SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

 X 	Annual  Report Pursuant to Section 13  or  15(d)  of  the Securities
	Exchange Act of 1934
      For the fiscal year ended July 31, 1999 (No Fee Required)

   	Transition Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 	1934 for the transition period
        from        to         (No Fee Required)

Commission File Number: 0-8174
CONOLOG CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE                                         52-0853566
(State or other jurisdiction of                 (IRS Employer
 incorporation or organization)               Identification No.)

5 Columbia Road, Somerville, NJ                    08876
(Address of principal executive office)           (Zip code)

 Issuer's telephone number, including area code: (908) 722-8081
Securities registered pursuant to Section 12(b) of the Act:

	Title of each class	Name of each exchange in which registered
Common Stock, $0.01 par value                    NASDAQ SmallCap Market
Redeemable Class A Warrants                      NASDAQ SmallCap Market

Check whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-K contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to the Form 10-K.   X

The aggregate market value of the voting stock held by non-affiliates
of the Registrant based on the closing sale price of $1.00 on
October 26, 1999 was $6,209,409

The number of shares outstanding of the Registrant's common stock outstanding
as of October 26, 1999 was 6,209,409

DOCUMENTS INCORPORATED BY REFERENCE












FORM 10-K

JULY 31, 1999

TABLE OF CONTENTS

PART I
Item 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . .  3

Item 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Item 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . .  22

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . .  22

PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . . .  23

Item 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . .  24

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
        AND FINANCIAL CONDITION. . . . . . . . . . . . . . . . . . . .  25

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . .  28

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . . . . . . .   28

PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS. . . . . . . . . . . . . . . . . 29

Item 11. EXECUTIVE COMPENSATION, PROMOTERS AND CONTROL PERSONS:
         COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT. . . . . .  31

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . .  33

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . .  34

PART IV
Item 14. EXHIBITS AND REPORTS. . . . . . . . . . . . . . . . . . . . .  34

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   38








PART I

BUSINESS

General

     Conolog Corporation, a Delaware Corporation (the  "Company"
or  "Conolog") is engaged in the design, manufacture (directly or
through subcontractors) and distribution of small electronic  and
electromagnetic   components  and  subassemblies   for   use   in
telephone,  radio  and microwave transmission and  reception  and
other  communication  areas that are used in  both  military  and
commercial  applications.  The Company's products  are  used  for
transceiving  various  quantities, data and  protective  relaying
functions in industrial, utility and other markets.

    Conolog acquired Atlas Design, a human resource company, in
September 1998.  Atlas Design provides short and long term qualified
Engineering and technical staff to major companies as well as human
Resource consulting.  The Company plans to utilize the qualified
engineering and technical staff in support of Conolog's longer
term contracts including the PTR1500 series.

History

     The  Company was organized in 1968 and was engaged primarily
in  the  design  and  manufacture of  electronic  components  and
systems for military applications.

     The  Company,  in July 1971, merged with DSI Systems,  Inc.,
then  engaged  in  the  development and manufacture  of  terminal
viewers for digital retrieval of microfilm.  Later that year, the
name was changed from DSI Systems, Inc. to Conolog Corporation.

     By  1980 it became apparent that the military segment of the
business  was  growing while the terminal viewer  segment  was  a
drain  on cash and other resources.  By the year end the terminal
viewer  business  was  discontinued and  the  inventory  relating
thereto  was written off, allowing the Company to concentrate  on
its military business.

     In  1981  the Company acquired one of its customers,  INIVEN
Corporation   ("INIVEN").   At  that  time,   the   Company   was
manufacturing,  on behalf of INIVEN, a line of  transmitters  and
receivers  used for controlling and transceiving the  measurement
of  the  flow of gases and  liquids, by gas and water  utilities,
for  controlling the flow of waste water and sewage and measuring
and controlling traffic.

     Since the 1980's, Conolog has been an active participant  in
providing   electromagnetic  wave  filters  for  major   military
programs,  such  as  the Patriot Missile, Hawk  Missile  and  Sea
Sparrow   Missile.   In  addition  to  these  projects,   Conolog
components  are  currently used by the  military  in  tanks,  the
Apache helicopters and the MK-50 torpedoes.


     During  1987,  the  Company made the strategic  decision  to
redirect the Company's focus from military to commercial markets.
Since  that time, the Company has refocused on manufacturing  and
marketing its products for the commercial marketplace rather than
depend  on the military and defense-related markets.  The  effort
has  included the introduction of new products, the  redesign  of
existing   products  and  increased  advertising  and   marketing
efforts,  as  permitted by its limited financial resources.   The
percentage  of  revenues attributed to products manufactured  for
use in commercial applications increased from approximately 4% of
sales  in 1981 ($171,000) to approximately 82% of sales  in  1998
($616,752).  The  decision to embark on this  program entailed  a
major  design  effort,  including  the  coordination  of  outside
engineering  consultants to develop a complete line  of  products
aimed at the Company s  target markets.  The primary emphasis was
on products for  electric utilities, co-generation  of power,  gas
and water companies, traffic control for departments of transport
(DOT)  and airports utilizing DSP (Digital Signal Processing)
technology.  Commercial product sales in 1999 were approximately
24% ($580,000)

     Testing of the Company's first commercial product group, the
Teleprotection Series PTR-1000, was under way in the latter  part
of  1992 by Bonneville Power Administration.  This detailed  test
permitted  the  Company  to "fine tune"  the  product  for  power
transmission  applications.  In March  1994,  the   PTR-1000  was
approved  for  use  by  such  utility  and  thereafter  by  other
utilities and municipalities.  To date, the Company has sold  and
delivered  approximately 1000 PTR-1000 sets to 14  utilities  and
3 municipalities, most of which are installed and in service.

     Following the  PTR-1000, in 1993, the Company introduced its
"98  Series"  Tone  Products for water, gas,  telephone  and  oil
companies,  waste water, traffic control and airports.   In  1994
the  Company  unveiled  the  Power Supply  Series  (allowing  the
various  utilities  to  power-up the  equipment  from  any  power
source), the "40 Series" for transmission of analog variable data
(water levels, gas pressures and temperature) and the Multiplexer
Series, which permits the transmission of up to 900 separate data
points,  again  using  a  telephone  line,  microwave  link,   or
satellite.   In 1994 the Company also introduced the "68  Series"
tone  products.   This  series  is  the  "98  Series"  repackaged
mechanically  specifically  for  customers  with  older   systems
wanting  to  upgrade to DSP technology without the expense  of  a
complete  mechanical installation.  The "68  Series"  offers  the
entire  line  offered by the "98 Series".  In 1995,  the  Company
introduced a stand alone "98 Series" transmitter and receiver for
field  installations and a wide range fiber optic  interface  for
the Iniven products.  The fiber optic interface is also available
as  a  stand alone  coupling device.   The  Company  launched its
industrial   grade  1200  Baud  Modem  for   data   transmission/
communication,  and  completed  the  PTR-1000  Systems   options.
Throughout 1997 and 1998, the Company designed and is in the process
of completing and building  the  PTR-1500  Quad  System, Protection
Equipment,  exclusively for the  General Electric Company ("GE"),
to be labeled GE-NS50 Series, for  worldwide sales as detailed in
the agreement between GE and Conolog dated April 1, 1997.


     In February 1999 Conolog completed field testing of its PTR1500
and introduction of unit to US and Canadian utilities.  In March 1999
GE advised Conolog that it has sold its Power Line Business to the
Trench Group in Canada; which has been in negotiations with Conolog
to enter into a potential purchase and sales agreement.  Conolog
has received an initial $200,000 order for PTR1500 units from
Boston Edison Energy Company.

     Due  to  the end of the cold war and the downsizing  of  the
American  military,  the  Company  experienced  unexpected  sharp
reductions  of  military contracts in fiscal 1993 (the  Company's
fiscal  year ends on July 31) resulting in a 50% decline  in  the
Company's sales for that year, down to $1,486,298 from $2,997,308
in  fiscal 1992.  The sales of new products could not replace the
decrease  in military sales.  The Company, however, continued  to
pursue  sales  as  aggressively as its available resources  would
permit.  Sales for the Fiscal year ended July  31, 1996 were
$1,924,466 as compared to $2,090,933  for the year ended July 31,
1995. Sales in fiscal 1997  totaled  $1,123,390,  a 42% decrease
from $1,924,466 for the same period in 1996, and sales for the
year ended July 31, 1998 were $746,420, a 33.5% decrease for the
same period of 1997.  Military sales for fiscal year ended July 31,
1999 were $118,042, an 85% decrease.

     In September 1998, the Company acquired the assets of Atlas
Design, Inc., a human resource outsourcing company, to further
its strategy of mergers and acquisitions, and to assist in
providing qualified engineering and technical staff in support
of Conolog's longer term contracts.

     Also in September 1998, the Company completed a sale/leaseback
of its manufacturing facility.  This enabled the Company to
significantly reduce operating costs and increases the working
capital.

     Revenues from the Company's  military product sales represented
approximately  14%, 5.6% and 1% of  sales  of  the  Company in
fiscal 1997, 1998 and 1999  respectively, reflecting the
Company's emphasis on commercial sales and markets and other business
strategies.

General Description

 Products

     The  Company is engaged in the design and manufacture of (i)
transducers,  which  are electro-magnetic devices  which  convert
electrical  energy  into mechanical and other forms  of  physical
energy,  or  conversely convert mechanical  and  other  forms  of
physical  energy  into  electrical energy;  (ii)  digital  signal
processing  (DSP)  systems and electromagnetic wave  filters  for
differentiation among discreet audio and radio frequencies; (iii)
audio  transmitters  and modulators, for  the  transmission  over
telephone  lines, microwave circuits, or satellite, of electrical
signals  obtained from transducers, data generated in  electronic
code  form  or  by  computers  or other  similar  equipment  (not
manufactured   by   the  Company);  (iv)  audio   receivers   and
demodulators which are small systems which receive and decode the
signals from the audio transmitters and convert them into digital
codes  for  input  into  computers, teletypes  or  other  similar
equipment  (not  manufactured by the  Company)  or  convert  such
signals  into mechanical or other form of energy, such as opening
or  closing valves, or starting or stopping a motor; (v) magnetic
"networks" which are devices that permit the matching or coupling
of  different types of communication equipment together  or  many
identical  or  similar equipment together or  onto  telephone  or
other  transmission  lines so as not to cause  interference;  and
(vi)   analog  transmitters  and  receivers,  which  permit   the
coding/transmission  and  receiving/decoding  of   a   constantly
variable data, such as the water level in a tank, pressure  in  a
pipe or temperature, by actually displaying the exact information
at the receiving end in digital form for storing in a computer or
other devices, or by physically displaying the information  in  a
visual  fashion such  as a  numerical readout or meter, and (VII)
multiplexer supervisory controls, which enable  callers with high
volumes of supervisory data to transmit on fewer phone lines.

     Such  products  are  used in radio and other  transmissions,
telephones  and  telephone exchanges, air  and  traffic  control,
automatic  transmission  of data for utilities,  tele-printing  of
transmitted  data such as news and stock market  information  and
for  use  by  electric utilities in monitoring power transmission
lines  for  faults and/or failures. The Company's products may be
used independently or in combination with other products to  form
a system  type configuration,  whereby the Company's equipment is
pre-assembled in a large  cabinet  with  other equipment   in   a
configuration that would provide the end user with protection  as
well as operational status displays.

Present Status/Business Product Description

     The  Company is presently engaged in four basic market segments:

          (A)  Commercial Sales (Under the trade-name " INIVEN" (a
               Division of Conolog))

	- Direct sales to end users

	- Sales to system assemblers

	- Sales to contractors/installers

              (B)  Military  Sales  - Direct contract  sales  to  the
               military

                         - As subcontractor to systems producers
                         - Foreign governments

          (C)  Commercial Sales - As Manufacturing  Subcontractor
               to Systems Producers.

	    (D)  Other Ventures -Short and long term qualified engineering
               and technical services as well as human resource consulting
               (Under the trade name "Atlas Design")



(A) Military Sales

     Since  1992 the Company's engineering staff is dedicated to
"INIVEN"  commercial  designs and does  not  engage  in  any  new
designs   for   military  applications.   The  Company   actively
participates  in  bids  only for parts the Company  has  designed
since  inception in 1968.  Presently there are approximately  400
designs  that  are  applicable  to  these military sales.

     Military sales  are primarily for the Company's electromagnetic
wave filters used in military radios, vehicles  (cars,  trucks or
tanks),  portable  (backpack),  special signaling equipment   and
exchanges  (as in  field command posts), weapon/missile  guidance
and control (Patriot missile, Tomahawk, Pave-Paws), torpedo active
signal recognition and differentiation mounted  in  the nose cone
of the torpedo  (MK-30, Captor, MK-50 torpedoes),  ship  to  ship
teletype signaling  filters  used  in deployment  of ships (UCC-1
and UCC-4 systems) as  well as many other signaling  applications
where  accurate  electromagnetic frequency control is required.

     The  Company  markets the above military sales directly  and
through  independent  manufacturing sales  representatives  on  a
commission basis.

B) Commercial "INIVEN" Sales and Products

     "INIVEN" equipment is designed around four (4) core  product
      groups:

          (1)  PTR Teleprotection Series
               (Protective  Tone Relaying Communications Terminal,
                which includes the PTR-1000 and the PTR-1500.
          (2)  Audio Tone & Telemetry Equipment
               (Audio   Tone  Control,  Telemetering   and   Data
               Transmission Systems), which includes Series "98",
               "68", "40" and "GEN-1".
          (3)  Multiplex Supervisory Control System
          (4)  Communication Link Multihead Fiber Optic Couplers
               and Industrial Grade 1200 Baud Modems.

(1) PTR-1000 Teleprotection Series

     This  product  is designed for use exclusively  by  electric
power  generators (electric utilities and cogenerators) in  order
to  protect their transmission and distribution lines.  The  PTR-
1000,  by  monitoring  the  output  signal  of  the  transmission
equipment  in  less  than one hundred of a  second  protects  the
transmission and distribution lines.

