|                                                                                            
|--------------------------------------------------------------------------------------------
|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 April 30,
 2010                                              
|                                                                                            
|o 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 x     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 x     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 x

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

The number of shares of common stock
outstanding as of June 11, 2010 was 6,965,039.

---



| |                    
| | -------------------
| | Conolog Corporation
| | Form 10-Q          
| | April 30, 2010     
| |                    
| | Explanatory Note   

Contrary to
the rules of the Securities and Exchange Commission, the Companys condensed
consolidated financial statements included in this filing have not been
reviewed by our independent public accountant in accordance with professional
standards for conducting such reviews.

Due to the
complex development of the derivative calculation required for the Class B
Common Stock Purchase Warrants a complete review of this Form 10-Q would not
have be completed by the required due date.

When the
review is complete, the Company will amend this Form 10-Q.

|                                                                                                                                                                          |                                         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | 
|                                                                                                                                                                          | 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: June
 21, 2010                                                                                                                                                      | By /s/
 Robert S. Benou                 | 
|                                                                                                                                                                          |                                         | 
|                                                                                                                                                                          | Robert S.
 Benou                       
|                                                                                                                                                                          | Chairman,
 Chief Executive Officer,    
|                                                                                                                                                                          | (Principal
 Executive Officer)         
|                                                                                                                                                                          | Chief
 Financial Officer and Treasurer,
|                                                                                                                                                                          | (Chief
 Accounting Officer)            

2

---



INDEX

|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- |  | --
|PART I                                                                                                                                                                                                                                                                                    | FINANCIAL INFORMATION                                                                                         
|                                                                                                                                                                                                                                                                                          |                                                                                                               
|Item 1.                                                                                                                                                                                                                                                                                   | CONDENSED CONSOLIDATED
 FINANCIAL STATEMENTS (Unaudited)                                                      
|                                                                                                                                                                                                                                                                                          |                                                                                                               
|Contrary to
 the rules of the Securities and Exchange Commission, the Companys condensed
 consolidated financial statements included in this filing have not been
 reviewed by our independent public accountant in accordance with professional
 standards for conducting such reviews. |                                                                                                                | 
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|                                                                                                                                                                                                                                                                                          | Condensed Consolidated Balance Sheets as of April 30, 2010 and July
 31, 2009                                  |  | 4 
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|                                                                                                                                                                                                                                                                                          | Condensed Consolidated Statements of Operations for the six and nine
 months ended April 30, 2010 and 2009     |  | 5 
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|                                                                                                                                                                                                                                                                                          | Condensed Consolidated Statements of Cash Flows for the nine months
 ended April 30, 2010 and 2009             |  | 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 |  | 11
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|Item 3                                                                                                                                                                                                                                                                                    | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                     |  | 12
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|Item 4T.                                                                                                                                                                                                                                                                                  | CONTROLS AND PROCEDURES                                                                                        |  | 12
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|PART II                                                                                                                                                                                                                                                                                   | OTHER INFORMATION                                                                                              |  | 13
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|Item 1.                                                                                                                                                                                                                                                                                   | LEGAL PROCEEDINGS                                                                                              |  | 13
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|Item 2.                                                                                                                                                                                                                                                                                   | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                    |  | 13
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|Item 3.                                                                                                                                                                                                                                                                                   | DEFAULTS UPON SENIOR SECURITIES                                                                                |  | 13
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|Item 4.                                                                                                                                                                                                                                                                                   | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                            |  | 13
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|Item 5.                                                                                                                                                                                                                                                                                   | OTHER INFORMATION                                                                                              |  | 13
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|Item 6.                                                                                                                                                                                                                                                                                   | EXHIBITS                                                                                                       |  | 13
|                                                                                                                                                                                                                                                                                          |                                                                                                                |  |   
|                                                                                                                                                                                                                                                                                          | SIGNATURES
 AND CERTIFICATIONS                                                                                 |  | 14

