SECURITIES
  AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-QSB



(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



FOR THE QUARTERLY PERIOD ENDED October 31, 2006



( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from ______________ to ____________________



Commission file number 0-8174





Conolog Corporation
(Exact name of registrant as specified in its charter)Delaware

      

      22-1847286(State or other jurisdiction of organization)

      

      (I. R. S. Employer Identification No.)






5 Columbia Road

Somerville, NJ  08876

(Address of principal executive offices and zip code)



Registrant's telephone number, including area code: (908) 722-8081



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirement for the past 90 days.    YES   x    NO



APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PROCEEDING FIVE YEARS.



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15 (d) of the Securities Exchange Act of 1934 subsequently to the distribution of securities under a plan confirmed by a court.     YESNO  _______



APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.





Class
        
        Shares Outstanding at November 20, 2006
        (Inclusive
          of Treasury Stock)Common Stock, $.001 par value
        
        1,902,586






1



---









INDEX





PART I

      FINANCIAL INFORMATION




Item 1.

      CONSOLIDATED FINANCIAL STATEMENTS




Condensed Consolidated Balance Sheets as of October 31, 2006 (Unaudited) and July 31, 2006 (Audited)



Condensed Consolidated Statements of Operations for the Three months ended October 31, 2006 (Unaudited) and October 31, 2005 (Unaudited)



Condensed
  Consolidated Statements of Cash Flows for the Three months ended October 31,
  2006 (Unaudited) and October 31, 2005 (Unaudited)



Notes to Condensed Consolidated Financial Statements




Item
          2.
        MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




Item 3.

      CONTROLS AND PROCEDURES






PART II

      OTHER INFORMATION




Item 1.

      LEGAL PROCEEDINGS




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




Item 3.

      DEFAULTS UPON SENIOR SECURITIES




Item 4.

      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




Item
          5.

      OTHER INFORMATION




Item 6.

      EXHIBITS






SIGNATURES AND CERTIFICATIONS



2



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CONOLOG CORPORATION AND SUBSIDIARIESCondensed Consolidated Balance Sheets

|ASSETS                                                | October 31, 2006(Unaudited) |  | July 31, 2006
      
      (Audited) |           
|----------------------------------------------------- | --------------------------- |  | ------------------------------------ | ----------
|                                                      |                             |  |                                      |           
|Current
      Assets:                                 |                             |  |                                      |           
|Cash
      and cash equivalents                       |                             |  | $                                    | 2,461,832 
|Certificate
      of Deposit                          |                             |  |                                      |          
|Accounts
      receivable - net of allowance          |                             |  |                                      | 98,102    
|Prepaid
      expenses                                |                             |  |                                      | 5,237     
|Accounts
      receivable - other                     |                             |  |                                      | 27,427    
|Current
      portion of note receivable              |                             |  |                                      | 14,864    
|Inventory                                             |                             |  |                                      | 600,000   
|Other
      current assets                            |                             |  |                                      | 146,364   
|                                                      |                             |  |                                      |           
|                                                      |                             |  |                                      |           
|Total
      Current Assets                            |                             |  |                                      | 3,353,826 
|                                                      |                             |  |                                      |           
|                                                      |                             | 
|Property,
      Plant and Equipment:                  |                             | 
|Machinery
      and equipment                         |                             |  |                                      | 1,341,960 
|Furniture
      and fixtures                          |                             |  |                                      | 423,342   
|Automobiles                                           |                             |  |                                      | 34,097    
|Computer
      software                               |                             |  |                                      | 147,203   
|Leasehold
      improvements                          |                             |  |                                      | 30,265    
|                                                      |                             |  |                                      |           
|Total Property,
      Plant and Equipment             |                             |  |                                      | 1,976,867 
|Less:
      accumulated depreciation and amortization |                             |  |                                      | (1,916,895
|                                                      |                             |  |                                      |           
|Net
      Property, Plant and Equipment               |                             |  |                                      | 59,972    
|                                                      |                             |  |                                      |           
|Other
      Assets:                                   |                             | 
|Inventory,
      net of current portion               |                             |  |                                      | 1,157,594 
|Deferred
      financing fees, net of amortization    |                             |  |                                      | 142,362   
|Note
      receivable, net of current portion         |                             |  |                                      | 105,288   
|                                                      |                             |  |                                      |           
|                                                      |                             |  |                                      |           
|Total
      Other Assets                              |                             |  |                                      | 1,405,244 
|                                                      |                             |  |                                      |           
|                                                      |                             |  |                                      |           
|TOTAL
      ASSETS                                    |                             |  | $                                    | 4,819,042 
|                                                      |                             |  |                                      |           

