~~SECURITIES~~UNITED STATES SECURITIES AND EXCHANGE ~~COMMISSION~~COMMISSIONWashington, D.C. 20549

Washington, D.C. 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 JULY 31, 2011
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 Number 002-96666

[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~CANAL~~For ~~CAPITAL~~the ~~CORPORATION~~quarterly period ended JULY 31, 2012

~~(Exact~~[ ] TRANSITION ~~name~~REPORT ofUNDER ~~registrant~~SECTION as13 ~~specified~~or in15(d) ~~its~~OF ~~charter)~~THE SECURITIES EXCHANGE ACT OF 1934

Delaware		51-0102492
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

For the transition period from __________to __________

4 Morris Street, Port Jefferson Station, NY		11776
(Address of principal executive offices)		(Zip Code)
(Registrant's telephone number, including area code)		(631) 234-0140
Securities registered pursuant to Section 12(b) of the Act:		None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value

002-96666
(Commission File Number)

~~Indicate~~CANAL ~~by check mark whether the registrant~~ CAPITAL CORPORATION(1)Exact ~~has~~name ~~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~~as ~~required~~specified toin ~~file such reports~~its charter)~~, and (2) has been subject to such filing requirements for the past 90 days. Yes x No~~

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes x No

Delaware	51-0102492
(State or other jurisdiction of	(I.R.S. Employer Identification Number)
incorporation or organization)

~~Indicate~~4 byMorris ~~check~~StreetPort ~~mark~~Jefferson ~~whether the Registrant is a large accelerated filer~~Station, anNew ~~accelerated~~York 11776 ~~filer,~~United orStates ~~a non-accelerated filer. See definition~~ of ~~“accelerated~~America(Address ~~filer and large accelerated filer” in Rule 12b-2~~ of ~~the~~principal ~~Exchange Act. (Check one~~executive offices):

~~Large~~(631) ~~accelerated~~234-0140(Registrant's ~~filer~~telephone onumber, including ~~Accelerated~~area ~~filer o Non-accelerated filer x~~code)

~~Indicate~~N/A(Former byname, ~~check~~address ~~mark~~and ~~whether~~former ~~the~~fiscal year, ~~Registrant~~if ischanged asince ~~shell~~last ~~company (as defined in Rule 12b-2 of the Exchange Act~~report)~~. Yes o Nox~~

~~The~~Indicate ~~number~~by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of ~~shares~~the Securities Exchange Act of ~~Common~~1934 ~~Stock,~~during ~~$.01~~the ~~par~~preceding ~~value,~~12 ~~outstanding~~months at(or ~~August~~for ~~31,~~such ~~2011~~shorter period that the registrant was 4required to file such reports),~~326,929~~ and (2) has been subject to such filing requirements for the past 90 days.

~~CANAL~~Yes ~~CAPITAL~~[ ] No ~~CORPORATION AND SUBSIDIARIES~~[X]

~~FORM~~Indicate ~~10-Q~~by ~~JULY~~check 31mark whether the registrant has submitted electronically and posted on its corporate Web site, ~~2011~~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).

~~INDEX~~Yes [ ] No [ ]

~~The~~Indicate ~~following~~by ~~documents~~check ~~are~~mark ~~filed~~whether asthe ~~part~~Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of ~~this~~“large ~~report:~~accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Part I -	Financial Information:	3
Item I .	Condensed Financial Statements:
Consolidated Balance Sheets - July 31, 2011 and October 31, 2010		4
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Nine Month Periods ended April 30, 2011 and 2010		6
Consolidated Statements of Changes in Stockholders’ Equity for the One Year and Nine Month Periods ended October 31, 2010 and July 31, 2011		10
Consolidated Statements of Cash Flows for the Nine Month Periods ended July 31, 2011 and 2010		11
Notes to Consolidated Financial Statements		13
Item II	Management’s Discussion and Analysis of Financial Condition	28
Liquidity and Capital Resources		37
Other Factors		38
Item III	Quantitative and Qualitative Disclosures About Market Risk	39
Item IV	Controls and Procedures	39
Part II	Other Information	40
Items 1 through 6		41
Signatures and Certifications		42

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [X]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

State the number of shares outstanding of each of the Issuers classes of common equity, as of the latest practicable date:

Common Stock, $.01 par value per share: 4,326,929 outstanding at September 15, 2012.

EXPLANATORY NOTE

As a result of financial constraints, the Company’s financial statements for the fiscal years ended October 31, 2011, 2010 and 2009, and for the interim fiscal quarters had not been previously audited or reviewed by an independent auditor. In February 2012, the Company received notice from the SEC of its obligation to file audited and reviewed financial statements with its periodic reports and the nine reports outlined above were appropriately amended and filed with the SEC on October 30, 2012. This report is the third of the final three filings which the Company expects to file in order to become fully compliant with its reporting requirements with SEC. The Company expects to be fully compliant on or before January 31, 2013.

Where indicated, the financial data presented in the 10-Q is as of July 31, 2012, however, the other disclosures have been updated to reflect the Company’s operations as at the date of this filing.

~~Index~~CANAL CAPITAL CORPORATION

TABLE OF CONTENTS

PART I -	FINANCIAL INFORMATION
		PAGE
ITEM 1.	INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31
ITEM 4.	CONTROLS AND PROCEDURES	32

PART II –	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	33
ITEM 1A.	RISK FACTORS	34
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	34
ITEM 4.	MINE SAFETY DISCLOSURES	34
ITEM 5.	OTHER INFORMATION	34
ITEM 6.	EXHIBITS	34
SIGNATURES		35

PART I

FINANCIAL INFORMATION

3ITEM 1. FINANCIAL STATEMENTS

Index

Consolidated Balance Sheets (UNAUDITED) – July 31, 2012 and October 31, 2011	5

Consolidated Statements of Operations and Comprehensive Income (Loss) (UNAUDITED) for the Nine and Three Month Periods ended July 31, 2012 and 2011	7

Consolidated Statements of Cash Flows (UNAUDITED) for the Nine Month Periods ended July 31, 2012 and 2011	11

Notes to Unaudited Consolidated Financial Statements	13

CANAL CAPITAL CORPORATION & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JULY 31, 2011 AND OCTOBER 31, 2010

	JULY 31,		OCT. 31,
	2011		2010
	(UNAUDITED)		(UNAUDITED)
ASSETS:
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS	$	78,472	$	510,361
NOTES AND ACCOUNTS RECEIVABLE, NET OF AN ALLOWANCE FOR DOUBTFUL ACCOUNTS OF $ZERO AT BOTH JULY 31, 2011 AND OCTOBER 31, 2010,		71,784		138,879
STOCKYARDS INVENTORY		1,260		14,608
PREPAID EXPENSES		29,642		12,461
TOTAL CURRENT ASSETS		181,158		676,309
NON-CURRENT ASSETS:
PROPERTY ON OPERATING LEASES, NET OF ACCUMULATED DEPRECIATION OF $489,049AND $472,399 AT JULY 31, 2011 AND OCTOBER 31, 2010, RESPECTIVELY		1,388,557		1,391,407
PROPERTY USED IN STOCKYARD OPERATIONS, NET OF ACCUMULATED DEPRECIATION OF $207,157 AND $191,857 AT JULY 31, 2011 AND OCTOBER 31, 2010, RESPECTIVELY		554,282		532,672
ART INVENTORY, NET OF A VALUATION ALLOWANCE OF $396,522 AT BOTH JULY 31, 2011 AND OCTOBER 31, 2010		100,000		100,000
OTHER ASSETS:
PROPERTY HELD FOR DEVELOPMENT OR RESALE		52,250		52,250
RESTRICTED CASH – LETTER OF CREDIT		140,000		140,000
RESTRICTED CASH - TRANSIT INSURANCE		40,700		26,000
DEPOSITS AND OTHER ASSETS		0		0
		232,950		218,250
	$	2,456,947	$	2,918,638

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JULY 31, 2012 (UNAUDITED) AND OCTOBER 31, 2011

CANAL CAPITAL CORPORATION & SUBSIDIARIES

		JULY 31,		OCT. 31,
		2012		2011
ASSETS:
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS	$	195,193	$	35,514
RESTRICTED CASH – TRANSIT INSURANCE		37,689		35,484
ACCOUNTS RECEIVABLE		131,160		120,300
STOCKYARDS INVENTORY		1,650		20,749
PREPAID EXPENSES		25,257		13,948
TOTAL CURRENT ASSETS		390,949		225,995


NON-CURRENT ASSETS:
PROPERTY ON OPERATING LEASES, NET OF ACCUMULATED DEPRECIATION OF $28,584 AND $494,599 AT JULY 31, 2012 AND OCTOBER 31, 2011, RESPECTIVELY		1,163,891		1,668,008

PROPERTY USED IN STOCKYARD OPERATIONS, NET OF ACCUMULATED DEPRECIATION OF $226,657 AND $212,257 AT JULY 31, 2012 AND OCTOBER 31, 2011, RESPECTIVELY		1,057,867		1,072,267

PROPERTY HELD FOR DEVELOPMENT OR RESALE		52,250		52,250

OTHER ASSETS:
RESTRICTED CASH – LETTER OF CREDIT		155,000		140,000
ART INVENTORY		10,000		10,000
		165,000		150,000
	$	2,829,957	$	3,168,520

CONSOLIDATED BALANCE SHEETS

JULY 31, 2011 AND OCTOBER 31, 2010

	JULY 31, 2011			OCT.31, 2010
	(UNAUDITED)			(UNAUDITED)
LIABILITIES & STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES	$	73,886		$	267,827
ACCRUED PROFESSIONAL FEES		37,205			55,000
INCOME TAXES PAYABLE		10,000			10,000
TOTAL CURRENT LIABILITIES		121,091			332,827
NON-CURRENT LIABILITIES:
LONG-TERM PENSION LIABILITY		714,830			869,676
PREFERRED STOCK DIVIDEND PAYABLE		223,550			169,550
SALARIES AND INTEREST PAYABLE – OFFICERS		344,025			175,000
REAL ESTATE TAXES PAYABLE		55,182			44,543
OTHER NON-CURRENT LIABILITIES		40,700			26,000
TOTAL NON-CURRENT LIABILITIES		1,378,287			1,284,769
LONG-TERM DEBT, RELATED PARTY		847,000			847,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, $0.01 PAR VALUE:10,000,000 SHARES AUTHORIZED; 9,102,655SHARES ISSUED AND OUTSTANDING AT JULY 31,2011 AND OCTOBER 31, 2010, RESPECTIVELY AND AGGREGATE LIQUIDATION PREFERENCE OF $10 PER SHARE FOR $ 91,026,550 AT JULY 31, 2011AND OCTOBER 31, 2010, RESPECTIVELY		91,027			91,027
COMMON STOCK, $0.01 PAR VALUE:10,000,000 SHARES AUTHORIZED; 5,313,794SHARES ISSUED AND 4,326,929 SHARES OUT-STANDING AT JULY 31, 2011 AND OCTOBER 31,2010, RESPECTIVELY		53,138			53,138
ADDITIONAL PAID-IN CAPITAL		28,322,341			28,322,341
ACCUMULATED DEFICIT		(15,539,019.00	)		(15,114,546.00	)
986,865 SHARES OF COMMON STOCK HELD IN TREASURY, AT COST		(11,003,545.00	)		(11,003,545.00	)
COMPREHENSIVE INCOME:
PENSION VALUATION RESERVE		(1,813,373.00	)		(1,894,373.00	)
		110,569		454,042
	$	2,456,947		$	2,918,638

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JULY 31, 2012 (UNAUDITED) AND OCTOBER 31, 2011

CANAL CAPITAL CORPORATION & SUBSIDIARIES

		JULY 31,			OCT. 31,
		2012			2011

LIABILITIES & STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES	$	23,459		$	160,370
LINE OF CREDIT – ORDER BUYING		74,000			106,395
TRANSIT INSURANCE		37,689			35,484

TOTAL CURRENT LIABILITIES		135,148			302,249


NON-CURRENT LIABILITIES:
LONG-TERM DEBT, RELATED PARTY		564,000			847,000
LONG-TERM PENSION LIABILITY		630,761			812,820
SALARIES AND INTEREST PAYABLE – OFFICERS		41,233			458,700
REAL ESTATE TAXES PAYABLE		66,617			56,200

TOTAL NON-CURRENT LIABILITIES		1,302,611			2,174,720


COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

PREFERRED STOCK, $0.01 PAR VALUE: 10,000,000 SHARES AUTHORIZED; 9,102,655 SHARES ISSUED AND OUTSTANDING AT JULY 31, 2012 AND OCTOBER 31, 2011, RESPECTIVELY AND AGGREGATE LIQUIDATION PREFERENCE OF $10 PER SHARE FOR $ 91,026,550 AT JULY 31, 2012 AND OCTOBER 31, 2011, RESPECTIVELY		91,027			91,027

COMMON STOCK, $0.01 PAR VALUE: 10,000,000 SHARES AUTHORIZED; 5,313,794 SHARES ISSUED AND 4,326,929 SHARES OUT- STANDING AT JULY 31, 2012 AND OCTOBER 31, 2011, RESPECTIVELY		53,138			53,138

ADDITIONAL PAID-IN CAPITAL		25,526,721			25,526,721

ACCUMULATED DEFICIT		(11,437,017	)		(12,056,664	)

986,865 SHARES OF COMMON STOCK HELD IN TREASURY, AT COST		(11,003,545	)		(11,003,545	)

COMPREHENSIVE INCOME: PENSION VALUATION RESERVE		(1,838,126	)		(1,919,126	)

		1,392,198			691,551

	$	2,829,957		$	3,168,520

CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)

FOR THE NINE MONTHS ENDED JULY 31, 2011 AND 2010

	2011			2010
	(UNAUDITED)			(UNAUDITED)
REAL ESTATE OPERATIONS:
REAL ESTATE REVENUES:
SALE OF REAL ESTATE		0			0
OUTSIDE REAL ESTATE RENT		202,732			202,284
EXCHANGE BUILDING RENTAL INCOME		0			14,493
		202,732			216,777
REAL ESTATE EXPENSES:
COST OF REAL ESTATE SOLD		0			0
LABOR, OPERATING AND MAINTENANCE		7,034			19,343
DEPRECIATION AND AMORTIZATION		16,650			16,650
TAXES OTHER THAN INCOME TAXES		11,250			16,550
GENERAL AND ADMINISTRATIVE		7,650			16,873
		42,584			69,416
INCOME FROM REAL ESTATE OPERATIONS		160,148			147,361
STOCKYARD OPERATIONS:
STOCKYARD REVENUES:
YARD HANDLING AND AUCTION	$	1,255,424		$	1,353,303
FEED AND BEDDING INCOME		83,224			79,836
RENTAL & OTHER INCOME		92,629			214,369
		1,431,277			1,647,508
STOCKYARD EXPENSES:
LABOR AND RELATED COSTS		562,070			610,017
OTHER OPERATING AND MAINTENANCE		332,280			386,417
FEED AND BEDDING EXPENSE		66,311			66,125
DEPRECIATION AND AMORTIZATION		15,300			10,103
TAXES OTHER THAN INCOME TAXES		56,909			116,272
GENERAL AND ADMINISTRATIVE		246,315			244,123
		1,279,185			1,433,057
INCOME (LOSS) FROM STOCKYARD OPERATIONS		152,092			214,451
GENERAL AND ADMINISTRATIVE EXPENSE		(619,510.00	)		(627,896.00	)
(LOSS) INCOME FROM OPERATIONS		(307,270.00	)		(266,084.00	)

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED JULY 31, 2012 AND 2011 (UNAUDITED)

CANAL CAPITAL CORPORATION & SUBSIDIARIES

	2012		2011
REAL ESTATE OPERATIONS:
REAL ESTATE REVENUES:
SALE OF REAL ESTATE	1,690,600		0
OUTSIDE REAL ESTATE RENT	178,306		202,732
	1,868,906		202,732
REAL ESTATE EXPENSES:
COST OF REAL ESTATE SOLD	553,250		0
LABOR, OPERATING AND MAINTENANCE	7,837		7,034
DEPRECIATION AND AMORTIZATION	14,950		16,650
TAXES OTHER THAN INCOME TAXES	11,250		11,250
GENERAL AND ADMINISTRATIVE	7,650		7,650
	594,937		42,584
INCOME FROM REAL ESTATE OPERATIONS	1,273,969		160,148

GENERAL AND ADMINISTRATIVE EXPENSE	(793,053	)	(619,510	)
INCOME (LOSS) FROM CONTINUING OPERATIONS	480,916		(459,362	)
OTHER (EXPENSE) INCOME:
INTEREST & OTHER INCOME	6,344		322
INTEREST EXPENSE	(64,354	)	(63,525	)
ART SALES AND OPERATIONS	0		0
	(58,010	)	(63,203	)

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES	422,906		(522,565	)
PROVISION FOR INCOME TAXES	0		0
INCOME (LOSS) FROM CONTINUING OPERATIONS	422,906		(522,565	)

CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)

FOR THE NINE MONTHS ENDED JULY 31, 2011 AND 2010

Continued ...

