DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

9 Months Ended

Jul. 31, 2012

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION [Text Block]

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

     Canal Capital Corporation, 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.

     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. As of the date of this report, the Company has sold its Sioux Falls, South Dakota property (formerly used in stockyard operations), two of its three remaining rental properties and its stockyard operations, including the 30 acres of land and the improvements thereon located in St. Joseph, Missouri. The Company’s only remaining real estate property is a rental property located in Omaha, Nebraska. 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, the Company is undertaking efforts to identify alternative business opportunities for the Company. If for some reason the Company is not able to identify an acceptable alternative 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.

      Canal was engaged in two distinct businesses - real estate and stockyard operations. As discussed above, as of the date of this report, Canal is no longer in the stockyards business.

     Real Estate Operations – At July 31, 2012 Canal's real estate properties are located in Sioux City, Iowa, St Joseph, Missouri and Omaha, Nebraska. The properties consist, for the most part of land and structures leased to third parties (a rail car repair shop) 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.

     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. Canal repaid $283,000 of its outstanding mortgage notes from the proceeds of this sale. 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.

     Stockyard Operations – At July 31, 2012 Canal operated one central public stockyard located in St. Joseph, Missouri. In August 2012, Canal sold its St. Joseph, Missouri stockyard operation (including approximately 30 acres of land and improvements) for $500,000 generating a loss of $577,000.