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, 2009

                          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.

         Yes  |X|          No  [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer,  a
non-accelerated  filer, or a smaller reporting  company.  See the definitions of
"large accelerated  filer,"  "accelerated filer" and "smaller reporting company"
in Rule 12b-2 of the Exchange Act.

         Large accelerated filer [ ]         Accelerated filer [ ]

         Non-accelerated filer [ ]           Smaller reporting company |X|

Indicated by check mark whether the registrant is a shell company (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 11, 2009
                       -----                    ---------------------------
         Common stock, $.33-1/3 par value            2,314,803 shares


<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 -
                           March 31, 2009 (Unaudited) and June 30, 2008        1

                           Statements of Income (Unaudited) -
                           Three and Nine Months Ended March 31, 2009 and
                           2008                                                3

                           Statements of Cash Flows (Unaudited)-
                           Nine Months Ended March 31, 2009 and 2008           4

                           Notes to Financial Statements (Unaudited)           5

         Item 2      Management's Discussion and Analysis of                   9
                     Financial Condition and Results of Operations

         Item 3      Quantitative and Qualitative Disclosures About Market
                     Risk                                                     12

         Item 4      Controls and Procedures                                  12


PART II  OTHER INFORMATION AND SIGNATURES                                     13

         Item 1      Legal Proceedings                                        13

         Item 2      Unregistered Sales of Equity Securities                  13

         Item 4      Submission of Matters to a Vote of Security Holders      13

         Item 5      Other Information                                        13

         Item 6      Exhibits                                                 13

         SIGNATURES                                                           14



<PAGE>
<TABLE>
<CAPTION>

                                   PART I: FINANCIAL INFORMATION

                                   ESPEY MFG. & ELECTRONICS CORP.
                                           Balance Sheets
                            March 31, 2009 (Unaudited) and June 30, 2008


                                                                              2009          2008
                                                                            March 31,      June 30,
                                                                           -----------   -----------
<S>                                                                          <C>           <C>
ASSETS:

          Cash and cash equivalents                                        $   852,199   $ 6,851,753
          Short term investments                                             7,866,000     7,336,000
          Trade accounts receivable, net                                     4,780,648     3,646,127
          Income tax receivable                                                142,724       276,087
          Other receivables                                                         99         4,348
          ESOP receivable due to dividends on unallocated shares               199,921        36,809

          Inventories:
                  Raw materials                                              1,473,070     1,575,116
                  Work-in-process                                              998,906     1,151,332
                  Costs relating to contracts in process, net of advance
                    payments of $667,623 at March 31, 2009 and
                    $959,175 at June 30, 2008                               10,246,364     7,461,786
                                                                           -----------   -----------
                                    Total inventories                       12,718,340    10,188,234

          Deferred income taxes                                                167,868       169,853
          Prepaid expenses and other current assets                            258,509       355,688
                                                                           -----------   -----------
                                    Total current assets                    26,986,308    28,864,899
                                                                           -----------   -----------

          Property, plant and equipment, net                                 2,800,159     2,956,590
          Loan receivable                                                       45,331        65,003
                                                                           -----------   -----------

                                    Total assets                           $29,831,798   $31,886,492
                                                                           ===========   ===========


See accompanying notes to the financial statements.                                      (Continued)

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

                                        ESPEY MFG. & ELECTRONICS CORP.
                                                Balance Sheets
                                 March 31, 2009 (Unaudited) and June 30, 2008


                                                                                    2009           2008
                                                                                  March 31,       June 30,
                                                                                ------------    ------------
<S>                                                                                   <C>             <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:

          Accounts payable                                                      $  2,060,275    $    600,931
          Accrued expenses:
                  Salaries, wages and commissions                                    235,620         184,377
                  Vacation                                                           502,229         542,441
                  Other                                                               48,289          46,253
          Payroll and other taxes withheld and accrued                                42,665          42,175
                                                                                ------------    ------------
                               Total current liabilities                           2,889,078       1,416,177
                                                                                ------------    ------------

          Deferred income taxes                                                      105,547         132,578
                                                                                ------------    ------------
                               Total liabilities                                   2,994,625       1,548,755
                                                                                ------------    ------------

          Common stock, par value $.33-1/3 per share. Authorized 10,000,000
              shares; issued 3,029,874 shares on March 31, 2009 and June 30,
              2008. Outstanding 2,314,803 and 2,325,902 (includes 207,450 and
              225,000 Unearned ESOP Shares on March 31, 2009 and
              June 30, 2008, respectively)                                         1,009,958       1,009,958

