FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
                 For the quarterly period ended January 31, 2002

              [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
                        For the transition period from to

                           Commission File No. 1-8709


                   Canal Capital Corporation and Subsidiaries
             (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 No.)

    717 Fifth Avenue, New York, NY                       10022
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code (212) 826-6040


                                      NONE
              Former name, former address and former fiscal year,
                         if changed since last report.

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 the number of shares  outstanding  for each of the issuer's  classes of
common stock, as of the latest practical date:


    Title of each class              Shares outstanding at February 28, 2002
-----------------------------        ---------------------------------------
Common stock, $0.01 par value                      4,326,929

(This document contains 26 pages)


<PAGE>


                   CANAL CAPITAL CORPORATION AND SUBSIDIARIES
                           FORM 10-Q JANUARY 31, 2002

                                      INDEX

The following documents are filed as part of this report:

Accountants' Review Report ...........................................   3

Part I - Financial Information .......................................   4

Item I.  Condensed Financial Statements:

      Consolidated Balance Sheets - January 31, 2002
       and October 31, 2001 ..........................................  5

      Statements of Consolidated Operations and
       Comprehensive Income for the Three Month
       Periods ended January 31, 2002 and 2001........................  7

      Statements of Consolidated Changes in
       Stockholders' Equity for the Three Month and
       One Year Periods ended January 31, 2002 and
       October 31, 2001 ..............................................  9

      Statements of Consolidated Cash Flows for the
       Three Month Periods ended January 31, 2002 and
       2001 ..........................................................  10

      Notes to Consolidated Financial Statements .....................  11

Item II.  Management's Discussion and Analysis of
          Financial Condition ........................................  18

      Capital Resources and Liquidity ................................  19

      Other Factors ..................................................  22

Item III.  Quantitative and Qualitative Disclosures
           About Market Risk .........................................  23

Part II - Other Information ..........................................  24

      Items 1 through 6 ..............................................  25

      Signatures .....................................................  26


                                        2
<PAGE>

                           ACCOUNTANTS' REVIEW REPORT



To the Stockholders of Canal Capital Corporation:


We have reviewed the consolidated balance sheet of Canal Capital Corporation and
subsidiaries  as of January 31, 2002,  the related  consolidated  statements  of
operations and comprehensive income for the three month period ended January 31,
2002 and the consolidated statements of changes in stockholders' equity and cash
flows for the three month period  ended  January 31,  2002.  These  consolidated
financial statements are the responsibility of the company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion regarding the consolidated  financial  statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the  consolidated  financial  statements for them to be in conformity
with generally accepted accounting principles.

The  financial  statements  have been  prepared  assuming  that the Company will
continue as a going concern. As discussed in Note 1 to the financial statements,
the Company has suffered  recurring  losses from  operations in nine of the last
ten years and is obligated to continue making substantial  annual  contributions
to its defined  benefit  pension plan.  All of these  matters raise  substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans in regard to these matters are also described in Note 1. 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.


New York, N.Y.                         /S/ Todman & Co., CPA's,P.C.
March 8, 2002                          -----------------------------------
                                       TODMAN & CO., CPA's,P.C.
                                       Certified Public Accountants (N.Y.)


                                        3
<PAGE>


                                     PART I

                              FINANCIAL INFORMATION









                                        4
<PAGE>


                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      JANUARY 31, 2002 AND OCTOBER 31, 2001

<TABLE>
<CAPTION>
                                                                     JANUARY 31,        OCTOBER 31,
                                                                         2002              2001
                                                                     (UNAUDITED)         (AUDITED)
                                                                     ------------      ------------
<S>                                                                  <C>               <C>
ASSETS:

CURRENT ASSETS:

       CASH AND CASH EQUIVALENTS                                     $    399,252      $     13,680
       NOTES AND ACCOUNTS RECEIVABLE, NET                                 105,266           127,771
       ART INVENTORY, NET OF A VALUATION ALLOWANCE OF
             $1,750,000 AND $1,750,000 AT JANUARY 31,
             2002 AND OCTOBER 31, 2001                                    250,000           250,000
       STOCKYARDS INVENTORY                                                21,575            16,213
       INVESTMENTS                                                         21,392            21,392
       PREPAID EXPENSES                                                   119,687           172,625
                                                                     ------------      ------------

            TOTAL CURRENT ASSETS                                          917,172           601,681
                                                                     ------------      ------------

NON-CURRENT ASSETS:

       PROPERTY ON OPERATING LEASES, NET OF
             ACCUMULATED DEPRECIATION OF $1,339,576
             AND $1,300,727 AT JANUARY 31, 2002 AND
             OCTOBER 31, 2001, RESPECTIVELY                             3,292,773         3,302,073
                                                                     ------------      ------------


       PROPERTY USED IN STOCKYARD OPERATIONS, NET OF
             ACCUMULATED DEPRECIATION OF $49,151 AND
             $44,340 AT JANUARY 31, 2002 AND OCTOBER
             31, 2001, RESPECTIVELY                                     1,288,045         1,281,476
                                                                     ------------      ------------

