Accounting Pronouncements
 3 Months Ended
Jan. 31, 2016
Basis of Presentation, Business Operations and Recent Accounting Pronouncements [Abstract]  
Basis of Presentation, Business Operations and Recent Accounting Pronouncements
Note 1. Basis of Presentation, Business Operations and Recent Accounting Pronouncements
 
The foregoing financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the Securities and Exchange Commission for interim financial reporting. The preparation of the financial statements in accordance with GAAP 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 GAAP. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended October 31, 2015, and related notes thereto contained in Champion Industries, Inc.’s Form 10-K filed January 29, 2016. The accompanying interim financial information is unaudited. The results of operations for the period are not necessarily indicative of the results to be expected for the full year. The balance sheet information as of October 31, 2015 was derived from our audited financial statements.
 
Reclassifications and Revisions
 
Certain prior-year amounts have been reclassified to conform to the current year financial statement presentation.
 
Newly Issued Accounting Standards
 
Effective July 1, 2009, changes to the ASC are communicated through an ASU. As of January 31, 2016, the FASB has issued ASU’s 2009-01 through 2016-01. The Company reviewed each ASU and determined that they will not have a material impact on the Company’s financial position, results of operations or cash flows, other than related disclosures to the extent applicable.
 
In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items. The Company adopted ASU 2015-01 in December, 2015. This amendment did not have a material impact on the Company's financial position, results of operation, or cash flows, but will have an impact on related presentation and disclosure to the extent applicable in future periods.

In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 provides guidance on simplifying the measurement of inventory. The current standard is to measure inventory at lower of cost or market; where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 updates this guidance to measure inventory at the lower of cost or net realizable value; where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. The Company adopted ASU 2015-11 in December, 2015. This amendment did not have and is not expected to have a material impact on the Company's financial position, results of operation, or cash flows given the nature of the Company’s business and its relatively short inventory holding period.
 
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). ASU 2015-17 updates guidance on classifying deferred tax assets and liabilities from current and noncurrent to all noncurrent when a classified balance sheet is presented. The netting of deferred tax assets and liabilities to present a single amount will remain with this update. The Company will adopt ASU 2015-17 in December, 2016. This amendment is not expected to have a material impact on the Company's financial position, results of operation, or cash flows, but will impact presentation of such deferred tax assets and liabilities to the extent applicable.


v3.3.1.900
Earnings per Share
 3 Months Ended
Jan. 31, 2016
Earnings per Share [Abstract]  
Earnings per Share
Note 2. Earnings per Share
 
Basic earnings per share is computed by dividing net income by the weighted average shares of common stock outstanding for the period and excludes any dilutive effects of stock options and warrants. 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 and warrants using the treasury stock method. There was no dilutive effect for the three months ended January 31, 2016 and 2015.


v3.3.1.900
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition
 3 Months Ended
Jan. 31, 2016
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition [Abstract]  
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition
Note 3. Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition
 
Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable are stated at the amount billed to customers. Accounts receivable are ordinarily due 30 days from the invoice date. The Company encounters risks associated with sales and the collection of the associated accounts receivable. As such, the Company records a provision for accounts receivable that are considered to be uncollectible and performs a comprehensive assessment periodically utilizing a variety of historical information and specific account review. The allowance for doubtful accounts is assessed periodically based on events that may change the rate such as a significant increase or decrease in collection performance and timing of payments as well as the calculated total exposure in relation to the allowance. Periodically, the Company compares the identified credit risks with the allowance that has been established using historical experience and adjusts the allowance accordingly.
 
Revenue Recognition: Revenues are recognized when products are shipped or ownership is transferred and when services are rendered to customers. The Company acts as a principal party in sales transactions, assumes title to products and assumes the risks and rewards of ownership including risk of loss for collection, delivery or returns. The Company typically recognizes revenue for the majority of its products upon shipment to the customer and transfer of title. Under agreements with certain customers, custom forms may be stored by the Company for future delivery. In these situations, the Company may receive a logistics and warehouse management fee for the services provided. In these cases, delivery and bill schedules are outlined with the customer and product revenue is recognized when manufacturing is complete and the product is received into the warehouse, title transfers to the customer, the order is invoiced and there is reasonable assurance of collectability. Since the majority of products are customized, product returns are not significant. Therefore, the Company records sales on a gross basis. Revenue generally is recognized net of any taxes collected from customers and subsequently remitted to government authorities.


v3.3.1.900
Inventories
 3 Months Ended
Jan. 31, 2016
Inventories [Abstract]  
Inventories
Note 4. Inventories
 
Inventories are stated at the lower of first-in, first-out cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Manufactured finished goods and work in process inventories include material, direct labor and overhead based on standard costs, which approximate actual costs.

At the dates indicated, inventories consisted of the following:

  
January 31,
2016
  
October 31,
2015
 
Printing:
      
Raw materials
 
$
 1,190,701  
$
1,111,203
 
Work in process
   647,042   
599,289
 
Finished goods
   871,252   
824,689
 
Office products and office furniture
  824,089   1,033,484 
  
$
3,533,084  
$
3,568,665
 


v3.3.1.900
Debt
 3 Months Ended
Jan. 31, 2016
Debt [Abstract]  
Debt
Note 5. Debt
 
At the dates indicated, debt consisted of the following:
 
 
January 31,
2016
  
October 31,
2015
 
Term Note A dated October 7, 2013, due in monthly installments of $50,000
plus interest payments equal to the prime rate of interest plus 2% maturing
April 1, 2017, collateralized by substantially all of the assets of the Company.
$ 8,600,000  $ 8,750,000 
Installment notes payable to banks, due in monthly installments plus interest at
rates approximating the bank’s prime rate or the prime rate subject to various floors
maturing in various periods ranging from February 2016 - January 2018, collateralized
by equipment and vehicles.
 563,444   634,998 
Notes payable to shareholders. The shareholder note of $2.5 million plus all accrued
interest was initially due in one balloon payment in September 2014; pursuant to Term
Note A, the maturity was adjusted to April 2015. The interest is accrued at a rate of 3.50%.
See discussion on next page for more details. (1)
 2,500,000   2,500,000 
Note payable to a bank, due April 2016, including interest accrued at 5.25%,
collateralized by specific accounts receivable of the Company. (2)
 980,000    750,000 
Capital lease obligation for printing equipment at an imputed interest rate of 6.02% per annum  24,505   28,380 
Note, payable to a bank in monthly installment of $8,441 including interest at 5.00%
collateralized by equipment
 430,057   443,208 
Note, payable to a bank in monthly installments of $4,197 including an imputed
interest rate of 0.0% collateralized by equipment
 139,489    147,694 
   13,237,495   13,254,280 
        
Less current portion long-term debt  1,160,323   1,179,358 
Less short-term notes payable to related party (1) 2,500,000   2,500,000 
Less current portion obligation under capital lease   16,091   15,852 
Less short-term debt (2)  980,000    750,000 
Long-term debt, net of current portion and capital lease obligation $8,581,081  $ 8,809,070 
        
        
Long-term debt, net of current portion $8,572,667  $ 8,796,542 
Long-term capital lease obligation  8,414   12,528 
Current portion of long-term debt   1,160,323   1,179,358 
Short-term notes payable to related party (1)  2,500,000   2,500,000 
Short-term debt (2)  980,000    750,000 
Current portion of capital lease obligation  16,091   15,852 
Total indebtedness$ 13,237,495  $ 13,254,280 
 
(1) On June 15, 2015 the Company’s Board of Directors approved the conversion of the Company’s $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company’s income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%.

