---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q/A

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

For the quarterly period ended April 30, 2011

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

For the transition period from __________to __________

002-96666(Commission File Number)

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

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

4 Morris StreetPort Jefferson Station, New York
11776United States of America(Address of principal
executive offices)

(631) 234-0140(Registrant's telephone number,
including area code)

N/A(Former name, address and former fiscal year,
if changed since last report)

Indicate by check mark whether the issuer (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 [  
]                                         
No [X]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).

Yes [   
]                                        
No [   ]

Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

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

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

Yes [  
]                                         
No [X]

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

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

---

EXPLANATORY NOTE

The purpose of this Quarterly Report on Form 10-Q for the period ended April 30, 2011 (the “10-Q”), is to provide financial statements of Canal Capital Corporation (the “Company”) that have been reviewed by the
Company’s independent public accounting firm that were not provided by the Company in its original filing of the 10-Q on June 15, 2010. Where indicated, the financial data presented in the 10-Q is as at April 30, 2011, however, the other
disclosures have been updated to reflect the Company’s operations as at the date of this filing.

2

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CANAL CAPITAL CORPORATION

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

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

PART II  OTHER INFORMATION

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

3

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PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Balance Sheets (Unaudited) 
      April 30, 2011 and October 31, 2010 5
    5Consolidated Statements of Operations and
      Comprehensive Income (Loss) (Unaudited) for the Six and Three Month Periods
      ended April 30, 2011 and 2010 7
    7Consolidated Statements of Cash Flows
      (Unaudited) for the Six Month Periods ended April 30, 2011 and 2010 11
    11Notes to Unaudited Consolidated Financial
      Statements 13
    13


4

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CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED
BALANCE SHEETSAPRIL 30, 2011 (UNAUDITED) AND OCTOBER 31, 2010

|                                                                                                                                                                 |   | APRIL 30, |  |   | OCTOBER 31, | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------- |  | - | ----------- | 
|                                                                                                                                                                 |   | 2011      |  |   | 2010        | 
|ASSETS:                                                                                                                                                          |   |           |  |   |             | 
|CURRENT ASSETS:                                                                                                                                                  |   |           |  |   |             | 
|CASH AND CASH
      EQUIVALENTS                                                                                                                                  | $ | 176,217   |  | $ | 510,361     | 
|RESTRICTED CASH  TRANSIT
      INSURANCE                                                                                                                        |   | 70,652    |  |   | 26,000      | 
|ACCOUNTS RECEIVABLE                                                                                                                                              |   | 146,830   |  |   | 163,879     | 
|STOCKYARDS INVENTORY                                                                                                                                             |   | 23,139    |  |   | 14,608      | 
|PREPAID EXPENSES                                                                                                                                                 |   | 52,316    |  |   | 12,461      | 
|TOTAL CURRENT ASSETS                                                                                                                                             |   | 469,154   |  |   | 727,309     | 
|                                                                                                                                                                 |   |           |  |   |             | 
|                                                                                                                                                                 |   |           |  |   |             | 
|NON-CURRENT ASSETS:                                                                                                                                              |   |           |  |   |             | 
|PROPERTY
      ON OPERATING LEASES, NET OF ACCUMULATED DEPRECIATION OF $483,499 AND
      $472,399 AT APRIL 30, 2011 AND OCTOBER 31, 2010, RESPECTIVELY          |   | 1,672,807 |  |   | 1,676,407   | 
|                                                                                                                                                                 |   |           |  |   |             | 
|PROPERTY
      USED IN STOCKYARD OPERATIONS, NET OF ACCUMULATED DEPRECIATION OF $202,057
      AND $191,857 AT APRIL 30, 2011 AND OCTOBER 31, 2010, RESPECTIVELY |   | 1,024,472 |  |   | 1,034,672   | 
|                                                                                                                                                                 |   |           |  |   |             | 
|PROPERTY HELD FOR DEVELOPMENT OR
      RESALE                                                                                                                    |   | 52,250    |  |   | 52,250      | 
|                                                                                                                                                                 |   |           |  |   |             | 
|OTHER ASSETS:                                                                                                                                                    |   |           |  |   |             | 
|RESTRICTED CASH 
      LETTER OF CREDIT                                                                                                                         |   | 140,000   |  |   | 140,000     | 
|ART INVENTORY                                                                                                                                                    |   | 100,000   |  |   | 100,000     | 
|                                                                                                                                                                 |   | 240,000   |  |   | 240,000     | 
|                                                                                                                                                                 | $ | 3,458,683 |  | $ | 3,730,638   | 

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.

5

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CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED
BALANCE SHEETSAPRIL 30, 2010 (UNAUDITED) AND OCTOBER 31, 2009

|                                                                                                                                                                                                                                                                                                                 |   | APRIL 30,   |   |   | OCTOBER 31, |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                                                                                                                                                                                                                                                                 |   | 2010        |   |   | 2009        |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|LIABILITIES &
      STOCKHOLDERS' EQUITY:                                                                                                                                                                                                                                                                        |   |             |   |   |             |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|CURRENT LIABILITIES:                                                                                                                                                                                                                                                                                             |   |             |   |   |             |  
|ACCOUNTS PAYABLE AND ACCRUED
      EXPENSES                                                                                                                                                                                                                                                                      | $ | 63,392      |   | $ | 156,827     |  
|LINE OF CREDIT 
      ORDER BUYING                                                                                                                                                                                                                                                                              |   | 97,000      |   |   | 154,000     |  
|TRANSIT INSURANCE                                                                                                                                                                                                                                                                                                |   | 70,652      |   |   | 26,000      |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|TOTAL
      CURRENT LIABILITIES                                                                                                                                                                                                                                                                                  |   | 231,044     |   |   | 336,827     |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|NON-CURRENT LIABILITIES:                                                                                                                                                                                                                                                                                         |   |             |   |   |             |  
|LONG-TERM DEBT, RELATED PARTY                                                                                                                                                                                                                                                                                    |   | 847,000     |   |   | 847,000     |  
|LONG-TERM PENSION
      LIABILITY                                                                                                                                                                                                                                                                                |   | 723,206     |   |   | 869,676     |  
|SALARIES AND INTEREST PAYABLE 
      OFFICERS                                                                                                                                                                                                                                                                   |   | 229,350     |   |   | 175,000     |  
|REAL ESTATE TAXES
      PAYABLE                                                                                                                                                                                                                                                                                  |   | 45,432      |   |   | 44,543      |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|TOTAL NON-CURRENT LIABILITIES                                                                                                                                                                                                                                                                                    |   | 1,844,988   |   |   | 1,936,219   |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                    |   |             |   |   |             |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|STOCKHOLDERS' EQUITY:                                                                                                                                                                                                                                                                                            |   |             |   |   |             |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|PREFERRED STOCK, $0.01 PAR VALUE:
      10,000,000 SHARES AUTHORIZED; 9,102,655 SHARES ISSUED AND OUTSTANDING
      AT APRIL 30, 2011 AND OCTOBER 31, 2010, RESPECTIVELY AND AGGREGATE
      LIQUIDATION PREFERENCE OF $10 PER SHARE FOR $ 91,026,550 AT APRIL 30, 2011
      AND OCTOBER 31, 2010, RESPECTIVELY |   | 91,027      |   |   | 91,027      |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|COMMON STOCK, $0.01 PAR VALUE: 10,000,000
      SHARES AUTHORIZED; 5,313,794 SHARES ISSUED AND 4,326,929 SHARES OUT-
      STANDING AT APRIL 30, 2011 AND OCTOBER 31, 2010, RESPECTIVELY                                                                                                                         |   | 53,138      |   |   | 53,138      |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|ADDITIONAL PAID-IN
      CAPITAL                                                                                                                                                                                                                                                                                 |   | 25,526,721  |   |   | 25,526,721  |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|ACCUMULATED DEFICIT                                                                                                                                                                                                                                                                                              |   | (11,444,317 | ) |   | (11,315,376 | )
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|986,865 SHARES OF COMMON STOCK HELD IN
      TREASURY, AT COST                                                                                                                                                                                                                                                   |   | (11,003,545 | ) |   | (11,003,545 | )
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|COMPREHENSIVE INCOME:                                                                                                                                                                                                                                                                                            |   |             |   |   |             |  
|PENSION VALUATION RESERVE                                                                                                                                                                                                                                                                                        |   | (1,840,373  | ) |   | (1,894,373  | )
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|                                                                                                                                                                                                                                                                                                                 |   | 1,382,651   |   |   | 1,457,592_  |  
|                                                                                                                                                                                                                                                                                                                 |   |             |   |   |             |  
|                                                                                                                                                                                                                                                                                                                 | $ | 3,458,683   |   | $ | 3,730,638   |  

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.