The accompanying notes are an integral part of
  the condensed consolidated financial statements





3



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CONOLOG CORPORATION AND SUBSIDIARIES
  Condensed Consolidated Balance Sheets

|                                                                                                                                                                                                                       |  | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|LIABILITIES & STOCKHOLDERS'
        EQUITY                                                                                                                                                                             |  | 
|                                                                                                                                                                                                                       |  | 
|Current
      Liabilities:                                                                                                                                                                                             |  | 
|Accounts
      payable                                                                                                                                                                                                 |  | 
|Accrued
      expenses                                                                                                                                                                                                 |  | 
|                                                                                                                                                                                                                       |  | 
|Total
      Current Liabilities                                                                                                                                                                                        |  | 
|                                                                                                                                                                                                                       |  | 
|                                                                                                                                                                                                                       |  | 
|Non-Current
      Liabilities:                                                                                                                                                                                         |  | 
|Convertible
      Debenture - net of discount of $ 363,610 at October 31, 2006 and $391,580
      at July 31, 2006                                                                                                     |  | 
|                                                                                                                                                                                                                       |  | 
|Total
      Liabilities                                                                                                                                                                                                |  | 
|                                                                                                                                                                                                                       |  | 
|                                                                                                                                                                                                                       |  | 
|Stockholders'
      Equity                                                                                                                                                                                             |  | 
|Preferred
        stock, par value $.50; Series A; 4% cumulative; 162,000 shares authorized;
        155,000 shares issued and outstanding at October 31, 2006 and July 31,
        2006                               |  | 
|Preferred
        stock, par value $.50; Series B; $.90 cumulative; 2,000,000 shares authorized;
        1,197 shares issued and outstanding at October 31, 2006 and July 31, 2006                                     |  | 
|Common
        stock, par value $0.01; 30,000,000 shares authorized; 1,862,893 and 1,244,668
        shares issued and outstanding at October 31, 2006 and July 31, 2006 including
        220 shares held in treasury |  | 
|Contributed
        capital                                                                                                                                                                                            |  | 
|Retained
        (deficit)                                                                                                                                                                                             |  | 
|Treasury
        shares at cost                                                                                                                                                                                        |  | 
|Deferred
        compensation                                                                                                                                                                                          |  | 
|                                                                                                                                                                                                                       |  | 
|                                                                                                                                                                                                                       |  | 
|Total
      Stockholders Equity                                                                                                                                                                                       |  | 
|                                                                                                                                                                                                                       |  | 
|                                                                                                                                                                                                                       |  | 
|TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                       |  | 
|                                                                                                                                                                                                                       |  | 

The accompanying notes are an integral part of
  the condensed consolidated financial statements



4



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CONOLOG CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Operations 
  (Unaudited)

|                                                         |  | For the Three Months Ended October 31, |  
|-------------------------------------------------------- |  | -------------------------------------- | -
|
|
|                                                         |  |                                        |  
|Product
      revenue                                    |  |                                        | $
|                                                         |  |                                       
|Cost of
      product revenue                            |  |                                       
|Materials
      used in the current quarter's production |  |                                        |  
|Write down
      of obsolete inventory parts             |  |                                        |  
|
|Total
      Cost of product revenue                      |  |                                        |  
|Gross
      Profit (Loss)                                |  |                                        |  
|                                                         |  |                                        |  
|Selling,
      general and administrative expenses       |  |                                        |  
|
|Loss
      Before Other Income (Expense)                 |  |                                        |  
|
|OTHER
      INCOME (EXPENSE)                             |  |                                       
|Interest
      income                                    |  |                                        |  
|Interest
      (expense)                                 |  |                                        |  
|
|                                                         |  |                                        |  
|Total
      Other Income                                 |  |                                        |  
|
|
|                                                         |  |                                        |  
|NET LOSS
      APPLICABLE TO COMMON SHARES               |  |                                        | $
|
|                                                         |  |                                        |  
|Net Loss
      per common share                          |  |                                        | $
|                                                         |  |                                       
|WEIGHTED
      AVERAGE NUMBER OF COMMON                  |  |                                       
|SHARES
      OUTSTANDING                                 |  |                                        |  
|