This conversion will reduce the Company’s liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company’s annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company’s annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved.

This conversion is pending a shareholder vote to amend the Company’s Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.
 
(2) These notes are short-term borrowings associated with large furniture projects that are on terms of 120 days or less. A portion of these borrowings were subsequently paid upon collection of the collateral in February 2016.


v3.3.1.900
Income taxes
 3 Months Ended
Jan. 31, 2016
Income taxes [Abstract]  
Income taxes
Note 6. Income taxes
 
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers a multitude of factors in assessing the utilization of its deferred tax assets including the reversal of deferred tax liabilities, projected future taxable income and other assessments, which may have an impact on financial results.

The Company reassessed its previous determination regarding its valuation allowance and although the Company has had positive operating trends, it was determined that a full valuation allowance was still warranted at January 31, 2016. The amount of deferred tax asset considered realizable could be adjusted in future periods and such adjustments may be material to the Consolidated Financial Statements.

The Company’s effective tax rate for the three months ended January 31, 2016 and 2015 was 0.0%. The effective income tax rate approximates the combined federal and state, net of federal benefit, statutory income tax rate, impacted by increases or decreases in the valuation allowance for deferred tax assets.


v3.3.1.900
Commitments and Contingencies
 3 Months Ended
Jan. 31, 2016
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
Note 7. Commitments and Contingencies
 
The nature of the Company’s business results in a certain amount of claims, litigation, investigations, and other legal and administrative cases and proceedings, all of which are considered incidental to the normal conduct of business. When the Company determines it has meritorious defenses to the claims asserted, it vigorously defends itself. The Company will consider settlement of cases when, in Management’s judgment, it is in the best interests of both the Company and its shareholders to do so.

The Company periodically assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. The Company would accrue a loss on legal contingencies in the event the loss is deemed probable and reasonably estimable. The accrual is adjusted as appropriate to reflect any relevant developments regarding the legal contingency. In the event of a legal contingency where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established.

In certain cases, exposure to loss may exist in excess of the accrual to the extent such loss is reasonably possible, but not probable. Management believes an estimate of the aggregate of reasonably possible losses, in excess of amounts accrued, for current legal proceedings not covered by insurance is not greater than $0.4 million at January 31, 2016 and may be substantially lower than this amount. Any estimate involves significant judgment, given the varying stages of the proceedings (including cases in preliminary stages), as well as numerous unresolved issues that may impact the outcome of a proceeding. Accordingly, Management’s estimate will change from time-to-time, and actual losses may be more or less than the current estimate. The current loss estimate excludes legal and professional fees associated with defending such proceedings. These fees are expensed as incurred and may be material to the Company's Consolidated Financial Statements in a particular period.

While the final outcome of legal proceedings is inherently uncertain, based on information currently available, advice of counsel, and available insurance coverage, Management believes that there is no accrual for legal contingencies required at this time. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these matters, if unfavorable, may be greater than the current range of estimates discussed above and may be material to the Company’s Consolidated Financial Statements in a particular period.
 
In accordance with the provisions of the Restated Credit Agreement, the Company issued $0.001 per share warrants issued for up to 30% (on a post-exercise basis) of the outstanding common stock of the Company in the form of non-voting Class B common stock and associated Investor Rights Agreement for the benefit of the Previous Secured Lenders under the Restated Credit Agreement. The warrants expire after October 19, 2017.
 
The Warrants entitle the Holders thereof to purchase that number of shares of Company Class B Common Stock equal to thirty percent (30%) of the then issued and outstanding Common Stock of the Company, on a fully diluted, post-exercise basis. Based on the 11,299,528 shares of Company Common Stock currently issued and outstanding, exercise in full of the Warrants would result in the Company’s issuance of an additional 4,842,654 shares to the Warrant Holders. In the event a greater number of issued and outstanding common shares exist at the time of option exercise, a greater number of options of shares of Class B Common Stock would be issuable. The Previous Secured Lenders assigned the warrants to Marshall T. Reynolds in consideration for his personal guaranty and stock pledge and security agreement to assist in facilitating the consummation of the October 2013 Credit Agreement. The Previous Secured Lenders, as Warrant Holders, were subject to the ownership limitations of the Bank Holding Company Act of 1956, as amended and regulations promulgated thereunder (the "Bank Holding Company Act") which placed limitations on their ability to control other companies. The Previous Secured Lenders/Warrant Holders requested, and the Company agreed to create a non-voting class of Common Stock, to be designated as "Class B Common Stock". The Warrants constitute the right to purchase Class B Common Stock. The warrants are exercisable solely for shares of Class B Common Stock. However, because any Class B Common Stock issuable pursuant to the Warrants may be sold by the Warrant Holders to entities not subject to the Bank Holding Company Act, or because one or more Warrant Holders may be permitted to own a limited number of voting shares of Company Class A Common Stock, the articles of amendment provide that those shares of Class B Common Stock are convertible into shares of Class A Common Stock, and vice versa, without charge. Marshall T. Reynolds, as the current Warrant Holder is entitled to convert Class B Common Shares into shares of Class A Common Stock.
 
As of January 31, 2016 the Company had contractual obligations in the form of leases and debt as follows:
 
 
Payments Due by Fiscal Year
Contractual Obligations:
2016
 
2017
 
2018
 
2019
 2020 
Residual
   Total 
               
Non-cancelable operating leases
$
377,271
 
$
423,949
 
$
334,642
 
$
230,098 $77,010 
$
32,673
 
$
1,475,643
 
                      
Term debt
 2,029,884  
8,344,299
  138,654  
97,644
  98,352  
4,157
  10,712,990 
                      
Obligations under capital lease 11,977  12,528  -  -  -  -  24,505 
                      
Notes payable - related party (1) 2,500,000  -  -  -  -  -  2,500,000 
                      
 
$
4,919,132
 
$
8,780,776
 
$
473,296
 
$
327,742
 $175,362 
$
36,830
 
$
14,713,138
 
 
(1) On June 15, 2015 the Company’s Board of Directors approved the conversion of the Company’s $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company’s income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%.
 
This conversion will reduce the Company’s liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company’s annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company’s annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved.
 
This conversion is pending a shareholder vote to amend the Company’s Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.


v3.3.1.900
Industry Segment Information
 3 Months Ended
Jan. 31, 2016
Industry Segment Information [Abstract]  
Industry Segment Information
Note 8. Industry Segment Information
 
The Company operates principally in two industry segments organized on the basis of product lines: the production, printing and sale, principally to commercial customers, of printed materials (including brochures, pamphlets, reports, tags, continuous and other forms) and the sale of office products and office furniture including interior design services.

