SECURITIES AND EXCHANGE COMMISSION
                            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, 2009

             [ ]  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

                           CANAL CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)

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

     490 WHEELER ROAD SUITE 185 HAUPPAUGE, NY           11788
     (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

   Indicate  by  check  mark  whether  the  registrant (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.  Yes  [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  [  ]

   Indicate  by  check mark whether the Registrant is a large accelerated filer,
an  accelerated  filer,  or  a  non-accelerated  filer.  See  definition  of
"accelerated  filer  and  large accelerated filer" in Rule 12b-2 of the Exchange
Act.  (Check  one):

Large accelerated filer [ ]  Accelerated filer [ ]  Non-accelerated filer [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]

   The number of shares of Common Stock, $.01 par value, outstanding at August
31, 2009 was 4,326,929.


<PAGE>
                   CANAL CAPITAL CORPORATION AND SUBSIDIARIES
                            FORM 10-Q JULY 31, 2009

                                     INDEX
                                     -----

The following documents are filed as part of this report:

Part I - Financial Information. . . . . . . . . . . . . . . . . . . . . . . .  3

Item I.  Condensed Financial Statements:

  Consolidated Balance Sheets - July 31, 2009
    and October 31, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . .  4

  Consolidated Statements of Operations and
    Comprehensive Income (Loss) for the Nine and Three
    Month Periods ended July 31, 2009 and 2008. . . . . . . . . . . . . . . .  6

  Consolidated Statements of Changes in Stockholders'
    Equity for the One Year and Nine Month Periods
    ended October 31, 2008 and July 31, 2009. . . . . . . . . . . . . . . . . 10

  Consolidated Statements of Cash Flows for the
    Nine Month Periods ended July 31, 2009 and
    2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39

Item III. Quantitative and Qualitative Disclosures
          About Market Risk. . . . . . . . . . . . . . . . . . . . . . . . .  39

Item IV.  Controls and Procedures. . . . . . . . . . . . . . . . . . . . . .  40

Part II.  Other Information. . . . . . . . . . . . . . . . . . . . . . . . .  41

  Items 1 through 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42

  Signatures and Certifications. . . . . . . . . . . . . . . . . . . . . . .  43


                                        2
<PAGE>
                                     PART I
                                     ------

                             FINANCIAL INFORMATION
                             ---------------------


                                        3
<PAGE>
                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                       JULY 31, 2009 AND OCTOBER 31, 2008

<TABLE>
<CAPTION>
                                                   JULY 30,     OCT. 31,
                                                     2009         2008
                                                 (UNAUDITED)    (AUDITED)
                                                 ------------  -----------
<S>                                              <C>           <C>
ASSETS:

CURRENT ASSETS:

  CASH AND CASH EQUIVALENTS                      $      6,975  $    21,115

  NOTES AND ACCOUNTS RECEIVABLE, NET OF AN
    ALLOWANCE FOR DOUBTFUL ACCOUNTS OF $ZERO AT
    BOTH JULY 31, 2009 AND OCTOBER 31, 2008,          194,343      147,140

  ART INVENTORY, NET OF A VALUATION ALLOWANCE
    OF $396,522 AT JULY 31, 2009 AND
    OCTOBER 31, 2008                                  100,000      100,000

  STOCKYARDS INVENTORY                                  4,282       24,426

  PREPAID EXPENSES                                     45,249       12,955
                                                 ------------  -----------

    TOTAL CURRENT ASSETS                              350,849      305,636
                                                 ------------  -----------

NON-CURRENT ASSETS:

  PROPERTY ON OPERATING LEASES, NET OF
    ACCUMULATED DEPRECIATION OF $444,649
    AND $427,799 AT JULY 31, 2009 AND
    OCTOBER 31, 2008, RESPECTIVELY                  1,629,157    1,645,807
                                                 ------------  -----------

  PROPERTY USED IN STOCKYARD OPERATIONS, NET OF
    ACCUMULATED DEPRECIATION OF $245,550 AND
    $230,687 AT JULY 31, 2009 AND OCTOBER
    31, 2007, RESPECTIVELY                          1,110,008    1,124,871
                                                 ------------  -----------

OTHER ASSETS:

  PROPERTY HELD FOR DEVELOPMENT OR RESALE              52,250       91,510
  RESTRICTED CASH - LETTER OF CREDIT                  130,000      100,000
  RESTRICTED CASH - TRANSIT INSURANCE                  41,623       26,736
  DEPOSITS AND OTHER ASSETS                             2,700        2,700
                                                 ------------  -----------

                                                      226,573      220,946
                                                 ------------  -----------

                                                 $  3,316,587  $ 3,297,260
                                                 ============  ===========
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.


                                        4
<PAGE>
                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                       JULY 31, 2009 AND OCTOBER 31, 2008
<TABLE>
<CAPTION>

                                                  JULY 30, 2009    OCT.31, 2008
                                                   (UNAUDITED)      (AUDITED)
                                                 ---------------  --------------
<S>                                              <C>              <C>
LIABILITIES & STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:
    ACCOUNTS PAYABLE AND ACCRUED EXPENSES        $      338,394   $     363,306
    PENSION PLAN PAYABLE                                104,895         149,919
    SALARIES AND INTEREST PAYABLE - OFFICERS            219,781          27,317
    ACCRUED PROFESSIONAL FEES                            83,880         113,523
    PREFERRED STOCK DIVIDEND PAYABLE                    138,712          84,712
    INCOME TAXES PAYABLE                                 10,000          10,000
                                                 ---------------  --------------
      TOTAL CURRENT LIABILITIES                         895,662         748,777
                                                 ---------------  --------------

NON-CURRENT LIABILITIES:
    LONG-TERM PENSION LIABILITY                         440,156         440,156
    REAL ESTATE TAXES PAYABLE                           174,448         115,165
                                                 ---------------  --------------
      TOTAL NON-CURRENT LIABILITIES                     614,604         555,321
                                                 ---------------  --------------

LONG-TERM DEBT, RELATED PARTY                         1,292,000       1,262,000
                                                 ---------------  --------------


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,
    2009 AND OCTOBER 31, 2008, RESPECTIVELY AND
    AGGREGATE LIQUIDATION PREFERENCE OF $10 PER
    SHARE FOR $91,026,550 AT JULY 31, 2009
    AND OCTOBER 31, 2008, 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, 2009 AND OCTOBER 31,
    2008, RESPECTIVELY                                   53,138          53,138

ADDITIONAL PAID-IN CAPITAL                           28,322,341      28,322,341

ACCUMULATED DEFICIT                                 (15,332,168)    (15,025,327)

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

COMPREHENSIVE INCOME:
  PENSION VALUATION RESERVE                          (1,616,472)     (1,706,472)
                                                 ---------------  --------------
                                                        514,321         731,162
                                                 ---------------  --------------
                                                 $    3,316,587   $   3,297,260
                                                 ===============  ==============
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.


