SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM
10-Q

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

FOR
THE QUARTERLY PERIOD ENDED October 31, 2009

( ) 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 reports), and (2) has been subject to such filing
requirements for the past 90 days.     Yes þ     No
o

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 þ     No
o

Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange
Act.     (Check one):

Large
accelerated filer o     Accelerated
filer o     Non-accelerated
filer o     Smaller
reporting company þ

Indicate by
check mark whether the registrant is a shell company (as defined by Rule 12b-2
of the Exchange Act) Yes o     No þ

The number of shares of common stock outstanding
as of December 5, 2009 was 3,180,846.

---



INDEX

|         |                                                                                                                |  |   
|-------- | -------------------------------------------------------------------------------------------------------------- |  | --
|PART I   | FINANCIAL INFORMATION                                                                                          |  |   
|         |                                                                                                                |  |   
|Item 1.  | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)                                                       |  |   
|         |                                                                                                                |  |   
|         | Condensed Consolidated Balance Sheets as of October 31, 2009 and July
 31, 2009                                |  | 3 
|         |                                                                                                                |  |   
|         | Condensed Consolidated Statements of Operations for the three months
 ended October 31, 2009 and 2008          |  | 5 
|         |                                                                                                                |  |   
|         | Condensed Consolidated Statements of Cash Flows for the three months
 ended October 31, 2009 and 2008          |  | 6 
|         |                                                                                                                |  |   
|         | Notes to Condensed Consolidated Financial Statements                                                           |  | 7 
|         |                                                                                                                |  |   
|Item 2.  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
 RESULTS OF OPERATIONS AND FINANCIAL CONDITION |  | 10
|         |                                                                                                                |  |   
|Item 3   | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                     |  | 11
|         |                                                                                                                |  |   
|Item 4T. | CONTROLS AND PROCEDURES                                                                                        |  | 11
|         |                                                                                                                |  |   
|PART II  | OTHER INFORMATION                                                                                              |  | 11
|         |                                                                                                                |  |   
|Item 1.  | LEGAL PROCEEDINGS                                                                                              |  | 11
|         |                                                                                                                |  |   
|Item 2.  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                    |  | 11
|         |                                                                                                                |  |   
|Item 3.  | DEFAULTS UPON SENIOR SECURITIES                                                                                |  | 11
|         |                                                                                                                |  |   
|Item 4.  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                            |  | 12
|         |                                                                                                                |  |   
|Item 5.  | OTHER INFORMATION                                                                                              |  | 12
|         |                                                                                                                |  |   
|Item 6.  | EXHIBITS                                                                                                       |  | 12
|         |                                                                                                                |  |   
|         | SIGNATURES AND CERTIFICATIONS                                                                                  |  | 12

2

---





|                                                  
|--------------------------------------------------
|CONOLOG CORPORATION AND SUBSIDIARIES              
|Condensed Consolidated
 Balance Sheets (Unaudited)