     The PTR-1000 are installed in pairs, one unit at each end of
the  line.   Each unit is connected and in constant communication
with the other, as they continuously monitor the line for faults.
In  the  event of a fault occurring (such as a downed line  or  a
short  circuit) at either end and when confirmed by the receiving
PTR-1000  unit, the line is immediately isolated for  shut  down,
averting costly damage and downtime.



     The  PTR-1000  system  is composed of  a  transmitter,  dual
receivers,  a  logic  card (brain center and  controller  of  the
system),  relay  module, line interface module and  power  supply
module.   The  transmitters  at  each  end  are  independent  and
transmit  (continuously) the status (information being monitored)
at their end of the line.

     In  the event of a fault, the information is transmitted  to
the  PTR-1000 at the other end of the line and once confirmed  by
both  its  receivers  (this duality is designed  such  that  both
receivers  must agree before any action is taken), it will,  when
programmed to do so, isolate that end of the line. Generation and
distribution  of  electric power entails expensive  equipment  at
both   ends   of  the  line.   Faults  causing  interruption   of
transmission can cause costly replacement of failed equipment and
loss of revenue caused by downtime for repairs.

      The PTR-1500, is a quad system and performs as 2 duals
or  4 singles  with many  unique  features such  as multiple line
operation, event recording with  date stamp with  optional analog
or digital transmission modes including optic fiber interface.

     The PTR Teleprotection Series is  designed  for  global  use
by electric utilities and any entity generating power for its own
consumption with  resale of surplus power to an electric utility,
such   as  cities,   municipalities,   cooperatives  and  large
corporations  that find it  more economical to generate their own
electricity.

     The PTR-1000 target market is worldwide, as follows:

    New   installations;  i.e.,  new  transmission  lines,   new
    distribution segments, for utilities and cogenerators.

    Existing  installations  not properly  protected,  improving
    efficiency and down time.

    Existing installations for upgrading to PTR-1000 technology,
    again improving efficiency and down time.

     Sales efforts for the PTR-1000 are presently being conducted
by   the  Company's  marketing  executives,  through  independent
manufacturers'  representatives and through distributors.   Sales
are   targeted  primarily  to  the  largest  utilities  and   co-
generators.

     According  to  McGraw-Hill, Inc. Electrical World  (Electric
Utilities  of  the  United States), in the United  States  alone,
there  are over 500 large entities generating electricity.   They
are:

    Investor-owned
    Municipal Systems
    Cooperative Systems
    Federal, State and District systems.



     To  date , the Company has sold and delivered approximately 1200
     PTR-1000 sets to 15  utilities  and 5  municipalities,  most of
     which are installed and in service.

(2) Audio Tone and Telemetry Equipment

     For  many  years  there  has been a  need  for  a  modularly
independent system that would permit a user, from a distance,  to
control  functions  such as opening a valve,  starting  a  motor,
shutting  down  a compressor, changing a traffic signal,  control
landing  lights  at an airport, activate a hazard  warning  on  a
highway,   and  in return allow the user to receive  information,
such  as the liquid level in a tank, the pressure in a pipe,  the
rate of flow out of a compressor, the flow of traffic, the status
of  a  traffic  light,  airport lights, or  confirmation  that  a
command  was  performed.   Such information  is  transmitted  and
received  and the control functions are performed from a distance
utilizing telephone lines, microwave link or direct wire.

     These  applications,  by their nature, can  be  accomplished
with  slow  speed signaling systems composed of a transmitter  on
one  end  and a receiver on the other to carry out the  necessary
instructions   provided   by   the   transmitter.     Each    set
(transmitter/receiver combination) is called a channel.   Because
of  the  slow speed, up to 30 channels could be made to  transmit
and  receive  signals, in either direction on a single  telephone
line, microwave link or direct wired line at the same time.  This
parallel transmission permits each transmitter/receiver  pair  to
be independent of all the others.

     This   product   segment  includes  the   first   generation
equipment,  known  as GEN-1, followed by later generations  which
include  technological improvements and programmable capabilities
to include:


    GEN-1 Series - First  generation with electromagnetic modules
     and first  generation  programmable modules without electro-
     magnetic modules.

    "98" and "68" Series - The  latest generation applies DSP and
     microprocessor technology with full programmability,  in the
     field or at the factory.

    "40" Series  -  Designed to function with the  "98"  or  "68"
      series; transmits and receives variable analog data.

GEN-1 and GEN-1 Programmable Series

     The  diversity of applications for this equipment  makes  it
available for  a wide range of users who are not restricted to  a
single   industry.    Typical  industrial   uses   include:   the
measurement  of  water  and  gas,  waste  water,  gasoline,  oil,
traffic, and electricity.  Typical users include: utilities,  co-
generators, airports, navy yards, telephone companies, paper  and
pulp  processors and wherever remote control and data acquisition
is required.



     Because of the ease of use and installation, there is   much
GEN-1 type equipment installed and used in the United States by a
wide spectrum of diverse users.  Since the Company's  line has  a
distinct mechanical configuration, the Company designed its GEN-1
Programmable  units  and other improvements as  replacements  for
existing  units.   These  account for approximately  18%  of  the
Company's commercial sales. The Company's line of GEN-1 equipment
is  extensive and provides the user with the ability  to  perform
multiple  control  functions,  status  monitoring  as   well   as
continuous variable data monitoring, such as a level in a tank or
pressure gauge.

     Sales  for  this  line are primarily for the replacement  of
existing  installations and for expansion of these  installations
where   it  would  not  be  economical  to  install  the   latest
technology, which would not be mechanically compatible.

     Sales to this market are made in the same manner as the PTR-
1000   market   except   that    manufacturers'   representatives
specialize in selling to this diverse market.


"98," "68" and "40" Series

     These  series represent the Company's latest designs in  the
audio  tone equipment utilizing the more advanced DSP technology,
which  provides  high  accuracy and long term  stability.   These
features  have allowed the Company to greatly improve the  scope,
density and number of functions that can be performed on a single
phone line, microwave link or direct line.

     Given  this technology and the high-reliability and  quality
standards  of  the Company's products, the Company  began      in
the first quarter of 1994 to offer a 12 year warranty for  all of
its  commercial  products.  This  warranty  has  been   favorably
received  by  customers.   Based upon its  past  experience,  the
Company  does not believe that its extended  warranty will result
in any material repair or replacement expenses.

     Sales  of  these products are made by the same  agents  who
sell  the  Company s  GEN-1 products, but are  also  directed  to
encompass  more sophisticated users with larger amounts  of  data
and  control  points.  The mechanical configuration of  the  "98"
series  is  more compact, permitting more equipment  in  a  given
space,  while performing many more functions when it is connected
to  the  "40"  Series.   The  "68"  Series  is  the  "98"  Series
repackaged  mechanically specifically for  customers  with  older
systems  permitting  them  to  upgrade  their  systems   to   DSP
technology.  The "40" Series, when connected to the "98" or  "68"
in  the  same  chassis,  permits  the  continuous  monitoring  of
variable  data.  Typical applications for these products  include
transmission  of the variable data (such as volume,  temperature,
pressure  and moisture) for water, gas, industrial gases,  oil  ,
gasoline,  transportation equipment and telephone exchanges,  and
for  use  at  airports, tunnels and bridges and for security  and
electricity systems.



(3) Multiplex Supervisory (IM) Control System

     This  product  is  a response to the cost  and  scarcity  of
dedicated  phone  lines (connections whereby the  phone  link  is
dedicated  to  one subscriber), and enables customers  with  high
volumes  of supervisory data (where many functions are  monitored
from  a single site) to transmit data on fewer phone lines (i.e.,
with  more  data per channel, up to a maximum of 30 channels  per
line).

     Using  the  "98" DSP Series as its communications link,  the
Company  designed the Multiplexer Supervisory Control  System  to
handle   8   times   the  normal  capacity  per   channel.    The
microprocessor  based system allows a single  telephone  line  to
handle up to 900 data inputs.

     This  product line, because of its data density  capability,
may  be  utilized  for a very broad range of applications.   This
product  has only recently been introduced and the Company  sales
efforts   for  it  are  being  conducted  through  its   existing
independent manufacturers sales representatives.

(4) Fiber Optic Link and Data Modem

     The  expansion of fiber lines by the Company's customers and
their need to switch equipment from phone lines to fiber prompted
the Company to design and introduce a fiber-optic-coupler line to
interface  with the many different fiber heads.  In  addition  to
complete data interface couplers the Company launched a series of
1200  Baud Modems (Industrial Grade) for operation under the same
environmental specifications in line with the Company's products.

(C) Commercial Subcontract Manufacturing to Systems Producers

     Since  the downsizing of the American Military, the  Company
has  actively sought manufacturing subcontract orders to fill the
production   void  created  by  the  severe  drop   in   military
production.   In  June 1996 the Company  negotiated  and  entered
into  a  renewable  annual agreement with  the  General  Electric
Company,   GE  Electrical  Distribution  and  Control   and   its
participating  affiliated companies for the manufacture  of  sub-
systems, board assemblies and magnetic filters and other products
consistent  with  the Company's expertise.  The success  of  this
agreement  has  prompted  the  Company  to  pursue  other  system
producers  to  more  fully  utilize the  Company's  manufacturing
capacity.

Recent Developments

      In February 1999 Conolog completed field testing of its PTR1500 and
introduction of units to US and Canadian utilities.  In March 1999,
GE advised Conolog that it has sold its Power Line Business to Trench
Group in Canada; which has been in negotiations with Conolog to enter
into a potential pruchase and sales agreement.  Conolog has received
an initial $200,000 order for PTR1500 units from the Boston Edison
Energy Company.



     The Company's new INIVEN Multiplexer  was tested  for 2 way radio
operation to  provide  8  analog  and 16 status    functions  bi-
directionally at a single site.  The  Company introduced this radio
link product line in the second half of 1998.

     In September 1998, the Company completed the sale of its building
resulting in $717,000 net proceeds to the Company.  The transaction
also provided for a three year rent-free lease to the Company of
approximately 38% of the total space.

     Also in September 1998, the Company completed the acquisition of the
assets of Atlas Design, Inc. for $145,000 in cash.  Atlas Design provides
short and long term qualified engineering and technical staff to the
country's leading companies as well as human resource consulting.
Atlas Design's integration with the Company will provide a pool of
project engineering leaders and software designers in support of
the Company's longer term contracts including the GE PTR-1500 series.

     Both the sale of the building and the acquisition of Atlas Design, Inc.
is in line with the Company's expansion plan through acquisitions, mergers
and GE software support.

     The Company and CLOG LLC have entered into an Option Agreement, dated
as of December 22, 1998, which was amended and restated as of May 5, 1999
(the "Option Agreement").  Pursuant to the Option Agreement, the Company
has granted an option to CLOG to purchase convertible debentures of the
Company having an aggregate principal amount of up to $2,000,000.  CLOG's
option may be exercised at any time prior to December 31, 1999.

     Each convertible debenture is convertible into common stock of the
Company at a conversion rate of $1.00 per share, the fair market value of
the common stock on the date of the Option Agreement.  If CLOG were to
exercise its option for all $2,000,000 of convertible debentures, it would
have the right to convert those notes into 2,000,000 shares of common stock.
The Option Agreement provides that the voting power of any Conversion
Shares owned by CLOG will be voted in the same manner as shares voted by
all other shareholders of the Company.

     Each convertible debenture bears interest at the rate of 8% per
annum and will be due 12 months from the date such debenture is issued,
subject to acceleration under certain circumstances.  At maturity, except
with respect to the initial $200,000 loaned, the Company will have the
option to pay each debenture, together with all accrued interest thereon,
by issuing shares of a new Series C preferred stock having a value of
$5.00 per share for purposes of such repayment.

     The Series C preferred will be non-voting and carry a cumulative
dividend of 8% per annum, which may be payable by the issuance of shares
of common stock valued at $5.00 per share.  The Series C preferred will
be convertible into common stock at the rate of one share of common stock
for each share of Series C preferred and have a liquidating preference of
$5.00 per share.  The Series C preferred may be redeemed by the Company at
any time by paying $5.00 in cash therefor.


     Pursuant to the Option Agreement, the Company filed a Registration
Statement with the Securities and Exchange Commission (the "Commission")
covering the resale of the 2,000,000 shares of common stock into which
the convertible debentures are convertible.  Such Registration Statement
was declared effective by the Commission on April 12, 1999.  The Company
will take appropriate measures to update the Registration Statement and
the Prospectus to reflect the results of the shareholder vote on this
proposal after its Annual Meeting of Shareholders to be held June 17, 1999.

     The Company and The Nybor Group Inc. have entered into a Consulting
Agreement, dated as of December 22, 1998, which was amended and restated
as of May 5, 1999 (the "Consulting Agreement").  Pursuant to the Consulting
Agreement, Nybor has agreed to provide the services of its President, Warren
Schreiber, to the Company for management consulting and financial consulting
Purposes through December 31, 2004.  Mr. Schreiber also serves as the managing
member of CLOG LLC.  As compensation, Nybor received 1,057,143 shares
of common stock.

     The Consulting Agreement provides that the voting power of the
Consulting Shares owned by Nybor will be voted in the same manner as shares
voted by the other shareholders (as discussed above).

     The Registration Statement discussed above also covered the resale
of the shares issuable pursuant to the Consulting Agreement.

Shares of Stock issued to Employees and Consultants

	In September 1998, the Company issued 25,000 shares of common stock to
a consultant at a value of $15,500.

     In November 1998, the Company issued 468,000 shares as a bonus to its
officers and key employees, of which $110,272 is included in cost of sales
and $313,853 in selling, general and administrative expenses.

     In December 1998, the Company issued 60,000 shares to various consultants
for the performance of various services in the amount of $58,084, which
was expensed to selling, general and administrative.

     The Company has registered such shares with the SEC.