6

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CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)FOR THE SIX
MONTHS ENDED APRIL 30, 2011 AND 2010 (UNAUDITED)

|                                         |   | 2011      |   |   | 2010      |  
|---------------------------------------- | - | --------- | - | - | --------- | -
|                                         |   |           |   |   |           |  
|REAL ESTATE OPERATIONS:                  |   |           |   |   |           |  
|                                         |   |           |   |   |           |  
|REAL ESTATE REVENUES:                    |   |           |   |   |           |  
|SALE
      OF REAL ESTATE                |   | 0         |   |   | 0         |  
|OUTSIDE REAL ESTATE RENT                 |   | 136,488   |   |   | 139,814   |  
|EXCHANGE BUILDING RENTAL INCOME          |   | 0         |   |   | 7,279     |  
|                                         |   | 136,488   |   |   | 147,093   |  
|                                         |   |           |   |   |           |  
|REAL ESTATE EXPENSES:                    |   |           |   |   |           |  
|COST
      OF REAL ESTATE SOLD           |   | 0         |   |   | 0         |  
|LABOR, OPERATING AND MAINTENANCE         |   | 4,534     |   |   | 13,578    |  
|DEPRECIATION AND AMORTIZATION            |   | 11,100    |   |   | 11,100    |  
|TAXES OTHER THAN INCOME TAXES            |   | 7,500     |   |   | 11,000    |  
|GENERAL AND ADMINISTRATIVE               |   | 5,100     |   |   | 9,616     |  
|                                         |   | 28,234    |   |   | 45,294    |  
|                                         |   |           |   |   |           |  
|INCOME FROM REAL ESTATE
      OPERATIONS |   | 108,254   |   |   | 101,799   |  
|                                         |   |           |   |   |           |  
|                                         |   |           |   |   |           |  
|STOCKYARD OPERATIONS:                    |   |           |   |   |           |  
|                                         |   |           |   |   |           |  
|STOCKYARD REVENUES:                      |   |           |   |   |           |  
|YARD HANDLING AND AUCTION                | $ | 1,039,421 |   | $ | 1,076,161 |  
|FEED
      AND BEDDING INCOME            |   | 67,063    |   |   | 58,019    |  
|RENTAL & OTHER INCOME                    |   | 65,158    |   |   | 180,341   |  
|                                         |   | 1,171,642 |   |   | 1,314,521 |  
|                                         |   |           |   |   |           |  
|STOCKYARD EXPENSES:                      |   |           |   |   |           |  
|LABOR AND RELATED COSTS                  |   | 411,153   |   |   | 464,207   |  
|OTHER OPERATING AND MAINTENANCE          |   | 239,682   |   |   | 274,881   |  
|FEED AND BEDDING EXPENSE                 |   | 50,114    |   |   | 50,299    |  
|DEPRECIATION AND AMORTIZATION            |   | 10,200    |   |   | 6,735     |  
|TAXES OTHER THAN INCOME TAXES            |   | 40,396    |   |   | 80,386    |  
|GENERAL AND ADMINISTRATIVE               |   | 201,184   |   |   | 189,482   |  
|                                         |   | 952,729   |   |   | 1,065,990 |  
|                                         |   |           |   |   |           |  
|INCOME FROM STOCKYARD
      OPERATIONS   |   | 218,913   |   |   | 248,531   |  
|                                         |   |           |   |   |           |  
|                                         |   |           |   |   |           |  
|                                         |   |           |   |   |           |  
|GENERAL AND ADMINISTRATIVE
      EXPENSE |   | (414,027  | ) |   | (412,854  | )
|                                         |   |           |   |   |           |  
|                                         |   |           |   |   |           |  
|(LOSS) INCOME FROM OPERATIONS            |   | (86,860   | ) |   | (62,524   | )

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.

7

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CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)FOR THE SIX
MONTHS ENDED APRIL 30, 2011 AND 2010 Continued ...

|                                           |   | 2011      |   |   | 2010      |  
|------------------------------------------ | - | --------- | - | - | --------- | -
|OTHER (EXPENSE) INCOME:                    |   |           |   |   |           |  
|INTEREST & OTHER INCOME                    |   | 269       |   |   | 230       |  
|INTEREST EXPENSE                           |   | (42,350   | ) |   | (54,879   | )
|ART SALES AND OPERATIONS                   |   | 0         |   |   | 0         |  
|                                           |   | (42,081   | ) |   | (54,649   | )
|                                           |   |           |   |   |           |  
|(LOSS) INCOME BEFORE PROVISION FOR         |   |           |   |   |           |  
|INCOME TAXES                               |   | (128,941  | ) |   | (117,173  | )
|PROVISION FOR INCOME TAXES                 |   | 0         |   |   | 0         |  
|NET (LOSS) INCOME                          |   | (128,941  | ) |   | (117,173  | )
|                                           |   |           |   |   |           |  
|OTHER COMPREHENSIVE (LOSS) INCOME:         |   |           |   |   |           |  
|MINIMUM PENSION
      LIABILITY ADJUSTMENT |   | 54,000    |   |   | 54,000    |  
|COMPREHENSIVE (LOSS) INCOME                | $ | (74,941   | ) | $ | (63,173   | )
|                                           |   |           |   |   |           |  
|NET (LOSS) INCOME PER COMMON SHARE         |   |           |   |   |           |  
|BASIC AND DILUTED                          | $ | (0.03     | ) | $ | (0.03     | )
|                                           |   |           |   |   |           |  
|AVERAGE SHARES OUTSTANDING - BASIC         |   |           |   |   |           |  
|AND DILUTED                                |   | 4,326,929 |   |   | 4,326,929 |  

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.

8

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CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)FOR THE THREE
MONTHS ENDED APRIL 30, 2011 AND 2010 (UNAUDITED)