|                                             |  |                  |            |   |               |   |            |  
|-------------------------------------------- |  | ---------------- | ---------- | - | ------------- | - | ---------- | -
|ASSETS                                       |  |                  |            |   |               |   |            |  
|                                             |  | October 31, 2009 |            |   | July 31, 2009
|                                             |  |                  |            |   |               |  
|Current Assets:                              |  |                  |            |   |               |   |            |  
|Cash and cash equivalents                    |  | $                | 465,744    |   |               | $ | 27,358     |  
|Certificate of deposit                       |  |                  | -          |   |               |   | -          |  
|Accounts receivable, net of allowance        |  |                  | 233,634    |   |               |   | 245,980    |  
|Prepaid expenses                             |  |                  | 416,310    |   |               |   | 70,843     |  
|Current portion of note receivable           |  |                  | 14,864     |   |               |   | 14,864     |  
|Inventory                                    |  |                  | 1,392,106  |   |               |   | 1,395,452  |  
|Other current assets                         |  |                  | 559,052    |   |               |   | 551,937    |  
|                                             |  |                  |            |   |               |   |            |  
|                                             |  |                  |            |   |               |   |            |  
|Total Current Assets                         |  |                  | 3,081,710  |   |               |   | 2,306,434  |  
|                                             |  |                  |            |   |               |   |            |  
|                                             |  |                  |            |   |               |   |            |  
|Property and equipment:                      |  |                  |            |   |               |   |            |  
|Machinery and equipment                      |  |                  | 1,357,053  |   |               |   | 1,357,053  |  
|Furniture and fixtures                       |  |                  | 429,765    |   |               |   | 429,765    |  
|Automobiles                                  |  |                  | 34,097     |   |               |   | 34,097     |  
|Computer software                            |  |                  | 552,684    |   |               |   | 520,622    |  
|Leasehold improvements                       |  |                  | 30,265     |   |               |   | 30,265     |  
|                                             |  |                  |            |   |               |   |            |  
|Total property and equipment                 |  |                  | 2,403,864  |   |               |   | 2,371,802  |  
|Less: accumulated depreciation               |  |                  | (1,979,100 | ) |               |   | (1,975,098 | )
|                                             |  |                  |            |   |               |   |            |  
|Net Property and Equipment                   |  |                  | 424,764    |   |               |   | 396,704    |  
|                                             |  |                  |            |   |               |   |            |  
|                                             |  |                  |            |   |               |   |            |  
|Other Assets:                                |  |                  |            |   |               |   |            |  
|Deferred financing fees, net of amortization |  |                  | 116,667    |   |               |   | 8,445      |  
|Note receivable, net of current portion      |  |                  | 68,239     |   |               |   | 69,846     |  
|                                             |  |                  |            |   |               |   |            |  
|                                             |  |                  |            |   |               |   |            |  
|Total Other Assets                           |  |                  | 184,906    |   |               |   | 78,291     |  
|                                             |  |                  |            |   |               |   |            |  
|                                             |  |                  |            |   |               |   |            |  
|TOTAL ASSETS                                 |  | $                | 3,691,380  |   |               | $ | 2,781,429  |  
|                                             |  |                  |            |   |               |   |            |  

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

3

---



CONOLOG CORPORATION AND SUBSIDIARIES 
Condensed Consolidated Balance Sheets, Continued (Unaudited)

|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | ----------- | ------------- |  | - | ----------- | -
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                         |  |                  |             |               |  |   |             |  
|                                                                                                                                                                                                             |  | October 31, 2009 |             | July 31, 2009
|                                                                                                                                                                                                             |  |                  |             |               |  |  
|Current Liabilities:                                                                                                                                                                                         |  |                  |             |               |  |   |             |  
|Accounts payable                                                                                                                                                                                             |  | $                | 139,506     |               |  | $ | 217,456     |  
|Accrued expenses                                                                                                                                                                                             |  |                  | 6,664       |               |  |   | 26,132      |  
|Current convertible debenture, net of
 discount                                                                                                                                                              |  |                  | -           |               |  |   | 34,318      |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|Total Current Liabilities                                                                                                                                                                                    |  |                  | 146,170     |               |  |   | 277,906     |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|Non-Current Liabilities:                                                                                                                                                                                     |  |                  |             |               |  |   |             |  
|Current Convertible debenture, net of
 discount                                                                                                                                                              |  |                  | 778,743     |               |  |   | -           |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|Total Liabilities                                                                                                                                                                                            |  |                  | 924,913     |               |  |   | 277,906     |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|Stockholders Equity                                                                                                                                                                                         |  |                  |             |               |  |   |             |  
|Preferred stock, par value $.50; Series A;
 4% cumulative; 500,000 shares authorized; 155,000 shares issued and
 outstanding at October 31, 2009 and July 31, 2009, respectively.                            |  |                  | 77,500      |               |  |   | 77,500      |  
|Preferred stock, par value $.50; Series B;
 $.90 cumulative; 2,000,000 shares authorized; 1,197 shares issued and
 outstanding at October 31, 2009 and July 31, 2009, respectively.                          |  |                  | 597         |               |  |   | 597         |  
|Common stock, par value $0.01; 30,000,000
 shares authorized; 2,380,846 and 1,842,485 shares issued and outstanding at
 October 31, 2009 and July 31, 2009 respectively including 2 shares held in
 treasury |  |                  | 23,808      |               |  |   | 18,425      |  
|Contributed capital                                                                                                                                                                                          |  |                  | 53,060,896  |               |  |   | 52,385,432  |  
|Accumulated deficit                                                                                                                                                                                          |  |                  | (49,928,233 | )             |  |   | (49,173,964 | )
|Treasury shares at cost                                                                                                                                                                                      |  |                  | (131,734    | )             |  |   | (131,734    | )
|Deferred compensation                                                                                                                                                                                        |  |                  | (336,367    | )             |  |   | (672,733    | )
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|Total Stockholders Equity                                                                                                                                                                                   |  |                  | 2,766,467   |               |  |   | 2,503,523   |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                   |  | $                | 3,691,380   |               |  | $ | 2,781,429   |  
|                                                                                                                                                                                                             |  |                  |             |               |  |   |             |  