                                        5
<PAGE>
                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)
              FOR THE NINE MONTHS ENDED JULY 31, 2009 AND 2008

<TABLE>
<CAPTION>

                                             2009          2008
                                         (UNAUDITED)   (UNAUDITED)
                                         ------------  ------------
<S>                                      <C>           <C>
REAL ESTATE OPERATIONS:

  REAL ESTATE REVENUES:
    SALE OF REAL ESTATE                      262,720     1,190,000
    OUTSIDE REAL ESTATE RENT                 290,037       359,461
    EXCHANGE BUILDING RENTAL INCOME           22,160        24,353
                                         ------------  ------------
                                             574,917     1,573,814
                                         ------------  ------------

  REAL ESTATE EXPENSES:
    COST OF REAL ESTATE SOLD                  69,069       277,367
    LABOR, OPERATING AND MAINTENANCE          43,683        58,639
    DEPRECIATION AND AMORTIZATION             16,650        16,650
    TAXES OTHER THAN INCOME TAXES             18,450        16,200
    GENERAL AND ADMINISTRATIVE                29,700        33,140
                                         ------------  ------------
                                             177,552       401,996
                                         ------------  ------------

INCOME FROM REAL ESTATE OPERATIONS           397,365     1,171,818
                                         ------------  ------------


STOCKYARD OPERATIONS:

STOCKYARD REVENUES:
    YARD HANDLING AND AUCTION            $ 1,877,220   $ 1,956,697
    FEED AND BEDDING INCOME                  150,991       150,811
    RENTAL & OTHER INCOME                    122,446       123,738
                                         ------------  ------------
                                           2,150,657     2,231,246
                                         ------------  ------------

STOCKYARD EXPENSES:
    LABOR AND RELATED COSTS                  922,270     1,074,354
    OTHER OPERATING AND MAINTENANCE          563,524       640,092
    FEED AND BEDDING EXPENSE                 113,618       139,123
    DEPRECIATION AND AMORTIZATION             14,863        14,863
    TAXES OTHER THAN INCOME TAXES            127,085       128,921
    GENERAL AND ADMINISTRATIVE               288,734       286,159
                                         ------------  ------------
                                           2,030,094     2,283,512
                                         ------------  ------------

INCOME (LOSS) FROM STOCKYARD OPERATIONS      120,563       (52,266)
                                         ------------  ------------

GENERAL AND ADMINISTRATIVE EXPENSE          (680,400)     (819,849)
                                         ------------  ------------

(LOSS) INCOME FROM OPERATIONS               (162,472)      299,703
                                         ------------  ------------
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

                                        6
<PAGE>
                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)
                FOR THE NINE MONTHS ENDED JULY 31, 2009 AND 2008
                                   Continued

<TABLE>
<CAPTION>

                                               2009          2008
                                           (UNAUDITED)   (UNAUDITED)
                                           ------------  ------------
<S>                                        <C>           <C>
OTHER (EXPENSE) INCOME:
  INTEREST & OTHER INCOME                        7,881        26,784
  INTEREST EXPENSE                             (94,650)     (146,043)
  ART SALES AND OPERATIONS                      (3,600)       (3,600)
                                           ------------  ------------

                                               (90,369)     (122,859)
                                           ------------  ------------

(LOSS) INCOME BEFORE PROVISION FOR
  INCOME TAXES                                (252,841)      176,844
PROVISION FOR INCOME TAXES                           0             0
                                           ------------  ------------

NET (LOSS) INCOME                             (252,841)      176,844

OTHER COMPREHENSIVE (LOSS) INCOME:

  MINIMUM PENSION LIABILITY ADJUSTMENT          90,000       189,000
                                           ------------  ------------

COMPREHENSIVE (LOSS) INCOME                $  (162,841)  $   365,844
                                           ============  ============

(LOSS) EARNINGS PER COMMON SHARE:

    NET (LOSS) INCOME                      $  (252,841)  $   176,844

    LESS PREFERRED STOCK DIVIDEND              (54,000)      (81,000)
                                           ------------  ------------

(LOSS) INCOME AVAILABLE TO COMMON STKDERS  $  (306,841)  $    95,844
                                           ------------  ------------

NET (LOSS) INCOME PER COMMON SHARE
  BASIC AND DILUTED                        $     (0.07)  $      0.02
                                           ============  ============

AVERAGE SHARES OUTSTANDING - BASIC
  AND DILUTED                                4,326,929     4,326,929
                                           ============  ============
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.


                                        7
<PAGE>
                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)
               FOR THE THREE MONTHS ENDED JULY 31, 2009 AND 2008

<TABLE>
<CAPTION>

                                          2009          2008
                                      (UNAUDITED)   (UNAUDITED)
                                      ------------  ------------
<S>                                   <C>           <C>
REAL ESTATE OPERATIONS:

REAL ESTATE REVENUES:

    SALE OF REAL ESTATE                         0       990,000
    OUTSIDE REAL ESTATE RENT               96,993       112,173
    EXCHANGE BUILDING RENTAL INCOME         6,773         7,718
                                      ------------  ------------
                                          103,766     1,109,891
                                      ------------  ------------

  REAL ESTATE EXPENSES:
    COST OF REAL ESTATE SOLD                    0       204,800
    LABOR, OPERATING AND MAINTENANCE       14,053        20,668
    DEPRECIATION AND AMORTIZATION           5,550         5,550
    TAXES OTHER THAN INCOME TAXES           6,150         5,400
    GENERAL AND ADMINISTRATIVE              9,900        11,100
                                      ------------  ------------
                                           35,653       247,518
                                      ------------  ------------

INCOME FROM REAL ESTATE OPERATIONS         68,113       862,373
                                      ------------  ------------


STOCKYARD OPERATIONS:

STOCKYARD REVENUES:
    YARD HANDLING AND AUCTION         $   397,784   $   430,368
    FEED AND BEDDING INCOME                35,300        39,744
    RENTAL & OTHER INCOME                  32,771        35,606
                                      ------------  ------------
                                          465,855       505,718
                                      ------------  ------------

STOCKYARD EXPENSES:
    LABOR AND RELATED COSTS               242,373       340,629
    OTHER OPERATING AND MAINTENANCE       157,902       195,104
    FEED AND BEDDING EXPENSE               21,470        35,583
    DEPRECIATION AND AMORTIZATION           4,954         4,954
    TAXES OTHER THAN INCOME TAXES          37,064        41,558
    GENERAL AND ADMINISTRATIVE             65,322        65,049
                                      ------------  ------------
                                          529,085       682,877
                                      ------------  ------------

(LOSS) FROM STOCKYARD OPERATIONS          (63,230)     (177,159)
                                      ------------  ------------

GENERAL AND ADMINISTRATIVE EXPENSE       (230,972)     (268,489)
                                      ------------  ------------

(LOSS) INCOME FROM OPERATIONS            (226,089)      416,725
                                      ------------  ------------
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.


                                        8
<PAGE>
                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS)
               FOR THE THREE MONTHS ENDED JULY 31, 2009 AND 2008
                                   Continued

<TABLE>
<CAPTION>
                                               2009          2008
                                           (UNAUDITED)   (UNAUDITED)
                                           ------------  ------------
<S>                                        <C>           <C>
OTHER (EXPENSE) INCOME:
  INTEREST & OTHER INCOME                          102             0
  INTEREST EXPENSE                             (31,550)      (40,202)
  ART SALES AND OPERATIONS                      (1,200)       (1,200)
                                           ------------  ------------

                                               (32,648)      (41,402)
                                           ------------  ------------

(LOSS) INCOME BEFORE PROVISION FOR
  INCOME TAXES                                (258,737)      375,323
PROVISION FOR INCOME TAXES                           0             0
                                           ------------  ------------

NET (LOSS) INCOME                             (258,737)      375,323

OTHER COMPREHENSIVE (LOSS) INCOME:

  MINIMUM PENSION LIABILITY ADJUSTMENT          30,000        63,000
                                           ------------  ------------

COMPREHENSIVE (LOSS) INCOME                $  (228,737)  $   438,323
                                           ============  ============

(LOSS) EARNINGS PER COMMON SHARE:

    NET (LOSS) INCOME                      $  (258,737)  $   375,323

    LESS PREFERRED STOCK DIVIDEND              (18,000)      (27,000)
                                           ------------  ------------

(LOSS) INCOME AVAILABLE TO COMMON STKHDRS  $  (276,737)   $  348,323
                                           ------------  ------------

NET (LOSS) INCOME PER COMMON SHARE
  BASIC AND DILUTED                        $     (0.06)  $      0.08
                                           ============  ============

AVERAGE SHARES OUTSTANDING - BASIC
  AND DILUTED                                4,326,929     4,326,929
                                           ============  ============
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.


