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 July 31, 1997

                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 August 31, 1997
Common stock, $0.01 par value                4,326,930

(This document contains 27 pages)


                           CANAL CAPITAL CORPORATION & SUBSIDIARIES 
                                CONSOLIDATED BALANCE SHEETS  
                            JULY 31, 1997 AND OCTOBER 31, 1996 
 
 
                                        JULY 31,        OCTOBER 31,        
                                          1997             1996 
                                       (UNAUDITED)       (AUDITED)         
                    
ASSETS: 
 
CURRENT ASSETS: 
 CASH AND CASH EQUIVALENTS            $   (36,150)     $    10,632 
 RESTRICTED CASH AND CASH EQUIVALENTS     470,000          470,000
 NOTES AND ACCOUNTS RECEIVABLE            262,419          295,202 
 ART INVENTORY, NET OF A VALUATION 
 ALLOWANCE OF $ 500,000  AT JULY 31, 
 1997 AND OCTOBER 31, 1996, RESPECTIVELY  500,000          500,000
 INVESTMENTS                              858,009          535,558 
 PREPAID EXPENSES                         217,171          203,238 
 
  TOTAL CURRENT ASSETS                  2,271,449        2,014,630 
 
 
  
NON-CURRENT ASSETS: 
 
 PROPERTY ON OPERATING LEASES, NET OF
 ACCUMULATED DEPRECIATION OF $ 4,046,937
 AND $ 5,753,088 AT JULY 31, 1997 AND  
 OCTOBER 31, 1996, RESPECTIVELY         6,542,454        7,105,534 
 
 
 ART INVENTORY NON-CURRENT, NET OF
 VALUATION ALLOWANCE OF $ 2,000,000
 AT JULY 31, 1997 AND OCTOBER 31,  
   1996, RESPECTIVELY                    2,714,352       3,089,088
            
 
  
 
 
OTHER ASSETS: 
 
 PROPERTY HELD FOR DEVELOPMENT OR RESALE 2,640,805       2,938,905 
 DEFERRED LEASING AND FINANCING COSTS       53,884          92,919 
 DEPOSITS AND OTHER                        232,500         248,132 
 
                                         2,927,189        3,279,956
 
                                       $14,455,444      $15,489,208 
                                      ============      =========== 
                                      


                                     2
                                      


                    CANAL CAPITAL CORPORATION & SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS  
                    JULY 31, 1997 AND OCTOBER 31, 1996 
                                               
                                        JULY 31,     OCTOBER 31,
                                          1997         1996
                                      (UNAUDITED)    (AUDITED)
LIABILITIES & STOCKHOLDERS' EQUITY: 
  
CURRENT LIABILITIES: 
 
CURRENT PORTION OF LONG-TERM 
  DEBT RELATED PARTY                $    360,000    $    500,000
CURRENT PORTION OF LONG-TERM DEBT      2,719,000          64,000 
ACCOUNTS PAYABLE AND ACCRUED EXPENSES  1,848,808       1,984,692 
ACCRUED LITIGATION SETTLEMENT            450,000         850,000 
INCOME TAXES PAYABLE                     211,621          27,877  
 
         TOTAL CURRENT LIABILITIES     5,589,429       3,426,569  
 
 
LONG-TERM DEBT, LESS CURRENT PORTION   2,429,610       6,130,769 
LONG-TERM DEBT, LESS CURRENT PORTION
     -RELATED PARTY                      710,000         849,000  
 
                                       3,139,610       6,979,769  
 
COMMITMENTS AND CONTINGENCIES                 

STOCKHOLDERS' EQUITY: 
 
 PREFERRED STOCK, $0.01 PAR VALUE: 
  5,000,000 SHARES AUTHORIZED; 2,997,900 AND 
  2,703,299 SHARES ISSUED AND OUTSTANDING 
  AT JULY 31, 1997 AND OCTOBER 31, 1996,
  RESPECTIVELY AND AGGREGATE LIQUIDATION  
  PREFERENCE OF $ 29,979,000 AND $ 27,032,990  
  AT JULY 31, 1997 AND OCTOBER 31, 1996
    RESPECTIVELY                          29,979           27,033 
 
  COMMON STOCK, $0.01 PAR VALUE: 
   10,000,000 SHARES AUTHORIZED; 5,313,794 
   SHARES ISSUED AND OUTSTANDING AT 
   JULY 31, 1997 AND OCTOBER 31, 1996,
     RESPECTIVELY                          53,138           53,138 
 
 PAID-IN CAPITAL                       26,781,294       26,636,939
 RETAINED EARNINGS (DEFICIT)           (8,514,765)      (9,010,999) 
 LESS-VALUATION RESERVE                (1,619,696)      (1,619,696) 
 LESS-986,865 SHARES OF COMMON STOCK 
     HELD IN TREASURY, AT COST        (11,003,545)     (11,003,545) 
 
                                        5,726,405        5,082,870 
 
                                     $ 14,455,444     $ 15,489,208 
                                    =============    ============= 

                                    3   


                          
               CANAL CAPITAL CORPORATION & SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE NINE MONTHS ENDED JULY 31, 1997 AND 1996



                                             1997            1996       
                                          (UNAUDITED)     (UNAUDITED)    
 
 REAL ESTATE OPERATIONS:
 REAL ESTATE REVENUES:
    SALE OF REAL ESTATE                    $ 2,407,000     $   612,872   
    RENTAL INCOME                            1,224,675       1,581,164     
    GROUND LEASE INCOME                        693,000         702,000     
    VOLUME BASED RENTAL INCOME                  80,750         538,115     
    OTHER INCOME                                12,274           4,609     