     In March 1999, 105,000 shares were issued upon exercise of Options
granted to certain key employees under the Conolog Corporation 1995/1996
Stock Option Plan (the "Option Plan").  The Option Plan is designed to
permit the Company to grant either incentive stock options under Section
422A of the Internal Revenue code (the "Code") or nonqualified stock options.
Under the Option Plan, a Stock Option Committee (the "Option Committee")
of the Board of Directors is authorized to grant options to purchase up
to 200,000 shares of stock to key employees, officers, directors and
consultants of the Company.  The Option Committee administers the
Option Plan and designates the optionee's, the type of options to be
granted (i.e., nonqualified or incentive stock options), the number of
shares subject to the options, and the terms and conditions of each
option.  The terms and conditions include the exercise price, date of
grant, and date of exercise of each option.  An employee may, at the
discretion of the Option Committee, be permitted to exercise an option
and make payment by giving a personal note.




     Incentive stock options may only be granted to employees of the
Company and not to directors or consultants who are not so employed.
The exercise price for incentive stock options must be at least
one hundred percent (100%) of the fair market value of the Common
Stock as determined by the Option Committee on the date of the grant.
All incentive stock options under the Option Plan must be granted
within ten (10) years from the date of adoption of the Option Plan
and each option must be exercised, if at all, within ten (10) years
of the date of grant.  In no event may any employee be given incentive
stock options whereby more than $100,000 of options become excercisable
for the first time in a single calendar year.  All incentive stock
options must be exercised by an option within three (3) months after
termination of the optionee's employment, unless such termination is as
a result of death, disability or retirement.  In the event an optionee's
employment is terminated as a result of death or disability, such optionee
or his designated beneficiary shall be entitled to exercise any and all
options for a period of twelve (12) months after such termination.  If
an optionee's employment is terminated as a result of retirement, the
optionee shall be entitled to exercise his options for a period of
twenty four (24) months following such termination.

     Nonqualified stock options under the Option Plan are generally
subject to the same rules as discussed above.  Nonqualified stock
options may, however, also be granted to directors and consultants,
whether or not such individuals are employees of the Company.  The
exercise price for nonqualified stock options may not be granted at
less that eighty-five percent (85%) of the fair market value of the
shares on the date of the grant.

Public Offering January 21, 1998

     On January 21, 1998 the Company offered to the public 700,000 units
(the Units) at a price of $5.00 per unit.  Each Unit consisted of one
(1) share of Common Stock, par value $1.00 per share (Common Stock),
and four (4) Redeemable Class A Warrants for Common Stock (Class A
Warrants).  The Common Stock and Class A Warrants are detachable and
trade separately.

     Each Class A Warrant entitles the holder to purchase one (1) share of
the Company's Common Stock, at a exercise price of $6.00, subject to
adjustment, from January 22, 1998 through August 30, 2002.  The Class
A Warrants are subject to redemption by the Company commencing the
earlier of (i) 24 months from the date of the offering or (ii) 12
months from the date of the offering, with the consent of the underwriter,
on not less than thirty (30) days notice at $.05 per Class AWarrant,
provided the average closing price of the Common Stock exceeds $7.20
per share for twenty (20) consecutive trading days ending within fifteen
(15) days prior to the notice.

     On March 6, 1998, the Company raised an additional $110,055, net of
expenses, from the sale of an over-allotment of 25,300 shares of the
Company's common stock.

     The offering raised $2,788,642 cash, net of offering costs.






STRATEGY

     The Company's strategy is to exploit new commercial  markets
by  continuing  to  develop  new  products  and  enhance existing
products  to  improve  both  its  market  share  and  competitive
position.  Growth in commercial sales is expected to come through
internal growth of  existing products,  new product introductions
and the expansion of regional  markets to meet  the growing needs
of   its  customers  for  more  sophisticated  and  comprehensive
products  and  services.  The  Company  introduced  a fiber optic
digitizer during fiscal  1996.  The  Company believes the largest
growth  opportunity  remains  with  the  electric utility market,
although it intends to reach other industrial and utility markets
such as railroad and waste water, respectively. The Company began
an  advertisement  program  during  1996  and devoted substantial
resources as available for promotion.  The Company  intends    to
participate in various trade  shows,  such  as  the     Utilities
Communications Council and IEEE/PES during the forthcoming year.

     The Company will continue to seek out and broaden its  base of
manufacturer reps, other marketing  strategies and acquisitions
to  strengthen its market presence in both areas.

MARKETING AND SALES

     In general, the Company's products are marketed by means  of
telemarketing and customer contacts by the Company's direct sales
force and through independent manufacturing sales representatives
and distributors.

     MILITARY -  The  Company markets its military sales directly
and through independent manufacturing sales representatives.

     COMMERCIAL -  The  Company  markets the PTR-1000, PTR-1500
and all of its INIVEN products by means of Company Sales personnel,
through  independent   manufacturers representatives, and through
distributors, focusing mainly on the largest utilities and co-
generators.   In the United States alone there are over 500
large  entities  generating  electricity which are identified
as investor-owned, municipal systems, cooperative systems  and
federal,  state and district  systems.   The Company intends
to expand its sales efforts and expand sales tointernational
markets.  The Company markets its Gen-1 and Gen-1 Programmable
Series, as well as its "98" Series,  "68" Series and "40"
Series,  in  the  same  way as the PTR-1000 except that the
manufacturers  representatives  used by the Company specialize in
selling to the diverse markets that utilize such products.



Competition

     The market for the Company's  products is very  competitive.
There  are  several  companies  engaged  in  the  manufacture of
products  of the type produced by the Company, most of which are
substantially  larger  and  have  substantially  greater  name
recognition  or greater  financial  resources  and personnel. The
major competitive factors include product quality and reliability
price, service and delivery. Competition is expected  to continue
and  intensify.    The  market  is  also  characterized  by rapid
technological  changes  and  advances.    The  Company  would  be
adversely  affected  if  its  competitors  introduced  technology
superior  products  or offered  these  products  at significantly
lower prices than the Company's products.


Largest Customers

     Sales to the Company's major customers during fiscal 1999
(Schering Plough Corporation, Newark Beth Israel Hospital and
Lockheed Martin) totaled $1,029,935 (41% of all
sales).  Sales to the Company's major customer in 1998
(Bonneville Power Company) totaled $205,868 (27.5% of all sales).
Sales to the Company's two major customers during fiscal 1997
(General Electric and Bonneville Power Authority) totaled $255,500
and $200,000 respectively (22.7% and 17.8%, respectively of all sales).
None of such customers has or had any material relationship other
than business with the Company.


Raw Materials

 Inventory

     The  Company  believes that it has  adequate  sources of raw
materials  available  for use  in  its  business.  The  Company s
products are  assembled from  a  variety  of  standard electronic
components, such as integrated circuits, transformers, transistors,
passive components ( i.e., resistors,  capacitors and inductors),
diodes and assorted  hardware  such  as  printed  circuit boards,
connectors  and faceplates. The Company is not dependent upon any
single supplier.   The Company  also  purchases a number of other
electronic  components and sub-assemblies from various suppliers.
There  has  been  no  material  increase  in the cost of most raw
materials  and  the  Company  has  no  reason  to  anticipate any
significant shortage of raw materials in the future.  The Company
generally is required to maintain adequate amounts of raw material
and parts inventories to meet delivery requirements  of customers
and to assure itself of a continuous availability of these items.

     In  the  past  the  Company  manufactured  and held  in  its
inventory   finished   products   pursuant   to   the    military
specifications and based  upon the military   forecast for future
quantities   and   delivery   schedules.   Widespread    military
procurements were discontinued as a result of the end of the cold
war  and  the  downsizing   of   the  military     establishment.
Consequently,  management  made  a decision  to   write off    a
substantial amount of the  military   inventory.  As a result  of
the Company no longer manufacturers military product in   advance.
Rather, it only schedules   production  as  purchase  orders  are
received.

     During fiscal 1999, the Company wrote off $36,313 of its inventory
as obsolete.


Manufacturing

     Of the 15,700  square  feet  that  the  Company  occupies at
5 Columbia Road in Somerville, NJ,  approximately  10,000  square
feet are dedicated to manufacturing. The Company assembles, under
normal  workload  conditions,  all  the  product  it  sells.  To
accommodate the  peak demands that occur from  time to  time  the
Company  has  developed a  number of  subcontractors to  assemble
boards to the Company's specifications.  All assemblies, however,
are  inspected  and  fully  tested  by  the  Company's   quality,
engineering and testing departments.  The Company maintains  test
equipment and every product is burned-in  (i.e., each  product is
run at full power for 48 hours) and tested prior to shipment. This
control, together  with  design  reliability,  has  permitted the
Company  to  offer  a  12-year  warranty  on  all  its commercial
products.

     In September 1998 the Company sold its facility and is
leasing back approximately 38% of the total space of the building
in a three year prepaid lease.


Warranty and Service

     The Company provides a twelve year warranty on its  products
which covers  parts  and   labor.  The  Company, at  its  option,
repairs  or  replaces  products  that  are found defective during
the       warranty   period   providing    proper      preventive
maintenance  procedures have been  followed by customers. Repairs
that  are  necessitated  by   misuse  of  such  products  are not
covered by the Company's warranty.

     In cases  of  defective  products,  the  customer  typically
returns them to the Company's facility in Somerville, New Jersey.
The  Company's  service  personnel  then  replace  or  repair the
defective items and ship them back to the customer. Generally all
servicing is  completed  at the Company's plant and customers are
charged a fee for those service items that are not covered by the
warranty.  The Company  does  not offer  its customers any formal
written service contracts.




Research and Development

 New Products

     Prior to fiscal 1997, amounts expended by the Company in
recent years  for  research  and development activities have  not
been   material.  During fiscal 1997-98, the Company invested
approximately  $1 million for the design and development of the
PTR 1500. During fiscal 1998-99 the Company invested approximately
$30,000 to complete the accessory modules of the PTR-1500 and extend
the range of its Multiplexer products. The Company completed
the PTR-1000 series option modules and the standard modules of the
PTR1500 QUAD series introducing the first prototype in May 1998
and completed field testing in February 1999.  In March 1999 GE
advised Conolog that it has sold its Power Line Business to the
Trench Group in Canada; which has been in negotiations with
Conolog to enter into a potential purchase and sales agreement.
In September 1999 Conolog received an initial order for PTR1500
equipment from Boston Edison Energy Company valued at $200,000.
    During 1996,  the Company invested  financial  resources  to
design  a fiber optic  digitizer  and a 1200  baud modem  to  be
sold separately or jointly with INIVEN products.    This product
enables the Company's INIVEN products to transmit directly onto
fiber optic cables, and opens a new market for the Company's products.
The Company intends to add designs that will extend its product
capability to handle  new data  inputs  not presently available.
There can be no assurance that the Company will be able to successfully
develop and add designs to its products.

Patents and Trademarks

     The  Company does not have any patents covering any  of  its
present products.  The Company uses the trademark INIVEN for  its
commercial products.  The Company believes that such trademark is
recognized in the Company's industry.  The Company believes  that
its  prospects are dependent primarily upon its ability to  offer
its  customers  high  quality, reliable products  at  competitive
prices  rather  than on its ability to obtain and defend  patents
and  trademarks.  The Company does not believe  that  its  INIVEN
trademark is of material importance to the Company's business.

Backlog

      As  of  July 31,  1999,    the  Company  had  a  backlog  of
approximately $1.6  million.  It is anticipated that this backlog
will be filled during the  balance of calendar year 1999 and  the
2000 fiscal year ending  July 31, 2000.  As of July 31, 1999 and
1998, the Company had  a  backlog of approximately  $1.4 million and
$2.9 million respectively.

     The backlog of orders for the Company's PTR 1000 series of product
consists of multiple blanket contracts at fixed    prices  for the
duration of the contract. There is no obligation or penalty if the
contracts expire prior to additional orders being placed for the
total value of the contract.



Governmental Regulation

     The Company's manufacturing facilities, in common with those
of  industry  generally,  are subject to  numerous  existing  and
proposed  Federal and state regulations designed to  protect  the
environment,  establish occupational safety and health  standards
and   cover  other  matters.   The  Company  believes  that   its
operations are in compliance with existing regulations  and  does
not  believe  that  such compliance has  had  or  will  have  any
material  effect  upon  its  capital  expenditures,  earnings  or
competitive  position.   With  respect  to  military  sales,  the
Company  is not subject to any special regulations.  The products
manufactured  are done so in accordance with accepted  commercial
practices.


Renegotiation

     No  material  portion  of the  Company's  business  has been
subject  to  renegotiation  of  profits  at  the  election of the
Government since 1987.


Seasonality

    The business of the Company is not seasonal, but is sensitive
to general economic factors, such as interest rates, availability
of  credit  for capital  purchases,  overall business climate and
general   business  outlooks  that  historically  impact  capital
purchase decisions.


Foreign Sales

     During fiscal 1999, the Company has foreign sales of approximately
$160,000.  During  fiscal 1998 and 1997, the Company did not have any
foreign sales.  The company had approximately $380,000 in foreign sales to
British Columbia  Hydro Power Authority, Inc.  during fiscal 1996.


Employees

     As of July 31, 1999,  the Company employed  20 persons  on a
full-time basis,  including  2 in management,   1 in sales,  1 in
clerical, 1 in  accounting, 1 in purchasing, 3 in engineering and
11 in production.   The Company has enjoyed good labor relations.
None of the Company's  employees are represented by a labor union
or bound  by a collective bargaining agreement.   The Company has
never suffered a work stoppage.   The Company believes its future
success will depend, in part, on its continued ability to recruit
and retain highly  skilled  management,  marketing  and technical
personnel.




Item 2. PROPERTIES

     In September 1998, the Company sold its facility located at
5 Columbia Road, Somerville, New Jersey in a sale/leaseback
transaction in which the Company is leasing approximately 38%
of the total space in a three year prepaid lease.

Credit Facility and Agreement with CNL Holdings, Inc.

     The  principal amount owing to the Bank under the  Company's
Credit  Facility at June 30, 1996 and amended as of January 1,1997
was  $1,012,500 and the unpaid accrued interest was $48,850.  The
Bank  and  the  Company  entered  into  the  Conolog  Corporation
Allonge  (dated  as of  September 11, 1996) pursuant to which the
Amended  and   Restated  Term Note  dated   as of  August 2, 1995
between the Company and the Bank (the  "Note") was further amended
to  permit the  conversion  by  the Bank  of the  unpaid principal
and  interest  due  under  the Note into  1,400,000 shares  of the
Company's Common Stock and provided for conversion to be exercised
by the Bank or its assignee.     The Bank deferred all payments of
principal and interest under the Note until April 16, 1997.