The accompanying notes are an integral part of
  the condensed consolidated financial statements



5



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CONOLOG
  CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows 
  For the Three Months Ended October 31, 2006 and 2005 
  (Unaudited)

|                                                        |  | 2006 |   |          | 2005 |  
|------------------------------------------------------- |  | ---- | - | -------- | ---- | -
|
|CASH
      FLOWS FROM OPERATING ACTIVITIES              |  |      |   |          |      |  
|Net
      loss from continuing operations               |  |      | $ | (710,613 | )    | $
|                                                        |  |     
|Adjustments
      to reconcile net loss to net cash     |  |     
|(used
      in) continuing operations:                  |  |     
|Depreciation                                            |  |      |   | 10,000   |      |  
|Amortization
      of deferred compensation             |  |      |   | 46,125   |      |  
|Amortization
      of prepaid consulting expense        |  |      |   |         |      |  
|Amortization
      of discount on debenture             |  |      |   | 27,970   |      |  
|Amortization
      of deferred financing fees           |  |      |   | 10,951   |      |  
|Write
      down of obsolete inventory                  |  |      |   | 76,802   |      |  
|                                                        |  |     
|Changes
      in assets and liabilities                 |  |     
|(Increase)
      decrease in accounts receivable        |  |      |   | 85,520   |      |  
|(Increase)
      in accounts receivable - other         |  |      |   | (23,050  | )    |  
|Decrease
      in prepaid expenses                      |  |      |   | 21,139   |      |  
|(Increase)
      in inventories                         |  |      |   | (110,715 | )    |  
|(Increase)
      in other current assets                |  |      |   |         |      |  
|Increase
      in accounts payable                      |  |      |   | 13,481   |      |  
|(Decrease)
      in accrued expenses and other liabilit |  |      |   | (60,017  | )    |  
|
|Net
      cash (used in) continuing operations          |  |      |   | (612,407 | )    |  
|

The accompanying notes are an integral part of
  the condensed consolidated financial statements



6



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CONOLOG CORPORATION AND SUBSIDIARIES
  Condensed Consolidated Statements of Cash Flows 
  For the Three Months Ended October 31, 2006 and 2005 
  (Unaudited)

Continued - page 2

|                                                        |  | 2006 |   |           | 2005 |  
|------------------------------------------------------- |  | ---- | - | --------- | ---- | -
|
|CASH
      FLOWS FROM INVESTING ACTIVITIES              |  |      |   |           |      |  
|Purchase
      of equipment                             |  |      |   |          |      |  
|
|Net
      cash (used in) investing activities           |  |      |   |          |      |  
|
|CASH FLOWS
      FROM FINANCING ACTIVITIES              |  |     
|Proceeds
      from the exercise of warrants            |  |      |   | 208,335   |      |  
|Proceeds
      from note receivable                     |  |      |   | 4,955     |      |  
|
|Net
      cash provided by financing activities         |  |      |   | 213,290   |      |  
|
|                                                        |  |      |   |           |      |  
|NET (DECREASE)
      IN CASH AND CASH EQUIVALENTS       |  |      |   | (399,117  | )    |  
|                                                        |  |      |   |           |      |  
|CASH AND
      CASH EQUIVALENTS - BEGINNING OF YEAR     |  |      |   | 2,860,949 |      |  
|
|                                                        |  |      |   |           |      |  
|CASH AND
      CASH EQUIVALENTS - END OF YEAR           |  |      | $ | 2,461,832 |      | $
|
|                                                        |  |     
|SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION: |  |     
|CASH PAID
      DURING THE YEAR FOR:                    |  |     
|
|Interest
      expense                                  |  |      | $ | 27,970    |      | $
|
|                                                        |  |     
|SUPPLEMENTAL
      DISCLOSURE OF NONCASH ACTIVITIES:    |  |     
|Common stock
      issued for deferred compensation     |  |      | $ | 184,500   |      | $
|

The accompanying notes are an integral part of
  the condensed consolidated financial statements

7



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Note
  1  Unaudited Financial Statements



These condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Annual Report on Form 10-KSB for the year ended July 31, 2006.  Since certain information and footnote disclosures normally included in condensed financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the instructions to Form 10-QSB of Regulation S-B as promulgated by the Securities and Exchange Commission, these condensed consolidated financial statements specifically refer to the footnotes to the condensed consolidated financial statements of the Company as of July 31, 2006.  In the opinion of management, these unaudited interim consolidated financial statements reflect all adjustments and disclosures necessary for a fair statement of the financial position and results of operations and cash
flows of the Company for the interim periods presented.  Such adjustments consisted only of those of a normal recurring nature. Results of operations for the three months ended October 31, 2006 should not necessarily be taken as indicative of the results of operations that may be expected for the fiscal year ending July 31, 2007.