3

---



CONOLOG CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)

|                                                                                                                                                                    |  |                |             |   |                        |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | - | ---------------------- | ----------- | -
|                                                                                                                                                                    |  |                |             |   | Restated
July 31, 2009 |            
|                                                                                                                                                                    |  | April
30, 2010 |             |  
|                                                                                                                                                                    |  |                |             |   |                       
|ASSETS                                                                                                                                                              |  |                |             |   |                        |             |  
|Current
Assets:                                                                                                                                                     |  |                |             |   |                        |             |  
|Cash and cash equivalents                                                                                                                                           |  | $              | 1,097,410   |   | $                      | 27,358      |  
|Accounts receivable, net of allowance                                                                                                                               |  |                | 396,118     |   |                        | 245,980     |  
|Prepaid expenses                                                                                                                                                    |  |                | 15,896      |   |                        | 70,843      |  
|Prepaid service agreements                                                                                                                                          |  |                | 435,651     |   |                        |            |  
|Current portion of note receivable                                                                                                                                  |  |                |            |   |                        | 14,864      |  
|Inventory                                                                                                                                                           |  |                | 700,000     |   |                        | 425,920     |  
|Other current assets                                                                                                                                                |  |                | 5,000       |   |                        | 5,000       |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Total Current Assets                                                                                                                                                |  |                | 2,650,075   |   |                        | 789,965     |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Property
and equipment:                                                                                                                                             |  |                |             |   |                        |             |  
|Net Property and Equipment                                                                                                                                          |  |                | 360,775     |   |                        | 396,704     |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Other
Assets:                                                                                                                                                       |  |                |             |   |                        |             |  
|Other non-current assets                                                                                                                                            |  |                | 262,234     |   |                        |             |  
|Non-current inventory                                                                                                                                               |  |                | 547,721     |   |                        | 425,000     |  
|Deferred financing fees, net of amortization                                                                                                                        |  |                | 51,507      |   |                        | 8,445       |  
|Note receivable, net of current portion                                                                                                                             |  |                | 83,103      |   |                        | 69,846      |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Total Other Assets                                                                                                                                                  |  |                | 944,565     |   |                        | 503,291     |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|TOTAL ASSETS                                                                                                                                                        |  | $              | 3,955,415   |   | $                      | 1,689,960   |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Current
Liabilities:                                                                                                                                                |  |                |             |   |                        |             |  
|Accounts payable                                                                                                                                                    |  | $              | 181,682     |   | $                      | 217,456     |  
|Accrued expenses                                                                                                                                                    |  |                | 47,334      |   |                        | 26,132      |  
|Derivative Liability                                                                                                                                                |  |                | 20,847,678  |   |                        |            |  
|Current Convertible debenture, net of discount                                                                                                                      |  |                |            |   |                        | 34,318      |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Total Current Liabilities                                                                                                                                           |  |                | 21,076,694  |   |                        | 277,906     |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Non-Current
Liabilities:                                                                                                                                            |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Convertible debenture, net of discount                                                                                                                              |  | $              | 355,634     |   |                        |            |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Total Liabilities                                                                                                                                                   |  |                | 21,432,328  |   |                        | 277,906     |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Stockholders Equity:                                                                                                                                               |  |                |             |   |                        |             |  
|Preferred stock, par value
$.50; Series A; 4% cumulative; 500,000 shares authorized; 155,000 shares
issued and outstanding                                          |  |                | 77,500      |   |                        | 77,500      |  
|Preferred stock, par value
$.50; Series B; $.90 cumulative; 500,000 500,000 shares authorized; 1,197
shares issued and outstanding                                  |  |                | 597         |   |                        | 597         |  
|Common stock, par value $0.01; 30,000,000 shares authorized; 6,965,680
and 1,842,485 shares issued and outstanding at April 30, 2010 and July 31, 2009 respectively |  |                | 69,679      |   |                        | 18,425      |  
|Contributed capital                                                                                                                                                 |  |                | 61,471,520  |   |                        | 52,385,432  |  
|Accumulated deficit                                                                                                                                                 |  |                | (78,964,475 | ) |                        | (50,938,166 | )
|Treasury shares at cost - 2 shares                                                                                                                                  |  |                | (131,734    | ) |                        | (131,734    | )
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|Total Stockholders Equity                                                                                                                                          |  |                | (17,476,913 | ) |                        | 1,412,054   |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  
|TOTAL
LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                          |  | $              | 3,955,415   |   | $                      | 1,689,960   |  
|                                                                                                                                                                    |  |                |             |   |                        |             |  