The Company reports segment information in a manner consistent with the way that our management, including our chief operating decision maker, the Company’s Chief Executive Officer, assesses performance and makes decisions regarding allocation of resources in accordance with the Segment Disclosures Topic of the ASC.

Our Financial Reporting systems present various data, which is used to operate and measure our operating performance. Our chief operating decision maker utilizes various measures of a segment’s profit or loss including historical internal reporting measures and reporting measures based on product lines with operating income or loss as the key profitability measure within the segment. Product line reporting is the basis for the organization of our segments and is the most consistent measure used by the chief operating decision maker and conforms with the use of segment operating income or loss that is the most consistent with those used in measuring like amounts in the Consolidated Financial Statements.

The identifiable assets are reflective of non-GAAP assets reported on the Company's internal balance sheets and are typically adjusted for taxes and other items excluded for segment reporting. The assets are classified based on the primary functional segment category as reported on the internal balance sheets. Therefore the actual segment assets may not directly correspond with the segment operating loss reported herein. The Company had certain assets classified as held for sale at January 31, 2016 and 2015 of $256,832. These assets were part of the printing segment prior to the reclassification as assets held for sale. The total assets reported on the Company's balance sheets as of January 31, 2016 and January 31, 2015 were $22,898,574 and $23,695,441, respectively. The identifiable assets reported below represent $22,641,742 and $23,438,609 at January 31, 2016 and 2015, respectively.

The table below presents information about reported segments for the three months ended January 31:
 
2016 Quarter 1
 
Printing
 
Office Products & Furniture
 
Total
 
        
Revenues
 
$
 9,549,752 
$
 7,511,474 
$
 17,061,226 
Elimination of intersegment revenue
   (504,021
)
  (633,833
)
  (1,137,854
)
Consolidated revenues
 
$
 9,045,731 
$
 6,877,641 
$
 15,923,372 
           
Operating (loss) income
   (218,669)   104,839   (113,830)
Depreciation & amortization
   389,804   21,639   411,443 
Capital expenditures
   151,235   15,561   166,796 
Identifiable assets
  15,596,719   7,045,023  22,641,742 
Goodwill
  -   1,230,485   1,230,485 
           

2015 Quarter 1
 
Printing
 
Office Products & Furniture
 
Total
 
        
Revenues
 
$
9,916,899
 
$
6,212,973
 
$
16,129,872
 
Elimination of intersegment revenue
  
(528,377
)
 
(801,235
)
 
(1,329,612
)
Consolidated revenues
 
$
9,388,522
 
$
5,411,738
 
$
14,800,260
 
           
Operating loss
  
(93,197
)
 
(110,743
) 
(203,940
)
Depreciation & amortization
  
379,643
  
22,359
  
402,002
 
Capital expenditures
  
377,301
  
70,194
  
447,495
 
Identifiable assets
  
16,633,275
  
6,805,334
  
23,438,609
 
Goodwill
  
-
  
1,230,485
  
1,230,485
 
           
 
A reconciliation of total segment revenue, assets and operating loss to consolidated loss before income taxes for and at the three months ended January 31, 2016 and 2015 is as follows:
 
 
Three months ended January 31,
 
   2016    2015 
Revenues:
       
Total segment revenues
$
 17,061,226  
$
16,129,872
 
Elimination of intersegment revenue
  (1,137,854
)
  
(1,329,612
)
Consolidated revenue
$
 15,923,372  
$
14,800,260
 
        
Operating loss:
       
Total segment operating loss
$
 (113,830)  
$
(203,940
)
Interest expense - related party
  (21,563
)
  
(20,764
)
Interest expense
  (148,744
)
  
(263,977
)
Other income
  13,765   
20,863
 
Consolidated loss before income taxes
$
 (270,372
)
 
$
(467,818
)
        
Identifiable assets:
       
Total segment identifiable assets
$
22,641,742  
$
23,438,609
 
Elimination of intersegment assets and assets held for sale
 
256,832
   
256,832
 
Total consolidated assets
$
22,898,574  
$
23,695,441
 


v3.3.1.900
Fair Value Measurements
 3 Months Ended
Jan. 31, 2016
Fair Value Measurements [Abstract]  
Fair Value Measurements
Note 9. Fair Value Measurements
 
There is a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 - Quoted market prices in active markets for identical assets or liabilities

Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3 - Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use.

The Company does not believe it is practicable to estimate the fair value of its variable interest-bearing debt with a private lender and its subordinated debt to a related party due primarily to the fact that an active market for the Company’s debt does not exist.

The term debt not discussed herein had a carrying value of approximately $2.1 million and the Company believes carrying value approximates fair value for this debt based on recent market conditions, collateral support, recent borrowings and other factors.
Cash consists principally of cash on deposit with banks. The Company's cash deposits in excess of federally insured amounts, to the extent applicable, are primarily maintained at a large well-known financial institution.

The carrying amounts of the Company's accounts receivable, accounts payable, accrued payrolls and commissions, taxes accrued and withheld and accrued expenses approximates fair value due to their short-term nature.

Goodwill and other intangible assets are measured on a non-recurring basis using Level 3 inputs. Goodwill is also subject to an annual impairment test. (see Note 10)


v3.3.1.900
Acquired Intangible Assets and Goodwill
 3 Months Ended
Jan. 31, 2016
Acquired Intangible Assets and Goodwill [Abstract]  
Acquired Intangible Assets and Goodwill
Note 10. Acquired Intangible Assets and Goodwill
 
The details of the Company's acquired intangible assets and goodwill, at the dates indicated, are as follows:
 
 
January 31, 2016
  
October 31, 2015
 
 
Gross
     
Gross
    
 
Carrying
  
Accumulated
  
Carrying
  
Accumulated
 
 
Amount
  
Amortization
  
Amount
  
Amortization
 
Amortizable intangible assets:
           
Non-compete agreement
$
1,000,000  
$
 1,000,000  
$
1,000,000
  
$
1,000,000
 
Customer relationships
  2,451,073    1,423,753   
2,451,073
   
1,393,228
 
Other
  564,946    564,946   
564,946
   
564,946
 
   4,016,019    2,988,699   
4,016,019
   
2,958,174
 
                
Unamortizable intangible assets:
               
Goodwill
  1,737,763    507,278   
1,737,763
   
507,278
 
  1,737,763    507,278   1,737,763   507,278 
                
Total goodwill and other intangibles
$
 5,753,782  
$
 3,495,977  
$
5,753,782
  
$
3,465,452
 
                
 
Amortization expense for the three months ended January 31, 2016 and 2015 was $31,000. Customer relationships are being amortized over a period of 20 years, related to the acquisition of Syscan in 2004. The weighted average remaining life of the Company's amortizable intangible assets was approximately 4 years.
 