                                             4,417,699       3,438,760    

 REAL ESTATE EXPENSES:
    COST OF REAL ESTATE SOLD                   845,661         232,760     
    LABOR, OPERATING AND MAINTENANCE           628,342         733,586     
    DEPRECIATION AND AMORTIZATION              277,089         273,670     
    TAXES OTHER THAN INCOME TAXES              203,100         270,000     
    PROVISION FOR LITIGATION SETTLEMENT              0         400,000     
    GENERAL AND ADMINISTRATIVE                  81,722          82,648     

                                             2,035,914       1,992,664     


INCOME FROM REAL ESTATE OPERATIONS           2,381,785       1,446,096     


ART OPERATIONS:
 ART REVENUES:
    SALES                                      107,850         108,900     
    OTHER REVENUES                               2,982               0     

                                               110,832         108,900     
  

 ART EXPENSES:
    COST OF ART SOLD                           378,791         226,581     
    VALUATION RESERVE                                0               0     
    SELLING, GENERAL AND ADMINISTRATIVE         29,771          36,965     
    
                                               408,562         263,546     


LOSS FROM ART OPERATIONS                      (297,730)       (154,646)    





                                     4


                      CANAL CAPITAL CORPORATION & SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                    FOR THE NINE MONTHS ENDED JULY 31, 1997 AND 1996
                                Continued ...


                                                1997           1996        
                                            (UNAUDITED)     (UNAUDITED)    

GENERAL AND ADMINISTRATIVE EXPENSE        $  (916,612)     $  (948,831)    

INCOME (LOSS) FROM OPERATIONS               1,167,443          342,619     


OTHER INCOME (EXPENSE):
  GAIN (LOSS) ON SALE OF INVESTMENTS                0                0     
  GAIN (LOSS) ON MARK-TO-MARKET OF 
     INVESTMENTS                              322,451                0     
  INTEREST & OTHER INCOME                      80,491            9,912     
  INTEREST EXPENSE                           (624,297)      (1,048,955)    
  INTEREST EXPENSE-RELATED PARTY             (113,000)        (129,000)    

                                             (334,355)      (1,168,043)    
                                             
GAIN (LOSS) BEFORE PROVISION FOR INCOME 
  TAXES                                       833,088         (825,424)    
 
PROVISION (BENEFIT) FOR INCOME TAXES         (200,000)               0     

NET INCOME (LOSS)                             633,088         (825,424)    
 
PREFERRED STOCK DIVIDEND                     (136,854)        (119,494)    

NET INCOME (LOSS) APPLICABLE TO COMMON
 SHARES                                   $   496,234     $   (944,918)    
                                          =============    ============    

NET INCOME (LOSS) PER COMMON SHARE        $      0.11     $     (0.22)    
                                          =============    ============    

















                                5          


                CANAL CAPITAL CORPORATION & SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE THREE MONTHS ENDED JULY 31, 1997 AND 1996



                                                1997            1996       
                                            (UNAUDITED)     (UNAUDITED)    

REAL ESTATE OPERATIONS:
 REAL ESTATE REVENUES:
    SALE OF REAL ESTATE                    $   145,000     $   136,245    
    RENTAL INCOME                              389,915         507,834     
    GROUND LEASE INCOME                        231,000         234,000     
    VOLUME BASED RENTAL INCOME                  28,341         171,590     
    OTHER INCOME                                 3,802           1,059     

                                               798,058       1,050,728     

 REAL ESTATE EXPENSES:
    COST OF REAL ESTATE SOLD                    49,530          73,027     
    LABOR, OPERATING AND MAINTENANCE           190,544         250,923     
    DEPRECIATION AND AMORTIZATION               92,643          90,478     
    TAXES OTHER THAN INCOME TAXES               53,700          90,000     
    PROVISION FOR LITIGATION SETTLEMENT              0         400,000     
    GENERAL AND ADMINISTRATIVE                  28,065          28,398     

                                               414,482         932,826     


INCOME FROM REAL ESTATE OPERATIONS             383,576         117,902     


ART OPERATIONS:
 ART REVENUES:
    SALES                                       90,550               0     
    OTHER REVENUES                                   0               0     

                                                90,550               0     
  

 ART EXPENSES:
    COST OF ART SOLD                           352,233               0     
    VALUATION RESERVE                                0               0     
    SELLING, GENERAL AND ADMINISTRATIVE          9,280          11,954     
    
                                               361,513          11,954     


LOSS FROM ART OPERATIONS                      (270,963)        (11,954)    


                                     6
                      CANAL CAPITAL CORPORATION & SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED JULY 31, 1997 AND 1996
                                Continued ...