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

4

---



CONOLOG CORPORATION AND SUBSIDIARIES 
Condensed Consolidated Statements of Operations 
(Unaudited)

|                                                     |  |                                         |           |      |  |   |           |  
|---------------------------------------------------- |  | --------------------------------------- | --------- | ---- |  | - | --------- | -
|                                                     |  | For the Three Months
 Ended October 31, |          
|                                                     |  | 2009                                    |           | 2008
|                                                     |  |                                         |           |      |  |  
|OPERATING
 REVENUES                                  |  |                                         |           |      |  |   |           |  
|Product revenue                                      |  | $                                       | 468,096   |      |  | $ | 456,681   |  
|                                                     |  |                                         |           |      |  |   |           |  
|Cost of
 product revenue                             |  |                                         |           |      |  |   |           |  
|Materials and Labor used in
 production              |  |                                         | 196,883   |      |  |   | 104,305   |  
|                                                     |  |                                         |           |      |  |   |           |  
|Total cost of product revenue                        |  |                                         | 196,883   |      |  |   | 104,305   |  
|                                                     |  |                                         |           |      |  |   |           |  
|Gross Profit from Operations                         |  |                                         | 271,213   |      |  |   | 352,376   |  
|                                                     |  |                                         |           |      |  |   |           |  
|Selling,
 general and administrative expenses        |  |                                         |           |      |  |   |           |  
|General and administrative                           |  |                                         | 373,731   |      |  |   | 321,876   |  
|Stock Compensation                                   |  |                                         | 336,366   |      |  |   | -         |  
|Stock Compliance                                     |  |                                         | 60,483    |      |  |   | 80,623    |  
|Professional fess                                    |  |                                         | 123,434   |      |  |   | 61,100    |  
|Marketing and trade shows                            |  |                                         | 59,276    |      |  |   | 55,545    |  
|                                                     |  |                                         |           |      |  |   |           |  
|Total
 selling, general and administrative expenses  |  |                                         | 953,290   |      |  |   | 519,144   |  
|                                                     |  |                                         |           |      |  |   |           |  
|                                                     |  |                                         |           |      |  |   |           |  
|Loss Before Other Income (Expenses)                  |  |                                         | (682,077  | )    |  |   | (166,768  | )
|                                                     |  |                                         |           |      |  |   |           |  
|OTHER
 INCOME (EXPENSES)                             |  |                                         |           |      |  |   |           |  
|Interest expense                                     |  |                                         | (6,433    | )    |  |   | (55,134   | )
|Interest income                                      |  |                                         | 860       |      |  |   | 11,329    |  
|Induced conversion cost                              |  |                                         | (31,208   | )    |  |   | (180,505  | )
|Amortization of deferred loan discount               |  |                                         | -         |      |  |   | (50,762   | )
|Amortization of deferred loan cost                   |  |                                         | (35,411   | )    |  |   | (118,012  | )
|                                                     |  |                                         |           |      |  |   |           |  
|Total Other Income (Expense)                         |  |                                         | (72,192   | )    |  |   | (393,084  | )
|                                                     |  |                                         |           |      |  |   |           |  
|Loss
 before provision for income taxes              |  |                                         | (754,269  | )    |  |   | (559,852  | )
|Provision for income taxes                           |  |                                         | -         |      |  |   | -         |  
|                                                     |  |                                         |           |      |  |   |           |  
|NET LOSS
 APPLICABLE TO COMMON SHARES                |  | $                                       | (754,269  | )    |  | $ | (559,852  | )
|                                                     |  |                                         |           |      |  |   |           |  
|                                                     |  |                                         |           |      |  |   |           |  
|NET LOSS
 PER BASIC AND DILUTED COMMON SHARE         |  | $                                       | (0.35     | )    |  | $ | (0.18     | )
|                                                     |  |                                         |           |      |  |   |           |  
|                                                     |  |                                         |           |      |  |   |           |  
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |  |                                         | 2,158,540 |      |  |   | 3,111,189 |  
|                                                     |  |                                         |           |      |  |   |           |  