     Subsequently,  on  September  12,  1996  the  bank  and  CNL
Holdings, Inc., a private investor group,  entered into an  Option
and Purchase, Sale and Assignment  Agreement dated as of September
12,  1996  (the "Option  Agreement").   Under the Option Agreement
the  Bank       granted  an option  to CNL to purchase  all of the
Bank's interest in (i)the Amended and Restated Term Loan Agreement
dated as  of  August  2,  1995  between  the Company and the Bank,
(ii) the Note and (iii) the 375,000 shares of the Company's Common
Stock owned by  the Bank.    CNL paid $150,000 to the Bank for the
option, which  had an exercise  price of $1,500,000  (a balance of
$1,350,000) and an expiration date of April 15, 1997.

     As part of the aforementioned transaction,    CNL     agreed
to   loan   up  to  $2,500,000  to  the  Company  under   certain
circumstances (as described below) and the Company    agreed   to
file a registration statement (the "Registration Statement") with
the  Securities and Exchange Commission to register  the  375,000
shares  of  Common  Stock owned by the Bank and  the    1,400,000
shares  of  Common  Stock  into which  the  Note  is  convertible
(collectively, the "Acquired Shares").  As of January 21, 1998
CNL Holdings, Inc. had loaned the Company $916,235 which was repaid
at the closing of the Company's public offering.

     Each CNL loan carried interest at the rate of 4% per annum and became
due 12 months from the date of such Loan.  At maturity, the Company had
the option to pay each Loan, together with all accrued interest thereon,
or by issuing shares of a new Series C Preferred Stock  (the  "Series C
Preferred") having a value of $5.00 per share for purposes of such
repayment.



     Had the Series C Preferred been issued, it would have been non-voting and
carried a cumulative dividend of 8% per annum which would payable by the
issuance of shares of Common Stock valued at $5.00 per share up to a maximum
of 40,000 shares per annum.  The Series C Preferred would have been convert-
ible into common stock at the rate of one share of common stock for each
share of Series C Preferred and had a liquidating preference of $5.00 per
share.

     The Agreement also provided that for the two year period commencing on the
issuance of any shares of Series C Preferred (the "Registration Period") CNL
may have elected to include its Series C Preferred in any post-effective
amendment to the Registration Statement or any new registration statement
under the Securities Act of 1933, as amended.   In addition, the Agreement
also provided that during the Registration Period, CNL may have given notice
to the Company to the effect that it desired to register its shares under
the Act for public distribution in which case the Company would file a post-
effective amendment to a then current registration statement or a new
registration statement.

     Management believes that these transactions benefited the Company and its
stockholders.  The exercise by CNL of its option under the Option Agreement
converted the Remaining Debt Claim. The Company had the opportunity to, in
effect, exchange its debt for equity and eliminated the Company's default
under the Credit Facility.



Bridge Loan

     In December 1996 and January 1997, the Company obtained Bridge financing
from seven (7) lenders in the amount of $200,000.  These lenders were the
individuals identified as "Selling Security holders." In exchange for making
the loans to the Company, each Selling Security holder received two (2)
promissory notes (the "Bridge Notes"). Certain Bridge Notes were in the
aggregate principal amount of $150,000 (the  "Principal Bridge Notes") and the
other Bridge Notes were in the aggregate principal amount of  $50,000  (the
 "Convertible Bridge Notes").   Each of the Bridge Notes bore interest at the
rate of eight percent (8%) per annum.

     The Bridge Notes were due and payable upon the earlier of (i) January 31,
1999 or  (ii) the date on which the next public offering closed. The
Convertible Bridge Notes were convertible into a total of 1,200,000 Class A
Warrants.  The proceeds of the bridge financing were used by the Company to pay
certain expenses in connection with this offering and to increase working
capital.  Each Class A Warrant contained in the Convertible Bridge Notes was
identical to the Class A Warrants offered therein.

     The Company's agreement with the Selling Security holders provided that
the Company would include in its registration statement a prospectus covering
the Class A Warrants owned by the Selling Security holders.


   On September 12, 1997 the Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission.   This statement covered the
primary offering of securities of the Company and the offering of other
securities by certain selling Security Holders.  The Company registered, under
a primary Prospectus 805,000 Units, each Unit consisting of one (1) share of
common stock and four (4) Class A warrants.    The selling Security Holders
registered, under an alternate prospectus, 1,200,000 Class A warrants.

     The costs were subsequently deducted from the proceeds of the sale of
stock.

     The Bridge loans were repaid on January 28, 1998 at the closing of the
Company's Public Offering.

Item 3. LEGAL PROCEEDINGS

Litigation

     In December 1998, the Company was named in two related litigations
pending, one in the United States District Court for the Southern
District of New York and the other in Superior Court of New Jersey.
The first of the pending litigations was commenced in 1993.  The
litigations relate to a dispute concerning real property acquired
in 1984.  While the property is near real property formerly owned
by Conolog, Conolog was not a party to that transaction.  The claim
made against Conolog alleges that Conolog contributed to environmental
contamination of the property acquired in 1984.  The New York litigation
has been dismissed, although the dismissal is on appeal.  The New
Jersey litigation is in its early stages, insofar as Conolog is
concerned.  However, the Company believes that it has no liability
and intends to vigorously defend itself.

     In the third quarter of fiscal 1999, the Company reached an agreement
in principle to purchase substantially all the stock or assets of Hallmark
Temps, Inc., for use in conjunction with the Company's Atlas Design
business.  After discussions were terminated withhout an agreement having
been reached, Conolog began doing business with an entity owned by
a former employee of Hallmark.  In October 1999, Hallmark filed a
lawsuit in the Superior Court of New Jersey seeking a preliminary
injunction and damages against the Company.  Hallmark alleges that
the Company breached a confidentiality agreement executed by the
Company and Hallmark.  While the litigation is in a very early
stage, the Company believes that it has no liability and intends
to vigorously defend itself.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     During the fiscal quarter ended January 31, 1997,  shareholders
of  the Company  approved  an amendment  to the  Certificate of
Incorporation to increase the total number of authorized shares
of all classes of  stock from 6,500,000 (of which 500,000 shares
were classified as  Preferred  Stock  and  6,000,000  shares are
classified  as  Common  Stock) to  22,000,000  shares  of which
2,000,000 shares are classified  as  Preferred  Stock  and
20,000,000 shares are classified as Common Stock.



       PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

MARKET PRICE FOR COMMON STOCK AND CLASS A WARRANTS

     The Company's  Common Stock and  Warrants  are thinly traded
on  the Nasdaq SmallCap Market, under the symbols CNLG and CNLGW,
respectively. Prior to the August 1995 Offering, the Common Stock
was traded on the OTC Bulletin Board.

        The following table sets forth, for the periods indicated,
the high and  low prices  of the Company's Units (which no longer
trade), Common  Stock and Warrants traded on the  Nasdaq SmallCap
Market for 1997, 1998 and the first, second and third quarters of
1999.  As of October 26, 1999, the Company's Common Stock was held
by approximately 815 shareholders of record.

                  Units        Common  Stock        Warrants

             High     Low      High     Low       High     Low

   1997

   First      ___     ____     5.875     3.00        .9375   .625
   Quarter

   Second     ___     ____      6.125    2.375      1.000    .375
   Quarter

   Third      ___     ____      5.675    2.250       .875    .250
   Quarter

   Fouth
   Quarter    ___     ____      4.250    2.500      1.000    .250



                    Units        Common  Stock        Warrants

             High     Low      High     Low       High     Low
1998
   First
   Quarter    ___     ____      6.00     2.000      2.1875    .4375

   Second
   Quarter    ___     ____      3.875    1.375      1.000     .375

   Third
   Quarter    ___     ____      2.00     0.4375     0.4375    .0625


   Fourth
   Quarter    ___     ____      1.625    0.4375     0.25      .0625


                    Units        Common  Stock        Warrants

             High     Low      High     Low       High     Low


   First
   Quarter    ____    _____	   2.75	.8750	     .4375    .0625

   Second
   Quarter    ____     _____     2.375    1.25       .375     .0625

   Third
   Quarter    ____     _____     1.75      .875       .3125   .125


DIVIDENDS

     Holders of Common Stock are entitled to receive such dividends as
may be declared by the Board of Directors of the Company. To date,
the  Company has  neither declared  nor paid any dividends on its
Common  Stock or on its Preferred A or Preferred B share.     The
Company anticipate that no such dividends will  be  paid  in  the
foreseeable  future.  Rather, the Company intends to  apply   any
earnings to the expansion and development of its  business.   Any
payment of cash dividends on any of its securities in  the future
will  be dependent    upon the future  earnings  of  the Company,
including  its financial condition, capital requirement and other
factors which the  Board  of Directors  deems relevant


Item 6.  SELECTED FINANCIAL DATA
                       			Year Ended
                      			 July 31,
(in thousands, except 	  1999	      1998 	    1997
per share amounts)

Operations Summary:

Net sales and other   	 $2,555   		$746     $1,123
income

Net income (loss)        (1,043)        (1,765)    (3,810)

Income (loss)
per primary                (.24) 	      (.54)     (2.41)
share

Balance Sheet
Summary:

 Total assets            $6,620	    $4,819     $4,340







Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

Results of Operations

     In order to summarize  the Company's  operating  results  for
the past three years, the following tables indicate the percentage
relationships of income and  expense  items in the  statements  of
income and the percentage changes in those items for such years.

Income & Expense Items as          Income &          Percentage
    a Percentage Of Revenues        Expense Items   Increase/Decrease
    From Operations
      For The Years Ended July 31
     1998   1997    1996               1998 to     1997 to     1996 to
                                      1999       1998        1997
    100.0%  100.0% 100.0%   Sales &      254.3%    (33.6%)   (41.6%)
                            other
                            income
     82.4%* 126.0%* 84.2%* Cost of       290.7    (0.5)      (27.9)
                            products
                            sold
     76.5   207.4   182.9   Selling,      26.2   (24.6)     (117.0)
                            general &
                            administrat
                            ive
      0       3.0     7.4   Interest     (95.8)   (72.9)     (38.0)
    161.9   336.5   274.4   Total costs   91.9    (18.5)      29.9
                            & expenses
    (41.5) (236.5) (174.4)  Income        40.9     (9.9)    (338.5)
                            (loss)
                            before
                            taxes
      0       0        .9   Income         0      (98.0)     494.2
                            taxes
                            (credits)
    (41.5)%(236.5)%(175.3)%  Loss before  40.9%   (10.4)%   (339.0)%
                            extraordinary
                            item

*    Includes write-offs for obsolete or excess inventory which were
$36,313, $410,759, and $28,101 in 1999, 1998, and 1997 respectively.


Results of Operations

1999 Compared to 1998

     Total revenue increased $1,809,237 or 242.39% from $746,420 to
$2,555,657 in 1999.  This increase was attributable primarily to
the acquisition of Atlas Design in September 1998.

     Gross Margins for the years ended July 31, 1999 and 1998 totaled
$437,791 and $177,847 representing 17.46% and 25.13% of revenues. Costs
of Sales were higher in 1998 than compared to 1998 due mostly to stock
compensation given to consultants and employees.

     Selling, General and  Administrative expenses increased from
$1,548,446 in 1998 to $1,954,742 in 1999 representing an increase of
26.24% or $406,296. This increase is attributable to shares of
common stock issued to consultants and employees as compensation.

     Interest expense totaled $945 for the year ended July 31,
1999 compared to $22,447 for the year ended July 31, 1998.  This
decrease was a result of the debt repayment from proceeds of the
Company's Public Offering.

     As a result of the foregoing, the Company reported a net loss
of $1,042,919 or  $0.24 per  share. This compares to a net loss of
$1,765,390 or $.54 per share for the same period last year.

1998 Compared to 1997

     Total revenue decreased $376,970 or 33% from $1,123,391 to
$746,420 in 1998.  This decrease was attributable, in part, to
delays in the release of tone protection orders from the Bonneville
Power Authority and other utilities customers which the Company
attributes to budget constraints and the delay in the release of
its new advanced PTR1500 tone protection system.  The Company
shipped its PTR1500 prototype to the General Electric Company (GE)
in May 1998 for extensive electrical and environmental tests.  As
a result of these tests, the Company has agreed to and is presently
redesigning some modules to accommodate modifications requested by
GE to expand the product's range.  The Company plans to ship the
expanded prototypes in late 1998 and production models by the end
of the third quarter ending April 30, 1999.

     Gross Margins, exclusive of inventory adjustments for the
years ended July 31, 1998 and 1997 totaled $177,847 and $198,743
representing 29% and 18% of revenues. Gross margins for 1998 were
higher than 1997 due to efficiencies in lower operating costs.

     Selling, General and  Administrative expenses decreased from
$2,054,630 in 1997 to $1,548,446 in 1998 representing  a decrease  of
24.6% or $506,184. This decrease is attributable to less shares of
common stock being issued as compensation.

     Interest expense totaled $22,447 for the year ended July 31,
1998 compared to $82,932 for the year ended July 31, 1997.  This
decrease was a result of the debt repayment from proceeds of the
Company's Public Offering.


     As a result of the foregoing, the Company reported a net loss
of $1,765,390 or  $0.54 per  share. This compares to a net loss of
$3,810,736 or $1.24 per share for the same period last year.

1997 Compared to 1996

     Total revenue decreased $801,076 or 42% from  $1,924,466  to
$1,123,391 in 1997.  This decrease was attributable to  delays in
the release of tone  protection  orders from the Bonneville Power
Administration  and other customers. The Company attributes these
delays to the budget constraints for various utilities and to the
pending  release  of the new advanced  tone  protection   device,
the PTR-1500.  The Company essentially completed the   prototypes
during  the  first  fiscal  quarter  ended October 31, 1997.  The
Company plans to ship prototypes to GE during November 1997.

