UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended September 30, 2009

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF THE  SECURITIES
EXCHANGE ACT OF 1934 for the transition period from ______ to ______


                          Commission File Number I-4383


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



         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. |X| Yes [ ] No

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company:
[ ] Large accelerated filer
[ ] Accelerated filer
[ ] Non-accelerated  filer
|X| Smaller reporting company

Indicate by check mark whether the registrant is a shell company. [ ] Yes |X| No

At  November  11,  2009,  there  were  2,335,289   shares   outstanding  of  the
registrant's Common stock, $.33-1/3 par value.

<PAGE>

                         ESPEY MFG. & ELECTRONICS CORP.
                          Quarterly Report on Form 10-Q
                                    I N D E X

PART I   FINANCIAL INFORMATION                                              PAGE

         Item 1      Financial Statements:

                           Balance Sheets -
                           September 30, 2009 (Unaudited) and June 30, 2009   1

                           Statements of Income (Unaudited) -
                           Three Months Ended September 30, 2009 and 2008     3

                           Statements of Cash Flows (Unaudited)-
                           Three Months Ended September 30, 2009 and 2008     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 4T     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

<PAGE>
<TABLE>
<CAPTION>
                                   PART I: FINANCIAL INFORMATION

                                  ESPEY MFG. & ELECTRONICS CORP.
                                           Balance Sheet
                         September 30, 2009 (Unaudited) and June 30, 2009

                                                                      September 30,       June 30,
                                                                               2009           2009
                                                                       ------------   ------------
<S>                                                                       <C>            <C>
ASSETS:

     Cash and cash equivalents                                         $  3,596,115   $  2,775,319
     Short term investments                                               7,349,874      6,349,874
     Trade accounts receivable, net                                       4,009,318      5,133,792
     ESOP receivable due to dividends on unallocated shares                  25,528         71,053
     Other receivables                                                            9            297

     Inventories:
             Raw materials                                                1,352,046      1,394,441
             Work-in-process                                              1,044,434      1,107,880
             Costs relating to contracts in process, net of progress
             payments of $1,256 at September 30, 2009 and
             aaa$60,079 at June 30, 2009                                 10,695,861     10,526,884
                                                                       ------------   ------------
     Total inventories                                                   13,092,341     13,029,205

     Deferred income taxes                                                  225,036        224,835
     Prepaid expenses and other current assets                              198,672        233,072
                                                                       ------------   ------------
                              Total current assets                       28,496,893     27,817,447
                                                                       ------------   ------------

     Property, plant and equipment, net                                   2,768,568      2,738,222
     Loan receivable                                                         34,209         38,673
                                                                       ------------   ------------

                              Total assets                             $ 31,299,670   $ 30,594,342
                                                                       ============   ============

See accompanying notes to the financial statements.                                    (Continued)

                                                1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                       ESPEY MFG. & ELECTRONICS CORP.
                                               Balance Sheet
                              September 30, 2009 (Unaudited) and June 30, 2009

                                                                             September 30,        June 30,
                                                                                      2009            2009
                                                                              ------------    ------------
<S>                                                                                <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:

     Accounts payable                                                         $  1,098,862    $    999,521
     Accrued expenses:
             Salaries, wages and commissions                                       161,140         219,533
             Vacation                                                              501,489         520,072
             Other                                                                  92,257          42,863
     Payroll and other taxes withheld and accrued                                   42,286          42,075
     Income taxes payable                                                           37,506         266,891
                                                                              ------------    ------------
                              Total current liabilities                          1,933,540       2,090,955
                                                                              ------------    ------------

     Deferred income taxes                                                          92,006          99,253
                                                                              ------------    ------------
                              Total liabilities                                  2,025,546       2,190,208
                                                                              ------------    ------------

     Common stock, par value $.33-1/3 per share.

