U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB



QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND

EXCHANGE ACT OF 1934

For The Quarter Ended December 31, 2001

|0-643
(Commission File Number)
New York
(State or other jurisdiction of
incorporation or organization) | Corning Natural Gas Corporation(Exact name of registrant as specified in its charter)
16-0397420
(IRS Employer ID No)
|------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------



330 W William Street, PO Box 58, Corning, New York 14830

(Address of principal executive offices)



607-936-3755

(Registrants telephone number, including area code)



Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 Or 15(d) of the Exchange Act of 1934 during the past 12 months and (2) has been subject to such filing requirements for at least the past 90 days. Yes X	 No ______.

Number of shares of Common Stock outstanding at the end of the quarter. 460,000

There is only one class of Common Stock and no Preference Stock outstanding.

CORNING NATURAL GAS CORPORATIONFORM 10-QSB FOR THE QUARTER ENDED DECEMBER 31, 2001

Managements Discussion & Analysis

As the Companys business is seasonal, the interim results should not be used as an indication of what results of the fiscal year 2002 may be.

Consolidated revenue of $5,833,900 for the quarter decreased $2,410,700 from the same quarter last year due primarily to the $1,987,700 decrease in Gas Company revenue as a result of lower gas costs. Changes in gas costs are passed through to customers, and are profit-neutral to the company.

Consolidated net income for the quarter was $133,900 compared to $91,800 in the same quarter the previous year. Earnings from gas operations increased $35,800 primarily as a result of a reduction in interest costs due to interest rate reductions on the Companys short-term credit lines. The Appliance Company earnings of $72,500 compared to $109,400 the same quarter last year as a result of the general slowdown in the economy. Corning Realty experienced a loss of $6,300 for the quarter compared to a loss of $19,000 for the same quarter last year, reflecting the benefits of recent restructuring efforts, but the residential marketplace activity remains slow. The Foodmart Plaza earnings were $21,400 compared to $1,000 last year due to a reduction in real estate taxes and full occupancy this year. Last year there was a vacant store in the Plaza during the first quarter. The Tax Center International produced earnings of $21,800 vs. $19,800 last year and Corning Mortgage experienced a loss of $1,700 compared to a loss of $9,800 last year.

The Company finances its capital additions as well as gas purchased through a combination of internally generated funds and short-term borrowing. The Company has $8,500,000 available through lines of credit at local banks, the terms of which are disclosed in the Companys latest annual report on form 10-KSB. It is expected that current capital resources will continue to be sufficient for planned operations.

Segment Overview:

The following table reflects first quarter results of the segments consistent with the Companys internal financial reporting process. The following results are used in part, by management, both in evaluating the performance of, and in allocating resources to, each of these segments.