          Capital in excess of par value                                          13,651,897      13,476,609

          Retained earnings                                                       22,359,796      25,796,703
                                                                                ------------    ------------
                                                                                  37,021,651      40,283,270

          Less:   Unearned ESOP shares                                            (3,251,248)     (3,251,248)

                  Treasury shares, cost of 715,071 shares on March
                  31, 2009 and 703,972 shares on June 30, 2008                    (6,933,230)     (6,694,285)
                                                                                ------------    ------------
                               Total stockholders' equity                         26,837,173      30,337,737
                                                                                ------------    ------------

                               Total liabilities and stockholders' equity       $ 29,831,798    $ 31,886,492
                                                                                ============    ============


See accompanying notes to the financial statements.

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

                                 ESPEY MFG. & ELECTRONICS CORP.
                                Statements of Income (Unaudited)
                       Three and Nine Months Ended March 31, 2009 and 2008


                                              Three Months                   Nine Months
                                          2009            2008           2009           2008
                                      ----------------------------   ---------------------------
<S>                                      <C>             <C>           <C>            <C>
Net sales                             $  6,709,880    $  6,479,020   $ 18,957,576   $ 19,512,950
Cost of sales                            4,977,068       4,301,589     15,447,559     14,303,824
                                      ------------    ------------   ------------   ------------
       Gross profit                      1,732,812       2,177,431      3,510,017      5,209,126

Selling, general and
   administrative expenses                 658,115         647,998      2,125,927      2,017,370
                                      ------------    ------------   ------------   ------------

       Operating income                  1,074,697       1,529,433      1,384,090      3,191,756
                                      ------------    ------------   ------------   ------------

Other income (expense)

       Interest and dividend income         72,982         137,594        268,866        537,039
       Other                                (2,278)         16,186         13,635         64,748
                                      ------------    ------------   ------------   ------------
                                            70,704         153,780        282,501        601,787
                                      ------------    ------------   ------------   ------------

Income before income taxes               1,145,401       1,683,213      1,666,591      3,793,543

Provision for income taxes                 364,129         584,008        529,436      1,305,669
                                      ------------    ------------   ------------   ------------

                  Net income          $    781,272    $  1,099,205   $  1,137,155   $  2,487,874
                                      ============    ============   ============   ============

Net income per share:

       Basic                          $        .37    $        .53   $        .54   $       1.20
       Diluted                        $        .37    $        .53   $        .54   $       1.18
                                      ------------    ------------   ------------   ------------



Weighted average number of
  shares outstanding:

       Basic                             2,113,772       2,083,659      2,107,735      2,074,743
       Diluted                           2,115,696       2,098,596      2,114,732      2,101,177
                                      ------------    ------------   ------------   ------------

Dividends per share:                  $      .2250    $     1.7000   $     2.1750   $     2.0500
                                      ============    ============   ============   ============

See accompanying notes to the financial statements.

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

                                       ESPEY MFG. & ELECTRONICS CORP.
                                    Statements of Cash Flows (Unaudited)
                                  Nine Months Ended March 31, 2009 and 2008
                                                                                          March 31,
                                                                                    2009             2008
                                                                                ------------    ------------
<S>                                                                                  <C>             <C>
Cash Flows From Operating Activities:
       Net income                                                               $  1,137,155    $  2,487,874

       Adjustments to reconcile net income to net
         cash provided by operating activities:
       Excess tax benefits from share-based compensation                              30,245          83,471
       Stock-based compensation                                                       85,111         115,822
       Depreciation                                                                  369,379         368,147
       ESOP compensation expense                                                     326,263         381,111
       Gain on disposal of assets                                                       (996)           (385)
       Deferred income tax                                                           (25,046)        (33,968)
       Changes in assets and liabilities:
           Increase in trade receivables, net                                     (1,134,521)       (774,588)
           Decrease in income taxes receivable                                       133,363              --
           Decrease (increase) in other receivables                                    4,249          (1,425)
           Increase in ESOP receivable due to dividends on unallocated shares       (163,112)       (129,681)
           (Increase) decrease in inventories                                     (2,530,106)        587,921
           Decrease in prepaid expenses and other current assets                      97,179         207,242
           Increase in accounts payable                                            1,459,344         146,956
           Increase in accrued salaries, wages and commissions                        51,243          20,313
           Decrease in vacation accrual                                              (40,212)        (54,865)
           Decrease in ESOP payable                                                 (326,263)       (381,111)
           Increase (decrease) in other accrued expenses                               2,036          (4,061)
           Increase (decrease) in payroll & other taxes withheld and accrued             490             (83)
           Decrease in income taxes payable                                          (30,245)       (107,691)
                                                                                ------------    ------------
                      Net cash (used in) provided by operating activities           (554,444)      2,910,999
                                                                                ------------    ------------