Estimated amortization expense for each of the following years is:
 
2016
 $
91,573
 
2017
  
122,098
 
2018
  
122,098
 
2019  122,098 
2020  122,098 
 Thereafter  447,355 
  
$
1,027,320
 
 
The changes in the carrying amount of goodwill and other amortizing intangibles for the three months ended January 31, 2016 were as follows:
Goodwill:
 
Printing
 
Office Products and Furniture
 
Total
 
       
Balance at October 31, 2015      
Goodwill$2,226,837 $ 1,230,485 $ 3,457,322 
Accumulated impairment losses (2,226,837)  -  (2,226,837)
  -  1,230,485  1,230,485 
          
Goodwill acquired three months ended January 31, 2016 -  -  - 
Impairment losses three months ended January 31, 2016  -  -  - 
          
Balance at January 31, 2016         
Goodwill 2,226,837  1,230,485  3,457,322 
Accumulated impairment losses (2,226,837) -  (2,226,837)
 $- $1,230,485 $1,230,485 
 
Amortizing Intangible Assets (net of amortization expense):
 Printing Office Products and Furniture Total 
       
Balance at October 31, 2015:
      
Amortizing intangible assets
$ 354,303 $ 703,542 $ 1,057,845 
Accumulated impairment losses
 -  -  - 
  354,303  703,542  1,057,845 
          
Amortizing intangible assets acquired three months ended January 31, 2016 -  -  - 
Impairment losses three months ended January 31, 2016 -  -  - 
Amortization expense 10,226  20,299  30,525 
          
Balance at January 31, 2016:         
Amortizing intangible assets
 344,077   683,243   1,027,320 
Accumulated impairment losses
 -  -  - 
 $  344,077 $  683,243 $ 1,027,320 


v3.3.1.900
Basis of Presentation, Business Operations and Recent Accounting Pronouncements (Policies)
 3 Months Ended
Jan. 31, 2016
Basis of Presentation, Business Operations and Recent Accounting Pronouncements [Abstract]  
Basis of Presentation
The foregoing financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and rules and regulations of the Securities and Exchange Commission for interim financial reporting. The preparation of the financial statements in accordance with GAAP 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 GAAP. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended October 31, 2015, and related notes thereto contained in Champion Industries, Inc.’s Form 10-K filed January 29, 2016. The accompanying interim financial information is unaudited. The results of operations for the period are not necessarily indicative of the results to be expected for the full year. The balance sheet information as of October 31, 2015 was derived from our audited financial statements.
Reclassifications and Revisions
Reclassifications and Revisions
 
Certain prior-year amounts have been reclassified to conform to the current year financial statement presentation.
Newly Issued Accounting Standards
Newly Issued Accounting Standards
 
Effective July 1, 2009, changes to the ASC are communicated through an ASU. As of January 31, 2016, the FASB has issued ASU’s 2009-01 through 2016-01. The Company reviewed each ASU and determined that they will not have a material impact on the Company’s financial position, results of operations or cash flows, other than related disclosures to the extent applicable.
 
In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items. The Company adopted ASU 2015-01 in December, 2015. This amendment did not have a material impact on the Company's financial position, results of operation, or cash flows, but will have an impact on related presentation and disclosure to the extent applicable in future periods.

In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 provides guidance on simplifying the measurement of inventory. The current standard is to measure inventory at lower of cost or market; where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 updates this guidance to measure inventory at the lower of cost or net realizable value; where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. The Company adopted ASU 2015-11 in December, 2015. This amendment did not have and is not expected to have a material impact on the Company's financial position, results of operation, or cash flows given the nature of the Company’s business and its relatively short inventory holding period.
 
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). ASU 2015-17 updates guidance on classifying deferred tax assets and liabilities from current and noncurrent to all noncurrent when a classified balance sheet is presented. The netting of deferred tax assets and liabilities to present a single amount will remain with this update. The Company will adopt ASU 2015-17 in December, 2016. This amendment is not expected to have a material impact on the Company's financial position, results of operation, or cash flows, but will impact presentation of such deferred tax assets and liabilities to the extent applicable.


v3.3.1.900
Inventories (Tables)
 3 Months Ended
Jan. 31, 2016
Inventories [Abstract]  
Schedule of inventories
At the dates indicated, inventories consisted of the following:

  
January 31,
2016
  
October 31,
2015
 
Printing:
      
Raw materials
 
$
 1,190,701  
$
1,111,203
 
Work in process
   647,042   
599,289
 
Finished goods
   871,252   
824,689
 
Office products and office furniture
  824,089   1,033,484 
  
$
3,533,084  
$
3,568,665
 


v3.3.1.900
Debt (Tables)
 3 Months Ended
Jan. 31, 2016
Debt [Abstract]  
Schedule of long-term debt
At the dates indicated, debt consisted of the following:
 
 
January 31,
2016
  
October 31,
2015
 
Term Note A dated October 7, 2013, due in monthly installments of $50,000
plus interest payments equal to the prime rate of interest plus 2% maturing
April 1, 2017, collateralized by substantially all of the assets of the Company.
$ 8,600,000  $ 8,750,000 
Installment notes payable to banks, due in monthly installments plus interest at
rates approximating the bank’s prime rate or the prime rate subject to various floors
maturing in various periods ranging from February 2016 - January 2018, collateralized
by equipment and vehicles.
 563,444   634,998 
Notes payable to shareholders. The shareholder note of $2.5 million plus all accrued
interest was initially due in one balloon payment in September 2014; pursuant to Term
Note A, the maturity was adjusted to April 2015. The interest is accrued at a rate of 3.50%.
See discussion on next page for more details. (1)
 2,500,000   2,500,000 
Note payable to a bank, due April 2016, including interest accrued at 5.25%,
collateralized by specific accounts receivable of the Company. (2)
 980,000    750,000 
Capital lease obligation for printing equipment at an imputed interest rate of 6.02% per annum  24,505   28,380 
Note, payable to a bank in monthly installment of $8,441 including interest at 5.00%
collateralized by equipment
 430,057   443,208 
Note, payable to a bank in monthly installments of $4,197 including an imputed
interest rate of 0.0% collateralized by equipment
 139,489    147,694 
   13,237,495   13,254,280 
        
Less current portion long-term debt  1,160,323   1,179,358 
Less short-term notes payable to related party (1) 2,500,000   2,500,000 
Less current portion obligation under capital lease   16,091   15,852 
Less short-term debt (2)  980,000    750,000 
Long-term debt, net of current portion and capital lease obligation $8,581,081  $ 8,809,070 
        
        
Long-term debt, net of current portion $8,572,667  $ 8,796,542 
Long-term capital lease obligation  8,414   12,528 
Current portion of long-term debt   1,160,323   1,179,358 
Short-term notes payable to related party (1)  2,500,000   2,500,000 
Short-term debt (2)  980,000    750,000 
Current portion of capital lease obligation  16,091   15,852 
Total indebtedness$ 13,237,495  $ 13,254,280 
 
(1) On June 15, 2015 the Company’s Board of Directors approved the conversion of the Company’s $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company’s income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%.

