| NEW YORK                 | 14-1387171                             |
|--------------------------|----------------------------------------|
| (State of incorporation) | (I.R.S. Employer's Identification No.) |

----

D

| PART I  | FINANCIAL INFORMATION            | PAGE                                                       |
|---------|----------------------------------|------------------------------------------------------------|
|    |                             |                                                       |   |   |
|    | Item 1                           | Financial Statements:                                      |   |
|    |                             |                                                       |   |   |
|    |                             |                                                       | Balance Sheets - |   |
|    |                             |                                                       | September 30, 2010 (Unaudited) and June 30, 2010 | 1 |
|    |                             |                                                       |   |   |
|    |                             |                                                       | Statements of Income (Unaudited) - |   |
|    |                             |                                                       | Three Months Ended September 30, 2010 and 2009 | 3 |
|    |                             |                                                       |   |   |
|    |                             |                                                       | Statements of Cash Flows (Unaudited)- |   |
|    |                             |                                                       | Three Months Ended September 30, 2010 and 2009 | 4 |
|    |                             |                                                       |   |   |
|    |                             |                                                       | Notes to Financial Statements (Unaudited) | 5 |
|    |                             |                                                       |   |   |
|    | Item 2                           | Management's Discussion and Analysis of                    | 8 |
|    |                             |                                                       | Financial Condition and Results of Operations |   |
|    |                             |                                                       |   |   |
|    | Item 3                           | Quantitative and Qualitative Disclosures About Market Risk | 11 |
|    |                             |                                                       |   |   |
|    | Item 4                           | Controls and Procedures                                    | 11 |
|    |                             |                                                       |   |   |
|    |                             |                                                       |   |   |
| PART II | OTHER INFORMATION AND SIGNATURES | 12                                                         |
|    |                             |                                                       |   |   |
|    | Item 1                           | Legal Proceedings                                          | 12 |
|    |                             |                                                       |   |   |
|    | Item 2                           | Unregistered Sales of Equity Securities                    | 12 |
|    |                             |                                                       |   |   |
|    | Item 3                           | Defaults Upon Senior Securities                            | 12 |
|    |                             |                                                       |   |   |
|    | Item 4                           | Submission of Matters to a Vote of Security Holders        | 12 |
|    |                             |                                                       |   |   |
|    | Item 5                           | Other Information                                          | 12 |
|    |                             |                                                       |   |   |
|    | Item 6                           | Exhibits                                                   | 12 |
|    |                             |                                                       |   |   |
|    | SIGNATURES                       |                                                       | 13 |

----

Index

A

S

B

|                                                                                                                                   |   | September 30, |       |   | June 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|----------|--------|
|                                                                                                                                   |   | 2010          |       |   | 2010     |   |
|                                                                                                                                   |   |          |       |   |     |   |
| ASSETS:                                                                                                                                |   |          |       |   |     |   |
|                                                                                                                                   |   |          |       |   |     |   |
|      Cash and cash equivalents                                                                                |   | $             | 7,776,228  |   |     | $      | 4,475,066 |   |
|      Short term investments                                                                                   |   |          | 4,761,182  |   |     |   | 7,111,182 |   |
|      Trade accounts receivable, net                                                                           |   |          | 4,036,921  |   |     |   | 5,495,251 |   |
|      Income tax receivable                                                                                    |   |          | 88,991     |   |     |   | -- |   |
|      Other receivables                                                                                        |   |          | 35         |   |     |   | -- |   |
|                                                                                                                                   |   |          |       |   |     |   |   |   |
|      Inventories:                                                                                             |   |          |       |   |     |   |   |   |
|           Raw materials                                                              |   |          | 1,284,116  |   |     |   | 1,233,597 |   |
|           Work-in-process                                                            |   |          | 1,397,631  |   |     |   | 1,490,749 |   |
|           Costs relating to contracts in process, net of progress                    |   |          |       |   |     |   |   |   |
|           payments of $147,589 at September 30, 2010 and                             |   |          |       |   |     |   |   |   |
|           $142,492 at June 30, 2010                                                  |   |          | 8,507,844  |   |     |   | 8,217,040 |   |
|    Total inventories                                                                                                    |   |          | 11,189,591 |   |     |   | 10,941,386 |   |
|                                                                                                                                   |   |          |       |   |     |   |   |   |
|      Deferred income taxes                                                                                    |   |          | 228,717    |   |     |   | 229,086 |   |
|      Prepaid expenses and other current assets                                                                |   |          | 235,249    |   |     |   | 185,832 |   |
|                    Total current assets |   |          | 28,316,914 |   |     |   | 28,437,803 |   |
|                                                                                                                                   |   |          |       |   |     |   |   |   |
|      Property, plant and equipment, net                                                                       |   |          | 2,710,932  |   |     |   | 2,717,330 |   |
|      Loan receivable                                                                                          |   |          | 6,946      |   |     |   | 11,546 |   |
|                                                                                                                                   |   |          |       |   |     |   |   |   |
|                    Total assets         |   | $             | 31,034,792 |   |     | $      | 31,166,679 |   |