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

5

---



CONOLOG CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows 
For The Three Months Ended October 31, 2009 and 2008(Unaudited)

|                                                                   |  |      |           |   |      |   |          |  
|------------------------------------------------------------------ |  | ---- | --------- | - | ---- | - | -------- | -
|                                                                   |  | 2009 |           |   | 2008 |  
|                                                                   |  |      |           |   |      |  
|CASH FLOWS FROM OPERATING ACTIVITIES                               |  |      |           |   |      |   |          |  
|Net loss                                                           |  | $    | (754,269  | ) |      | $ | (559,852 | )
|Adjustments to reconcile net loss to net
 cash used in operations: |  |      |           |   |      |   |          |  
|Depreciation                                                       |  |      | 4,002     |   |      |   | 4,000    |  
|Amortization of deferred compensation                              |  |      | 336,366   |   |      |   | -        |  
|Induced conversion cost                                            |  |      | 31,208    |   |      |   | 180,505  |  
|Amortization of deferred loan discount                             |  |      | 3,631     |   |      |   | 50,762   |  
|Amortization of deferred financing fees                            |  |      | 31,779    |   |      |   | 118,012  |  
|Stock issued for services to be provided                           |  |      | 384,000   |   |      |   | -        |  
|Stock issued for interest                                          |  |      | 6,433     |   |      |   | -        |  
|Changes in assets and liabilities                                  |  |      |           |   |      |   |          |  
|Decrease (increase) in accounts receivable                         |  |      | 12,346    |   |      |   | (11,593  | )
|Decrease (increase) in accounts receivable
 - other                |  |      | (7,115    | ) |      |   | (10,429  | )
|(Increase) in prepaid expenses                                     |  |      | (345,467  | ) |      |   | (238,650 | )
|(Increase) in inventories                                          |  |      | 3,346     |   |      |   | (126,641 | )
|(Decrease) in accounts payable                                     |  |      | (77,950   | ) |      |   | (13,361  | )
|(Decrease)
 in accrued expenses and other liabilities              |  |      | (19,468   | ) |      |   | (9,365   | )
|                                                                   |  |      |           |   |      |   |          |  
|Net cash used in operations                                        |  |      | (391,158  | ) |      |   | (616,612 | )
|                                                                   |  |      |           |   |      |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                               |  |      |           |   |      |   |          |  
|Purchase of property and equipment                                 |  |      | (32,062   | ) |      |   | -        |  
|Redemption
 of certificates of deposit                             |  |      | -         |   |      |   | 600,182  |  
|                                                                   |  |      |           |   |      |   |          |  
|Net cash provided by (used in) investing activities                |  |      | (32,062   | ) |      |   | 600,182  |  
|                                                                   |  |      |           |   |      |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                               |  |      |           |   |      |   |          |  
|Proceeds from issuance of convertible
 debentures                  |  |      | 1,000,000 |   |      |   | -        |  
|Payment of financing fees related to
 convertible debentures       |  |      | (140,000  | ) |      |   | -        |  
|Proceeds
 from note receivable                                     |  |      | 1,607     |   |      |   | 4,950    |  
|                                                                   |  |      |           |   |      |   |          |  
|Net cash provided by financing activities                          |  |      | 861,607   |   |      |   | 4,950    |  
|                                                                   |  |      |           |   |      |   |          |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               |  |      | 438,387   |   |      |   | (11,480  | )
|CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                    |  |      | 27,358    |   |      |   | 680,647  |  
|                                                                   |  |      |           |   |      |   |          |  
|CASH AND CASH EQUIVALENTS - END OF PERIOD                          |  | $    | 465,745   |   |      | $ | 669,167  |  
|                                                                   |  |      |           |   |      |   |          |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:                 |  |      |           |   |      |   |          |  
|CASH PAID DURING THE PERIOD FOR:                                   |  |      |           |   |      |   |          |  
|Interest
 expense                                                  |  | $    | -         |   |      | $ | 2,582    |  
|                                                                   |  |      |           |   |      |   |          |  
|Income Taxes                                                       |  | $    | -         |   |      | $ | -        |  
|                                                                   |  |      |           |   |      |   |          |  
|SUPPLEMENTAL DISCLOSURE OF NONCASH
 ACTIVITIES:                    |  |      |           |   |      |   |          |  
|Debt
 converted to equity                                          |  | $    | 259,206   |   |      | $ | 300,042  |  
|                                                                   |  |      |           |   |      |   |          |  
|Common stock
 for services to be provided                          |  | $    | 384,000   |   |      | $ | -        |  
|                                                                   |  |      |           |   |      |   |          |  
|Common stock
 issued for accrued interest                          |  | $    | 6,433     |   |      | $ | 52,552   |  
|                                                                   |  |      |           |   |      |   |          |  