                                                1997           1996        
                                            (UNAUDITED)     (UNAUDITED)    

GENERAL AND ADMINISTRATIVE EXPENSE        $  (296,858)     $  (311,688)    

INCOME (LOSS) FROM OPERATIONS                (184,245)        (205,740)    
 

OTHER INCOME (EXPENSE):
  GAIN (LOSS) ON SALE OF INVESTMENTS                0                0     
  GAIN (LOSS) ON MARK-TO-MARKET OF 
    INVESTMENTS                               496,742                0     
  INTEREST & OTHER INCOME                       1,633            2,113     
  INTEREST EXPENSE                           (175,864)        (352,943)    
  INTEREST EXPENSE-RELATED PARTY              (36,000)         (42,000)    

                                              286,511         (392,830)    
                                             

GAIN (LOSS) BEFORE PROVISION FOR INCOME 
  TAXES                                       102,266         (598,570)    
 
PROVISION (BENEFIT) FOR INCOME TAXES         (200,000)               0     

NET INCOME (LOSS)                             (97,734)        (598,570)    
 
PREFERRED STOCK DIVIDEND                      (47,197)         (41,229)    

NET INCOME (LOSS) APPLICABLE TO COMMON
 SHARES                                   $  (144,931)      $  (639,799)   
                                          =============    ============    

NET INCOME (LOSS) PER COMMON SHARE        $     (0.03)      $     (0.15)   
                                          =============    ============    














                                7          


                  CANAL CAPITAL CORPORATION & SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED JULY 31, 1997 AND 1996


                                            1997              1996         
                                        (UNAUDITED)       (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
  NET INCOME (LOSS)                    $   833,088      $  (825,424)     

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

   PROVISION FOR LITIGATION SETTLEMENT     (75,000)         400,000      
   DEPRECIATION AND AMORTIZATION           294,926          290,915       
   GAIN  ON SALES OF REAL ESTATE        (1,561,339)        (380,112)       
   GAIN FROM SALE OF INVESTMENTS                 0                0        
   VALUATION RESERVE - ART INVENTORY             0                0       
   (GAIN )LOSS ON MARK-TO-MARKET OF
   INVESTMENTS                            (322,451)               0        


CHANGES IN ASSETS AND LIABILITIES:

     NOTES AND ACCOUNTS RECEIVABLES, NET    32,783          (16,493)  
     ART INVENTORY, NET                    374,736          214,164        
     PREPAID EXPENSES AND OTHER, NET      (309,857)         413,816       
     PAYABLES AND ACCRUED EXPENSES, NET   (352,140)        (427,708)     
NET CASH (USED) PROVIDED 
    BY OPERATING ACTIVITIES             (1,085,254)        (330,842)


CASH FLOWS FROM INVESTING ACTIVITIES:
  PROCEEDS FROM SALES OF REAL ESTATE     2,407,000          612,872
  PROCEEDS FROM SALE OF INVESTMENTS              0                0        
  CAPITAL EXPENDITURES                     (43,369)         (75,630)   
NET CASH PROVIDED BY INVESTING ACTIVITIES2,363,631          537,242    

CASH FLOWS FROM FINANCING ACTIVITIES:
  PROCEEDS FROM LONG-TERM DEBT-RELATED
    PARTIES                                      0                0        
TRANSFERS TO LONG-TERM                     325,000                0 
REPAYMENT OF LONG-TERM DEBT OBLI4GATIONS(1,650,159)        (341,725) 
NET CASH USED BY FINANCING ACTIVITIES   (1,325,159)        (341,725) 

(INCREASE) IN RESTRICTED CASH AND
  CASH EQUIVALENTS                               0                0       
NET (DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS                              (46,782)        (135,325)     
CASH AND CASH EQUIVALENTS AT
 BEGINNING OF YEAR                          10,632          114,750       
CASH AND CASH EQUIVALENTS AT 
 END OF YEAR                           $   (36,150)     $   (20,575)       
                                       ============     ============

NOTE:    Canal  made  federal  and state income tax payments of $16,000 and
$33,000  and interest payments of $737,000 and $1,100,000 in the nine month
periods ended July 31, 1997 and 1996, respectively.
                                     8


                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
             FOR THE YEAR ENDED OCTOBER 31, 1996 (AUDITED) AND 
            FOR THE NINE MONTHS ENDED JULY 31, 1997 (UNAUDITED)


                              COMMON STOCK     PREFERRED STOCK
                              NUMBER           NUMBER         
                               OF               OF
                            SHARES   AMOUNT     SHARES       AMOUNT

BALANCE, OCTOBER 31, 1995 5,313,794   $53,138    2,358,542    $23,585   
 NET INCOME (LOSS)                0         0            0          0
 PREFERRED STOCK DIVIDEND         0         0      344,757      3,448
 RESERVE                          0         0            0          0       
                         --------------------   ---------------------   
BALANCE, OCTOBER 31, 1996 5,313,794   $53,138    2,703,299    $27,033  
NET INCOME (LOSS)                 0         0            0          0       
PREFERRED STOCK DIVIDEND          0         0      294,601      2,946       
RESERVE                           0         0            0          0       
                        --------------------   ---------------------   
BALANCE, JULY 31, 1997    5,313,794   $53,138    2,997,900    $29,979    
                         ====================   =====================   


                                   RETAINED                   TREASURY
                    PAID-IN        EARNINGS     VALUATION       STOCK
                    CAPITAL         DEFICIT      RESERVE       AT COST

BAL.,OCT.31,1995$26,468,008    ($9,690,693)   ($1,736,671)  ($11,003,545)
NET INCOME(LOSS)          0        841,733              0              0   
PREFERRED STOCK DIV 168,931       (162,039)             0              0
RESERVE                   0              0        116,975              0   
              ---------------  -------------   ------------  ------------
BAL.,OCT.31,1996$26,636,939    ($9,010,999)   ($1,619,696)  ($11,003,545)
NET INCOME(LOSS)          0        633,088              0              0
PREFERRED STOCK DIV 144,355       (136,854)             0              0
RESERVE                   0              0              0              0
               -------------  --------------   ------------ ------------   
BAL.,JUL 31,1997$26,781,294    ($8,514,765)   ($1,619,696)  ($11,003,545)
               =============  ==============  ============= =============


















                                     9


                 CANAL CAPITAL CORPORATION AND SUBSIDIARIES
               NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      NINE MONTHS ENDED JULY 31, 1997
                                (UNAUDITED)



1.   GENERAL

     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 of its
agribusiness  related real estate properties located in the Midwest and art
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  six  of  the  last eight years, has a working capital
deficit  at July 31, 1997 of approximately $3.4 million, and is involved in
various litigations.  A reserve has been provided in the amount of $450,000
associated  with  the  litigation  in  Minnesota.    However, the financial
statements  do  not  include  any  adjustments  that  might result from the
resolution  of  these  other  uncertainties.    The  accompanying financial
statements  do  not  include any adjustments relating to the recoverability
a n d   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.