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

4

---



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

|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|-------------------------------------------------------------------------------- |  | ------------------------------------- | ---------- | ---- | ------------------------------------ | ---------- | ---- |  | ---- | ----------- | - | - | ---------- | -
|                                                                                 |  | For the
 Three MonthsEnded
 April 30, |            |      | For the
 Nine MonthsEnded
 April 30, |           
|                                                                                 |  | 2010                                  |            | 2009 |                                      |            | 2010 |  | 2009 |            
|                                                                                 |  |                                       |            |      |                                      |            |      |  |     
|OPERATING REVENUES                                                               |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Product revenue                                                                  |  | $                                     | 515,897    |      | $                                    | 293,920    |      |  | $    | 1,095,913   |   |   | 1,239,560  |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Cost of product revenue                                                          |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Cost of goods sold                                                               |  |                                       | 220,403    |      |                                      | 78,159     |      |  |      | 514,394     |   |   | 312,522    |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Total Cost of product revenue                                                    |  |                                       | 220,403    |      |                                      | 78,159     |      |  |      | 514,394     |   |   | 312,522    |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Gross Profit (Loss) from Operations                                              |  |                                       | 295,494    |      |                                      | 215,761    |      |  |      | 581,519     |   |   | 927,038    |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Selling, general and administrative expenses                                     |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|General and administrative (includes non-cash stock grants)                      |  |                                       | 849,894    |      |                                      | 1,152,063  |      |  |      | 3,434,412   |   |   | 2,285,610  |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Total selling, general and administrative expenses                               |  |                                       | 849,894    |      |                                      | 1,152,063  |      |  |      | 3,434,412   |   |   | 2,285,610  |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Loss Before Other Income (Expenses)                                              |  |                                       | (554,400   | )    |                                      | (936,302   | )    |  |      | (2,852,893  | ) |   | (1,358,572 | )
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|OTHER INCOME (EXPENSES)                                                          |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Interest expense                                                                 |  |                                       | (4,946,564 | )    |                                      | (6,289     | )    |  |      | (22,415,385 | ) |   | (75,563    | )
|Interest income                                                                  |  |                                       | 1,244      |      |                                      | 76         |      |  |      | 2,661       |   |   | 13,888     |  
|Other Income                                                                     |  |                                       |           |      |                                      | (320       | )    |  |      | 284,703     |   |   | 354,947    |  
|Change in Fair Market value of derivatives                                       |  |                                       | 13,965,643 |      |                                      |           |      |  |      | (2,102,682  | ) |   |            |  
|Induced conversion cost                                                          |  |                                       |           |      |                                      | (142,071   | )    |  |      | (150,201    | ) |   | (347,982   | )
|Amortization                                                                     |  |                                       | (438,666   | )    |                                      | (36,155    | )    |  |      | (1,263,444  | ) |   | (373,703   | )
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Total Other Income (Expense)                                                     |  |                                       | 8,581,657  |      |                                      | (184,759   | )    |  |      | (25,644,348 | ) |   | (428,413   | )
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|Loss before provision for income taxes                                           |  |                                       | 8,027,257  |      |                                      | (1,121,061 | )    |  |      | (28,497,241 | ) |   | (1,786,985 | )
|Provision for income taxes                                                       |  |                                       |           |      |                                      |           |      |  |      |            |   |   |           |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|NET
            INCOME (LOSS)                                                    |  | $                                     | 8,027,257  |      | $                                    | (1,121,061 | )    |  | $    | (28,497,241 | ) | $ | (1,786,985 | )
|Preferred
          stock dividends                                              |  | $                                     | (1,045     | )    | $                                    |           |      |  | $    | (3,135      | ) | $ |           |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|NET
            INCOME (LOSS) APPLICABLE TO COMMON SHARES                        |  | $                                     | 8,026,212  |      | $                                    | (1,121,061 | )    |  | $    | (28,500,376 | ) | $ | (1,786,985 | )
|NET
            INCOME (LOSS) PER COMMON SHARE                                   |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|BASIC
            EARNINGS (LOSS)                                                |  | $                                     | 1.22       |      | $                                    | (1.19      | )    |  | $    | (7.24       | ) | $ | (2.46      | )
|DILUTIVE
            EARNINGS (LOSS)                                             |  | $                                     | 0.47       |      | $                                    |           |      |  | $    |            |   | $ |           |  
|                                                                                
|WEIGHTED
            AVERAGE COMMON SHARES
      OUTSTANDING - BASIC             |  |                                       | 6,596,113  |      |                                      | 939,688    |      |  |      | 3,938,957   |   |   | 727,420    |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  
|WEIGHTED
            AVERAGE COMMON SHARES
      OUTSTANDING - ASSUMING DILUTIVE |  |                                       | 17,068,624 |      |                                      |           |      |  |      |            |   |   |           |  
|                                                                                 |  |                                       |            |      |                                      |            |      |  |      |             |   |   |            |  