                                        9
<PAGE>
                   CANAL CAPITAL CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
               FOR THE YEAR ENDED OCTOBER 31, 2008 (AUDITED) AND
              FOR THE NINE MONTHS ENDED JULY 31, 2009 (UNAUDITED)

<TABLE>
<CAPTION>

                                  COMMON STOCK            PREFERRED STOCK

                              NUMBER                      NUMBER
                                OF                          OF
                              SHARES         AMOUNT       SHARES     AMOUNT
<S>                         <C>          <C>            <C>         <C>
BALANCE, OCTOBER 31, 2007     5,313,794  $      53,138  9,102,655   $91,027
  NET LOSS                            0              0          0         0
  PREFERRED STOCK DIVIDEND            0              0          0         0
  MINIMUM PEN. LIAB. ADJ.             0              0          0         0
                            --------------------------  -------------------

BALANCE, OCTOBER 31, 2008     5,313,794  $      53,138  9,102,655   $91,027
  NET LOSS                            0              0          0         0
  PREFERRED STOCK DIVIDEND            0              0          0         0
  MINIMUM PEN. LIAB. ADJ.             0              0          0         0
                            --------------------------  -------------------

BALANCE, JULY 31, 2009        5,313,794  $      53,138  9,102,655   $91,027
                            ==========================  ===================
</TABLE>

<TABLE>
<CAPTION>

                            ADDITIONAL                                   TREASURY
                              PAID-IN     ACCUMULATED   COMPREHENSIV      STOCK,
                              CAPITAL       DEFICIT         LOSS          AT COST
<S>                         <C>          <C>            <C>            <C>
BALANCE, OCTOBER 31, 2007   $28,322,341  ($14,885,103)   ($1,592,262)  ($11,003,545)
  NET LOSS                            0       (55,512)             0              0
  PREFERRED STOCK DIVIDEND            0       (84,712)             0              0
  MINIMUM PEN. LIAB. ADJ.             0             0       (114,210)             0
                            -----------  -------------  -------------  -------------

BALANCE, OCTOBER 31, 2008   $28,322,341  ($15,025,327)   ($1,706,472)  ($11,003,545)
  NET LOSS                            0      (252,841)             0              0
  PREFERRED STOCK DIVIDEND            0       (54,000)             0              0
  MINIMUM PEN. LIAB. ADJ.             0             0         90,000              0
                            -----------  -------------  -------------  -------------
BALANCE, JULY 31, 2009      $28,322,341  ($15,332,168)   ($1,616,472)  ($11,003,545)
                            ===========  =============  =============  =============
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.


                                       10
<PAGE>
                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED JULY 31, 2009 AND 2008

<TABLE>
<CAPTION>
                                                JULY 2009     JULY 2008
                                               ------------  -----------
<S>                                            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  NET (LOSS) INCOME                            $  (252,841)  $  176,844
                                               ------------  -----------

ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
  (USED IN) PROVIDED BY OPERATING ACTIVITIES:

  DEPRECIATION AND AMORTIZATION                     31,513       31,513

  GAIN ON SALES OF REAL ESTATE                    (193,651)    (912,633)

  MINIMUM PENSION LIABILITY ADJUSTMENT              90,000      189,000

DECREASE (INCREASE) IN ASSETS:

  MORTGAGE NOTE RECEIVABLE - PROCEEDS                    0    1,600,000

  NOTES AND ACCOUNTS RECEIVABLE                    (47,203)     (71,263)

  STOCKYARDS INVENTORY                              20,144       (7,140)

  PREPAID EXPENSES                                 (32,294)      (4,536)

  RESTRICTED CASH - LETTER OF CREDIT               (30,000)           0

  RESTRICTED CASH - TRANSIT INSURANCE              (14,887)      12,720

INCREASE (DECREASE) IN LIABILITIES:

  ACCOUNTS PAYABLE AND ACCRUED EXPENSES            (24,912)     (56,858)

  PENSION PLAN PAYABLE                             (45,024)     (94,677)

  SALARIES AND INTEREST PAYABLE - OFFICERS         192,464     (223,916)

  ACCRUED PROFESSIONAL FEES                        (29,643)     (18,771)

  REAL ESTATE TAXES PAYABLE                         59,283      (17,432)
                                               ------------  -----------

    TOTAL ADJUSTMENTS                              (24,210)     426,007
                                               ------------  -----------

NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES                              (277,051)     602,851
                                               ------------  -----------
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.


                                       11
<PAGE>
                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED JULY 31, 2009 AND 2008
                                   Continued

<TABLE>
<CAPTION>
                                              JULY 2009    JULY 2008
                                             -----------  ------------
<S>                                          <C>          <C>
CASH FLOWS FROM INVESTING ACTIVITIES:

  PROCEEDS FROM SALES OF REAL ESTATE            262,720     1,190,000
  COSTS RELATING TO SALES OF REAL ESTATE        (29,809)     (204,367)
  CAPITAL EXPENDITURES                                0       (34,995)
                                             -----------  ------------

NET CASH PROVIDED BY INVESTING ACTIVITIES       232,911       950,638
                                             -----------  ------------

CASH FLOWS PROVIDED BY (USED) IN FINANCING
    ACTIVITIES:

    PROCEEDS FROM LONG-TERM DEBT OBLIGATION      30,000             0
    REPAYMENT OF LONG-TERM DEBT OBLIGATION            0    (1,565,000)
                                             -----------  ------------

NET CASH PROVIDED BY (USED) IN FINANCING
    ACTIVITIES                                   30,000    (1,565,000)
                                             -----------  ------------

NET (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                   (14,140)      (11,511)

CASH AND CASH EQUIVALENTS AT BEGN OF YEAR        21,115        27,925
                                             -----------  ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR     $    6,975   $    16,414
                                             ===========  ============

                                                     JULY 31,
                                                   -----------
                                                 2009          2008
                                             -----------  ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION:

CASH PAID DURING THE YEAR FOR:

  INTEREST                                   $   94,650   $   146,083
                                             ===========  ============
  INCOME TAXES                               $        0   $         0
                                             ===========  ============

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
  AND FINANCING ACTIVITIES:

  PREFERRED STOCK DIVIDENDS                  $   54,000   $    81,000
                                             ===========  ============
</TABLE>

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.


                                       12
<PAGE>
                   CANAL CAPITAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    FOR THE NINE MONTHS ENDED JULY 31, 2009

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.

     General  -  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  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.

     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
an  Exchange  Building  (commercial  office  space),  land  and


                                       13
<PAGE>
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, rental income from its Exchange Building, 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.

     Real  estate  operations  resulted  in  operating  income  of  $397,000 and
$1,172,000  for  the  nine  month  periods  ended  July  31,  2009  and  2008,
respectively.  Included in the fiscal 2009 results is a 194,000 gain on the sale
of  approximately  16  acres  of  vacant  land  located in St. Joseph, Missouri.
Included in the 2008 real estate operating income is a $913,000 gain on the sale
of two properties consisting of approximately 8 acres of land and the associated
improvements  located  in South Saint Paul, Minnesota. Additionally, real estate
operations  contributed $575,000 and $1,574,000 to Canal's revenues for the nine
month  periods  ended  July  31,  2009  and  2008,  respectively.

     As  of  July  31, 2009, there are approximately 2 acres of undeveloped land
owned by Canal adjacent to its stockyard 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.

     Stockyard  Operations  -  Through  an  August  1,  1999  asset  repurchase
agreement,  Canal  now  operates  two  central  public stockyards located in St.
Joseph,  Missouri  and  Sioux  Falls,  South  Dakota.

     Public  stockyards  act  much like a securities exchange, providing markets
for  all  categories  of  livestock  and  fulfilling  the  economic functions of
assembly,  grading, and price discovery.  The livestock handled by the Company's
stockyards include cattle, hogs, and sheep. Cattle and hogs may come through the
stockyard  facilities  at  two  different  stages, either as feeder livestock or
slaughter  livestock.  The  Company's  stockyards  provide  all  services  and
facilities  required to operate an independent market for the sale of livestock,
including  veterinary  services  facilities,  auction arenas, auctioneers, weigh
masters  and


                                       14
<PAGE>
scales, feed  and  bedding, and security personnel.  In addition, the stockyards
provide  other  services  including  pure  bred  and  other  specialty sales for
producer  organizations.  The  Company  promotes  its stockyard business through
public  relations  efforts, advertising, and personal solicitation of producers.