|                               |         | Gas        |        | Appliance   |       | Tax     |        | Corning   |        | Foodmart  |       | Corning  |         |             
|------------------------------ | ------- | ---------- | ------ | ----------- | ----- | ------- | ------ | --------- | ------ | --------- | ----- | -------- | ------- | ------------
|                               |         | Company    |        | Corporation |       | Center  |        | Realty    |        | Plaza     |       | Mortgage |         | Consolidated
|Revenue:( 1)                   |         |            |        |             |       |         |        |           |        |           |       |          |        
|                               |         |            |        |             |       |         |        |           |        |           |       |          |         |             
|02:                            |         | 4,105,626  |        | 714,371     |       | 97,171  |        | 847,500   |        | 67,768    |       | 1,485    |         | 5,833,921   
|01:                            |         | 6,093,333  |        | 767,610     |       | 89,218  |        | 1,237,842 |        | 56,634    |       | --       |         | 8,244,637   
|                               |         |            |        |             |       |         |        |           |        |           |       |          |         |             
|Net income (loss):(1)          |         |            |        |             |       |         |        |           |        |           |       |          |        
|02:                            |         | 26,128     |        | 72,512      |       | 21,786  |        | -6,275    |        | 21,394    |       | -1,685   |         | 133,860     
|01:                            |         | -9,681     |        | 109,418     |       | 19,831  |        | -18,986   |        | 985       |       | -9,779   |         | 91,788      
|                               |         |            |        |             |       |         |        |           |        |           |       |          |         |             
|Interest Income: (1)           |         |            |        |             |       |         |        |           |        |           |       |          |        
|02:                            |         | 25,671     |        | 23,944      |       | 2,634   |        | --        |        | --        |       | --       |         | 52,249      
|01:                            |         | 1,637      |        | 31,919      |       | 1,878   |        | --        |        | --        |       | --       |         | 35,434      
|                               |         |            |        |             |       |         |        |           |        |           |       |          |         |             
|Interest Expense: (1)          |         |            |        |             |       |         |        |           |        |           |       |          |        
|02:                            | 288,332 |            | 4,157  |             | 124   |         | 36,819 |           | 12,908 |           | 3,917 |          | 346,257
|01:                            |         | 350,760    |        | 7,491       |       | 262     |        | 36,300    |        | 22,286    |       | --       |         | 417,099     
|Total assets: (1)&(2)          |         |            |        |             |       |         |        |           |        |           |       |          |        
|02:                            |         | 31,450,277 |        | 4,192,343   |       | 351,832 |        | 1,910,678 |        | 1,142,299 |       | 219,764  |         | 39,267,193  
|01:                            |         | 29,986,912 |        | 3,205,593   |       | 216,279 |        | 1,910,633 |        | 1,208,558 |       | 166,630  |         | 36,694,605  
|                               |         |            |        |             |       |         |        |           |        |           |       |          |         |             
|Depreciation and amortization: |         |            |        |             |       |         |        |           |        |           |       |          |        
|02:                            | 122,830 |            | 57,305 |             | 3,209 |         | 43,694 |           | 7,565  |           | --    |          | 234,603
|01:                            |         | 121,877    |        | 60,209      |       | 3,175   |        | 44,899    |        | 9,420     |       | --       |         | 239,580     
|                               |         |            |        |             |       |         |        |           |        |           |       |          |         |             
|Income tax expense:            |         |            |        |             |       |         |        |           |        |           |       |          |        
|02:                            |         | 36,570     |        | 37,677      |       | 11,269  |        | -3,233    |        | -11,021   |       | -868     |         | 70,394      
|01:                            |         | 31,669     |        | 59,825      |       | 10,216  |        | -9,722    |        | -507      |       | -3,012   |         | 88,469      



(1) Before elimination of intercompany transactions.

(2) Total assets include property, plant and equipment, accounts receivable, inventories, cash and other amounts specifically related to each identified segment.

Interest income and expense have been displayed in the segment in which it has been earned or incurred. Segment interest expense other than the Gas Company is included within unregulated expenses in the consolidated statements of income.

In June 1998, June 1999 and June 2000 the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities- Deferral of the Effective Date of FASB Statement No. 133" and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an Amendment of FASB Statement No. 133". These Statements establish accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. These statements require that changes in the derivatives fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivates gains and losses to offset related results on the hedged item in the statement of operations, and requires that the Company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. During the first quarter of 2001, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities. The Company has not identified any derivatives that meet the criteria for a derivative instrument and does not participate in any hedging activities. As a result, management of the Company concluded that there was no material effect on the Companys consolidated financial position, results of operations or cash flows resulting from the adoption of SFAS No. 133 during the quarter ended December 31, 2001.



The Financial Accounting Standards Board has approved for issuance Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141 will require that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and that the use of the pooling-of-interest method is no longer allowed. SFAS No. 142 requires that upon adoption, amortization of goodwill will cease and instead, the carrying value of goodwill will be evaluated for impairment on an annual basis. Identifiable intangible assets will continue to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. The Company is evaluating the impact of the adoption of these standards and has not yet determined the effect of adoption on its financial position and results of operations.



The information furnished herewith reflects all adjustments, which are in the opinion of management necessary to a fair statement of the results for the period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principals generally accepted in the United States of America have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading.

The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Companys latest annual report on Form 10-KSB. These unaudited interim financial statements have not been audited or certified by a firm of certified public accountants.

There were no sales of unregistered securities (debt or equity) during the quarter ended December 31, 2001.









SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:

February 14, 2002/S/ THOMAS K. BARRY

Thomas K. Barry, Chairman of the Board,

President and CEO.