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

5

---



CONOLOG CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Statement of Cash Flows (Unaudited)
For the Nine Months Ended April 30, 2010 and
2009

|                                                                    |  |      |             |      |   |            |  
|------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | ---------- | -
|                                                                    |  | 2010 |             | 2009 |  
|                                                                    |  |      |             |      |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                |  |      |             |      |   |            |  
|Net loss                                                            |  | $    | (28,497,241 | )    | $ | (1,786,985 | )
|Adjustments to reconcile net loss to net cash used in
 operations:  |  |      |             |      |   |            |  
|Amortization and Depreciation                                       |  |      | 69,150      |      |   | 8,000      |  
|Amortization of prepaid consulting expense                          |  |      | 35,763      |      |   | 11,921     |  
|Stock based compensation                                            |  |      | 1,381,800   |      |   | 378,876    |  
|Change in Fair Market value of derivatives                          |  |      | 2,102,682   |      |   |           |  
|Induced conversion cost                                             |  |      | 150,201     |      |   | 347,982    |  
|Amortization and interest discount on convertible debt and warrants |  |      | 24,013,198  |      |   | 112,399    |  
|Stock issued interest                                               |  |      | 39,545      |      |   |           |  
|Changes in assets and liabilities                                   |  |      |             |      |   |            |  
|(Increase) Decrease in accounts receivable                          |  |      | (150,176    | )    |   | 119,193    |  
|(Increase) decrease in accounts receivable - other                  |  |      |            |      |   | 16,592     |  
|Decrease (increase) in prepaid expenses                             |  |      | (380,703    | )    |   | (14,085    | )
|(Increase) in inventories                                           |  |      |            |      |   | (341,199   | )
|Decease in other assets                                             |  |      |            |      |   |           |  
|Deferred financing fees                                             |  |      | (43,062     | )    |   | 261,304    |  
|(Decrease) in accounts payable                                      |  |      | (35,774     | )    |   | (64,043    | )
|Increase in accrued expenses                                        |  |      | 21,202      |      |   | 5,676      |  
|                                                                    |  |      |             |      |   |            |  
|Net cash used in operations                                         |  |      | (1,293,415  | )    |   | (944,369   | )
|                                                                    |  |      |             |      |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                |  |      |             |      |   |            |  
|Purchase of property and equipment                                  |  |      | (33,220     | )    |   |           |  
|Redemption of certificates of deposit                               |  |      |             |      |   | 600,182    |  
|                                                                    |  |      |             |      |   |            |  
|Net cash used in investing activities                               |  |      | (33,220     | )    |   | 600,182    |  
|                                                                    |  |      |             |      |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                |  |      |             |      |   |            |  
|Proceeds from issuance of stock                                     |  |      | 1,000,000   |      |   |           |  
|Proceeds from issuance of convertible debentures                    |  |      | 1,000,000   |      |   |            |  
|Proceeds from exercise of warrants                                  |  |      | 635,070     |      |   |           |  
|Payments of financing fees related to convertible debentures        |  |      | (240,000    | )    |   |            |  
|Proceeds from note receivable                                       |  |      | 1,607       |      |   | 10,649     |  
|                                                                    |  |      |             |      |   |            |  
|Net cash provided by financing activities                           |  |      | 2,396,677   |      |   | 10,649     |  
|                                                                    |  |      |             |      |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                |  |      | 1,070,042   |      |   | (333,538   | )
|CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                       |  |      | 27,358      |      |   | 680,647    |  
|                                                                    |  |      |             |      |   |            |  
|CASH AND CASH EQUIVALENTS - END OF YEAR                             |  |      | 1,097,400   |      |   | 347,109    |  
|                                                                    |  |      |             |      |   |            |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                   |  |      |             |      |   |            |  
|CASH PAID DURING THE YEAR FOR:                                      |  |      |             |      |   |            |  
|Interest expense                                                    |  | $    |            |      | $ | 7,931      |  
|                                                                    |  |      |             |      |   |            |  
|Income Taxes                                                        |  |      |            |      |   |           |  
|                                                                    |  |      |             |      |   |            |  
|SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:                      |  |      |             |      |   |            |  
|Debt converted to equity                                            |  | $    | 748,550     |      | $ | 633,327    |  
|                                                                    |  |      |             |      |   |            |  
|Common stock issued for services to be provided                     |  | $    | 506,200     |      | $ |           |  
|                                                                    |  |      |             |      |   |            |  
|Common stock (cancelled) issued for services to be provided         |  | $    |            |      | $ | (19,890    | )
|                                                                    |  |      |             |      |   |            |  
|Common stock (cancelled) issued for deferred compensation           |  | $    |            |      | $ | (561,210   | )
|                                                                    |  |      |             |      |   |            |  
|Common stock issued for accrued interest                            |  | $    | 39,545      |      | $ | 67,631     |  
|                                                                    |  |      |             |      |   |            |  
|Common stock issued for deferred compensation                       |  |      | 1,381,800   |      | $ | 1,345,465  |  
|                                                                    |  |      |             |      |   |            |  

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

6

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CONOLOG CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED APRIL 30, 2010
(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.