             Authorized 10,000,000 shares; issued 3,029,874 shares
             on September 30, 2009 and June 30, 2009. Outstanding
             2,335,289 and 2,314,803 (includes 196,041 and 201,666
             Unearned ESOP Shares) on September 30, 2009 and June
             30, 2009, respectively                                              1,009,958       1,009,958

     Capital in excess of par value                                             13,939,481      13,755,808

     Retained earnings                                                          24,002,983      23,485,675
                                                                              ------------    ------------
                                                                                38,952,422      38,251,441

     Less:   Unearned ESOP shares                                               (2,914,077)     (2,914,077)
             Cost of 694,585 and 715,071 shares of common stock in
             treasury on September 30, 2009 and June 30, 2009, respectively     (6,764,221)     (6,933,230)
                                                                              ------------    ------------
                              Total stockholders' equity                        29,274,124      28,404,134
                                                                              ------------    ------------

                              Total liabilities and stockholders' equity      $ 31,299,670    $ 30,594,342
                                                                              ============    ============

See accompanying notes to the financial statements.

                                                     2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                            ESPEY MFG. & ELECTRONICS CORP.
                           Statements of Income (Unaudited)
                    Three Months Ended September 30, 2009 and 2008

                                                             Three Months
                                                    September 30,      September 30,
                                                             2009               2008
                                                 ----------------   ----------------
<S>                                              <C>                <C>
Net sales                                        $      6,874,940   $      6,053,519
Cost of sales                                           4,816,738          4,902,244
                                                 ----------------   ----------------
       Gross profit                                     2,058,202          1,151,275

Selling, general and administrative expenses              752,386            678,227
                                                 ----------------   ----------------

       Operating income                                 1,305,816            473,048
                                                 ----------------   ----------------

Other income

       Interest and dividend income                        42,639            102,915
       Other                                                8,102             11,241
                                                 ----------------   ----------------
           Total other income, net                         50,741            114,156
                                                 ----------------   ----------------

Income before income taxes                              1,356,557            587,204

Provision for income taxes                                363,794            188,908
                                                 ----------------   ----------------

                  Net income                     $        992,763   $        398,296
                                                 ================   ================

Net income per share:

       Basic                                     $           0.47   $           0.19
       Diluted                                   $           0.47   $           0.19
                                                 ----------------   ----------------

Weighted average number of shares outstanding:

           Basic                                        2,116,984          2,102,306
           Diluted                                      2,118,848          2,116,039
                                                 ----------------   ----------------

Dividends per share:                             $         0.2250   $         0.2250
                                                 ================   ================

See accompanying notes to the financial statements.

                                          3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                      ESPEY MFG. & ELECTRONICS CORP.
                                   Statements of Cash Flows (Unaudited)
                              Three Months Ended September 30, 2009 and 2008

                                                                            September 30,   September 30,
                                                                                     2009           2008
                                                                              -----------    -----------
<S>                                                                               <C>            <C>
Cash Flows From Operating Activities:
     Net income                                                               $   992,763    $   398,296

     Adjustments to reconcile net income to net cash provided
      by operating activities:
     Excess tax benefits from share-based compensation                                626         30,245
     Stock-based compensation                                                      25,304         29,083
     Depreciation                                                                 115,348        124,325
     ESOP compensation expense                                                     90,899        118,418
     Loss on disposal of assets                                                     1,615          2,542
     Deferred income tax benefit                                                   (7,448)        (6,055)
     Changes in assets and liabilities:
         Decrease (increase) in trade receivable, net                           1,124,474       (638,428)
         Increase in income taxes receivables                                          --       (226,157)
         Decrease in other receivables                                                288          1,474
         Decrease in ESOP receivable due to dividends on unallocated shares        45,525         36,809
         Increase in inventories                                                  (63,136)      (687,678)
         Decrease in prepaid expenses and other current assets                     34,400         64,491
         Increase in accounts payable                                              99,341        930,103
         (Decrease) increase in accrued salaries, wages and commissions           (58,393)        70,277
         Increase (decrease) in other accrued expenses                             49,394         (9,460)
         Decrease in vacation accrual                                             (18,583)       (61,423)
         Decrease in ESOP payable                                                 (90,899)       (87,434)
         Increase in payroll and other taxes withheld and accrued                     211          6,840
         Decrease in income taxes payable                                        (230,011)       (30,245)
                                                                              -----------    -----------
                Net cash provided by operating activities                       2,111,718         66,023
                                                                              -----------    -----------