| See accompanying notes to the financial statements. | (Continued) |
|-----------------------------------------------------|-------------|

----

Index

|                                                                                                                                                                     |   | September 30, |       |   | June 30, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|----------|--------|
|                                                                                                                                                                     |   | 2010          |       |   | 2010     |   |
|                                                                                                                                                                     |   |          |       |   |     |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY:                                                                                                                                    |   |          |       |   |     |   |
|                                                                                                                                                                     |   |          |       |   |     |   |
|      Accounts payable                                                                                                                           |   | $             | 1,180,809  |   |     | $      | 1,607,147 |   |
|      Accrued expenses:                                                                                                                          |   |          |       |   |     |   |   |   |
|           Salaries, wages and commissions                                                                              |   |          | 235,473    |   |     |   | 203,435 |   |
|           Vacation                                                                                                     |   |          | 509,240    |   |     |   | 544,021 |   |
|           ESOP Payable                                                                                                 |   |          | 66,721     |   |     |   | -- |   |
|           Other                                                                                                        |   |          | 33,628     |   |     |   | 177,086 |   |
|      Payroll and other taxes withheld and accrued                                                                                               |   |          | 41,963     |   |     |   | 46,330 |   |
|      Income taxes payable                                                                                                                       |   |          | --         |   |     |   | 14,793 |   |
|              Total current liabilities                                                                       |   |          | 2,067,834  |   |     |   | 2,592,812 |   |
|                                                                                                                                                                     |   |          |       |   |     |   |   |   |
|      Deferred income taxes                                                                                                                      |   |          | 136,231    |   |     |   | 127,148 |   |
|                      Total liabilities      |   |          | 2,204,065  |   |     |   | 2,719,960 |   |
|                                                                                                                                                                     |   |          |       |   |     |   |   |   |
|      Common stock, par value $.33-1/3 per share.                                                                                                |   |          |       |   |     |   |   |   |
|           Authorized 10,000,000 shares;  Issued 3,029,874 shares                                             |   |          |       |   |     |   |   |   |
|           on September 30, 2010 and June 30, 2010.  Outstanding                                              |   |          |       |   |     |   |   |   |
|           2,324,502 and 2,319,876 (includes 173,749 and 179,166                                                   |   |          |       |   |     |   |   |   |
|           Unearned ESOP Shares) on September 30,                                                                       |   |          |       |   |     |   |   |   |
|           2010 and June 30, 2010, respectively                                                                         |   |          | 1,009,958  |   |     |   | 1,009,958 |   |
|      Capital in excess of par value                                                                                                             |   |          | 14,246,389 |   |     |   | 14,172,284 |   |
|      Retained earnings                                                                                                                          |   |          | 23,274,720 |   |     |   | 23,002,981 |   |
|                                                                                                                                                                     |   |          | 38,531,067 |   |     |   | 38,185,223 |   |
|                                                                                                                                                                     |   |          |       |   |     |   |   |   |
|      Less:    Unearned ESOP shares                                                                                          |   |          | (2,588,954 | )      |     |   | (2,588,954 | ) |
|           Cost of 705,372 and 709,998 shares of common stock in                                                        |   |          |       |   |     |   |   |   |
|           treasury on September 30, 2010 and June 30, 2010, respectively                                               |   |          | (7,111,386 | )      |     |   | (7,149,550 | ) |
|                Total stockholders’ equity                                               |   |          | 28,830,727 |   |     |   | 28,446,719 |   |
|                                                                                                                                                                     |   |          |       |   |     |   |   |   |
|                Total liabilities and stockholders' equity                                     |   | $             | 31,034,792 |   |     | $      | 31,166,679 |   |
|                                                                                                                                                                     |   |          |       |   |     |   |   |   |