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 nine months ended April 30, 2010 should not necessarily be taken as
indicative of the results of operations that may be expected for the fiscal
year ending July 31, 2010.

The Company has filed an 8-K, on March 22, 2010
regarding non-reliance for the 10-Q for the period October 31, 2009.
Adjustments to the October 31, 2010 10-Q relate to the accounting for
derivative liability on convertible debt and warrants. All accounting
adjustments for these convertible debentures and warrants have been property
recorded for the nine month period ended April 30, 2010. .

Note 2 
Conversion of Debt

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.

On March 9, 2009 the Maturity Date of the Convertible
debt 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.

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 was required to 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
was obtained approval of its shareholders on September 24, 2009. At a special meeting of shareholders held on September 24, 2009, the shareholder approval was obtained.
As a result, the escrow funds were released and after 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.)The amount of the Note was increased to $500,000.
The initial interest rate of the Notes is 4% per annum and upon the
shareholder Approval the interest rate became 8% per annum. Interest accrues
from the date of the Closing Date and is be payable quarterly, in arrears,
commencing six

7

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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 entitle the Subscribers after September 24, 2009
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 original Notes and 40,000 warrants
(exercisable in 1,000 blocks) to purchase 128,205 shares of the Companys
Common Stock, per 1,000 Warrants, 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.

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). Fees
paid to the selling agent will be amortized over the term of the subscription
agreement.

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 were issued a total of 288,605restricted
common shares. On January 29, 2010, two holders of the Companys Convertible
Notes dated August 3, 2009 converted additional principal amounts of $489,344
and interest amounts of $19,895.25 and were issued a total of 652,872
restricted common shares. At January 31, 2010 the remaining balance on these
debentures amounted to $ 289,400, net of discount of $ 313,199.

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
class A 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.

On December 29, 2009 the Board of Directors voted to reduce the class A
warrant exercise price for the 635,070 warrants registered on Form S-1 to $1.00
per Class A Warrant. The balance of the Class A Warrants was reduced to an
exercise price of $0.01 per warrant.

During January 2010, the 635,070 class A warrants which were registered
and reduced to a $1.00 exercise price were exercised for 635,070 shares of
common stock.

8

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On February 25, 2010, three investors converted 10,000 Class B Warrants
for $1,000,000. Under the terms of the Class B warrants, The Company issued new
interest bearing convertible debentures totaling $1,000,000 with interest at
8%. These new debentures can be converted into restricted common shares at the
rate of $0.78 per share, but in no event greater than $1.00 per share. Class C
Common Stock Purchase Warrants (2,564,102 warrants) were issued with the new
secured promissory notes. The exercise price of the Class C Warrants is $1.12.
These notes and Class C Warrants contain a provisions where the conversion and
exercise price may reset. This provision creates a derivative and is separately
accounted for as a liability at fair value. Please see Note 5.

Note 3 
Major Customers

The Companys revenues from four customers accounted
for $641,867 or 59% of total revenues in the nine months ended April 30, 2010.
Each of these four customers accounted for 10% or more of total revenues, which
is the definition of a major customer. Accounts receivable from these same four
customers at April 30, 2010 amounted to $204,947 of 52% of total accounts
receivable.

Note 4 
2009 Stock Incentive Plan

In accordance with the Companys 2009 Stock Incentive
Plan, on November 20, 2009, 735,000 shares of common stock were issued to
officers, employees and directors of the Company at an aggregate market value
of $1,381,800 and recorded as stock compensation expense at time of grant. This
non-cash expense was recorded in General and Administrative costs on the Condensed
Consolidated Statements of Operations.

Note 5 
Warrant and Conversion liabilities

Secured promissory notes in the amount of $1,000,000
were issued on August 3, 2009 along with 2,564,102 Class A common stock
purchase warrant. These notes and Class A Warrants contain a provisions where
the conversion and exercise price may reset. This provision creates a
derivative and is separately accounted for as a liability at fair value. At
March 6, 2010, $1,000,000 of secured promissory notes and the 2,564,102 Class A
common stock purchase warrants have been converted and exercised.