       ART INVENTORY NON-CURRENT, NET OF A
             VALUATION ALLOWANCE OF $834,150
             AND $942,150 AT JANUARY 31, 2002
             AND OCTOBER 31, 2001, RESPECTIVELY                           867,137           933,739
                                                                     ------------      ------------

OTHER ASSETS:

       PROPERTY HELD FOR DEVELOPMENT OR RESALE                            620,416           620,416
       DEFERRED LEASING AND FINANCING COSTS                                27,876            28,118
       DEPOSITS AND OTHER                                                 210,902           210,902
                                                                     ------------      ------------

                                                                          859,194           859,436
                                                                     ------------      ------------

                                                                     $  7,224,321      $  6,978,405
                                                                     ============      ============
</TABLE>


                                       5
<PAGE>


                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      JANUARY 31, 2002 AND OCTOBER 31, 2001

<TABLE>
<CAPTION>
                                                                     JANUARY 31,        OCTOBER 31,
                                                                         2002              2001
                                                                     (UNAUDITED)         (AUDITED)
                                                                     ------------      ------------
<S>                                                                  <C>               <C>
LIABILITIES & STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:

       ACCOUNTS PAYABLE AND ACCRUED EXPENSES                         $  2,408,568      $  2,538,229
       INCOME TAXES PAYABLE                                                 8,896             9,857
                                                                     ------------      ------------

         TOTAL CURRENT LIABILITIES                                      2,417,464         2,548,086
                                                                     ------------      ------------

LONG-TERM DEBT, RELATED PARTY                                           2,667,000         2,667,000
                                                                     ------------      ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

  PREFERRED STOCK, $0.01 PAR VALUE:
       5,000,000 SHARES AUTHORIZED; 4,998,446 AND
       4,998,446 SHARES ISSUED AND OUTSTANDING
       AT JANUARY 31, 2002 AND OCTOBER 31, 2001,
       RESPECTIVELY AND AGGREGATE LIQUIDATION
       PREFERENCE OF $10 PER SHARE FOR $ 49,984,460
       AND $49,984,460 AT JANUARY 31, 2002 AND
       OCTOBER 31, 2001, RESPECTIVELY                                      49,984            49,984

  COMMON STOCK, $0.01 PAR VALUE:
       10,000,000 SHARES AUTHORIZED; 5,313,794
       SHARES ISSUED AND 4,326,929 SHARES OUTSTANDING
       AT JANUARY 31, 2002 AND OCTOBER 31, 2001,
       RESPECTIVELY                                                        53,138            53,138

  ADDITIONAL PAID-IN CAPITAL                                           27,926,561        27,848,561

  ACCUMULATED DEFICIT                                                 (12,720,836)      (13,019,374)

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

  COMPREHENSIVE INCOME:

    PENSION VALUATION RESERVE                                          (2,165,445)       (2,165,445)

    UNREALIZED LOSS ON INVESTMENTS AVAILABLE
     FOR SALE                                                                   0                 0
                                                                     ------------      ------------

                                                                        2,139,857         1,763,319
                                                                     ------------      ------------

                                                                     $  7,224,321      $  6,978,405
                                                                     ============      ============
</TABLE>


                                        6
<PAGE>


                          CANAL CAPITAL CORPORATION & SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME
                   FOR THE THREE MONTHS ENDED JANUARY 31, 2002 AND 2001


                                                       2002            2001
                                                   (UNAUDITED)      (UNAUDITED)
                                                   -----------      -----------

STOCKYARD OPERATIONS:
 STOCKYARD REVENUES:
    YARD HANDLING AND AUCTION                        1,079,203        1,148,428
    FEED AND BEDDING INCOME                             68,922           81,581
    RENTAL INCOME                                        2,827            1,566
    OTHER INCOME                                        34,431           72,685
                                                   -----------      -----------

                                                     1,185,383        1,304,260
                                                   -----------      -----------

STOCKYARD EXPENSES:
    LABOR AND RELATED COSTS                            407,543          463,269
    OTHER OPERATING AND MAINTENANCE                    255,500          271,337
    FEED AND BEDDING EXPENSE                            55,526           62,615
    DEPRECIATION AND AMORTIZATION                        6,233            4,563
    TAXES OTHER THAN INCOME TAXES                       64,069           67,482
    GENERAL AND ADMINISTRATIVE                         133,112          155,814
                                                   -----------      -----------

                                                       921,983        1,025,080
                                                   -----------      -----------

INCOME FROM STOCKYARD OPERATIONS                       263,400          279,180
                                                   -----------      -----------

REAL ESTATE OPERATIONS:
 REAL ESTATE REVENUES:
    SALE OF REAL ESTATE                            $         0      $         0
    EXCHANGE BUILDING RENTAL INCOME                    125,757          108,883
    OUTSIDE REAL ESTATE RENT                           127,590          133,374
    OTHER INCOME                                           118                0
                                                   -----------      -----------

                                                       253,465          242,257
                                                   -----------      -----------

 REAL ESTATE EXPENSES:
    COST OF REAL ESTATE SOLD                                 0                0
    LABOR, OPERATING AND MAINTENANCE                   108,593          122,684
    DEPRECIATION AND AMORTIZATION                       35,285           28,348
    TAXES OTHER THAN INCOME TAXES                       30,300           36,500
    GENERAL AND ADMINISTRATIVE                          11,739           13,166
                                                   -----------      -----------

                                                       185,917          200,698
                                                   -----------      -----------

INCOME FROM REAL ESTATE OPERATIONS                      67,548           41,559
                                                   -----------      -----------


                                       7
<PAGE>


                          CANAL CAPITAL CORPORATION & SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME
                   FOR THE THREE MONTHS ENDED JANUARY 31, 2002 AND 2001
                                  Continued ...