     In   the  past  three  years,  Canal  has  made  significant  cuts  in
expenditures,  primarily  in salaries and other overhead expenses and plans
to  continue  to reduce the level of its art inventories to enhance current
cash  flows.  Management believes that its cost cutting program and planned
reduction  of its art inventory and its real estate sales 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,  sell  real  estate  or that its cost cutting program in itself
will be sufficient to fund operating cash requirements.




                                     10




2.   Interim Financial Statements

     The  interim  consolidated  financial  statements included herein have
been  prepared  by  Canal without audit.  In the opinion of Management, the
a c c o mpanying  unaudited  financial  statements  of  Canal  contain  all
adjustments  necessary  to present fairly its financial position as of July
31,  1997 and the results of its operations and its cash flows for the nine
month  period ended July 31, 1997.  All of the above referenced adjustments


were  of  a  normal  recurring  nature.    Certain information and footnote
d i s closures  normally  included  in  financial  statements  prepared  in
a c cordance  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, 1996 and the notes thereto which are contained in Canal s
1996  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 1997.


3.   Reclassification

     Certain  prior  year  amounts have been reclassified to conform to the
current year s presentation.


4.   Notes Receivable

     Included in the notes and accounts receivable were the current portion
of  notes  from real estate sales in the amount of $25,000 at July 31, 1997
and October 31, 1996.


5.   INVESTMENTS

     Canal s investments consisted of the following:

    (Thousands of Dollars)         July 31, 1997     October 31, 1996

    Aggregate market value..........   $ 858                $ 535

    Aggregate carrying value........   $ 858                $ 535

        Canal  recognized  unrealized  gains on investments of $323,000 and
$55,000  for the nine months ended July 31, 1997 and the year ended October
31,  1996, respectively.  Additionally, Canal has investments in the equity
securities 

                                     11


of  a  company in which other entities affiliated with Canal also have made
investments,  and  which  entities together comprise a group for regulatory
reporting  purposes.      At    July  31, 1997, 100% of the market value of
Canal  s  investments  was invested in equity securities of this company in
which  such parties held 5% or more of the outstanding equity securities of
the  issuer.    Certain  of  Canal  s  officers and directors also serve as
officers and/or directors of this company.
     

6.   ART OPERATIONS

     Canal  established  its  art operations in October 1988 by acquiring a
significant  inventory for resale of antiquities primarily from the ancient
Mediterranean   cultures.    In  November  1989,  Canal  expanded  its  art
operations by entering into a cost and revenue sharing agreement with a New
York  City  gallery  for  the  exclusive representation of Jules Olitski, a
world renowned artist of contemporary paintings.  As part of this agreement
Canal  purchased  a  number of Olitski paintings which it holds for resale.


The  representation  agreement  expired  December  1,  1994  and  Canal now
operates  independently in the marketing of its contemporary art inventory.
     

     Due  to  general  economic  conditions  and  the  softness  of the art
markets,  Canal  has  not  purchased  inventory in several years.  However,
Canal  continues  its  marketing efforts to sell its existing art inventory
through various consignment agreements and at public auctions.  Antiquities
and  contemporary art represented 68% ($2,179,089) and 32% ($1,035,263) and
64%  ($2,311,825)  and  36% ($1,277,263) of total art inventory at July 31,
1997  and  October  31,  1996,  respectively.    Substantially  all  of the
contemporary  art  inventory  held  for  resale is comprised of the work of
Jules Olitski.

       Management estimates it may take two to five years to dispose of its
current  art  inventory.    The  Company  s  ability  to dispose of its art
inventory  is  dependent  at least in part, on general economic conditions,
including  supply, demand, international monetary conditions and inflation.
Additionally,  the  art  market  itself  is very competitive.  Accordingly,
there can be no assurance that Canal will be successful in disposing of its
art inventory within the time frame discussed above. 

     Canal  has  its  art  inventory  appraised by an independent appraiser
annually.    The  1996 appraisal covered approximately 66% 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 34% of the inventory was estimated by management based in part on
operating  history and in part on the results of the independent appraisals
done. In fiscal 1996 


                                     12




C a nal  recognized  a  $1,500,000  valuation  allowance  against  its  art
inventory,  thereby, increasing the total valuation allowance to $2,500,000
as  of  October  31, 1996 as compared to $1,000,000 and $500,000 at October
31, 1995 and 1994, respectively.  These estimates were based in part on the
Company  s  history  of  losses  sustained  on art sales in the current and
previous years.

     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 price at which pieces are consigned is usually in line with
appraisals  and  above  the  cost  of  the piece.  The amount classified as
current 
represents management s best estimate  of the amount of inventory that will
be  sold  in this market.  Management believes that the provision discussed
above  has  effectively  reduced  inventory to its estimated net realizable
value.