On November 30, 2009 the Company filed a Registration
Statement to register 635,070 common stock shares underlying the Class A
Warrants. On December 29, 2009 the Board of Directors voted to adjust the
exercise price of these 635,070 Class A Warrants from $1.12 to $1.00 and
1,929,032 Class A Warrants from $1.12 to $0.01. 635,070 These Class A Warrants
were subsequently exercised at $1.00 per warrant for a total of $635,070. The
remaining Class A Warrants ($0.01) were exercised on a Cashless basis for
1,926,265 shares of common stock.

During the 3rd quarter, three investors
converted 10,000 Class B Warrants for $1,000,000. Under the terms of the Class
B warrants, The Company issued new interest bearing convertible debentures
totaling $1,000,000 with interest at 8%. These new debentures can be converted
into restricted common shares at the rate of $0.78 per share, but in no event
greater than $1.00 per share. Class C Common Stock Purchase Warrants (2,564,102
warrants) were issued with the new secured promissory notes.

The exercise of the Class B Warrants resulted in the
issuance of secured promissory notes and the issuance of Class C common stock
purchase warrants which are considered derivative equities, The Company has
determined these Class B Warrants should also to be recognized as derivative
liabilities and separately accounted for at fair value. The Company determined
the fair value of the embedded conversion feature and the free-standing class B
warrants utilizing a Black-Scholes pricing model. The fair values were measured
at the commitment date, at the conversion or exercise date, as applicable, and
at the end of the interim period, based on the following range of assumptions: strike
price - $0.78 (conversion feature) and $1.00 - $1.12 (warrants); expected life
 18 months from commitment date (conversion feature) and 5 years from
commitment date (warrants); risk-free rate  2.36% - 2.43%; dividend yield 
none; volatility  117.4% (conversion feature) and 108.0% (warrants). The total
commitment date value of the derivative liabilities of $16,139,959 was recorded
with a charge to interest expense of $14,665,698.

The secured promissory notes totaling $1,000,000 were
issued on February 25, 2010 and March 3, 2010. The notes and the 2,564,102
Class C common stock purchase warrants issued with these notes contain a
provision whereby if the Company were to issue common stock prior to the
complete conversion or payment of the notes or exercise of the warrants, for a
consideration less than the fixed conversion price of the note or exercise
price of the warrants, then the conversion price or

9

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exercise price would be reduced to such other lower
price. The Company has determined that this provision precludes the conversion
feature and underlying warrants from being treated as indexed to the Companys
own stock, requiring these conversion features and warrants to be recognized as
derivative liabilities and separately accounted for at fair value. The Company
determined the fair value of the embedded conversion feature and the
free-standing warrants utilizing a Black-Scholes pricing model. The fair values
were measured at the commitment date, at the conversion or exercise date, as
applicable, and at the end of the interim period, based on the following range
of assumptions: strike price - $0.78 (conversion feature) and $1.00 - $1.12
(warrants); expected life  18 months from commitment date (conversion feature)
and 5 years from commitment date (warrants); risk-free rate  2.36% - 2.43%;
dividend yield  none; volatility  117.4% (conversion feature) and 108.0%
(warrants). The total commitment date value of the derivative liabilities of
$5,689,078 was recorded as a debt discount of $1,000,000 and a charge to
interest expense of $4,689,079. The debt discount is being amortized over the
life of the notes, with the amortizable base adjusted for conversions of debt
on a pro rata basis. A total of $355,634 in amortization expense was recognized
during the three months ended April 30, 2009 for amortization of the debt
discount. Upon partial conversion of debt ($289,400 in principal was converted
during the three months ended April 30, 2010), the fair value of the converted
shares was determined using the Black-Scholes model on the conversion date and
this value ($488,625) was removed from the carrying fair value of the
derivative liability. The change in fair value of the derivative liabilities
for the three months ended April 30, 2010 of $1,050,200 (income) was measured
at April 30, 2010 based on the net change in the commitment date value of the
derivative liabilities plus the value of derivative liabilities converted
during the period upon conversions of debt. At April 30, 2010, a total of
371,038 common shares were convertible under these convertible notes.

Note 6 -
Loss Per Share of Common Stock

Loss per share of common stock is computed by dividing
net loss (after dividends on preferred shares) by the weighted average number
of shares of Common Stock outstanding during the year. The preferred dividends
are not reflected in arriving at the net loss as they are not material and
would have no effect on earnings per share available to common shareholders.
The effect of assuming the exchange of Series A Preferred Stock and Series B
Preferred Stock in 2009 and 2008 would be anti-dilutive.

Note 6 
Restatement of Opening Balances Sheets

The Company has restated the Condensed Consolidated
Balance Sheets at July 31, 20009 to reflect adjustment made to the Companys
financial information, as amended on From 10-K for the fiscal year ended July
31, 2009. At that time the Company did not properly account for the timely
amortization of certain costs related to its Stock Grant Plan and the Company
has revised the amount of inventory to be reserved in accordance with Generally
Accepted Accounting Principles and, as a result, cannot be relied upon.

