UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

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

                  For the Quarterly Period Ended March 31, 2005

                          Commission File Number I-4383

                         ESPEY MFG. & ELECTRONICS CORP.
               --------------------------------------------------
               (Exact name of registrant as specified in charter)

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

              233 Ballston Avenue, Saratoga Springs, New York 12866
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

         Registrant's telephone number, including area code 518-584-4100
                           ---------------------------

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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).  YES [ ] NO [X]



Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.


             Class                                  Outstanding at May 16, 2005
             -----                                  ---------------------------
Common stock, $.33-1/3 par value                           1,006,694 shares


<PAGE>
<TABLE>
<CAPTION>
                                 ESPEY MFG. & ELECTRONICS CORP.
                                 Quarterly Report on Form 10-Q
                                           I N D E X

PART I    FINANCIAL INFORMATION                                                         PAGE
<S>                                                                                      <C>

          Item 1      Financial Statements:

                          Balance Sheets (Unaudited)  -
                          March 31, 2005 and June 30, 2004                               1

                          Statements of Income (Unaudited) -
                          Three and Nine Months Ended March 31, 2005 and 2004            3

                          Statements of Cash Flows (Unaudited)-
                          Nine Months Ended March 31, 2005 and 2004                      4

                          Notes to Financial Statements (Unaudited)                      5

          Item 2      Management's Discussion and Analysis of
                      Financial Condition and Results of Operations                      7

          Item 3      Quantitative and Qualitative Disclosures About
                      Market Risk                                                       10

          Item 4      Controls and Procedures                                           10

PART II   OTHER INFORMATION                                                             11

          Item 1      Legal Proceedings                                                 11

          Item 2      Unregistered Sales of Equity Securities and Use of Proceeds       11

          Item 3      Defaults on Senior Securities                                     11

          Item 4      Submission of Matters to a Vote of Security Holders               11

          Item 5      Other Information                                                 11

          Item 6      Exhibits                                                          11

          SIGNATURES                                                                    12
</TABLE>


<PAGE>

                          PART I: FINANCIAL INFORMATION

                         ESPEY MFG. & ELECTRONICS CORP.

                           Balance Sheets (Unaudited)

                        March 31, 2005 and June 30, 2004
                        --------------------------------
                                   A S S E T S

<TABLE>
<CAPTION>
                                                                 2005           2004
                                                               March 31,      June 30,
                                                              -----------   -----------
<S>                                                           <C>           <C>
ASSETS:

          Cash and cash equivalents                           $10,159,787   $12,310,972
          Short term investments                                2,688,000     1,056,000
          Trade accounts receivable, net                        2,658,061     2,140,397
          Other receivables                                         8,065         1,809


          Inventories:
                  Raw materials and supplies                    1,736,095     1,543,930
                  Work-in-process                               3,621,414     3,390,133
                  Costs relating to contracts in
                        process, net of advance payments of
                        $ 348,336 at March 31, 2005 and
                        $ 905,646 at June 30, 2004              4,570,202     5,151,234
                                                              -----------   -----------

                                    Total inventories           9,927,711    10,085,297
                                                              -----------   -----------

          Deferred income taxes                                    76,876        76,876
          Prepaid expenses and other current assets               497,763       359,393
                                                              -----------   -----------

                                    Total current assets       26,016,263    26,030,744
                                                              -----------   -----------

          Property, plant and equipment, net                    3,069,322     3,100,516
                                                              -----------   -----------

                                    Total assets              $29,085,585   $29,131,260
                                                              ===========   ===========
</TABLE>

See accompanying notes to the financialstatements.                   (Continued)


                                       1
<PAGE>
<TABLE>
<CAPTION>

                                      ESPEY MFG. & ELECTRONICS CORP.

                                  Balance Sheets (Unaudited), Continued

                                    March 31, 2005 and June 30, 2004
                                    --------------------------------
                                  LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                                   2005            2004
                                                                                 March 31,       June 30,
                                                                               ------------    ------------
<S>                                                                            <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:

          Accounts payable                                                     $    576,870    $    250,675
          Accrued expenses:
              Salaries, wages and commissions                                        60,026          44,519
              Employees' insurance costs                                                 --           7,487
              Vacation                                                              456,500         451,516
              Other                                                                  54,656          50,370
          Payroll and other taxes withheld and accrued                               43,503          26,000
          Income taxes payable                                                       10,919         134,471
                                                                               ------------    ------------
                               Total current liabilities                          1,202,474         965,038
                                                                               ------------    ------------
          Deferred income taxes                                                     356,510         324,316
                                                                               ------------    ------------
                               Total liabilities                                  1,558,984       1,289,354
                                                                               ------------    ------------