|                                         |   | 2011     |   |   | 2010     |  
|---------------------------------------- | - | -------- | - | - | -------- | -
|                                         |   |          |   |   |          |  
|REAL ESTATE OPERATIONS:                  |   |          |   |   |          |  
|                                         |   |          |   |   |          |  
|REAL ESTATE REVENUES:                    |   |          |   |   |          |  
|SALE
      OF REAL ESTATE                |   | 0        |   |   | 0        |  
|OUTSIDE REAL ESTATE RENT                 |   | 66,244   |   |   | 67,270   |  
|EXCHANGE BUILDING RENTAL INCOME          |   | 0        |   |   | 3,593    |  
|                                         |   | 66,244   |   |   | 70,863   |  
|                                         |   |          |   |   |          |  
|REAL ESTATE EXPENSES:                    |   |          |   |   |          |  
|COST
      OF REAL ESTATE SOLD           |   | 0        |   |   | 0        |  
|LABOR, OPERATING AND MAINTENANCE         |   | 2,204    |   |   | 7,122    |  
|DEPRECIATION AND AMORTIZATION            |   | 5,550    |   |   | 5,550    |  
|TAXES OTHER THAN INCOME TAXES            |   | 3,750    |   |   | 5,550    |  
|GENERAL AND ADMINISTRATIVE               |   | 2,550    |   |   | 4,816    |  
|                                         |   | 14,054   |   |   | 23,038   |  
|                                         |   |          |   |   |          |  
|INCOME FROM REAL ESTATE
      OPERATIONS |   | 52,190   |   |   | 47,825   |  
|                                         |   |          |   |   |          |  
|                                         |   |          |   |   |          |  
|STOCKYARD OPERATIONS:                    |   |          |   |   |          |  
|                                         |   |          |   |   |          |  
|STOCKYARD REVENUES:                      |   |          |   |   |          |  
|YARD HANDLING AND AUCTION                | $ | 533,348  |   | $ | 581,738  |  
|FEED
      AND BEDDING INCOME            |   | 27,165   |   |   | 30,319   |  
|RENTAL & OTHER INCOME                    |   | 32,312   |   |   | 44,083   |  
|                                         |   | 592,825  |   |   | 656,140  |  
|                                         |   |          |   |   |          |  
|STOCKYARD EXPENSES:                      |   |          |   |   |          |  
|LABOR AND RELATED COSTS                  |   | 205,508  |   |   | 199,464  |  
|OTHER OPERATING AND MAINTENANCE          |   | 132,516  |   |   | 134,824  |  
|FEED AND BEDDING EXPENSE                 |   | 21,308   |   |   | 25,450   |  
|DEPRECIATION AND AMORTIZATION            |   | 5,100    |   |   | 3,367    |  
|TAXES OTHER THAN INCOME TAXES            |   | 20,181   |   |   | 40,432   |  
|GENERAL AND ADMINISTRATIVE               |   | 97,583   |   |   | 111,486  |  
|                                         |   | 482,196  |   |   | 515,023  |  
|                                         |   |          |   |   |          |  
|INCOME FROM STOCKYARD
      OPERATIONS   |   | 110,629  |   |   | 141,117  |  
|                                         |   |          |   |   |          |  
|                                         |   |          |   |   |          |  
|                                         |   |          |   |   |          |  
|GENERAL AND ADMINISTRATIVE
      EXPENSE |   | (208,167 | ) |   | (207,908 | )
|                                         |   |          |   |   |          |  
|                                         |   |          |   |   |          |  
|(LOSS) INCOME FROM OPERATIONS            |   | (45,348  | ) |   | (18,966  | )

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.

9

---

CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)FOR THE THREE
MONTHS ENDED APRIL 30, 2011 AND 2010 Continued ...

|                                           |   | 2011      |   |   | 2010      |  
|------------------------------------------ | - | --------- | - | - | --------- | -
|OTHER (EXPENSE) INCOME:                    |   |           |   |   |           |  
|INTEREST & OTHER
      INCOME              |   | 52        |   |   | 104       |  
|INTEREST
      EXPENSE                     |   | (21,175   | ) |   | (30,049   | )
|ART SALES AND OPERATIONS                   |   | 0         |   |   | 0         |  
|                                           |   | (21,123   | ) |   | (29,945   | )
|                                           |   |           |   |   |           |  
|(LOSS) INCOME BEFORE
      PROVISION FOR   |   |           |   |   |           |  
|INCOME TAXES                               |   | (66,471   | ) |   | (48,911   | )
|PROVISION FOR INCOME TAXES                 |   | 0         |   |   | 0         |  
|NET (LOSS) INCOME                          |   | (66,471   | ) |   | (48,911   | )
|                                           |   |           |   |   |           |  
|OTHER COMPREHENSIVE (LOSS) INCOME:         |   |           |   |   |           |  
|MINIMUM
      PENSION LIABILITY ADJUSTMENT |   | 27,000    |   |   | 27,000_   |  
|COMPREHENSIVE (LOSS) INCOME                | $ | (39,471   | ) | $ | (21,911   | )
|                                           |   |           |   |   |           |  
|NET (LOSS) INCOME PER COMMON SHARE         |   |           |   |   |           |  
|BASIC AND
      DILUTED                    | $ | (0.02     | ) | $ | (0.01     | )
|                                           |   |           |   |   |           |  
|AVERAGE SHARES OUTSTANDING -
      BASIC   |   |           |   |   |           |  
|AND DILUTED                                |   | 4,326,929 |   |   | 4,326,929 |  

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.

10

---

CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED APRIL 30, 2011 AND
2010(UNAUDITED)

|                                                                                                |   | 2011     |   |   | 2010     |  
|----------------------------------------------------------------------------------------------- | - | -------- | - | - | -------- | -
|CASH FLOWS FROM OPERATING
      ACTIVITIES:                                                     |   |          |   |   |          |  
|NET (LOSS)                                                                                      | $ | (128,941 | ) | $ | (117,173 | )
|ADJUSTMENTS TO RECONCILE NET
      LOSS TO NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES: |   |          |   |   |          |  
|DEPRECIATION AND AMORTIZATION                                                                   |   | 21,300   |   |   | 17,835   |  
|GAIN ON SALES OF REAL ESTATE                                                                    |   | 0        |   |   | 0        |  
|MINIMUM
      PENSION LIABILITY ADJUSTMENT                                                      |   | 54,000   |   |   | 54,000   |  
|                                                                                                |   |          |   |   |          |  
|DECREASE (INCREASE) IN ASSETS                                                                   |   |          |   |   |          |  
|ACCOUNTS RECEIVABLE                                                                             |   | 17,049   |   |   | (186,217 | )
|STOCKYARDS
      INVENTORY                                                                      |   | (8,531   | ) |   | (5,842   | )
|PREPAID EXPENSES                                                                                |   | (39,855  | ) |   | (24,536  | )
|RESTRICTED
      CASH  LETTER OF CREDIT                                                        |   | 0        |   |   | (10,000  | )
|RESTRICTED CASH  TRANSIT INSURANCE                                                             |   | (44,652  | ) |   | (19,550  | )
|                                                                                                |   |          |   |   |          |  
|INCREASE (DECREASE) IN
      LIABILITIES:                                                       |   |          |   |   |          |  
|ACCOUNTS
      PAYABLE AND ACCRUED EXPENSES                                                     |   | (93,435  | ) |   | (69,755  | )
|LINE OF CREDIT  ORDER BUYING                                                                   |   | (57,000  | ) |   | 125,000  |  
|PENSION
      PLAN PAYABLE                                                                      |   | (146,470 | ) |   | 0        |  
|SALARIES AND INTEREST PAYABLE - OFFICERS                                                        |   | 54,350   |   |   | 223,700  |  
|REAL ESTATE
      TAXES PAYABLE                                                                 |   | 889      |   |   | (43,305  | )
|TRANSIT INSURANCE                                                                               |   | 44,652   |   |   | 19,550   |  
|TOTAL ADJUSTMENTS                                                                               |   | (197,703 | ) |   | 80,880   |  
|NET CASH PROVIDED BY (USED
      IN) OPERATING ACTIVITIES                                       |   | (326,644 | ) |   | (36,293  | )

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.