Date:

February 14, 2002/S/GARY K. EARLEY

Gary K. Earley, Treasurer





|CORNING NATURAL GAS CORPORATION AND SUBSIDIARY                  |           |            |            
|--------------------------------------------------------------- | --------- | ---------- | -----------
|Consolidated Balance Sheets                                     |           |            |            
|Unaudited                                                       |           |            |            
|Form 10 QSB                                                     |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            
|Assets                                                          |           |            |            
|                                                                |           |            |            
|Plant:                                                          |           |            |            
|Utility property, plant and equipment                           |           |            | $23,170,485
|Non-utility - property, plant and equipment                     |           | 4,312,100  |            
|Less accumulated depreciation                                   |           |            | 10,490,980 
|Total plant utility and non-utility net                         |           |            | 16,991,605 
|                                                                |           |            |            
|Investments:                                                    |           |            |            
|Marketable securities available for sale at fair value          |           | 1,319,420  |            
|Investment in joint venture and associated companies            |           | 191,341    |            
|Total investments                                               |           |            |            
|                                                                |           |            |            
|Current assets:                                                 |           |            |            
|Cash and cash equivalents                                       |           |            | 518,723    
|Customer accounts receivable, less allowance for uncollectibles | 2,316,247 |            | 1,244,121  
|Gas stored underground, at average cost                         |           | 2,792,150  |            
|Gas and appliance inventories                                   |           |            | 594,583    
|Prepaid expenses                                                |           |            |            
|Prepaid income taxes                                            |           |            |            
|Total current assets                                            |           |            |            
|                                                                |           |            |            
|Deferred debits and other assets:                               |           |            |            
|Regulatory assets:                                              |           |            |            
|Income taxes recoverable through rates                          |           | 1,016,661  |            
|Prepaid pension costs                                           |           |            |            
|Unrecovered gas costs                                           |           |            |            
|Other                                                           |           |            |            
|Goodwill net of amortization                                    |           |            | 1,615,935  
|Unamortized debt issuance cost                                  |           |            | 322,811    
|Other                                                           |           |            |            
|Total deferred debits and other assets                          |           |            | 8,194,325  
|                                                                |           |            |            
|Total assets                                                    |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            
|See accompanying notes to consolidated financial statements.    |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            
|CORNING NATURAL GAS CORPORATION AND SUBSIDIARY                  |           |            |            
|Consolidated Balance Sheets                                     |           |            |            
|Unaudited                                                       |           |            |            
|Form 10 QSB                                                     |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            
|Capitalization and liabilities:                                 |           |            |            
|                                                                |           |            |            
|Common stockholders equity:                                     |           |            |            
|Common stock (common stock $5.00 par                            |           |            |            
|value per share. Authorized 1,000,000                           |           |            |            
|shares; issued and outstanding 460,000 shares)                  |           | $2,300,000 |            
|Other paid-in capital                                           |           |            |            
|Retained earnings                                               |           |            |            
|Accumulated other comprehensive income(loss)-                   |           |            |            
|net unrealized gain(loss) on securities available for sale      | 8,090     |            | (39,630)   
|Total common stockholders equity                                |           |            | 4,921,735  
|                                                                |           |            |            
|                                                                |           |            |            
|Long-term debt, less current installments                       |           |            | 10,805,803 
|                                                                |           |            |            
|Current liabilities:                                            |           |            |            
|Current portion of long term debt                               |           |            | 530,893    
|Borrowings under lines-of-credit                                |           |            | 8,149,384  
|Accounts payable                                                |           |            |            
|Accrued expenses                                                |           |            |            
|Customer deposits and accrued interest                          |           | 1,129,154  |            
|Deferred income taxes                                           |           |            |            
|Accrued general taxes                                           |           |            |            
|Supplier refunds                                                |           |            |            
|Dividends payable                                               |           |            |            
|Total current liabilities                                       |           |            |            
|                                                                |           |            |            
|Deferred credits and other liabilities:                         |           |            |            
|Deferred income taxes                                           |           |            |            
|Deferred compensation and post-retirement                       |           |            |            
|benefits                                                        |           |            |            
|Other                                                           |           |            |            
|Total deferred credits and other liabilities                    |           | 5,468,083  |            
|                                                                |           |            |            
|Concentrations and commitments                                  |           |            |            
|                                                                |           |            |            
|Total capitalization and liabilities                            |           |            | $33,694,601
|                                                                |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            
|See accompanying notes to consolidated financial statements.    |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            
|                                                                |           |            |            