Note 2  Reverse 1-for-6 common stock split and exercise of Warrants



All
      prior period common stock and applicable share and per share amounts have
      been retroactively adjusted to reflect the 1-for-6 reverse split of the
Companys Common Stock.



At a Special Meeting of the shareholders held on August 2, 2006 a proposal to amend the Certificate of Incorporation to give effect to a one-for-six reverse stock split of the common stock of the Company was approved by the stockholders. The reverse split was effected on August 4, 2006.



Pursuant to a Subscription Agreement dated January 19, 2006, the Company sold and issued to three Subscribers Convertible Notes having an aggregate principal balance of $ 1,250,000 which as a result of the reverse split are convertible into 166,667 (the Note Shares) post split shares of (post 1-for-6 stock reverse split) common stock at a post split conversion price of $7.50, and warrants to purchase 166,668 shares of (post 1-for-6 stock reverse split) common stock at a post split exercise price of $5.7474 per share (the Conversion Price).   Pursuant to an agreement dated as of September 28, 2006, between the Company and the selling shareholders who were parties to the January 19, 2006 Subscription Agreement (the Subscribers), the Company reduced the warrant exercise price of warrants held by the Subscribers to $1.25 so long as such warrants were exercised by October 31,
2006, after which time the warrant exercise price would revert to $5.7474, subject to adjustment as provided in the warrants. Pursuant to an agreement between the Company and First Montauk Securities Corp. (the placement agent in the private placement with the selling shareholders who were parties to the January 19, 2006 Subscription Agreement) the Company reduced the exercise price of warrants issued to First Montauk Securities Corp. and/or its transferees to $1.25.  On October 2, 2006 the Subscribers  exercised their 166,668 warrants at a conversion price of $1.25 per share. The Company received a Gross amount of $208,335 for these warrants.



As permitted by the January 19, 2006 Subscription Agreement, on November 30th, the Company reduced the Conversion Price to $1.10 per share. Any shares in excess of the Notes Shares will not be registered under the Securities Act of 1933, as amended, and, therefore, may not be offered for sale, pledged or hypothecated in the absence of an effective registration statement or an opinion of counsel reasonably satisfactory to the Company that such registration is not required.





ITEM
  2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONS



FOR THE THREE MONTHS ENDED October 31, 2006



Product revenues for the three months ended October 31, 2006 totaled $127,661 representing a net decrease of 32% or $60,277 from the $187,938 reported for the same three-month period last year. The Companys Iniven division was unable to accelerate deliveries during the first quarter of fiscal 2007, due to the continued delay and extended deliveries by the Companys utility customers.



Product Cost for the three months ended October 31, 2006 totaled $65,488 a decrease of 21.5% or $ 17,998 as compared to the three months ended October 31, 2005.  The Company attributes the decrease in the current quarters product cost to the continued outsourcing of assembly boards and the introduction of new assembly standards under ISO-9000, which have made the assembly process more cost efficient.



8



---





For the quarter ended October 31, 2006 the Company, in accordance with its inventory management policy, expensed $ 76,802 of cost relating to inventory parts which had become obsolete or which were not used in the manufacturing process in the prior three years.



Gross profit for products for the three months ended October 31, 2006 amounted to $62,173 or 48.7.% of product revenue as compared to $104,452 or 55.5% of product revenue for the three months ended October 31, 2005.



Selling, general and administrative expenses decreased by $111,043 for the three months ended October 31, 2006 as compared to the three months ended October 31, 2005. The Company attributes this decrease over the three-month period ended October 31, 2006 to the decreased research and development costs related to new products, and to the decrease in non-cash Stock Compensation expense which the Company incurred during the quarter ended October 31, 2005 as a result of issuing shares of its common stock to its directors, employees and officers, which the Company did not incur during the three months ended October 31, 2006.



Interest income for the three-month period was $40,175, an increase of $15,406 over the three month period ended October 31, 2005.