Cash Flows From Investing Activities:
     Additions to property, plant and equipment                                  (147,308)      (125,755)
     Proceeds from loan receivable                                                  4,464          6,509
     Purchase of short term investments                                        (3,696,000)    (4,242,000)
     Proceeds from maturity of short term investments                           2,696,000      2,112,000
                                                                              -----------    -----------
                Net cash used in investing activities                          (1,142,844)    (2,249,246)
                                                                              -----------    -----------

Cash Flows From Financing Activities:
     Sale of treasury stock                                                       326,752             --
     Dividends on common stock                                                   (475,456)      (473,378)
     Purchase of treasury stock                                                        --        (52,038)
     Proceeds from exercise of stock options                                           --         66,900
     Excess tax benefits from share-based compensation                                626         30,245
                                                                              -----------    -----------
                Net cash used in financing activities                            (148,078)      (428,271)
                                                                              -----------    -----------

Increase (decrease) in cash and cash equivalents                                  820,796     (2,611,494)
Cash and cash equivalents, beginning of period                                  2,775,319      6,851,753
                                                                              -----------    -----------
Cash and cash equivalents, end of period                                      $ 3,596,115    $ 4,240,259
                                                                              ===========    ===========

Supplemental Schedule of Cash Flow Information:
     Income taxes paid                                                        $   600,000    $   400,000
                                                                              ===========    ===========

See accompanying notes to the financial statements.

                                                    4
</TABLE>
<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.
The preparation of these financial  statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities,  revenues and
expenses, and related disclosure of assets and liabilities. On an ongoing basis,
we evaluate our  estimates  and  judgments,  including  those related to revenue
recognition, inventories, income taxes, and stock-based compensation. Management
bases its estimates on historical  experience  and on various other factors that
are believed to be reasonable under the circumstances, the results of which form
the  basis  for  making  judgments  about the  carrying  values  of  assets  and
liabilities that are not readily apparent from other sources. Actual results may
differ from these  estimates under  different  assumptions or conditions.  These
financial  statements  should be read in  conjunction  with the  Company's  most
recent audited financial  statements included in its report on Form 10-K for the
year ended June 30, 2009.

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.  As
Unearned ESOP shares are released or committed-to-be-released  the shares become
outstanding for earnings-per-share computations.

Note 3. Stock Based Compensation

The Company follows Statement of Financial Accounting Standards No. 123(R) (FASB
ASC 718) in establishing  standards for the accounting for transactions in which
an entity  exchanges its equity  instruments  for goods or services,  as well as
transactions  in which an entity  incurs  liabilities  in exchange  for goods or
services that are based on the fair value of the entity's equity  instruments or
that maybe  settled by the  issuance of those equity  instruments.  FASB ASC 718
requires that the cost resulting from all  share-based  payment  transactions be
recognized  in  the  financial  statements  based  on  the  fair  value  of  the
share-based  payment.  FASB ASC 718  establishes  fair value as the  measurement
objective in accounting for  share-based  payment  transactions  with employees,
except for equity instruments held by employee share ownership plans.

Total stock-based compensation expense recognized in the Statement of Income for
the three  month  period  ended  September  30,  2009 and 2008,  was $25,304 and
$29,083,  respectively,  before  income taxes.  The related  total  deferred tax
benefit was approximately $2,477 for the same periods. FASB ASC 718 requires the
tax benefits  resulting from tax deductions in excess of the  compensation  cost
recognized  for those options to be classified and reported as both an operating
cash outflow and a financing cash inflow on a prospective basis upon adoption.