     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.

     Virtually  all  of  the volume at Canal's Sioux Falls stockyards is handled
through  market  agencies and independent commission sales people, while 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 2009.  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.

     Canal  maintains  an  inventory  of  feed  and  bedding  which is comprised
primarily  of  hay,  corn and straw.  The value of this inventory was $4,000 and
$24,000  at  July  31,  2009  and  October  31,  2008,  respectively.

     Stockyard  operations  resulted  in  operating  income  of  $121,000 and an
operating  loss  of  $52,000  for the nine month periods ended July 31, 2009 and
2008,  respectively.  Additionally,  stockyard operations contributed $2,151,000
and  $2,231,000  to  Canal's  revenues for the nine month periods ended July 31,
2009  and  2008,  respectively.


                                       15
<PAGE>
2.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
    ----------------------------------------------

     A)  Principles  of  Consolidation  -- The consolidated financial statements
include the accounts of Canal Capital Corporation ("Canal") and its wholly-owned
subsidiaries  ("the  Company").  All  material  intercompany  balances  and
transactions  have  been  eliminated  in  consolidation.

     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.

       Property  held for Development or Resale -- Property held for development
or resale consist of approximately 2 acres located in the Midwest of undeveloped
land  not  currently  utilized for corporate purposes nor included in any of the
present  operating  leases.  The Company constantly evaluates proposals received
for  the  purchase, leasing or development of this asset.  The land is valued at
cost  which  does  not  exceed  the  net  realizable  value.

       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.

     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.

     E) Art Inventory Held for Sale - Inventory of art is valued at the lower of
cost,  including  direct acquisition and restoration expenses, or net realizable
value  on  a specific identification basis. The nature of art makes it difficult
to  determine  a  replacement  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


                                       16
<PAGE>
management  based  in  part  on  the  Company's  history  of  art  sales in  the
current  and  previous  years  and  in  part on the results  of the  independent
appraisals  done  in  previous  years.  However,  because  of  the nature of art
inventory,  such  determination is very subjective and, therefore, the estimated
values  could  differ  significantly  from  the  amount  ultimately  realized.

     F)  Income  Taxes -- Canal and its subsidiaries file a consolidated Federal
income  tax  return.  The  Company accounts for income taxes under the liability
method.  Under  this  method, deferred tax assets and liabilities are determined
based  on  differences  between  financial reporting and tax bases of assets and
liabilities.

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

     H)  Accounting  Estimates  --  The  preparation  of financial statements in
conformity  with  accounting  principles generally accepted in the United States
requires  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
revenues  and expenses during the reporting period.  Actual results could differ
from  those  estimates.

     I)  Revenue 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 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.

     Other Income (Expense) Items -- Art sales are recognized using the specific
identification method, when the piece is shipped to the purchaser.  Art owned by
Canal which is on consignment, joint venture, or being examined in contemplation
of sale is not removed from inventory and not recorded as a sale until notice of
sale  or  acceptance  has  been received.  The sale of investments available for
sale,  if  any,  are  recognized on a specific identification method, on a trade
date  basis.


                                       17
<PAGE>
     J)  Statements  of  Cash  Flows  --  The  company  considers all short-term
investments with a maturity of three months or less to be cash equivalents. Cash
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 $95,000, and $146,000 for the nine month period
ended  July  31,  2009  and  2008,  respectively.

     K)  Comprehensive  Income (Loss) -- The Company's only adjustments for each
classification  of  the  comprehensive income was for minimum pension liability.

     L) Earnings (Loss) Per Share -- Basic earnings (loss) per share is computed
by  dividing  the  net income (loss) applicable to common shares by the weighted
average  of common shares outstanding during the period. Diluted earnings (loss)
per  share  adjusts  basic  earnings  (loss)  per  share  for  the  effects  of
convertible  securities,  stock options and other potentially dilutive financial
instruments,  only in the period in which such effect is dilutive. There were no
dilutive  securities in any of 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  would  be  antidilutive.

     M) Recently Issued Accounting Pronouncements -- In September 2006, the FASB
issued  SFAS  No.  157,  "Fair  Value  Measurements."  SFAS No. 157 defines fair
value,  establishes  a frame work for measuring fair value in generally accepted
accounting  principles,  and  expands disclosures about fair value measurements.
SFAS  No.  157  does  not  require any new fair value measurements. SFAS No. 157
becomes  effective  for fiscal years beginning after November 15, 2007, which is
the  Company's 2009 fiscal year beginning on November 1, 2008. In February 2008,
the  FASB issued FASB staff position No. 157-2, effective date of FASB statement
No.  157  (FSP  157-2), which delayed the effective date of SFAS 157 for certain
non-financial  assets  and  non-financial  liabilities to fiscal years beginning
after  November  15, 2008.  The Company evaluated the impact of SFAS No. 157 and
FSP  157-2  on  its  consolidated  financial  statements, and has determined the
impact  of  adopting  this  standard  does  not  have  a  material effect on the
Company's  financial  position,  results  of  operations  or  cash  flows.

        In  June  2009,  the  FASB  issued  SFAS  No.  168, "The FASB Accounting
Standards  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.


                                       18
<PAGE>
3.  INTERIM  FINANCIAL  STATEMENTS
    ------------------------------

     The  interim  consolidated  financial  statements included herein have been
prepared  by  Canal  and  in  the opinion of Management, contain all adjustments
necessary  to  present fairly its financial position as of July 31, 2009 and the
results of its operations and its cash flows for the  nine  month  period  ended
July  31,  2009.  All  of  the above  referenced adjustments were  of  a  normal
recurring  nature.  Certain  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, 2008 and the notes thereto
which  are contained in Canal's 2008 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  2009.

4.  MORTGAGE  NOTE  RECEIVABLE
    --------------------------

     On  November  1,  2004  Canal sold its Exchange Building and the associated
five acres of land located in South Saint Paul, Minnesota on a contract for deed
for  $1,750,000,  generating  operating  income of approximately $850,000. Canal
issued  a mortgage note for the full sales price, which note carries interest at
a  rate  of 4.12% per annum, payable in equal monthly installments. The mortgage
note  was  due  and  payable  in  full  on  October  31,  2007.

     In  March, 2007 Canal received a $50,000 payment on this note as the result
of the mortgagee having sold a small piece (0.1 acres of land) of the underlying
collateral. On October 31, 2007 after receiving payments totaling $150,000 Canal
adjusted the interest rate and extended the due date to March 17, 2008 This note
was  paid  in  full  in  March  2008.

5.  STOCK OPTION PLAN
    -----------------

     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,  2009  or  2008.


                                       19
<PAGE>
6.  BORROWINGS
    ----------

     The  Company's  variable  rate  mortgage  notes  (originally  issued  in
1998)  are  due  May  15,  2012  and  are  held  entirely by the Company's Chief
Executive  Officer and members of his family.  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. The Company
is  in  the  process  of  negotiating  a three year extension of these notes and
anticipates this will be achieved prior to year end. Accordingly, as of July 31,
2009,  the  balance  due  under  these  notes  was  $1,292,000,  all of which is
classified  as  long-term  debt-related  party.

     At  July  31, 2009, substantially all of Canal's real properties, the stock
of  certain  subsidiaries,  the investments and a substantial portion of its art
inventories  are  pledged  as  collateral  for  the  following  obligations:

<TABLE>
<CAPTION>
                                    July 31,   October 31,
($000's Omitted)                      2009        2008
---------------------------------  ---------  ------------
<S>                                <C>        <C>
Variable rate mortgage notes due
  May 15, 2012 - related party     $   1,292  $      1,262
Less -- current maturities                 0             0
                                   ---------  ------------
Long-term debt                     $   1,292  $      1,262
                                   ---------  ------------
</TABLE>

     The  following  table  summarizes  the Company's commitments as of July 31,
2009  to  make  future  payments under its debt agreements and other contractual
obligations  (in  000's):

<TABLE>
<CAPTION>

                                                                More
                                    Less Than   1 - 3   3 - 5   Than
                            Total     1 year    Years   Years   5Yrs.
                            ------  ----------  ------  ------  ------
<S>                         <C>     <C>         <C>     <C>     <C>
Pension Plan Liability (a)  $  545  $      105  $  210  $  230  $    0
Mortgage Notes Payable (b)   1,292           0   1,292       0       0
                            ------  ----------  ------  ------  ------
                            $1,837  $      105  $1,502  $  230  $    0
                            ------  ----------  ------  ------  ------
</TABLE>

(a)  See Note  16.