	2011			2010
	(UNAUDITED)			(UNAUDITED)
OTHER (EXPENSE) INCOME:
INTEREST & OTHER INCOME		322			407
INTEREST EXPENSE		(63,525.00	)		(88,179.00	)
ART SALES AND OPERATIONS		0		0
		(63,203.00	)		(87,772.00	)
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES		(370,473.00	)		(353,856.00	)
PROVISION FOR INCOME TAXES		0		0
NET (LOSS) INCOME		(370,473	)		(353,856	)
OTHER COMPREHENSIVE (LOSS) INCOME:
MINIMUM PENSION LIABILITY ADJUSTMENT		81,000		81,000
COMPREHENSIVE (LOSS) INCOME	$	(289,473	)	$	(272,856	)
(LOSS) EARNINGS PER COMMON SHARE:
NET (LOSS) INCOME	$	(370,473	)	$	(353,856	)
LESS PREFERRED STOCK DIVIDEND		(54,000.00	)		(54,000.00	)
(LOSS) INCOME AVAILABLE TO COMMON STKDERS	$	(424,473	)	$	(407,856	)
NET (LOSS) INCOME PER COMMON SHARE BASIC AND DILUTED	$	(0.10	)	$	(0.09	)
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED		4,326,929			4,326,929

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED JULY 31, 2012 AND 2011 Continued

CANAL CAPITAL CORPORATION & SUBSIDIARIES

		2012		2011

DISCONTINUED STOCKYARD OPERATIONS:

STOCKYARD REVENUES:
YARD HANDLING AND AUCTION	$	1,354,929	$	1,255,424
FEED AND BEDDING INCOME		93,051		83,224
RENTAL & OTHER INCOME		131,179		92,629
		1,579,159		1,431,277

STOCKYARD EXPENSES:
LABOR AND RELATED COSTS		592,310		562,070
OTHER OPERATING AND MAINTENANCE		371,629		332,280
FEED AND BEDDING EXPENSE		81,885		66,311
DEPRECIATION AND AMORTIZATION		14,400		15,300
TAXES OTHER THAN INCOME TAXES		57,126		56,909
GENERAL AND ADMINISTRATIVE		265,068		246,315
		1,382,418		1,279,185

INCOME FROM DISCONTINUED STKY OPERATIONS		196,741		152,092

NET INCOME (LOSS)		619,647		(370,473	)

OTHER COMPREHENSIVE INCOME (LOSS):

MINIMUM PENSION LIABILITY ADJUSTMENT		81,000		81,000

COMPREHENSIVE INCOME (LOSS)	$	700,647	$	(289,473	)

NET INCOME (LOSS) PER COMMON SHARE BASIC AND DILUTED	$	0.14	$	(0.09	)

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED		4,326,929		4,326,929

CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED JULY 31, 2011 AND 2010

	2011			2010
	(UNAUDITED)			(UNAUDITED)
REAL ESTATE OPERATIONS:
REAL ESTATE REVENUES:
SALE OF REAL ESTATE		0			0
OUTSIDE REAL ESTATE RENT		66,244			67,270
EXCHANGE BUILDING RENTAL INCOME		0			2,414
		66,244			69,684
REAL ESTATE EXPENSES:
COST OF REAL ESTATE SOLD		0			0
LABOR, OPERATING AND MAINTENANCE		2,500			5,765
DEPRECIATION AND AMORTIZATION		5,550			5,550
TAXES OTHER THAN INCOME TAXES		3,750			5,550
GENERAL AND ADMINISTRATIVE		2,550			7,257
		14,350			24,122
INCOME FROM REAL ESTATE OPERATIONS		51,894			45,562
STOCKYARD REVENUES:
YARD HANDLING AND AUCTION	$	216,003		$	277,142
FEED AND BEDDING INCOME		16,161			21,817
RENTAL & OTHER INCOME		27,471			34,028
		259,635			332,987
STOCKYARD EXPENSES:
LABOR AND RELATED COSTS		150,917			145,810
OTHER OPERATING AND MAINTENANCE		92,598			111,536
FEED AND BEDDING EXPENSE		16,197			15,826
DEPRECIATION AND AMORTIZATION		5,100			3,368
TAXES OTHER THAN INCOME TAXES		16,513			35,886
GENERAL AND ADMINISTRATIVE		45,131			54,641
		326,456			367,067
INCOME (LOSS) FROM STOCKYARD OPERATIONS		(66,821.00	)		(34,080.00	)
GENERAL AND ADMINISTRATIVE EXPENSE		(205,483.00	)		(208,042.00	)
(LOSS) INCOME FROM OPERATIONS		(220,410.00	)		(196,560.00	)

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED JULY 31, 2012 AND 2011 (UNAUDITED)

CANAL CAPITAL CORPORATION & SUBSIDIARIES

	2012		2011
REAL ESTATE OPERATIONS:
REAL ESTATE REVENUES:
SALE OF REAL ESTATE	838,600		0
OUTSIDE REAL ESTATE RENT	45,261		66,244
	883,861		66,244
REAL ESTATE EXPENSES:
COST OF REAL ESTATE SOLD	47,429		0
LABOR, OPERATING AND MAINTENANCE	3,009		2,500
DEPRECIATION AND AMORTIZATION	3,850		5,550
TAXES OTHER THAN INCOME TAXES	3,750		3,750
GENERAL AND ADMINISTRATIVE	2,550		2,550
	60,588		14,350
INCOME FROM REAL ESTATE OPERATIONS	823,273		51,894

GENERAL AND ADMINISTRATIVE EXPENSE	(305,079	)	(205,483	)
INCOME (LOSS) FROM CONTINUING OPERATIONS	518,194		(153,589	)
OTHER (EXPENSE) INCOME:
INTEREST & OTHER INCOME	6,072		53
INTEREST EXPENSE	(19,725	)	(21,175	)
ART SALES AND OPERATIONS	0		0
	(13,653	)	(21,122	)

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES	504,541		(174,711	)
PROVISION FOR INCOME TAXES	0		0
INCOME (LOSS) FROM CONTINUING OPERATIONS	504,541		(174,711	)

CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED JULY 31, 2011 AND 2010

Continued ...

	2011			2010
	(UNAUDITED)			(UNAUDITED)
OTHER (EXPENSE) INCOME:
INTEREST & OTHER INCOME		53			177
INTEREST EXPENSE		(21,175.00	)		(33,300.00	)
ART SALES AND OPERATIONS		0			0
		(21,122.00	)		(33,123.00	)
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES		(241,532.00	)		(229,683.00	)
PROVISION FOR INCOME TAXES		0			0
NET (LOSS) INCOME		(241,532.00	)		(229,683.00	)
OTHER COMPREHENSIVE (LOSS) INCOME:
MINIMUM PENSION LIABILITY ADJUSTMENT		27,000			27,000
COMPREHENSIVE (LOSS) INCOME	$	(214,532	)	$	(202,683	)
(LOSS) EARNINGS PER COMMON SHARE:
NET (LOSS) INCOME	$	(241,532	)	$	(229,683	)
LESS PREFERRED STOCK DIVIDEND		(18,000.00	)		(18,000.00	)
(LOSS) INCOME AVAILABLE TO COMMON STKDERS	$	(259,532	)	$	(247,683	)
NET (LOSS) INCOME PER COMMON SHARE BASIC AND DILUTED	$	(0.06	)	$	(0.06	)
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED		4,326,929			4,326,929

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED JULY 31, 2012 AND 2011 Continued

CANAL CAPITAL CORPORATION AND SUBSIDIARIES

		2012			2011

DISCONTINUED STOCKYARD OPERATIONS:

STOCKYARD REVENUES:
YARD HANDLING AND AUCTION	$	259,238		$	216,003
FEED AND BEDDING INCOME		23,264			16,161
RENTAL & OTHER INCOME		48,416			27,471
		330,918			259,635

STOCKYARD EXPENSES:
LABOR AND RELATED COSTS		167,109			150,917
OTHER OPERATING AND MAINTENANCE		104,793			92,598
FEED AND BEDDING EXPENSE		16,393			16,197
DEPRECIATION AND AMORTIZATION		4,800			5,100
TAXES OTHER THAN INCOME TAXES		16,173			16,513
GENERAL AND ADMINISTRATIVE		55,657			45,131
		364,925			326,456

INCOME FROM DISCONTINUED STKY OPERATIONS		(34,007	)		(66,821	)

NET INCOME (LOSS)		470,534			(241,532	)

OTHER COMPREHENSIVE INCOME (LOSS):

MINIMUM PENSION LIABILITY ADJUSTMENT		27,000			27,000

COMPREHENSIVE INCOME (LOSS)	$	497,534		$	(214,532	)

NET INCOME (LOSS) PER COMMON SHARE BASIC AND DILUTED	$	0.11		$	(0.06	)

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED		4,326,929			4,326,929

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEAR ENDED OCTOBER 31, 2010 (UNAUDITED) AND

FOR THE NINE MONTHS ENDED JULY 31, 2011 (UNAUDITED)

	COMMON STOCK				PREFERRED STOCK
	NUMBER				NUMBER				ADDITIONAL								TREASURY
	OF				OF				PAID-IN		ACCUMULATED			COMPREHENSIV			STOCK,
	SHARES		AMOUNT		SHARES		AMOUNT		CAPITAL		DEFICIT			LOSS			AT COST
BALANCE, OCTOBER 31, 2009		5,313,794	$	53,138		9,102,655	$	91,027	$	28,322,341	$	(15,068,051	)	$	(1,915,985	)	$	(11,003,545	)
NET INCOME		0		0		0		0		0		10,505			0			0
PREFERRED STOCK DIVIDEND		0		0		0		0		0		-57,000			0			0
MINIMUM PEN. LIAB. ADJ.		0		0		0		0		0		0			21,612			0
BALANCE, OCTOBER 31, 2010		5,313,794	$	53,138		9,102,655	$	91,027	$	28,322,341	$	(15,114,546	)	$	(1,894,373	)	$	(11,003,545	)
NET LOSS		0		0		0		0		0		-370,473			0			0
PREFERRED STOCK DIVIDEND		0		0		0		0		0		-54,000			0			0
MINIMUM PEN. LIAB. ADJ.		0		0		0		0		0		0			81,000			0
BALANCE, JULY 31, 2011		5,313,794	$	53,138		9,102,655	$	91,027	$	28,322,341	$	(15,539,019	)	$	(1,813,373	)	$	(11,003,545	)

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JULY 31, 2012 AND 2011 (UNAUDITED)

CANAL CAPITAL CORPORATION & SUBSIDIARIES

		JULY 2012			JULY 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)	$	619,647		$	(370,473	)

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION		29,350			31,950
GAIN ON SALES OF REAL ESTATE		(1,137,350	)		0
MINIMUM PENSION LIABILITY ADJUSTMENT		81,000			81,000

DECREASE (INCREASE) IN OPERATING ASSETS
ACCOUNTS RECEIVABLE		(10,860	)		67,095
STOCKYARDS INVENTORY		19,099			13,348
PREPAID EXPENSES		(11,309	)		(17,181	)
RESTRICTED CASH – LETTER OF CREDIT		(15,000	)		0
RESTRICTED CASH – TRANSIT INSURANCE		(2,205	)		(14,700	)

INCREASE (DECREASE) IN OPERATING LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES		(136,911	)		(57,736	)
LINE OF CREDIT – ORDER BUYING		(32,395	)		(154,000	)
PENSION PLAN PAYABLE		(182,059	)		(154,846	)
SALARIES AND INTEREST PAYABLE - OFFICERS		(417,467	)		169,025
REAL ESTATE TAXES PAYABLE		10,417			10,639
TRANSIT INSURANCE		2,205			14,700

TOTAL ADJUSTMENTS		(1,803,485	)		(10,706	)

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(1,183,838	)		(381,179	)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JULY 31, 2011 AND 2010

	JULY 2011			JULY 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
NET (LOSS) INCOME	$	(370,473	)	$	(353,856	)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION		31,950			26,753
GAIN ON SALES OF REAL ESTATE		0			0
MINIMUM PENSION LIABILITY ADJUSTMENT		81,000			81,000
DECREASE (INCREASE) IN ASSETS:
NOTES AND ACCOUNTS RECEIVABLE		67,095			(164,470.00	)
STOCKYARDS INVENTORY		13,348			11,729
PREPAID EXPENSES		(17,181.00	)		(44,974.00	)
RESTRICTED CASH – LETTER OF CREDIT		0			-10,000
RESTRICTED CASH – TRANSIT INSURANCE		(14,700.00	)		(6,535.00	)
INCREASE (DECREASE) IN LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES		(193,941.00	)		113,159
PENSION PLAN PAYABLE		0			0
PAYABLE TO EXECUTIVE OFFICERS		169,025			337,875
ACCRUED PROFESSIONAL FEES		(17,795.00	)		(65,969.00	)
LONG-TERM PENSION LIABILITY		(154,846.00	)		(14,540.00	)
REAL ESTATE TAXES PAYABLE		10,639			(27,391.00	)
OTHER NON-CURRENT LIABILITIES		14,700		0
TOTAL ADJUSTMENTS		(10,706.00	)	236,637
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(381,179.00	)		(117,219.00	)

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JULY 31, 2012 AND 2011 Continued

CANAL CAPITAL CORPORATION & SUBSIDIARIES

		JULY 2012			JULY 2011

CASH FLOWS FROM INVESTING ACTIVITIES:

PROCEEDS FROM SALES OF REAL ESTATE		1,690,600			0
COSTS RELATING TO SALES OF REAL ESTATE		(64,083	)		0
CAPITAL EXPENDITURES		0			(50,710	)

NET CASH PROVIDED BY INVESTING ACTIVITIES		1,626,517			(50,710	)

CASH FLOWS PROVIDED BY (USED) IN FINANCING ACTIVITIES:

PROCEEDS FROM LONG-TERM DEBT OBLIGATION		0			0
REPAYMENT OF LONG-TERM DEBT OBLIGATION		(283,000	)		0

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(283,000	)		0

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		159,679			(431,889	)

CASH AND CASH EQUIVALENTS AT BEGN OF YEAR		35,514			510,361

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	195,193		$	78,472


		JULY 31,
		2012			2011
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

CASH PAID DURING THE YEAR FOR:

INTEREST	$	64,354		$	63,525
INCOME TAXES	$	0		$	0

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JULY 31, 2011 AND 2010

Continued ...

	JULY 2010			JULY 2010
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALES OF REAL ESTATE		0			0
COSTS RELATING TO SALES OF REAL ESTATE		0			0
CAPITAL EXPENDITURES		(50,710	)		(375,000	)
NET CASH PROVIDED BY INVESTING ACTIVITIES		(50,710	)		(375,000	)
CASH FLOWS PROVIDED BY (USED) IN FINANCING ACTIVITIES:
PROCEEDS FROM LONG-TERM DEBT OBLIGATION		0			340,000
REPAYMENT OF LONG-TERM DEBT OBLIGATION		0			0
NET CASH PROVIDED BY (USED) IN FINANCING ACTIVITIES		0			340,000
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(431,889.00	)		(152,219.00	)
CASH AND CASH EQUIVALENTS AT BEGN OF YEAR		510,361			154,624
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	78,472		$	2,405
	JULY 31,
	2011			2010
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR:
INTEREST	$	63,525		$	88,179
INCOME TAXES	$	0		$	0
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
PREFERRED STOCK DIVIDENDS	$	54,000		$	54,000

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

~~Index~~CANAL CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

CANAL CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2011

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Canal Capital Corporation ~~("Canal")~~, incorporated in the state of Delaware in 1964, commenced business operations through a predecessor in 1936.

As Going Concern - While the Company is currently operating as a ~~Stockholder~~going ofconcern, ~~Canal~~certain ~~Capital~~significant ~~Corporation~~factors ~~you~~raise substantial ~~should~~doubt beabout ~~aware~~the ~~that~~Company's ~~due~~ability to ~~financial~~continue ~~constraints~~as ~~Canal’s~~a ~~fiscal~~going ~~2011~~concern. The ~~and~~Company ~~2010~~has ~~Financial~~suffered ~~Statements~~recurring ~~are~~losses ~~being~~from ~~presented~~operations inand ~~this~~is ~~Form~~obligated ~~10-Q~~to continue ~~without~~making substantial annual contributions to its defined benefit pension plan. The financial statements do not include any adjustments that might result from the resolution of ~~independent~~these ~~audit~~uncertainties. Additionally, the accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or ~~review~~the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

~~General~~ Due -to ~~While~~cash ~~the~~flow constraints, the Company ishas ~~currently~~entered a program of closely monitoring and reducing where possible its operating asexpenses. aAs ~~going~~part ~~concern~~of that program, ~~certain~~the ~~significant~~Company ~~factors~~has ~~raise~~sold ~~substantial~~most ~~doubt~~of its ~~about~~property and has reduced the ~~Company's~~level ~~ability~~of toits ~~continue~~art asinventories ato ~~going~~enhance ~~concern~~cash flows. ~~The~~ As of the date of this report, the Company has ~~suffered~~sold ~~recurring~~its ~~losses~~Sioux ~~from~~Falls, South Dakota property (formerly used in stockyard operations), two of its three remaining rental properties and isits ~~obligated~~stockyard tooperations, ~~continue~~including ~~making~~the ~~substantial~~30 ~~annual~~acres of ~~contributions~~land toand ~~its~~the ~~defined~~improvements ~~benefit~~thereon ~~pension~~located ~~plan~~in St. Joseph, Missouri. The Company’s ~~financial~~only ~~statements~~remaining doreal ~~not~~estate ~~include~~property ~~any~~is ~~adjustments~~a ~~that~~rental ~~might~~property ~~result~~located in Omaha, Nebraska. Management is unsure if its income from ~~the~~operations ~~resolution~~combined with its cost-cutting program and planned reduction of ~~these~~its ~~uncertainties~~antiquities art inventory will enable it to finance its future business activities or fund operating cash requirements. ~~Additionally~~In the interim, the ~~accompanying~~Company ~~financial~~is ~~statements~~undertaking doefforts to ~~not~~identify ~~include~~alternative ~~any~~business ~~adjustments~~opportunities ~~relating~~for tothe Company. If for some reason the ~~recoverability~~Company ~~and~~is ~~classification~~not able to identify an acceptable alternative business opportunity within a reasonable period of ~~recorded~~time, ~~asset~~it ~~amounts~~may ornot have sufficient resources to continue meeting its reporting obligations with the ~~amounts~~Securities and Exchange ~~classification~~Commission or other obligations which arise from its minimal of operations. ~~liabilities~~This ~~that~~in ~~might~~turn bewould ~~necessary~~severely ~~should~~diminish the ~~Company~~ability beof ~~unable~~the Company to explore ~~continue~~alternative asbusiness ~~a going concern~~opportunities.

Canal continues to closely monitor and reduce where possible its operating expenses and plans to continue its program to develop or sell the property it holds for development or resale as well as to reduce the level of its art inventories to enhance current cash flows. Management believes that its income from operations combined with its cost cutting program and planned reduction of its art inventory will enable it to finance its current business activities. There can, however, be no assurance that Canal will be able to effectuate its planned art inventory reductions or that its income from operations combined with its cost cutting program in itself will be sufficient to fund operating cash requirements.

Canal is engaged in two distinct businesses - real estate and stockyard operations.

Real Estate Operations - Canal's real estate properties are located in Sioux City, Iowa, South St Paul, Minnesota, St Joseph, Missouri, Omaha, Nebraska and Sioux Falls, South Dakota. The properties consist, for the most part, of land and structures leased to third parties (rail car repair shops, lumber yards and various other commercial and retail businesses) as well as vacant land available for development or resale. Its principal real estate operating revenues are derived from lease income from land and structures leased to various commercial and retail enterprises, and proceeds from the sale of real estate properties. In addition to selling what was excess stockyard property, the company entertains any offers to purchase, develop and restructure real estate lots surrounding its existing operating lease properties, stockyard operating properties and properties held for development or resale in order to enhance the value of the existing properties and surrounding real estate.

~~Index~~ Canal was engaged in two distinct businesses - real estate and stockyard operations. As discussed above, as of the date of this report, Canal is no longer in the stockyards business.