----

Index

E

|                                                                                                                                |   | Three Months Ended |      |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                                                                                |   | September 30,      |      |   | September 30, |   |
|                                                                                                                                |   | 2010               |      |   | 2009 |   |
|                                                                                                                                |   |               |      |   |   |   |
| Net sales                                                                                                                           |   | $                  | 6,026,330 |   |   | $ | 6,874,940 |   |
| Cost of sales                                                                                                                       |   |               | 4,375,798 |   |   |   | 4,816,738 |   |
|      Gross profit                                                                                          |   |               | 1,650,532 |   |   |   | 2,058,202 |   |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Selling, general and administrative expenses                                                                                        |   |               | 692,709   |   |   |   | 752,386 |   |
|          Operating income                                                              |   |               | 957,823   |   |   |   | 1,305,816 |   |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Other income                                                                                                                        |   |               |      |   |   |   |   |   |
|       Interest income                                                                                 |   |               | 16,824    |   |   |   | 42,639 |   |
|       Other                                                                                           |   |               | 75,048    |   |   |   | 8,102 |   |
|                   Total other income, net |   |               | 91,872    |   |   |   | 50,741 |   |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Income before income taxes                                                                                                          |   |               | 1,049,695 |   |   |   | 1,356,557 |   |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Provision for income taxes                                                                                                          |   |               | 296,156   |   |   |   | 363,794 |   |
|                                                                                                                                |   |               |      |   |   |   |   |   |
|      Net income                                                                                            |   | $                  | 753,539   |   |   | $ | 992,763 |   |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Net income per share:                                                                                                               |   |               |      |   |   |   |   |   |
|      Basic                                                                                                 |   | $                  | 0.35      |   |   | $ | 0.47 |   |
|      Diluted                                                                                               |   | $                  | 0.35      |   |   | $ | 0.47 |   |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Weighted average number of shares outstanding:                                                                                      |   |               |      |   |   |   |   |   |
|           Basic                                                                   |   |               | 2,141,447 |   |   |   | 2,116,984 |   |
|           Diluted                                                                 |   |               | 2,153,627 |   |   |   | 2,118,848 |   |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Dividends per share:                                                                                                                |   | $                  | 0.2250    |   |   | $ | 0.2250 |   |
| See accompanying notes to the financial statements.                                                                                 |   |               |      |   |   |   |   |   |