Cash Flows From Investing Activities:
       Additions to property, plant & equipment                                     (211,952)       (423,131)
       Payment for issuance of loan receivable                                            --         (80,000)
       Proceeds from loan receivable                                                  19,672           6,395
       Purchase of short term investments                                         (7,318,000)     (5,887,000)
       Maturity of short term investments                                          6,788,000       3,360,000
                                                                                ------------    ------------
                      Net cash used in investing activities                         (722,280)     (3,023,736)
                                                                                ------------    ------------

Cash Flows From Financing Activities:
       Dividends on common stock                                                  (4,574,062)     (4,263,849)
       Purchase of treasury stock                                                   (311,545)       (716,363)
       Proceeds from exercise of stock options                                       132,532         502,147
       Excess tax benefits from share-based compensation                              30,245          83,471
                                                                                ------------    ------------
                      Net cash used in financing activities                       (4,722,830)     (4,394,594)
                                                                                ------------    ------------

Decrease in cash and cash equivalents                                             (5,999,554)     (4,507,331)
Cash and cash equivalents, beginning of period                                     6,851,753      11,096,111
                                                                                ------------    ------------
Cash and cash equivalents, end of period                                             852,199       6,588,780
                                                                                ============    ============

Supplemental disclosures of cash flow information:
       Income Taxes Paid                                                        $    400,000    $  1,290,000
                                                                                ============    ============

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-KSB for
the year ended June 30, 2008.

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

Effective July 1, 2006, the Company  adopted  Statement of Financial  Accounting
Standards  No. 123 (Revised  2004),"Share-Based  Payment"  ("SFAS No. 123 (R)"),
which amends SFAS No. 123 and  supersedes  Accounting  Principles  Board Opinion
("APB") No. 25 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 may be settled by the issuance of those equity instruments. SFAS No. 123(R)
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.  SFAS No.123(R)  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. As allowed
under SFAS No. 123(R),  the Company elected the modified  prospective  method of
adoption,   under  which  compensation  cost  is  recognized  in  the  financial
statements  beginning  with  the  effective  date of  SFAS  No.  123(R)  for all
share-based  payments  granted  after that  date,  and for all  unvested  awards
granted  prior to the  effective  date of SFAS No.  123(R).  Accordingly,  prior
period amounts have not been restated.

Total stock-based compensation expense recognized in the Statement of Income for
the three  months  ended  March 31,  2009 and 2008,  was  $26,945  and  $32,491,
respectively,  before income taxes.  The related total  deferred tax benefit was
approximately  $2,399 and $2,487,  for the three months ended March 31, 2009 and
2008,  respectively.  Total stock-based  compensation  expense recognized in the
Statement  of Income for the nine  months  ended  March 31,  2009 and 2008,  was
$85,111 and  $115,822,  respectively,  before  income  taxes.  The related total
deferred tax benefit was  approximately  $7,353 and $8,991,  for the nine months
ended March 31, 2009 and 2008,  respectively.  Prior to the adoption of SFAS No.
123(R), the Company presented all tax benefits for deductions resulting from the
exercise of stock  options as  operating  cash flows in the  Statements  of Cash
Flows.  SFAS No. 123(R) 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.

                                       5
<PAGE>

As  of  March  31,  2009,  there  was  approximately  $140,854  of  unrecognized
compensation  cost  related  to  stock  option  awards  that is  expected  to be
recognized as expense over a period of 2.0 years.

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, of which 65,700 have been granted and are outstanding as of March
31, 2009. While no further grants of options may be made under the 2000 Plan, as
of March 31, 2009, 80,900 options were outstanding, vested and exercisable.