Real Estate Operations – At July 31, 2012 Canal's real estate ~~operations~~properties ~~resulted~~are located in ~~operating~~Sioux ~~income~~City, ofIowa, ~~$160~~St Joseph,~~000~~ Missouri and ~~$147~~Omaha,~~000~~ ~~for~~Nebraska. ~~the~~The ~~nine~~properties ~~month~~consist, ~~periods~~for ~~ended~~the ~~July~~most ~~31,~~part of ~~2011~~land and ~~2010,~~structures ~~respectively.~~leased ~~There~~to ~~were~~third noparties ~~real~~(a ~~estate~~rail ~~sales~~car inrepair ~~the~~shop) ~~first~~as ~~nine~~well as ~~months~~vacant ofland ~~fiscal~~available ~~2011~~for development or ~~2010~~resale. ~~Additionally,~~Its principal real estate operating ~~operations~~revenues ~~contributed~~are ~~$203,000~~derived ~~and~~from ~~$217,000~~lease toincome ~~Canal’s~~from ~~revenues~~land ~~for~~and ~~the~~structures ~~nine~~leased to ~~month~~various ~~periods~~commercial ~~ended~~and ~~July~~retail 31enterprises, ~~2011~~ and ~~2010,~~proceeds ~~respectively~~from the sale of real estate properties.

As In ofApril ~~July 31~~2012, ~~2011,~~Canal ~~there~~sold ~~are~~6 ~~approximately 2~~ acres of ~~undeveloped~~ land ~~owned~~and bythe ~~Canal~~improvements ~~adjacent~~thereon tolocated ~~its~~in ~~stockyard~~Sioux ~~properties.~~City, InIowa ~~addition~~ to ~~selling~~the company’s ~~what~~Chief ~~was~~Executive ~~excess~~Officer, ~~stockyard~~Michael ~~property,~~E. ~~the~~Schultz ~~company~~for ~~entertains~~$852,000 ~~any~~generating ~~offers~~a gain toof ~~purchase~~$346,000. ~~develop~~Canal ~~and~~repaid ~~restructure~~$283,000 ~~real~~of ~~estate~~its ~~lots~~outstanding ~~surrounding~~mortgage ~~its~~notes ~~existing~~from the ~~operating~~proceeds ~~lease~~of ~~properties,~~this ~~stockyard~~sale. ~~operating~~In ~~properties~~July ~~and~~2012, ~~properties~~Canal ~~held~~sold ~~for~~one ~~development~~acre orof ~~resale~~land inand ~~order~~the improvements tothereon ~~enhance~~located ~~the~~in ~~value~~South ofSt. ~~the~~Paul, ~~existing~~Minnesota ~~properties~~for ~~and~~$839,000 generating ~~surrounding~~a ~~real~~gain ~~estate~~of $791,000.

Stockyard Operations -– ~~Canal~~At ~~currently~~July 31, ~~operates~~2012 Canal operated one central public stockyard located in St. Joseph, Missouri. In August 2012, Canal sold its St. Joseph, Missouri stockyard operation (including approximately 30 acres of land and improvements) for $500,000 generating a loss of $577,000.

Sioux Falls Stockyard Closure - In December 2009, after extensive efforts to reorganize and return this stockyard to profitability, Canal ceased all stockyard operations at its Sioux Falls, South Dakota location. In September 2010,Canal sold approximately 37 acres of land previously used in stockyard operations located in Sioux Falls, South Dakota for $2.0 ~~million~~SUMMARY ~~generating~~OF ~~operating~~SIGNIFICANT ~~income~~ACCOUNTING ~~of $0.7 million.~~POLICIES

~~Public~~ A) ~~stockyards~~Earnings ~~act~~(Loss) ~~much~~Per ~~like~~Share a-- Basic ~~securities~~earnings ~~exchange,~~(loss) ~~providing~~per ~~markets~~share ~~for~~is ~~all~~computed ~~categories~~by ofdividing ~~livestock and fulfilling~~ the ~~economic~~net ~~functions~~income of(loss) applicable ~~assembly,~~to ~~grading,~~common ~~and~~shares ~~price discovery. The livestock handled~~ by the ~~Company’s~~weighted ~~stockyards~~average ~~include~~of ~~cattle,~~common ~~hogs,~~shares ~~and~~outstanding during ~~sheep. Cattle and hogs may come through~~ the ~~stockyard facilities at two different stages, either as feeder livestock or slaughter livestock~~period. ~~The~~Diluted ~~Company’s~~earnings ~~stockyards~~(loss) ~~provide~~per ~~all~~share ~~services~~adjusts ~~and~~basic ~~facilities~~earnings (loss) ~~required~~per toshare ~~operate an independent market~~ for the ~~sale~~effects of ~~livestock~~convertible securities, ~~including~~stock ~~veterinary~~options ~~services~~and other ~~facilities,~~potentially ~~auction~~dilutive ~~arenas,~~financial ~~auctioneers~~instruments, ~~weigh~~only ~~masters~~in ~~and scales,~~the ~~feed~~period ~~and~~in ~~bedding,~~which such ~~and~~effect ~~security~~is ~~personnel~~dilutive. InThere ~~addition,~~were ~~the~~no ~~stockyards~~dilutive ~~provide~~securities ~~other~~in ~~services~~any ~~including~~of ~~pure~~the ~~bred~~periods presented ~~and~~herein. ~~other~~The ~~specialty~~shares ~~sales~~issuable ~~for~~upon ~~producer~~the ~~organizations.~~exercise ~~The~~of ~~Company~~stock ~~promotes~~options ~~its~~are excluded ~~stockyard~~from ~~business~~the ~~through~~calculation ~~public~~of ~~relations~~net ~~efforts,~~income ~~advertising,~~(loss) ~~and~~per ~~personal~~share ~~solicitation~~as oftheir ~~producers~~effect would be antidilutive.

B) Recent Accounting Pronouncements -- In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04"). This update amends ASC Topic 820, “Fair Value Measurement and Disclosure.” ASU 2011-04 clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. ASU 2011-04 is effective for annual and interim reporting periods beginning on or after December 15, 2011. The new guidance is to be adopted prospectively and early adoption is not permitted. We do not believe that adoption of ASU 2011-04 will have a significant impact on our financial position, results of operations or cash flows.

~~Index~~ On June 16, 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05"). This update amends ASC Topic 220, “Comprehensive Income” to provide that total comprehensive income will be reported in one continuous statement or two separate but consecutive statements of financial performance. Presentation of total comprehensive income in the statement of stockholders’ equity or the footnotes will no longer be allowed. The calculation of net income and basic and diluted net income per share will not be affected. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2011. Retrospective adoption is required and early adoption is permitted. We do not believe that adoption of ASU 2011-05 will have a significant impact on our financial position, results of operations or cash flows.

~~Actual marketing transactions at a stockyard are managed for livestock producers by market agencies and independent commission sales people to which the livestock are consigned for sale~~3. ~~These~~ ~~market~~INTERIM ~~agencies~~FINANCIAL (some of which are owned and operated by the Company) and independent sales people receive commissions from the seller upon settlement of a transaction and the stockyard receives a yardage fee on all livestock using the facility which is paid within twenty-four hours of the sale. Yardage fees vary depending upon the type of animal, the extent of services provided by the stockyard, and local competition. Yardage revenues are not directly dependent upon market prices, but rather are a function of the volume of livestock handled. In general, stockyard livestock volume is dependent upon conditions affecting livestock production and upon the market agencies and independent commission sales people which operate at the stockyards. Stockyard operations are seasonal, with greater volume generally experienced during the first and fourth quarters of each fiscal year, during which periods livestock is generally brought to market.STATEMENTS

In The ~~addition~~interim toconsolidated financial ~~market~~statements ~~agencies~~included ~~and~~herein ~~independent~~have ~~commission~~been ~~sales~~prepared ~~people~~by ~~the~~Management, ~~St.~~in accordance ~~Joseph~~with ~~stockyards~~accounting ~~has~~principles ~~solicitation~~generally ~~operations~~accepted in the United States, and in the opinion of ~~its~~Management, ~~own~~contain ~~which~~all ~~account~~adjustments ~~for~~necessary ~~approximately~~to ~~50%~~present fairly its financial position as of ~~its~~July ~~livestock~~31, ~~volume~~2012 ~~annually.~~and ~~Canal~~the ~~intends~~results toof ~~continue~~its operations and its ~~soliciting~~cash ~~efforts~~flows atfor ~~its~~the ~~St.~~nine ~~Joseph~~month ~~stockyards~~period inended ~~fiscal~~July ~~2011. Further~~31, ~~Canal~~2012. ~~tries~~All of tothe ~~balance~~above ~~its~~referenced ~~dependence~~adjustments onwere ~~market~~of ~~agencies~~a normal recurring nature. Certain information and ~~independent~~footnote ~~commission~~disclosures ~~sales~~normally ~~people~~included in ~~various~~the ~~ways,~~financial statements ~~including:~~prepared ~~developing~~in ~~solicitation~~accordance ~~operations~~with ofgenerally ~~its~~accepted ~~own;~~accounting ~~direct~~principles have ~~public~~been ~~relations;~~condensed ~~advertising~~or ~~and~~omitted. ~~personal~~These ~~solicitation~~financial ofstatements ~~producers~~should onbe ~~behalf~~read ofin conjunction with the ~~stockyards;~~consolidated ~~providing~~financial ~~additional~~statements ~~services~~for at the ~~stockyards~~two toyears ~~attract~~ended October ~~sellers~~31, 2011 and the notes thereto which are contained in Canal’s 2011 ~~buyers;~~ Annual ~~and~~Report ~~providing~~on ~~incentives~~Form to10-K. ~~market~~The ~~agencies~~results ~~and~~of ~~independent~~operations ~~commission~~for ~~sales~~the ~~people~~period presented is not necessarily indicative of the results to be expected for ~~increased~~the ~~business~~remainder of fiscal 2012.

Stockyard operations resulted in operating income of $152,000 and operating income of $214,000 for the nine month periods ended July 31, 2011 and 2010, respectively. Additionally, stockyard operations contributed $1,431,000 and $1,648,000 to Canal’s revenues for the nine month periods ended JULY 31, 2011 and 2010, respectively. Canal maintains an inventory of feed and bedding which is comprised primarily of hay, corn and straw. The value of this inventory was $1,000 and $15,000 at July 31, 2011 and October 31, 2010, respectively.

~~Index~~4. RELATED PARTY DEBT

~~SUMMARY~~ The OFCompany’s ~~SIGNIFICANT~~mortgage ~~ACCOUNTING~~notes (originally ~~POLICIES~~issued in 1998) are due May 15, 2015 and are held entirely by the Company’s Chief Executive Officer. These notes carry interest at the rate of ten percent per annum. These notes, among other things, prohibit Canal from becoming an investment company as defined by the Investment Company Act of 1940; require Canal to maintain minimum net worth; restricts Canal’s ability to pay cash dividends or repurchase stock and require principal prepayments to be made only out of the proceeds from the sale of certain assets. As of July 31, 2012, the balance due under these notes was 564,000, all of which is classified as long-term debt-related party. Canal has incurred interest expense on these notes of approximately $64,000 and $64,000 for the nine month periods ended July 31, 2012 and 2011, respectively. Accrued interest of $41,200 and $84,700 is included in salaries and interest payable-officers at July 31, 2012 and October 31, 2011, respectively.

~~A) Principles~~ At ofJuly ~~Consolidation~~31, --2012, ~~The~~substantially all ~~consolidated~~of ~~financial~~Canal's ~~statements~~real ~~include~~properties, the ~~accounts~~stock of ~~Canal~~certain ~~Capital~~subsidiaries, ~~Corporation~~the investments ~~("Canal")~~ and ~~its~~a ~~wholly-owned~~substantial ~~subsidiaries~~portion ~~(“the~~of ~~Company”).~~its ~~All~~art ~~material~~inventories ~~intercompany~~are ~~balances~~pledged ~~and~~as collateral ~~transactions~~for ~~have~~the ~~been~~following ~~eliminated in consolidation.~~obligations:

B) Properties and Related Depreciation -- Properties are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the properties. Such lives are estimated from 35 to 40 years for buildings and from 5 to 20 years for improvements and equipment.

		July 31,		October 31,
($ 000's Omitted)		2012		2011
Variable rate mortgage notes due May 15, 2015 - related party	$	564	$	847
Less -- current maturities		0		0
Long-term debt	$	564	$	847

~~Property~~ The ~~held~~Company ~~for~~has ~~Development~~a orline ~~Resale~~of --credit with ~~Property~~HNB ~~held~~Bank ~~for~~in ~~development~~the oramount ~~resale~~of ~~consist~~$250,000. ofThis ~~approximately~~credit 2line ~~acres~~is ~~located~~used in the Company’s ~~Midwest~~Saint ofJoseph ~~undeveloped~~stockyard ~~land~~order ~~not~~buying ~~currently~~operation. ~~utilized~~The ~~for~~outstanding balances ~~corporate~~on ~~purposes~~this ~~nor~~line ~~included in any~~ of ~~the~~credit ~~present~~are ~~operating~~secured ~~leases. The~~by ~~Company~~either ~~constantly~~the ~~evaluates~~livestock ~~proposals~~purchased ~~received~~on order ~~for~~or the ~~purchase,~~associated ~~leasing~~receivable orfor ~~development~~the oflivestock ~~this~~that ~~asset. The~~has ~~land~~been isdelivered ~~valued at cost which does not exceed~~ to the ~~net realizable value~~purchaser.

~~Long-Lived Assets –~~ The ~~Company~~outstanding ~~reviews~~balances ~~the~~on ~~impairment~~this credit ofline ~~long-lived~~were ~~assets~~$74,000 ~~whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company considers historical performance~~ and ~~future~~$106,000 ~~estimated~~at ~~results~~July in31, ~~its~~2012 ~~evaluation of potential impairment~~ and ~~then~~October ~~compares the carrying amount of the assets to the estimated future cash flows expected to result from the use of the asset. The measurement of the loss~~31, ~~if any~~2011, ~~will be calculated as the amount by which the carrying amount of the asset exceeds the fair value of the asset~~ respectively.

C) Expenditures for maintenance and repairs are charged to operations as incurred. Significant renewals and betterments are capitalized. When properties are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in current income.

D) Reclassification -- Certain prior year amounts have been reclassified to conform to the current year presentation.

~~Index~~5. RESTRICTED CASH

~~E) Art~~ Letter ~~Inventory~~of ~~Held~~Credit ~~for Sale~~ - ~~Inventory~~This ~~of art~~ is ~~valued at the lower of cost~~a $155,000 ~~including~~deposit ~~direct~~with ~~acquisition~~Mercantile ~~and~~Bank ~~restoration expenses, or net realizable value on a specific identification basis. The nature of art makes it difficult~~ to ~~determine~~secure abonds ~~replacement~~required ~~value. The most compelling evidence of a value in most cases is an independent appraisal. The net realizable value of Canals remaining art inventory has been estimated~~ by ~~management based in part on~~ the ~~Company’s history~~ ~~of art sales in the~~Packers ~~current~~ and ~~previous~~Stockyards ~~years~~Administration ~~and~~ in ~~part~~relation onto the ~~results of the independent appraisals done in previous years~~St. ~~However,~~Joseph ~~because~~Stockyards ofclearing operation. ~~the~~This ~~nature~~deposit ~~of art inventory, such determination~~ is ~~very~~maintained ~~subjective~~in ~~and,~~an ~~therefore,~~interest ~~the~~bearing ~~estimated values could differ significantly from the amount ultimately realized~~account.

~~F) Income~~ Transit ~~Taxes~~Insurance -- ~~Canal~~Transit insurance covers livestock for the period that they are physically at the stockyards and ~~its~~under ~~subsidiaries~~the ~~file~~care of stockyard personnel. This self insurance program is funded by a ~~consolidated~~per ~~Federal~~head ~~income~~charge ~~tax~~on ~~return~~all livestock received at the stockyard. The ~~Company~~restricted ~~accounts~~cash ~~for~~-transit ~~income~~insurance ~~taxes~~balances ~~under~~of ~~the~~approximately $38,000 ~~liability~~and ~~method.~~$35,000 ~~Under~~at ~~this~~July ~~method~~31, ~~deferred~~2012 ~~tax~~and ~~assets~~October ~~and~~31, ~~liabilities~~2011, ~~are~~respectively, represents ~~determined~~the ~~based~~excess onof ~~differences~~per ~~between~~head ~~financial~~fees ~~reporting~~charged ~~and~~over ~~tax~~actual ~~bases~~payments ofmade ~~assets~~for livestock ~~and~~that ~~liabilities~~was injured or died while at the stockyards.

~~G) Stockyard Inventory - Inventory is stated at the lower of cost or market~~6. ~~Cost~~ isSTOCK ~~determined~~OPTION ~~using the first-in, first-out method.~~PLAN

~~H) Accounting~~ Under ~~Estimates~~Canal's --1984 ~~The~~Employee ~~preparation~~and 1985 Directors Stock Option Plans, 550,000 and 264,000 shares, respectively, of Canal's ~~financial~~common ~~statements~~stock inhave ~~conformity~~been ~~with~~reserved ~~accounting~~for ~~principles~~option ~~generally~~grants. ~~accepted~~The inpurchase price of shares subject to each option granted, under the ~~United~~Employee ~~States~~and ~~requires~~Directors ~~management~~Plans, will tonot ~~make~~be ~~estimates~~less than 85% and ~~assumptions~~100%, ~~that~~respectively, ~~affect~~of ~~the~~their ~~reported~~fair ~~amounts~~market value at the date of ~~assets~~grant. ~~and~~Options ~~liabilities~~granted ~~and~~under ~~disclosure~~both plans are exercisable for 10 years from the date of ~~contingent~~grant, ~~assets~~but ~~and~~no ~~liabilities~~option atwill be exercisable earlier than one year from the date of grant. Under the ~~financial~~Employee ~~statements~~Plan, ~~and~~stock appreciation rights may be granted in connection with stock options, either at the ~~reported~~time ~~amounts~~of grant of ~~revenues~~the options ~~and~~or ~~expenses~~at ~~during~~any ~~the~~time ~~reporting~~thereafter. ~~period~~No stock appreciation rights have been granted under this plan. ~~Actual~~ ~~results~~There ~~could~~were ~~differ~~no ~~from~~exercisable ~~those~~options ~~estimates~~outstanding under either of these plans at July 31, 2012.