     Gross Margins, exclusive of inventory adjustments  for  the
years ended July 31, 1997 and 1996  totaled  $198,743 & $632,185
representing 15.8% and 32.9% of revenues. Gross margins for 1997
were lower than 1996 due to the lower utilization of the factory
in fiscal 1997 over 1996.
     Selling, General and  Administrative expenses increased from
$946,954 in 1996 to $2,054,630 in 1997 representing  an increase  of
117%.  This increase  is the  result of the Company issuing 359,500
shares of Common Stock to eight employees, incurring an additional
$1,313,750 in salary expense.

     Interest expense totaled $82,932 for the year ended July 31,
1997 compared to $133,652 for the year ended July 31, 1996.  This
decrease  was  a result  of lower   outstanding  loan    balances
resulting from the paydown of the credit facility during the year.

     As a result of the foregoing, the Company reported a net loss
before extraordinary item of $1,969,736 or  $1.24 per  share. This
compares to a net loss before extraordinary item of $448,622 or $.43
per share for the same period last year.

LIQUIDITY AND CAPITAL RESOURCES

     Working capital at July 31, 1999 was $4,766,016 compared  to
$4,192,541 at year ended  July  31, 1998.  The improvement in the
working capital is primarily attributable to higher cash reserves
and the sale of the building in September 1998.

     Accounts receivable have increased from $44,477 at year-end
July  31, 1998 to $351,881 at July 31, 1998.  This increase of
$307,404 is the result of the increased sales and related
receivables generated by Atlas Design which is primarily engaged
in providing engineers and other personnel to major companies.

     The Company plans to meet its cash requirements for the next
twelve months through existing cash balances and cash generated from
operations . In  addition, the Company believes that it can obtain
financing  from institutional investors secured by its assets, if
necessary.


Inflation

     Management  believes that the results of operations have not
been  affected  by  inflation  and  management  does  not  expect
inflation  to  have a significant effect on its operations in the
future.


Y2K Issues

     The company contracted a Y2K solution provider to review
its mainframe computer system for Y2K issues and to upgrade the
computer system to be Y2K compliant.  The upgrade was successfully
completed by fiscal year end July 31, 1999.  The Company is in the
process of contacting all of its major suppliers to request
representations that their systems are or will be Y2K compliant.
The Company is in the process of determining the impact, if any,
that third parties who are not Y2K compliant may have on its
operations.	The Company has a contingency plan in the event that
any of its third parties are not Y2K compliant.

	The Company's entire product line is not date sensitive and the
Company presently believes that there are no potential product-related
implications that may result from Y2K issues.


Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial  statements  of Conolog Corporation,  together
with notes and the Independent Auditors  Report,  are  set  forth
immediately following Item 14 of this Form 10-K.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

     None



                            PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

                           MANAGEMENT

Directors and Executive Officers

     The following table sets forth certain information regarding
the  officers  and directors of the Company as of July 31, 1999.

NAME AGE          POSITION

Robert S. Benou      65            President and Director

Arpad J. Havasy      63            Executive Vice President,
                                   Secretary, Treasurer and
                                   Director

Louis S. Massad      62            Director

Marc  R.  Benou      32            Vice President,  Assistant
                                   Secretary and Director

Edward J. Rielly     32            Director

Thomas Fogg          64            Vice President-Engineering


     Robert  S.  Benou has served as President and a Director  of
the  Company  since 1968.  Mr. Benou is responsible for  military
products,  new product development and supervision of  sales  and
marketing.  Mr. Benou is a graduate of Victoria College and holds
a BS degree from Kingston College, England and a BSEE from Newark
College  of  Engineering,  in addition to  industrial  management
courses  at Newark College of Engineering.   Robert S.  Benou  is
the father of Marc R. Benou.

     Arpad  J. Havasy has served as the Company's Executive  Vice
President  and Director since 1968.  Mr. Havasy is a graduate  of
Electromos  E's Gepeszeti Technikum (Hungary) and the  University
of  Budapest.   In addition, Mr. Havasy has attended  courses  at
both  Rutgers University and the American Management Association.
Mr. Havasy is on total disability.

     Louis  S.  Massad has been a Director of the  Company  since
April  1995.  Mr. Massad has been Vice President, Chief Financial
Officer  and  Director of Computer Power Inc.  since  1986.   Mr.
Massad holds a BS and MS degree from Cairo University (Egypt) and
an MBA from Long Island University, New York.


      Marc  R. Benou joined the Company in 1991 and is responsible
for  material, purchasing and inventory control.  In March  1995,
he was elected Vice President, Assistant Secretary and a Director.
Mr. Benou attended Lehigh and High Point University and holds
a BS degree in Psychology and a BS in Business Administration and
Management.   Marc R. Benou is the son of Robert  S.  Benou,  the
Company's President.

     Thomas  R. Fogg joined the Company in 1976 as Chief Engineer
responsible for analog and guidance projects.  Since  1986,  when
he  became Vice President-Engineering, he led the design team  in
the  development of the Company's commercial products.  Mr.  Fogg
holds a BSEE degree from Lafayette College and a MSEE degree from
Rutgers  University.  Mr. Fogg is a fellow of  the  Institute  of
Electrical and Electronic Engineers and has published articles on
delay equalization and the use of crystal resonators.

     Edward J. Rielly has been a Director of the Corporation since
January 1998.  Mr. Rielly is an Application Developer with Chubb & Son.
From 1993 to 1998, Mr. Rielly was an Application Developer with the
United States Golf Association.  Mr. Rielly is a graduate of Lehigh
University and holds a BS in Computer Science.

     Directors hold  office  until  the  annual  meeting  of  the
Company's stockholders  and  the  election  and  qualification of
their successors.  Officers hold  office,  subject  to removal at
any time by the Board, until the meeting of directors immediately
following  the  annual  meeting  of  stockholders and until their
successors are appointed and qualified.

     Section 16 (a) Beneficial Ownership Reporting Requirements
     There were no delinquent or untimely filers during the fiscal
year.




Item 11. EXECUTIVE COMPENSATION

Executive Compensation

     The   following  table  sets  forth  the  cash  compensation
(consisting  entirely of salary) paid (or  accrued  for)  by  the
Company  to  its  President,  the only  executive  officer  whose
aggregate  remuneration exceeded $100,000 in each of the
three Company's fiscal years ended July 31, 1999, 1998 and 1997:


                      Summary Compensation Table

                    Annual Compensation      Long Term Compensation

Name and                             Other Annual
Principal   Fiscal                   Compensation
Position   Year-End  Salary       Bonus (1)        Awards   Payouts

             1999    $190,000        0               0         0
Robert
Benou,
President    1998    $170,000        0               0         0

             1997    $150,000        0               0         0

_________________

Incentive Stock Option Plan

     On May 15, 1995, the  Board  of  Directors  of  the  Company
adopted and on August 14, 1995,  the  shareholders  approved  the
Conolog Corporation 1995/1996  Stock  Option  Plan  ( the "Option
Plan").  The Option Plan is designed to  permit  the  Company  to
grant either incentive  stock  options  under Section 422A of the
Internal Revenue Code  (the "Code") or nonqualified stock options.
Under the Option Plan,  a  Stock  Option  Committee  (the "Option
Committee") of the  Board  is  authorized  to  grant  options  to
purchase up to 200,000 shares of stock to key employees, officers,
directors  and  consultants of the Company.  The Option Committee
administers the Option Plan and designates the optionee's, the type
of  options to be granted (i.e., nonqualified or incentive  stock
options),  the  number of shares subject to the options, and  the
terms  and  conditions  of each option.  The terms and conditions
include the exercise price, date of grant, and date  of  exercise
of each option.  An employee may, at the discretion of the Option
Committee, be permitted to exercise an option and make payment by
giving a personal note.



     Incentive  stock options may only be granted to employees of
the Company and not to  directors  or  consultants who are not so
employed.  The exercise price for incentive stock options must be
at least one  hundred  percent (100%) of the fair market value of
the  Common Stock  as  determined  by the Option Committee on the
date of grant. All incentive stock options  under the Option Plan
must be granted within ten (10) years from  the  date of adoption
of the Option Plan and each option  must  be exercised, if at all,
within ten (10) years of the date  of  grant. In no event may any
employee  be  given  incentive  stock  options whereby more  than
$100,000 of options become exercisable  for  the first time in a
single  calendar  year.   All  incentive  stock  options must  be
exercised by an option within three (3) months  after termination
of the optionee's employment, unless such  termination  is  as  a
result  of  death, disability or retirement.   In  the  event  an
optionee's  employment  is  terminated  as  a  result of death or
disability, such optionee or his designated beneficiary  shall be
entitled to exercise any and all options for a  period  of twelve
(12) months after such termination.  If an  optionee's employment
is terminated as a result of  retirement,  the  optionee shall be
entitled to exercise his options for a period of twenty four (24)
months following such termination.

     Nonqualified  stock options  under  the  Option   Plan   are
generally  subject  to  the  same  rules   as   discussed   above.
Nonqualified stock  options  may, however,  also  be  granted  to
directors and  consultants,  whether  or not such individuals are
employees of the Company.    The  exercise price for nonqualified
stock options may not be granted at less than eighty-five percent
(85%)  of  the  fair  market  value  of the shares on the date of
grant.

EMPLOYMENT AGREEMENTS

     The  Company has  entered into a 5-year employment agreement
commencing June 1, 1997 and ending May 31, 2002, with Robert Benou.
Under his employment  agreement,  Mr. Benou will receive an annual
base salary of  $150,000 for the first  year of employment with an
increase of $20,000 beginning November 1997.  In addition,
Mr. Benou is entitled to an  annual  bonus equal to 6% of the
Company's annual "income before income tax provision" as stated in
its annual Form 10-K. The employment agreement also entitles Mr. Benou
to the use of an automobile and to employee benefit plans, such
as  life,   health,  pension,  profit sharing and other plans.

Under  the employment agreement, employment terminates upon death
or disability of the  employee and employee may be  terminated by
the Company for cause.  The  company presently has a $1
million life insurance policy  on the life of Robert Benou.

     The  Company  has entered into a 5-year employment agreement
commencing  June 1, 1997 and ending May 31, 2002, with Marc Benou.
Under his employment  agreement, Mr. Benou will receive an annual
base salary of $55,000  for  the first year of employment with an
increase of $6,000 beginning June 1998 and every year thereafter.



     Mr. Benou is entitled to an annual bonus equal to 3% of  the
Company's annual "income before income tax  provision" as  stated
in its annual Form 10-K.  The employment  agreement also entitles
him to the use of an automobile and to  employee  benefit  plans,
such as life, health, pension,  profit  sharing  and other plans.
Under the employment agreement, employment terminated upon  death
or disability of the employee and employee  may  be terminated by
the Company for cause.

     On March 12, 1998, the Company entered into a five year employment
with Dina Stellwagen to serve as Corporate Development Manager.
Base salary is $50,000 per annum with annual increases of $4,000.

     The agreement calls for the Corporate Development Manager to receive
a quarterly bonus of 5,000 shares of Common Stock that have not been
registered and eligible for sale under Rule 144 code.  The employment
agreement also entitles her to the use of an automobile and to reimburse
her for all ordinary and necessary business expenses. Eligibility for
all employee benefit  plans, such as life, health, pension, profit
sharing and other plans is provided under the agreement, however, the
Company is not obligated to establish or maintain any of the afore-
mentioned executive plans.  Upon termination without cause, the agree-
ment provides for severance compensation equal to 2.99 times the
average annual compensation.


Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

     The  following table sets forth the beneficial ownership  of
outstanding shares of Common Stock of the Company as of the  date
hereof  by any person who, to the knowledge of the Company,  owns
beneficially more than 5% of the outstanding Common Stock, by all
directors  of the Company, and by the directors and  officers  of
the Company as a group.


      Name and             Amount and
      Address  of          Nature of
   Beneficial Owner(1)  Beneficial Ownership       % of Ownership

     Robert S. Benou        253,100                    4.00%

     Arpad J. Havasy         55,000                     .89%

     Marc R. Benou           21,500            	        .00%

     Louis Massad             5,000                     .00%

     Edward J. Rielly         4,500            	        .00%
 All Directors and Officers
 as a Group (5 persons)      339,100                   5.40%

 (1)  The address for these individuals is c/o Conolog
Corporation, 5 Columbia Road, Somerville, New Jersey 08876.





Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

NONE

FORWARD LOOKING STATEMENTS

     The foregoing contains certain forward looking statements.
Due to the uncertainties associated with doing business with
governmental entities and the release of backlog orders and
competition in a business characterized by rapid technologic
changes and advances, actual results may differ materially from
any such forward looking statements.










                             PART IV
Item 14. EXHIBITS AND REPORTS ON FORM 8-K

(a)Financial Statements

Balance Sheets as of July 31, 1999 and 1998                      F-2-3

Statements of Operations for the years ended
   July 31, 1999 and 1998  						     F-4

Statements of Stockholders' Equity for the years
   ended July 31, 1999 , 1998 and 1997                           F-5-6

Statements of Cash Flows for the years ended July 31, 1999 and
   1998                                                          F-7-8

Notes to Financial Statements                                    F-9 to-19

Index of Exhibits

Exhibit No. Description of Exhibit

1(a)*       Form of Underwriting Agreement

1(b)*       Form of Selected Dealer Agreement

            1(c)*                   Form   of   Agreement   Among
            Underwriters

            3(a)                  Certificate of Incorporation  -
            incorporated   by   reference  to  the   Registrant's
            Exhibit  3.01 to Registration Statement on  Form  S-1
            (File No. 2-31302).



                (b)                 Certificate of  Amendment  of
            Certificate   of  Incorporation  -  incorporated   by
            reference   to   Exhibit  3.02  to  the  Registrant's
            Registration  Statement on  Form  S-1  (File  No.  2-
            31302).

                (c)                 Certificate of  Amendment  of
            Certificate   of   Incorporation   incorporated    by
            reference  to  Exhibit 4 to the Registrant's  Current
            Report on Form 8-K for July 1971.