As of  September  30,  2009,  there was  approximately  $96,684 of  unrecognized
compensation  cost  related  to  stock  option  awards  that is  expected  to be
recognized  as expense  over the next 2 years.  The total  deferred  tax benefit
related to these awards is approximately $8,526.

The  Company has one  employee  stock  option  plan under  which  options may be
granted,  the 2007 Stock Option and Restricted Stock Plan (the "2007 Plan"). The
Board of  Directors  may grant  options  to  acquire  shares of common  stock to
employees  of the  Company at the fair market  value of the common  stock on the
date of grant.  Generally,  options granted have a two-year vesting period based
on two years of continuous service and have a ten-year  contractual life. Option
grants provide for accelerated  vesting if there is a change in control.  Shares
issued upon the  exercise of options are from those held in  Treasury.  The 2007
Plan was approved by the Company's  shareholders at the Company's Annual Meeting
on November 30, 2007 and  supercedes  the Company's  2000 Stock Option Plan (the
"2000 Plan").  Options covering 400,000 shares are authorized for issuance under
the 2007 Plan, and 68,700 have been granted and are  outstanding as of September

                                                    5
<PAGE>

30, 2009. While no further grants of options may be made under the 2000 Plan, as
of September 30, 2009, 76,500 options remain outstanding, vested and exercisable
from the 2000 Plan.

FASB ASC 718 requires the use of a valuation  model to calculate  the fair value
of stock-based  awards. The Company has elected to use the Black-Scholes  option
valuation model,  which  incorporates  various  assumptions  including those for
volatility, expected life and interest rates.

The table below outlines the weighted average  assumptions that the Company used
to calculate stock-based employee compensation for the three months ended:

<TABLE>
<CAPTION>
                                                                  September 30,    September 30,
                                                                           2009             2008
                                                                  -------------    -------------
<S>                                                                       <C>             <C>
       Dividend yield                                                     4.49%           3.34 %
       Expected stock price volatility                                   29.22%          24.41 %
       Risk-free interest rate                                            2.46%           3.91 %
       Expected option life (in years)                                    4 yrs            4 yrs
       Weighted average fair value per share of options
         granted during the period                                       $3.351           $3.594
</TABLE>

The Company pays  dividends  quarterly and  anticipates  that it will be able to
continue  to pay  dividends  in the  foreseeable  future.  Expected  stock price
volatility is based on the  historical  volatility of the Company's  stock.  The
risk-free interest rate is based on the implied yield available on U.S. Treasury
issues with an equivalent term  approximating  the expected life of the options.
The expected  option life (in years)  represents  the  estimated  period of time
until exercise and is based on actual historical experience.

The following  table  summarizes  stock option  activity during the three months
ended September 30, 2009:

                                                Employee Stock Options Plan
                                           ------------------------------------
                                                                   Weighted
                                            Number of   Weighted    Average
                                             Shares      Average   Remaining
                                             Subject    Exercise  Contractual
                                            To Option     Price       Term
                                           ------------------------------------
       Balance at July 1, 2009              140,400       $18.29        7.65
       Granted                                2,500       $17.09        9.84
       Exercised                                 --           --          --
       Forfeited or expired                  (3,400)      $19.07          --
                                           ------------------------------------
       Balance September 30, 2009           139,500       $18.25        7.69
                                           ====================================
       Exercisable at September 30, 2009     76,500       $17.41        6.58
                                           ====================================

The intrinsic  value of stock options  exercised was $0 and $18,495,  during the
three months ended  September  30, 2009 and 2008,  respectively.  The  intrinsic
value of stock options  outstanding and exercisable as of September 30, 2009 and
2008 was $42,948 and $90,945, respectively.

Note 4.  Commitments and Contingencies

The Company at certain  times enters 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  to zero at September  30, 2009.  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 can be asserted  against
the  Company.  It is not  possible  to  predict  the  outcome  of such  actions.
Currently the Company has no claims or assertions  pending or threatened against
it.