~~I) Revenue Recognition –- Lease and rental revenues are recognized ratably over the period covered~~7. ~~All~~ ~~real~~ART estate leases are accounted for as operating leases. Revenues from the sale of real estate are recognized at the time the sale has been consummated on the full accrual method wherein the seller has transferred to the buyer the usual risks and rewards of ownership in a transaction that is in substance a sale and does not have a substantial continuing involvement with the property; the seller’s receivable is not subject to future subordination and the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay for the property. Revenues from stockyard operations which consist primarily of yardage fees (a standard per head charge for each animal sold through the stockyards) and sale of feed and bedding are recognized at the time the service is rendered or the feed and bedding are delivered.INVENTORY

Antiquities art valued at $10,000 represented 100% of total art inventory at both July 31, 2012 and October 31, 2011. The Company records a valuation allowance against the current portion of its inventory to reduce it to its estimated net realizable value based on the history of losses sustained on inventory items sold in the current and previous years. As of July 31, 2012 the valuation allowance is approximately $466,000.

~~Index~~8. INCOME TAXES

~~Other~~ At ~~Income~~July ~~(Expense)~~31, ~~Items~~2012, --the ~~Art~~Company ~~sales~~has net ~~are~~operating ~~recognized~~loss ~~using~~carry ~~the~~forwards ~~specific~~of ~~identification~~approximately ~~method~~$8,213,000 ~~when~~that ~~the~~expire through ~~piece~~2029. isFor ~~shipped~~financial tostatement ~~the~~purposes, ~~purchaser. Art~~a ~~owned~~valuation byallowance ~~Canal~~has ~~which~~been provided isto onoffset ~~consignment,~~the ~~joint~~net ~~venture,~~deferred ortax ~~being~~assets ~~examined~~due into ~~contemplation~~the ofcumulative ~~sale~~net operating islosses ~~not~~incurred ~~removed~~during ~~from~~recent ~~inventory~~years. ~~and~~The ~~not~~valuation ~~recorded~~allowance aswill abe reduced ~~sale~~when ~~until~~and ~~notice~~if, ofin ~~sale~~the oropinion ~~acceptance~~of ~~has~~management, ~~been~~significant ~~received. The~~positive ~~sale~~evidence exists ofwhich ~~investments~~indicates ~~available~~that ~~for~~it ~~sale,~~is ifmore ~~any,~~likely ~~are~~than ~~recognized~~not onthat athe ~~specific~~Company ~~identification~~will ~~method,~~be able onto arealize ~~trade~~its ~~date~~deferred ~~basis~~tax assets.

~~J) Statements of Cash Flows -- The company considers all short-term investments with a maturity of three months or less to be cash equivalents~~9. ~~Cash~~LEASE equivalents primarily include bank, broker and time deposits with an original maturity of less than three months. These investments are carried at cost, which approximates market value. Canal made state income tax payments of $0, and $0, and interest payments of $64,000, and $88,000 for the nine month periods ended July 31, 2011 and 2010, respectively.COMMITMENTS

~~K) Comprehensive Income (Loss) -- The Company~~ Canal’s ~~only~~corporate ~~adjustments~~headquarters are ~~for~~now ~~each~~located ~~classification~~in of the ~~comprehensive~~personal ~~income~~residence ~~was~~of ~~for~~its ~~minimum~~Chief ~~pension~~Financial ~~liability~~Officer.

L) There ~~Earnings~~are ~~(Loss)~~no ~~Per~~operating ~~Share~~leases that --have ~~Basic~~initial ~~earnings~~or ~~(loss)~~remaining ~~per~~non-cancellable ~~share~~terms isin ~~computed~~excess ~~by dividing the net income (loss) applicable to common shares by the weighted average~~ of ~~common~~one ~~shares~~year ~~outstanding~~as ~~during the period. Diluted earnings (loss) per share adjusts basic earnings (loss) per share for the effects~~ of July ~~convertible securities~~31, ~~stock~~2012. ~~options and other potentially dilutive financial instruments~~Accordingly, ~~only~~Canal inhas ~~the period in which such effect is dilutive. There were~~ no ~~dilutive~~future ~~securities~~minimum inpayments ~~any~~due ofover the ~~periods presented herein. The shares issuable upon the exercise of stock options are excluded from the calculation of net income (loss) per share as their~~ ~~effect~~ next ~~would~~five ~~be antidilutive~~years.

~~In June 2009, the FASB issued SFAS No~~10. ~~168,~~MINIMUM ~~“The~~FUTURE ~~FASB~~RENTALS ~~Accounting~~ON ~~Standards~~OPERATING Codification and the Hierarchy of Generally Accepted Accounting Principles a replacement of FASB Statement No. 162” (“SFAS 168”). Under SFAS 168, the FASB Accounting Standards Codification (Codification) will become the sole source of authoritative U.S. GAAP to be applied by nongovernmental entities. SFAS 168 is effective for the financial statements issued for interim and annual periods ending after September 15, 2009. The adoption will have no material impact on the Company’s consolidated financial statements but will require that interim and annual filings include references to the Codification.LEASES

Minimum future rentals consist primarily of rental income from leased land and structures, Exchange Building rents (commercial office space) and other rental activities, all of which are accounted for as operating leases. The estimated minimum future rentals on operating leases are $210,000, $110,000, $110,000, $110,000 and $110,000 for fiscal years 2012, 2013, 2014, 2015 and 2016, respectively.

11.	PROPERTY USED IN STOCKYARD OPERATIONS

A schedule of the Company’s property used in stockyard operations at July 31, 2012 is as follows (000's omitted):

						Current Year
						(Retirements)
		Historical Cost				Additions							Carrying
				Bldgs. &				Bldgs. &		Accum.			Value
Description (1)		Land		Imprvmts.		Land		Imprvmts.		Depr.			07/31/12

30 acres of land in St. Joseph, MO Acquired in 1942	$	902	$	384	$	0	$	0	$	(228	)	$	1,058

Substantially all of Canal’s real property is pledged as collateral for its related party debt obligations.

~~Index~~12. PROPERTY ON OPERATING LEASES

3. A ~~INTERIM~~schedule ~~FINANCIAL~~of ~~STATEMENTS~~the Company’s property on operating leases at July 31, 2012 is as follows (000's omitted):

As a Stockholder of Canal Capital Corporation you should be aware that due to financial constraints Canal’s fiscal 2011 and 2010 Financial Statements are being presented in this Form 10-Q without benefit of independent audit or review.

						Current Year
						(Retirements
		Historical Cost				Additions									Carrying
				Bldgs. &					Bldgs. &			Accum.			Value
Description (1)		Land		Imprvmts.		Land			Imprvmts.			Depr.			07/31/12
New York office Leasehold assets	$	0	$	8	$	0		$	0		$	(8	)	$	0

9 acres of land in Omaha, NE Acquired in 1976		1,150		35		0			0			(21	)		1,164

3 acres of land in S. St. Paul, MN Acquired in 1937		10		485		(10	)		(485	)		0			0

4 acres of land in Sioux City, IA Acquired in 1937		475		0		(475	)		0			0			0

	$	1,635	$	520	$	(485	)	$	(485	)	$	(21	)	$	1,164

~~General~~Substantially -all ~~While~~of ~~the Company is currently operating as a going concern, certain significant factors raise substantial doubt about the Company'~~Canal’s ~~ability~~real toproperty ~~continue as a going concern. The Company has suffered recurring losses from operations and~~ is ~~obligated~~pledged toas collateral ~~continue~~for ~~making substantial annual contributions to~~ its ~~defined~~related ~~benefit~~party ~~pension~~debt ~~plan~~obligations. The financial statements do not include any adjustments that might result from the resolution of these uncertainties. Additionally, the accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The interim consolidated financial statements included herein have been prepared by Management, in accordance with accounting principles generally accepted in the United States, and in the opinion of Management, contain all adjustments necessary to present fairly its financial position as of July 31, 2011 and the results of its operations and its cash flows for the nine month period ended July 31, 201113. ~~All~~ ofPROPERTY ~~the~~HELD ~~above referenced~~FOR ~~adjustments~~DEVELOPMENT ~~were of a normal recurring nature. Certain~~OR information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These financial statements should be read in conjunction with the consolidated financial statements for the three years ended October 31, 2010 and the notes thereto which are contained in Canal’s 2010 Annual Report on Form 10-K. The results of operations for the period presented is not necessarily indicative of the results to be expected for the remainder of fiscal 2011.RESALE

4. A ~~STOCK~~schedule ~~OPTION~~of ~~PLAN~~the Company’s property held for development or resale at July 31, 2012 is as follows (000's omitted):

Under Canal's 1984 Employee and 1985 Directors Stock Option Plans, $550,000 and 264,000 shares, respectively, of Canal's common stock have been reserved for option grants. The purchase price of shares subject to each option granted, under the Employee and Directors Plans, will not be less than 85% and 100%, respectively, of their fair market value at the date of grant. Options granted under both plans are exercisable for 10 years from the date of grant, but no option will be exercisable earlier than one year from the date of grant. Under the Employee Plan, stock appreciation rights may be granted in connection with stock options, either at the time of grant of the options or at any time thereafter. No stock appreciation rights have been granted under this plan. There were no exercisable options outstanding under either of these plans at July 31, 2011 or 2010.

Description		Land
02 acres of land Sioux City, IA	$	52

Substantially all of Canal’s real property is pledged as collateral for its related party debt obligations.

~~Index~~14. PENSION VALUATION RESERVE

5 The Pension Valuation Reserve represents the excess of additional minimum pension liability required under the provisions of ASC 715 over the unrecognized prior service costs of former stockyard employees. ~~BORROWINGS~~Such excess arose due to the decline in the market value of pension assets available for pension benefits of former employees, which benefits were frozen at the time the stockyard operations were sold in 1989. The additional minimum pension liability will be expensed as actuarial computations of annual pension cost recognize the deficiency that exists.

AtThe ~~July~~components ~~31, 2011, substantially all~~ of ~~Canal's~~net ~~real~~periodic ~~properties,~~benefit ~~the~~cost ~~stock of certain subsidiaries, the investments and a substantial portion of its art inventories~~ are ~~pledged~~ as ~~collateral for the following obligations~~follows:

	July 31,			October 31,
	Nine Months Ended
($ 000's Omitted)	2011			2010
	7/31/12		7/31/11
Variable rate mortgage notes due May 15, 2012 - related party	$	847		$	847
Service cost	6,000		6,000
Less -- current maturities		0			0
Interest cost	78,000		78,000
Long-term debt	$	847		$	847
Expected return on plan assets	(84,000	)	(84,000	)
Amortization of prior service cost	0		0
Recognized net actuarial loss	90,000		90,000
Net periodic benefit cost	90,000		90,000

~~The~~For ~~following~~the ~~table~~nine ~~summarizes~~months ~~the~~ended ~~Company’s~~July ~~commitments~~31, as2012, ofamounts ~~July~~have 31been estimated, ~~2011~~actual toamounts ~~make~~will ~~future~~be ~~payments~~based ~~under~~on ~~its~~the ~~debt~~discount ~~agreements~~rate and ~~other~~assets available ~~contractual~~at ~~obligations~~year ~~(in 000's):~~end.

	Total		Less Than 1 year		1 - 3 Years		3 - 5 Years		More Than 5Yrs.
Pension Plan Liability (a)	$	715	$	125	$	400	$	190	$	0
Mortgage Notes Payable (b)		847		0		847		0		0
	$	1,562	$	125	$	1,247	$	190	$	0

The Company’s required contribution to its pension plan for fiscal 2012 is approximately $182,000, all of which wad contributed to the pension plan as of July 31,2012.

15. 401(ak) ~~See Note 16.~~PLAN

~~(b)~~ The ~~mortgage~~Company ~~notes~~has ~~are~~a ~~due~~defined contribution ~~May~~401(k) ~~15,~~plan ~~2012~~covering ~~and~~substantially ~~are~~all ~~held~~of ~~entirely~~its byfull ~~the~~time ~~Company’s~~stockyard employees. ~~Chief~~The ~~Executive~~plan ~~Officer~~provides for employee contributions and ~~members~~401(k) matching contributions of ~~his~~up ~~family.~~to ~~These~~2 ~~notes~~½% ~~carry~~of the employee’s annual ~~interest~~salary ofby ~~10%~~the ~~and~~Company. ~~are~~The Company ~~collateralized~~made by401(k) ~~substantially~~matching ~~all~~contributions of ~~Canal’s~~approximately ~~property~~$8,000 ~~the~~for ~~stock~~each of the ~~certain~~nine ~~subsidiaries~~month ~~and~~periods ~~its~~ended ~~art~~July ~~inventories~~31, 2012 and 2011.

~~Index~~16. LEGAL PROCEEDINGS

6 From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. ~~RESTRICTED~~However, ~~CASH~~litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

~~Letter~~Environmental of Credit - This is a $140,000 deposit with Chase Bank to secure a Letter of Credit issued by the bank to the Hartford Insurance Company for bonds issued in relation to the St. Joseph Stockyards clearing operation. This deposit is maintained in an interest bearing account.Contingency

~~Transit~~ In ~~Insurance~~1989, -the ~~Transit~~Company ~~insurance~~sold ~~covers~~its ~~livestock~~48 acre ~~for~~Portland, ~~the~~Oregon ~~period~~stockyard ~~that~~to ~~they~~Oregon ~~are~~Waste ~~physically~~Systems, atInc. On September 29, 2003, the ~~stockyards~~United ~~and~~States ~~under~~Environmental ~~the~~Agency ~~care~~(EPA) ofplaced ~~stockyard~~a ~~personnel~~4. ~~This~~2 ~~self~~acre ~~insurance~~portion ~~program~~of that isproperty ~~funded~~on bythe aNational ~~per~~Priorities ~~head~~List ~~charge~~pursuant onto ~~all~~the ~~livestock~~Comprehensive Environmental ~~received~~Response atCompensation ~~the~~and ~~stockyard.~~Liability ~~The~~Act ~~restricted~~(CERCLA), ~~cash~~commonly -known as ~~transit~~the ~~insurance~~Superfund ~~balances~~Act. ofIn ~~approximately~~a ~~$41,000~~letter ~~and~~from ~~$26~~the EPA dated June 27,~~000~~ at2005 ~~July~~the 31Company, along ~~2011~~with ~~and~~approximately ~~October~~13 ~~31,~~other ~~2010~~parties, ~~respectively,~~including ~~represents~~ the ~~excess~~current owner and operator of ~~per~~the ~~head~~site, ~~fees~~was ~~charged~~notified ~~over~~that ~~actual~~it ~~payments~~might ~~made~~be liable to perform or pay for the ~~livestock~~remediation ~~that~~of ~~was~~environmental ~~injured~~contamination orfound ~~died~~on ~~while~~and ataround the ~~stockyards~~site.

7 Since the receipt of the letter, the Company has been in periodic communications with the other parties who received a similar letter with respect to what action, collectively or individually, should be taken in response to the EPA assertion of liability. ~~INCOME~~The Company ~~TAXES~~believes that the remediation of contamination of the site is properly the responsibility of other parties that have occupied and used it for waste recycling purposes since 1961, although under CERCLA the EPA is able to assert joint and several liability against all parties who ever owned or operated the site or generated or transported wastes to it. The EPA investigation is in its preliminary stages and the Company intends to vigorously defend any liability for remediation. At July 31, 2012, the liability for remediation, if any, was not estimable and therefore no accrual has been recorded in the financial statements.

At We ~~July~~are ~~31,~~currently ~~2011,~~not ~~the~~aware ~~Company~~of ~~has~~any other ~~net~~legal ~~operating~~proceedings ~~loss~~or ~~carryforwards~~claims ~~of approximately $8,100,000~~ that ~~expire~~we ~~through~~believe ~~2030. For~~will ~~financial~~have ~~statement purposes,~~ a ~~valuation~~material ~~allowance~~adverse affect ~~has~~on ~~been~~our ~~provided~~business, tofinancial ~~offset~~condition ~~the~~or ~~net deferred tax assets due to the cumulative net~~ operating ~~losses incurred during recent years~~results. The valuation allowance will be reduced when and if, in the opinion of management, significant positive evidence exists which indicates that it is more likely than not that the Company will be able to realize its deferred tax assets.

In July 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes.” FIN 48 prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” The Company applied the provisions of this interpretation on November 1, 2007. The provisions of FIN 48 were applied to all existing uncertain income tax provisions on the effective date. Upon the implementation of FIN 48, any cumulative effect of this Interpretation would be required to be reported as an adjustment to the opening balance of retained earnings. The implementation of FIN 48 did not have any impact on the Company’s financial statements.

8. IMPAIRMENT LOSS ON LONG-LIVED ASSETS

The Company reviews the values of its long-lived assets annually. There was no impairment in the value of Canal’s long-lived assets to be recorded as of July 31, 2011 and October 31, 2010.

~~Index~~17. RELATED PARTY TRANSACTIONS

9 At July 31, 2012, all of Canal’s Long-Term Debt was held by the company’s Chief Executive Officer. ~~ART~~The ~~INVENTORY~~notes ~~HELD~~pay interest ~~FOR~~at ~~SALE~~a rate of 10% per annum and come due May 15, 2015. Canal has incurred interest expense on these notes of approximately $64,000 and $64,000 for the nine month periods ended July 31, 2012 and 2011, respectively. At various times during period the holder of these notes agrees to defer interest payments. This deferred interest liability accrues additional interest at a rate of 10% per annum, while outstanding and is repaid as funds become available. As of July 31, 2012, the balance due under these notes was $564,000 all of which is classified as long-term debt related party. Accrued interest of $41,200 and $84,700 is included in salaries and interest payable-officers at April 30, 2012 and October 31, 2011, respectively.

~~Canal is in the process of selling, in an orderly manner, its remaining art inventory~~18. ~~This~~SUBSEQUENT will be accomplished primarily through consignment arrangements with various independent art dealers and through sale at public art auctions. The Company's ability to dispose of its art inventory is dependent primarily on general economic conditions and the competitiveness of the art market itself. Accordingly, there can be no assurance that Canal will be successful in selling its art inventory. Canal had no sales of art in the first six months of fiscal 2011 or 2010.EVENTS

~~Antiquities~~ In ~~art~~August ~~valued at $100~~2012,~~000~~ ~~represented~~Canal ~~100%~~sold ofits stockyard ~~total~~operation ~~art~~(30 ~~inventory~~acres atof ~~both~~land ~~July 31, 2011~~ and ~~October 31, 2010. The Company records a valuation allowance against~~ the ~~current~~improvements ~~portion~~thereon) oflocated ~~its~~in St. ~~inventory~~Joseph, toMissouri, ~~reduce it~~ to ~~its~~an ~~estimated~~unrelated ~~net~~third ~~realizable~~party, ~~value~~for ~~based~~$500,000 ongenerating ~~the~~a loss ~~history~~ of ~~losses~~$577,000. ~~sustained~~Canal onrepaid ~~inventory~~$164,000 ~~items~~of ~~sold~~its inoutstanding ~~the~~mortgage ~~current~~notes ~~and~~from the ~~previous~~proceeds ~~years. As~~ of ~~July~~this ~~31, 2011 the valuation allowance is approximately $397,000~~sale.