(b)  The mortgage  notes  are  due  May  15,  2012  and are held entirely by the
     Company's  Chief  Executive  Officer and members of his family. These notes
     carry annual interest of 10% and are collateralized by substantially all of
     Canal's  property,  the  stock  of  certain  subsidiaries  and  its  art
     inventories.


                                       20
<PAGE>
7.  RESTRICTED  CASH
    ----------------

     Letter  of  Credit - This is a $130,000 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.

     Transit  Insurance - Transit insurance covers livestock for the period that
they are physically at the stockyards and under the care of stockyard personnel.
This  self  insurance  program  is  funded by a per head charge on all livestock
received  at  the stockyard. The restricted cash - transit insurance balances of
approximately  $42,000  and  $27,000  at  July  31,  2009  and October 31, 2008,
respectively,  represents  the  excess  of  per  head  fees  charged over actual
payments  made  for  livestock that was injured or died while at the stockyards.

8.  INCOME  TAXES
    -------------

     At  July  31,  2009,  the  Company  has net operating loss carryforwards of
approximately  $10,800,000  that  expire  through 2028.  For financial statement
purposes, a valuation allowance has been provided to offset the net deferred tax
assets  due to the cumulative net operating losses incurred during recent years.
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.

9.  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,  2009  and  October  31,  2008.


                                       21
<PAGE>
10. ART  INVENTORY  HELD  FOR  SALE
    -------------------------------

     Canal is in the process of selling, in an orderly manner, its remaining art
inventory.  This 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 nine months of fiscal
2009  or  2008.  Canal's  art  operations  have generated an operating losses of
approximately  $4,000  and  $4,000 in the nine month periods ended July 31, 2009
and  2008,  respectively.

     Antiquities  art valued at $100,000 represented 100% of total art inventory
at  both  July  31,  2009  and October 31, 2008. 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, 2009 the
valuation  allowance  is  approximately  $397,000.

11. LEASE  COMMITMENTS
    ------------------

     In June 2004 Canal entered into a lease for approximately 1,000 square feet
of  office  space  in  Hauppauge,  New York at a monthly rental of approximately
$1,900.  This  lease  expires  May  31,  2010.

     Canal's  future  minimum  payments  for  the next five years required under
operating  leases  that have initial or remaining noncancellable terms in excess
of one year as of July 31, 2009 are $24,000 and $14,000 in fiscal 2009 and 2010,
respectively.  There  are  no  commitments  extending past fiscal 2010. Net rent
expense  under  these and other operating leases was $18,000 and $17,000 for the
nine  month  periods  ended  July  31,  2009  and  2008,  respectively.

12. 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 $450,000, $475,000,
$500,000,  $525,000  and  $550,000  for  fiscal years 2009, 2010, 2011, 2012 and
2013,  respectively.


                                       22
<PAGE>
13. PROPERTY ON OPERATING LEASES
    ----------------------------

     Property  on  operating  leases  consist  of approximately 30 acres of land
located  in Omaha, Nebraska; S. St. Paul, Minnesota; Sioux City, Iowa as well as
furniture  and  equipment  used  in  the  Hauppauge,  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.

     A  schedule  of the Company's property on operating leases at July 31, 2009
is  as  follows  (000's  omitted):

<TABLE>
<CAPTION>

                                                   Current Year
                                                   (Retirements
                             Historical Cost         Additions                   Carrying
                                       Bldgs. &           Bldgs. &     Accum.      Value
------------------------------------------------------------------------------------------
Description (1)             Land      Imprvmts.   Land   Imprvmts.     Depr.     07/31/09
                       -------------  ----------  -----  ----------  ----------  ---------
New York office
<S>                    <C>            <C>         <C>    <C>         <C>         <C>
Leasehold assets       $           0  $        8  $   0  $        0  $      (8)  $       0

9 acres of land
  in Omaha, NE
  Acquired in 1976             1,150          21      0           0        (16)      1,155

3 acres of land
  in S. St. Paul, MN
  Acquired in 1937                10         485      0           0       (421)         74

18 acres of land
  in Sioux City, IA
  Acquired in 1937               400           0      0           0          0         400
                       -------------  ----------  -----  ----------  ----------  ---------
                       $       1,560  $      514  $   0  $        0  $    (445)  $   1,629
                       =============  ==========  =====  ==========  ==========  =========
</TABLE>

     A  schedule of the Company's reconciliation of property on operating leases
carried  for  the nine months ended July 31, 2009 and the year ended October 31,
2008  is  as  follows  (000's  omitted):

<TABLE>
<CAPTION>

                                July 31,    October 31,
                                  2009         2008
                               ----------  -------------
<S>                            <C>         <C>

Balance at beginning of year   $   1,646   $      1,741
Acquisitions and Improvements          0              0
Cost of property sold                  0            (73)
Depreciation                         (17)           (22)
Reclassifications                      0              0
                               ----------  -------------
Balance at end of the period   $   1,629   $      1,646
                               ----------  -------------
</TABLE>

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


                                       23
<PAGE>
14.  PROPERTY USED IN STOCKYARD OPERATIONS
     -------------------------------------

     Property  used in stockyard operations consist of approximately 60 acres of
land  located  in  St.  Joseph,  Missouri  and  Sioux  Falls, South Dakota.  The
Company's  stockyards provide all services and facilities required to operate an
independent  market  for  the  sale  of  livestock. Stockyard facilities include
exchange  buildings  (commercial  office  space),  auction arenas, scale houses,
veterinary  facilities,  barns,  livestock  pens  and  loading  docks.

     A  schedule  of the Company's property used in stockyard operations at July
31,  2009  is  as  follows  (000's  omitted):

<TABLE>
<CAPTION>

                                  Current Year
                                 (Retirements)
                              Historical Cost          Additions                 Carrying
                                        Bldgs. &            Bldgs. &    Accum.     Value
Description (1)             Land        Imprvmts.   Land   Imprvmts.    Depr.    07/31/09
---------------------  --------------  -----------  -----  ----------  --------  ---------

<S>                    <C>             <C>          <C>    <C>         <C>       <C>
30 acres of land
  in St. Joseph, MO
  Acquired in 1942     $          902  $       265  $   0  $        0  $  (173)  $     994

30 acres of land
  in Sioux Falls, SD
  Acquired in 1937                100           89      0           0      (73)        116
                       --------------  -----------  -----  ----------  --------  ---------
                       $        1,002  $       354  $   0  $        0  $  (246)  $   1,110
                       ==============  ===========  =====  ==========  ========  =========
</TABLE>

     A  schedule  of  the Company's reconciliation of property used in stockyard
operations  carried  for  the  six months ended July 31, 2009 and the year ended
October  31,  2008  is  as  follows  (000's  omitted):

<TABLE>
<CAPTION>

                                July 31,    October 31,
                                  2009         2008
                               ----------  -------------
<S>                            <C>         <C>
Balance at beginning of year   $   1,125   $      1,080
Acquisitions and Improvements          0             65
Cost of property sold                  0              0
Depreciation                         (15)           (20)
                               ----------  -------------
Balance at end of the period   $   1,110   $     1,125_
                               ----------  -------------
</TABLE>

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


                                       24
<PAGE>
15.  PROPERTY HELD FOR DEVELOPMENT OR RESALE
     ---------------------------------------

     Property held for development or resale consist of approximately 2 acres of
land  located  in  the  Midwest  of  undeveloped land not currently utilized for
corporate purposes and not included in any of the present operating leases.  The
Company  constantly  evaluates  proposals  received for the purchase, leasing or
development of this asset.  The land is valued at cost which does not exceed the
net  realizable  value.