Note 5.  Recently Issued Accounting Standards

In May 2009, the Financial  Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standard No. 165, Subsequent Events (FASB ASC 855-10).
FASB ASC 855-10  establishes  principles and requirements for subsequent events.

                                       6
<PAGE>

FASB ASC 855-10 is  effective  for interim or annual  financial  periods  ending
after June 15, 2009. As such,  the Company is required to adopt this standard in
the current  period.  Adoption of FASB ASC 855-10 did not have a material effect
on the company's financial statements.

In June 2009, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standard  No. 168 ("SFAS  168"),  The FASB  Accounting
Standards Codification  ("Codification") and the Hierarchy of Generally Accepted
Accounting  Principles - a replacement  of FASB Statement No. 162, The Hierarchy
of Generally Accepted Accounting  Principles.  Under the provisions of SFAS 168,
the Codification will become the source of authoritative U.S. GAAP recognized by
the FASB to be applied by nongovernmental  entities.  The rules and interpretive
releases of the SEC under authority federal  securities laws are also sources of
authoritative  GAAP for SEC registrants.  On the effective date of SFAS 168, the
Codification will supersede all then-existing  non-SEC  accounting and reporting
standards.  All  other  non-grandfathered   non-SEC  accounting  literature  not
included in the Codification  will become  non-authoritative.  The provisions of
SFAS 168 are effective for  financial  statements  issued for interim and annual
periods ending after  September 15, 2009.  Adoption of SFAS 168 had no effect on
the company's financial statements.

In  September  2009,  the FASB  issued ASC 605-25 for revenue  recognition  with
multiple deliverables.  These new standards impact the determination of when the
individual  deliverables  included  in a  multiple-element  arrangement  may  be
treated as  separate  units of  accounting.  Additionally,  these new  standards
modify the manner in which the transaction consideration is allocated across the
separately  identified  deliverables by no longer permitting the residual method
of allocating  arrangement  consideration.  These new standards are effective in
fiscal  years  beginning on or after June 15, 2010,  however  early  adoption is
permitted.  The Company is currently  assessing the potential impact, if any, of
the guidance on its financial statements.

Note 6. Employee Stock Ownership Plan

The Company sponsors a leveraged employee stock ownership plan (the "ESOP") that
covers  all  nonunion  employees  who work  1,000 or more hours per year and are
employed on June 30. The Company makes annual contributions to the ESOP equal to
the ESOP's debt service less  dividends on  unallocated  shares  received by the
ESOP. All dividends on unallocated  shares  received by the ESOP are used to pay
debt service.  Dividends on allocated ESOP shares are recorded as a reduction of
retained earnings.  As the debt is repaid,  shares are released and allocated to
active employees,  based on the proportion of debt service paid in the year. The
Company accounts for its ESOP in accordance with FASB ASC 718. Accordingly,  the
shares  purchased  by the ESOP are  reported  as  Unearned  ESOP  Shares  in the
statement    of    financial    position.    As   shares   are    released    or
committed-to-be-released,  the Company reports compensation expense equal to the
current  average market price of the shares,  and the shares become  outstanding
for earnings-per-share  (EPS) computations ESOP compensation expense was $90,899
for the  three-month  period  ended  September  30,  2009 and  $118,418  for the
three-month period ended September 30, 2008. The ESOP shares as of September 30,
2009 and 2008 were as follows:

                                                September 30,    September 30,
                                                         2009             2008
                                               --------------   --------------
         Allocated Shares                             461,537          442,886
         Committed-to-be-released shares                5,625            5,833
         Unreleased shares                            196,041          219,167
                                               --------------   --------------

         Total shares held by the ESOP                663,203          667,886
                                               ==============   ==============

         Fair value of unreleased shares       $    3,473,847   $    4,021,714
                                               ==============   ==============


Note 7.  Subsequent Events

Subsequent  events were  evaluated  through  November 11, 2009,  the dates these
financial statements were available for issue.

                                       7
<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 artillery.