10. LEASE COMMITMENTS

In July 2009 Canal terminated its lease on approximately 1,000 square feet of office space in Hauppauge, New York at a monthly rental of approximately $1,900. Canal relocated its New York operations to approximately 300 square feet of rent free office space located in Port Jefferson Station, New York.

There are no operating leases that have initial or remaining noncancellable terms in excess of one year as of July 31, 2011. Accordingly, Canal has no future minimum payments due over the next five years.

11. MINIMUM FUTURE RENTALS ON OPERATING LEASES

Minimum future rentals consist primarily of rental income from leased land and structures, Exchange Building rents (commercial office space) and other rental activities, all of which are accounted for as operating leases. The estimated minimum future rentals on operating leases are $275,000, $275,000, $300,000, $300,000 and $350,000 for fiscal years 2011, 2012, 2013, 2014 and 2015, respectively.

~~Index~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

12The following management’s discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. ~~PROPERTY~~In ONaddition ~~OPERATING~~to historical ~~LEASES~~information, the following discussion contains certain forward-looking information. See “Special Note Regarding Forward Looking Statements” below for certain information concerning those forward looking statements. Our financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.

~~Property~~Special onNote ~~operating~~Regarding ~~leases~~Our ~~consist~~Financial ofStatements ~~approximately 16 acres of land located in Omaha, Nebraska; S. St. Paul, Minnesota; Sioux City, Iowa as well as furniture~~ and Forward-looking equipment used in the Port Jefferson Station, New York office. Land and structures leased to third parties include vacant land, exchange buildings (commercial office space), meat packing facilities, railcar repair shops, lumber yards and various other commercial and retail businesses.Statements

A In ~~schedule~~addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the ~~Company’s~~Securities ~~property~~Act onof ~~operating~~1933, ~~leases~~as atamended, ~~July~~and 31Section 21E of the Securities Exchange Act of 1934, ~~2011~~as isamended. We use words such as ~~follows~~“believe,” “expect,” ~~(000's~~“anticipate,” ~~omitted):~~“project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; and any statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

	Current Year
	(Retirements
	Historical Cost				Additions							Carrying
Description (1)	Land		Bldgs. & Imprvmts.		Land		Bldgs. & Imprvmts.		Accum. Depr.			Value 07/31/11
New York office
Leasehold assets	$	0	$	8	$	0	$	0	$	(8	)	$	0
9 acres of land
in Omaha, NE	$	800	$	21	$	0	$	14	$	(19	)	$	816
Acquired in 1976
3 acres of land
in S. St. Paul, MN	$	10	$	485	$	0	$	0	$	(462	)	$	33
Acquired in 1937
4 acres of land
in Sioux City, IA Acquired in 1937	$	540	0		$	0	$	0	$	0		$	540
	$	1,350	$	514	$	0	$	14	$	(489	)	$	1,389

Because the factors discussed in this report could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement made by us or on our behalf, you should not place undue reliance on any such forward-looking statement. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time, and it is not possible for us to predict which will arrive. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

AUse ~~schedule~~ of ~~the Company’s reconciliation of property on operating leases carried for the nine months ended July 31, 2011 and the year ended October 31, 2010 is as follows (000's omitted):~~Terms

	July 31,			October 31,
	2011			2010
Balance at beginning of year		1391			1074
Acquisitions and Improvements		14			0
Cost of property sold		0			0
Depreciation		(16	)		(23	)
Reclassifications		0			340
Balance at end of the period		1389			1391

Except as otherwise indicated by the context, all references in this report to:

~~(1)~~“Canal ~~Substantially~~Capital,” ~~all~~the of“Company,” ~~Canal’s~~“we,” ~~real~~“us,” ~~property~~and is“our,” ~~pledged~~are asto ~~collateral~~Canal ~~for~~Capital Corporation and its ~~debt~~subsidiaries, ~~obligations~~Omaha Livestock Market, Inc., Sioux Falls Stockyards Company and Canal Arts Corporation;
“SEC” are to the United States Securities and Exchange Commission;
“Securities Act” are to the Securities Act of 1933, as amended;
“Exchange Act” are to the Securities Exchange Act of 1934, as amended; and
“U.S. dollar,” “USD,” “US$” and “$” are to the legal currency of the United States.

~~Index~~ Canal Capital Corporation’s fiscal year ends on October 31, of each calendar year. Each reference to a fiscal quarter refers to a three-month period ending on either, January 31, April 30 and July 31, of the calendar year indicated, and each reference to a fiscal year refers to the fiscal year ended October 31 of the calendar year indicated.

~~13.~~Overview ~~PROPERTY~~of ~~USED~~the INCompany’s ~~STOCKYARD OPERATIONS~~Business

~~Property~~ Canal ~~used~~Capital Corporation engages in real estate and stockyard operations ~~consist~~in the Midwest section of ~~approximately~~the 30United States. ~~acres~~Canal, ofalong ~~land~~with ~~located~~its inwholly ~~St.~~owned ~~Joseph~~subsidiaries, ~~Missouri~~Omaha Livestock Market, Inc. ~~The~~ and Sioux Falls Stockyards Company’s ~~stockyards~~is ~~provide~~involved ~~all~~in ~~services~~the management and ~~facilities~~sale of ~~required~~its toreal ~~operate~~estate anproperties ~~independent~~and, ~~market~~until ~~for~~August 2012, in the ~~sale~~operation of central ~~livestock~~public stockyards. ~~Stockyard~~Canal ~~facilities~~also ~~include~~sells ~~exchange~~antiquities ~~buildings~~through ~~(commercial~~independent ~~office~~art dealers ~~space),~~and ~~auction~~at ~~arenas,~~public ~~scale~~art ~~houses,~~auctions ~~veterinary~~through ~~facilities,~~its ~~barns,~~wholly ~~livestock~~owned ~~pens~~subsidiary ~~and~~Canal Arts ~~loading docks~~Corporation.

A At ~~schedule~~July of31, ~~the~~2012, ~~Company’~~Canal's ~~property~~real estate ~~used~~properties were located in ~~stockyard~~Sioux ~~operations~~City, atIowa, ~~July~~St 31Joseph, ~~2011~~Missouri isand Omaha, asNebraska. ~~follows~~The properties consisted, for the most part, of land and structures leased to third parties (~~000's~~a ~~omitted~~rail car repair facility): as well as vacant land available for development or resale. Canal owned approximately 2 acres of undeveloped land in Sioux City, Iowa and it operated a central public stockyard located in St. Joseph, Missouri. Canal’s stockyard provided various services and facilities required to operate an independent market for the sale of livestock including veterinary facilities, auction arenas, auctioneers, weight masters and scales, feed and bedding facilities and security personnel. Canal also offered other services, such as pure bred and other specialty sales for producer organizations.

					Current Year
					(Retirements)
	Historical Cost				Additions						Carrying
Description (1)	Land		Bldgs. & Imprvmts.		Land		Bldgs. & Imprvmts.		Accum. Depr.		Value 07/31/11
30 acres of land in St. Joseph, MO Acquired in 1942	$	400	$	325	$	0	$	37	$	(206)		554

Recent Developments

A Due ~~schedule~~to cash flow constraints, the Company has entered a program of closely monitoring and reducing where possible its operating expenses. As part of that program, the Company’s ~~reconciliation~~has sold most of its property ~~used~~and has reduced the level of its art inventories to enhance cash flows. In September 2010, Canal sold approximately 35 acres of land and the improvements thereon located in Sioux Falls, South Dakota (formerly used in stockyard operations) ~~carried~~ for $2,000,000, generating a gain of $1,242,000. In April 2012, Canal sold 6 acres of land and the ~~nine~~improvements ~~months~~thereon ~~ended~~located in Sioux City, Iowa to the company’s Chief Executive Officer, Michael E. Schultz for $852,000, generating a gain of $346,000. In July 312012, ~~2011~~Canal sold one acre of land and the ~~year~~improvements ~~ended~~thereon ~~October~~located 31in South St. Paul, ~~2010~~Minnesota isfor $839,000, asgenerating ~~follows~~a gain of $791,000. In August 2012, Canal sold its stockyard operation (30 acres of land and the improvements thereon) located in St. Joseph, Missouri for $500,000', generating a loss of $577,000. The Company’s only ~~omitted):~~remaining real estate property is a rental property located in Omaha, Nebraska.

	July 31,			October 31,
	2011			2010
Balance at beginning of year	$	533		$	988
Acquisitions and Improvements		37			60
Transfers		0			(502	)
Depreciation		(16	)		(13	)
Balance at end of the period	$	554		$	533

As a result of the foregoing financial constraints, the Company’s financial statements for the fiscal years ended October 31, 2011, 2010 and 2009, and for the interim fiscal quarters had not been previously audited or reviewed by an independent auditor. In February 2012, the Company received notice from the SEC of its obligation to file audited and reviewed financial statements with its periodic reports. Accordingly, the nine reports outlined above were appropriately amended and filed with the SEC on October 30, 2012. This report is another in the series of corrective filings which the Company expects to file in order to become fully compliant with its reporting requirements with SEC. The Company expects to be fully compliant on or before January 31, 2013.

~~(1)~~ Management ~~Substantially~~is ~~all~~unsure if its income from operations combined with its cost-cutting program, planned reduction of ~~Canal’s~~its ~~real~~antiquities ~~property~~art inventory and sales of properties will enable it to finance its future business activities or fund operating cash requirements. In the interim, management is ~~pledged~~undertaking asefforts ~~collateral~~to identify appropriate business opportunities for the Company. If for some reason management is not able to identify an appropriate business opportunity within a reasonable period of time, it may not have sufficient resources to continue meeting its ~~debt~~reporting obligations with the Securities and Exchange Commission or other obligations which arise from its minimal operations. This in turn would severely diminish the Company’s ability to explore alternative business opportunities in the future.

~~Index~~Plan of Operations

14 We are undertaking efforts to identify appropriate business opportunities for our Company. ~~PROPERTY~~If ~~HELD~~for ~~FOR~~some ~~DEVELOPMENT~~reason the ORCompany ~~RESALE~~is not able to identify an acceptable business opportunity within a reasonable period of time, it may not have sufficient resources to continue meeting its reporting obligations with the Securities and Exchange Commission or other obligations which arise from its minimal operations. This in turn would severely diminish the ability of the Company to explore alternative business opportunities.

~~Property~~ Even ~~held~~if ~~for~~we ~~development~~are orable ~~resale~~to ~~consist~~identify business ofopportunities ~~approximately~~that 2our ~~acres~~Board ofdeems ~~land~~appropriate, ~~located~~we incannot ~~the~~assure ~~Midwest~~you that ofsuch ~~undeveloped~~a ~~land~~strategy ~~not~~will ~~currently~~provide ~~utilized~~you ~~for~~with ~~corporate~~a ~~purposes~~positive return on your investment, and ~~not~~may ~~included~~in fact result in ~~any~~a ofsubstantial decrease in the ~~present~~value ~~operating~~of ~~leases~~your stock. ~~The~~ ~~Company~~In addition, ~~constantly~~if ~~evaluates~~the ~~proposals~~Board ~~received~~identifies ~~for~~a ~~the~~business ~~purchase~~opportunity that it deems appropriate, ~~leasing~~there is no guarantee that the Company could raise the additional capital or ~~development~~get ofthe ~~this~~needed ~~asset. The~~financing ~~land~~to ispursue ~~valued~~the atbusiness ~~cost~~opportunity. ~~which~~These factors ~~does~~will ~~not~~substantially ~~exceed~~increase the ~~net~~uncertainty, ~~realizable~~and ~~value~~thus the risk, of investing in our shares.

AResults ~~schedule~~ of ~~the Company’s property held for development or resale at July 31, 2011 is as follows (000's omitted):~~Operations

Current Year

(Retirements)

Historical Cost

Additions

Carrying

Description (1)

Land

Bldgs. & Imprvmts.

Land

Bldgs. & Imprvmts.

Accum. Depr.

Value 07/31/11

2 acres of land

in Sioux City, IA Acquired in 1937

N/A

The following tables set forth certain items in our statement of operations for the periods indicated:

A schedule of the Company’s reconciliation of property held for development or resale carried for the nine months ended July 31, 2011 and the year ended October 31, 2010 is as follows (000's omitted):

		Nine Months Ended July 31,
		2012			2011
		(In Thousands)
Revenues:
Real Estate Revenue	$	1,869		$	203
Stockyard Revenue		1,579			1,431
Total Revenue		3,448			1,634


Costs and Expenses:

Real Estate Expenses		595			43
Stockyard Expenses		1,382			1,279
General and Administrative Expenses		793			619
Total Costs and Expenses		2,770			1,941

(Loss) Income from Operations		678			(307	)
Other Income		6			0
Interest Expense		(64	)		(63	)
Other Expenses		0			0

Net (Loss) Income	$	620		$	(370	)

	July 31,		October 31,
	2011		2010
Balance at beginning of year	$	53	$	273
Acquisitions and Improvements		0		0
Cost of property sold		0		0
Reclassification of property		0		(220	)
Balance at end of the period	$	53	$	53

(1) Substantially all of Canal’s real property is pledged as collateral for its debt obligations.

~~Index~~Revenues

15 Canal's revenues from continuing operations consist of revenues from its real estate and stockyard operations. Revenues ~~PENSION~~for ~~VALUATION~~the ~~RESERVE~~nine month period ended July 31, 2012 increased by $1,814,000 to $3,448,000 as compared with $1,634,000 for the same period in fiscal 2011. The fiscal 2012 increase in revenues was due primarily to the $1,691,000 increase in sale of real estate in the first nine months of fiscal 2012.

~~The~~ Revenues ~~Pension~~for ~~Valuation Reserve represents~~ the ~~excess~~three ofmonth period ~~additional~~ended ~~minimum~~July ~~pension~~31, ~~liability~~2012 ~~required~~increased ~~under~~by ~~the~~$889,000 ~~provisions~~to of$1,215,000 ~~Statement~~as ofcompared ~~Financial~~with $326,000 ~~Accounting~~for ~~Standards (“SFAS”) No. 87 amended by SFAS 158 over~~ the ~~unrecognized~~same ~~prior~~period ~~service~~in ~~costs~~fiscal ~~of former stockyard employees~~2011. ~~Such~~ ~~excess~~The ~~arose~~fiscal ~~due~~2012 toincrease ~~the decline~~ in revenues ~~the~~was ~~market~~due ~~value~~primarily ofto ~~pension~~the ~~assets~~$839,000 ~~available~~increase ~~for pension~~in ~~benefits~~sale of ~~former~~real ~~employees,~~estate ~~which benefits were frozen at~~ in the ~~time~~third ~~the~~quarter ~~stockyard operations were sold in 1989. The additional minimum pension liability will be expensed as actuarial computations~~ of ~~annual~~fiscal ~~pension cost recognize the deficiency that exists~~2012.

~~The~~ Real ~~components~~Estate Revenues: Real estate revenues for the nine months ended July 31, 2012 of ~~net~~$1,869,000 ~~periodic~~accounted ~~benefit~~for 54.2% ~~cost~~of ~~are~~the fiscal 2012 revenues as ~~follows:~~compared to real estate revenues of $203,000 or 12.4% for the same period in fiscal 2011. Real estate revenues were comprised of sale of real estate (90.5% and 0.0%) and rentals and other lease income from the rental of vacant land and certain structures (9.5% and 100.0%) for the nine months ended July 31, 2012 and 2011, respectively. The percentage variations in the year to year comparisons were due primarily to the sharp increase in sale of real estate in the first nine months of fiscal 2012.

	Six Months Ended
	7/31/11			7/31/10
Service cost		6,000			6,000
Interest cost		78,000			78,000
Expected return on plan assets		(84,000	)		(84,000	)
Amortization of prior service cost		0			0
Recognized net actuarial loss		90,000			90,000
Net periodic benefit cost		90,000			90,000

Real estate revenues for the three months ended July 31, 2012 of $884,000 accounted for 72.8% of the fiscal 2012 revenues as compared to real estate revenues of $66,000 or 20.3% for the same period in fiscal 2011. Real estate revenues were comprised of sale of real estate (94.9% and 0.0%) and rentals and other lease income from the rental of vacant land and certain structures (5.1% and 100.0%) for the three months ended July 31, 2012 and 2011, respectively. The percentage variations in the year to year comparisons were due primarily to the sharp increase in sale of real estate in the third quarter of fiscal 2012.

~~For~~ Stockyard Revenues: Stockyard revenues for the nine months ended July 31, 2012 of $1,579,000 accounted for 45.8% of the fiscal 2012 revenues as compared to stockyard revenues of $1,431,000 or 87.6% for the same period in fiscal 2011. ~~amounts~~The ~~have~~2012 ~~been~~increase ~~estimated~~in stockyard revenues was due primarily to an increase in the volume of livestock handled at the St Joseph stockyards during the first nine months of fiscal 2012. Stockyard revenues were comprised of yard handling and auction (85.8% and 87.7%), ~~actual~~feed ~~amounts~~and ~~will~~bedding beincome ~~based~~(5.9% onand 5.8%) and rental and other income (8.3% and 6.5%) for the ~~discount~~nine ~~rate~~month periods ended July 31, 2012 and ~~assets~~2011, respectively. ~~available~~There atwere no significant percentage variations in the year ~~end~~to year comparisons.

~~The~~ Stockyard ~~Company’s~~revenues ~~required~~for ~~contribution~~the tothree months ~~its~~ended ~~pension~~July ~~plan~~31, 2012 of $331,000 accounted for 27.2% of the fiscal ~~2011~~2012 revenues isas ~~approximately~~compared to stockyard revenues of $~~172~~260,000 or 79. A7% ~~$155,000~~for ~~contribution~~the ~~has~~same period ~~been~~in ~~made~~fiscal to2011. ~~date~~The ~~and~~2012 ~~the~~increase ~~Company~~in ~~expects~~stockyard revenues was due primarily to ~~make~~an increase in the ~~full~~volume ~~required~~of ~~contribution~~livestock ~~before~~handled at the ~~end~~St ofJoseph stockyards during the third quarter of fiscal 2012. Stockyard revenues were comprised of yard handling and auction (78.3% and 83.2%), feed and bedding income (7.0% and 6.2%) and rental and other income (14.7% and 10.6%) for the three month periods ended July 31, 2012 and 2011, respectively. There were no significant percentage variations in the year to year comparisons.

16. 401(k) PLAN

The Company has a defined contribution 401(k) plan covering substantially all of its full time stockyard employees. The plan provides for employee contributions and 401(k) matching contributions of up to 2 ½% of the employee’s annual salary by the Company. The Company made 401(k) matching contributions of approximately $8,000 for each of the nine month periods ended July 31, 2011 and 2010.