This conversion will reduce the Company’s liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company’s annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company’s annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved.

This conversion is pending a shareholder vote to amend the Company’s Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.
 
(2) These notes are short-term borrowings associated with large furniture projects that are on terms of 120 days or less. A portion of these borrowings were subsequently paid upon collection of the collateral in February 2016.


v3.3.1.900
Commitments and Contingencies (Tables)
 3 Months Ended
Jan. 31, 2016
Commitments and Contingencies [Abstract]  
Contractual obligations of leases and debt
As of January 31, 2016 the Company had contractual obligations in the form of leases and debt as follows:
 
 
Payments Due by Fiscal Year
Contractual Obligations:
2016
 
2017
 
2018
 
2019
 2020 
Residual
   Total 
               
Non-cancelable operating leases
$
377,271
 
$
423,949
 
$
334,642
 
$
230,098 $77,010 
$
32,673
 
$
1,475,643
 
                      
Term debt
 2,029,884  
8,344,299
  138,654  
97,644
  98,352  
4,157
  10,712,990 
                      
Obligations under capital lease 11,977  12,528  -  -  -  -  24,505 
                      
Notes payable - related party (1) 2,500,000  -  -  -  -  -  2,500,000 
                      
 
$
4,919,132
 
$
8,780,776
 
$
473,296
 
$
327,742
 $175,362 
$
36,830
 
$
14,713,138
 
 
(1) On June 15, 2015 the Company’s Board of Directors approved the conversion of the Company’s $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company’s income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%.
 
This conversion will reduce the Company’s liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company’s annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company’s annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved.
 
This conversion is pending a shareholder vote to amend the Company’s Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.


v3.3.1.900
Industry Segment Information (Tables)
 3 Months Ended
Jan. 31, 2016
Industry Segment Information [Abstract]  
Schedule of segment reporting information, by segment
The table below presents information about reported segments for the three months ended January 31:
 
2016 Quarter 1
 
Printing
 
Office Products & Furniture
 
Total
 
        
Revenues
 
$
 9,549,752 
$
 7,511,474 
$
 17,061,226 
Elimination of intersegment revenue
   (504,021
)
  (633,833
)
  (1,137,854
)
Consolidated revenues
 
$
 9,045,731 
$
 6,877,641 
$
 15,923,372 
           
Operating (loss) income
   (218,669)   104,839   (113,830)
Depreciation & amortization
   389,804   21,639   411,443 
Capital expenditures
   151,235   15,561   166,796 
Identifiable assets
  15,596,719   7,045,023  22,641,742 
Goodwill
  -   1,230,485   1,230,485 
           

2015 Quarter 1
 
Printing
 
Office Products & Furniture
 
Total
 
        
Revenues
 
$
9,916,899
 
$
6,212,973
 
$
16,129,872
 
Elimination of intersegment revenue
  
(528,377
)
 
(801,235
)
 
(1,329,612
)
Consolidated revenues
 
$
9,388,522
 
$
5,411,738
 
$
14,800,260
 
           
Operating loss
  
(93,197
)
 
(110,743
) 
(203,940
)
Depreciation & amortization
  
379,643
  
22,359
  
402,002
 
Capital expenditures
  
377,301
  
70,194
  
447,495
 
Identifiable assets
  
16,633,275
  
6,805,334
  
23,438,609
 
Goodwill
  
-
  
1,230,485
  
1,230,485
 
           
Reconciliation of total segment revenue, assets and operating (loss)
A reconciliation of total segment revenue, assets and operating loss to consolidated loss before income taxes for and at the three months ended January 31, 2016 and 2015 is as follows:
 
 
Three months ended January 31,
 
   2016    2015 
Revenues:
       
Total segment revenues
$
 17,061,226  
$
16,129,872
 
Elimination of intersegment revenue
  (1,137,854
)
  
(1,329,612
)
Consolidated revenue
$
 15,923,372  
$
14,800,260
 
        
Operating loss:
       
Total segment operating loss
$
 (113,830)  
$
(203,940
)
Interest expense - related party
  (21,563
)
  
(20,764
)
Interest expense
  (148,744
)
  
(263,977
)
Other income
  13,765   
20,863
 
Consolidated loss before income taxes
$
 (270,372
)
 
$
(467,818
)
        
Identifiable assets:
       
Total segment identifiable assets
$
22,641,742  
$
23,438,609
 
Elimination of intersegment assets and assets held for sale
 
256,832
   
256,832
 
Total consolidated assets
$
22,898,574  
$
23,695,441
 


v3.3.1.900
Acquired Intangible Assets and Goodwill (Tables)
 3 Months Ended
Jan. 31, 2016
Acquired Intangible Assets and Goodwill [Abstract]  
Acquired intangible assets and goodwill
The details of the Company's acquired intangible assets and goodwill, at the dates indicated, are as follows:
 
 
January 31, 2016
  
October 31, 2015
 
 
Gross
     
Gross
    
 
Carrying
  
Accumulated
  
Carrying
  
Accumulated
 
 
Amount
  
Amortization
  
Amount
  
Amortization
 
Amortizable intangible assets:
           
Non-compete agreement
$
1,000,000  
$
 1,000,000  
$
1,000,000
  
$
1,000,000
 
Customer relationships
  2,451,073    1,423,753   
2,451,073
   
1,393,228
 
Other
  564,946    564,946   
564,946
   
564,946
 
   4,016,019    2,988,699   
4,016,019
   
2,958,174
 
                
Unamortizable intangible assets:
               
Goodwill
  1,737,763    507,278   
1,737,763
   
507,278
 
  1,737,763    507,278   1,737,763   507,278 
                
Total goodwill and other intangibles
$
 5,753,782  
$
 3,495,977  
$
5,753,782
  
$
3,465,452
 
                
Estimated amortization expense
Estimated amortization expense for each of the following years is:
 
2016
 $
91,573
 
2017
  
122,098
 
2018
  
122,098
 
2019  122,098 
2020  122,098 
 Thereafter  447,355 
  
$
1,027,320
 
Changes in the carrying amount of goodwill
The changes in the carrying amount of goodwill and other amortizing intangibles for the three months ended January 31, 2016 were as follows:
Goodwill:
 
Printing
 
Office Products and Furniture
 
Total
 
       
Balance at October 31, 2015      
Goodwill$2,226,837 $ 1,230,485 $ 3,457,322 
Accumulated impairment losses (2,226,837)  -  (2,226,837)
  -  1,230,485  1,230,485 
          
Goodwill acquired three months ended January 31, 2016 -  -  - 
Impairment losses three months ended January 31, 2016  -  -  - 
          
Balance at January 31, 2016         
Goodwill 2,226,837  1,230,485  3,457,322 
Accumulated impairment losses (2,226,837) -  (2,226,837)
 $- $1,230,485 $1,230,485 
Amortizing intangible assets (net of amortization expense)
Amortizing Intangible Assets (net of amortization expense):
 Printing Office Products and Furniture Total 
       
Balance at October 31, 2015:
      