----

Index

|                                                                                                            |   | September 30, |       |   | September 30, |   |
|-----------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|---------------|--------|
|                                                                                                            |   | 2010          |       |   | 2009          |   |
| Cash Flows From Operating Activities:                                                                           |   |          |       |   |          |   |
|      Net income                                                                        |   | $             | 753,539    |   |          | $      | 992,763 |   |
|                                                                                                            |   |          |       |   |          |   |   |   |
|      Adjustments to reconcile net income to net cash provided by operating activities: |   |          |       |   |          |   |   |   |
|      Excess tax benefits from share-based compensation                                 |   |          | 4,488      |   |          |   | 626 |   |
|      Stock-based compensation                                                          |   |          | 16,040     |   |          |   | 25,304 |   |
|      Depreciation                                                                      |   |          | 113,645    |   |          |   | 115,348 |   |
|      ESOP compensation expense                                                         |   |          | 107,033    |   |          |   | 90,899 |   |
|      Loss on disposal of assets                                                        |   |          | --         |   |          |   | 1,615 |   |
|      Deferred income tax benefit                                                       |   |          | 9,452      |   |          |   | (7,448 | ) |
|      Changes in assets and liabilities:                                                |   |          |       |   |          |   |   |   |
|      Decrease in trade receivable, net                                                 |   |          | 1,458,330  |   |          |   | 1,124,474 |   |
|      Increase in income taxes receivables                                              |   |          | (88,991    | )      |          |   | -- |   |
|      (Increase) decrease in other receivables                                          |   |          | (35        | )      |          |   | 288 |   |
|      Decrease in ESOP receivable due to dividends on unallocated shares                |   |          | --         |   |          |   | 45,525 |   |
|      Increase in inventories                                                           |   |          | (248,205   | )      |          |   | (63,136 | ) |
|      (Increase) decrease in prepaid expenses and other current assets                  |   |          | (49,417    | )      |          |   | 34,400 |   |
|      (Decrease) increase in accounts payable                                           |   |          | (426,338   | )      |          |   | 99,341 |   |
|      Increase (decrease) in accrued salaries, wages and commissions                    |   |          | 32,038     |   |          |   | (58,393 | ) |
|      (Decrease) increase in other accrued expenses                                     |   |          | (143,458   | )      |          |   | 49,394 |   |
|      Decrease in vacation accrual                                                      |   |          | (34,781    | )      |          |   | (18,583 | ) |
|      Decrease in ESOP payable                                                          |   |          | (40,312    | )      |          |   | (90,899 | ) |
|      (Decrease) increase in payroll and other taxes withheld and accrued               |   |          | (4,367     | )      |          |   | 211 |   |
|      Decrease in income taxes payable                         |   |          | (19,281    | )      |          |   | (230,011 | ) |
|      Net cash provided by operating activities                                         |   |          | 1,439,380  |   |          |   | 2,111,718 |   |
|                                                                                                            |   |          |       |   |          |   |   |   |
| Cash Flows From Investing Activities:                                                                           |   |          |       |   |          |   |   |   |
|      Additions to property, plant and equipment                                        |   |          | (107,247   | )      |          |   | (147,308 | ) |
|      Proceeds from loan receivable                                                     |   |          | 4,600      |   |          |   | 4,464 |   |
|      Purchase of short term investments                                                |   |          | (1,778,000 | )      |          |   | (3,696,000 | ) |
|      Proceeds from maturity of short term investments                                  |   |          | 4,128,000  |   |          |   | 2,696,000 |   |
|      Net cash used in investing activities                                             |   |          | 2,247,353  |   |          |   | (1,142,844 | ) |
|                                                                                                            |   |          |       |   |          |   |   |   |
| Cash Flows From Financing Activities:                                                                           |   |          |       |   |          |   |   |   |
|      Sale of treasury stock                                                            |   |          | 12,081     |   |          |   | 326,752 |   |
|      Dividends on common stock                                                         |   |          | (481,800   | )      |          |   | (475,456 | ) |
|      Proceeds from exercise of stock options                                           |   |          | 79,660     |   |          |   | -- |   |
|      Excess tax benefits from share-based compensation                                 |   |          | 4,488      |   |          |   | 626 |   |
|      Net cash used in financing activities                                             |   |          | (385,571   | )      |          |   | (148,078 | ) |
|                                                                                                            |   |          |       |   |          |   |   |   |
| Increase (decrease) in cash and cash equivalents                                                                |   |          | 3,301,162  |   |          |   | 820,796 |   |
| Cash and cash equivalents, beginning of period                                                                  |   |          | 4,475,066  |   |          |   | 2,775,319 |   |
| Cash and cash equivalents, end of period                                                                        |   | $             | 7,776,228  |   |          | $      | 3,596,115 |   |
|                                                                                                            |   |          |       |   |          |   |   |   |
| Supplemental Schedule of Cash Flow Information:                                                                 |   |          |       |   |          |   |   |   |
|      Income taxes paid                                                                 |   | $             | 386,000    |   |          | $      | 600,000 |   |
|                                                                                                            |   |          |       |   |          |   |   |   |