~~Index~~ Art Revenues: Canal had no art sales in the nine month periods ended July 31, 2012 or 2011. Art revenues, if any, were comprised of the proceeds from the sale of antiquities art. Canal had no art expenses for the nine month periods ended July 31, 2012 and 2011, respectively. Art expenses, if any, were comprised of the cost of inventory sold and selling, general and administrative expenses. It is the Company’s policy to use the adjusted carrying value for sales, thereby reducing the valuation reserve proportionately as the inventory is sold.

17 Canal had no art sales in the three month periods ended July 31, 2012 or 2011. ~~RELATED~~Art ~~PARTY~~revenues, ~~TRANSACTIONS~~if any, were comprised of the proceeds from the sale of antiquities art. Canal had no art expenses for the three month periods ended July 31, 2012 and 2011, respectively. Art expenses, if any, were comprised of the cost of inventory sold and selling, general and administrative expenses. It is the Company’s policy to use the adjusted carrying value for sales, thereby reducing the valuation reserve proportionately as the inventory is sold.

Interest Expense Related Party - At July 31, 2011, all of Canal’s Long-Term Debt is held by the company’s Chief Executive Officer. These notes pay interest at a rate of 10% per annum and come due May 15, 2012. Canal has incurred interest expense on these notes of $64,000 and $88,000 and for the nine month periods ended July 31, 2011 and 2010, respectively. At various times during fiscal 2011 and 2010 the holder of these notes agreed to defer interest payments due him to help Canal with its cash flow. All deferred interest liability for fiscal 2011 and 2010 plus accrued interest at a rate of 10% per annum, will be repaid as funds become available. As of July 31, 2011, the balance due under these notes was $847,000 all of which is classified as long-term debt related party.Expenses

Real Estate Expenses: Real estate expenses for the nine months ended July 31, 2012 of $595,000 increased by $552,000 from real estate expenses of $43,000 for the same period in fiscal 2011. The increase in real estate expenses was consistent with the 2012 increase in real estate revenues. Real estate expenses were comprised of the cost of real estate sold (93.0% and 0.0%), labor, operating and maintenance (1.3% and 16.5%), depreciation and amortization (2.5% and 39.1%), taxes other than income taxes (1.9% and 26.4%) and general and administrative expenses (1.3% and 18.0%) ~~LITIGATION~~for the nine months ended July 31, 2012 and 2011, respectively. The percentage variations in the year to year comparisons were due primarily to the sharp increase in cost of real estate sold in the first nine months of fiscal 2012.

~~Canal~~ Real ~~and~~estate ~~its~~expenses ~~subsidiaries~~for ~~are~~the three months ended July 31, 2012 of $61,000 increased by $47,000 from ~~time~~real estate toexpenses ~~time~~of ~~involved~~$14,000 for the same period in ~~litigation~~fiscal ~~incidental~~2011. toThe ~~their~~increase ~~normal~~in real ~~business~~estate ~~activities,~~expenses ~~none~~was ofconsistent ~~which,~~with the 2012 increase in real estate revenues. Real estate expenses were comprised of the ~~opinion~~cost of ~~management,~~real ~~will~~estate ~~have~~sold (78.3% aand ~~material~~0.0%), ~~adverse~~labor, ~~effect~~operating onand ~~the~~maintenance ~~consolidated~~(5.0% ~~financial~~and ~~condition~~17.4%), depreciation and ~~operations~~amortization of(6.4% ~~the~~and ~~Company~~38.7%), ~~Canal~~taxes ~~was~~other ~~not~~than aincome ~~party~~taxes (6.2% toand ~~any~~26.1%) ~~ongoing~~and ~~litigation~~general atand administrative expenses (4.1% and 17.8%) for the three months ended July 31, 2012 and 2011, respectively. The ~~following~~percentage variations ~~situation~~in ~~did~~the ~~arise~~year to year comparisons were due primarily to the sharp increase in cost of real estate sold in the third quarter of fiscal ~~2005:~~2012.

~~Environmental~~ Stockyard ~~Protection~~Expenses: ~~Agency~~Stockyard expenses -for ~~Special~~the ~~Notice~~nine ~~Letter~~months ended July 31, 2012 of $1,382,000 increased by $103,000 (8.1%) from stockyard expenses of $1,279,000 for ~~Investigation~~ the same period in fiscal 2011. The increase in stockyard expenses was consistent with the 2012 increase in stockyard revenues. Stockyard expenses were comprised of labor and related costs (42.9% and 43.9%), ~~Portland~~other operating and maintenance (26.9% and 26.0%), ~~Oregon~~feed ~~Property~~and bedding expense (5.9% and 5.2%), depreciation and amortization (1.0% and 1.2%), taxes other than income taxes (4.1% and 4.4%) and general and administrative expense (19.2% and 19.3%) for the nine month periods ended July 31, 2012 and 2011, respectively. There were no significant percentage variations in the year to year comparisons.

In Stockyard ~~1989,~~expenses for the ~~Company~~three months ~~sold~~ended ~~its~~July ~~48 acre Portland~~31, ~~Oregon~~2012 ~~stockyard~~of ~~to Oregon Waste Systems~~$365,000 ~~Inc. On~~increased ~~September~~by 29$38,000 ~~2003, the United States Environmental Agency~~ (~~EPA) placed a 4~~11.~~2 acre portion of that property on the National Priorities List pursuant to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA~~8%), ~~commonly known as the Superfund Act. In a letter~~ from stockyard ~~the~~expenses ~~EPA dated June 27, 2005 the Company, along with approximately 13 other parties, including the current owner and operator~~ of ~~the site~~$326,000 ~~was notified that it might be liable to perform or pay~~ for the ~~remediation~~same ofperiod ~~environmental~~in ~~contamination~~fiscal ~~found~~2011. onThe ~~and around~~increase ~~the~~ in ~~site. Since~~stockyard ~~the~~expenses ~~receipt~~was ofconsistent ~~the letter, the Company has been in periodic communications~~ with the ~~other~~2012 ~~parties~~increase ~~who received a similar letter with respect to what action, collectively or individually, should be taken~~ in ~~response to the EPA assertion of liability~~stockyard revenues. ~~The~~ ~~Company~~Stockyard ~~believes~~expenses ~~that~~were ~~the~~comprised ~~remediation~~ of ~~contamination~~labor ofand ~~the~~related ~~site~~costs is(45.8% and ~~properly~~46.2%), ~~the responsibility of~~ other ~~parties~~operating ~~that~~and ~~have~~maintenance ~~occupied~~(28.7% and ~~used~~28.4%), itfeed ~~for~~and ~~waste~~bedding expense ~~recycling~~(4.5% ~~purposes~~and ~~since 1961~~5.0%), ~~although~~depreciation ~~under~~and ~~CERCLA~~amortization ~~the~~(1.3% ~~EPA is able to assert joint~~ and ~~several~~1.6%), ~~liability~~taxes other ~~against~~than ~~all~~income ~~parties~~taxes ~~who~~(4.4% ~~ever~~and ~~owned~~5.1%) orand ~~operated~~general ~~the~~and ~~site~~administrative orexpense (15.3% ~~generated~~and ~~or transported wastes to it~~13.7%) ~~This~~for ~~investigation is in its preliminary stages and~~ the ~~Company~~three ~~intends~~month toperiods ~~vigorously~~ended ~~defend any liability for remediation. At~~ July 31, ~~2011,~~2012 ~~the~~and ~~liability for remediation~~2011, respectively. ifThere ~~any,~~were ~~is not estimatable and therefore~~ no ~~accrual~~significant ~~has~~percentage ~~been recorded~~variations in the ~~financial~~year ~~statements~~to year comparisons.

~~Index~~General and Administrative

~~ITEM~~ General IIand administrative expenses for the nine months ended July 31, 2012 of $793,000 increased by $174,000 (28.0%) ~~MANAGEMENT'S~~as ~~DISCUSSION~~compared ~~AND~~to ~~ANALYSIS~~$619,000 OFfor ~~THERESULTS~~the OFsame ~~OPERATIONS~~period ~~AND~~in ~~FINANCIAL~~fiscal ~~CONDITION~~2011. ~~FOR~~The major ~~THE~~components ~~NINE~~of ~~MONTHS~~general ~~ENDED~~and ~~JULY~~administrative expenses were officer’s salaries (46.0% and 57.4%), pension expense (10.2% and 13.1%), insurance expense (14.9% and 6.7%), administrative salaries (9.0% and 11.4%), travel expense (3.0% and 2.2%) and professional fees (8.3% and 1.7%) for the nine month periods ended July 31, 2012 and 2011, respectively. The significant percentage variations in the year to year comparisons were due primarily to the sharp increases in both insurance expense and professional fees in the first nine months of fiscal 2012.

As General aand ~~Stockholder~~administrative expenses offor ~~Canal~~the ~~Capital~~three ~~Corporation~~months ~~you~~ended ~~should~~July be31, ~~aware~~2012 ~~that~~of ~~due~~$305,000 increased by $100,000 (48.5%) as compared to ~~financial~~$205,000 ~~constraints~~for ~~Canal’s~~the same period in fiscal 2011. The major components of general and ~~2010~~administrative ~~Financial~~expenses ~~Statements~~were ~~are~~officer’s ~~being~~salaries (39.8% ~~presented~~and 58.4%), pension expense (8.6% and 13.3%), insurance expense (18.3% and 6.8%), administrative salaries (7.7% and 11.6%), travel expense (3.0% and 2.2%) and professional fees (14.0% and 1.5%) for the three month periods ended July 31, 2012 and 2011, respectively. The significant percentage variations in the ~~this~~year ~~Form~~to ~~10-Q~~year ~~without~~comparisons ~~benefit~~were ofdue ~~independent~~primarily ~~audit~~to orthe ~~review~~sharp increases in both insurance expense and professional fees in the third quarter of fiscal 2012.

~~You~~Interest should read the following discussion together with the more detailed business information and consolidated financial statements and related notes that appear elsewhere in this report and in the documents that we incorporate by reference into this report. This report may contain certain “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. This information involves risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in “Risk factors”.Expense

~~Company~~ Interest ~~Overview~~expense for the nine months ended July 31, 2012 of $64,000 was unchanged from the same period in fiscal 2011. The principal balance outstanding at July 31, 2012 of $564,000 was classified as long-term debt-related party.

~~The~~ Interest ~~Registrant~~expense for the three months ended July 31, ~~Canal~~2012 ~~Capital~~of ~~Corporation~~$20,000 ~~("Canal"~~decreased orby ~~the~~$1,000 ~~"Company"~~(6.8%) from $21,000 for ~~incorporated~~the same period in ~~the~~fiscal ~~state~~2011. ofThe ~~Delaware~~principal inbalance ~~1964~~outstanding at July 31, ~~commenced~~2012 ~~business~~of ~~operations~~$564,000 ~~through~~was aclassified ~~predecessor~~as inlong-term ~~1936~~debt-related party.

~~Canal~~Net is(Loss) ~~engaged in two distinct businesses -- real estate and stockyard operations.~~Income

~~Real Estate Operations -~~ Canal's ~~real~~recognized ~~estate~~net ~~properties~~income ~~are~~of approximately ~~located~~$620,000 in ~~Sioux~~the ~~City,~~nine ~~Iowa,~~month ~~South~~period Stended ~~Paul,~~July ~~Minnesota~~31, St2012 ~~Joseph,~~as ~~Missouri,~~compared to ~~Omaha,~~a ~~Nebraska~~net ~~and~~loss ~~Sioux~~of ~~Falls,~~approximately ~~South Dakota. The properties consist~~$370,000 for the ~~most part,~~ ofsame ~~land~~period ~~and~~in ~~structures~~fiscal ~~leased to third parties (rail car repair shops, lumber yards and various other commercial and retail businesses) as well as vacant land available for development or resale~~2011. ~~Its~~ Included ~~principal~~in ~~real~~the ~~estate~~2012 ~~operating~~results ~~revenues~~were ~~are~~sales ~~derived from lease income from land and structures leased to various commercial and retail enterprises and proceeds from the sale~~ of real estate ~~properties.~~of ~~In addition to selling what was excess stockyard property~~approximately $1, ~~the company entertains any offers to purchase~~169,000 ~~develop~~which ~~and~~generated ~~restructure~~gains ~~real estate lots surrounding its existing operating lease properties, stockyard operating properties and properties held for development or resale in order to enhance the value~~ of ~~the~~approximately ~~existing properties and surrounding real estate~~$1,137,000. ~~See "Real Estate Operations".~~

Canal recognized net income of approximately $471,000 in the three month period ended July 31, 2012 as compared to a net loss of approximately $242,000 for the same period in fiscal 2011. Included in the 2012 results were sales of real estate of approximately $839,000 which generated gains of approximately $791,000.

~~Index~~Liquidity and Capital Resources

~~Stockyard~~ Cash ~~Operations~~and -cash ~~Canal~~equivalents increased ~~currently~~approximately ~~operates~~$159,000, ~~one~~from ~~central~~$36,000 ~~public~~at ~~stockyard~~October ~~located~~31, in2011, Stto $195,000 at July 31, 2012. ~~Joseph~~At July 31, ~~Missouri~~2012 the Company’s current assets exceeded current liabilities by approximately $256,000, as compared to October 31, 2011 when the Company’s current liabilities exceeded current assets by approximately $76,000.

~~Sioux~~ Net ~~Falls~~cash ~~Stockyard~~used ~~Closure~~in -operating activities Infor ~~December~~the ~~2009,~~nine ~~after~~months ~~extensive~~ended ~~efforts~~July to31, ~~reorganize~~2012 ~~and~~were ~~return~~$1,184,000, ~~this~~as ~~stockyard~~ compared to ~~profitability~~$381,000 ~~Canal~~for ~~ceased~~the ~~all~~same ~~stockyard~~period ~~operations~~in atfiscal ~~its Sioux Falls~~2011, ~~South~~for ~~Dakota~~a ~~location.~~net Inincrease ~~September~~of ~~2010~~$803,~~Canal~~000. During ~~sold~~fiscal ~~approximately~~2012 37the ~~acres~~Company repaid $283,000 of ~~land~~its ~~previously~~outstanding ~~used~~mortgage innotes and ~~stockyard~~reduced ~~operations~~other ~~located~~liabilities inby ~~Sioux~~$756,000. ~~Falls~~Additionally, ~~South~~the ~~Dakota~~Company ~~for~~made payments ~~$2.0~~of ~~million~~interest ~~generating~~on ~~operating~~the ~~income~~long-term ofdebt ~~$0.7~~discussed ~~million~~at “Obligations under Material Contracts” below.

~~Public~~ While ~~stockyards~~the ~~act~~Company ~~much~~is ~~like~~currently operating as a ~~securities~~going ~~exchange~~concern, ~~providing~~certain ~~markets~~significant ~~for~~factors ~~all~~raise ~~categories~~substantial doubt ofabout ~~livestock~~the ~~and~~Company's ~~fulfilling~~ability ~~the~~to ~~economic~~continue ~~functions~~as ofa ~~assembly,~~going ~~grading,~~concern. The Company has suffered recurring losses from operations and ~~price~~is ~~discovery~~obligated to continue making substantial annual contributions to its defined benefit pension plan. The financial ~~Company’s~~statements ~~principal~~do ~~stockyard~~not ~~revenues~~include ~~are~~any ~~derived~~adjustments that might result from athe resolution ~~per~~of ~~head~~these ~~charge~~uncertainties. ~~(“yardage~~Additionally, ~~charge”)~~the ~~imposed~~accompanying onfinancial statements ~~all~~do ~~livestock~~not ~~consigned~~include ~~for~~any ~~sale~~adjustments atrelating to the ~~stockyards~~recoverability and classification of recorded asset amounts or the ~~sale~~amounts and classification of liabilities ~~feed~~that ~~and~~might ~~bedding. See~~be ~~“Stockyard~~necessary ~~Operations”~~should the Company be unable to continue as a going concern.

~~Real~~ As ~~Estate~~discussed ~~Operations~~above, Canal’s cash flow position has been under significant strain for the past several years. Canal continues to closely monitor and reduce where possible its operating expenses and plans to continue its program to develop or sell the property it holds for development or resale as well as to reduce the level of its art inventories to enhance current cash flows. Management is unsure if its income from operations combined with its cost-cutting program and planned reduction of its antiquities art inventory will enable it to finance its current business activities. There can be no assurance that Canal will be able to effectuate its planned antiquities art inventory reductions or that its income from operations combined with its cost cutting program in itself will be sufficient to fund operating cash requirements. Canal may, as it has in the past, be forced to sell income producing assets to raise needed cash, thereby, further adversely impacting future revenues. As of the date of this report Canal has sold its Sioux Falls, South Dakota property (formerly used in stockyard operations); two of its three remaining rental properties’ and its stockyard operations (30 acres of land and the improvements thereon) located in St. Joseph, Missouri. The Company’s only remaining real estate property is a rental property located in Omaha, Nebraska.

~~Real~~Obligations ~~estate~~under ~~operations~~Material resulted in operating income of $160,000 and $147,000 for the nine month periods ended July 31, 2011 and 2010, respectively. There were no real estate sales in the first nine months of fiscal 2011 or 2010. Additionally, real estate operations contributed $203,000 and $217,000 to Canal’s revenues for the nine month periods ended July 31, 2011 and 2010, respectively.Contracts

As At July 31, 2012, all of the Company’s Long-Term Debt was held by the company’s Chief Executive Officer. These notes pay interest at a rate of 10% per annum and come due May 15, 2015. At various times during fiscal 2012 the holder of these notes agreed to defer interest payments. This deferred interest liability accrued additional interest at a rate of 10% per annum, while outstanding, and is repaid as funds became available. Canal has incurred interest expense on these notes of $64,000 in both the nine month periods ended July 31, 2012 and 2011, ~~there~~respectively. ~~are~~These ~~approximately~~notes, 2among ~~acres~~other things, ofprohibit ~~undeveloped~~Canal ~~land~~from ~~owned~~becoming an investment company, as defined by the Investment Company Act of 1940, restrict Canal’s ~~adjacent~~ability to ~~its~~pay ~~stockyard~~cash ~~properties.~~dividends or Inrepurchase ~~addition~~stock, and require principal prepayments to ~~selling~~be ~~what~~made ~~was~~only ~~excess~~out ~~stockyard~~of the ~~property~~proceeds from the sale of certain assets. As of July 31, 2012, the ~~company~~balance due ~~entertains~~under ~~any~~these ~~offers~~notes towas ~~purchase~~$564,000 ~~develop~~all ~~and~~of ~~restructure~~which ~~real~~was ~~estate~~classified ~~lots~~as ~~surrounding~~long-term ~~its~~debt due ~~existing~~to ~~operating~~related ~~lease~~party. ~~properties~~Accrued interest of $41,200 ~~stockyard~~and ~~operating~~$84,700 ~~properties~~is included in salaries and ~~properties~~interest ~~held~~payable-officers ~~for~~at ~~development~~April or30, ~~resale~~2012 inand ~~order~~October to31, ~~enhance~~2011, respectively. As of the ~~value~~filing of this report, the ~~existing~~balance ~~properties~~due ~~and~~under ~~surrounding~~these ~~real~~notes was ~~estate~~$400,000.