Amortizing intangible assets
$ 354,303 $ 703,542 $ 1,057,845 
Accumulated impairment losses
 -  -  - 
  354,303  703,542  1,057,845 
          
Amortizing intangible assets acquired three months ended January 31, 2016 -  -  - 
Impairment losses three months ended January 31, 2016 -  -  - 
Amortization expense 10,226  20,299  30,525 
          
Balance at January 31, 2016:         
Amortizing intangible assets
 344,077   683,243   1,027,320 
Accumulated impairment losses
 -  -  - 
 $  344,077 $  683,243 $ 1,027,320 


v3.3.1.900
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition (Details)
 3 Months Ended
Jan. 31, 2016
Accounts Receivable, Allowance for Doubtful Accounts and Revenue Recognition [Abstract]  
Accounts receivable, payment period from invoice date 30 days


v3.3.1.900
Inventories (Details) - USD ($)
Jan. 31, 2016
Oct. 31, 2015
Printing [Abstract]    
Raw materials $ 1,190,701 $ 1,111,203
Work in process 647,042 599,289
Finished goods 871,252 824,689
Office products and office furniture 824,089 1,033,484
Total inventory $ 3,533,084 $ 3,568,665


v3.3.1.900
Debt (Details) - USD ($)
 3 Months Ended
Jan. 31, 2016
Oct. 31, 2015
Debt Instrument [Line Items]    
Long-term debt $ 10,712,990  
Total indebtedness 13,237,495 $ 13,254,280
Less current portion long-term debt 1,160,323 1,179,358
Less short-term notes payable to related party [1] 2,500,000 2,500,000
Less current portion obligation under capital lease 16,091 15,852
Less short-term debt [2] 980,000 750,000
Long-term debt, net of current portion and capital lease obligation 8,581,081 8,809,070
Long-term debt, net of current portion 8,572,667 8,796,542
Long-term capital lease obligation 8,414 12,528
Current portion long-term debt 1,160,323 1,179,358
Short-term notes payable to related party [1] 2,500,000 2,500,000
Short-term debt [2] 980,000 750,000
Current portion of capital lease obligation 16,091 15,852
Term Note A dated October 7, 2013 [Member]    
Debt Instrument [Line Items]    
Long-term debt 8,600,000 8,750,000
Periodic installment payment $ 50,000  
Debt maturity date Apr. 01, 2017  
Term Note A dated October 7, 2013 [Member] | Prime Rate [Member]    
Debt Instrument [Line Items]    
Basis spread on variable rate 2.00%  
Installment Notes Payable to Banks [Member]    
Debt Instrument [Line Items]    
Long-term debt $ 563,444 634,998
Installment Notes Payable to Banks [Member] | Minimum [Member]    
Debt Instrument [Line Items]    
Debt maturity date Feb. 29, 2016  
Installment Notes Payable to Banks [Member] | Maximum [Member]    
Debt Instrument [Line Items]    
Debt maturity date Jan. 31, 2016  
Notes Payable to Shareholders [Member]    
Debt Instrument [Line Items]    
Long-term debt [1] $ 2,500,000 2,500,000
Periodic installment payment $ 2,500,000  
Debt maturity date Apr. 30, 2015  
Accrued interest rate 3.50%  
Note Payable to Bank Due April 2016 [Member]    
Debt Instrument [Line Items]    
Long-term debt [2] $ 980,000 750,000
Debt maturity date Apr. 30, 2016  
Accrued interest rate 5.25%  
Capital Lease Obligation for Printing Equipment [Member]    
Debt Instrument [Line Items]    
Capital Lease Obligations $ 24,505 28,380
Interest rate 6.02%  
Note Payable to a Bank Including Interest at 5.00% [Member]    
Debt Instrument [Line Items]    
Long-term debt $ 430,057 443,208
Periodic installment payment $ 8,441  
Interest rate 5.00%  
Note Payable to a Bank Including an Imputed Interest Rate of 0.0% [Member]    
Debt Instrument [Line Items]    
Long-term debt $ 139,489 $ 147,694
Periodic installment payment $ 4,197  
Interest rate 0.00%  
[1] On June 15, 2015 the Company's Board of Directors approved the conversion of the Company's $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company's income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%. This conversion will reduce the Company's liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company's annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company's annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved. This conversion is pending a shareholder vote to amend the Company's Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.
[2] These notes are short-term borrowings associated with large furniture projects that are on terms of 120 days or less. A portion of these borrowings were subsequently paid upon collection of the collateral in February 2016.


v3.3.1.900
Debt, Conversion to Preferred Stock Equity (Details) - USD ($)
 3 Months Ended
Jun. 15, 2015
Jan. 31, 2016
Oct. 31, 2015
Debt Conversion [Line Items]      
Decrease in liabilities $ (2,500,000) $ (21,154,901) $ (20,912,481)
Increase in equity 2,500,000 $ 1,743,673 $ 2,014,045
Reduction in annual interest expense (100,000)    
Minimum [Member]      
Debt Conversion [Line Items]      
Preferred stock dividend 0    
Increase or (decrease) of annual cash outflow (100,000)    
Maximum [Member]      
Debt Conversion [Line Items]      
Preferred stock dividend 200,000    
Increase or (decrease) of annual cash outflow 100,000    
Term of short term borrowings with furniture projects   120 days  
Related Party Debt Conversion [Member]      
Debt Conversion [Line Items]      
Related party debt approved for conversion to Preferred Stock 2,500,000    
Income after taxes threshold for dividend payment $ 1,000,000    
Related Party Debt Conversion [Member] | Minimum [Member]      
Debt Conversion [Line Items]      
Dividend rate on preferred stock 0.00%    
Related Party Debt Conversion [Member] | Maximum [Member]      
Debt Conversion [Line Items]      
Dividend rate on preferred stock 6.00%    


v3.3.1.900
Income taxes (Details)
 3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Income taxes [Abstract]    
Effective tax rate 0.00% 0.00%