          Common stock, par value .33-1/3 per share. Authorized 10,000,000
              shares; issued 1,514,937 shares on March 31, 2005 and June 30,
              2004. Outstanding 1,006,694 and 1,014,618 on
              March 31, 2005 and June 30, 2004, respectively                        504,979         504,979

          Capital in excess of par value                                         10,408,095      10,411,915

          Retained earnings                                                      24,796,481      24,911,920
                                                                               ------------    ------------
                                                                                 35,709,555      35,828,814

          Less:   Cost of 508,243 and 500,319 shares on
                  March 31, 2005 and June 30, 2004
                  respectively of common stock in treasury                       (8,182,954)     (7,986,908)
                                                                               ------------    ------------
                               Total stockholders' equity                        27,526,601      27,841,906
                                                                               ------------    ------------
                                        Total liabilities and
                                        stockholders' equity                   $ 29,085,585    $ 29,131,260
                                                                               ============    ============
</TABLE>

See accompanying notes to the financial statements.


                                                    2
<PAGE>

                         ESPEY MFG. & ELECTRONICS CORP.

                        Statements of Income (Unaudited)

               Three and Nine Months Ended March 31, 2005 and 2004
               ---------------------------------------------------
<TABLE>
<CAPTION>
                                         Three Months                    Nine Months
                                     2005            2004            2005            2004
                                 ---------------------------     ---------------------------
<S>                              <C>             <C>             <C>             <C>
Net sales                        $ 4,219,861     $ 6,116,221     $13,846,929     $17,083,213
Cost of sales                      3,568,971       5,398,659      11,774,510      14,737,602
                                 -----------     -----------     -----------     -----------
         Gross profit                650,890         717,562       2,072,419       2,345,611

Selling, general and
   administrative expenses           565,145         671,575       1,746,362       1,905,972
                                 -----------     -----------     -----------     -----------
         Operating income             85,745          45,987         326,057         439,639
                                 -----------     -----------     -----------     -----------

Other income

         Interest and
           dividend income            66,420          24,588         144,908          69,817
         Other                         7,816           2,707          14,182          25,521
                                 -----------     -----------     -----------     -----------
                                      74,236          27,295         159,090          95,338
                                 -----------     -----------     -----------     -----------

Income before income taxes           159,981          73,282         485,147         534,977

Provision for income taxes            47,994          19,274         145,544         138,574
                                 -----------     -----------     -----------     -----------


                  Net Income     $   111,987     $    54,008     $   339,603     $   396,403
                                 ===========     ===========     ===========     ===========

Net income per share:

         Basic                   $       .11     $       .05     $       .34     $       .39
         Diluted                 $       .11     $       .05     $       .33     $       .39
                                 -----------     -----------     -----------     -----------

Weighted average number
   of shares outstanding :
         Basic                     1,010,671       1,011,416       1,011,744       1,013,545
         Diluted                   1,023,303       1,021,908       1,022,558       1,021,874
                                 ===========     ===========     ===========     ===========
</TABLE>

See accompanying notes to the financial statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>
                                     ESPEY MFG. & ELECTRONICS CORP.

                                  Statements of Cash Flows (Unaudited)

                                Nine Months Ended March 31, 2005 and 2004
                                -----------------------------------------

                                                                                             March 31,
                                                                                      2005               2004
                                                                                  ------------      ------------
<S>                                                                                    <C>               <C>

Cash Flows From Operating Activities:

       Net income                                                                 $    339,603      $    396,403

       Adjustments to reconcile net income to net cash provided by operating
       activities:

       Depreciation                                                                    411,499           431,919
       Loss on disposal of assets                                                           --            22,121
       Deferred income tax                                                              32,194            99,108
       Changes in assets and liabilities:
              Increase in trade receivables, net                                      (517,664)         (711,872)
              Increase in income taxes receivable                                           --           (13,639)
              (Increase) Decrease in other receivables                                  (6,256)            6,332
              Decrease in inventories                                                  157,586         1,974,766
              Increase in prepaid expenses and other current assets                   (138,370)         (152,818)
              Increase (Decrease) in accounts payable                                  326,195          (109,547)
              Increase (Decrease) in accrued salaries, wages and commissions            15,507           (48,234)
              (Decrease) Increase in accrued employees' insurance costs                 (7,487)            1,557
              Increase in other accrued expenses                                         4,286            10,584
              Increase (Decrease) in vacation accrual                                    4,984              (290)
              Increase (Decrease) in payroll and other taxes withheld and accrued       17,503              (473)
              (Decrease) in income taxes payable                                      (123,552)         (350,232)
              Increase in ESOP payable                                                      --           403,238
                                                                                  ------------      ------------
                           Net cash provided by operating activities                   516,028         1,958,923
                                                                                  ------------      ------------
Cash Flows From Investing Activities:

       Additions to property, plant & equipment                                       (380,305)         (211,860)
       Purchase of short term investments                                           (2,304,000)       (1,056,000)
       Maturity of short term investments                                              672,000                --
                                                                                  ------------      ------------
                           Net cash used by investing activities                    (2,012,305)       (1,267,860)
                                                                                  ------------      ------------
Cash Flows From Financing Activities:

       Dividends on common stock                                                      (455,042)         (885,776)
       Purchase of treasury stock                                                     (215,366)         (272,328)
       Proceeds from exercise of stock options                                          15,500           113,105
                                                                                  ------------      ------------
                           Net cash used in financing activities                      (654,908)       (1,044,999)
                                                                                  ------------      ------------
Decrease in cash and cash equivalents                                               (2,151,185)         (353,936)
Cash and cash equivalents, beginning of period                                      12,310,972        10,996,483
                                                                                  ------------      ------------
Cash and cash equivalents, end of period                                            10,159,787        10,642,547
                                                                                  ============      ============
Income Taxes Paid                                                                 $    236,902      $    403,337
                                                                                  ============      ============
</TABLE>

See accompanying notes to the financial statements


                                                    4
<PAGE>

                         ESPEY MFG. & ELECTRONICS CORP.

                    Notes to Financial Statements (Unaudited)
                    -----------------------------------------

Note 1. Basis of Presentation

In the opinion of management the  accompanying  unaudited  financial  statements
contain  all  adjustments  (consisting  of only  normal  recurring  adjustments)
necessary for a fair  presentation of the results for such periods.  The results
for any  interim  period are not  necessarily  indicative  of the  results to be
expected for the full fiscal year. Certain information and footnote  disclosures
normally  included in financial  statements  prepared in accordance  with United
States generally accepted accounting  principles have been condensed or omitted.
These financial statements should be read in conjunction with the Company's most
recent audited financial statements included in its 2004 Form 10-K.

Note 2. Net income per Share

Basic net income per share  excludes  dilution  and is computed by dividing  net
income available to common stockholders by the weighted average number of common
shares  outstanding  for the period.  Diluted net income per share  reflects the
potential  dilution that could occur if  securities or other  contracts to issue
common stock were  exercised  or converted  into common stock or resulted in the
issuance of common stock that then shared in the income of the Company.

Note 3. Employee Stock Ownership Plan

In fiscal 1989 the Company  established an Employee Stock  Ownership Plan (ESOP)
for eligible non-union employees.  The ESOP used the proceeds of a loan from the
Company  to  purchase   316,224  shares  of  the  Company's   common  stock  for
approximately $8.4 million and the Company contributed approximately $400,000 to
the ESOP, which was used by the ESOP to purchase an additional  15,000 shares of
the Company's  common stock.  Effective June 30, 2004, the ESOP loan was paid in
full and all  shares  in the  ESOP  are  allocated  to  participant's  accounts.
Therefore,  in fiscal 2005 no  contributions  to the ESOP have been made.  As of
March 31, 2005, there were 230,120 shares allocated to participants.

Note 4. Stock Based Compensation

The Company has elected to account for its stock-based  compensation plans under
the intrinsic  value-based method of accounting as permitted by SFAS No. 123 and
as prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock  Issued to  Employees,"  and related  interpretations  including  FASB
Interpretation  No. 44,  "Accounting  for Certain  Transactions  Involving Stock
Compensation  - An  Interpretation  of APB No. 25," in accounting  for its fixed
stock option plans. Under this method, compensation expense would be recorded on
the date of grant  only if the  current  market  price of the  underlying  stock
exceeded the exercise price.

The  following  table  illustrates  the  effect on net income and net income per
share if the Company had applied the fair value  recognition  provisions of SFAS
No. 123, to stock-based employee compensation.