----

Index

S

----

Index

|                                                                       |   | September 30, |        | September 30, |
|----------------------------------------------------------------------------|--------|---------------|-------------|---------------|
|                                                                       |   | 2010          |        | 2009          |
| Dividend yield                                                             |   |          | 4.          | 69%           |   |   | 5. | 30% |
| Expected stock price volatility                                            |   |          | 33.         | 13%           |   |   | 31. | 41% |
| Risk-free interest rate                                                    |   |          | 1.          | 08%           |   |   | 1. | 79% |
| Expected option life (in years)                                            |   | 4.            | 1 yrs  |          | 4.3 |  yrs  |
| Weighted average fair value per share of options granted during the period |   | $             | 3.          | 335      |   | $ | 2. | 767  |

|                              |   | Employee Stock Options Plan |    |
|-----------------------------------|--------|-----------------------------|---------|
|                              |   |                        |    |   |   |   |   | Weighted |   |
|                              |   | Number of                   |    |   | Weighted |   |   | Average |   |
|                              |   | Shares                      |    |   | Average |   |   | Remaining |   |
|                              |   | Subject                     |    |   | Exercise |   |   | Contractual |   |
|                              |   | To Option                   |    |   | Price |   |   | Term |   |
| Balance at July 1, 2010           |   |                        | 127,600 |   |   | $ | 18.31 |   |   |   | 7.02 |   |
| Granted                           |   |                        | 31,100  |   |   | $ | 19.20 |   |   |   | 9.91 |   |
| Exercised                         |   |                        | (4,000  | ) |   | $ | 19.92 |   |   |   | -- |   |
| Forfeited or expired              |   |                        | (2,000  | ) |   | $ | 17.09 |   |   |   | -- |   |
| Balance September 30, 2010        |   |                        | 152,700 |   |   | $ | 18.46 |   |   |   | 7.37 |   |
| Exercisable at September 30, 2010 |   |                        | 92,500  |   |   | $ | 18.67 |   |   |   | 6.21 |   |

----

Index

|                                                          |   | September 30, |      |   | September 30, |   |
|---------------------------------------------------------------|--------|---------------|-----------|--------|---------------|--------|
|                                                          |   | 2010          |      |   | 2009          |   |
|      Allocated Shares                |   |          | 445,729   |   |          |   | 461,537 |   |
|      Committed-to-be-released shares |   |          | 5,417     |   |          |   | 5,625 |   |
|      Unreleased shares               |   |          | 173,749   |   |          |   | 196,041 |   |
|                                                          |   |          |      |   |          |   |   |   |
|      Total shares held by the ESOP   |   |          | 624,895   |   |          |   | 663,203 |   |
|                                                          |   |          |      |   |          |   |   |   |
|      Fair value of unreleased shares |   | $             | 3,752,978 |   |          | $      | 3,473,847 |   |

----

Index

n

----

Index

----

Index

|                                                |   | Three Months Ended |      |
|-----------------------------------------------------|--------|--------------------|-----------|
|                                                |   | September 30,      |      |   | September 30, |   |
|                                                |   | 2010               |      |   | 2009 |   |
| Net cash provided by operating activities           |   | $                  | 1,439,380 |   |   | $ | 2,111,718 |   |
| Net cash provided by (used in) investing activities |   |               | 2,247,353 |   |   |   | (1,142,844 | ) |
| Net cash used in financing activities               |   |               | (385,571  | ) |   |   | (148,078 | ) |

----

Index

l

u

----

Index

R

g

l

|   |  (a) | Securities Sold - | For the three-month period ended September 30, 2010, the Company sold 626 shares to the ESOP.  The aggregate gross proceeds from the shares of common stock sold were $5,165.  The securities were sold for cash and the sales were made without registration under the Securities Act in reliance upon the exemption from registration afforded under Section 4(2) of the Securities Act of 1933.  Proceeds were used for general working capital purposes. |
|--------|-----------|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (c) | Securities Repurchased  - None |
|--------|-----------|------------------------------------------|

e

t

n

t

|   |  31.1 | Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  31.2 | Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  32.2 | Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

S

|   | ESPEY MFG. & ELECTRONICS CORP.        |
|--------|-------------------------------------------|
|   |                                      |
|   |                                      |
|   | /s/ Mark St. Pierre                       |
|   | Mark St. Pierre                           |
|   | President and Chief Executive Officer     |
|   |                                      |
|   | /s/ David O'Neil                          |
|   | David O'Neil                              |
|   | Treasurer and Principal Financial Officer |