     A schedule of the Company's property held for development or resale at July
31,  2009  is  as  follows  (000's  omitted):

<TABLE>
<CAPTION>

                                  Current Year
                                 (Retirements)
                             Historical Cost           Additions                Carrying
                                       Bldgs. &             Bldgs. &   Accum.     Value
Description (1)            Land       Imprvmts.    Land    Imprvmts.    Depr.   07/31/09
--------------------  --------------  ----------  -------  ----------  -------  ---------
<S>                   <C>             <C>         <C>      <C>         <C>      <C>
16 acres of land
  in St. Joseph, MO   $           40  N/A         $  (40)  N/A         N/A      $       0
  Acquired in 1942

2 acres of land
  in Sioux City, IA               52  N/A         $    0   N/A         N/A             52
                      --------------  ----------  -------  ----------  -------  ---------
  Acquired in 1937
                      $           92  $        0  $  (40)  $        0  $     0  $      52
                      ==============  ==========  =======  ==========  =======  =========
</TABLE>

     A schedule of the Company's reconciliation of property held for development
or  resale  carried  for  the  six months ended July 31, 2009 and the year ended
October  31,  2008  is  as  follows  (000's  omitted):

<TABLE>
<CAPTION>

                                July 31,   October 31,
                                  2009         2008
                               ----------  ------------
<S>                            <C>         <C>
Balance at beginning of year   $      92   $         92
Acquisitions and Improvements          0              0
Cost of property sold                (40)             0
Reclassification of property           0              0
                               ----------  ------------
Balance at end of the period   $      52   $         92
                               ----------  ------------
</TABLE>

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


                                       25
<PAGE>
16.  PENSION  VALUATION  RESERVE
     ---------------------------

     The  Pension  Valuation Reserve represents the excess of additional minimum
pension  liability  required  under  the  provisions  of  Statement of Financial
Accounting  Standards  ("SFAS") No. 87 amended by SFAS 158 over the unrecognized
prior service costs of former stockyard employees.  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.

     The  components  of  net  periodic  benefit  cost  are  as  follows:

<TABLE>
<CAPTION>

                                      Nine Months Ended
                                     7/31/09    7/31/08
                                    ---------  ----------

<S>                                 <C>        <C>
Service cost                           4,000       4,000
Interest cost                         76,000      75,000
Expected return on plan assets       (80,000)    (80,000)
Amortization of prior service cost         0           0
Recognized net actuarial loss         90,000     202,000
                                    ---------  ----------
Net periodic benefit cost             90,000     201,000
                                    =========  ==========
</TABLE>

For  the  nine  months  ended  July 31, 2009 amounts have been estimated, actual
amounts  will  be  based  on the discount rate and assets available at year end.

The  Company's  required  contribution  to  its  pension  plan  fiscal  2009  is
approximately  $150,000.  A  contribution  of  $45,000  was made in fiscal 2009.
Additionally,  the Company expects to make the full required contribution before
the  end  of  the  fiscal  year.

17.  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  % of the employee's
annual  salary by the Company. The Company made 401(k) matching contributions of
approximately $13,000 for each of the nine month periods ended July 31, 2009 and
2008.


                                       26
<PAGE>
18.  RELATED  PARTY  TRANSACTIONS
     ----------------------------

     Interest Expense Related Party - At July 31, 2009, all of Canal's Long-Term
Debt is held by the company's Chief Executive Officer and members of his family.
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 $95,000 and $146,000 and
for  the  nine  month  periods  ended  July  31, 2009 and 2008, respectively. At
various  times  during  fiscal 2009 and 2008 certain holders of these notes have
agreed to defer interest payments due them to help Canal with its cash flow. All
deferred  interest liability for fiscal 2009 and 2008 plus accrued interest at a
rate of 10% per annum, will be repaid as funds become available.  As of July 31,
2009,  the  balance  due  under  these  notes  was  $1,292,000  all  of which is
classified  as  long-term  debt  related  party.

19.  LITIGATION
     ----------

     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, 2009.  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, 2009, the liability for remediation, if
any,  is  not  estimatable  and  therefore  no  accrual has been recorded in the
financial  statements.


                                       27
<PAGE>
ITEM II. MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF THE RESULTS OF OPERATIONS AND
         FINANCIAL  CONDITION  FOR  THE  NINE  MONTHS  ENDED  JULY  31,  2009

     You  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".

COMPANY  OVERVIEW

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

     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  an  Exchange  Building (commercial office space), land and structures leased
to  third  parties (meat packing facilities, 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,  rental  income from its Exchange
Building,  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.  See  "Real  Estate  Operations".

     Stockyard  Operations  -  As  a  result of an August 1, 1999 asset purchase
agreement,  Canal  now  operates  two  central  public stockyards located in St.
Joseph,  Missouri and Sioux Falls, South Dakota (collectively the "Stockyards").
Public stockyards act much like a securities exchange, providing markets for all
categories  of  livestock  and


                                       28
<PAGE>
fulfilling  the  economic  functions  of assembly, grading, and price discovery.
The  Company's  principal  stockyard revenues are derived from a per head charge
("yardage charge") imposed on all livestock consigned for sale at the stockyards
and  the  sale  of  feed  and  bedding.  See  "Stockyard  Operations".

     Real  Estate  Operations
     ------------------------

     Real  estate  operations  resulted  in  operating  income  of  $397,000 and
$1,172,000  for  the  nine  month  periods  ended  July  31,  2009  and  2008,
respectively.  Included in the fiscal 2009 results is a 194,000 gain on the sale
of  approximately  16  acres  of  vacant  land  located in St. Joseph, Missouri.
Included in the 2008 real estate operating income is a $913,000 gain on the sale
of two properties consisting of approximately 8 acres of land and the associated
improvements  located  in South Saint Paul, Minnesota. Additionally, real estate
operations  contributed $575,000 and $1,574,000 to Canal's revenues for the nine
month  periods  ended  July  31,  2009  and  2008,  respectively.

     As  of  July  31, 2009, there are approximately 2 acres of undeveloped land
owned by Canal adjacent to its stockyard 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.

     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.  To a certain extent,
Canal's  real  estate  revenues  are  dependent  on the ability of the stockyard
operations  and  the various meat packers located adjacent to Canal's properties
to  successfully  compete  in  their  respective  businesses.

     Stockyard  Operations
     ---------------------

     General  -  Through an August 1, 1999 asset repurchase agreement, Canal now
operates two central public stockyards located in St. Joseph, Missouri and Sioux
Falls,  South  Dakota.


                                       29
<PAGE>
     Public  stockyards  act  much like a securities exchange, providing markets
for  all  categories  of  livestock  and  fulfilling  the  economic functions of
assembly,  grading,  and  price  discovery.   The  livestock  handled  by  the
Company's  stockyards include cattle, hogs, and sheep.  Cattle and hogs may come
through  the  stockyard  facilities  at  two  different stages, either as feeder
livestock  or slaughter livestock. The Company's stockyards provide all services
and  facilities  required  to  operate  an  independent  market  for the sale of
livestock,  including  veterinary facilities, auction arenas, auctioneers, weigh
masters  and scales, feed and bedding, and security personnel.  In addition, the
stockyards  provide other services including pure bred and other specialty sales
for producer organizations.  The Company promotes its stockyard business through
public  relations  efforts, advertising, and personal solicitation of producers.

     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.

      Virtually  all  of the volume at Canal's Sioux Falls stockyards is handled
through  market  agencies and independent commission sales people, while 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  2009.  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.

     Stockyard  operations  resulted  in  operating  income  of  $121,000 and an
operating  loss  of  $52,000  for the nine month periods ended July 31, 2009 and
2008,  respectively.  Additionally,  stockyard operations contributed $2,151,000
and  $2,231,000  to  Canal's  revenues for the nine month periods ended July 31,
2009  and  2008,  respectively.