SFAS No.  123(R)  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 and nine months
ended March 31, 2009 and 2008:

<TABLE>
<CAPTION>
                                             Three Months Ended       Nine Months Ended
                                                  March 31,               March 31,
                                             2009          2008       2009          2008
                                            --------------------    ---------------------
<S>                                           <C>          <C>        <C>           <C>
Dividend yield                                3.93%        2.59%      3.93%         2.40%
Expected stock price volatility              26.55%       20.50%     26.55%        22.29%
Risk-free interest rate                       3.26%        4.80%      3.26%         4.54%
Expected option life (in years)               4.1 yrs      5 yrs      4.1 yrs       5 yrs
Weighted average fair value per share of
   options granted during the period         $3.341       $3.655     $3.341        $3.838
</TABLE>

The Company  pays  dividends  quarterly  and does plan 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
the safe harbor calculation under SFAS No. 123.

The following  table  summarizes  stock option  activity  during the nine months
ended March 31, 2009:

                                                Employee Stock Options Plan
                                                                      Weighted
                                         Number of     Weighted        Average
                                          Shares        Average       Remaining
                                          Subject      Exercise      Contractual
                                         To Option       Price           Term
                                        ----------------------------------------
       Balance at July 1, 2008           126,500         $18.40           7.61
       Granted                            31,800         $17.09           9.89
       Exercised                          (8,800)        $15.06            --
       Forfeited or expired               (2,900)        $18.46            --
                                        ----------------------------------------
       Balance at March 31, 2009         146,600         $18.32           8.18
                                        ========================================
       Exercisable at March 31, 2009      80,900         $17.45           7.10
                                        ========================================

The intrinsic value of stock options exercised was $21,073 and $242,495,  during
the nine months ended March 31, 2009 and 2008, respectively. The intrinsic value
of stock options  outstanding  and exercisable as of March 31, 2009 and 2008 was
$25,120 and $132,828, respectively.

                                       6
<PAGE>

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  March  31,  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 2008, the Financial  Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standard  No.  162 ("SFAS  162"),  The  Hierarchy  of
Generally  Accepted  Accounting  Principals.  SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation  of  financial  statements  of  nongovernmental  entities  that  are
presented in conformity with generally accepted accounting  principles (GAAP) in
the United States. SFAS 162 is effective 60 days following the SEC's approval of
the Public Company Accounting  Oversight Board amendments to AU Section 411, The
Meaning of Present  Fairly in  Conformity  With  Generally  Accepted  Accounting
Principles.  SFAS 162 did not have a material effect on the company's  financial
statements.

In March 2008, the FASB issued  Statement of Financial  Accounting  Standard No.
161  ("SFAS  161"),   Disclosures  about  Derivative   Instruments  and  Hedging
Activities,  an amendment of FASB Statement No. 133. SFAS 161 requires  enhanced
disclosures  about an entity's  derivative and hedging  activities.  SFAS 161 is
effective for financial  statements  issued for fiscal years and interim periods
beginning after November 15, 2008 with early  application  encouraged.  As such,
the Company  was  required to adopt these  provisions  at the  beginning  of the
fiscal year ended June 30, 2009.  The adoption of the provisions of SFAS 161 did
not have a material effect on the Company's financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standard No.
160 ("SFAS 160"), Noncontrolling Interests in Consolidated Financial Statements,
an  amendment  of ARB No. 51.  SFAS 160  establishes  accounting  and  reporting
standards  for  the  noncontrolling   interest  in  a  subsidiary  and  for  the
deconsolidation  of a subsidiary.  SFAS 160 is effective  for fiscal years,  and
interim  periods  within those fiscal years,  beginning on or after December 15,
2008. As such, the Company was required to adopt these  provisions on January 1,
2009. The adoption of the provisions of SFAS 160 did not have a material  effect
on the Company's financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standard No.
141(R)  ("SFAS  141(R)"),   Business   Combinations.   SFAS  141(R)  establishes
principles and requirements for how the acquirer  recognizes and measures in its
financial statements the identifiable assets acquired,  the liabilities assumed,
an any  noncontrolling  interest in the  acquiree,  recognizes  and measures the
goodwill acquired in the business combination or a gain from a bargain purchase,
and  determines  what  information  to disclose to enable users of the financial
statements  to  evaluate  the  nature  and  financial  effects  of the  business
combination.  SFAS 141(R) is effective  for fiscal  years,  and interim  periods
within those fiscal years, beginning on or after December 15, 2008. As such, the
Company was required to adopt these  provisions on January 1, 2009. The adoption
of the provisions of SFAS 141(R) did not have a material effect on the Company's
financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standard No.
159 ("SFAS  159"),  The Fair Value  Option for  Financial  Assets and  Financial
Liabilities.  SFAS 159  provides  companies  with an option  to report  selected
financial assets and financial  liabilities at fair value.  Unrealized gains and
losses on items for which the fair value option has been elected are reported in
earnings at each subsequent reporting date. SFAS 159 is effective beginning July
1, 2008.  The  adoption  of the  provisions  of SFAS 159 did not have a material
effect on the Company's financial statements.