11

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CANAL CAPITAL CORPORATION & SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS ENDED APRIL 30, 2011 AND
2010Continued ...

|                                                             |   | 2011            |   |   | 2010     |  
|------------------------------------------------------------ | - | --------------- | - | - | -------- | -
|                                                             |   |                 |   |   |          |  
|CASH FLOWS FROM INVESTING
      ACTIVITIES:                  |   |                 |   |   |          |  
|                                                             |   |                 |   |   |          |  
|PROCEEDS
      FROM SALES OF REAL ESTATE                     |   | 0               |   |   | 0        |  
|COSTS RELATING TO SALES
      OF REAL ESTATE                 |   | 0               |   |   | 0        |  
|CAPITAL
      EXPENDITURES                                   |   | (7,500          | ) |   | (340,000 | )
|                                                             |   |                 |   |   |          |  
|NET CASH PROVIDED BY
      INVESTING ACTIVITIES              |   | (7,500          | ) |   | (340,000 | )
|                                                             |   |                 |   |   |          |  
|                                                             |   |                 |   |   |          |  
|CASH FLOWS PROVIDED BY (USED) IN FINANCING
      ACTIVITIES: |   |                 |   |   |          |  
|                                                             |   |                 |   |   |          |  
|PROCEEDS
      FROM LONG-TERM DEBT OBLIGATION                |   | 0               |   |   | 340,000  |  
|REPAYMENT OF LONG-TERM DEBT OBLIGATION                       |   | 0               |   |   | 0        |  
|                                                             |   |                 |   |   |          |  
|NET CASH PROVIDED BY (USED)
      IN FINANCING ACTIVITIES    |   | 0               |   |   | 340,000  |  
|                                                             |   |                 |   |   |          |  
|                                                             |   |                 |   |   |          |  
|NET (DECREASE) INCREASE IN CASH AND CASH
      EQUIVALENTS   |   | (334,144        | ) |   | (36,293  | )
|                                                             |   |                 |   |   |          |  
|CASH AND CASH EQUIVALENTS AT BEGN OF YEAR                    |   | 510,361         |   |   | 154,624  |  
|                                                             |   |                 |   |   |          |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                     | $ | 176,217         |   | $ | 118,331  |  
|                                                             |   |                 |   |   |          |  
|                                                             |   |                 |   |   |          |  
|                                                             |   | APRIL
      30, |  
|                                                             |   | 2011            |   |   | 2010     |  
|SUPPLEMENTAL DISCLOSURES OF
      CASH FLOW                  |   |                 |   |   |          |  
|INFORMATION:                                                 |   |                 |   |   |          |  
|                                                             |   |                 |   |   |          |  
|CASH PAID DURING THE YEAR FOR:                               |   |                 |   |   |          |  
|                                                             |   |                 |   |   |          |  
|INTEREST                                                     | $ | 42,350          |   | $ | 54,879   |  
|INCOME
      TAXES                                           | $ | 0               |   | $ | 0        |  

SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.

12

---

CANAL CAPITAL CORPORATION AND SUBSIDIARIES 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.                 DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

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

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

13

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

Real Estate Operations - Canal's real estate properties are located in Sioux City, Iowa, South St Paul, Minnesota, St Joseph, Missouri and Omaha, Nebraska. The properties consist, for the most part, of land and structures leased to third parties
(rail car repair shops, lumber yards and various other commercial and retail businesses) as well as vacant land available for development or resale. Its principal real estate operating revenues are derived from lease income from land and structures
leased to various commercial and retail enterprises, and proceeds from the sale of real estate properties.

Stockyard Operations - Canal currently operates one central public stockyard located in St. Joseph, Missouri. Canal closed the stockyard it operated in Sioux Falls, South Dakota in December 2009 (collectively the “Stockyards”).

Sioux Falls Stockyard Closure - In December 2009, after extensive efforts to reorganize and return our Sioux Falls, South Dakota stockyard to profitability, we ceased its stockyard operations. In September 2010, we sold the entire Sioux Falls,
South Dakota property (approximately 35 acres of land and improvements) for $2.0 million, which generated a gain of $1.2 million.

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

14

---

2.         
RESTATEMENT AND RECLASSIFICATIONS

The Company has restated its previously issued Consolidated
Financial Statements to correct the recording of the gain on sale of property
and other errors. The Company has also reclassified its recording of past
preferred stock dividends as an adjustment to accumulated deficit.

The following tables summarize the corrections on each of the
affected financial statement line items for each period presented:

|                              |   | As Previously |   |   | Restatement |   |   |             |  
|----------------------------- | - | ------------- | - | - | ----------- | - | - | ----------- | -
|                              |   | Reported      |   |   | Adjusted    |   |   | As Restated |  
|                              |   |               |   |   |             |   |   |             |  
|Consolidated Balance Sheet    |   |               |   |   |             |   |   |             |  
|                              |   |               |   |   |             |   |   |             |  
|ACCOUNTS RECEIVABLE           | $ | 121,830       |   | $ | 25,000      |   | $ | 146,830     |  
|PROPERTY ON OPERATING LEASES  |   | 1,387,807     |   |   | 285,000     |   |   | 1,672,807   |  
|PROPERTY USED IN STKY. OPER.  |   | 522,472       |   |   | 502,000     |   |   | 1,024,472   |  
|                              |   |               |   |   |             |   |   |             |  
|                              |   |               |   |   |             |   |   |             |  
|ACCOUNTS PAYABLE & ACCR. EXP. |   | 130,408       |   |   | (67,016     | ) |   | 63,392      |  
|LINE OF CREDIT - ORDER BUYING |   | 0             |   |   | 97,000      |   |   | 97,000      |  
|ACCRUED PROFESSIONAL FEES     |   | 41,984        |   |   | (41,984     | ) |   | 0           |  
|PREFERRED STOCK DIV. PAYABLE  |   | 205,550       |   |   | (205,550    | ) |   | 0           |  
|INCOME TAXES PAYABLE          |   | 10,000        |   |   | (10,000     | ) |   | 0           |  
|                              |   |               |   |   |             |   |   |             |  
|ADDITIONAL PAID-IN CAPITAL    |   | 28,322,341    |   |   | (2,795,620  | ) |   | 25,526,721  |  
|ACCUMULATED DEFICIT           |   | (15,279,487   | ) |   | 3,835,170   |   |   | (11,444,317 | )

15

---

3.              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A) Earnings (Loss) Per Share -- Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common shares by the weighted average of common shares outstanding during the period. Diluted earnings (loss) per share
adjusts  basic earnings (loss) per share for the effects of convertible securities, stock options and other potentially dilutive financial instruments, only in the period in which such effect is dilutive. There were no dilutive securities in any of
the periods presented herein. The shares issuable upon the exercise of stock options are excluded from the calculation of net income (loss) per share as their effect would be antidilutive.

B) Recent Accounting Pronouncements –-  In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements” (“ASU 2010-06"). ASU 2010-06
requires reporting entities to provide information about movements of assets among Levels 1 and 2 of the three-tier fair value hierarchy established by ASC 820.  The guidance is effective for any fiscal year that begins after December 15, 2010 and
should be used for quarterly and annual filings. We do not believe that adoption of ASU 2010-06 will have a significant impact on our financial position, results of operations or cash flows.

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

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

16

---

4.               INTERIM FINANCIAL STATEMENTS

The interim consolidated financial statements included herein have been prepared by Management, in accordance with accounting principles generally accepted in the United States, and in the opinion of Management, contain all adjustments necessary to
present fairly its financial position as of April 30, 2011 and the results of its operations and its cash flows for the six month  period  ended  April 30, 2011.  All of the above referenced adjustments were  of  a  normal  recurring  nature.
Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.  These financial statements should be read in conjunction
with the consolidated financial statements for the two years ended October 31, 2010 and the notes thereto which are contained in Canal’s 2010 Annual Report on Form 10-K.  The results of operations for the period presented is not necessarily
indicative of the results to be expected for the remainder of fiscal 2011.

5.              STOCK OPTION PLAN

Under Canal's 1984 Employee and 1985 Directors Stock Option Plans, $550,000 and 264,000 shares, respectively, of Canal's common stock have been reserved for option grants. The purchase price of shares subject to each option granted, under the
Employee and Directors Plans, will not be less than 85% and 100%, respectively, of their fair market value at the date of grant.  Options granted under both plans are exercisable for 10 years from the date of grant, but no option will be exercisable
earlier than one year from the date of grant. Under the Employee Plan, stock appreciation rights may be granted in connection with stock options, either at the time of grant of the options or at any time thereafter. No stock appreciation rights have
been granted under this plan.  There were no exercisable options outstanding under either of these plans at April 30, 2011 or 2010.