                                       5
<PAGE>



                              Three Months Ended      Nine Months Ended
                                   March 31,              March 31,
                               2005        2004       2005         2004
                            ---------   ---------   ---------   ---------
Net income as reported      $ 111,987   $  54,008   $ 339,603  $  396,403

Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related  tax effects           (8,286)     (7,867)    (26,660)    (26,321)
                            ---------   ---------   ---------   ---------

Pro forma net income        $ 103,701   $  46,141   $ 312,943   $ 370,082
                            =========   =========   =========   =========

Net Income per share:

    Basic-as reported       $     .11   $     .05   $     .34   $     .39
                            =========   =========   =========   =========
    Basic-pro forma         $     .10   $     .05   $     .31   $     .36
                            =========   =========   =========   =========

    Diluted-as reported     $     .11   $     .05   $     .33   $     .39
                            =========   =========   =========   =========
    Diluted-pro forma       $     .10   $     .05   $     .31   $     .36
                            =========   =========   =========   =========

Note 5.  Commitments and Contingencies

The Company has entered into standby letters of credit agreements with financial
institutions  primarily  relating  to the  guarantee  of future  performance  on
certain  contracts.  Contingent  liabilities on outstanding  standby  letters of
credit  agreements  aggregated  $39,300 at March 31, 2005.  The Company does not
expect to fund any of the  amounts  under the  standby  letters of credit.  As a
government  contractor,  the Company is continually  subject to audit by various
agencies of the U.S. Government to determine compliance with various procurement
laws and regulations.  As a result of such audits and as part of normal business
operations of the Company,  various claims and charges are asserted  against the
Company.  It is not  possible  at this time to predict  the  outcome of all such
actions. However, management is of the opinion that it has good defenses against
such actions and believes that none of these matters will have a material effect
on the consolidated  financial position,  results of operations or cash flows of
the Company.

Note 6.  Recently Issued Accounting Standards

In November  2004,  the FASB issued SFAS No.  151,  "Accounting  for  Unexpected
Production  Defects and Waste." SFAS No. 151 requires  that  "abnormal  freight,
handling costs, and amounts of wasted materials (spoilage)" should be treated as
current-period  costs.  Under this  concept,  if the costs  associated  with the
actual  level of spoilage  or  production  defects  are  greater  than the costs
associated with the range of normal spoilage or defects,  the difference  should
be charged to  current-period  expense.  SFAS No.  151 is  effective  for annual
periods  beginning  after June 15, 2005. In December  2004, the FASB issued SFAS
No. 123R,  "Share Based Payment." SFAS No. 123R requires  companies to recognize
in the income  statement  the  grant-date  fair value of stock options and other
equity-based  compensation  issued to  employees.  SFAS No. 123R was  originally
effective for interim and annual periods  beginning after December 15, 2005. The
effective date has been delayed by the SEC until annual periods  beginning after
December  15,  2005.  The  adoption  of SFAS No.  151 and SFAS No.  123R are not
expected to have a material  impact on the Company's  results of operations  and
financial condition.

In December 2004, the FASB issued Staff Position FAS 109-1 regarding Income from
Domestic Production Activities which was effective  immediately.  Staff Position
FAS 109-1  clarifies  SFAS No. 109's  guidance that applies to the new deduction
for qualified domestic production activities.  The staff position clarifies that
the deduction should be accounted for as a special deduction under SFAS No. 109.
The adoption of Staff  Position FAS 109-1 did not have a material  impact on the
Company's results of operations or financial condition.

In December 2004, the FASB issued SFAS No. 153,  Exchanges of Nonmonetary Assets
-  Accounting  Principles  Board  Opinion  No. 29,  Accounting  for  Nonmonetary
Transactions.  SFAS No. 153  requires  that  exchanges  should be  recorded  and
measured at the fair value of the assets  exchanged,  with  certain  exceptions.
SFAS No. 153 is effective for nonmonetary  exchanges occurring in fiscal periods
beginning  after June 15, 2005.  The adoption of SFAS No. 153 is not expected to
have a significant  impact on the  Company's  results of operations or financial
position.