In September 2006, the FASB issued  Statement of Financial  Accounting  Standard
No. 157 ("SFAS  157"),  Fair Value  Measurements.  SFAS 157 defines  fair value,
establishes a framework for measuring fair value, and expands  disclosures about
fair value  measurements.  SFAS 157 applies to other  accounting  pronouncements


                                       7
<PAGE>

that  require or permit  fair value  measurements,  but does not require any new
fair value measurements.  SFAS 157 is effective for financial  statements issued
for fiscal years  beginning  after November 15, 2007, and interim periods within
those years. SFAS 157 did not have a material effect on the Company's  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   Statement  of  Position  93-6.
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 $97,360
for the three-month  period ended March 31, 2009 and $326,263 for the nine-month
period  ended  March 31,  2009.  The ESOP  shares  as of March 31,  2009 were as
follows:

         Allocated Shares                                           426,894
         Committed-to-be-released shares                             17,500
         Unreleased shares                                          207,500
                                                                 ----------

         Total shares held by the ESOP                              651,894
                                                                 ==========

         Fair value of unreleased shares at March 31, 2009       $3,133,250
                                                                 ==========

                                       8
<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 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 nine months of fiscal 2009 were  approximately
$14.2  million,  representing  a 12.8%  decrease  from the  amount of new orders
received in the first nine months of fiscal 2008. These orders are predominately
follow-on  production  quantities for mature products.  These orders are in line
with the  Company's  strategy of getting  involved in  long-term  high  quantity
military and  industrial  products.  The Company's  backlog was $40.0 million at
March 31, 2009  compared to $33 million at March 31, 2008,  and is $38.9 million
at May 10, 2009,  which includes $19.1 million from two  significant  customers.
The backlog for the Company  represents the estimated  remaining  sales value of
work to be performed under firm contracts.  These contracts include  significant
orders for military and industrial power supplies,  and contracts to manufacture
certain customer products in accordance with pre-engineered requirements.

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 2009 to be higher than fiscal 2008 sales.  In addition
to the backlog,  the Company currently has outstanding  quotations and potential
business representing approximately $56 million in the aggregate for both repeat
and new programs.

Net  sales to two  significant  customers  represented  59.0%  and  58.4% of the
Company's total sales for the three-month  period ended March 31, 2009 and 2008,
respectively. Sales to these two customers for the nine-month period ended March
31,  2009 and 2008  represented  65.7% and 57.9% of total  sales,  respectively.
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
objective of lowering the concentration of sales,  mitigating excessive reliance
upon a single major product  program 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

                                       9
<PAGE>

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 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 an ongoing 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 March 31, 2009 were  $6,709,880 as compared
to $6,479,020 for the same period in 2008,  representing  an 3.6% increase.  Net
sales for the nine months ended March 31, 2009 were  $18,957,576  as compared to
$19,512,950  for  the  same  period  in  2008,  representing  a  2.8%  decrease.
Generally,  the  increases  and  decreases in net sales can be attributed to the
contract specific nature of the Company's  business.  The increase for the three
months  ended March 31,  2009,  was due to an overall  increase in power  supply
shipments offset by a decrease in transmitter component shipments.  The decrease
for the nine months  ended  March 31, 2009 was due to a decrease in  transmitter
component  and  transformer  shipments  offset by an  increase  in power  supply
shipments.

For the three months ended March 31, 2009 and 2008 gross profits were $1,732,812
and  $2,177,431,  respectively.  Gross profit as a percentage of sales was 25.8%
and 33.6%, for the three months ended March 31, 2009 and 2008, respectively. For
the nine months ended March 31, 2009 and 2008 gross profits were  $3,510,017 and
$5,209,126,  respectively.  Gross profit as a percentage  of sales was 18.5% and
26.7%,  for the nine months  ended March 31,  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 decreased gross profit and gross profit percentage in the three
and nine months ended March 31, 2009,  was  primarily  the result of  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  testing and has made  significant
progress  towards  completion.  There also is a third loss  contract  that had a
negative  impact on gross  profit and net income in the 3 months ended March 31,
2009.  This contract is near  completion and should ship prior to June 30, 2009.
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 March 31, 2009 was 166 compared to 173 people at March 31,
2008.