                                       30
<PAGE>
     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  Report.


                                       31
<PAGE>
     Revenue 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 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.

     Art Inventory Held for Sale -- The nature of art makes it difficult to
     ---------------------------
determine  a  replacement value. The most compelling evidence of a value in most
cases  is an independent appraisal. Canal has had varying percentages of its art
inventory appraised by independent appraisers in previous years. For fiscal 2009
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 current
and previous years and in part on the results of the independent appraisals done
in  previous  years.

     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.

     Property held for Development or Resale -- Property held for development or
     ---------------------------------------
resale  consist  of  approximately 2 acres located in the Midwest of undeveloped
land  not  currently  utilized for corporate purposes nor included in any of the
present  operating  leases.  The Company constantly evaluates proposals received
for  the  purchase,  leasing or development of this asset. The land is valued at
cost  which  does  not  exceed  the  net  realizable  value.

     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.


                                       32
<PAGE>
Results  of  Operations
-----------------------

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

<TABLE>
<CAPTION>

                                          Nine Months Ended July 31,
                                      --------------------------------
                                            2009             2008
                                      ----------------  --------------
(In Thousands)
Revenues:
<S>                                   <C>               <C>
Real Estate Revenues                  $           575   $       1,574
Stockyard Revenues                              2,151           2,231
                                      ----------------  --------------
  Total Revenues                                2,726           3,805
                                      ----------------  --------------

Costs and Expenses:
Real Estate Expenses                              178             402
Stockyard Expenses                              2,030           2,283
General and Administrative Expenses               680             820
                                      ----------------  --------------
  Total Costs and Expenses                      2,888           3,505
                                      ----------------  --------------

(Loss) Income from Operations                    (162)            300

Other Income                                        8              27
Other Expenses                                    (99)           (150)
                                      ----------------  --------------
Net (Loss) Income                     $          (253)  S         177
                                      ----------------  --------------
</TABLE>

     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 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.

     Canal  recognized  a  net  loss of approximately $253,000 in the first nine
months  of fiscal 2009 as compared to net income of $177,000 for the same period
in  fiscal  2008.  After  recognition  of  accrued  preferred stock dividends of
$54,000  and $81,000 in 2009 and 2008, respectively, the results attributable to
common  stockholders  were  a  net  loss  of  $307,000 in 2009 and net income of
$96,000  in  2008.

     Canal's  revenues  from  continuing operations consist of revenues from its
real  estate  and  stockyard  operations.  Revenues for the first nine months of
fiscal 2009 decreased by $1,079,000 to $2,726,000 as compared with 2008 revenues
of  $3,805,000.  The  fiscal  2009  decrease  in  revenues is due primarily to a
$927,000  decrease  in  sales of real estate combined with a $81,000 decrease in
stockyard  revenues.


                                       33
<PAGE>
COMPARISON  OF  FISCAL  PERIODS  ENDED  JULY  31,  2009  AND  2008
------------------------------------------------------------------

Real  Estate  Revenues
----------------------

     Real  estate  revenues  for the nine months ended July 31, 2009 of $575,000
accounted  for  21.1%  of  the  fiscal  2009 revenues as compared to real estate
revenues  of $1,574,000 or 41.4% for the same period in fiscal 2008. Real estate
revenues  are  comprised  of  sale  of  real  estate  (45.7% and 75.6%), rentals
and  other  lease  income  from the rental of vacant land and certain structures
(50.4% and 22.8%) and rental income from commercial office space in its Exchange
Buildings  (3.9%  and  1.5%)  for  the nine months ended July 31, 2009 and 2008,
respectively.  The percentage variations in the year to year comparisons are due
to the decrease in sales of real estate combined with a decrease in outside real
estate  rent  (due  to  a fiscal 2008 property sale) in the first nine months of
fiscal  2009.

Real  Estate  Revenues
----------------------

     Real  estate  revenues for the three months ended July 31, 2009 of $104,000
accounted  for  18.2%  of  the  fiscal  2009 revenues as compared to real estate
revenues  of $1,110,000 or 68.7% for the same period in fiscal 2008. Real estate
revenues are comprised of sale  of  real  estate (0.0% and 89.2%), rentals   and
other  lease  income  from  the  rental  of  vacant  land and certain structures
(93.5% and 10.1%) and rental income from commercial office space in its Exchange
Buildings  (6.5%  and  0.7%)  for the three months ended July 31, 2009 and 2008,
respectively.  The percentage variations in the year to year comparisons are due
to  the  decrease  in  sales of real estate in the third quarter of fiscal 2009.

Real  Estate  Expenses
----------------------

     Real  estate  expenses  for the nine months ended July 31, 2009 of $178,000
decreased by $224,000 (55.8%) from real estate expenses of $402,000 for the same
period  in  fiscal 2008. The decrease in real estate expenses is consistent with
the  2009  decrease in sales of real estate.  Real estate expenses are comprised
of  the  cost  of  real  estate  sold  (38.9%  and  69.0%), labor, operating and
maintenance  (24.6% and 14.6%), depreciation and amortization  (10.4% and 4.1%),
taxes  other  than  income  taxes (9.4% and 4.0%) and general and administrative
expenses  (16.7%  and  8.3%)  for  the nine months ended July 31, 2009 and 2008,
respectively.  The  percentage  variations  in  the year to year comparisons are
consistent  with  the decrease in the cost of real estate sold in the first nine
months  of  fiscal  2009.


                                       34
<PAGE>
Real  Estate  Expenses
----------------------

     Real  estate  expenses  for the three months ended July 31, 2009 of $36,000
decreased by $212,000 (85.6%) from real estate expenses of $248,000 for the same
period  in  fiscal 2008. The decrease in real estate expenses is consistent with
the  2009  decrease in real estate revenues.  Real estate expenses are comprised
of  the  cost  of  real  estate  sold  (0.0%  and  82.7%),  labor, operating and
maintenance  (39.4% and 8.4%), depreciation and  amortization  (15.6% and 2.2%),
taxes  other  than  income taxes (17.2% and 2.2%) and general and administrative
expenses  (27.8%  and  4.5%)  for the three months ended July 31, 2009 and 2008,
respectively.  The  percentage  variations  in  the year to year comparisons are
consistent with the decrease in the cost of real estate sold in the third fiscal
quarter  of  2009.

Stockyard  Revenues
-------------------

Stockyard  revenues  for  the  nine  months  ended  July  31, 2009 of $2,151,000
accounted  for  78.9%  of  the  fiscal  2009  revenues  as compared to stockyard
revenues  of  $2,231,000  or 58.6% for the same period in fiscal 2008.  The 2009
decrease  in stockyard revenue was due  primarily to the severity of the weather
experienced  in  the mid-west. Stockyard revenues are comprised of yard handling
and  auction  (87.3%  and  87.7%),  feed  and bedding income (7.0% and 6.8%) and
rental  and  other  income (5.7% and 5.5%) for the nine month periods ended July
31, 2009 and 2008, respectively. There were no significant percentage variations
in  the  year  to  year  comparisons.

Stockyard  Revenues
-------------------

Stockyard  revenues  for  the  three  months  ended  July  31,  2009 of $466,000
accounted  for  81.8%  of  the  fiscal  2009  revenues  as compared to stockyard
revenues  of  $506,000  or  31.3%  for the same period in fiscal 2008.  The 2009
decrease  in  stockyard  revenue  was  due  primarily  to  the  severity  of the
weather  experienced  in  the mid-west. Stockyard revenues are comprised of yard
handling  and auction (85.4% and 85.1%), feed and bedding income (7.6% and 7.9%)
and  rental  and  other income (7.0% and 7.0%) for the three month periods ended
July  31,  2009  and  2008,  respectively.  The  2009  increase in the stockyard
revenues  as  a  percent  of  total  revenues,  is due primarily to the $990,000
decrease in sales of real estate in the third fiscal quarter of 2009. There were
no  significant  percentage  variations  in  the  year  to  year  comparisons.