6.              RESTRICTED CASH

Letter of Credit - This is a $140,000 deposit with Mercantile Bank to secure bonds required by the Packers and Stockyards Administration in relation to the St. Joseph Stockyards clearing operation. This deposit is maintained in an interest
bearing account.

Transit Insurance - Transit insurance covers livestock for the period that they are physically at the stockyards and under the care of stockyard personnel. This self insurance program is funded by a per head charge on all livestock received at the
stockyard. The restricted cash - transit insurance balances of approximately $71,000 and $26,000 at April 30, 2011 and October 31, 2010, respectively, represents the excess of per head fees charged over actual payments made for livestock
that was injured or died while at the stockyards.

17

---

7.          
RELATED PARTY DEBT

The Companys mortgage notes (originally issued in 1998) are
due May 15, 2015 and are held entirely by the Companys Chief Executive Officer.
These notes carry interest at the rate of ten percent per annum. These notes,
among other things, prohibit Canal from becoming an investment company as
defined by the Investment Company Act of 1940; require Canal to maintain minimum
net worth; restricts Canals ability to pay cash dividends or repurchase stock
and require principal prepayments to be made only out of the proceeds from the
sale of certain assets. As of April 30, 2011, the balance due under these notes
was 847,000, all of which is classified as long-term debt-related party. Canal
has incurred interest expense on these notes of approximately $42,000 and
$55,000 for the six month periods ended April 30, 2011 and 2010, respectively.

At April 30, 2011, substantially all of Canal's real
properties, the stock of certain subsidiaries, the investments and a substantial
portion of its art inventories are pledged as collateral for the following
obligations:

|                                                                    |   | Apr. 30, |  |   | October
      31, | 
|------------------------------------------------------------------- | - | -------- |  | - | ----------------- | 
|($ 000's Omitted)                                                   |   | 2011     |  |   | 2010              | 
|Variable rate mortgage notes
      due May 15, 2015 - related party | $ | 847      |  | $ | 847               | 
|Less -- current maturities                                          |   | 0        |  |   | 0                 | 
|Long-term debt                                                      | $ | 847      |  | $ | 847               | 

The Company has a line of credit with HNB Bank in the amount of
$250,000. This credit line is used in the Companys Saint Joseph stockyard order
buying operation. The outstanding balances on this line of credit are secured by
either the livestock purchased on order or the associated receivable for the
livestock that has been delivered to the purchaser.

The outstanding balances on this credit line were $97,000 and
$154,000 at April 30, 2011 and October 31, 2010, respectively.

8.            
ART INVENTORY

Antiquities art valued at $100,000 represented 100% of total
art inventory at both April 30, 2011 and October 31, 2010. The Company records a
valuation allowance against the current portion of its inventory to reduce it to
its estimated net realizable value based on the history of losses sustained on
inventory items sold in the current and previous years. As of April 30, 2011 the
valuation allowance is approximately $396,000.

18

---

9.            
INCOME TAXES

At April 30, 2011, the Company has net operating loss carry
forwards of approximately $12,200,000 that expire through 2030. For financial
statement purposes, a valuation allowance has been provided to offset the net
deferred tax assets due to the cumulative net operating losses incurred during
recent years. The valuation allowance will be reduced when and if, in the
opinion of management, significant positive evidence exists which indicates that
it is more likely than not that the Company will be able to realize its deferred
tax assets.

10.           
LEASE COMMITMENTS

Canals corporate headquarters are now located in the personal
residence of its Chief Financial Officer.

There are no operating leases that have initial or remaining
non-cancellable terms in excess of one year as of April 30, 2011. Accordingly,
Canal has no future minimum payments due over the next five years.

11.            
MINIMUM FUTURE RENTALS ON OPERATING LEASES

Minimum future rentals consist primarily of rental income from
leased land and structures, Exchange Building rents (commercial office space)
and other rental activities, all of which are accounted for as operating leases.
The estimated minimum future rentals on operating leases are $270,000, $210,000,
$110,000, $110,000 and $110,000 for fiscal years 2011, 2012, 2013, 2014 and
2015, respectively.

12.             
 PROPERTY USED IN STOCKYARD OPERATIONS

A schedule of the Companys property used in stockyard
operations at April 30, 2011 is as follows (000's omitted):

Current Year(Retirements)Historical Cost
    
    
    Additions
    
    
    
    
    
    CarryingBldgs. &
    
    
    
    
    
    Bldgs. &
    
    
    Accum.
    
    
    ValueDescription (1)
    
    Land
    
    
    Imprvmts.
    
    
    Land
    
    
    Imprvmts.
    
    
    Depr.
    
    
    04/30/1130 acres of land in St.
      Joseph, MO Acquired in 1942
    $
    902
    
    $
    325
    
    $
    0
    
    $
    0
    
    $
    (202
    )
    $
    1,025


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

19

---

13.          
PROPERTY ON OPERATING LEASES

A schedule of the Companys property on operating leases at
April 30, 2011 is as follows (000's omitted):

Current Year(RetirementsHistorical Cost
    
    
    Additions
    
    
    
    
    
    CarryingBldgs.
      &
    
    
    
    
    
    Bldgs.
      &
    
    
    Accum.
    
    
    ValueDescription (1)
    
    Land
    
    
    Imprvmts.
    
    
    Land
    
    
    Imprvmts.
    
    
    Depr.
    
    
    04/30/11New York office Leasehold
      assets
    $
    0
    
    $
    8
    
    $
    0
    
    $
    0
    
    $
    (8
    )
    $
    09 acres of land in Omaha, NE Acquired in 1976
    
    1,150
    
    
    21
    
    
    0
    
    
    8
    
    
    (19
    )
    
    1,1603 acres of land in S. St.
      Paul, MN Acquired in 1937
    
    10
    
    
    485
    
    
    0
    
    
    0
    
    
    (457
    )
    
    384 acres of land in Sioux City, IA Acquired in
      1937
    
    475
    
    
    0
    
    
    0
    
    
    0
    
    
    0
    
    
    475$
    1,635
    
    $
    514
    
    $
    0
    
    $
    8
    
    $
    (484
    )
    $
    1,673


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

14.             
PROPERTY HELD FOR DEVELOPMENT OR RESALE

A schedule of the Companys property held for development or
resale at April 30, 2011 is as follows (000's omitted):

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

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

20

---

15.              PENSION
VALUATION RESERVE

The Pension Valuation Reserve represents the excess of
additional minimum pension liability required under the provisions of Statement
of Financial Accounting Standards (SFAS) No. 87 amended by SFAS 158 over the
unrecognized prior service costs of former stockyard employees. Such excess
arose due to the decline in the market value of pension assets available for
pension benefits of former employees, which benefits were frozen at the time the
stockyard operations were sold in 1989. The additional minimum pension liability
will be expensed as actuarial computations of annual pension cost recognize the
deficiency that exists.

The components of net periodic benefit cost are as follows:

|                                   |  | Six Months |   |  | Ended   |  
|---------------------------------- |  | ---------- | - |  | ------- | -
|                                   |  | 4/30/11    |   |  | 4/30/10 |  
|                                   |  |            |   |  |         |  
|Service cost                       |  | 4,000      |   |  | 4,000   |  
|Interest cost                      |  | 52,000     |   |  | 52,000  |  
|Expected return on plan assets     |  | (56,000    | ) |  | (56,000 | )
|Amortization of prior service cost |  | 0          |   |  | 0       |  
|Recognized net actuarial loss      |  | 60,000     |   |  | 60,000  |  
|Net periodic benefit cost          |  | 60,000     |   |  | 60,000  |  

For the six months ended April 30, 2011, amounts have been
estimated, actual amounts will be based on the discount rate and assets
available at year end.

The Companys required contribution to its pension plan for
fiscal 2011 is approximately $172,000. A contribution of $147,000 has been made
to date and the Company expects to make the full required contribution before
the end of the fiscal year.