                (d)                 Certificate of Ownership  and
            Merger  with  respect to the merger of Data  Sciences
            (Maryland)  into  the Registrant and  the  change  of
            Registrant's  name from "Data Sciences  Incorporated"
            to  "DSI  Systems, Inc." - incorporated by  reference
            to  Exhibit  3.03(a) to the Registrant's Registration
            Statement on Form S-1 (File No. 2-31302).




                   (e)                   Certificate    of    the
            Designation,      Preferences      and      Relative,
            Participating,  Option or Other  Special  Rights  and
            Qualifications,  Limitations or Restrictions  thereof
            of  the Series A Preferred Stock (par value $.50)  of
            DSI  Systems,  Inc. - incorporated  by  reference  to
            Exhibit   3.04   to  the  Registrant's   Registration
            Statement on Form S-1 (File No. 2-31302).




                   (f)                   Certificate    of    the
            Designation,      Preferences      and      Relative,
            Participating,  Option or Other  Special  Rights  and
            Qualifications,  Limitations or Restrictions  thereof
            of  the Series B Preferred Stock (par value $.50)  of
            DSI  Systems,  Inc. - incorporated  by  reference  to
            Exhibit 1 to the Registrant's Current Report on  Form
            8-K for November 1972.

                (g)                 Certificate of Ownership  and
            Merger respecting merger of Conolog Corporation  into
            the  Registrant and the changing of the  Registrant's
            name   from   "DSI   Systems,   Inc."   to   "Conolog
            Corporation" - incorporated by reference  to  Exhibit
            3  to the Registrant's Current Report on Form 8-K for
            June 1975.

                (h)                Amended By-Laws - incorporated
            by  reference  to  Exhibit 3(h)  to the  Registrant's
            Annual Report on Form 10-K for the fiscal year  ended
            July 31, 1981.

4(a)*       Specimen   Certificate for shares of Common Stock

 (b)*       Specimen Certificate for Class A Warrant

 (c)*       Form of Warrant Agreement

 (d)*       Form of Representative's  Unit Purchase Option

 (e)*       Form  of Financial Consulting Agreement

 10.1        Credit  Facility  documents between  Manufacturers Hanover
            Trust Company and  the Registrant  pursuant to which Registrant
            obtained  a  Credit  Facility  for $4,000,000  -  incorporated
            by reference   to   Exhibit  6A-D  to  the  Registrant's
            Current Report on Form 8-K dated April 5, 1989.

10.2  *     Conolog Corporation 1995/1996 Stock Option Plan.

10.3 ***    Option  and  Purchase, Sale and Assignment Agreement,
            dated  as  of  September 12, 1996 by and between  The
            Chase Manhattan Bank and CNL Holdings, Inc.

10.4 ***    Irrevocably Proxy dated as of September 12,  1996  by
            and   between   CNL   Holdings,  Inc.   and   Conolog
            Corporation.

10.5 ***    Agreement  dated September 12, 1996  by  and  between
            CNL Holdings, Inc. and Conolog Corporation.

10.5 (A)**  Amendment No. 1 dated January 31, 1997 to Conolog Corporation
            Allonge.



10.6        Agreement with General Electric Company dated April 1, 1997
            incorporated by reference to the Company s  Form 10-Q for the
            quarter ended April 30, 1997.

10.7****    Employment Agreement dated June 1, 1997 between Robert
            Benou and Conolog Corporation

10.8****    Employment Agreement dated June 1, 1997 between Marc Benou
            and Conolog Corporation

10.9*****   Employment Agreement dated March 1, 1998 between Dina Stellwagen
            and Conolog Corporation
___________________

*    Incorporated  by reference to the Registrant's  Registration
Statement on Form S-1 (33-92424).

**  Filed by Amendment to the Registrant's Registration Statement
file on Form S-1 (File No. 0-8184) as filed on October 16, 1996.


***  Incorporated  by reference to the Registrant's  Registration
Statement file on Form S-1 (File No 0-8174) as filed on  October
16, 1996

****  Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (File No. 0-8174) as filed on September 12,
1997



(b) Reports on Form 8-K
               None

















                           SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
	Conolog Corporation
	By:
October 28, 1999	/s/ Robert S. Benou
	President, Chief Executive
	Officer and Chairman of the Board

In accordance with the Exchange Act, this report has been signed
below by the following persons, on behalf of the registrant and
in the capacities and on the dates indicated.

October 28, 1999
	/s/Robert S. Benou
	President, Chief Executive Officer
	and Chairman of the Board

October 28, 1999	/s/Arpad J. Havasy
	Executive Vice President, Secretary,
	Treasurer and Director

October 28, 1999	/s/Marc R. Benou
	Vice President, Assistant Secretary and Director

October 28, 1999	/s/Louis S. Massad
	Director

















				Conolog Corporation and Subsidiary

				Consolidated Financial Statements

						July 31, 1999






















































					Annual Report on Form 10-K

					Item 8, Item 14 (a)(1) and (2)

				    Consolidated Financial Statements

					Year Ended July 31, 1999



				   Conolog Corporation and Subsidiary

					   Somerville, New Jersey
































				Form 10-K - Item 14 (a) (1) and (2)
			Index to the Consolidated Financial Statements
				Conolog Corporation and Subsidiary
						July 31, 1999





											Page

The following consolidated financial statements of the registrant
are included in Item 14:

Independent Auditors' Report							F-1

Consolidated Balance Sheets - July 31, 1999 and 1998			F-2 - F-3

Consolidated Statements of Operations - Years Ended July 31,
1999, 1998 and 1997								F-4

Consolidated Statements of Stockholders' Equity (Deficiency) -
Years Ended July 31, 1999, 1998 and 1997					F-5 - F-6

Consolidated Statements of Cash Flows - Years Ended July 31,
1999, 1998 and 1997								F-7 - F-8

Notes to the Consolidated Financial Statements				F-9 - F-19






























					Independent Auditor's Report


To the Board of Directors of
Conolog Corporation and Subsidiary


   We have audited the accompanying consolidated balance sheets of Conolog
   Corporation and Subsidiary as of July 31, 1999 and 1998 and the related
   consolidated statements of operations, stockholders' equity (deficiency)
   and cash flows for each of the three years in the period ended July 31,
   1999.  These financial statements are the responsibility of the Company's
   management.  Our responsibility is to express an opinion on these financial
   statements based on our audits.

   We conducted our audits in accordance with generally accepted auditing
   standards.  Those standards require that we plan and perform the audit
   to obtain reasonable assurance about whether the financial statements
   are free of material misstatement.  An audit includes examining, on a
   test basis, evidence supporting the amounts and disclosures in the
   financial statements.  An audit also includes assessing the accounting
   principles used and significant estimates made by management, as well
   as evaluating the overall financial statement presentation.  We believe
   that our audits provide a reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
   present fairly, in all material respects, the financial position of Conolog
   Corporation and Subsidiary as of July 31, 1999 and 1998, and the results of
   its operations and its cash flows for each of the three years in the period
   ended July 31, 1999 in conformity with generally accepted accounting
   principles.


ROSENBERG RICH BAKER BERMAN AND COMPANY

Bridgewater, New Jersey
October 15, 1999







												F-1









		      	  Conolog Corporation and Subsidiary
					Consolidated Balance Sheets

										July 31,
									1999			1998
Assets

Current Assets

	Cash and equivalents				$ 1,142,572	  	  $ 1,108,581
	Accounts receivable - less allowances
	   of $6,000 in 1999 and 1998			     351,881	       44,477
	Inventories
	   Finished goods					     714,001	      905,939
	   Work-in-process				   1,285,168	    1,205,450
	   Materials and supplies			   1,194,546          1,098,879
								 ------------	   ----------
								   3,193,715	    3,210,268

Other current assets
   Prepaid consulting fees			           103,264			-
   Other current assets				           285,021		 30,531
						             ------------	   ----------
Total Current Assets			               5,076,453	    4,393,857


Property, Plant and Equipment
Land and improvements					          - 		 34,524
Building and improvements				          -	            700,461
Leasehold improvements					     12,478		     	      -
Machinery and equipment				        1,331,800	          1,328,218
Furniture and fixtures				          378,767	            341,607
Computer software						     17,986	              8,601
								 ------------	   ----------
                                                  1,741,031	          2,413,411

Less allowance for depreciation and amortization   1,604,796	    1,997,607
								 ------------	   ----------
                                                     136,235		415,804

Goodwill,net of accumulated amortization of $3,129   140,108			-
Prepaid consulting fees					   1,187,970			-
Other assets							79,658		  9,803
								-------------	   ----------

Total Assets						$  6,620,424	  $ 4,819,464
								=============	 ============
See notes to the consolidated financial statements.

												F-2






                                                         July 31,

                                                  1999	     	   1998

   Liabilities
Current Liabilities
   Accounts payable					$  49,604	     $  60,845
   Accrued payroll					   34,330	 	  30,950
   Accrued expenses					  175,078		 115,337
   Deferred gain on sale of assets			   51,425			 -
								----------		---------
Total Current Liabilities			        310,437		 207,132


Deferred gain on sale of assets 			   79,658			 -
								----------		---------
Total Liabilities					        390,095		 207,132


Stockholders' Equity
   Preferred Stock, par value $.50; Series A;
     4% cumulative; 162,000 shares authorized;
     155,000 shares issued and outstanding	   77,500		  77,500
   Preferred Stock, par value $.50; Series B;
     $.90 cumulative; 50,000 shares authorized;
     1,197 shares issued and outstanding			597		     597
   Common Stock, par value $0.01 (1999), $1.00
     (1998); 20,000,000 shares authorized;
     issued 5,912,987 shares in 1999 and 3,724,773
     shares in 1998, including 8,813 shares held
     in Treasury 						   59,130	     3,724,773

   Contributed Capital				     15,973,954        9,643,215
   Retained Earnings (Deficit)		     (9,749,118)	    (8,702,019)
   Treasury Shares at Cost			       (131,734)        (131,734)
							    ------------	   ------------
Total Stockholders' Equity				6,230,329	     4,612,332
							    ------------	   ------------

  Total Liabilities and Stockholders' Equity  $ 6,620,424	   $ 4,819,464
							    ============     ============







See notes to the consolidated financial statements.
												F-3




				Conolog Corporation and Subsidiary
				Consolidated Statements of Operations


                                               Year Ended July 31,

                                        1999		  1998	   1997

Revenue					$ 2,508,373	   $   707,805   $  1,116,122
Costs of revenue				  2,070,582	       529,958	    917,379
						------------   ------------   ------------
Gross Profit				    437,791		 177,847	    198,743
						------------   ------------   ------------
Selling, general and administrative	  1,954,742      1,548,446      2,054,630
						------------   ------------   ------------
Loss From Operations		       (1,516,951)    (1,370,599)    (1,855,887)
						------------   ------------   ------------
Other Income (Expense)

   Interest income			     47,284		  38,615	      7,268
   Interest expense				 (945)	 (22,447)	    (82,932)
   Gain on sale of assets		    464,206		 	 -	 	   -
   Write-off of obsolete or
excess inventories		          (36,313)      (410,759)	    (28,101)
						------------   ------------   ------------
Total Other Income (Expense)	          474,232	      (394,591)	   (103,765)


Loss Before Income Taxes and
   Extraordinary Items			 (1,042,719)    (1,765,190)    (1,959,652)

Provision for Income Taxes			  200	 	     200   	     10,084
						------------   ------------   ------------

Net Loss Before Extraordinary Items  (1,042,919)    (1,765,390)    (1,969,736)

Extraordinary Item				    -		     	 -     (1,841,000)
						------------   ------------   ------------

Net Loss					$(1,042,919)   $(1,765,390)   $(3,810,736)
						============   ============   ============

Loss from Continuing Operations
Per Share				      $      (.24)   $      (.54)   $     (1.24)

Loss Per Share
- Basic loss per share		      $      (.24)   $      (.54)   $     (2.41)
- Diluted loss per share	      $      (.24)   $      (.54)   $     (2.41)



See notes to the consolidated financial statements.

												F-4





	Conolog Corporation and Subsidiary
		Consolidated Statement of Stockholders' Equity (Deficiency)





                   Series A 	       Series B
                   Preferred 	       Preferred 	     Common	      Contributed
	             Stock 	       Stock		Stock		Capital
	             -----------	 -----------   ------------   -------------
Balance at
   July 31, 1996		$  77,500	  $     597	   $ 1,035,186     $ 4,512,204

Debt to equity conversion       -		    -	     1,408,787	   1,563,377
Additional shares issued
   to employees			  -		    - 	 359,500	     954,250
Net loss for the year		  -		    -			 -		     -
Dividends				  -		    -			 -		 4,177
				----------    ----------   ------------    ------------
Balance at
   July 31, 1997		   77,500		  597	     2,803,473	   7,034,008
Public stock offering		  -		    - 	 725,300 	   2,045,777
Additional shares issued
   to employees			  -		    -		  55,000	      80,100
Additional shares issued
   to consultant			  -		    -		 141,000	     429,150
Debt to Equity Conversion	  -		    -			 -	      50,000
Net Loss for the Year		  -		    -			 -		     -
Dividends				  -		    -			 -		 4,180
				----------	  ----------    -----------    ------------
Balance at
   July 31, 1998		   77,500     	  597	     3,724,773	   9,643,215
Debt to equity conversion	  -		    -		 300,000		    -
Additional shares issued
   to employees			  -		    -		 746,000	      34,719
Additional shares issued
to consultants			  -		    -      1,142,143	     438,054
Net Loss for the Year		  -		    -			 -		     -
Dividends				  -		    -			 -		 4,180
Change in par value from
   $1.00 to $0.01			  -		    -	    (5,853,786)	   5,853,786
				----------	  ----------    -----------     -----------
Balance at
   July 31, 1999		$  77,500	  $     597	    $   59,130	 $15,973,954
				==========    ==========    ===========    ============







												F-5






	              Conolog Corporation and Subsidiary
		Consolidated Statement of Stockholders' Equity (Deficiency)

						(Continued)
											    Total
						Retained			    Stockholders'
						Earnings	    Treasury      Equity
						(Deficit)	     Stock	    (Deficiency)
   	                            -------------      --------    -------------
Balance at July 31, 1996	   $ (3,117,536)	   $ (131,734)    $  2,376,217
Debt to equity conversion			  - 		      -	   2,972,164
Additional shares issued
   to employees					  -			-	   1,313,750
Net loss for the year		     (3,810,736)			-	  (3,810,736)
Dividends					   (4,177)			-		    -
					   -------------	   -----------	 ------------
Balance at July 31, 1997	     (6,932,449)	     (131,734)	   2,851,395
Public stock offering			   	  -			-	   2,771,077
Additional shares issued
   to employees					  -			-	     135,100
Additional shares issued
   to consultant					  -			-	     570,150
Debt to Equity Conversion			  -			-		50,000
Net Loss for the Year		     (1,765,390)			-	  (1,765,390)
Dividends					   (4,180)			-		     -
					   -------------     -----------     ------------
Balance at July 31, 1998	     (8,702,019)       (131,734)       4,612,332
Debt to equity conversion			  -			-	     300,000
Additional shares issued
   to employees					  -			-	     780,719
Additional shares issued
   to consultants					  -			-	   1,580,197
Net Loss for the Year		     (1,042,919)			-	  (1,042,919)
Dividends					   (4,180)			-		     -
Change in par value from
   $1.00 to $0.01					  -			-		     -
					    ------------    ------------     ------------
Balance at July 31, 1999	    $(9,749,118)     $ (131,734)     $ 6,230,329












See notes to the consolidated financial statements.