                                                       2002            2001
                                                   (UNAUDITED)      (UNAUDITED)
                                                   -----------      -----------

GENERAL AND ADMINISTRATIVE EXPENSE                    (227,665)        (265,576)
                                                   -----------      -----------

INCOME FROM OPERATIONS                                 103,283           55,163
                                                   -----------      -----------

OTHER INCOME (EXPENSE):
  INTEREST & OTHER INCOME                              323,353          130,118
  INTEREST EXPENSE                                     (66,675)         (63,397)
  INCOME (LOSS)FROM ART SALES                           16,577           (7,340)
  REALIZED GAIN (LOSS) ON INVESTMENTS                        0                0
  OTHER EXPENSE                                              0                0
                                                   -----------      -----------

                                                       273,255           59,381
                                                   -----------      -----------

INCOME BEFORE PROVISION FOR
  INCOME TAXES                                         376,538          114,544

PROVISION FOR INCOME TAXES                                   0                0
                                                   -----------      -----------

NET INCOME                                             376,538          114,544

OTHER COMPREHENSIVE (LOSS) INCOME:

  UNREALIZED (LOSS) ON INVESTMENTS
  AVAILABLE FOR SALE                                         0          (31,616)
                                                   -----------      -----------

COMPREHENSIVE INCOME                               $   376,538      $    82,928
                                                   ===========      ===========

INCOME PER COMMON SHARE - BASIC
  AND DILUTED                                      $      0.07      $      0.01
                                                   ===========      ===========

AVERAGE SHARES OUTSTANDING - BASIC
  AND DILUTED                                        4,327,000        4,327,000
                                                   ===========      ===========


                                        8
<PAGE>


                        CANAL CAPITAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                    FOR THE YEAR ENDED OCTOBER 31, 2001 (AUDITED) AND
                  FOR THE THREE MONTHS ENDED JANUARY 31, 2002 (UNAUDITED)


<TABLE>
<CAPTION>
                                                 COMMON STOCK                      PREFERRED STOCK
                                            NUMBER                              NUMBER                          ADDITIONAL
                                              OF                                  OF                              PAID-IN
                                            SHARES            AMOUNT            SHARES           AMOUNT           CAPITAL
                                            ------            ------            ------           ------           -------
<S>                                         <C>            <C>                  <C>           <C>               <C>
BALANCE, OCTOBER 31, 2000                   5,313,794      $     53,138         4,407,614     $     44,076      $ 27,545,053

 NET (LOSS)                                         0                 0                 0                0                 0
 PREFERRED STOCK DIVIDEND                           0                 0           590,832            5,908           303,508
 MINIMUM PEN. LIAB. ADJUSTMENT                      0                 0                 0                0                 0
 UNREALIZED LOSS ON INVESTMENTS                     0                 0                 0                0                 0
                                         ------------------------------      -----------------------------      ------------

BALANCE, OCTOBER 31, 2001                   5,313,794            53,138         4,998,446           49,984        27,848,561
 NET INCOME                                         0                 0                 0                0                 0
 PREFERRED STOCK DIVIDEND                           0                 0                 0                0            78,000
 MINIMUM PEN. LIAB. ADJUSTMENT                      0                 0                 0                0                 0
 UNREALIZED LOSS ON INVESTMENTS                     0                 0                 0                0                 0
                                         ------------------------------      -----------------------------      ------------

BALANCE, JANUARY 31, 2002                   5,313,794      $     53,138         4,998,446     $     49,984      $ 27,926,561
                                         ==============================      =============================      ============

<CAPTION>
                                                            -COMPREHENSIVE (LOSS) INCOME-       TREASURY
                                          ACCUMULATED        VALUATION        UNREALIZED          STOCK
                                            DEFICIT           RESERVE        GAIN ON INV.        AT COST
                                            -------           -------        ------------        -------
<S>                                      <C>               <C>               <C>              <C>
BALANCE, OCTOBER 31, 2000                ($11,945,307)     ($ 1,969,621)     $          0     ($11,003,545)
 NET (LOSS)                                  (772,547)                0                 0                0
 PREFERRED STOCK DIVIDEND                    (301,520)                0                 0                0
 MINIMUM PEN. LIAB. ADJ                             0          (195,824)                0                0
 UNREALIZED LOSS ON INV                             0                 0                 0                0
                                         ------------      ------------      ------------     ------------