v3.3.1.900
Commitments and Contingencies (Details)
Jan. 31, 2016
USD ($)
Holder
$ / shares
shares
Non-cancelable Operating Leases [Abstract]  
2016 $ 377,271
2017 423,949
2018 334,642
2019 230,098
2020 77,010
Residual 32,673
Total 1,475,643
Term Debt [Abstract]  
2016 2,029,884
2017 8,344,299
2018 138,654
2019 97,644
2020 98,352
Residual 4,157
Total 10,712,990
Obligations Under Capital Lease  
2016 11,977
2017 12,528
2018 0
2019 0
2020 0
Residual 0
Total 24,505
Notes Payable - Related Party [Abstract]  
2016 2,500,000 [1]
2017 0 [1]
2018 0 [1]
2019 0 [1]
2020 0 [1]
Residual 0 [1]
Total 2,500,000 [1]
Contractual Obligations, Total [Abstract]  
2016 4,919,132
2017 8,780,776
2018 473,296
2019 327,742
2020 175,362
Residual 36,830
Total 14,713,138
Not Covered by Insurance [Member] | Maximum [Member]  
Commitments and Contingencies [Abstract]  
Estimate of reasonably possible losses $ 400,000
Restated Credit Agreement [Member]  
Commitments and Contingencies [Abstract]  
Price of warrants issued (in dollars per share) | $ / shares $ 0.001
Percentage of Common stock outstanding 30.00%
Common stock, shares outstanding (in shares) | shares 11,299,528
Potential shares issued from exercise of warrants (in shares) | shares 4,842,654
Minimum number of warrant holders permitted to own a limited number of voting shares | Holder 1
[1] On June 15, 2015 the Company's Board of Directors approved the conversion of the Company's $2.5 million related party debt to Preferred Stock equity. The Preferred Stock will pay a 6.00% or 0.00% annual dividend contingent on the Company's income after income taxes. If the Company's income after income taxes is $1.0 million or greater, the dividend rate is 6.00%; if the Company's income after income taxes is less than $1.0 million, the dividend rate is 0.00%. This conversion will reduce the Company's liabilities by $2.5 million and increase its equity by $2.5 million. In addition, this conversion will reduce the Company's annual interest expense by $0.1 million. However, contingent on the after income tax income, this conversion could trigger the payment of an annual Preferred Stock dividend of $0.2 million or zero. If the $1.0 million after income tax income target is achieved, the Company's annual cash outflow would increase $0.1 million, or decrease $0.1 million if the $1.0 million after income tax income target is not achieved. This conversion is pending a shareholder vote to amend the Company's Articles of Incorporation to allow for the issuance of Preferred Stock. The proposed amendment to the Company's Articles of Incorporation was approved by the Company's Board of Directors on January 18, 2016. This was anticipated to be part of the Company's definitive Proxy Statement with respect to the Annual Meeting of Shareholders to be held on March 21, 2016, but the Company will now present the amendment at a special shareholder meeting expected to be held in May 2016. The Company will continue to accrue interest on the related party debt equal to the prime rate until such conversion has been consummated.


v3.3.1.900
Commitments and Contingencies, Conversion to Preferred Stock Equity (Details) - USD ($)
Jun. 15, 2015
Jan. 31, 2016
Oct. 31, 2015
Debt Conversion [Line Items]      
Decrease in liabilities $ (2,500,000) $ (21,154,901) $ (20,912,481)
Increase in equity 2,500,000 $ 1,743,673 $ 2,014,045
Reduction in annual interest expense (100,000)    
Minimum [Member]      
Debt Conversion [Line Items]      
Preferred stock dividend 0    
Increase or (decrease) of annual cash outflow (100,000)    
Maximum [Member]      
Debt Conversion [Line Items]      
Preferred stock dividend 200,000    
Increase or (decrease) of annual cash outflow 100,000    
Related Party Debt Conversion [Member]      
Debt Conversion [Line Items]      
Related party debt approved for conversion to preferred stock 2,500,000    
Income after taxes threshold for dividend payment $ 1,000,000    
Related Party Debt Conversion [Member] | Minimum [Member]      
Debt Conversion [Line Items]      
Dividend rate on preferred stock 0.00%    
Related Party Debt Conversion [Member] | Maximum [Member]      
Debt Conversion [Line Items]      
Dividend rate on preferred stock 6.00%    


v3.3.1.900
Industry Segment Information (Details)
 3 Months Ended
Jan. 31, 2016
USD ($)
Segment
Jan. 31, 2015
USD ($)
Oct. 31, 2015
USD ($)
Industry Segment Information [Abstract]      
Number of operating segments | Segment 2    
Total assets held for sale/discontinued operations $ 256,832 $ 256,832  
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues 15,923,372 14,800,260  
Operating (loss) income (113,830) (203,940)  
Depreciation & amortization 411,443 402,002  
Capital expenditures 166,796 447,495  
Identifiable assets 22,641,742 23,438,609  
Goodwill 1,230,485 1,230,485 $ 1,230,485
Interest expense - related party (21,563) (20,764)  
Interest expense (148,744) (263,977)  
Other income 13,765 20,863  
Loss before income taxes (270,372) (467,818)  
Identifiable assets [Abstract]      
Total segment identifiable assets 22,641,742 23,438,609  
Elimination of intersegment assets and assets held for sale 256,832 256,832  
Total assets 22,898,574 23,695,441 22,926,526
Printing [Member]      
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues 9,045,731 9,388,522  
Goodwill 0   0
Office Products & Furniture [Member]      
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues 6,877,641 5,411,738  
Goodwill 1,230,485   $ 1,230,485
Operating Segment [Member]      
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues 17,061,226 16,129,872  
Operating Segment [Member] | Printing [Member]      
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues 9,549,752 9,916,899  
Operating (loss) income (218,669) (93,197)  
Depreciation & amortization 389,804 379,643  
Capital expenditures 151,235 377,301  
Identifiable assets 15,596,719 16,633,275  
Goodwill 0 0  
Identifiable assets [Abstract]      
Total segment identifiable assets 15,596,719 16,633,275  
Operating Segment [Member] | Office Products & Furniture [Member]      
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues 7,511,474 6,212,973  
Operating (loss) income 104,839 (110,743)  
Depreciation & amortization 21,639 22,359  
Capital expenditures 15,561 70,194  
Identifiable assets 7,045,023 6,805,334  
Goodwill 1,230,485 1,230,485  
Identifiable assets [Abstract]      
Total segment identifiable assets 7,045,023 6,805,334  
Elimination of Intersegment Revenue [Member]      
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues (1,137,854) (1,329,612)  
Elimination of Intersegment Revenue [Member] | Printing [Member]      
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues (504,021) (528,377)  
Elimination of Intersegment Revenue [Member] | Office Products & Furniture [Member]      
Segment reporting information, revenue for reportable segment [Abstract]      
Revenues $ (633,833) $ (801,235)  


v3.3.1.900
Fair Value Measurements (Details)
$ in Millions
Jan. 31, 2016
USD ($)
Fair Value Measurements [Abstract]  
Carrying value of term debt not related to credit agreement $ 2.1