     The Company s plan to sell inventory at auction is contemplated in the
normal  course  of  business.   Auction in this context is one of the usual
channels  used  for disposal of its art inventory.  The proceeds from these
sales  will  be  used  to  reduce the Company s outstanding debt.  If these
sales are not made, the Company has alternate means of raising cash such as
sales  of  investments,  sale  of  real  estate, raising of new capital and


rescheduling  of debt.  Because of the alternatives in raising cash to meet
its  debt requirements available to the Company, it does not anticipate any
extraordinary  losses  associated  with  the  sale  of its art inventory in
fiscal 1997.   

     Canal s art operations have generated operating losses of $298,000 and
$155,000  on  revenues  of  $111,000 and $109,000 for the nine months ended
July  31,  1997  and 1996, respectively.  Art sales have resulted primarily
through  activities  in  conjunction  with  sales  of antiquities.  Canal s
management  believes  that  through  its  consignment agreements as well as
other  potential  distribution  outlets  Canal  will  continue  to  deal in
antiquities and contemporary art.


     Inventory  on  Consignment - The Company had $2,000,000 and $1,268,000
of  art  inventory on consignment with third party dealers at July 31, 1997
and October 31, 1996, respectively. 


7.   Property and Equipment

     Included  in  property  and  equipment  were  the cost of buildings of
approximately $5 million at July 31, 1997 and October 31, 1996.


                                     13



8.   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.

9.   BORROWINGS

     At  July  31,  1997, 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:
                                           July 31,       October 31,
                                              1997            1996    
                                          (Unaudited)        (Audited)
(Thousands of Dollars)
Variable rate mortgage notes due
 May 15, 1998.............................   $ 2,655         $ 3,960
Variable rate mortgage notes due
 September 15, 1998 - related party.......       710             849
11% mortgage note; original principal
 amount $1,697; due April 1, 2011;
 payable in monthly installments
 (including interest) of $17..............     1,286           1,336


9.5% mortgage note; original principal
 amount $472; due November 1, 2012,
 payable in monthly installments
 (including interest) of $4...............       408             414
10 1/2% mortgage note (adjusted
 periodically to prime plus 1 3/4%);
 original principal amount $556 due
 January 15, 2013; payable in monthly
 installments (including interest) of $6..       475             485

Other Note - Related Party................       360             500

Other.....................................       325               0

Total ....................................     6,219           7,544 

Less -- current maturities ...............     3,079             564

Long-term debt ...........................   $ 3,140         $ 6,980
                                     14


     
     On May 22, 1985, Canal completed the sale of $20 million face value of
Variable  Rate  Mortgage  Notes, due May 15, 1993.  As discussed more fully
below, Canal has extended these notes to May 15, 1998 under essentially the
same terms and conditions.  The notes carry interest at the highest of four
variable rates, determined on a quarterly basis.

     The  new  agreement, 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
requires  the  accrual  of  additional interest (to be paid at maturity) of
two,  three  and four percent per annum for the fiscal years commencing May
15,  1995, 1996 and 1997, respectively.  In fiscal 1996, this agreement was
amended  to  provide for the forgiveness of all additional interest accrued
in  the  event  that  the  Company  meets  on  a  timely  basis  all of its
obligations  under  the  Note, including the payment of all other principal
and  accrued  interest on or before May 15, 1998.  In consideration for the
new  agreement,  Canal  agreed to pay a fee to the noteholders of 2% of the
principal  amount  outstanding  as  of  May  15, 1995. At July 31, 1997 the
balance  due  under  these  notes  was  $2,655,000 which is classified as a
current liability.

     On  September 20, 1995, the Company issued $1,032,000 of variable rate
mortgage  notes  due  September  15,  1998  to  a  group  which includes an
investment  partnership  controlled  by  the  Company  s  Chairman  and the
Company  s  Chief  Executive  Officer and members of his family.  The notes
issued  have  essentially  the  same  terms  and  conditions  as  the notes
discussed  above.    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  requires  the  accrual  of additional interest (to be paid at
maturity)  of  two,  three  or  four percent per annum for the fiscal years
commencing  September  15,  1995,  1996 and 1997, respectively. At July 31,
1997  the balance due under these notes was $710,000 which is classified as


a long term liability.

     In  March  1994 the Company borrowed $500,000 from an individual.  The
Company  executed  a  $350,000  note  due  December 31, 1996 and a $150,000
convertible  note  also  due  December  31,  1996.    The  $150,000 note is
convertible  at  the holder s option into one million (1,000,000) shares of
the  Company  s common stock.  The notes pay quarterly interest at the rate
of  7% per annum and are secured by 125,000 shares of Datapoint Corporation
common stock owned by the Company.   The  proceeds from this loan were used
by the 

                                     15





Company to meet its obligations under its secured credit line.  On February
14,  1997,  these  notes  were  extended to December 31, 1997.  The Company
agreed  to increase the interest rate to prime (8.50% at July 31, 1997) and
pay  down  $100,000  no  later  than  March  31, 1997. At July 31, 1997 the
balance due under these notes was $360,000 which is classified as a current
liability.




