16.            
401(k) PLAN

The Company has a defined contribution 401(k) plan covering
substantially all of its full time stockyard employees. The plan provides for
employee contributions and 401(k) matching contributions of up to 2 1⁄2% of the
employees annual salary by the Company. The Company made 401(k) matching
contributions of approximately $5,000 for each of the six month periods ended
April 30, 2011 and 2010.

21

---

17. LEGAL PROCEEDINGS

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

Environmental Protection Agency

In 1989, the Company sold its 48 acre Portland, Oregon stockyard to Oregon Waste Systems, Inc.  On September 29, 2003, the United States Environmental Agency (EPA) placed a 4.2 acre portion of that property on the National Priorities List pursuant
to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), commonly known as the Superfund Act. In a letter from the EPA dated June 27, 2005 the Company, along with approximately 13 other parties, including the current
owner and operator of the site, was notified that it might be liable to perform or pay for the remediation of environmental contamination found on and around the site.

Since the receipt of the letter, the Company has been in periodic communications with the other parties who received a similar letter with respect to what action, collectively or individually, should be taken in response to the EPA assertion of
liability. The Company believes that the remediation of contamination of the site is properly the responsibility of other parties that have occupied and used it for waste recycling purposes since 1961, although under CERCLA the EPA is able to assert
joint and several liability against all parties who ever owned or operated the site or generated or transported wastes to it. The EPA investigation is in its preliminary stages and the Company intends to vigorously defend any liability for
remediation.  At April 30, 2011, the liability for remediation, if any, was not estimatable and therefore no accrual has been recorded in the financial statements.

We are currently not aware of any other legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

22

---

18.                RELATED PARTY TRANSACTIONS

At April 30, 2011, all of Canal’s Long-Term Debt is held by the company’s Chief Executive Officer. These notes which pay interest at a rate of 10% per annum and come due May 15, 2015. Canal has incurred interest expense on these notes
of approximately $42,000 and $55,000 for the six month periods ended April 30, 2011 and 2010, respectively. At various times during period the holder of these notes agrees to defer interest payments. This deferred interest liability accrues
additional interest at a rate of 10% per annum, while outstanding and is repaid as funds become available. As of April 30, 2011, the balance due under these notes was $847,000 all of which is classified as long-term debt related party.

19.                 SUBSEQUENT EVENTS

In April 2012, Canal sold 6 acres of land and the improvements thereon  located in Sioux City, Iowa to the company’s Chief Executive Officer, Michael E. Schultz for $852,000 generating a gain of $346,000.

In July 2012, Canal sold one acre of land and the improvements thereon located in South St. Paul, Minnesota for $839,000 generating a gain of $791,000.

In August 2012, Canal sold its stockyard operation (30 acres of land and the improvements thereon) located in St. Joseph, Missouri for $500,000 generating a loss of $577,000.

23

---

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

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

Special Note Regarding Our Financial Statements and Forward-looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  We use words
such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar
expressions which are intended to identify forward-looking statements.  Such statements include, among others, any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of
management for future operations; and any statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or beliefs about future events.  You are cautioned that any such
forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially
from those expressed or implied by such forward-looking statements. Additional disclosures regarding factors that could cause our results and performance to differ from results or anticipated performance are discussed in Item 1A, “Risk
Factors” included herein.

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

Use of Terms

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

- “Canal Capital,” the “Company,” “we,” “us,” and “our,” are to Canal Capital Corporation and its subsidiaries, Omaha Livestock Market, Inc., Sioux Falls Stockyards Company and Canal Arts
Corporation;
- “SEC” are to the United States Securities and Exchange Commission;
- “Securities Act” are to the Securities Act of 1933, as amended;
- “Exchange Act” are to the Securities Exchange Act of 1934, as amended; and
- “U.S. dollar,” “USD,” “US$” and “$” are to the legal currency of the United States.

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

Overview of the Company’s Business

Canal Capital Corporation engages in real estate and stockyard operations in the Midwest section of the United States.  Canal, along with its wholly owned subsidiaries, Omaha Livestock Market, Inc. and Sioux Falls Stockyards Company is involved in
the management and sale of its real estate properties and, until August 2012, in the operation of central public stockyards. Canal also sells antiquities through independent art dealers and at public art auctions through its wholly owned subsidiary
Canal Arts Corporation.

At April 30, 2011, Canal's real estate properties were located in Sioux City, Iowa, South St Paul, Minnesota, St Joseph, Missouri and Omaha, Nebraska. The properties consisted, for the most part, of land and structures leased to third parties (rail
car repair shops, lumber yards and various other commercial and retail businesses) as well as vacant land available for development or resale. Canal owned approximately 2 acres of undeveloped land in Sioux City, Iowa and it operated a central public
stockyard located in St. Joseph, Missouri. Canal’s stockyard provided various services and facilities required to operate an independent market for the sale of livestock including veterinary facilities, auction arenas, auctioneers, weight
masters and scales, feed and bedding facilities and security personnel.  Canal also offered other services, such as pure bred and other specialty sales for producer organizations.

Recent Developments

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

As a result of past financial constraints, the Company’s financial statements for the fiscal years ended October 31, 2011, 2010 and 2009, and for the interim fiscal quarters have not been audited or reviewed by an independent auditor. In
February 2012, the Company received notice from the SEC of its obligation to file audited and reviewed financial statements with its periodic reports and this is another in a series of corrective filings which the Company expects to file in order to
comply with the SEC’s request. The Company expects to be fully compliant on or about March 31, 2013.

Management is unsure if its income from operations combined with its cost-cutting program and planned reduction of its antiquities art inventory will enable it to finance its future business activities or fund operating cash requirements. In the
interim, management is undertaking efforts to identify appropriate business opportunities for the Company. If for some reason management is not able to identify an appropriate business opportunity within a reasonable period of time, it may not have
sufficient resources to continue meeting its reporting obligations with the Securities and Exchange Commission or other obligations which arise from its minimal operations.  This in turn would severely diminish the attractiveness of the Company to
another operating company and the Company’s ability to consummate a business combination.

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Plan of Operations

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

Even if we are able to identify business opportunities that our
Board deems appropriate, we cannot assure you that such a strategy will provide
you with a positive return on your investment, and may in fact result in a
substantial decrease in the value of your stock. In addition, if the Board
identifies a business opportunity that it deems appropriate, there is no
guarantee that the Company could raise the additional capital or get the needed
financing to pursue the business opportunity. These factors will substantially
increase the uncertainty, and thus the risk, of investing in our shares.

Results of Operations

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

|                                          |   | Six Months
      Ended April 30, |  
|----------------------------------------- | - | -------------------------------- | -
|                                          |   | 2011                             |  
|                                          |   | (In
      Thousands)             |  
|Revenues:                                 |   |                                  |  
|Real Estate Revenue                       | $ | 136                              |  
|Stockyard Revenue                         |   | 1,172                            |  
|Total Revenue                             |   | 1,308                            |  
|                                          |   |                                  |  
|                                          |   |                                  |  
|Costs and Expenses:                       |   |                                  |  
|                                          |   |                                  |  
|Real Estate Expenses                      |   | 28                               |  
|Stockyard Expenses                        |   | 953                              |  
|General and Administrative
      Expenses |   | 414                              |  
|Total Costs and
      Expenses            |   | 1,395                            |  
|                                          |   |                                  |  
|                                          |   |                                  |  
|(Loss) Income from Operations             |   | (87                              | )
|Other Income                              |   | 0                                |  
|Interest Expense                          |   | (42                              | )
|Other Expenses                            |   | 0                                |  
|                                          |   |                                  |  
|Net (Loss) Income                         | $ | (129                             | )

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Revenues

Canal's revenues from continuing operations consist of revenues from its real estate and stockyard operations. Revenues for the six month period ended April 30, 2011 decreased by $154,000 to $1,308,000 as compared with $1,462,000 for the
same period in fiscal 2010.  The fiscal 2011 decrease in revenues is due primarily to the closure of the Sioux Falls stockyard operation in the fourth quarter of fiscal 2009.