v3.3.1.900
Acquired Intangible Assets and Goodwill (Details) - USD ($)
 3 Months Ended
Jan. 31, 2016
Jan. 31, 2015
Jan. 31, 2016
Oct. 31, 2015
Finite-Lived Intangible Assets, Net [Abstract]        
Amortizable intangible assets, gross carrying amount $ 4,016,019   $ 4,016,019 $ 4,016,019
Amortizable intangible assets, accumulated amortization     2,988,699 2,958,174
Unamortizable intangible assets [Abstract]        
Goodwill 1,737,763   1,737,763 1,737,763
Goodwill, accumulated amortization $ 507,278   507,278 507,278
Total goodwill and other intangibles, gross carrying amount     5,753,782 5,753,782
Total goodwill and other intangibles, accumulated amortization     3,495,977 3,465,452
Amortization period 4 years      
Estimated amortization expense for future fiscal years [Abstract]        
2016     91,573  
2017     122,098  
2018     122,098  
2019     122,098  
2020     122,098  
Thereafter     447,355  
Total $ 1,027,320   1,027,320 1,057,845
Goodwill [Roll Forward]        
Goodwill, gross, beginning of period 1,737,763      
Accumulated impairment losses, beginning of period (507,278)      
Goodwill, beginning of period 1,230,485      
Goodwill, gross, end of period 1,737,763      
Accumulated impairment losses, end of period (507,278)      
Goodwill, ending balance 1,230,485 $ 1,230,485    
Amortizing Intangible Assets (net of amortization expense) [Roll Forward]        
Amortizing intangible assets (net of amortization expense), beginning of period 4,016,019      
Amortizing intangible assets (net of amortization expense and impairment losses), beginning of period 1,057,845      
Amortization expense 31,000 $ 31,000    
Amortizing intangible assets (net of amortization expense), end of period 4,016,019      
Amortizing intangible assets (net of amortization expense and impairment losses), end of period 1,027,320      
Non-compete Agreements [Member]        
Finite-Lived Intangible Assets, Net [Abstract]        
Amortizable intangible assets, gross carrying amount 1,000,000   1,000,000 1,000,000
Amortizable intangible assets, accumulated amortization     1,000,000 1,000,000
Amortizing Intangible Assets (net of amortization expense) [Roll Forward]        
Amortizing intangible assets (net of amortization expense), beginning of period 1,000,000      
Amortizing intangible assets (net of amortization expense), end of period 1,000,000      
Customer Relationships [Member]        
Finite-Lived Intangible Assets, Net [Abstract]        
Amortizable intangible assets, gross carrying amount 2,451,073   2,451,073 2,451,073
Amortizable intangible assets, accumulated amortization     1,423,753 1,393,228
Amortizing Intangible Assets (net of amortization expense) [Roll Forward]        
Amortizing intangible assets (net of amortization expense), beginning of period 2,451,073      
Amortizing intangible assets (net of amortization expense), end of period 2,451,073      
Other [Member]        
Finite-Lived Intangible Assets, Net [Abstract]        
Amortizable intangible assets, gross carrying amount 564,946   564,946 564,946
Amortizable intangible assets, accumulated amortization     564,946 564,946
Amortizing Intangible Assets (net of amortization expense) [Roll Forward]        
Amortizing intangible assets (net of amortization expense), beginning of period 564,946      
Amortizing intangible assets (net of amortization expense), end of period 564,946      
Printing [Member]        
Finite-Lived Intangible Assets, Net [Abstract]        
Amortizable intangible assets, gross carrying amount 354,303   344,077 354,303
Unamortizable intangible assets [Abstract]        
Goodwill 2,226,837   2,226,837 2,226,837
Goodwill, accumulated amortization 2,226,837   2,226,837 2,226,837
Estimated amortization expense for future fiscal years [Abstract]        
Total 354,303   344,077 354,303
Goodwill [Roll Forward]        
Goodwill, gross, beginning of period 2,226,837      
Accumulated impairment losses, beginning of period (2,226,837)      
Goodwill, beginning of period 0      
Goodwill acquired 0      
Impairment losses 0      
Goodwill, gross, end of period 2,226,837      
Accumulated impairment losses, end of period (2,226,837)      
Goodwill, ending balance 0      
Amortizing Intangible Assets (net of amortization expense) [Roll Forward]        
Amortizing intangible assets (net of amortization expense), beginning of period 354,303      
Accumulated impairment losses, beginning of period 0      
Amortizing intangible assets (net of amortization expense and impairment losses), beginning of period 354,303      
Amortizing intangible assets acquired 0      
Impairment losses 0      
Amortization expense 10,226      
Amortizing intangible assets (net of amortization expense), end of period 344,077      
Accumulated impairment losses, end of period 0      
Amortizing intangible assets (net of amortization expense and impairment losses), end of period 344,077      
Office Products and Furniture [Member]        
Finite-Lived Intangible Assets, Net [Abstract]        
Amortizable intangible assets, gross carrying amount 703,542   683,243 703,542
Unamortizable intangible assets [Abstract]        
Goodwill 1,230,485   1,230,485 1,230,485
Goodwill, accumulated amortization 0   0 0
Estimated amortization expense for future fiscal years [Abstract]        
Total 703,542   683,243 703,542
Goodwill [Roll Forward]        
Goodwill, gross, beginning of period 1,230,485      
Accumulated impairment losses, beginning of period 0      
Goodwill, beginning of period 1,230,485      
Goodwill acquired 0      
Impairment losses 0      
Goodwill, gross, end of period 1,230,485      
Accumulated impairment losses, end of period 0      
Goodwill, ending balance 1,230,485      
Amortizing Intangible Assets (net of amortization expense) [Roll Forward]        
Amortizing intangible assets (net of amortization expense), beginning of period 703,542      
Accumulated impairment losses, beginning of period 0      
Amortizing intangible assets (net of amortization expense and impairment losses), beginning of period 703,542      
Amortizing intangible assets acquired 0      
Impairment losses 0      
Amortization expense 20,299      
Amortizing intangible assets (net of amortization expense), end of period 683,243      
Accumulated impairment losses, end of period 0      
Amortizing intangible assets (net of amortization expense and impairment losses), end of period 683,243      
Printing and Office Products and Furniture [Member]        
Finite-Lived Intangible Assets, Net [Abstract]        
Amortizable intangible assets, gross carrying amount 1,057,845   1,027,320 1,057,845
Unamortizable intangible assets [Abstract]        
Goodwill 3,457,322   3,457,322 3,457,322
Goodwill, accumulated amortization 2,226,837   2,226,837 2,226,837
Estimated amortization expense for future fiscal years [Abstract]        
Total 1,057,845   $ 1,027,320 $ 1,057,845
Goodwill [Roll Forward]        
Goodwill, gross, beginning of period 3,457,322      
Accumulated impairment losses, beginning of period (2,226,837)      
Goodwill, beginning of period 1,230,485      
Goodwill acquired 0      
Impairment losses 0      
Goodwill, gross, end of period 3,457,322      
Accumulated impairment losses, end of period (2,226,837)      
Goodwill, ending balance 1,230,485      
Amortizing Intangible Assets (net of amortization expense) [Roll Forward]        
Amortizing intangible assets (net of amortization expense), beginning of period 1,057,845      
Accumulated impairment losses, beginning of period 0      
Amortizing intangible assets (net of amortization expense and impairment losses), beginning of period 1,057,845      
Amortizing intangible assets acquired 0      
Impairment losses 0      
Amortization expense 30,525      
Amortizing intangible assets (net of amortization expense), end of period 1,027,320      
Accumulated impairment losses, end of period 0      
Amortizing intangible assets (net of amortization expense and impairment losses), end of period $ 1,027,320      
Syscan [Member] | Customer Relationships [Member]        
Unamortizable intangible assets [Abstract]        
Amortization period 20 years      
Champion Industries (CE) (USOTC:CHMP)
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