                                       6
<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Overview

Espey Mfg. & Electronics Corp. (the "Company") located in Saratoga Springs,  New
York, is engaged principally in the development,  design, production and sale of
specialized  electronic power supplies, a wide variety of transformers and other
types of iron-core components,  and electronic system components. In some cases,
the  Company   manufactures  such  products  in  accordance  with  pre-developed
mechanical and electrical  requirements  ("build to print"). In other cases, the
Company  is  responsible  for both the  overall  design and  manufacture  of the
product. The Company does not generally manufacture  standardized components and
does not have a product  line.  The  products  manufactured  by the Company find
application principally in (i) shipboard and land based radar, (ii) locomotives,
(iii)  aircraft,   (iv)  short  and  medium  range  communication  systems,  (v)
navigation systems, and (vi) land based military vehicles.

Business is solicited from large industrial manufacturers and defense companies,
the  government of the United States and foreign  governments  and major foreign
electronic  equipment  companies.  In certain countries the Company has external
sales  representatives  to help solicit and coordinate  foreign  contracts.  The
Company  is also  on the  eligible  list of  contractors  of the  United  States
Department of Defense and generally is automatically  solicited by such agencies
for procurement  needs falling within the major classes of products  produced by
the Company.  In addition,  the Company  directly  solicits bids from the United
States Department of Defense for prime contracts.

There is competition in all classes of products manufactured by the Company from
divisions  of the  largest  electronic  companies,  as well as from  many  small
companies.  The  Company's  sales do not  represent a  significant  share of the
industry's  market  for any class of its  products.  The  principal  methods  of
competition  for electronic  products of both a military and  industrial  nature
include, among other factors, price, product performance,  the experience of the
particular company and history of its dealings in such products. The Company, as
well as other  companies  engaged in supplying  equipment  for military  use, is
subject to various risks,  including,  without limitation,  dependence on United
States and  foreign  government  appropriations  and  program  allocations,  the
competition  for available  military  business,  and  government  termination of
orders for convenience.

Business Outlook

Management  is  optimistic  about the future of the  Company.  In the first nine
months of fiscal 2005, the Company received  approximately  $12.7 million in new
orders.  These orders  include both follow-on  production  quantities for mature
products,  and engineering  development  orders which will enable the Company to
utilize its engineering  expertise in developing new customer specific products.
Some of these  products,  once  developed,  will be  produced  in the  Company's
manufacturing  facility  and are  expected  to provide  large  production  order
quantities  over  several  years.  These  orders are in line with the  Company's
strategy of getting involved in long-term high quantity  military and industrial
products.

The Company has received  another  approximately  $20.0 million in new orders in
the fourth quarter of fiscal 2005. These orders increased the Company's  backlog
to  approximately  $33.1  million at May 16, 2005 from $14.7 million on February
14, 2005, as reported in the Company's  report on Form 10-Q for the period ended
December  31,  2004.  Shipments  of products  with  respect to these  orders are
expected  over the  next  four  years.  Many  additional  potential  orders  are
currently  being  discussed and  negotiated  with our  customers.  Some of these
orders  management  expected  to receive in the first half of fiscal  2005.  The
delay in placing these orders may be due to several factors including the war in
Iraq.  In  addition  to the  backlog,  the  Company  currently  has  outstanding
quotations  representing  in excess of $26.2  million in the  aggregate for both
repeat and new programs.  The outstanding  quotations  encompass various new and
previously  manufactured  power  supplies,   transformers,   and  subassemblies.
However,  there can be no assurance  that the Company will acquire any or all of
the anticipated orders described above, many of which are subject to allocations
of the United States defense spending and factors affecting the defense industry
and military procurement generally.

Management,  along with the Board of  Directors,  continues to evaluate the need
and use of the  Company's  working  capital.  Expectations  are that the working
capital  will be required to fund the  increase in orders over the next  several
quarters,  dividend payments, and general operations of the business.  Also, the
Mergers  and  Acquisitions  Committee  of the Board of  Directors  continues  to
evaluate potential strategic alternatives on a periodic basis.

As stated in the Company's Form 10-K filed for the year ended June 30, 2004, the
Company  anticipated  a decrease in sales for fiscal 2005.  During  fiscal 2004,
while net sales increased,  new orders received by the Company did not keep pace
with backlog  relieved.  Thus,  while the sales backlog of  approximately  $15.4
million  at June 30,  2004 gave the  Company a solid base of future  sales,  the
Company  has  experienced  the  reduction  of sales  during  fiscal 2005 that it
anticipated.


                                       7
<PAGE>

Critical Accounting Policies and Estimates

We believe our most critical accounting policies include revenue recognition and
estimates to completion.