BALANCE, OCTOBER 31, 2001                 (13,019,374)     ($ 2,165,445)                0      (11,003,545)
 NET INCOME                                   376,538                 0                 0                0
 PREFERRED STOCK DIVIDEND                     (78,000)                0                 0                0
 MINIMUM PEN. LIAB. ADJ                             0                 0                 0                0
 UNREALIZED LOSS ON INV                             0                 0                 0                0
                                         ------------      ------------      ------------     ------------

BALANCE, JANUARY 31, 2002                ($12,720,836)     ($ 2,165,445)     $          0     ($11,003,545)
                                         ============      ============      ============     ============
</TABLE>


                                       9
<PAGE>


                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE THREE MONTHS ENDED JANUARY 31, 2002 AND 2001



                                                          2002           2001
                                                       (UNAUDITED)   (UNAUDITED)
                                                       -----------   -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
  NET INCOME                                            $ 376,538     $ 114,544

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

   DEPRECIATION AND AMORTIZATION                           44,108        36,312

CHANGES IN ASSETS AND LIABILITIES:

     NOTES AND ACCOUNTS RECEIVABLES, NET                   22,505       151,091
     ART INVENTORY, NET                                    66,602             0
     PREPAID EXPENSES AND OTHER, NET                       47,821        40,853
     PAYABLES AND ACCRUED EXPENSES, NET                  (130,622)     (374,112)
                                                        ---------     ---------

NET CASH PROVIDED (USED) BY OPERATING
     ACTIVITIES                                           426,952       (31,312)
                                                        ---------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES:

  CAPITAL EXPENDITURES                                    (41,380)      (42,485)
                                                        ---------     ---------

NET CASH (USED) BY INVESTING ACTIVITIES                   (41,380)      (42,485)
                                                        ---------     ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  PROCEEDS FROM LONG-TERM DEBT-RELATED
    PARTIES                                                     0             0
  REPAYMENT OF CURRENT PORTION OF LONG-TERM                     0             0
  REPAYMENT OF LONG-TERM DEBT OBLIGATIONS                       0             0
                                                        ---------     ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                0             0
                                                        ---------     ---------

NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                             385,572       (73,797)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD           13,680        87,269
                                                        ---------     ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD              $ 399,252     $  13,472
                                                        =========     =========


NOTE:   Canal made  federal and state  income tax  payments of $1,000 and $6,000
        and interest  payments of $67,000 and $63,000 in the three month periods
        ended January 31, 2002 and 2001, respectively.


                                       10
<PAGE>


                   CANAL CAPITAL CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                       THREE MONTHS ENDED JANUARY 31, 2002
                                   (UNAUDITED)



1.   NATURE OF BUSINESS

     Canal Capital Corporation ("Canal"),  incorporated in the state of Delaware
in 1964,  commenced business operations through a predecessor in 1936. Canal was
a wholly owned subsidiary of Canal-Randolph Corporation until June 1, 1984, when
Canal-Randolph   Corporation   distributed  to  its   stockholders  all  of  the
outstanding   shares  of  Canal's  common  stock,   under  a  plan  of  complete
liquidation.

     Canal is engaged in two distinct  businesses - the  management  and further
development  of its  agribusiness  related real estate  properties and stockyard
operations.

     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  in nine of the last ten years 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 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.


                                       11
<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 significant  intercompany  balances and
transactions have been eliminated in consolidation.

     B) Investments Available for Sale - Canal has an investment in a company in
which it, together with other  affiliated  entities,  comprise a reporting group
for  regulatory  purposes.  It is  important  to note  that it is the  group (as
defined) that can exercise influence over this company, not Canal.  Accordingly,
this  investment  does not qualify for  consolidation  as a method of reporting.
Certain  of  Canal's  officers  and  directors  also  serve as  officers  and/or
directors of this company.  This investment (in which Canal's ownership interest
is  approximately  1%) is  carried  at market  value and the  realized  gains or
losses,  if any, are recognized in operating  results.  Any unrealized  gains or
losses are reflected in Stockholders' Equity (Note 9).

     Investments  in Joint Ventures - Investments  in which  ownership  interest
range from 20% to 50% or less owned joint  ventures are  accounted for under the
equity  method.  These joint  ventures  are not, in the  aggregate,  material in
relation  to the  financial  position  or results of  operations  of Canal.  The
carrying  amount of such  investments  was $101,000 at both January 31, 2002 and
October 31, 2001,  and is included in other  assets.  The  operating  results of
joint ventures accounted for on the equity method were not material to financial
statement  presentation  and were  therefore  included in other income from real
estate operations.

     C)  Accounting  Estimates -- The  preparation  of financial  statements  in
conformity with generally accepted accounting  principles requires management to
make  estimates and  assumptions  that affect the reported  amount 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.

     D)  Comprehensive  Income --  Effective  for fiscal years  beginning  after
December  15, 1997,  Statement of  Accounting  Standards  No. 130 requires  that
comprehensive  income  and its  components,  as  defined  in the  statement,  be
reported in a financial statement.  The only adjustments for each classification
of the  comprehensive  income was for minimum  pension  liability and unrealized
(loss) gain on investments available for sale.