Note 7 
Subsequent Events

On May 6, 2010, the Company received a comment letter
from the Securities and Exchange Commission. The Company has addressed these
comments and is awaiting any further comments from the Securities and Exchange
Commission.

On June 10, 2010 the Board of Directors amended the
provisions of the secured promissory notes, Class B and C Common Stock Purchase
Warrants (contained within the August 3, 2009 Subscription Agreement) to (1)
set a fixed conversion and exercise price of these promissory notes and
warrants at $0.60 and $0.50 respectively and (2) eliminate the reset provision
therefore removing the derivative nature of the instrument which would require
accounting for a liability at fair value.

On June 8, 2010, a Form 8-K, Item 4.02 Non-reliance on Previously
Issued Financial Statements or a Related Audit Report or Completed Interim
Period. was filed by the management of Conolog Corporation. Management
concluded that its financial statements for the year ended July 31 2009, which
are included in its Form 10-K for the year ended July 31, 2009 and the
financial statements for three month periods ended October 31, 2009 and January
31, 2010 which are included in its 10-Q for the three months ended October 31,
2009 and January 31, 2010 did not properly account for the timely amortization
of certain costs related to its Stock Grant Plan and the Company has revised
the amount of inventory to be reserved in accordance with Generally Accepted
Accounting Principles and, as a result, cannot be relied upon. The Company has
correctly accounted for these costs in subsequent filings with the Securities
and Exchange Commission. The Company has discussed the matters in this report
with its independent auditor.

On June 18, 2010, Thomas R. Fogg, the Companys Vice President  Engineering, passed away.

10

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

Contrary to
the rules of the Securities and Exchange Commission, the Companys condensed
consolidated financial statements included in this filing have not been reviewed
by our independent public accountant in accordance with professional standards
for conducting such reviews.

Due to the
complex development of the derivative calculation required for the Class B
Common Stock Purchase Warrants a complete review of this Form 10-Q would not
have be completed by the required due date.

When the
review is complete, the Company will amend this Form 10-Q.

Results of Operations (three months ended April 30, 2010
compared to the three months ended April 30, 2009.

For the three months ended
April 30, 2010 product revenues were $515,897 compared to $293,920 for the
three months ended April 30, 2009. The Company attributes this increase to
additional customer purchase order releases.

Cost of goods sold
(Materials and Labor) increased to $220,403 for the quarter ended April 30,
2010 from $78,159 for the same quarter ended April 30, 2009. This increase in
cost can be attributed to the increase in products produced and shipped within
the quarter and by an increase in fixed labor costs.

Gross profit for the three
month periods ended April 30, 2010 and 2009, amounted to $295,494 or 57% of
revenues and $215,761 or 73% of revenues respectively.

Total Selling, general and
administrative expenses decreased to $849,894 for the three months ended April
30, 2010 compared to $1,152,063 for the three months ended April 30, 2009.
This decrease for the three
month period was primarily due to a non-cash expense of $1,381,800 for the
annual stock incentive grant to employees, officers and directors which was
amortized in an earlier period.

Other non-cash non-operating
income (expenses) increased to $8,581,657 for the three months ended April 30,
2010 compared to ($184,759) for the three months ended April 30, 2009. This
increase consisted primarily of changes in fair market value of derivatives of
$13,965,643 offset by related interest expense ($4,946,564) related to
recording of equity derivatives on debt.

As a result of the
foregoing, the Company reported net income from operations for the three months
ended April 30, 2010 of $8,027,257, or $1.22 earnings per share- Basic and $0.47
    earnings per share- Diluted, compared to a net loss from operations of ($1,121,061),
    or ($1.19) (loss) per share  Basic
and diluted, for the three months ended April 30, 2009.

Basic earnings per share is computed based on the weighted average number of common
shares outstanding, including potential common shares outstanding for conversion and exercise
of secured promissory notes and warrants to purchase common stock, which are recognized as
derivative liabilities and separately accounted for at fair value for each reporting period.

The Company determined the fair value of the embedded conversion feature
and the free-standing warrants utilizing a Black-Scholes pricing model. The fair values were
measured at the commitment date, at the conversion or exercise date, as applicable, and at the end of
the interim period, based on the following range of assumptions: strike price - $0.78 (conversion
feature) and $1.00 - $1.12 (warrants); expected life  18 months from commitment date
(conversion feature) and 5 years from commitment date (warrants); risk-free rate  2.36% - 2.43%;
dividend yield  none; volatility  117.4% (conversion feature) and 108.0% (warrants).