Risk - Real estate activities in general may involve various degrees of risk, such as the ability to collect receivables, competition for tenants, general market conditions and interest rates. Furthermore, there can be no assurance that Canal will be successful in the development, lease or sale of its real estate properties.

Competition - Canal competes in the area of real estate development with other regional developers, some of which are substantially larger and have significantly greater financial resources than Canal.

~~Index~~ We are currently not party to any other material agreements, other than employment agreements, that impose any payment obligation, whether in cash or securities, on the Company now or in the future.

~~Stockyard~~Recent ~~Operations~~Accounting Pronouncements

~~Stockyard~~ In ~~Operations~~May 2011, the FASB issued ASU 2011-04, ~~Canal~~“Fair ~~currently~~Value ~~operates~~Measurement ~~one~~(Topic ~~central~~820): ~~public~~Amendments ~~stockyard~~to ~~located~~Achieve Common Fair Value Measurement and Disclosure Requirements in StU.S. ~~Joseph~~GAAP and IFRSs" (“ASU 2011-04”). This update amends ASC Topic 820, ~~Missouri~~“Fair Value Measurement and Disclosure.” ASU 2011-04 clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. ASU 2011-04 is effective for annual and interim reporting periods beginning on or after December 15, 2011, which means that it will be effective for our fiscal quarter beginning January 1, 2012. The new guidance is to be adopted prospectively and early adoption is not permitted. We do not believe that adoption of ASU 2011-04 will have a significant impact on our financial position, results of operations or cash flows.

~~Public~~ On ~~stockyards~~June ~~act~~16, ~~much~~2011, ~~like~~the aFASB ~~securities~~issued ASU ~~exchange~~No. 2011-05, ~~providing~~“Comprehensive ~~markets~~Income ~~for~~(Topic ~~all~~220): ~~categories~~Presentation of Comprehensive ~~livestock~~Income” ~~and~~(“ASU ~~fulfilling~~2011-05”). ~~the~~This ~~economic~~update ~~functions~~amends ofASC ~~assembly~~Topic 220, ~~grading, and price discovery. The livestock~~ “Comprehensive ~~handled~~Income” byto ~~the~~provide ~~Company’s~~that ~~stockyards~~total ~~include~~comprehensive ~~cattle,~~income ~~hogs,~~will ~~and~~be reported ~~sheep. Cattle~~in ~~and~~one ~~hogs~~continuous ~~may~~statement ~~come~~or ~~through~~two ~~the~~separate ~~stockyard~~but ~~facilities~~consecutive atstatements of ~~two~~financial ~~different~~performance. ~~stages,~~Presentation ~~either~~of astotal ~~feeder~~comprehensive ~~livestock~~income in the statement of stockholders' equity or ~~slaughter~~the ~~livestock.~~footnotes will no longer be allowed. The ~~Company’s~~calculation ~~stockyards~~of ~~provide~~net ~~all~~income ~~services~~and basic and ~~facilities~~diluted ~~required~~net toincome ~~operate~~per anshare ~~independent~~will not ~~market~~be ~~for~~affected. ~~the~~ASU ~~sale~~2011-005 ofis ~~livestock,~~effective ~~including~~for ~~veterinary~~fiscal ~~facilities~~years, and interim periods ~~auction~~ within ~~arenas,~~those ~~auctioneers~~years, ~~weigh~~beginning ~~masters~~on ~~and~~or ~~scales,~~after ~~feed~~December ~~and~~15, ~~bedding~~2011, ~~and~~which ~~security~~means ~~personnel. In~~that ~~addition,~~it will ~~the~~be ~~stockyards~~effective ~~provide~~for ~~other~~our ~~services~~fiscal ~~including~~year ~~pure~~beginning ~~bred~~July ~~and~~1, ~~other~~2012. ~~specialty~~Retrospective adoption ~~sales~~is ~~for~~required ~~producer~~and ~~organizations~~early adoption is permitted. ~~The~~ ~~Company~~We ~~promotes~~do ~~its~~not ~~stockyard~~believe ~~business~~that adoption ~~through~~of ~~public~~ASU ~~relations~~2011-05 ~~efforts,~~will ~~advertising,~~have ~~and~~a ~~personal~~significant ~~solicitation~~impact on our financial position, results of ~~producers~~operations or cash flows.

Actual marketing transactions at a stockyard are managed for livestock producers by market agencies and independent commission sales people to which the livestock are consigned for sale. These market agencies (some of which are owned and operated by the Company) and independent sales people receive commissions from the seller upon settlement of a transaction and the stockyard receives a yardage fee on all livestock using the facility which is paid within twenty-four hours of the sale. Yardage fees vary depending upon the type of animal, the extent of services provided by the stockyard, and local competition. Yardage revenues are not directly dependent upon market prices, but rather are a function of the volume of livestock handled. In general, stockyard livestock volume is dependent upon conditions affecting livestock production and upon the market agencies and independent commission sales people which operate at the stockyards. Stockyard operations are seasonal, with greater volume generally experienced during the first and fourth quarters of each fiscal year, during which periods livestock is generally brought to market.

In addition to market agencies and independent commission sales people the St. Joseph stockyards has solicitation operations of its own which account for approximately 50% of its livestock volume annually. Canal intends to continue its soliciting efforts at its St. Joseph stockyards in fiscal 2011. Further, Canal tries to balance its dependence on market agencies and independent commission sales people in various ways, including: developing solicitation operations of its own; direct public relations; advertising and personal solicitation of producers on behalf of the stockyards; providing additional services at the stockyards to attract sellers and buyers; and providing incentives to market agencies and independent commission sales people for increased business.

~~Index~~Critical Accounting Policies and Estimates

Stockyard operations resulted in operating income of $152,000 and $214,000 for the nine month periods ended July 31, 2011 and 2010, respectively. Additionally, stockyard operations contributed $1,431,000 and $1,648,000 to Canal’s revenues for the nine month periods ended July 31, 2011 and 2010, respectively.

Risk - Stockyard activities face a variety of risks and uncertainties related to the safeguarding of the national food supply which are beyond our control. Public confidence in the government’s efforts to safeguard the food supply is essential for the success of our stockyard operations. An outbreak of a disease such as bovine spongiform encephalopathy (BSE) better known as Mad Cow Disease could have a devastating impact on stockyard operations. For the company’s part we strictly follow all USDA regulations to ensure to the extent we can the safety of the food supply. Furthermore, stockyard activities in general may involve various degrees of risk, such as competition from other regional stockyards and sale barns, general market conditions and to a lesser extent interest rates.

Competition - Canal competes in the area of public stockyards with other regional public stockyards and sale barns, some of which are substantially larger and have greater financial resources than Canal. To a certain extent, Canal’s stockyard revenues are dependent on the ability of the market agencies and independent commission sales people at each of Canal’s stockyard locations to compete within the region.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. These generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. We continually evaluate our estimates, including those related to revenue recognition, bad debts, income taxes, fixed assets, restructuring, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies impact our most difficult, subjective and complex judgments used in the preparation of our consolidated financial statements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a further discussion of these and other accounting policies, please see Note 2 of the Notes to Consolidated Financial Statements included elsewhere in this ~~Quarterly~~Annual Report.

Long-Lived Assets -- The Company reviews the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the assets to the estimated future cash flows expected to result from the use of the asset. The measurement of the loss, if any, will be calculated as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Seasonality

Our operations and operating cash flows were subject to seasonal variations. Stockyard operations were seasonal, with greater volume generally experienced during the first and second quarters of each fiscal year during which periods livestock is generally brought to market. As of the date of this report, the Company is no longer in the stockyard business and therefore its operations and operating cash flows are no longer subject to seasonal variations.

Off-Balance Sheet Arrangements

For the nine months ended July 31, 2012, we did not have any off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

~~Index~~ITEM 4. CONTROLS AND PROCEDURES

~~Revenue~~Evaluation ~~Recognition –- Lease and rental revenues are recognized ratably over the period covered. All real estate leases are accounted for as operating leases. Revenues from the sale~~ of ~~real~~Disclosure ~~estate~~Controls ~~are recognized at the time the sale has been consummated on the full accrual method wherein the seller has transferred to the buyer the usual risks~~ and rewards of ownership in a transaction that is in substance a sale and does not have a substantial continuing involvement with the property; the seller’s receivable is not subject to future subordination and the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay for the property. Revenues from stockyard operations which consist primarily of yardage fees (a standard per head charge for each animal sold through the stockyards) and sale of feed and bedding are recognized at the time the service is rendered or the feed and bedding are delivered.Procedures

~~Art~~ We ~~Inventory~~maintain ~~Held~~disclosure ~~for~~controls and ~~Sale~~procedures --(as ~~The~~defined ~~nature~~in ofRule ~~art~~13a-15(e) ~~makes~~under itthe ~~difficult~~Exchange Act) that are designed to ~~determine~~ensure athat ~~replacement~~information ~~value. The~~that ~~most~~would ~~compelling~~be ~~evidence~~required ofto abe ~~value~~disclosed in Exchange ~~most~~Act ~~cases~~Reports is anrecorded, ~~independent~~processed, ~~appraisal.~~summarized ~~Canal~~and ~~has~~reported ~~had~~within ~~varying~~the time ~~percentages~~period ofspecified ~~its art inventory appraised by independent appraisers~~ in ~~previous years. For fiscal 2011~~ the ~~net~~SEC’s ~~realizable~~rules ~~value~~and offorms, ~~Canals~~and ~~remaining~~that ~~art~~such ~~inventory~~information ~~has~~is accumulated ~~been~~and ~~estimated~~communicated byto our management, ~~based~~including into ~~part~~our onChief ~~the~~Executive Officer ~~Company’s history of art sales in the current~~ and ~~previous~~Chief ~~years~~Financial ~~and~~Officer, inas ~~part~~appropriate, onto ~~the~~allow ~~results~~timely ofdecisions regarding ~~the~~required ~~independent appraisals done in previous years~~disclosure.

~~Properties~~ As ~~and~~required ~~Related~~by ~~Depreciation~~Rule 13a--15 ~~Properties~~under the ~~are~~Exchange ~~stated~~Act, atour ~~cost~~management, ~~less~~including ~~accumulated~~our ~~depreciation~~Chief Executive Officer, Mr. ~~Depreciation~~ Michael isE. ~~provided~~Schultz, onand ~~the~~Chief ~~straight-line~~Financial ~~method~~Officer, ~~over~~Mr. ~~the~~Reginald ~~estimated~~Schauder, evaluated ~~useful~~the ~~lives~~effectiveness of the ~~properties~~design and operation of our disclosure controls and procedures as of July 31, 2012. ~~Such~~ ~~lives~~Based ~~are~~upon, ~~estimated~~and ~~from~~as 35of tothe 40date ~~years~~of this ~~for~~evaluation, ~~buildings~~Messrs. Schultz and ~~from~~Schauder 5determined tothat 20because ~~years~~of ~~for~~the material ~~improvements~~weaknesses described below, our disclosure controls and ~~equipment~~procedures were not effective.

~~Property~~ Our ~~held~~management ~~for~~concluded ~~Development~~that orour internal ~~Resale~~control --over ~~Property~~financial ~~held~~reporting was not effective, as of October 31, 2009 through the period covered by this report, as we had limited accounting personnel and funds available for ~~development~~continuous orlegal ~~resale~~and ~~consist~~accounting ofadvice ~~approximately~~as 2it pertained ~~acres~~to ~~located~~our infiling ~~the~~requirements ~~Midwest~~with ofthe ~~undeveloped~~SEC. ~~land~~Furthermore, ~~not~~since ~~currently~~its ~~utilized~~annual report for ~~corporate~~the ~~purposes~~fiscal ~~nor~~year ~~included~~ended October 31, 2008, the Company submitted its annual and quarterly financial statements in ~~any~~filings to the SEC without the benefit of the ~~present~~audit, ~~operating~~and ~~leases~~review, as applicable by an independent public accounting firm. ~~The~~ ~~Company~~Additionally, ~~constantly~~in ~~evaluates~~our ~~proposals~~annual ~~received~~and quarterly reports on Forms 10-K and 10-Q for ~~the~~our ~~purchase~~fiscal years 2009, ~~leasing~~2010 orand ~~development~~2011 there was a lack of ~~this~~adequate controls ~~asset. The~~over ~~land~~the isrecording ~~valued~~of atgains ~~cost~~on ~~which~~sales ~~does~~of ~~not~~properties ~~exceed~~and ~~the~~other transactions ~~net~~that ~~realizable~~constituted ~~value~~a material weakness in internal control over financial reporting.

~~Long-Lived~~ In ~~Assets~~an -–effort ~~The~~to remediate this material weakness, our management has appointed qualified personnel and has engaged the Company’s auditors to conduct reviews ~~the~~and ~~impairment~~audits, as applicable, of its ~~long-lived~~financial ~~assets~~statements ~~whenever~~for ~~events~~the ornon-compliant ~~changes~~periods. inAccordingly, ~~circumstances~~the ~~indicate~~nine reports ~~that~~outlined ~~the~~above ~~carrying~~were ~~amount~~appropriately ofamended anand ~~asset~~filed ~~may~~with ~~not~~the beSEC ~~recoverable~~on October 30, 2012. The Company ~~considers~~expects ~~historical~~that ~~performance~~the ~~and~~filing ~~future~~of ~~estimated~~this ~~results~~quarterly inreport on ~~its~~Form ~~evaluation~~10-Q offor ~~potential~~the ~~impairment~~nine months ended July 31, 2012 and ~~then~~2011 ~~compares~~will ~~the~~be ~~carrying~~a ~~amount~~further step ofin ~~the~~curing ~~assets~~this todeficiency with the ~~estimated~~SEC. ~~future~~Our ~~cash~~management ~~flows~~does ~~expected~~not tobelieve that ~~result~~this ~~from~~material ~~the~~weakness ~~use~~had ofa ~~the~~material ~~asset.~~effect ~~The~~on ~~measurement~~our offinancial ~~the~~condition ~~loss,~~or results ifof ~~any,~~operations ~~will~~or becaused ~~calculated~~our asfinancial ~~the~~statements ~~amount~~as byof ~~which~~and for the ~~carrying~~nine months ~~amount~~ended ofJuly ~~the~~31, ~~asset~~2012 ~~exceeds~~and ~~the~~2011, ~~fair~~included ~~value~~in ofthis ~~the~~report ~~asset~~to contain a material misstatement.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the nine month period ended July 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Index~~PART II. OTHER INFORMATION

~~Results~~Item of1. ~~Operations~~LEGAL PROCEEDINGS

~~The~~ From ~~following~~time ~~tables~~to ~~set~~time, ~~forth~~we ~~certain~~may ~~items~~become involved in ~~our~~various ~~statement~~lawsuits ofand ~~operations~~legal ~~for~~proceedings which arise in the ~~periods~~ordinary course ~~indicated:~~of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

	Nine Months Ended July 31,
	2011			2010
	(In Thousands)
Revenues:
Real Estate Revenues	$	203		$	217
Stockyard Revenues		1,431			1,648
Total Revenues		1,634			1,865
Costs and Expenses:
Real Estate Expenses		43			70
Stockyard Expenses		1,279			1,433
General and Administrative Expenses		619			628
Total Costs and Expenses		1,941			2,131
(Loss) Income from Operations		(307.00	)		(266.00	)
Other Income		0			0
Other Expenses		(63.00	)		(88.00	)
Net (Loss) Income	$	(307	)	$	(354	)

Environmental Contingency

~~While~~ In 1989, the Company issold ~~currently~~its ~~operating~~48 acre asPortland, aOregon ~~going~~stockyard ~~concern,~~to ~~certain~~Oregon ~~significant~~Waste ~~factors~~Systems, ~~raise~~Inc. ~~substantial~~On ~~doubt~~September ~~about~~29, 2003, the ~~Company's~~United ~~ability~~States toEnvironmental ~~continue~~Agency as(EPA) placed a ~~going concern~~4. ~~The~~2 ~~Company~~acre ~~has~~portion ~~suffered~~of that ~~recurring~~property ~~losses~~on ~~from~~the ~~operations~~National ~~and~~Priorities isList ~~obligated~~pursuant to ~~continue~~the ~~making~~Comprehensive Environmental ~~substantial~~Response ~~annual~~Compensation ~~contributions~~and toLiability ~~its~~Act ~~defined~~(CERCLA), ~~benefit~~commonly ~~pension~~known as ~~plan. The~~the ~~financial~~Superfund ~~statements~~Act. doIn ~~not~~a ~~include~~letter ~~any adjustments that might result~~ from the ~~resolution~~EPA ofdated ~~these~~June ~~uncertainties. Additionally~~27, 2005 the ~~accompanying~~Company, along ~~financial~~with ~~statements~~approximately do13 ~~not~~other ~~include~~parties, ~~any~~including ~~adjustments relating to~~ the ~~recoverability~~current owner and operator ~~classification~~ of ~~recorded asset amounts or~~ the ~~amounts~~site, ~~and~~was ~~classification~~notified ~~of liabilities~~ that it might be ~~necessary~~liable ~~should~~to perform or pay for the ~~Company~~remediation beof ~~unable~~environmental tocontamination ~~continue~~found ason aand ~~going~~around ~~concern~~the site.

~~Canal~~ Since ~~recognized~~the areceipt ~~net loss~~ of ~~approximately~~the ~~$370~~letter,~~000~~ the inCompany ~~the~~has ~~first~~been ~~nine~~in ~~months~~periodic ofcommunications ~~fiscal~~with ~~2011~~the asother ~~compared~~parties towho received a ~~net~~similar ~~loss~~letter ofwith ~~$354~~respect to what action,~~000~~ ~~for~~collectively ~~the~~or individually, ~~same~~should ~~period~~be taken in ~~fiscal~~response ~~2010~~to the EPA assertion of liability. ~~After~~ ~~recognition~~The Company believes that the remediation of ~~accrued~~contamination ~~preferred~~of ~~stock~~the ~~dividends~~site is properly the responsibility of ~~$54,000~~other ~~and~~parties ~~$54,000~~that inhave ~~2011~~occupied and ~~2010,~~used ~~respectively~~it for waste recycling purposes since 1961, although under CERCLA the ~~results~~EPA ~~attributable~~is able to ~~common~~assert joint ~~stockholders~~and ~~were~~several aliability ~~net~~against ~~loss~~all ofparties ~~424,000~~who ever owned or operated the site or generated or transported wastes to it. The EPA investigation is in ~~2011~~its preliminary stages and athe ~~net~~Company ~~loss~~intends ofto ~~408~~vigorously defend any liability for remediation. At July 31,~~000~~ 2012, the liability for remediation, if any, was not estimable and therefore no accrual has been recorded in ~~2010~~the financial statements.