Revenue recognition and estimation

A significant portion of our business is comprised of development and production
contracts.  Generally,  revenues on long-term fixed-price contracts are recorded
on a percentage of completion  basis using units of delivery as the  measurement
basis for progress toward completion.

Percentage  of  completion  accounting  requires  judgment  relative to expected
sales,  estimating costs and making assumptions  related to technical issues and
delivery schedule. Contract costs include material, subcontract costs, labor and
an  allocation  of overhead  costs.  The  estimation  of cost at completion of a
contract is subject to numerous variables involving contract costs and estimates
as to the length of time to complete the contract. Given the significance of the
estimation  processes  and  judgments  described  above,  it  is  possible  that
materially  different  amounts of  expected  sales and  contract  costs could be
recorded if different  assumptions were used, based on changes in circumstances,
in the  estimation  process.  When a change in expected sales value or estimated
cost is determined, changes are reflected in current period earnings.

Results of Operations

The  Company's  operating  cycle is  long-term  and  includes  various  types of
products and varying delivery  schedules.  Accordingly,  results of a particular
period or period-to-period comparison of recorded revenues and income may not be
indicative  of future  operating  results.  The following  comparative  analysis
should be viewed in this context.

Net sales for the three months ended March 31, 2005 were  $4,219,861 as compared
to $6,116,221  for the same period in 2004,  representing  a 31%  decrease.  Net
sales for the nine months ended March 31, 2005 were  $13,846,929  as compared to
$17,083,213 for the same period in 2004,  representing  an 18.9%  decrease.  The
Company's  decrease  in sales for the three  month and nine month  period  ended
March 31, 2005 is due  primarily to lower backlog  levels (see Business  Outlook
discussion).  The  backlog at March 31,  2005 was  approximately  $14.2  million
compared to  approximately  $14.0  million at March 31,  2004 and  approximately
$20.9 million at September 30, 2003. New orders for the three months ended March
31, 2005 were approximately  $4.4 million.  New orders for the nine-month period
ended March 31, 2005 were approximately $12.7 million.  Management  continues to
market the  engineering and production  capabilities of the Company.  Currently,
approximately  $26.2 million in quotations are outstanding to various  customers
of the Company.

The primary factor in determining gross profit and net income is product mix. In
any given accounting  period, the mix of product shipments between higher margin
mature programs and less mature  programs and loss contracts,  has a significant
impact on gross profit and net income. The table below presents the statement of
income line items as a percentage of net sales for  period-to-period  comparison
purposes.

<TABLE>
<CAPTION>
                                           Three Months Ended March 31,    Nine Months Ended March 31,
                                                2005        2004               2005        2004
                                               ------      ------             ------      ------
<S>                                            <C>         <C>                <C>         <C>
Net sales                                      100.0%      100.0%             100.0%      100.0%
Cost of sales                                   84.6%       88.3%              85.0%       86.3%
                                               ------      ------             ------      ------
       Gross profit                             15.4%       11.7%              15.0%       13.7%

Selling, general and administrative expenses    13.4%       11.0%              12.6%       11.2%
                                               ------      ------             ------      ------
       Operating income                          2.0%        0.8%               2.4%        2.6%

Other income

       Interest and dividend income              1.6%        0.4%               1.0%        0.4%
       Other                                     0.2%        0.0%               0.1%        0.1%
                                               ------      ------             ------      ------
                                                 1.8%        0.4%               1.1%        0.6%

Income before income taxes                       3.8%        1.2%               3.5%        3.1%

Provision for income taxes                       1.1%        0.3%               1.0%        0.8%
                                               ------      ------             ------      ------
           Net income                            2.7%        0.9%               2.5%        2.3%
                                               ======      ======             ======      ======
</TABLE>


                                       8
<PAGE>

For the three months ended March 31, 2005,  gross profit as a percentage  of net
sales was 3.7% higher as compared to the three months ended March 31, 2004.  The
improved  gross profit  percentage  relates to favorable  product mix, and lower
ESOP contribution expense offset partially by decreased sales. ESOP contribution
expense was zero for the  three-month  period ended March 31, 2005, and $134,413
for the  three-month  period  ended March 31, 2004 (see Note 3 to the  financial
statements). Net income expressed in dollars for the same period improved due to
a decrease in selling,  general and  administrative  expenses and an increase in
other  income,  offset  partially  by a decrease in gross  profit  caused by the
decrease in sales.  For the nine months  ended March 31, 2005 gross  profit as a
percentage  of net sales  increased by 1.3% as compared to the nine months ended
March 31, 2004. The ESOP contribution expense was zero for the nine-month period
ended March 31, 2005,  and $403,238  for the  nine-month  period ended March 31,
2004. This decrease in expense had a positive impact on gross profit,  which was
offset by lower sales.  Net income was slightly lower for the same period due to
lower  sales,  partially  offset by lower  selling,  general and  administrative
expenses and higher interest income due to higher yielding investments.