|CORNING NATURAL GAS CORPORATION AND SUBSIDIARY                               |                                
|---------------------------------------------------------------------------- | -------------------------------
|Condensed Consolidated Statements of Income                                  |                                
|Unaudited                                                                    |                                
|Form 10 QSB                                                                  |                                
|                                                                             |                                
|                                                                             |                                
|                                                                             |                                
|                                                                             |                                
|Utility Operating Revenues                                                   |                                
|                                                                             |                                
|Cost and Expense                                                             |                                
|                                                                             | Operating Expense              
|                                                                             | Interest Expense               
|                                                                             | Income Tax                     
|                                                                             | Other Deductions, Net          
|Total Costs and Expenses                                                     |                                
|                                                                             |                                
|Utility Operating Loss                                                       |                                
|                                                                             |                                
|Other Income                                                                 |                                
|                                                                             |                                
|Corning Natural Gas Appliance Corp                                           |                                
|                                                                             | Operating Revenues             
|                                                                             | Depreciation                   
|                                                                             | Operating Expense              
|                                                                             | Federal Income Tax             
|                                                                             | Equity in Earnings of Assoc Cos
|                                                                             | Net Income Of Appliance Corp.  
|Net Income                                                                   |                                
|                                                                             |                                
|Earnings per Share-                                                          |                                
|                                                                             | basic & diluted                
|Dividends Per Share                                                          |                                
|Dividends Declared                                                           |                                
|                                                                             |                                
|Shares of common stock outstanding were 460,000 at December 31, 2001 & 2000.
|Earnings per share= Net Income as shown above divided by 460,000 shares.    
|Dividends per share=Dividends declared by shares outstanding at the time.   
|                                                                             |                                





|CORNING NATURAL GAS CORPORATION AND SUBSIDIARY               |         |             |            
|------------------------------------------------------------ | ------- | ----------- | -----------
|Consolidated Statements of Cash Flows                        |         |             |            
|For the Quarter Ended December 31, 2001                      |         |             |            
|Unaudited                                                    |         |             |            
|Form 10-QSB                                                  |         |             |            
|                                                             |         |             |            
|                                                             |         |             |            
|                                                             |         |             |            
|Cash flows from operating activities:                        |         |             |            
|Net income                                                   |         |             |            
|Adjustments to reconcile net income to net cash              |         |             |            
|used in operating activities:                                |         |             |            
|Depreciation and amortization                                |         |             | 234,603    
|Unrealized loss on investment                                |         |             | 1,441      
|(Gain) loss on sale of marketable securities                 |         | (3,371)     |            
|Deferred income taxes                                        |         |             | 349,365    
|                                                             |         |             |            
|Changes in assets and liabilities:                           |         |             |            
|(Increase) decrease in:                                      |         |             |            
|Accounts receivable                                          |         |             | (1,072,126)
|Gas stored underground                                       |         |             | (2,303,279)
|Gas and appliance inventories                                |         |             | 41,209     
|Prepaid expenses                                             |         |             |            
|Unrecovered gas costs                                        |         |             | (835,923)  
|Prepaid income taxes                                         |         |             | (78,565)   
|Deferred charges - pension and other                         |         |             | 67,238     
|Increase (decrease) in:                                      |         |             |            
|Accounts payable                                             |         |             |            
|Customer deposit liability                                   |         |             | 217,684    
|Accrued general taxes                                        |         |             | 7,695      
|Supplier refunds                                             |         |             |            
|Other liabilities and deferred credits                       |         |             | (94,921)   
|Net cash used in operating activities                        |         | (3,353,371) |            
|                                                             |         |             |            
|Cash flow from investing activities:                         |         |             |            
|Purchase of securities available for sale                    |         |             | (47,971)   
|Investment in joint venture                                  |         |             | (5,250)    
|Capital expenditures, net of minor disposals                 |         | (271,284)   |            
|Net cash used in investing activities                        |         | (324,505)   |            
|                                                             |         |             |            
|Cash flows from financing activities:                        |         |             |            
|Net borrowings under lines-of-credit                         |         |             | 4,224,151  
|Dividends paid                                               |         |             |            
|Repayment of long-term debt                                  |         |             | (103,291)  
|Net cash provided by financing activities                    |         | 3,971,360   |            
|Net increase (decrease) in cash                              |         |             | 293,484    
|                                                             |         |             |            
|Cash and cash equivalents at beginning of period             | 225,239 |             | 257,035    
|                                                             |         |             |            
|Cash and cash equivalents at end of period                   |         | $518,723    |            
|                                                             |         |             |            
|                                                             |         |             |            
|Supplemental disclosures of cash flow information:           |         |             |            
|Cash paid during the period for:                             |         |             |            
|Interest                                                     |         |             |            
|                                                             |         |             |            
|Income taxes                                                 |         |             |            
|                                                             |         |             |            
|                                                             |         |             |            
|See accompanying notes to consolidated financial statements. |         |             |