                                     16



                    Management s Discussion and Analysis
              Of Results of Operations and Financial Condition
                  For the Nine Months Ended July 31, 1997


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  six  of  the  last eight years, has a working capital
deficit  at July 31, 1997 of approximately $3.4 million, and is involved in
various litigations.  A reserve has been provided in the amount of $450,000
associated  with  the  litigation  in  Minnesota.    However, the financial
statements  do  not  include  any  adjustments  that  might result from the
resolution  of  these  other  uncertainties.  Furthermore, 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 $633,000 and a net loss of $98,000 for
the  nine  and  three  month periods ended July 31, 1997 as compared to net
losses  of  $825,000  and  $599,000  for  the  same periods in fiscal 1996,
respectively.    After  recognition of preferred stock dividend payments of
$137,000  and  $47,000  for the nine and three month periods ended July 31,
1997  and  $119,000  and  $41,000  for  the  same  periods  in fiscal 1996,
respectively,  the  results  attributable  to  common stockholders were net
income  of  $496,000,    and  a net loss of $145,000 for the nine and three
month periods ended July 31, 1997 as compared to net losses of $950,000 and
$640,000  for  the  same periods in fiscal 1996, respectively.  Included in
the  current  year  results  are  gains  on  the  sales  of  real estate of
$1,561,000,  a $497,000 gain on the mark-to-market of investments and other
income  of $75,000 representing a reduction in the provision for litigation
settlement.    

     Canal  s  revenues from continuing operations consist of revenues from
its  real estate and art operations. Due to general economic conditions and
more  specifically  a  depressed  national  art  market,  Canal s aggregate
revenues  from  art  sales  and  the  prices  at which sales were made have
significantly  declined in recent years.  Revenues increased by $981,000 or
27.7%  to $4,529,000 and decreased by $162,000 or 15.4% to $889,000 for the
nine and three month periods ended July 31, 1997, respectively, as compared
to  the revenues for the same periods in fiscal 1996.  The 1997 increase is
due  primarily  to a $1,632,000  increase in revenues from the sale of real
estate,  offset to a certain extent by a $457,000 reduction in volume based
rental income and a $346,000 decrease in rental income.

                                     17



Real Estate Revenues


     Real  estate  revenues  for  the  nine  months  ended July 31, 1997 of
$4,418,000  accounted for 97.6% of the year to date revenues as compared to
real  estate  revenues  of $3,439,000 or 96.9% for the same period in 1996.
Real estate revenues are comprised of rental income from  Exchange Building


(commercial office space) rentals and other lease income from the rental of
vacant  land  and certain structures (27.7% and 46.0%), Ground lease income
(15.7%  and 20.4%), volume based rental income (1.8% and 15.7%) and sale of
real  estate  and  other income (54.8% and 17.9%) for the nine months ended
July  31,  1997  and  1996, respectively.  The 1997 revenue increase is due
primarily  to  a  $1,794,000  increase  in  revenues  from the sale of real
estate,  offset  to  a  certain  extent  by  reductions  in  rental  income
($457,000)  and  volume  based  rental  income ($346,000).  The decrease in
rental income is due to the December 1996 loss of the largest tenant (State
of  Minnesota)  in  Canal  s South St. Paul, Minnesota Exchange Building as
well  as  the  continued consolidation of other stockyards related tenants.
The  decrease  in  volume  based  rental  income  is  the result of Canal s
September  1996  sale  of  the John Morrell property located in Sioux City,
Iowa.   The changes in percentages  in the year to year comparisons are due
primarily to the significant increase in real estate sales for fiscal 1997.

     Real  estate  revenues  for  the  three  months ended July 31, 1997 of
$798,000  accounted  for 89.8% of the third quarter revenues as compared to
real  estate  revenues of $1,051,000 or 100.0% for the same period in 1996.
Real  estate revenues are comprised of rental income from Exchange Building
(commercial office space) rentals and other lease income from the rental of
vacant  land  and certain structures (48.9% and 48.3%), Ground lease income
(28.9%  and 22.3%), volume based rental income (3.6% and 16.3%) and sale of
real  estate  and other income (18.6% and 13.1%) for the three months ended
July 31, 1997 and 1996, respectively. 

Real Estate Expenses

     Real  estate  expenses  for  the  nine  months  ended July 31, 1997 of
$2,036,000  increased by $43,000 (2.2%) from $1,993,000 for the same period
in  1996.    Real  estate  expenses  were comprised of labor, operating and
maintenance  (30.9%  and  36.8%),  depreciation and amortization (13.6% and
13.7%),  taxes  other  than  income  taxes  (10.0% and 13.6%), cost of real
estate sold (41.5% and 11.7%) and general and administrative expenses (4.0%
and  23.2%) for the nine months ended July 31, 1997 and 1996, respectively.
The  1997 increase in real estate expenses is due primarily to the $613,000
increase  in  cost  of  real estate sales offset by a $400,000 reduction in
provision  for litigation settlement.  The percentage variations in year to
year  comparison  is also due primarily to the increase in the cost of real
estate sold for fiscal 1997.  
                                     18



     Real  estate  expenses  for  the  three  months ended July 31, 1997 of
$414,000 decreased by $518,000 (55.6%) from $933,000 for the same period in
1996.    Real  estate  expenses  were  comprised  of  labor,  operating and
maintenance  (46.0%  and  26.9%),  depreciation and amortization (22.3% and
9.7%),  taxes other than income taxes (13.0% and 9.7%), cost of real estate
sold  (11.9%  and  7.8%)  and general and administrative expenses (6.8% and
45.9%)  for  the  three  months ended July 31, 1997 and 1996, respectively.
Included  in  the  1996  general  and administrative expenses is a $400,000
provision for litigation settlement.


Art Operations

       Management estimates it may take two to five years to dispose of its
current  art  inventory.    The  Company  s  ability  to dispose of its art
inventory  is  dependent  at least in part, on general economic conditions,


including  supply, demand, international monetary conditions and inflation.
Additionally,   the  art  market  itself  is  a  very  competitive  market.
Accordingly,  there  can  be  no assurance that Canal will be successful in
disposing of its art inventory within the time frame discussed above. 