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


                                       12
<PAGE>


3.   Interim Financial Statements

     The interim  consolidated  financial  statements  included herein have been
prepared by Canal without audit. In the opinion of Management,  the accompanying
unaudited  financial  statements of Canal contain all  adjustments  necessary to
present fairly its financial  position as of January 31, 2002 and the results of
its  operations  and its cash flows for the three month period ended January 31,
2002. All of the above referenced adjustments were of a normal recurring nature.
Certain  information  and footnote  disclosures  normally  included in 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,  2001 and the notes  thereto  which are  contained  in Canal's  2001
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 2002.

4.   Real Estate Operations

     Canal's real estate properties  located in six Midwest states are primarily
associated with its current and former  agribusiness  related  operations.  Each
property is adjacent to a stockyards  operation  (three of which are operated by
the company) and 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, truck stops,  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  rental  income from its  Exchange  Buildings,  lease  income from land and
structures leased to various commercial and retail enterprises and proceeds from
the sale of real estate properties.

     Real estate operations  resulted in operating income of $68,000 and $42,000
for the three month  periods  ended  January  31,  2002 and 2001,  respectively.
Additionally,  real  estate  operations  contributed  $253,000  and  $242,000 to
Canal's  revenues for the three month  periods  ended January 31, 2002 and 2001,
respectively.

     As of January 31, 2002,  there are  approximately  178 acres of undeveloped
land owned by Canal  adjacent to its stockyard  properties.  Canal is continuing
the  program,  which it  started  several  years  ago,  to  develop or sell this
property.


                                       13
<PAGE>


5.   Stockyard Operations

     On August 1, 1999,  Canal  purchased the  operating  assets of three public
stockyards  (formerly subject to the Master Lease between the Company and United
Market  Services)  located in Sioux City,  Iowa, 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  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, auctioneer,  weigh masters and
scales,  feed and bedding,  and security personnel.  In addition,  the stockyard
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 or producers.

     Stockyard  operations resulted in operating income of $263,000 and $279,000
for the three month  periods  ended  January  31,  2002 and 2001,  respectively.
Additionally,  stockyard  operations  contributed  $1,185,000  and $1,304,000 to
Canal's  revenues for the three month  periods  ended January 31, 2002 and 2001,
respectively.

     Canal has entered  into an option  agreement  to sell the property on which
the Sioux City Stockyards operates.  The Company anticipates that this sale will
occur in the  second or third  quarter of fiscal  2002 at which  time  stockyard
operations in Sioux City, Iowa will cease.

6.   ART INVENTORY HELD FOR SALE

     Canal has not  purchased  inventory in several  years nor does it currently
have any intention of  purchasing  additional  art inventory in the  foreseeable
future. It is the Company's  intention to liquidate,  in an orderly manner,  its
art  inventory.  Management  estimates it may take  approximately  five years to
dispose of its current art  inventory.  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 disposing of its art inventory  within the time
frame discussed above.

     Antiquities  and  contemporary  art  represented  43%  ($475,388)  and  57%
($641,749)  and 46%  ($541,990)  and 54%  ($641,749)  of total art  inventory at
January 31, 2002 and October 31, 2001,  respectively.  Substantially  all of the
contemporary  art  inventory  held for resale is  comprised of the work of Jules
Olitski.


                                       14
<PAGE>


     The amount  recorded as the  current  portion of art  inventory  represents
management's  estimate  of the  inventory  expected  to be sold  during the next
twelve months.  The Company recorded 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.  In fiscal 2002 Canal applied against sales $108,000 of the
valuation  allowance  against its art inventory,  thereby,  decreasing the total
valuation  allowance  to  $2,584,150  as of January  31,  2002,  as  compared to
$2,692,150 at October 31, 2001.

     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 its art inventory appraised by an independent appraiser annually.  The
2001 appraisal  covered  approximately 53% of the inventory value. The appraised
values estimate the current market value of each piece giving  consideration  to
Canal's practices of engaging in consignment,  private and public auction sales.
The net realizable  value of the remaining 47% of the inventory was estimated by
management based in part on operating  history and in part on the results of the
independent appraisals done.

     Canal's  first  quarter  art sales  generated  income of $17,000  (net of a
decrease in the valuation allowance of $108,000) as compared to a loss of $7,000
for the three month periods ended January 31, 2002 and 2001, respectively.

     Inventory  on  Consignment  - The Company had  approximately  $857,000  and
$1,012,000 of art inventory on  consignment  with third party dealers at January
31, 2002 and October 31, 2001, respectively.

7.   Property and Equipment

     Included  in  property  and  equipment   were  the  cost  of  buildings  of
approximately $2.5 million at January 31, 2002 and October 31, 2001.

8.   PENSION VALUATION RESERVE

     The  valuation  reserve  represents  the excess of the  additional  minimum
pension  liability  required  under  the  provisions  of SFAS  No.  87 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 the
pension benefits of the former employees, which benefits were frozen at the time
the  stockyard  operations  were sold in 1989.  The excess will  effectively  be
expensed  over time as actuarial  computations  of annual  pension cost (made in
accordance with SFAS No. 87) recognize the deficiency that exists.