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

6

---



CONOLOG CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 2009
(Unaudited)

Note 1  Unaudited Financial Statements

The condensed
unaudited interim consolidated financial statements included herein have been
prepared, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The condensed consolidated financial
statements and notes are presented as permitted on Form 10-Q and do not
contain information included in the Companys annual statements and notes.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested that
these condensed consolidated financial statements be read in conjunction with
the July 31, 2009 audited consolidated financial statements and the
accompanying notes thereto. While management believes the procedures followed
in preparing these condensed consolidated financial statements are reasonable,
the accuracy of the amounts are in some respects dependent upon the facts that
will exist, and procedures that will be accomplished by the Company later in
the year.

These
condensed unaudited consolidated financial statements reflect all adjustments,
including normal recurring adjustments, which, in the opinion of management,
are necessary to present fairly the operations and cash flows for the period
presented. Results of
operations for the three months ended October 31, 2009 should not necessarily
be taken as indicative of the results of operations that may be expected for
the fiscal year ending July 31, 2010.

Note 2  Conversion of Debt

On March 12,
2007 a private placement of an aggregate of $2,825,000 of Convertible
Debentures was placed with eight investors. The Convertible Debentures, subject
to stockholder approval as required by any applicable Nasdaq rules, are
convertible into an aggregate of 1,412,500 shares of the common stock of the
Company.

The Conversion
Price of the Convertible Debentures is $2.00 per share. The investors also
received warrants to purchase an aggregate of 1,412,500 shares of the Companys
common stock at an exercise price of $2.88 per share, exercisable beginning at
any time on the sooner of September 8, 2007 or the date the Companys
stockholders approves the issuance of the Companys common stock issuable on
conversion of the Convertible Debentures (if such approval is required by the
applicable rules of the Nasdaq) through the fifth anniversary of the issuance.
The Companys shareholders approved the issuance of the common stock issuable
upon conversion of the Debentures. In addition, the selling agent (including
certain of its employees and affiliates) was granted a warrant to acquire
282,500 shares of the Companys common stock. The Company received net proceeds
of $2,487,500.

On September
7, 2007, the Companys Board of Directors voted unanimously to adjust the
original conversion price of their outstanding debentures from $2.00 to $1.40.

On December
26, 2007, the Companys Board of Directors voted unanimously to further adjust
the original conversion price of their outstanding debentures from $1.40 to
$1.05. There has been no reduction in Notes payable at this $1.05 conversion
price.