                                       35
<PAGE>
Stockyard  Expenses
-------------------

     Stockyard  expenses  for  the nine months ended July 31, 2009 of $2,030,000
decreased by $254,000 (11.1%) from stockyard expenses of $2,284,000 for the same
period  in  fiscal  2008.  Stockyard expenses are comprised of labor and related
costs (45.4% and 47.0%), other operating and maintenance (27.8% and 28.0%), feed
and  bedding  expense  (5.6%  and 6.1%), depreciation and amortization (0.7% and
0.7%),  taxes  other  than  income  taxes  (6.3%  and  5.6%)  and  general  and
administrative  expense  (14.2% and 12.6%) for the nine month periods ended July
31,  2009  and  2008,  respectively.  There  were  no  significant  percentage
variations  in  the  year  to  year  comparisons.

Stockyard  Expenses
-------------------

     Stockyard  expenses  for  the  three months ended July 31, 2009 of $466,000
decreased  by  $40,000  (7.9%)  from stockyard expenses of $506,000 for the same
period  in  fiscal  2008.  Stockyard expenses are comprised of labor and related
costs (45.8% and 49.9%), other operating and maintenance (29.8% and 28.6%), feed
and  bedding  expense  (4.1%  and 5.2%), depreciation and amortization (0.9% and
0.8%),  taxes  other  than  income  taxes  (7.0%  and  6.1%)  and  general  and
administrative  expense  (12.4% and 9.4%) for the three month periods ended July
31,  2009  and  2008,  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, 2009
of  $680,000  decreased by $140,000 (17.0%) as compared to $820,000 for the same
period  in  fiscal  2008.  The  major  components of general and  administrative
expenses  are  officers  salaries  (51.4% and 43.4%), pension expense (13.2% and
23.1%),  insurance  expense  (5.8%  and 6.6%), office salaries (10.2% and 8.6%),
travel expense (4.0% and 3.7%), rent (2.6% and 2.1%) and professional fees (3.2%
and 2.6%) for the nine month periods ended July 31, 2009 and 2008, respectively.
The  percentage  variations in the year to year comparisons are due primarily to
the  sharp  decrease  in  pension  expenses  in  fiscal  2009.

General  and  Administrative
----------------------------

     General  and  administrative  expenses  for the three months ended July 31,
2009  of  $231,000  decreased by $36,000 (14.0%) as compared to $268,000 for the
same  period in fiscal 2008. The major components of general and  administrative
expenses  are  officers  salaries  (48.8% and 44.1%), pension expense (13.0% and
23.5%),  insurance  expense  (5.7%  and  6.7%), office salaries (9.8% and 8.8%),
travel expense (3.4% and 3.9%), rent (2.7% and 2.1%) and professional fees (3.1%
and  2.7%)  for  the  three  month  periods  ended  July  31,  2009  and  2008,
respectively.  The percentage variations in the year to year comparisons are due
primarily  to  the  sharp  decrease  in  pension  expenses  in  fiscal  2009.


                                       36
<PAGE>
Interest  and  Other  Income
----------------------------

     Interest and other income for the nine months ended July 31, 2009 of $8,000
decreased  by  $19,000  (70.6%) from $27,000 for the same period in fiscal 2008.
Interest  and  other  income  in fiscal 2008 was comprised primarily of interest
income on the $1,600,000 note receivable associated with the fiscal 2005 sale of
the  company's  South  St.  Paul,  Minnesota  Exchange  Building.  As more fully
described  in  note 4 the terms of this mortgage note were amended, including an
increase of the rate of interest to 12% per annum. The 2009 decrease in interest
and  other  income  is due primarily to the principal reduction of this mortgage
note  receivable,  which  was  repaid  in  full  in  March,  2008.

Interest  Expense
-----------------

     Interest  expense  for  the  nine  months  ended  July  31, 2009 of $95,000
decreased  by  $51,000 (35.2%) from $146,000 for the same period in fiscal 2008.
The  2009  decrease  is due primarily to Canal's $1,425,000 partial repayment of
this  debt  in  fiscal 2008.  The principal balance outstanding at July 31, 2009
and  October  31, 2008 was $1,292,000 and $1,262,000, respectively, all of which
is  classified  as  long-term  debt-related  party.  The  interest rate (10%) on
Canal's  variable  rate  mortgage  notes  has remained unchanged for the past 12
months.

(Expense)  Income  from  Art  Sales  &  Operations
--------------------------------------------------

     Other  expense  from  art sales & operations for the nine months ended July
31, 2009 was $4,000, while the same period in fiscal 2008 also generated an loss
from  art sales & operations of $4,000. Canal had no art sales in the first nine
months  of  fiscal  2009 or fiscal 2008.  Art revenues, if any, are comprised of
the  proceeds  from  the sale of antiquities and contemporary art.  Art expenses
are  comprised  of  the  cost  of  inventory  sold  and  selling,  general  and
administrative  expenses.  Canal  incurred  selling,  general and administrative
expenses of $4,000 and $4,000 for the nine month periods ended July 31, 2009 and
2008,  respectively.  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


                                       37
<PAGE>
contributions  to its defined benefit pension plan.  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  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 and members of his family.  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 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. The Company is in
the process of negotiating a three year extension of these notes and anticipates
this  will  be achieved prior to year end. Accordingly, as of July 31, 2009, the
balance  due  under  these  notes  was $1,292,000, all of which is classified as
long-term  debt-related  party.

      Cash  and  cash  equivalents  of $7,000 at July 31, 2009 decreased $14,000
from  $21,000  at  October  31,  2008.  Net cash used in operating activities in
fiscal 2009 was $277,000.  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 2009 the balance of Canal's liabilities increased by a total
of  $236,000.

     At  July  31,  2009 the Company's current liabilities exceed current assets
by  approximately  $0.5  million which increased slightly as compared to October
31,  2008 when the Company's current liabilities exceeded current assets by $0.4
million.  The  only  required principal repayments under Canal's debt agreements
for  fiscal  2009  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.


                                       38
<PAGE>
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.

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,  2009,  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,  2009,  the  following  long-term  debt-related  party  financial
instruments  are  sensitive  to  changes  in interest rates by expected maturity
dates:

<TABLE>
<CAPTION>

As of        Fixed rate      Average       Fair
July 31,       ($US)      Interest Rate    Value
----------  ------------  --------------  -------
<S>         <C>           <C>             <C>
2009        $          0  N/A
2010                   0  N/A
2011                   0  N/A
2012               1,292             10%
2013                   0  N/A
Thereafter             0  N/A
            ------------
Total       $      1,292                  N/A (A)
            ------------                  -------
</TABLE>

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


                                       39
<PAGE>
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, 2009 ("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.


                                       40
<PAGE>
                                    PART II
                                    -------

                               OTHER INFORMATION
                               -----------------


                                       41
<PAGE>
Item  1:        Legal  Proceedings:
-----------------------------------

     Also  see  Item  3  of  Canal's  October  31,  2008  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,  2009.

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, 2009, 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


                                       42
<PAGE>
                                   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 duly authorized, on the 14th day of
September,  2009.

                                     CANAL CAPITAL CORPORATION

                                     By: /S/ Michael E. Schultz
                                         ----------------------
                                         Michael E. Schultz
                                         President and Chief
                                         Executive Officer
                                         (Principal Executive Officer)

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
Registrant  and  in  the  capacities  and  on  the  dates  indicated.

Signature                            Title                      Date
----------------------  -------------------------------  ------------------
                        President and Chief
/S/ Michael E. Schultz  Executive Officer and Director
----------------------
Michael E. Schultz      (Principal Executive Officer)    September 14, 2009

                        Vice President-Finance
                        Secretary and Treasurer
/S/ Reginald Schauder   (Principal Financial and
----------------------
Reginald Schauder       Accounting Officer)              September 14, 2009

/S/ Asher B. Edelman    Chairman of the Board
----------------------
Asher B. Edelman        and Director                     September 14, 2009


                                       43