~~Canal's~~ We ~~revenues~~are ~~from~~currently ~~continuing~~not ~~operations~~aware ~~consist~~ of ~~revenues~~any other ~~from~~legal ~~its~~proceedings ~~real~~or ~~estate~~claims ~~and~~that ~~stockyard~~we ~~operations. Revenues~~believe ~~for~~will ~~the~~have ~~first nine months of fiscal 2011 decreased by $231,000 to $1,634,000 as compared with 2010 revenues of $1,865,000. The fiscal 2011 decrease in revenues is due primarily to~~ a ~~$217,000~~material ~~decrease~~adverse affect inon ~~stockyard~~our ~~revenues as a result of the closing of the Sioux Falls Stockyards in the first quarter of fiscal 2010 combined with a $14~~business,~~000~~ ~~decrease~~financial incondition ~~real~~or ~~estate~~operating ~~revenues in the first nine months of fiscal 2011~~results.

~~Index~~ITEM 1A. RISK FACTORS – Not applicable

COMPARISON OF FISCAL PERIODS ENDED JULY 31, 2011 AND 2010

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS - None

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4.	MINE SAFETY DISCLOSURES – Not applicable

ITEM 5.	OTHER INFORMATION

~~Real~~ We ~~Estate~~have ~~Revenues~~no information to disclose that was required to be disclosed in a report on Form 8-K during our first quarter ended January 31, 2012, but was not reported.

~~Real~~ITEM ~~estate revenues for the nine months ended July 31, 2011 of $203,000 accounted for 12.4% of the fiscal 2011 revenues as compared to real estate revenues of $217,000 or 11.~~6~~% for the same period in fiscal 2010~~. Real estate revenues are comprised of sale of real estate (0.0% and 0.0%), rentals and other lease income from the rental of vacant land and certain structures (100.0% and 93.3%) and rental income from commercial office space in its Exchange Buildings (0.0% and 6.7%) for the nine months ended July 31, 2011 and 2010, respectively. The percentage variations in the year to year comparisons are due primarily to the elimination of rental income from the Sioux Falls, South Dakota Exchange Building which was closed in September 2010.EXHIBITS

~~Real~~The ~~estate~~following ~~revenues~~exhibits ~~for~~are ~~the~~filed ~~three months ended July 31, 2011 of $66,000 accounted for 20.3% of the fiscal 2011 revenues~~ as ~~compared~~part ~~to real estate revenues~~ of ~~$70,000~~this orreport 17.3% for the same period in fiscal 2010. Real estate revenues are comprised of sale of real estate (0.0% and 0.0%), rentals and other lease income from the rental of vacant land and certain structures (100.0% and 96.5%) and rental income from commercial office space in its Exchange Buildings (0.0% and 3.5%) for the three months ended July 31, 2011 and 2010, respectively. The percentage variations in the year to yearor ~~comparisons~~ incorporated ~~are~~by ~~due primarily to the elimination of rental income from the Sioux Falls, South Dakota Exchange Building which was closed in September 2010.~~reference:

~~Real~~EXHIBIT ~~Estate~~No. ~~Expenses~~31.1 - Certifications of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. EXHIBIT No. 31.2 – Certifications of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. EXHIBIT No. 32.1 - Certifications of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. EXHIBIT No. 32.2 – Certifications of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. EXHIBIT No.101* - Interactive data files pursuant to Rule 405 of Regulation S-T.

~~Real~~*Filed ~~estate~~with ~~expenses~~this ~~for~~Form ~~the~~10-Q ~~nine~~for ~~months~~Canal ~~ended July 31, 2011 of $43,000 decreased by $27,000 (38~~Capital Corporation.~~7%)~~ ~~from~~Pursuant ~~real~~to ~~estate~~Rule ~~expenses~~406T of ~~$70~~Regulation S-T,~~000~~ ~~for~~ the ~~same~~interactive ~~period~~data infiles on ~~fiscal~~Exhibit ~~2010.~~101 ~~The~~hereto ~~decrease~~are indeemed ~~real~~not ~~estate~~filed ~~expenses~~or ispart ~~consistent~~of ~~with~~a ~~the~~registration ~~2011~~statement or ~~decrease~~prospectus infor ~~real~~purposes ~~estate~~of ~~revenues. Real~~Sections ~~estate~~11 ~~expenses~~or ~~are~~12 ~~comprised~~ of the ~~cost~~Securities Act of ~~real estate sold (0.0% and 0.0%)~~1933, as ~~labor~~amended, ~~operating~~or ~~and~~for ~~maintenance~~purposes ~~(16.5%~~of ~~and~~Section ~~27.9%), depreciation and amortization (39.1% and 24.0%), taxes other than income taxes (26.4% and 23.8%) and general and administrative expenses (~~18~~.0%~~ ~~and~~of ~~24.3%) for~~ the ~~nine~~Securities ~~months~~Act ~~ended~~of ~~July 31~~1934, ~~2011 and~~as ~~2010~~ amended, ~~respectively.~~and ~~The~~otherwise ~~percentage~~are ~~variations~~not insubject ~~the year~~ to ~~year~~liability ~~comparisons~~under ~~are~~those ~~the result of the fiscal 2011 decreases in all but depreciation expense~~sections.

Index

Real estate expenses for the three months ended July 31, 2011 of $14,000 decreased by $10,000 (40.5%) from real estate expenses of $24,000 for the same period in fiscal 2010. The decrease in real estate expenses is consistent with the 2011 decrease in real estate revenues. Real estate expenses are comprised of the cost of real estate sold (0.0% and 0.0%), labor, operating and maintenance (17.4% and 23.9%), depreciation and amortization (38.7% and 23.0%), taxes other than income taxes (26.1% and 23.0%) and general and administrative expenses (17.8% and 30.1%) for the three months ended July 31, 2011 and 2010, respectively. The percentage variations in the year to year comparisons are the result of the fiscal 2011 decreases in all but depreciation expense.

Stockyard Revenues

Stockyard revenues for the nine months ended July 31, 2011 of $1,431,000 accounted for 87.6% of the fiscal 2011 revenues as compared to stockyard revenues of $1,648,000 or 88.4% for the same period in fiscal 2010. The 2011 decrease in stockyard revenues was due primarily to the closing of the Sioux Falls Stockyards in the first quarter of fiscal 2010. Stockyard revenues are comprised of yard handling and auction (87.7% and 82.1%), feed and bedding income (5.8% and 4.8%) and rental and other income (6.5% and 13.1%) for the nine month periods ended July 31, 2011 and 2010, respectively. The 2010 percentage variations in the year to year comparisons are due primarily to the closing of the Sioux Falls Stockyards in the first quarter of fiscal 2010 as discussed above.

Stockyard revenues for the three months ended July 31, 2011 of $260,000 accounted for 79.7% of the fiscal 2011 revenues as compared to stockyard revenues of $333,000 or 82.7% for the same period in fiscal 2010. The 2011 decrease in stockyard revenues was due primarily to the closing of the Sioux Falls Stockyards in the first quarter of fiscal 2010. Stockyard revenues are comprised of yard handling and auction (83.2% and 83.2%), feed and bedding income (6.2% and 6.6%) and rental and other income (10.6% and 10.2%) for the three month periods ended July 31, 2011 and 2010, respectively. The 2010 percentage variations in the year to year comparisons are due primarily to the closing of the Sioux Falls Stockyards in the first quarter of fiscal 2010 as discussed above.

Stockyard Expenses

Stockyard expenses for the nine months ended July 31, 2011 of $1,279,000 decreased by $154,000 (10.7%) from stockyard expenses of $1,433,000 for the same period in fiscal 2010. Stockyard expenses are comprised of labor and related costs (43.9% and 42.6%), other operating and maintenance (26.0% and 27.0%), feed and bedding expense (5.2% and 4.6%), depreciation and amortization (1.2% and 0.7%), taxes other than income taxes (4.4% and 8.1%) and general and administrative expense (19.3% and 17.0%) for the nine month periods ended July 31, 2011 and 2010, respectively. There were no significant percentage variations in the year to year comparisons.

Index

Stockyard expenses for the three months ended July 31, 2011 of $326,000 decreased by $41,000 (11.1%) from stockyard expenses of $367,000 for the same period in fiscal 2010. Stockyard expenses are comprised of labor and related costs (46.2% and 39.7%), other operating and maintenance (28.4% and 30.4%), feed and bedding expense (5.0% and 4.3%), depreciation and amortization (1.6% and 0.9%), taxes other than income taxes (5.1% and 9.8%) and general and administrative expense (13.7% and 14.9%) for the three month periods ended July 31, 2011 and 2010, respectively. There were no significant percentage variations in the year to year comparisons.

General and Administrative

General and administrative expenses for the nine months ended July 31, 2011 of $620,000 decreased by $8,000 (1.3%) as compared to $628,000 for the same period in fiscal 2010. The major components of general and administrative expenses are officers salaries (57.4% and 56.6%), pension expense (13.1% and 12.9%), insurance expense (6.7% and 6.6%), office salaries (11.4% and 11.2%), travel expense (2.2% and 2.8%) and professional fees (1.7% and 2.9%) for the nine month periods ended July 31, 2011 and 2010, respectively. The percentage variations in the year to year comparisons are due primarily to the sharp decreases in both travel and professional fees expenses in fiscal 2011.

General and administrative expenses for the three months ended July 31, 2011 of $205,000 decreased by $3,000 (1.2%) as compared to $208,000 for the same period in fiscal 2010. The major components of general and administrative expenses are officers salaries (58.4% and 56.5%), pension expense (13.3% and 12.9%), insurance expense (6.8% and 6.6%), office salaries (11.6% and 11.2%), travel expense (2.2% and 2.9%) and professional fees (1.5% and 2.9%) for the three month periods ended July 31, 2011 and 2010, respectively. The percentage variations in the year to year comparisons are due primarily to the sharp decreases in both travel and professional fees expenses in fiscal 2011.

Index

Interest Expense

Interest expense for the nine months ended July 31, 2011 of $64,000 decreased by $24,000 (28.0%) from $88,000 for the same period in fiscal 2010. The 2011 decrease is due primarily to Canal’s $485,000 partial repayment of this debt in fiscal 2010. The principal balance outstanding at July 31, 2011 of $847,000 is classified as long-term debt-related party.

(Expense) Income from Art Sales & Operations

There were no other expense from art sales & operations for the nine month periods ended July 31, 2011 and 2010, respectively. Canal had no art sales in the first nine months of fiscal 2011 or fiscal 2010. Art revenues, if any, are comprised of the proceeds from the sale of antiquities art. Art expenses are comprised of the cost of inventory sold and selling, general and administrative expenses. It is the Company’s policy to use the adjusted carrying value for sales, thereby reducing the valuation reserve proportionately as the inventory is sold.

Liquidity and Capital Resources

While the Company is currently operating as a going concern, certain significant factors raise substantial doubt about the Company's ability to continue as a going concern. The Company has suffered recurring losses from operations and is obligated to continue making substantial annual contributions to its defined benefit pension plan. The financial statements do not include any adjustments that might result from there solution of these uncertainties. Additionally, the accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s variable rate mortgage notes (originally issued in 1998 and amended several times since then) are due May 15, 2012 and are held entirely by the Company’s Chief Executive Officer. These notes carry interest at the rate of ten percent per annum.

Index

These notes, among other things, prohibit Canal from becoming an investment company as this is defined by the Investment Company Act of 1940;restricts Canal’s ability to pay cash dividends or repurchase stock and require principal prepayments to be made only out of the proceeds from the sale of certain assets. Accordingly, as of July 31, 2011, the balance due under these notes was $847,000, all of which is classified as long-term debt-related party.

Cash and cash equivalents of $78,000 at July 31, 2011 decreased $432,000 from $510,000 at October 31, 2010. Net cash used in operating activities in fiscal 2011 was $381,000. Substantially all of the net proceeds from the sales of real estate or art, if any, will be used in operating activities or to reduce debt. During fiscal 2011 the balance of Canal’s liabilities decreased by a total of $118,000.

At July 31, 2011 the Company’s current assets exceed current liabilities by approximately $0.6 million as compared to October 31, 2010 when the Company’s current assets exceeded current liabilities by $0.3 million. The only required principal repayments under Canal's debt agreements for fiscal 2011 will be from the proceeds (if any) of the sale of certain assets.

As discussed above, Canal’s cash flow position has been under significant strain for the past several years. Canal continues to closely monitor and reduce where possible its operating expenses and plans to continue its program to develop or sell the property it holds for development or resale as well as to reduce the level of its art inventories to enhance current cash flows. Management believes that its income from operations combined with its cost cutting program and planned reduction of its art inventory will enable it to finance its current business activities. There can, however, be no assurance that Canal will be able to effectuate its planned art inventory reductions or that its income from operations combined with its cost cutting program in itself will be sufficient to fund operating cash requirements.

Other Factors

Some of the statements in this Form 10-Q, as well as statements by the Company in periodic press releases, oral statements made by the Company’s officials to analysts and stockholders in the course of presentations about the Company and conference calls following earning releases, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involved 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 expressed or implied by the forward-looking statements.

Index

ITEM III. Quantitative and Qualitative Disclosures About Market Risk

The Securities and Exchange Commission’s rule related to market risk disclosure requires that we describe and quantify our potential losses from market risk sensitive instruments attributable to reasonably possible market changes. Market risk sensitive instruments include all financial or commodity instruments and other financial instruments (such as investments and debt) that are sensitive to future changes in interest rates, currency exchange rates, commodity prices or other market factors. We are not exposed to market risks from changes in foreign currency, exchange rates or commodity prices. As of July 31, 2011, we do not hold derivative financial instruments nor do we hold securities for trading or speculative purposes. Under our current policies, we do not use interest rate derivative instruments to manage our exposure to interest rate changes.

At July 31, 2011, the following long-term debt-related party financial instruments are sensitive to changes in interest rates by expected maturity dates:

As of	Fixed rate		Average		Fair
JULY 31,	($ US)		Interest Rate		Value
2011	$	0		N/A
2012		847		10%
2013		0		N/A
2014		0		N/A
2015		0		N/A
Thereafter		0		N/A
Total	$	847			N/A (A)

(A) Long-term debt related party: it is not practicable to estimate the fair value of the related party debt.

ITEM IV. Controls and Procedures

Our management, which includes our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13(a)-14(c) promulgated under the Securities Exchange Act of 1934) as of July 31, 2011 (“the Evaluation Date”) within 45 days prior to the filing date of this report. Based upon that evaluation our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective for timely gathering, analyzing and disclosing the information we are required to disclose in our reports filed under the Securities Exchange Act of 1934, as amended. There have been no significant changes made in our internal controls or other factors that could significantly effect our internal controls subsequent to the Evaluation Date.

Index

PART II

OTHER INFORMATION

Index

Item 1: Legal Proceedings:

Also see Item 3 of Canal’s October 31, 2010 Form 10-K.

Canal and its subsidiaries are from time to time involved in litigation incidental to their normal business activities, none of which, in the opinion of management, will have a material adverse effect on the consolidated financial condition and operations of the Company. Canal was not a party to any ongoing litigation at July 31, 2011.

The following situation did arise in fiscal 2005:

Environmental Protection Agency - Special Notice Letter for Investigation, Portland, Oregon Property

In 1989, the Company sold its 48 acre Portland, Oregon stockyard to Oregon Waste Systems, Inc. On September 29, 2003, the United States Environmental Agency (EPA) placed a 4.2 acre portion of that property on the National Priorities List pursuant to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), commonly known as the Superfund Act. In a letter from the EPA dated June 27, 2005 the Company, along with approximately 13 other parties, including the current owner and operator of the site, was notified that it might be liable to perform or pay for the remediation of environmental contamination found on and around the site. Since the receipt of the letter, the Company has been in periodic communications with the other parties who received a similar letter with respect to what action, collectively or individually, should be taken in response to the EPA assertion of liability. The Company believes that the remediation of contamination of the site is properly the responsibility of other parties that have occupied and used it for waste recycling purposes since 1961, although under CERCLA the EPA is able to assert joint and several liability against all parties who ever owned or operated the site or generated or transported wastes to it. This investigation is in its preliminary stages and the Company intends to vigorously defend any liability for remediation. At July 31, 2011, the liability for remediation, if any, is not estimatable and therefore no accrual has been recorded in the financial statements.

Item 2 and 3: Not applicable.

Item 4: Submission of Matters to a Vote of Security Holders: None.

Item 5: Other Information: None.

Item 6: Exhibits and Reports on Form 8-K: (A) Not applicable.

(B) None

Index

SIGNATURES

Pursuant to the requirements of ~~Section 13 or 15(d) of~~ the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, ~~thereunto~~hereunto duly authorized~~, on the 12th day of September, 2011~~.

~~CANAL CAPITAL CORPORATION Date By~~Dated: ~~/s/~~November ~~Michael~~28, ~~E. Schultz Michael E. Schultz President and Chief Executive Officer (Principal Executive Officer)~~2012

~~Pursuant~~CANAL toCAPITAL ~~the~~CORPORATION ~~requirements~~By: of/S/ ~~the~~Michael ~~Securities~~E. ~~Exchange~~Schultz ~~Act~~Michael ofE. ~~1934,~~Schultz ~~this~~President ~~report~~and ~~has~~Chief ~~been~~Executive ~~signed~~Officer ~~below~~(Principal byExecutive ~~the~~Officer) ~~following~~By: ~~persons~~/S/ onReginald ~~behalf~~Schauder ofReginald ~~the~~Schauder ~~Registrant~~Vice President-Finance, Secretary and inTreasurer ~~the~~(Principal ~~capacities~~Financial and onAccounting ~~the dates indicated.~~Officer)

Signature	Title	Date
	President and Chief
/S/ Michael E. Schultz	Executive Officer and Director
Michael E. Schultz	(Principal Executive Officer)	September 12, 2011
	Vice President-Finance
	Secretary and Treasurer
/S/ Reginald Schauder	(Principal Financial and
Reginald Schauder	Accounting Officer)	September 12, 2011
/S/ Asher B. Edelman	Chairman of the Board
Asher B. Edelman	and Director	September 12, 2011

Filing Compare · CANAL CAPITAL CORP