     Canal  has  its  art  inventory  appraised by an independent appraiser
annually.    The  fiscal  1996  appraisal  covered approximately 66% 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  34%  of  the inventory was estimated by management based in
part  on  operating  history  and in part on the results of the independent
appraisals  done.    In fiscal 1996 Canal recognized a $1,500,000 valuation
allowance  against  its  art inventory, thereby, increasing the total value
allowance  to  $2,500,000 as of October 31, 1996 compared to $1,000,000 and
$500,000  at  October 31, 1995 and 1994, respectively.  These estimates are
based  in part on the Company s history of losses sustained on art sales in
the current and previous years.

     The  valuation  allowance represents management s best estimate of the
loss that will be incurred by the Company in the normal course of business.
The  estimate  is  predicated  on past history and the information that was
available  at  the  time  that the financial statements were prepared.  The
provision  contemplates  the  loss  that  could result if the level of sale
anticipated was achieved. 

     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 price at which pieces are consigned is usually in line with
appraisals  and  above  the  cost  of  the piece.  The amount classified as
current 

                                     19




represents  management s best estimate of the amount of inventory that will
be  sold  in this market.  Management believes that the provision discussed
above  has  effectively  reduced  inventory to its estimated net realizable
value.  The Company will continually monitor the market for its product and
will make adjustments to the value of its art inventory as such adjustments
become necessary.

     The Company s plan to sell inventory at auction is contemplated in the
normal  course  of  business.   Auction in this context is one of the usual
channels  used  by  the  Company  for  disposal  of its art inventory.  The
proceeds 
from  these  sales  are  used  to reduce the Company s outstanding debt and
finance  current  operations.   If these sales are not made the Company has
alternate  means of raising cash such as sales of investments, sale of real
estate,  raising  of new capital and further rescheduling of debt.  Some of
these  measures  were  successfully implemented in fiscal 1996.  Because of
t h e    available  alternatives,  the  Company  does  not  anticipate  any
extraordinary losses associated with the art inventory in fiscal 1997.


Art Revenues

     Art  revenues  for  the  nine  months  ended July 31, 1997 of $111,000
decreased  $2,000  or  1.8% from $109,000 for the same period in 1996.  Art
revenues  are  comprised  of  proceeds  from  the  sale  of antiquities and
contemporary  art  (97.3%  and 100.0%) and commission income on sale of art
owned  by  third  parties  (2.7% and 0.0%) for the nine month periods ended
July  31,  1997  and  1996,  respectively.  The Company s art inventory was
reduced through sales by $375,000 in the first nine months of fiscal 1997.

     Art  revenues  for  the  three  months  ended July 31, 1997 of $91,000
increased  $91,000  or  100.0% as compared to the same period in 1996.  Art
revenues  are  comprised  of  proceeds  from  the  sale  of antiquities and
contemporary art (100.0% and 0.0%) and commission income on the sale of art
owned  by  third  parties (0.0% and 0.0%) for the three month periods ended
July 31, 1997 and 1996, respectively.


Art Expenses

     Art  expenses  for  the  nine  months  ended July 31, 1997 of $409,000
increased  by  $145,000  (55.0%) from $264,000 for the same period in 1996.
Art  expenses (excluding valuation allowances) consisted of the cost of art
sold  (92.7%  and  86.0%)  and selling, general and administrative expenses
(7.3%  and  14.0%) for the nine month periods ended July 31, 1997 and 1996,
respectively. 


                                     20



     Art  expenses  for  the  three  months ended July 31, 1997 of $362,000
increased  by  $350,000  from  $12,000  for  the  same period in 1996.  Art
expenses (excluding valuation allowances) consisted of the cost of art sold
(97.4% and 0.0%) and selling, general and administrative expenses (2.6% and
100.0%)  for  the  three  month  periods  ended  July  31,  1997  and 1996,
respectively.


General and Administrative

     General and administrative expenses for the nine months ended July 31,
1997 of $917,000 decreased $32,000 (3.4%) from $949,000 for the same period
in  1996.   The major components of general and administrative expenses are
officers  salaries  (35.3%  and  34.1%),  rent  (9.5%  and 9.7%), legal and
professional fees (10.3% and 10.0%), insurance (11.8% and 11.2%) and office
salaries  (10.6  and  10.7%) for the nine month periods ended July 31, 1997
and  1996,  respectively.    The  percentage  changes  in  the year to year
comparisons  are  due  primarily  to  the aggregate decrease in general and
administrative expenses in fiscal 1997.

     General  and  administrative  expenses for the three months ended July
31,  1997  of  $297,000 decreased $15,000 (4.8%) from $312,000 for the same
period  in  1996.    The  major  components  of  general and administrative
expenses  are  officers  salaries (36.3% and 34.6%), rent (8.8% and 10.4%),
legal  and professional fees (10.6% and 10.4%), insurance (12.1% and 11.3%)
and  office  salaries  (10.1%  and 10.9%) for the three month periods ended
July 31, 1997 and 1996, respectively. 


Gain (loss) on Mark-to-Market of Investments

     Canal recognized gains of $322,000 and $497,000 for the nine and three
month  periods  ended July 31, 1997, respectively, on the mark-to-market of
its investments.  There was no similar activity recorded in fiscal 1996.


Interest and Other Income

     Interest  and  other  income  for  the nine months ended July 31, 1997
increased  to  $80,000  from $10,000 for the same period in 1996.  The 1997
results  included  a  $75,000  reversal  of an amount previously accrued to
settle  certain litigation related to Canal s 1988 sale of property located
in Portland, Oregon.