                                       10
<PAGE>

Selling,  general and administrative expenses were $658,115 for the three months
ended March 31, 2009; an increase of $10,117, compared to the three months ended
March 31, 2008. Selling, general and administrative expenses were $2,125,927 for
the nine months  ended March 31, 2009,  an increase of $108,557  compared to the
nine months  ended March 31,  2008.  The  increase for the three and nine months
ended March 31,  2009,  relates  primarily  to an  increase  in salaries  and an
increase in legal and consulting fees.

Other  income for the three and nine months  ended March 31, 2009  decreased  as
compared  to the three and nine months  ended  March 31,  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 that there
is a significant risk associated with its investment policy,  since at March 31,
2009 all of the  investments  were primarily  represented  by short-term  liquid
investments including certificates of deposit and money market funds.

The  effective  income tax rate at March 31,  2009 and 2008 was 31.8% and 34.4%,
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 March 31, 2009,  was $ 781,272 or $.37 per
share,  both basic and diluted,  compared to $1,099,205 or $.53 per share,  both
basic and diluted, for the three months ended March 31, 2008. Net income for the
nine months ended March 31, 2009, was  $1,137,155 or $.54 per share,  both basic
and  diluted,  compared to  $2,487,874  or $1.20 and $1.18 per share,  basic and
diluted, respectively, for the nine months ended March 31, 2008. The decrease in
net income per share was primarily due to the loss programs  explained above 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  three  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 March 31, 2009 and 2008 was  approximately
$24.1  million and $26.4  million,  respectively.  During the three months ended
March  31,  2009 and 2008 the  Company  repurchased  14,350  and  7,500  shares,
respectively,  of its common  stock for a total  purchase  price of $209,035 and
$144,600,  respectively. Of the total purchases, 10,699 shares and 7,500 shares,
respectively,  were purchased from the Company's  Employee  Retirement  Plan and
Trust ("ESOP") for a purchase price of $157,222 and $144,600,  respectively. All
remaining shares were purchased on the open market. During the nine months ended
March 31,  2009 and 2008 the  Company  repurchased  19,899  and  33,220  shares,
respectively,  of its common  stock for a total  purchase  price of $311,545 and
$716,363, respectively. Of the total purchases, 11,499 shares and 33,220 shares,
respectively,  were purchased from the Company's  Employee  Retirement  Plan and
Trust ("ESOP") for a purchase price of $171,662 and $716,363,  respectively. All
remaining   shares  were   purchased   on  the  open  market.   Under   existing
authorizations  from the  Company's  Board of  Directors,  as of March 31, 2009,
management is authorized to purchase an additional $1,688,454 million of Company
stock.

                                                     Nine Months Ended March 31,
                                                          2009         2008
                                                     ------------  ------------
Net cash (used in) provided by operating activities  $  (554,444)  $ 2,910,999
Net cash used in investing activities                   (722,280)   (3,023,736)
Net cash used in financing activities                 (4,722,830)   (4,394,594)

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
nine months of fiscal 2009 primarily due to more short-term investments maturing
during the current period. The increase in cash used in financing  activities is
due primarily to increased dividends paid on common stock, decreased purchase of
treasury  shares,  and a decrease  in the  proceeds  from the  exercise of stock
options.

                                       11
<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 for the foreseeable future.

During the nine  months  ended March 31,  2009 and 2008,  the  Company  expended
$211,952 and $423,131,  respectively,  for plant improvements and new equipment.
The Company has  budgeted  approximately  $350,000 for new  equipment  and plant
improvements in fiscal 2009. 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 March 31, 2009 and March 31,
2008.


    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.

                                       12
<PAGE>

                    PART II: Other Information and Signatures

Item 1.       Legal Proceedings

              None

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

              (a) None

              (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, 2009       14,350     $14.5669       14,350        $1,688,454
</TABLE>
              (1)  Pursuant to a prior Board of Directors  authorization,  as of
              March 31, 2009 the Company can  repurchase up to $1,688,454 of its
              common stock pursuant to an ongoing plan.

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

                                       13
<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 13, 2009
------------
   Date





                                       14