                                       15
<PAGE>


9.   INVESTMENTS AVAILABLE FOR SALE

     At January 31, 2002 the  investments  available  for sale  consisted of the
following:

                                             January 31,      October 31,
     ($ 000's Omitted)                          2002              2001
                                             -----------      -----------

     Aggregate market value.................   $   21           $   21
                                               ------           ------

     Aggregate carrying value...............   $   21           $   21
                                               ------           ------

     Canal has an  investment  in a company  in which it,  together  with  other
affiliated entities,  comprises a reporting group for regulatory purposes. It is
important to note that it is the group (as defined) that can exercise  influence
over this company, not Canal. Accordingly,  this investment does not qualify for
consolidation  as a  method  of  reporting.  Certain  of  Canal's  officers  and
directors  also  serve  as  officers  and/or  directors  of this  company.  This
investment (in which Canal's ownership  interest is approximately 1%) is carried
at market value and the realized  gains or losses,  if any,  are  recognized  in
operating results.  Any unrealized gains or losses are reflected in Stockholders
Equity.  The  realized  gains or losses,  if any,  are  recognized  in operating
results.

     On May 3, 2000 this company  filed for  reorganization  under Chapter 11 of
the Bankruptcy Code and subsequently  emerged in December 2000. This action,  in
combination with other factors,  has resulted in Canal's  determination that the
decline in market value of its investment in this company as of October 2001 was
permanent  and  accordingly,  recognized  a  realized  loss  on  investments  in
marketable  securities of approximately $47,000 for fiscal 2001. Management will
continue to monitor this  situation  closely and take  appropriate  action if it
determines  that future  fluctuations in the market value of this investment are
other than temporary.

10.  BORROWINGS

     At January 31,  2002,  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 to secure the following obligations:

                                          January 31,       October 31,
                                             2002              2001
                                          -----------       -----------
                                          (Unaudited)        (Audited)
(Thousands of Dollars)

Variable rate mortgage notes due
 May 15, 2003 - related party............    $ 2,667          $ 2,667
                                             -------          -------


                                       16
<PAGE>


     On January 8, 1998, the Company issued $3,700,000 of variable rate mortgage
notes due May 15, 2001. The purchasers of these notes included  certain entities
controlled by the Company's Chairman,  the Company's Chief Executive Officer and
members of their families.  These notes carried  interest at the highest of four
variable  rates,  determined  on a quarterly  basis.  These  notes,  among other
things,  prohibits  Canal from becoming an investment  company as defined by the
Investment  Company Act of 1940;  requires Canal to maintain  minimum net worth;
restricts  Canal's ability to pay cash dividends or repurchase  stock;  requires
principal  prepayments  to be made  only  out of the  proceeds  from the sale of
certain assets,  and required the accrual of additional  interest (to be paid at
maturity) of approximately three percent per annum.

     On July 29, 1999 the above Notes were amended to extend the  maturity  date
to May 15, 2003;  to fix the interest  rate at 10% per annum;  to agree that the
additional  interest due to the holders of the notes shall become current and be
treated as  principal  due under the notes;  and to have  certain of the holders
loan the Company  $525,000 in  additional  financing,  the proceeds of which was
used to repay in full  certain of the other  holders of the notes.  As a result,
the notes are now held in total by the  Company's  Chief  Executive  Officer and
members of his family.

     On January 10, 2000,  the above Notes were further  amended to have holders
loan the Company $1,725,000 in additional  financing,  the proceeds of which was
used to  repay  in full  all of the  Company's  outstanding  non  related  party
long-term  debt.  As of January 31, 2002,  the balance due under these notes was
$2,667,000 all of which is classified as long-term debt-related party.


                                       17
<PAGE>


                 Item II - Management's Discussion and Analysis
                Of Results of Operations and Financial Condition
                   For the Three Months Ended January 31, 2002


Results of Operations - 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  in nine of the last ten years 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  net income of $377,000  for the three month period ended
January 31,  2002 as  compared to net income of $115,000  for the same period in
fiscal 2001.  After  recognition of an unrealized  loss on investments  held for
sale of $0 and $32,000 for the three month  periods  ended  January 31, 2002 the
Company  recognized  comprehensive  income of $377,000 and $83,000 for the three
month periods ended January 31, 2002.  Further,  after  recognition of preferred
stock dividend  payments of $78,000 for the three month period ended January 31,
2002, the Company  recognized net income  applicable to common  stockholders  of
$299,000  ($0.07 per common  share) for the three month period ended January 31,
2002 as  compared to net income  applicable  to common  stockholders  of $37,000
($0.01 per common share) for the same period in fiscal 2001.Included in the 2002
results  is  other  income  of  approximately  $323,000  received  by Canal as a
demutualization  compensation  payment  from an insurance  company,  from which,
Canal had  purchased  annuity  contracts  in the early 1980's for certain of its
retired  stockyards  employees.  Included in the 2001 results is other income of
approximately  $143,000 comprised  primarily of a damage award Canal received in
connection  with its lawsuit  against a meat packing  company in South St. Paul,
Minnesota which was subsequently fully reserved at year end due to the financial
instability of the debtor.