Revenues for the three month period ended April 30, 2011 decreased by $68,000 to $659,000 as compared with $727,000 for the same period in fiscal 2010.  The fiscal 2011 decrease in revenues is due primarily to the closure of the Sioux
Falls stockyard operation in the fourth quarter of fiscal 2009.

Real Estate Revenues: Real estate revenues for the six months ended April 30, 2011 of $136,000 accounted for 10.4% of the fiscal 2011 revenues as compared to real estate revenues of $147,000 or 10.0% for the same period in fiscal 2010. Real
estate revenues are comprised of sale of real estate (0.0% and 0.0%), rentals and other lease income from the rental of vacant land and certain structures (100.0% and 95.1%) and rental income from commercial office space in its Exchange Building
(0.0% and 4.9%) for the six months ended April 30, 2011 and 2010, respectively. The percentage variations in the year to year comparisons are due primarily to the elimination of rental income from the Sioux Falls, South Dakota exchange building
which was closed in September 2010.

Real estate revenues for the three months ended April 30, 2011 of $66,000 accounted for 10.1% of the fiscal 2011 revenues as compared to real estate revenues of $71,000 or 9.7% for the same period in fiscal 2010. Real estate
revenues are comprised of sale of real estate (0.0% and 0.0%), rentals and other lease income from the rental of vacant land and certain structures (100.0% and 94.9%) and rental income from commercial office space in its Exchange Building (0.0% and
5.1%) for the three months ended April 30, 2011 and 2010, respectively. The percentage variations in the year to year comparisons are due primarily to the elimination of rental income from the Sioux Falls, South Dakota exchange building which was
closed in September 2010.

Stockyard Revenues: Stockyard revenues for the six months ended April 30, 2011 of $1,172,000 accounted for 89.6% of the fiscal 2011 revenues as compared to stockyard revenues of $1,315,000 or 89.9% for the same period in fiscal 2010. The
2011 decrease in stockyard revenues was due primarily to the closing of the Sioux Falls stockyard operations in the fourth quarter of fiscal 2009. Stockyard revenues are comprised of yard handling and auction (88.7% and 81.9%), feed and bedding
income (5.7% and 4.4%) and rental and other income (5.6% and 13.7%) for the six month periods ended April 30, 2011 and 2010, respectively. The 2011 percentage variations in the year to year comparisons are due primarily to the closing of the Sioux
Falls stockyard operations as discussed above.

Stockyard revenues for the three months ended April 30, 2011 of $593,000 accounted for 89.9% of the fiscal 2011 revenues as compared to stockyard revenues of $656,000 or 90.3% for the same period in fiscal 2010. The 2011 decrease in
stockyard revenues was due primarily to the closing of the Sioux Falls stockyard operations in the fourth quarter of fiscal 2009. Stockyard revenues are comprised of yard handling and auction (90.0% and 88.7%), feed and bedding income (4.6% and
4.6%) and rental and other income (5.4% and 6.7%) for the three month periods ended April 30, 2011 and 2010, respectively. The 2011 percentage variations in the year to year comparisons are due primarily to the closing of the Sioux Falls stockyard
operations as discussed above.

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Art Revenues: Canal had no art sales in the six month periods ended April 30, 2011 or 2010.  Art revenues, if any, are comprised of the proceeds from the sale of antiquities art. Canal had no art expenses for the six month periods ended April 30,
2011 and 2010, respectively. Art expenses are comprised of the cost of inventory sold and selling, general and administrative expenses. It is the Company’s policy to use the adjusted carrying value for sales, thereby reducing the valuation
reserve proportionately as the inventory is sold.

Canal had no art sales in the three month periods ended April 30, 2011 or 2010.  Art revenues, if any, are comprised of the proceeds from the sale of antiquities art. Canal had no art expenses for the three month periods ended April 30, 2011 and
2010, respectively. Art expenses are comprised of the cost of inventory sold and selling, general and administrative expenses. It is the Company’s policy to use the adjusted carrying value for sales, thereby reducing the valuation reserve
proportionately as the inventory is sold.

Expenses

Real Estate Expenses: Real estate expenses for the six months ended April 30, 2011 of $28,000 decreased by $17,000 (37.7%) from real estate expenses of $45,000 for the same period in fiscal 2010. The decrease in real estate expenses is
consistent with the 2011 decrease in real estate revenues. Real estate expenses are comprised of the cost of real estate sold (0.0% and 0.0%), labor, operating and maintenance (16.1% and 30.0%), depreciation and amortization (39.3% and 24.5%), taxes
other than income taxes (26.6% and 24.3%) and general and administrative expenses (18.0% and 21.2%) for the six months ended April 30, 2011 and 2010, respectively. The percentage variations in the year to year comparisons are consistent with the
decrease in real estate revenues discussed above.

Real estate expenses for the three months ended April 30, 2011 of $14,000 decreased by $9,000 (39.0%) from real estate expenses of $23,000 for the same period in fiscal 2010. The decrease in real estate expenses is consistent with the
2011 decrease in real estate revenues. Real estate expenses are comprised of the cost of real estate sold (0.0% and 0.0%), labor, operating and maintenance (15.7% and 30.9%), depreciation and amortization (39.5% and 24.1%), taxes other than income
taxes (26.7% and 24.1%) and general and administrative expenses (18.1% and 20.9%) for the three months ended April 30, 2011 and 2010, respectively. The percentage variations in the year to year comparisons are consistent with the decrease in real
estate revenues discussed above.

Stockyard Expenses: Stockyard expenses for the six months ended April 30, 2011 of $953,000 decreased by $113,000 (10.6%) from stockyard expenses of $1,066,000 for the same period in fiscal 2010. The decrease in stockyard expenses is
consistent with the 2011 decrease in stockyard revenues. Stockyard expenses are comprised of labor and related costs (43.2% and 43.5%), other operating and maintenance (25.2% and 25.8%), feed and bedding expense (5.3% and 4.7%), depreciation and
amortization (1.1% and 0.6%), taxes other than income taxes (4.2% and 7.5%) and general and administrative expense (21.0% and 17.9%) for the six month periods ended April 30, 2011 and 2010, respectively. There were no significant percentage
variations in the year to year comparisons.

Stockyard expenses for the three months ended April 30, 2011 of $482,000 decreased by $33,000 (6.4%) from stockyard expenses of $515,000 for the same period in fiscal 2010. The decrease in stockyard expenses is consistent with the 2011
decrease in stockyard revenues. Stockyard expenses are comprised of labor and related costs (42.6% and 38.7%), other operating and maintenance (27.5% and 26.2%), feed and bedding expense (4.4% and 4.9%), depreciation and amortization (1.1% and
0.7%), taxes other than income taxes (4.2% and 7.9%) and general and administrative expense (20.2% and 21.6%) for the three month periods ended April 30, 2011 and 2010, respectively.  There were no significant percentage variations in the year to
year comparisons.

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General and Administrative

General and administrative expenses for the six months ended April 30, 2011 of $414,000 increased by $1,000 (0.2%) as compared to $413,000 for the same period in fiscal 2010. The major components of general and administrative expenses
are officer’s salaries (57.2% and 56.4%), pension expense (13.0% and 12.9%), insurance expense (6.7% and 6.6%), office salaries (11.4% and 11.2%), travel expense (2.1% and 3.3%) and professional fees (1.5% and 2.9%) for the six month periods
ended April 30, 2011 and 2010, respectively. There were no significant percentage variations in the year to year comparisons.

General and administrative expenses for the three months ended April 30, 2011 of $208,000 remained unchanged as compared to $208,000 for the same period in fiscal 2010. The major components of general and administrative expenses are
officer’s salaries (56.9% and 57.0%), pension expense (13.0% and 13.0%), insurance expense (6.6% and 6.6%), office salaries (11.3% and 11.3%), travel expense (2.4% and 2.4%) and professional fees (1.4% and 2.9%) for the three month periods
ended April 30, 2011 and 2010, respectively. There were no significant percentage variations in the year to year comparisons.