As a result of the foregoing, the Company reported a net loss from continuing operations of ($710,613) or ($0.41) per share compared to a loss of ($690,011) or ($0.56) per share, an increased loss of $20,602, for the three months ended October 31, 2006 and 2005, respectively.





LIQUIDITY AND FINANCIAL CONDITION



Inventories from the Companys product segment increased from $1,723,681 at July 31, 2006 to $1,757,594 for the quarter ended October 31, 2006, an increase of $33,913, which is primarily attributed to the introduction of the Companys CM-100 product line.



Accounts Receivable decreased to $98,102 for the three months ended October 31, 2006 from $183,622 as of July 31, 2006.  The decrease is attributed to reduced sales.



The Company expects to meet its cash requirements for the next 12 months through existing cash balances and cash generated from operations.



STATEMENT REGARDING PRESENT OPERATIONS



There were no material changes in the nature of the operations of the Registrant during the three months ended October 31, 2006. Detailed information is contained in the Registrants annual report on Form 10-KSB for the fiscal year ended July 31, 2006.



FORWARD LOOKING STATEMENTS

This quarterly report contains certain forward-looking statements within the meaning of Section 27A of The Securities Act of 1933, as amended and section 21E of The Securities Act of 1934, as amended.  Such Statements are subject to certain risks and uncertainties, including, among other things, significant variations in recognizing revenue due to customer-caused delays, and intense competition from more well known companies, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected.  The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  The Company wishes to advise readers that the factors listed above, among other factors, could affect the Companys financial performance and could cause the Companys actual
results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.  The Company does not undertake, and specifically declines any obligations, to publicly release the results of any revisions, which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of unanticipated events.





9



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ITEM
  3  CONTROLS AND PROCEDURES





(a)
  Evaluation of disclosure controls and procedures



Pursuant
  to Rule 13a-15 under the Securities Exchange Act of 1934, the Company carried
  out an evaluation, under the supervision and with the participation of the Companys
  management, including the Companys principal executive officer and principal
  financial officer, of the effectiveness of the design and operation of the Companys
  disclosure controls and procedures (as defined under Rule 13a-15 (e) under the
  Securities Exchange Act of 1934) as of the end of the period covered by this
  report. Based upon that evaluation, the Companys principal executive officer
  and principal financial officer concluded that the Companys disclosure
  controls and procedures are effective for gathering, analyzing and disclosing
  the information we are required to disclose under the Securities and Exchange
  Act of 1934.



(b) Changes in internal controls



There have been no significant changes in the Companys internal controls or, to its knowledge, in other factors that could significantly affect internal controls subsequent to the date the Company carried out its evaluation.



PART
  II - OTHER INFORMATION



1. Legal Proceedings  None



2.
  Unregistered Sales of Equity Securities and Use of Proceeds  N/A



3.
  Defaults upon Senior Securities - None



4.
  Submission of Matters to a Vote of Security Holders



The following matters were submitted to a vote of the stockholders at a Special Meeting held on August 2, 2006: (1) a proposal to amend the Certificate of Incorporation to give effect to a one-for-six reverse stock split of the common stock of the Company; (2) a proposal that, in their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment of adjournments thereof. The number of shares of common stock outstanding and eligible to vote as of the record date of July 5, 2006 was 7,531,353. Set forth below is the number of votes cast for or withheld with respect to each matter submitted to a vote of the stockholders at the meeting.



Proposal #1 Proposal to amend the Certificate of Incorporation to give effect to a one-for-six reverse stock split of the common stock of the Company.

For
      
      Against
      
      Abstaining6,418,503
      
      322,236
      
      3,132




Proposal #2 In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment or adjournments thereof.

For
      
      Against
      
      Abstaining5,742,643
      
      891,662
      
      109,566




5.
  Other Information  None



|6 . | Exhibits      
|--- | --------------
|    |               
|    | Exhibit Number
|    | 31 (1)        
|    | 32            





10



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SIGNATURES



In accordance with the requirements of the Exchange Act, the Registrants caused this report to be signed on its behalf by the undersigned, thereunto and duly authorized



CONOLOG CORPORATION



Date: December 15, 2006

      By /s/ Robert S. Benou


Chairman,
          Chief Executive Officer,
          Chief Financial Officer and Treasurer






Date: December 15, 2006

      By /s/ Marc R. Benou


Chief Operating Officer, President and Secretary



11



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