     Canal's  revenues from continuing  operations  consist of revenues from its
real estate and stockyards  operations.  Total revenues decreased by $108,000 or
7.0% to  $1,439,000  for the three  month  period  ended  January 31,  2002,  as
compared to the revenues of $1,547,000  for the same period in fiscal 2001.  The
fiscal 2002  decrease in revenues is due  primarily  to softer than  anticipated
volume from our stockyard operations.


                                       18
<PAGE>


Capital Resources and Liquidity

     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  in nine of the last ten years 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.

     On January 8, 1998, the Company issued $3,700,000 of variable rate mortgage
notes due May 15, 2001. The purchasers of these notes included  certain entities
controlled by the Company's Chairman,  the Company's Chief Executive Officer and
members of their families.  These notes carried  interest at the highest of four
variable  rates,  determined  on a quarterly  basis.  These  notes,  among other
things,  prohibits  Canal from becoming an investment  company as defined by the
Investment  Company Act of 1940;  requires Canal to maintain  minimum net worth;
restricts  Canal's ability to pay cash dividends or repurchase  stock;  requires
principal  prepayments  to be made  only  out of the  proceeds  from the sale of
certain  assets and required the accrual of  additional  interest (to be paid at
maturity) of approximately three percent per annum.

     On July 29, 1999 the above Notes were amended to extend the  maturity  date
to May 15, 2003;  to fix the interest  rate at 10% per annum;  to agree that the
additional  interest due to the holders of the notes shall become current and be
treated as  principal  due under the notes;  and to have  certain of the holders
loan the Company  $525,000 in  additional  financing,  the proceeds of which was
used to repay in full  certain of the other  holders of the notes.  As a result,
the notes are now held in total by the  Company's  Chief  Executive  Officer and
members of his family.

     On January 10, 2000,  the above Notes were further  amended to have holders
loan the Company $1,725,000 in additional  financing,  the proceeds of which was
used to  repay  in full  all of the  Company's  outstanding  non  related  party
long-term  debt.  As of January 31, 2002,  the balance due under these notes was
$2,667,000 all of which is classified as long-term debt related party.

     Cash and cash  equivalents  of $399,000 at January  31, 2002  increased  by
$385,000 from cash and cash equivalents of $14,000 at October 31, 2001. Net cash
provided by operations so far in fiscal 2002 was $427,000.  As discussed  above,
cash  provided by  operations  in the first  quarter of fiscal 2002 includes the
$323,000 demutualization compensation payment Canal received in January 2002.


                                       19
<PAGE>


     At January 31, 2002 and October 31, 2001, the Company's current liabilities
exceeded  current  assets  by  $1.5  million  and  $1.9  million,  respectively.
Primarily all of the funds received by Canal as a  demutualization  compensation
payment in January 2002 were  subsequently used to pay down its accounts payable
and accrued expenses.  The only required principal repayments under Canal's debt
agreements  for fiscal  2001 will be from the  proceeds  (if any) of the sale of
certain assets.

     Canal  continues to closely  monitor and reduce where possible its overhead
expenses  and plans to  continue 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.

2002 Compared to 2001

Stockyard Revenues

     Stockyard  revenues  for  the  three  months  ended  January  31,  2002  of
$1,185,000  accounted  for 82.4% of the fiscal  2002  revenues  as  compared  to
stockyard  revenues of  $1,304,000  or 84.3% for the same period in fiscal 2001.
Stockyard revenues are comprised of yard handling and auction (91.0% and 88.1%),
feed and bedding income (5.8% and 6.3%), rental income (0.2% and 0.1%) and other
income (3.0% and 5.5%) for the three month  periods  ended  January 31, 2002 and
2001, respectively.  There were no significant percentage variations in the year
to year comparisons.

Stockyard Expenses

     Stockyard  expenses for the three months ended January 31, 2002 of $922,000
decreased by $103,000 (10.1%) from stockyard expenses of $1,025,000 for the same
period in fiscal 2001.  Stockyard  expenses  are  comprised of labor and related
costs (44.2% and 45.2%), other operating and maintenance (27.7% and 26.5%), feed
and bedding expense (6.0% and 6.1%),  depreciation  and  amortization  (0.7% and
0.4%),   taxes  other  than  income  taxes  (6.9%  and  6.6%)  and  general  and
administrative  (14.5% and 15.2%) for the three month  periods ended January 31,
2002 and 2001, respectively.  There were no significant percentage variations in
the year to year comparisons.

     Canal has entered  into an option  agreement  to sell the property on which
the Sioux City Stockyards operates.  The Company anticipates that this sale will
occur in the  second or third  quarter of fiscal  2002 at which  time  stockyard
operations in Sioux City, Iowa will cease.