On June 12,
2008, the Companys Board of Directors voted unanimously to adjust the original
conversion price of their outstanding debenture from $4.20 (post reversal) to
$1.20 resulting in the reduction in Notes payable of $627,071.

On September
8, 2008, the Company reduced the exercise price of the warrants issued in
connection with the Subscription Agreement, dated March 12, 2007 (the
Subscription Agreement), from $1.20 per share to $0.50 per share. As a result
of the reduction of the warrant exercise price, pursuant to Section 12 (b) of
the Subscription Agreement, the conversion price of the Convertible Notes
issued in connection with the Subscription Agreement is now $0.50 per share.
Any shares in excess of the shares that already have been registered for sale
on conversion of the Notes 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.

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On March 9,
2009 the Maturity Date of the Notes was extended from March 11, 2009 to August
31,2009. In addition, from the date of March 9, 2009 until immediately after
the Maturity Date, the holders may convert at a conversion rate of 75% of the
average closing bid prices for the five trading days preceding the date of the
Conversion Notice.

As a result of
the above reductions in exercise and conversion prices, for the three months
ended October 31, 2009 investors have converted $37,950 of debt for 46,592
common stock shares. The Company has recognized an Induced Conversion cost
related to these conversions of $31,208 for the three months ended October 31,
2009 compared to a $180,506 Induced Conversion cost for the same three month
period last year.

Conolog
Corporation (the Company) entered into a Subscription Agreement (the
Subscription Agreement), dated as of August 3, 2009 ( the Closing Date),
with three investors, pursuant to which it sold an aggregate of One Million
Dollars of its principal amount of secured promissory notes (the Notes). On
the Closing Date the Company received gross proceeds of $500,000 and $500,000
(the Escrowed Funds) was placed in escrow pursuant to an Escrow Agreement
between the Company, the Subscribers and the escrow agent. Pursuant to the
Subscription Agreement, the Company must file a preliminary proxy statement
with the Securities and Exchange Commission by September 2, 2009 seeking
approval for the transactions contemplated by the Subscription Agreement and
the Company must obtain approval of its shareholders within 90 days of the
Closing Date (125 days if the SEC reviews the proxy statement.). Provided
shareholder approval is obtained (the Shareholder Approval), the Company will
receive the Escrowed Funds. In the event that the Shareholder Approval is not
obtained (Shareholder Rejection), the amount of the Note will decrease to $500,000
and the Escrowed Funds will be returned to the Subscribers. 
The initial interest rate of the Notes is 4% per annum and upon the shareholder
Approval or a Rejection the interest rate will be 8% per annum. Interest shall
accrue from the date of the Closing Date and shall be payable quarterly, in
arrears, commencing six months after the Closing Date and on the maturity date
of the Note. The Conversion Price of the Notes is $.78 (the Fixed Conversion
Price) as may be adjusted (the Initial Conversion Price). Commencing six
months after the Closing Date, the Conversion Price shall be the Fixed
Conversion Price or 75% of the lowest three closing bid prices for the
Companys common stock for the ten days prior to when the Note is converted. 
The Company also issued the Subscribers Class A Warrants to purchase 1,282,051
shares of the Companys Common Stock at $1.12 per share. The Class A warrants
are exercisable for a period beginning on August 3, 2009 and terminate on
August 3, 2014. Pursuant to the Subscription Agreement, the Company also issued
the Subscribers a total of 40,000 class B Warrants.The
Class B Warrants entitles the Subscribers at any time after the sooner of six
months from the Closing Date or after the Company obtains the Approval until
July 3, 2012, to purchase up to $4,000,000 of principal amount of the Companys
8% notes on the same terms as the Notes and 1,000 warrants to purchase 128,205
shares of the Companys Common Stock at a per share purchase price equal to 105
% of the closing bid price of the Companys common stock or the exercise price
of the Class A Warrants.For
each $100,000 of principal of notes purchased pursuant to the Class B Warrants,
the Subscribers will surrender 1,000 Class B Warrants.

