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RELATED PARTY DEBT

3 Months Ended

Apr. 30, 2012

4.	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, 2012, the balance due under these notes was $564,000, all of which is classified as long-term debt-related party. Canal has incurred interest expense on these notes of approximately $45,000 and $42,000 for the six month periods ended April 30, 2012 and 2011, respectively. Accrued interest of $84,600 and $84,700 is included in salaries and interest payable-officers at April 30, 2012 and October 31, 2011, respectively.

At April 30, 2012, 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. 31,		October 31,
($ 000’s Omitted)		2012		2011
Variable rate mortgage notes due May 15, 2015 - related party	$	564	$	847
Less -- current maturities		0		0
Long-term debt	$	564	$	847

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 $164,000 and $106,000 at April 30, 2012 and October 31, 2011, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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