												F-6



				  Conolog Corporation and Subsidiary
				Consolidated Statements of Cash Flows

								    Year Ended July 31,

								1999		1998		1997
Cash Flows From Operating Activities
   Net Loss						$(1,042,919) $(1,765,390)$(3,810,736)
   Adjustments to Reconcile Net Loss to Net
     Cash Used by Operating Activities
   Debt retirement cost					    -		     -   1,841,000
   Common stock base compensation		    715,406      135,100   1,313,750
   Common stock for consulting fees           107,206      570,150           -
   Depreciation and amortization		     39,407		59,419      57,781
   Gain on disposition of assets	   	   (413,789) 	     -	     -

Provision for losses on accounts receivable      -		     -	(8,000)
(Increase) Decrease in Operating Assets
   Accounts receivable				   (307,404)	65,094     202,449
   Inventories					     16,553	     (36,476)   (236,012)
   Other current assets				    (72,733)	13,554	  (568)
   Other assets					    (69,855)	     -	     -
Increase (Decrease) in Operating Liabilities
   Accounts payable				    (11,241)    (127,665)    (92,119)
   Accrued expenses and other liabilities	     63,121	     (33,523)     78,241
   Deferred gain on sale of assets		    131,083		     -	     -
							   ---------  -----------    --------
     	Net Cash Used by Operating Activities  (845,165)  (1,119,737)   (654,214)
							   ---------  -----------   ---------
Cash Flows From Investing Activities
   Purchase of equipment and
       leasehold improvements			    (62,604)     (87,418)    (11,680)
   Proceeds from sale of assets		    719,684		     -	     -
   Purchase of intangible assets		   (143,237)	     -	     -
							   ---------  -----------    --------
Net Cash Provided (Used) by
  Investing Activities			          513,843	     (87,418)    (11,680)
Cash Flows From Financing Activities
   Deferred offering costs				    -      113,813    (113,813)
   Increase from public stock offering		    -	   2,771,077  	     -
   (Repayment) proceeds from borrowings		    -	    (916,235)    916,235
   Increase (Decrease) in bridge loan		    -	    (150,000)    200,000
   Repayments of long-term borrowings		    -	      (3,802)    (34,453)
   (Increase) reductions in other assets		    -		(2,334)	22,929
   Proceeds from issuance of stock options     65,313		     -	     -
   Proceeds from sale of convertible
Debentures					          300,000		     -	     -
							   ---------  ------------   --------
    Net Cash Provided by Financing Activities 365,313    1,812,519     990,898
							   ---------  ------------   --------
Net Increase in Cash and Equivalents	     33,991	     605,364     325,004
Cash and Equivalents at Beginning of Period 1,108,581	     503,217     178,213
						      ------------  ------------  ---------
Cash and Equivalents at End of Period	$ 1,142,572	 $ 1,108,581   $ 503,217
							============  ============ ==========
See notes to the consolidated financial statements.
												F-7



                  	Conolog Corporation and Subsidiary
			    Consolidated Statements of Cash Flows


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid (received) during the year for:


Interest					$   945	$  39,821	$  77,349
Taxes						$   200	$  (9,520)	$  10,084


SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
   On January 21, 1998, the Company satisfied a $50,000 Bridge Loan with the
   conversion of the loan to 1.2 million Class A warrants.

   During fiscal year ended July 31, 1999, the Company satisfied the $300,000
   convertible debentures with conversion of the bonds to 300,000 common stock
   shares.

   During fiscal year ended July 31, 1999, the Company issued 1,092,143 shares
   of common stock for consulting services.




























See notes to the consolidated financial statements.
												F-8




				Conolog Corporation and Subsidiary
			Notes to the Consolidated Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Organization
   The principal business activity of Conolog Corporation (the "Company") is
   The design, manufacturing and distribution of small electronic and
   electromagnetic components and subassemblies for use in telephone, radio and
   microwave transmissions and reception and other communication areas.  The
   Company's products are used for transceiving various quantities, data and
   protective relaying functions in industrial, utility and other markets.  The
   Company's customers include primarily industrial customers, which include
   power companies and various branches of the military.

   During the year, the Company formed a wholly owned subsidiary, Nologoc
   Corporation.  In September 1998, Nologoc Corporation purchased the assets of
   Atlas Design, Inc. and is currently trading as Atlas Design.  Atlas Design
   provides short term and long term qualified engineering and technical staff,
   as well as human resource consulting to various industries.

Principles of Consolidation
   The consolidated financial statements include the accounts of Conolog
   Corporation and its wholly owned subsidiary.  All significant intercompany
   balances and transactions have been eliminated.

Cash and Equivalents
   For the purpose of the statements of cash flows, cash equivalents include
   time deposits, certificates of deposit and all highly liquid debt
   instruments with original maturities of three months or less.

Inventories
   Inventories are valued at the lower of cost (determined on a first-in, first
   out basis) or market.

Property, Plant and Equipment
   Property, plant and equipment are carried at cost, less allowances for
   depreciation and amortization.  Depreciation and amortization are computed
   by the straight-line method over the estimated useful lives of the assets.
   Depreciation and amortization was $39,407, $59,419 and $57,781 for the years
   ended July 31, 1999, 1998 and 1997, respectively.

Revenue Recognition
   Sales are recognized when the products are shipped and services are
   performed.  Sales under certain fixed-price-type contracts, where progress
   payments are received, are recognized when work is performed, under the
   percentage-of-completion method, in accordance with Statement of Position
   81-1, Accounting for Performance of Construction Type and Certain
   Production-Type contracts.




F-9




Conolog Corporation
	Notes to the Consolidated Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

Costs of Revenue
   Costs of revenue includes direct costs to produce product and direct costs
   to provide services.

Goodwill
   Goodwill represents the excess of the purchase price of assets acquired over
   the fair market value at the date of acquisition and is being amortized on
   the straight line method over 40 years.  Amortization expense charged to
   operations for 1999 was $3,129.

Advertising Costs
   Advertising costs are charged to operations when incurred. Advertising
   expense was $20,589, $7,354 and $27,915 for the years ended July 31, 1999,
   1998 and 1997, respectively.

Securities Issued for Services
   The Company accounts for common stock issued for services by reference to
   the fair market value of the Company's stock on the date of stock issuance.
   Compensation and consulting expense is recorded for the fair market value of
   the stock issued.

Income Taxes
   Income taxes are provided for the tax effects of transactions reported in
   the financial statements and consist of taxes currently due plus deferred
   taxes related primarily to differences between the bases of assets and
   liabilities for financial and income tax reporting.  The deferred tax assets
   and liabilities represent the future tax return consequences of those
   differences, which will either be taxable or deductible when the assets and
   liabilities are recovered or settled.  Deferred taxes also are recognized
   for operating losses that are available to offset future federal and state
   income taxes.

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 number of shares used in
   the computations were 4,336,009,  3,251,150 and 1,581,218 for 1999,  1998
   and 1997 respectively.  The effect of assuming the exchange of the warrants,
   Series A Preferred Stock and Series B Preferred Stock in 1999 and 1998 would
   be anti-dilutive.

Use of Estimates
   The preparation of financial statements in conformity with generally
   accepted accounting principles requires management to make estimates and
   assumptions that affect the reported amounts of assets and liabilities and
   disclosure of contingent assets and liabilities at the date of the financial
   statements and the reported amounts of revenues and expenses during the
   reporting period.  Actual results could differ from those estimates.

												F-10


                             Conolog Corporation
			Notes to the Consolidated Financial Statements


CONCENTRATIONS OF BUSINESS AND CREDIT RISK

   At times throughout the year, the Company may maintain certain bank accounts
   in excess of FDIC insured limits.

   The company provides credit in the normal course of business.  The Company
   performs ongoing credit evaluations of its customers and maintains
   allowances for doubtful accounts based on factors surrounding the credit
   risk of specific customers, historical trends, and other information.

NOTES PAYABLE - OTHER

   CNL Holdings, Inc. loaned the Company $916,235.  The notes were due
   During the fiscal year July 31, 1998 and bore interest at the rate
   of 4% per annum.  The loans were payable in cash or Series C
   Preferred Stock, at the Company's option at $5.00 per share.
   Interest was payable in Common Stock up to a maximum of 40,000
   shares per annum.  On January 21, 1998, the Company paid CNL
   Holdings, Inc. $916,235 plus accrued interest of $25,421 in cash.
   This effectively eliminated all debts and liens with CNL Holdings,
   Inc.

BRIDGE LOAN

   The Company received $200,000 in net proceeds from several investors in a
   private placement.  Each investor received two (2) Promissory Notes.
   Promissory Notes (the "First Note") totaling $150,000 were due and payable
   on the earlier of January 31, 1999 or the closing of the Company's next
   public offering (the "First Note").  The Second Convertible Note (the
   "Second Note"), totaling $50,000 plus accrued interest was payable on the
   earlier of January 31, 1999 or the closing of the Company's next public
   offering, or convertible at the time the next Registration Statement is
   declared effective by the Securities and Exchange Commission and at the
   option of the selling security holders into a total of 1.2 million Class A
   Warrants.  Each Class A Warrant contained in the Second Note is identical to
   the Company' currently outstanding Class A Warrants.  On January 21, 1998,
   at the closing of the Company's public offering, $150,000 plus accrued
   interest of $13,306 was paid in cash in full settlement of the First Note.
   The Second Note was satisfied with the 1.2 million Class A Warrants issued
   on January 21, 1998.

LEASES

   The Company leases their facility and various equipment under operating
   leases.  Equipment leases expire during fiscal year ended July 31, 2000.  As
   part of the sale leaseback of the facility, the company entered into a three
   year prepaid lease.

   Total rental expense for all operating leases of the Company amounted to
   approximately $58,000, $7,659 and $10,353 during the years ended July 31,
   1999, 1998 and 1997, respectively.
												F-11




                              Conolog Corporation
			Notes to the Consolidated Financial Statements

INCOME TAXES

   The income tax provision is comprised of the following:

                                                     July 31,

                                           1999		1998		1997

Current Income Taxes
Federal					   $     -      $      -    $  9,884
State							 200		   200	   200
						   --------     ---------   --------
         				         $   200	    $    200    $ 10,084

   A reconciliation between taxes computed at the federal statutory rate and
   the effective tax rate follows:

                                                      July 31,
                                          1999		1998		1997

Federal statutory tax rate		     (34.0)%     (34.0)%     (34.0)%
Valuation Allowance on Net Operating Loss
   Carryover					34.0		34.0 		34.0
Permanent and other differences	         -		   - 		 0.5
						    -------     -------    -------
                                             - %	   - %	 0.5 %

   Deferred taxes are recognized for temporary differences between the bases of
   assets and liabilities for financial statement and income tax purposes.

   The temporary differences causing deferred tax benefits are primarily due to
   net operating loss carryforwards.

   At July 31, 1999, the Company has net operating loss carryforwards for
   federal and state income tax purposes of approximately $3,925,100 and
   $4,834,607, respectively, which are available to offset future Federal and
   State taxable income, if any.  The federal and state net operating loss
   carryforwards expire as follows:
                                        Federal		   State
               2001	        $         -	   $    706,241
               2002				-		  897,997
               2004				-		  542,540
               2005				-		1,649,146
               2006				-		1,038,683
               2014			679,324			  -
               2017			550,752			  -
               2018		    1,656,388			  -
               2019		    1,038,636			  -
					  ------------	    ------------
    					  $ 3,925,100	    $ 4,834,607
				        ============	    ============
										F-12




                               Conolog Corporation
			Notes to the Consolidated Financial Statements

INCOME TAXES, Continued

   At July 31, 1999 the Company has available unused general business credits
   that may provide future tax benefits and expire as follows:

                                  Amount

              2000		   $ 12,100
              2001	           26,300
              2002		     64,900
				         ---------
        				   $103,300
					   =========
The Company's deferred tax asset is comprised of the following temporary
differences:

                                        Federal		State

Net operating losses and tax
   credit carryforwards			$ 1,438,508		$  435,115
Less:  valuation allowance		 (1,438,508)	  (435,115)
						------------	-----------
   Net Deferred Tax Assets		$         -		$        -
						============      ===========
   The net change in the valuation allowance decreased by approximately
   $63,000.

PROFIT SHARING PLAN

   The Company sponsors a qualified profit sharing plan that covers
   substantially all full time employees.  Contributions to the plan are
   discretionary and determined annually by management.

   The Plan also provides an employee savings provision (401(k) plan) whereby
   eligible participating employees may elect to contribute up to 15% of their
   compensation to an investment trust.  The Company contributes $2 for every
   $1 of the participant's elective contribution, up to 6% of the participant's
   compensation.

   The total expense for the above plan amounted to $68,763, $52,721 and
   $28,531 for the years ended July 31, 1999, 1998 and 1997, respectively.