Business is solicited from large industrial manufacturers and defense companies,
the  government  of the United  States,  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 agencies 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 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.

New orders received in the first three months of fiscal 2010 were  approximately
$4.8  million,  representing  a 13.1%  decrease  from the  amount of new  orders
received in the first three months of fiscal 2009.  These new orders are in line
with the  Company's  strategy of getting  involved in  long-term  high  quantity
military and industrial products and are predominately for follow-on  production
of mature  products.  The  Company's  backlog was $37.0 million at September 30,
2009 which includes  $19.1 million from two  significant  customers  compared to
$44.2  million at  September  30, 2008 which  included  $28.0  million  from two
significant  customers.  The backlog for the Company  represents  the  estimated
remaining sales value of work to be performed under firm contracts.

The sales backlog gives the Company a solid base of future sales. Based upon the
backlog and the anticipated  schedule for the fulfillment of orders,  management
expects  sales for fiscal 2010 to be higher than fiscal 2009 sales.  In addition
to the backlog,  the Company currently has outstanding  quotations and potential
business  representing  approximately  $52.1  million in the  aggregate for both
repeat and new programs.

Net sales to three  significant  customers  represented  66.8% of the  Company's
total sales for the three month period ended September 30, 2009 and net sales to
two significant customers represented 71.8% of the Company's total sales for the
first three month period ended September 30, 2008. Historically,  a small number
of customers have accounted for a large  percentage of the Company's total sales
in  any  given  fiscal  year.   For  several   years,   management  has  pursued
opportunities  with  current  and new  customers  with an overall  objective  of
lowering the concentration of sales, mitigating excessive reliance upon a single
major product of a particular program and minimizing the impact of the loss of a
single  significant  customer.  Management  continues  to evaluate  its business
development functions and potential revised courses of action.

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.

                                       8
<PAGE>

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 any  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 options on a periodic basis.

Critical Accounting Policies and Estimates

Management  believes  our most  critical  accounting  policies  include  revenue
recognition and estimates to completion.

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

Net sales for the three  months  ended  September  30, 2009 were  $6,874,940  as
compared  to  $6,053,519  for the  same  period  in 2008,  representing  a 13.6%
increase.  The increase for the three months ended September 30, 2009 was due to
an overall  increase  in  transformer  shipments  offset by a decrease  in power
supply shipments.

For the three  months  ended  September  30,  2009 and 2008 gross  profits  were
$2,058,202 and $1,151,275,  respectively.  Gross profit as a percentage of sales
was 29.9% and 19.0%,  for the three  months ended  September  30, 2009 and 2008,
respectively.  The primary factor in determining  gross profit and net income is
product mix. The gross profits on mature  products and build to print  contracts
are  higher  as  compared  to  products  which  are  still  in  the  engineering
development stage or in the early stages of production.  In any given accounting
period the mix of product  shipments  between higher margin mature  programs and
less mature  programs,  including loss  contracts,  has a significant  impact on
gross  profit and net  income.  The  increased  gross  profit  and gross  profit
percentage  in the three  months  ended  September  30,  2009,  as  compared  to
September 30, 2008, was primarily the result of favorable  product mix with only
minor  cost  overruns  related to loss  contracts.  For the three  months  ended
September 30, 2008 the Company had  unexpected  losses  incurred on two programs
with  significant  engineering  and production time required for design efforts.
These two programs experienced significant cost overruns due to extended product
qualification  testing and  difficulties  moving the products  from  engineering
design into full production.  Currently, one program has completed qualification
testing  and has moved  into full  production.  The  other  program  is still in
qualification and has made significant  progress towards completion.  Management
continues to evaluate the  Company's  workforce  to ensure that  production  and
overall  execution of the backlog orders and additional  anticipated  orders are
successfully  obtained and  executed.  Employment  of full time  equivalents  at
September 30, 2009 was 166 compared to 169 people at September 30, 2008.