As  reported in the prior  quarter's  Form 10-Q,  the  Company  has  encountered
performance problems with one customer due to technical problems associated with
a product.  Several  shipments of hardware have been made to this customer.  The
customer and the Company are working together to resolve the technical  problems
and to date the  customer  has not asserted  any  liability  claims  against the
Company.  Currently  Management believes that it has a solution to the technical
problems  and is working with the  customer to create  technical  specifications
that will help the customer meet all the required specifications placed on their
system.  The  cost of this  solution  is being  shared  by the  Company  and the
customer.  Management has added the expected  additional  funding and additional
costs to contract  estimates to cover the anticipated  work necessary to resolve
the technical issues.

Selling,  general and administrative expenses were $565,145 for the three months
ended March 31, 2005, a decrease of $106,430  compared to the three months ended
March 31, 2004. The decrease is primarily due to a decrease in professional fees
offset  partially  by  increased   selling   salaries.   Selling,   general  and
administrative  expenses  were  $1,746,362  for the nine months  ended March 31,
2005,  a decrease of $159,610  compared to the nine months ended March 31, 2004.
The decrease is primarily due to a decrease in professional fess, administrative
salaries and ESOP  contribution  expense.  Employment  at March 31, 2005 was 171
people compared to 190 people at March 31, 2004.

Other income for the three months ended March 31, 2005 was $74,236 as compared
to $27,295 for the three months ended March 31, 2004. Other income for the nine
months ended March 31, 2005 increased to $159,090 as compared to $95,338 for the
nine months ended March 31, 2004. The increase for both periods is due to higher
returns on short-term investments and cash equivalents. The Company does not
believe there is significant risk associated with its investment policy, since
at March 31, 2005 all of the investments are primarily represented by short-term
liquid investments including certificates of deposit and money market funds.

The Company estimates its income taxes using an estimated effective tax rate for
the annual period.  The effective income tax rate at March 31, 2005 and 2004 was
30% and 26%, respectively. The effective tax rate fluctuates between periods and
is less  than the  statutory  tax rate  mainly  due to the  foreign  exportation
benefit the Company receives on its foreign sales.

Liquidity and Capital Resources

As of March 31, 2005, the Company had working capital of $24.8 million  compared
to $24.6 million at March 31, 2004. The Company meets its  short-term  financing
needs through cash flow from  operations and when  necessary,  from its existing
cash and cash equivalents.

The table below presents the summary of cash flow for the periods indicated:

                                                Nine Months Ended March 31,
                                                   2005             2004
                                                -----------      -----------
Net cash provided by operating activities       $   516,028      $ 1,958,923
Net cash used by investing activities            (2,012,305)      (1,267,860)
Net cash used in financing activities              (654,908)      (1,044,999)

Net cash provided by operating  activities  fluctuates between periods primarily
as a result of  differences  in net  income,  the  timing of the  collection  of
accounts  receivable,  purchase  of  inventory,  level of sales and  payment  of
accounts payable.  The change in net cash used by investing activities is due to
the purchase of  short-term  certificates  of deposit.  The decrease in net cash
used in financing  activities  is due mainly to decreased  dividends.  The first
quarter of fiscal  year ended June 30,  2004  included  the payment of a special
dividend in the amount of $506,357 or $.50 per share.


                                       9
<PAGE>

The Company currently  believes that the cash flow generated from operations and
when necessary,  from cash and cash equivalents,  will be sufficient to meet its
long-term funding requirements.  Management, if necessary, has at its disposal a
$3,000,000 line of credit to help fund further growth. For the first nine months
of fiscal 2005 capital expenditures were $380,305.

Stock options  exercised under the Company's  existing stock option plan for the
three-month  period ended March 31, 2005 and the  nine-month  period ended March
31, 2005 were 0 and 800, respectively. During the three month period ended March
31, 2005, 4,710 shares of common stock were repurchased by the Company at a cost
of $125,051.  For the  nine-month  period ended March 31, 2005, a total of 8,724
shares of common stock were repurchased by the company at a cost of $215,366. As
of March 31, 2005, under existing Board authorizations,  approximately  $327,200
could be utilized to repurchase the Company's common stock.


CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
                    SECURITIES LITIGATION REFORM ACT OF 1995

This  report  contains  "forward-looking  statements"  within the meaning of the
Private  Securities   Litigation  Reform  Act  of  1995.  The  terms  "believe,"
"anticipate,"  "intend," "goal," "expect," and similar  expressions may identify
forward-looking  statements.  These  forward-looking  statements  represent  the
Company's current  expectations or beliefs concerning future events. The matters
covered by these statements are subject to certain risks and uncertainties  that
could  cause  actual  results to differ  materially  from those set forth in the
forward-looking  statements,   including  the  Company's  dependence  on  timely
development, introduction and customer acceptance of new products, the impact of
competition and price erosion, supply and manufacturing  constraints,  potential
new orders from customers and other risks and uncertainties.  The foregoing list
should not be construed as exhaustive,  and the Company disclaims any obligation
subsequently  to revise any  forward-looking  statements  to  reflect  events or
circumstances  after the date of such statements or to reflect the occurrence of
anticipated or unanticipated  events.  The Company wishes to caution readers not
to place undue reliance on any such forward-looking statements, which speak only
as of the date made.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

The  Company  is a  small  business  as  defined  under  Security  and  Exchange
Commission  rule 12b-2 and  therefore  files Form 10-Q  utilizing  the exemption
available to small business issuers for Item 305 of Regulation S-K, quantitative
and  qualitative  disclosures  about market risk, and therefore does not provide
the information for this item.

Item 4. Controls and Procedures

(a) The Company's  management,  with the  participation  of the Company's  chief
executive officer and chief financial officer,  carried out an evaluation of the
effectiveness  of our  disclosure  controls and  procedures  (as defined in Rule
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end
of the period  covered  by this  Quarterly  Report on Form  10-Q.  Based on such
evaluation,  our chief  executive  officer  and  chief  financial  officer  have
concluded that our disclosure  controls and procedures  were effective as of the
end of the period covered by this report.

(b) There have been no changes in our internal controls over financial reporting
during the period covered by this report that have materially  affected,  or are
reasonably  likely to materially  affect,  our internal  controls over financial
reporting.


                                       10
<PAGE>


                    PART II: Other Information and Signatures

Item 1.  Legal Proceedings

         None

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

         (a) Securities Sold - For  the nine-month  period ended March 31, 2005,
                               800  stock  options  were  exercised   under  the
                               Company's    existing   stock  option  plan.  The
                               securities  were  sold for   cash  and 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
<TABLE>
<CAPTION>
                                     Purchases of Equity Securities

                                                                Total Number        Maximum Number
                                                                  of Shares         (or Approximate
                                                                  Purchased         Dollar Value)
                                                                 as Part of           of Shares
                                    Total          Average        Publicly           that May Yet
                                   Number           Price         Announced          Be Purchased
                                  of Shares         Paid           Plan or          Under the Plan
         Period                   Purchased       per Share        Program          or Program (1)
         -----------------------------------------------------------------------------------------
        <S>                       <C>              <C>            <C>              <C>
         March 1 to
         March 31, 2005             4,710          $26.55           4,710              $327,200
         -----------------------------------------------------------------------------------------
         Total                      4,710                           4,710
         =========================================================================================
</TABLE>


         (1) The Board of Directors has  authorized the Company to repurchase up
         to $327,200 of its common stock pursuant to an ongoing plan.

Item 3.  Defaults on Senior Securities

         None

Item 4.  Submission of Matters to a Vote of Security Holders

         None

Item 5.  Other Information

         None

Item 6.  Exhibits

         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


                                       11
<PAGE>

                               S I G N A T U R E S

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
      registrant  has duly  caused this report to be signed on its behalf by the
      undersigned thereunto duly authorized.

                                                  ESPEY MFG. & ELECTRONICS CORP.


                                                  /s/ Howard Pinsley
                                                  ------------------------------
                                                  Howard Pinsley, President and
                                                  Chief Executive Officer

                                                  /s/ David O'Neil
                                                  ------------------------------
                                                  David O'Neil, Treasurer and
                                                  Principal Financial Officer

 May 16, 2005
---------------
     Date


                                       12