												F-13



					Conolog Corporation
			Notes to the Consolidated Financial Statements


CAPITAL STOCK

   The Series A Preferred Stock provides 4% ($.02 per share) cumulative
   dividends, which were $93,000 in arrears at July 31, 1999.  In addition,
   each share of Series A Preferred Stock may be exchanged for one share of
   Common Stock upon surrender of the Preferred Stock and payment of $1,200 per
   share.  The Company may redeem the Series A Preferred Stock at $.50 per
   share plus accrued and unpaid dividends.

   The Series B Preferred Stock provides cumulative dividends of $.90 per share
   which were $30,097 in arrears at July 31, 1999.  In addition, each five
   shares of Series B Preferred Stock is convertible into 1 share of Common
   Stock.  The Company may redeem the Series B Preferred Stock at $15 per share
   plus accrued and unpaid dividends.

   The Company has reserved 155,392 shares of Common Stock for Series A and B
   Preferred Stock.

WARRANTS

   The Company issued common stock purchase warrants separately and as a part
   of the previous offerings as follows:
						  Exercise	   Original      Extended
				Number of	  Price Per    Expiration    Expiration
      Date of Grant	Shares 	  Share           Date		  Date


      8/16/95	     1,135,750       $6.00	    8/16/98		8/16/02
      1/21/98	     2,901,200	   $6.00	    8/30/02		     -
      1/21/98	     1,200,000	   $5.25	    1/21/01		     -

MAJOR CUSTOMERS

   The following summarizes sales to major customers (each 10% or more of net
   sales) by the Company:


	       Sales to Major		Number of		Percentage of
Year Ended    Customers			Customers		Total

   1999	   1,029,935			3		   41
   1998	     205,868			1		   28
   1997	     625,134			3		   57







												F-14




						Conolog Corporation
				Notes to the Consolidated Financial Statement



COMMITMENTS AND CONTINGENCIES

Employment Agreements
   On February 18, 1999 the Company amended the employment agreement, dated
   June 1, 1997, with Robert Benou, to serve as the Company's President through
   May 31, 2002.  Base salary under the agreement is $190,000 per annum with
   Annual increases of $20,000.  The agreement also calls for an annual bonus
   equal to 6% of the Company's income before income taxes as stated in its
   annual Form 10-K.  Employee benefit plans, such as life, health, pension and
   other plans are provided under the agreement.  The Company will also provide
   reimbursement of ordinary and necessary business expenses and a monthly car
   allowance.  A noncompetition/nonsolicitation restriction applies for one
   year after termination of employment.  Upon termination without cause, the
   agreement provides for severance compensation equal to 2.99 times the
   average annual compensation.

   The Vice President of the Company entered into an employment agreement on
   June 1, 1997.  The agreement is for a period of five years expiring May 31,
   2002. Pursuant to the terms of agreement, the officer is to receive a base
   salary of $55,000 for the period June 1, 1997 through May 31, 1998 and an
   increase of $6,000 per annum for each twelve month period thereafter.  The
   agreement also calls for an annual bonus equal to 3% of the Company's income
   before income taxes as stated in its annual Form 10-K.  The Vice President
   is entitled to participate in all general pension, profit-sharing, life,
   medical, disability and other insurance and executive benefit plans at any
   time in effect for executives of the Company, however, the Company is not
   obligated to establish or maintain any of the aforementioned executive
   benefit plans.  The Company will also provide an automobile for the use of
   the Vice President and reimburse him for all ordinary and necessary business
   expenses.  A noncompetition/nonsolicitation restriction applies for six
   months after termination of employment.  Upon termination without cause the
   agreement provides for severance compensation equal to 2.99 times the
   average annual compensation paid by the Company.

   On March 1, 1998, the Company entered into an employment agreement with a
   Company executive to serve as a Corporate Development Manager for a period
   of five years.  Base salary under the agreement is $50,000 per annum with
   annual increases of $4,000.  The agreement calls for the Corporate
   Development Manager to receive a quarterly bonus of 5,000 shares of Conolog
   Corporation stock that have not been registered and eligible for sale under
   Rule 144 code.  Eligibility for all general pension, profit-sharing, life,
   medical disability and other insurance and executive benefit plans is
   provided under the agreement, however, the Company is not obligated to
   establish or maintain any of the aforementioned executive plans.  The
   Company will also provide an automobile for the use of the Corporate
   Development Manager and reimburse her for all ordinary and necessary
   business expenses.  Upon termination without cause, the agreement provides
   for severance compensation equal to 2.99 times the average annual
   compensation.
												F-15




					Conolog Corporation
			Notes to the Consolidated Financial Statements

COMMITMENTS AND CONTINGENCIES, Continued

Option Agreement
   The Company and CLOG LLC have entered into an Option Agreement, dated as of
   December 22, 1998, which was amended and restated as of May 5, 1999 (the
   "Option Agreement").  Pursuant to the Option Agreement, the Company has
   granted an option to CLOG to purchase convertible debentures of the Company
   having an aggregate principal amount of up to $2,000,000.  CLOG's option may
   be exercised at any time prior to December 31, 1999.

   Each convertible debenture is convertible into common stock of the Company
   at a conversion rate of $1.00 per share, the fair market value of the common
   stock on the date of the Option Agreement.  If CLOG were to exercise its
   option for all $2,000,000 for convertible debentures, it would have the
   right to convert those notes into 2,000,000 shares of common stock.  The
   Option Agreement provides that the voting power of any Conversion Shares
   owned by CLOG will be voted in the same manner as shares voted by all other
   shareholders of the Company.

   Each convertible debenture will bear interest at the rate of 8% per annum
   and will be due 12 months from the date such debenture is issued.  With
   respect to the initial $200,000 loaned, the Company will have the option to
   pay each debenture, together with all accrued interest thereon, by issuing
   shares of a new Series C preferred stock having a value of $5.00 per share
   for purposes of such payment.

   The Series C preferred will be non-voting and carry a cumulative dividend of
   8% per annum, which may be payable by the issuance of shares of common stock
   valued at $5.00 per share.  The Series C preferred will be convertible into
   common stock at the rate of one share of common stock for each share of
   Series C preferred and have a liquidating preference of $5.00 per share.
   The Series C preferred may be redeemed by the Company at any time by paying
   $5.00 in cash therefor.

   During the year CLOG purchased $300,000 worth of convertible debentures and
   subsequently converted them to common stock.

Legal Matters
     In December 1998, the Company was named in two related litigations
     pending, one in the United States District Court for the Southern
     District of New York and the other in Superior Court of New Jersey.
     The first of the pending litigations was commenced in 1993.  The
     litigations relate to a dispute concerning real property acquired
     in 1984.  While the property is near real property formerly owned
     by Conolog, Conolog was not a party to that transaction.  The claim
     made against Conolog alleges that Conolog contributed to environmental
     contamination of the property acquired in 1984.  The New York litigation
     has been dismissed, although the dismissal is on appeal.  The New
     Jersey litigation is in its early stages, insofar as Conolog is
     concerned.  However, the Company believes that it has no liability
     and intends to vigorously defend itself.
												F-16


                             Conolog Corporation
			Notes to the Consolidated Financial Statements

Legal Matters, Continued

     In the third quarter of fiscal 1999, the Company reached an agreement
     in principle to purchase substantially all the stock or assets of Hallmark
     Temps, Inc., for use in conjunction with the Company's Atlas Design
     business.  After discussions were terminated withhout an agreement having
     been reached, Conolog began doing business with an entity owned by
     a former employee of Hallmark.  In October 1999, Hallmark filed a
     lawsuit in the Superior Court of New Jersey seeking a preliminary
     injunction and damages against the Company.  Hallmark alleges that
     the Company breached a confidentiality agreement executed by the
     Company and Hallmark.  While the litigation is in a very early
     stage, the Company believes that it has no liability and intends
     to vigorously defend itself.

Stock Option Plan
   On May 15, 1995, the Board of Directors of the Company adopted and on August
   14, 1995, the shareholders approved the Conolog corporation 1995/1996 Stock
   Option Plan (the "Option Plan").  The Option Plan is designed to permit the
   Company to grant either incentive stock options under Section 422A of the
   Internal Revenue Code (the "Code") or nonqualified stock options.  Under the
   Option Plan, the Board is authorized to grant options to purchase up to
   200,000 shares of stock to key employees, officers, directors and
   consultants of the Company.

   Incentive stock options may only be granted to employees of the Company and
   not to directors or consultants who are not so employed.  The exercise price
   for incentive stock options must be at least one hundred percent (100%) of
   the fair market value of the common stock as determined on the date of
   grant.  All incentive stock options under the Option Plan must be granted
   within ten (10) years from the date of adoption of the Option Plan and each
   option must be exercised, if at all, within ten (10) years  of the date of
   grant.  In no event may any employee be given incentive stock options
   whereby more than $100,000 of options become exercisable for the first time
   in a single calendar year.  All incentive stock options must be exercised by
   an optionee within three (3) months after termination of the optionee's
   employment, unless such termination is as a result of death, disability or
   retirement. In the event an optionee's employment is terminated as a result
   of death or disability, such optionee or his designated beneficiary shall be
   entitled to exercise any and all options for a period of twelve (12) months
   after such termination.  If an optionee's employment is terminated as a
   result of retirement, the optionee shall be entitled to exercise his options
   for a period of twenty four (24) months following such termination.

   Nonqualified stock options under the Option Plan are generally subject to
   the same rules as discussed above.  Nonqualified stock options may, however,
   also be granted to directors and consultants, whether or not such
   individuals are employees of the Company.  The exercise price for
   nonqualified stock options may not be granted at less than eighty-five
   percent (85%) of the fair market value of the shares on the date of grant.

   The Company granted 105,000 options to purchase the Company's common stock
   at  $.6875 per share.  All options granted under this plan were exercised.
												F-17


                   		Conolog Corporation
			Notes to the Consolidated Financial Statements

Stock Option Plan - (Continued)

   No incentive stock options or nonqualified options were granted during
   fiscal years ended July 31, 1998 and 1997.

   No stock options were outstanding as of July 31, 1999.

COMMON STOCK ISSUED FOR SERVICES

Consulting Agreements
   In June of 1999 the Company entered into a consulting agreement with the
   NYBOR Group Inc.  In consideration for such services the Company granted
   1,057,143 shares of common stock to the NYBOR Group Inc.  This agreement
   expires on December 31, 2004.

   In November 1998 the Company entered into a consulting agreement with Paul
   B. Radler and Associates and Maple Business Consultants.  In consideration
   for such services the Company granted 35,000 shares of common stock.  These
   agreements expire on October 31, 1999.

   In February of 1998 the Company entered into a management and financial
   consulting agreement with Warren Schreiber ("Schreiber"), whereby Schreiber
   would act as a consultant to the Company.  In consideration of such
   services,  Schreiber was granted 75,000 shares of common stock of the
   Company upon commencement of the contract.  Additionally, for the duration
   of the agreement, Schreiber was to receive 25,000 shares of the Company's
   common stock on the last day of March, June, September and December of each
   year.  Under the agreement, termination could occur by either party with or
   without cause at any time upon 60 days prior written notice.  The agreement
   was terminated in February 1999.

   Consulting expense is recorded at the fair market value at the date of grant
   and is amortized over the life of the contracts.  Consulting expense for the
   years ended July 31, 1999 and 1998 amounted to approximately $107,000 and
   $488,000, respectively.

Employees
   During the year the Company issued 633,000 shares of the Company's common
   stock, as additional remuneration to certain employees.  Compensation
   expense was recorded at the average fair value of the stock at the time of
   issuance,  $648,844 ($1.025 per share).

   In February 1998 the Company issued 45,000 shares of the Company's common
   stock as additional remuneration to certain employees.  Compensation expense
   was recorded at the average fair value of the stock at the time of issuance,
   $121,500 ($2.70 per share).

   In accordance with the employment agreement between the Company and one of
   their executives the Company issued 20,000 and 10,000 shares of common stock
   during fiscal years ended July 31, 1999 and 1998, respectively.
   Compensation expense was recorded at the average fair value of the stock at
   the time of issuance, 26,875 (1.34 per share) and $13,600 ($1.36 per share)
   in 1999 and 1998, respectively.
F-18



					Conolog Corporation
			Notes to the Consolidated Financial Statements

COMMON STOCK ISSUED FOR SERVICES, Continued

   In July 1997 the Company issued 359,500 shares of common stock to several
   employees.  Compensation expense was recorded at the average fair value of
   the stock at the time of issuance, $1,313,750 ($3.66 per share).

FAIR VALUE OF FINANCIAL INSTRUMENTS

   The carrying amounts of cash, accounts receivable, other current assets,
   accounts payable and accrued expenses approximates fair value because of the
   short maturity of these instruments.

Limitations
   Fair value estimates are made at a specific point in time, based on relevant
   market information and information about the financial instrument.  These
   estimates are subjective in nature and involve uncertainties and matters of
   significant judgment and therefore cannot be determined with precision.
   Changes in assumptions could significantly affect the estimates.

SALE - LEASEBACK TRANSACTION

   The Company entered into a sale-leaseback arrangement.  Under the
   arrangement, the Company sold the building, land and improvements for a
   realized gain of $595,289 and leased a portion of the building back for a
   period of three years.  The leaseback has been accounted for as an operating
   lease.  Of the total gain realized, $181,500 has been deferred and will be
   amortized to income in proportion to rental expense over the term of the
   lease.

EXTRAORDINARY ITEM

   During the year ended July 31, 1997, the Bank converted 1,400,000 shares of
   Common Stock it was holding using a value negotiated between Conolog and the
   Bank.  The difference between the fair value and the negotiated value was
   $1.315 and was considered to be contributed capital and an extraordinary
   expense called Debt Retirement Cost.  The total value placed upon this
   transaction was $1,841,000 (1,400,000 x $1.315).

   The cost of debt retirement of $1,841,000, which occurred in 1997, is
   considered an extraordinary item with no tax effect due to the non-
   deductibility of this expense.

RECLASSIFICATIONS

   Certain items in the prior years report have been reclassified to conform to
   current year classifications.  Such reclassifications had no effect on
   previously reported net income.



												F-19




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