     Interest  and  other  income of $2,000 for the three months ended July
31, 1997 approximated the amount for the same period in 1996.


                                     21





Interest Expense

     Interest  expense  for  the  nine months ended July 31, 1997 decreased
37.4%  to  $737,000  as compared to $1,178,000 for the same period in 1996.
The 1997 decrease is due primarily to a $4.8 million reduction in aggregate
debt  outstanding  at July 31, 1997 as compared to the same period in 1996.
For  the  most  part interest rates on Canal s debt have remained unchanged
for the past 12 months.

     Interest  expense  for  the three months ended July 31, 1997 decreased
46.4% to $212,000 as compared to $395,000 for the same period in 1996.









                                     22



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  six  of  the  last eight years, has a working capital
deficit  at  July 31, 1997 of approximately $3.4 million and is involved in
various litigations.  A reserve has been provided in the amount of $450,000
associated  with  the  litigation  in  Minnesota.    However, the financial
statements  do  not  include  any  adjustments  that  might result from the
resolution  of  these  other  uncertainties.  Furthermore, 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  May 22, 1995 Canal completed the sale of $20 million face value of
Variable  Rate  Mortgage Notes, due May 15, 1993.  Canal has extended these
notes to May 15, 1998 under essentially the same terms and conditions.  The
notes carry interest at the highest of four variable rates, determined on a
quarterly  basis.    The new agreement, 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 form the sale of
certain assets; and requires the accrual of additional interest (to be paid
at  maturity) of two, three and four percent per annum for the fiscal years
commencing May 15, 1995, 1996 and 1996, respectively.  In fiscal 1996, this
agreement  was  amended  to  provide  for the forgiveness of all additional
interest  accrued in the event that the Company meets on a timely basis all
of  its  obligations  under  the  Note,  including the payment of all other
principal   and  accrued  interest  on  or  before  May  15,  1998.      In
consideration  for  the  new  agreement,  Canal  agreed to pay a fee to the
noteholders  of  2% of the principal amount outstanding as of May 15, 1995.
At  July 31, 1997 the balance due under these notes was $2,655,000 which is
classified as a current liability.

     On  September 20, 1995, the Company issued $1,032,000 of variable rate
mortgage  notes  due September 15, 1998, the proceeds of which were used to
repay  in  full  the  Company s secured credit line and a $650,000 note the
Company  issued  in  1993.    The  purchasers  of  these  notes included an
investment  partnership  controlled  by  the  Company  s  Chairman  and the
Company  s  Chief  Executive  Officer and members of his family.  The notes
issued  have  essentially  the  same  terms  and  conditions  as  the notes
discussed  above.    These  notes, among other things, prohibits Canal from
becoming an investment 
company as defined by the Investment Company Act of 1940; requires Canal to


                                     23



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 requires the accrual of
additional  interest (to be paid at maturity) of two, three or four percent
per  annum  for  the  fiscal  years commencing September 15, 1995, 1996 and
1997,  respectively. At July 31, 1997 the balance due under these notes was
$710,000 which is classified as a long term liability.
     
     Cash  and  cash  equivalents  of  a  negative $36,000 at July 31, 1997
decreased  $47,000  from  $11,000  at  October  31, 1996.  Net cash used by
operations  in  fiscal  1997 was $1,085,000.  Substantially all of the 1997
net  proceeds  from  the sale of real estate of $2,407,000 and the proceeds
from  the  sale  of art of $110,000 was used to reduce outstanding debt and
accrued expenses.

     During  fiscal  1997 Canal reduced its variable rate mortgage notes by
$1,305,000  and  other  long-term  debt  by  $345,000  for  a net 1997 debt
reduction  of  $1,650,000.  This was offset by a transfer to long-term debt
from accounts payable and accrued expenses in the amount of $325,000.
     
     At  July  31,  1997 the Company s current liabilities exceeded current
assets  by $3.4 million, an increase of $2.0 million from October 31, 1996.
The  1997  increase  is  due primarily to the reclassification to a current
liability  of  the  variable  rate  mortgage  notes due May 15, 1998 in the
amount  of  $1.7  million.     The only required principal repayments under
Canal  s  debt  agreements for fiscal 1997 will be from the proceeds of the
sale  of  certain assets (if any) and approximately $0.1 million on various
fixed mortgages.

     The  Company  leases  139  acres  of  land  (at  five  locations) to a
stockyard  operator.    This  lease  represents  approximately  25%  of the
Company  s  annual  revenues.    The  lessee  under  the Lease is currently
experiencing  financial  difficulties related primarily to a cattle feeding
and  financing  business  the  lessee entered into after purchasing Canal s
stockyard  operations.  While the payments under the Lease are current, the
lessee  was  in default under the terms of certain other leases it has with
the  Company  for  office  space  at  various locations.  The cross default
provisions of these leases puts the 
lessee in technical default of the Lease. The Company has reached agreement
with  the  stockyard operator for repayment of all arrears over the balance
of the lease term.  Currently, all payments due under the revised agreement
have been made by the stockyard operator.

     Management  believes  that the 1997 cash flow from operations combined
with  the proceeds from the sales of real estate and art will be sufficient
to support its ongoing operations.



                                     24
                                      

















                                  PART II

                             OTHER INFORMATION
























                                     25




Item 1:        Legal Proceedings:
               
               See Item 3 of Canal s October 31, 1996 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.





                                      


















                                      
                                     26


                                 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




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


Date: September 12, 1997





















                                     27