Interest Expense

Interest expense for the six months ended April 30, 2011 of $42,000 decreased by $13,000 (22.8%) from $55,000 for the same period in fiscal 2010. The 2011 decrease is due primarily to Canal’s $485,000 partial repayment of its
long-term debt in fiscal 2010. The principal balance outstanding at April 30, 2011 of $847,000 is classified as long-term debt-related party.

Interest expense for the three months ended April 30, 2011 of $21,000 decreased by $9,000 (29.5%) from $30,000 for the same period in fiscal 2010. The 2011 decrease is due primarily to Canal’s $485,000 partial repayment of its
long-term debt in fiscal 2010. The principal balance outstanding at April 30, 2011 of $847,000 is classified as long-term debt-related party.

Net (Loss) Income

Canal recognized a net loss of approximately $129,000 in the six month period ended April 30, 2011 as compared to a net loss of approximately $117,000 for the same period in fiscal 2010. There were no sales of real estate in the first six
months of either fiscal 2011 or 2010.

Canal recognized a net loss of approximately $66,000 in the three month period ended April 30, 2011 as compared to a net loss of approximately $49,000 for the same period in fiscal 2010. There were no sales of real estate in the three month
periods ended April 30, 2011 or 2010.

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Liquidity and Capital Resources

Cash and cash equivalents decreased approximately $334,000, from $510,000 at October 31, 2010, to $176,000 at April 30, 2011. At April 30, 2011 the Company’s current assets exceeded current liabilities by approximately
$238,000 which was down somewhat, as compared to October 31, 2010 when the Company’s current assets exceeded current liabilities by approximately $390,000.

Net cash used in operating activities for the six months ended April 30, 2011 were $327,000, as compared to $36,000 for the same period in fiscal 2010, for a net increase of $291,000. This increase in cash used during the six
months ended April 30, 2011 was not significant. During fiscal 2011 the Company invested $8,000 in capital expenditures. Additionally, the Company made payments of interest on the long-term debt discussed at “Obligations under Material
Contracts” below.

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

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

Obligations under Material Contracts

At April 30, 2011, all of the Company’s Long-Term Debt is held by the company’s Chief Executive Officer. These notes pay interest at a rate of 10% per annum and come due May 15, 2015. At various times during fiscal 2011 the holder of
these notes agreed to defer interest payments. This deferred interest liability accrued additional interest at a rate of 10% per annum, while outstanding, and is repaid as funds became available. Canal has incurred interest expense on these notes of
$42,000 and $55,000 for the six month periods
 ended April 30, 2011 and 2010, respectively. These notes, among other things, prohibit Canal from becoming an investment company as defined by the Investment Company Act of 1940, restrict Canal’s ability to pay cash dividends or repurchase
stock, and require principal prepayments to be made only out of the proceeds from the sale of certain assets. As of April 30, 2011, the balance due under these notes was $847,000 all of which was classified as long-term debt due to related
party. As of the filing of this report, the balance due under these notes was $400,000.

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

Recent Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 requires reporting entities to
provide information about movements of assets among Levels 1 and 2 of the three-tier fair value hierarchy established by ASC 820. The guidance is effective for any fiscal year that begins after December 15, 2010 and should be used for quarterly and
annual filings. We are currently evaluating the impact on our financial statements of adopting the amendments in ASU 2010-06 and cannot estimate the impact of adoption at this time.

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

On June 16, 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). This update amends ASC Topic 220, “Comprehensive Income” to provide that
total comprehensive income will be reported in one continuous statement or two separate but consecutive statements of financial performance. Presentation of total comprehensive income in the statement of stockholders' equity or the footnotes will no
longer be allowed. The calculation of net income and basic and diluted net income per share will not be affected. ASU 2011-005 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2011, which
means that it will be effective for our fiscal year beginning July 1, 2012. Retrospective adoption is required and early adoption is permitted. We do not believe that adoption of ASU 2011-05 will have a significant impact on our financial position,
results of operations or cash flows.

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Critical Accounting Policies and Estimates

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

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

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

Seasonality

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

Off-Balance Sheet Arrangements

For the six months ended April 30, 2011, we did not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act Reports is recorded, processed, summarized and
reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer, Mr. Michael E. Schultz, and Chief Financial Officer, Mr. Reginald Schauder, evaluated the effectiveness of the design and operation of our
disclosure controls and procedures as of April 30, 2011. Based upon, and as of the date of this evaluation, Messrs. Schultz and Schauder determined that because of the material weaknesses described below, our disclosure controls and procedures were
not effective.

Our management concluded that our internal control over financial reporting was not effective, as of October 31, 2009 through the period covered by this report, as we had limited accounting personnel and funds available for continuous legal and
accounting advice as it pertained to our filing requirements with the SEC. Furthermore, since its annual report for the fiscal year ended October 31, 2008, the Company submitted its annual and quarterly financial statements in filings to the SEC
without the benefit of the audit, and review, as applicable by an independent public accounting firm. Additionally, in our annual and quarterly reports on Forms 10-K and 10-Q for our fiscal years 2009, 2010 and 2011 there was a lack of adequate
controls over the recording of gains on sales of properties and other transactions that constituted a material weakness in internal control over financial reporting.

In an effort to remediate this material weakness, our management has appointed qualified personnel and has engaged the Company’s auditors to conduct reviews and audits, as applicable, of its financial statements for the non-compliant periods.
The Company expects that the filing of this quarterly report on Form 10-Q for the six months ended April 30, 2011 and 2010 will be a further step in curing this deficiency with the SEC. Our management does not believe that this material weakness had
a material effect on our financial condition or results of operations or caused our financial statements as of and for the six months ended April 30, 2011 and 2010, included in this report to contain a material misstatement.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the six month period ended April 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

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

Environmental Protection Agency

In 1989, the Company sold its 48 acre Portland, Oregon stockyard to Oregon Waste Systems, Inc.  On September 29, 2003, the United States Environmental Agency (EPA) placed a 4.2 acre portion of that property on the National Priorities List pursuant
to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), commonly known as the Superfund Act. In a letter from the EPA dated June 27, 2005 the Company, along with approximately 13 other parties, including the current
owner and operator of the site, was notified that it might be liable to perform or pay for the remediation of environmental contamination found on and around the site.

Since the receipt of the letter, the Company has been in periodic communications with the other parties who received a similar letter with respect to what action, collectively or individually, should be taken in response to the EPA assertion of
liability. The Company believes that the remediation of contamination of the site is properly the responsibility of other parties that have occupied and used it for waste recycling purposes since 1961, although under CERCLA the EPA is able to assert
joint and several liability against all parties who ever owned or operated the site or generated or transported wastes to it. The EPA investigation is in its preliminary stages and the Company intends to vigorously defend any liability for
remediation.  At April 30, 2011, the liability for remediation, if any, was not estimatable and therefore no accrual has been recorded in the financial statements.

We are currently not aware of any other legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

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ITEM 1A. RISK FACTORS

Not applicable

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

We have no information to disclose that was required to be
disclosed in a report on Form 8-K during the six month period ended April 30,
2011, but was not reported.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this report or
incorporated by reference:

**EXHIBIT** No. 31.1
    Certifications of Chief
      Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.**EXHIBIT** No. 31.2
    Certifications of Chief
      Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.**EXHIBIT** No. 32.1
    Certifications of Chief
      Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.**EXHIBIT** No. 32.2
    Certifications of Chief
      Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.

Dated: October 30, 2012

CANAL CAPITAL CORPORATION

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

By: /S/ Reginald
Schauder        Reginald
Schauder        Vice
President-Finance,       Secretary and
Treasurer        (Principal
Financial and       Accounting
Officer)

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