                                       20
<PAGE>


Real Estate Revenues

     Real  estate  revenues  for the three  months  ended  January  31,  2002 of
$253,000  accounted  for 17.6% of the fiscal  2002  revenues as compared to real
estate  revenues of $242,000 or 15.7% for the same period in fiscal  2001.  Real
estate revenues are comprised of the sale of real estate (0.0% and 0.0%), rental
income from commercial  office space in Canal's  Exchange  Buildings  (49.6% and
45.0%),  outside  real estate rent  consisting  of rental and other lease income
from the  rental of vacant  land and  certain  structures  (50.3% and 55.0%) and
other income  (0.1% and 0.0%) for the three  months  ended  January 31, 2002 and
2001,  respectively.  The percentage  variations in the year to year comparisons
are due primarily to increased  occupancy in Canal's  South St. Paul,  Minnesota
exchange building.

Real Estate Expenses

     Real  estate  expenses  for the three  months  ended  January  31,  2002 of
$186,000  decreased by $15,000 (7.4%) from real estate  expenses of $201,000 for
the same period in fiscal 2001.  Real estate expenses were comprised of the cost
of real estate sold (0.0% and 0.0%), labor,  operating and maintenance  expenses
(58.4% and 61.1%),  depreciation and amortization (19.0% and 14.1%), taxes other
than income  taxes  (16.3% and 18.2%) and general  and  administrative  expenses
(6.3%  and  6.6%)  for the  three  months  ended  January  31,  2002  and  2001,
respectively.  There were no  significant  percentage  variations in the year to
year comparisons.

General and Administrative

     General and administrative  expenses for the three months ended January 31,
2002 of $228,000  decreased by $38,000 (14.3%) from expenses of $266,000 for the
same period in fiscal 2001. The major  components of general and  administrative
expenses are officers  salaries (50.4% and 43.2%),  rent (9.9% and 8.4%),  legal
and  professional  fees (0.8% and 5.8%),  insurance (15.0% and 10.2%) and office
salaries (8.2% and 11.6%) for the three month periods ended January 31, 2002 and
2001,  respectively.  The percentage  variations in the year to year comparisons
are due  primarily  to the sharp  decrease  in legal and  professional  fees for
fiscal 2002.

Interest Expense

     Interest  expense for the three  months  ended  January 31, 2002 of $66,000
increased by $3,000 (5.2%) from interest  expense of $63,000 for the same period
in fiscal 2001.  Interest rates on Canal's debt have remained  unchanged for the
past 12 months.


                                       21
<PAGE>


Interest and Other Income

     Interest and other  income for the three  months ended  January 31, 2002 of
$323,000  increased  by $193,000  (148.5%)  from  interest  and other  income of
$130,000  for the same period in fiscal  2001.  Included in the 2002  results in
other income of  approximately  $323,000  received by Canal as a  demutalization
compensation  payment from an insurance company that Canal had purchased annuity
contracts  from  in the  early  1980's  for  certain  of its  retired  stockyard
employees.  Included  in the 2001  results  is  other  income  of  approximately
$130,000 comprised primarily of a damage award Canal received in connection with
its lawsuit against a meat packing company in South St. Paul, Minnesota.

Income (Loss) from Art Sales

     Income from art sales for the three months ended January 31,2002 of $17,000
increased  by $24,000  from a loss of $7,000 for the same period in fiscal 2001.
Art revenues are  comprised of the  proceeds  from the sale of  antiquities  and
contemporary  art.  Canal  recognized  revenues  of $90,000 and $0 for the three
month periods ended  January 31, 2002 and 2001,  respectively.  Art expenses are
comprised of the cost of inventory sold and selling,  general and administrative
expenses.  Canal  incurred cost of inventory sold of $67,000 (net of a valuation
allowance of  $108,000)  and $0 as well as selling,  general and  administrative
expenses of $7,000 and $7,000 for the three month periods ended January 31, 2002
and 2001, 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.

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 involve known and
unknown  risks,  uncertainties  and other  factors  that may  cause  the  actual
results,  performance or achievements of the Company to be materially  different
from any future results, performance or achievements expressed or implied by the
forward-looking statements.


                                       22
<PAGE>


Item III - Quantitative and Qualitative Disclosures About Market Risk

     We do not have  any  derivative  financial  instruments  in our  marketable
securities  portfolio as of January 31, 2002. We employ established policies and
procedures  to  manage  our  exposure  to  changes  in the  market  risk  of our
marketable  securities which are classified as  available-for-sale as of January
31,  2002.  Canal's  related  party  mortgage  notes have fixed  interest  rates
therefore,  the fair value of these  instruments  is not  affected by changes in
market interest rates.  Canal believes that the market risk arising from holding
its financial instruments is not material.

     Information  relating to  quantitative  and  qualitative  disclosure  about
market risk is set forth in  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources".


                                       23
<PAGE>


                                     PART II

                                OTHER INFORMATION










                                       24
<PAGE>


Item 1:        Legal Proceedings:

               See Item 3 of Canal's October 31, 2001 Form 10-K.

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)  No reports on Form 8-K have been  filed  during the  quarter
                    for which the report is filed.


                                       25
<PAGE>


                                   SIGNATURES

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


                                        Canal Capital Corporation
                                        ----------------------------
                                              Registrant


                                        /s/ Reginald Schauder
                                        ----------------------------
                                        Reginald Schauder
                                        Vice President-Finance &
                                        Chief Financial Officer


Date: March 13, 2002


                                       26