Results of Operations (nine months ended April 30, 2010
compared to the nine months ended April 30, 2009.

For the nine months ended
April 30, 2010 product revenues were $1,095,913 compared to $1,239,560 for the
nine months ended April 30, 2009. The Company attributes this decrease to the
scheduling in receiving customer purchase order releases. The Company believes
that this scheduling of releases will adjust in the following quarter.

Cost of goods sold
(Materials and Labor) increased to $514,394 for the nine months ended April 30,
2010 from $312,522 for the same nine months period ended April 30, 2009. The
Company attributes this increase in cost of $201,872 to production of more
costly systems combined with an increase in fixed labor costs.

Gross profit for the nine
month periods ended April 30, 2010 and 2009, amounted to $581,519 or 53% of revenues
and $927,038 or 75% of revenues respectively.

Total Selling, general and
administrative expenses increased to $3,434,412 for the nine months ended April
30, 2010 compared to $2,285,610 for the nine months ended April 30, 2009.This
increase of $1,148,802 was primarily due to the amortization of a non-cash
expense of $1,381,800 for the annual stock incentive grant to employees,
officers and directors in an earlier period.

11

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Other non-cash non-operating
expenses increased to $25,644,348 for the nine months ended April 30, 2010
compared to $428,413 for the nine months ended April 30, 2009. This increase in
expenses consisted primarily of negative change in fair market value of
derivatives of ($2,102,682) and the increase in interest expense ($23,678,829)
related to recording of equity derivatives on debt.

As a result of the foregoing, the Company reported a net loss
    from operations for the nine months ended April 30, 2010 of ($28,500,376),
    or ($7.24) (loss) per share Basic and Diluted,
    compared to a net loss  of ($1,786,985), or ($2.46) (loss)
per share for the nine months ended April 30, 2009.

Basic earnings per share is computed based on the weighted average
    number of common shares outstanding, including potential common shares outstanding
    for conversion and exercise of secured promissory notes and warrants to purchase
    common stock, which are recognized as derivative liabilities and separately
    accounted for at fair value for each reporting period.

The Company determined the fair value of the embedded conversion
    feature and the free-standing warrants utilizing a Black-Scholes pricing
    model. The fair values were measured at the commitment date, at the conversion
    or exercise date, as applicable, and at the end of the interim period, based
    on specific assumptions for each reporting period including: strike price
    (conversion feature and warrants);  expected
    life  18
    months from commitment date (conversion feature) and 5 years from commitment
    date (warrants); risk-free rate; dividend yield  none; and
    volatility.

LIQUIDITY AND FINANCIAL CONDITION

Inventories
from the Companys product segment increased from $850,920 at July 31, 2009 to
$1,247,721 for the nine months ended April 30, 2010, an increase of $188,455.
The Company classifies (in accordance with GAAP) as current assets only that
amount of inventory it expects to realize in the next 1 year operating cycle,
the balance of the inventory is classified as non-current  Accounts
Receivable-trade increased to $396,118 for the nine months ended April 30, 2010
from $245,980 as of July 31, 2009.


Cash
expenditures have exceeded revenues for the prior year and Management expects
this consumption of cash to continue into next year. Our operations have been
and will continue to be funded from existing cash balances and private
placements of equity. The Company also anticipates additional financing during
the next12 months of up to $3,000,000 from current investors.


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.


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 the filing date
of Form 10-Q Quarterly Report. Based upon their evaluation as of April 31,
2010, the end of the period covered by this 10-Q 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 significent 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.

12

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Additionally due to the Companys poor
expertise in applying the FASB Codification guidance in regard to interpreting
the requirement for a derivative liability; the error in the presentation of
employee stock-based compensation and an error in calculating earnings per
share, it has engaged outside expects to advise management on all required
disclosures.

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.

PART II - OTHER
INFORMATION

Item
1. Legal Proceedings A Promissory Note dated October 22, 2002 from Natony
Corp. and Independent Computer Maintenance, LLC to Conolog Corporation came
into default during November 2009. The Company has filed for a judgment seeking
full payment and penalty against the makers.

Item
2. Unregistered Sales of Equity Securities and Use of Proceeds: During the
quarter ended April 30, 2010, a Note Holders exercised conversion rights to
convert $289,400 principal and $13,217 of interest to 387,971 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

ITEM
4 - Removed and Reserved

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.

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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: June
 21, 2010 | 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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