The Notes cannot be converted to
the extent such conversion would cause the Subscriber, together with such
holders affiliates, to beneficially own in excess of 4.99% of the of the
Companys outstanding common stock immediately following such conversion.

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The
Company also entered into a Security Agreement pursuant to which it granted the
Subscribers a security interest in its assets.

The
security interest granted pursuant to the Security Agreement will terminate
when the Approval is obtained or the Notes, including outstanding interest due
thereon) are repaid. 
The Company paid the selling agent for this transaction, a cash fee of $100,000
(10% of the aggregate gross proceeds received by the Company) and issued
warrants to purchase 256,410 shares of the Companys common stock ( 20% of the
shares issuable to the subscribers upon conversion of the Notes).

At a Special Meeting of
Shareholders held on September 24, 2009, the Shareholder Approval was obtained.
As a result, the Escrowed Funds were released and after the payment of fees in
the amount of $50,000 to the placement agent for the transaction. The Company
received net proceeds of $450,000 (prior to the deduction of other fees and
expenses related to the Offering).

At the Special Meeting of
Shareholders held on September 24, 2009, Shareholder approval was obtained for
the Companys 2009 Restrictive Stock Incentive Plan.

On September 28, 2009, the
Company entered into an Advisory Service Agreement with Garden State Securities
Inc. (GSS) to perform certain Advisory and Business services. The Board of
Directors has approved the Company to issue 200,000 restricted common shares to
GSS.

On October 21, 2009, Two
holders of the Companys outstanding Convertible Notes dated August 3, 2009
converted principal amounts of $221,256 and interest amounts of $3,855 and
issued a total of 288,605restricted common shares.

After the above transactions,
3,180,846 shares of the Companys common stock will be issued and outstanding.

Note 3  Major
Customers

The Companys
revenues from three customers accounted for $339,769 or 72% of total revenues
in the three months ended October 31, 2009. Each of these three customers
accounted for 10% or more of total revenues, which is the definition of a major
customer. Accounts receivable from these same three customers at October 31, 2009 amounted to $156,664 of 66.7% of total accounts receivable.

Note 4  Subsequent
Events

On November 30, 2009, the
Company filed a Preliminary Prospectus, Form S-1, subject to completion. This
prospectus relates to the public offering of up to 635,070 shares of common
stock, par value $0.01 per share, of Conolog Corporation, by the selling
stockholder, which is issuable upon exercise of warrants with an exercise price
of $1.12. The number of shares being registered is 33% of the shares held by
non-affiliates of the company. The Form S-1 went effective as of December 11, 2009.

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

FOR THE THREE MONTHS ENDED October 31, 2009

Product
revenues for the three months ended October 31, 2009 totaled $468,096,
representing an increase of 3% from $456,681 for the same three month period
last year. The Company attributes this three month increase to more timely
order releases from utilities.          Product
Cost (Material and Direct Labor) for the three months ended October 31, 2009
and 2008 totaled $196,883 and $104,305 respectively. 
          Gross
Profit for the three months ended October 31, 2009 and 2008 amounted to
$271,213 or 58% and $352,376 or 77% respectively.          Selling,
general and administrative expenses for the three months ended October 31, 2009
amounted to $953,290, an increase of $434,146 from the same period last year.
The Company attributes this primarily to an increase of $62,334 for
professional fees and services and the amortization of $336,366 for the annual
stock grant program.          Non-cash
non-operating expenses for the three-month period totaled $72,192 and consisted
primarily of expenses related to the induced conversion cost of $31,208 and
$35,411 for amortization of deferred financing fees.          As a result
of the foregoing, the Company reported a net loss from operations of ($754,269)
or ($0.35) per share compared to a loss of ($559,853) or ($0.18) per share for
the three months ended October 31, 2009 and 2008, respectively.