Selling,  general and administrative expenses were $752,386 for the three months
ended  September 30, 2009; an increase of $74,159,  compared to the three months
ended  September 30, 2008. The increase for the three months ended September 30,
2009  relates  primarily  to an  increase  in salary  expense,  consulting,  and
director fees.

Other income for three months ended  September 30, 2009 decreased as compared to
the three months ended  September 30, 2008 due to decreased  interest  rates and
related  interest  income  on  the  Company's  cash  and  cash  equivalents  and
short-term investments. The Company does not believe there is a significant risk
associated  with its investment  policy,  since at September 30, 2009 all of the
investments  were  primarily   represented  by  short-term  liquid   investments
including certificates of deposit and money market funds.

                                       9
<PAGE>

The  effective  income  tax rate at  September  30,  2009 and 2008 was 26.8% and
32.2%, respectively.  The effective tax rate is less than the statutory tax rate
mainly due to the  benefit  the Company  receives  on its  Qualified  Production
Activities  and the benefit  derived from the ESOP  dividends  paid on allocated
shares.

Net income for the three months ended  September 30, 2009,  was $992,763 or $.47
per share, both basic and diluted,  compared to $398,296 or $.19 per share, both
basic and diluted,  for the three months ended  September 30, 2008. The increase
in net income per share was mainly due to higher gross profit on sales offset by
higher  selling  general and  administrative  expenses  and  decreased  interest
income.

Liquidity and Capital Resources

The Company's  working  capital is an appropriate  indicator of the liquidity of
its business,  and during the past two fiscal years, the Company, when possible,
has  funded  all of its  operations  with cash flows  resulting  from  operating
activities  and when  necessary  from its  existing  cash and  investments.  The
Company did not borrow any funds during the last three fiscal years.

The Company's working capital as of September 30, 2009 was  approximately  $26.6
million.  During the three months ended  September 30, 2009 and 2008 the Company
repurchased  0 and 2,744 shares,  respectively,  of its common stock on the open
market  for a  total  purchase  price  of $0 and  $52,038,  respectively.  Under
existing  authorizations from the Company's Board of Directors,  as of September
30, 2009,  management is authorized to purchase an additional $1,688,454 million
of Company stock.

                                                         Three Months Ended
                                                  September 30,    September 30,
                                                           2009             2008
                                                  -------------    -------------
Net cash provided by operating activities             2,111,718     $    66,023
Net cash used in investing activities                (1,142,844)     (2,249,246)
Net cash used in financing activities                  (148,078)       (428,271)

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.  Net cash used in investing  activities decreased in the first
three  months  of  fiscal  2010  due to the due to more  short-term  investments
maturing  during the current  period.  The  decrease  in cash used in  financing
activities  is due  primarily  to  decreased  purchase of treasury  shares and a
decrease in the proceeds from the exercise of stock options.

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 for the foreseeable future.

During the three months ended September 30, 2009 and 2008, the Company  expended
$147,308 and $125,755,  respectively,  for plant improvements and new equipment.
The Company has  budgeted  approximately  $450,000 for new  equipment  and plant
improvements in fiscal 2010. Management anticipates that the funds required will
be available from current operations.

The Company at certain  times enters 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 to zero at September 30, 2009.

                                       10
<PAGE>

    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 smaller  reporting  company as defined  under  Securities  and
Exchange  Commission Rule 12b-2.  Pursuant to the exemption available to smaller
reporting  company  issuers under Item 305 of Regulation S-K,  quantitative  and
qualitative  disclosures  about  market  risk,  the  Company is not  required to
provide the information for this item.

Item 4T. 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.

                                       11
<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  three-month  period ended September
                                    30, 2009,  the Company sold 20,486 shares to
                                    the ESOP. The aggregate  gross proceeds from
                                    the   shares  of  common   stock  sold  were
                                    $169,009.50.  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

Item 3        Defaults Upon 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

                                       12
<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
                                             Chief Executive Officer

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

November 11, 2009
-----------------
      Date


                                       13