LIQUIDITY AND FINANCIAL CONDITION

Inventories
from the Companys product segment decreased from $1,395,452 at July 31, 2009
to $1,392,106 for the three months ended October 31, 2009, a decrease of
$3,346.          Accounts
Receivable-trade decreased to $233,634 for the three months ended October 31,
2009 from $245,980 as of July 31, 2009.
          The Company
expects to meet its cash requirements for the next twelve months through existing
cash balances and cash generated from operations. However, we anticipate that
we may require additional financing to expand our 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, 2009. Detailed information is contained in
the Registrants annual report on Form 10-K for the fiscal year ended July 31,
2009.

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

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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.

ITEM 3 QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.

N/A

ITEM 4T  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

It is managements responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the Exchange Act). Our
management, including our principal executive officer and our principal financial officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of (90) days of the filing date of Form 10-K Annual Report. Based
upon their evaluation as of the end of the period covered by this report, the Companys chief executive officer and chief financial officer concluded that, the Companys disclosure controls and procedures are not effective to ensure that
information required to be included in the Companys periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.

The Companys board of directors was advised by Bagell, Josephs, Levine & Company, L.L.C., the Companys independent registered public accounting firm, that during their performance of audit procedures for 2009
Bagell, Josephs, Levine & Company, L.L.C. identified a material weakness as defined in Public Company Accounting Oversight Board Standard No. 2 in the Companys internal control over financial reporting.

The deficiency consisted primarily of inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and disclosure matters and failure to perform timely and effective reviews.
However, the size of the Company prevents us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10Q that have materially affected, or are reasonably likely to materially affect our
internal control over financial reporting.

Managements Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. Our internal control
system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. Our management assessed the effectiveness of our internal control over
financial reporting as of July 31,2009. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control  Integrated Framework. Based on our assessment our management has concluded that our control and procedures were not effective as of the end of the period covered by this Report due to the existence of the significant internal control deficiencies described
below.

The deficiency consisted primarily of inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and disclosure matters and failure to perform timely effective reviews. This
annual report does not include an attestation report of the Companys registered accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered
public accounting firm pursuant to temporary rules of the Securities and Exchange Commission.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings -None

Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds: During the quarter ended October 31, 2009, two
Note Holders exercised conversion rights to convert $259,206 principal and
$6,433 of interest to 338,363 unregistered shares of common stock. In
connection with the foregoing, the Company relied upon the exemption from
securities registration afforded by Rule 506 of Regulation D as promulgated by
the SEC under the Securities Act of 1933, as amended (the Securities Act)
an/or Section 4(2) of the Securities Act. No advertising or general
solicitation was employed in offering the securities. The offerings and sales
were made to a limited number of persons, all of whom were accredited investors,
and transfer was restricted by the Company in accordance with the requirements
of the Securities Act of 1933.

Item 3. Defaults upon Senior Securities 
None

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ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS

At a
Special Meeting of Shareholders held on September 24, 2009, the Shareholder
Approval was obtained. As a result, the Escrowed Funds related to the August 3rd
Subscription Agreement were released and after the payment of fees in the
amount of $50,000 to Garden State Securities, Inc., the placement agent for the
transaction, the Company received net proceeds of $450,000 (prior to the
deduction of other fees and expenses related to the Offering).

At the
Special Meeting of Shareholders held on September 24, 2009, Shareholder
approval was obtained for the Companys 2010 Restrictive Stock Incentive Plan.

ITEM 5. Other Information  None

ITEM 6. Exhibits

| |                 |                                                                                                                           | 
| | --------------- | ------------------------------------------------------------------------------------------------------------------------- | 
| | Exhibit
 Number | Description                                                                                                               | 
| |                 |                                                                                                                           | 
| | 31.1            | Certification
 of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act                              
| | 31.2            | Certification
 of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act                              
| | 32              | Certification
 of Chief Executive Officer and Chief Financial Officer pursuant to Section
 906 of the Sarbanes Oxley Act.

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, 2009 | By /s/
 Robert S. Benou                 | 
|                         |                                         | 
|                         | Robert S.
 Benou                       
|                         | Chairman,
 Chief Executive Officer,    
|                         | (Principal
 Executive Officer)         
|                         | Chief
 Financial Officer and Treasurer,
|                         | (Chief
 Accounting Officer)            

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