UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10 - K

|X|   Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
      Act of 1934 for the fiscal year ended June 30, 2004

|_|   Transition Report Pursuant to Section 13 or 15 (d) of the Securities
      Exchange Act of 1934.

      For the transition period from             to

                           Commission File No. 1-4383

                         Espey Mfg. & Electronics Corp.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

                   New York                                14-1387171
--------------------------------------------------------------------------------
       (State or other jurisdiction of                   (IRS Employer
        incorporation or organization)                 Identification No.)

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

        (Registrant's telephone number including area code) (518)245-4400

                                                        Name of Each Exchange
              Title of Each class                       on Which Registered
              -------------------                       -------------------
         Common Stock $.33-1/3 par value                American Stock Exchange
         Common Stock Purchase Rights                   American Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to the filed by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during  the  preceding  12  months,  and (2) has  been  subject  to such  filing
requirements for the past 90 days.

      |X| Yes |_| No

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
      |X| Yes |_| No

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act).

      |_| Yes |X| No

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  was  $23,184,021  based upon the closing sale price of $22.85 on the
American Stock Exchange on June 30, 2004.

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 September 14, 2001
                  -----                        ---------------------------------
    Common stock, $.33-1/3 par value                    1,010,804 shares

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  registrants  definitive  proxy  statement  relating to the 2004
Annual  Meeting of  Shareholders,  to be filed with the  Securities and Exchange
Commission,  are  incorporated by reference in Part III, Items 10 and 14 on Form
10-K as indicated herein.


1
<PAGE>

                                     PART I

Item 1. Business.

General

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. The
Company operates a one-segment business and was incorporated in 1928.

The electronic  power supplies and components  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.

The Company's iron-core  components include (i) transformers of the audio, power
and  pulse  types,  (ii)  magnetic  amplifiers  and  (iii)  audio  filters.  The
electronic system components manufactured by the Company include antenna systems
and high power radar transmitters. These system components utilize the Company's
own electronic power supplies,  transformers and other iron-core  components and
mechanical assemblies.

In the fiscal year ended June 30, 2004 and 2003, the Company's  total sales were
$22,507,199 and $19,773,411,  respectively.  Sales to two domestic customers and
one foreign  customer  accounted  for 22%,  16% and 18% and 25%, 19% and 12%, of
total sales in 2004 and 2003, respectively.  Sales to two domestic customers and
one foreign customer accounted for 26%, 21% and 14% respectively, of total sales
in 2002.

Export sales in 2004, 2003 and 2002 were approximately  $9,800,000,  $7,100,000,
and $6,600,000, respectively.

Sources of Raw Materials

The Company has never experienced any significant delay or shortage with respect
to the purchase of raw materials and components  used in the  manufacture of its
products, and has at least two potential sources of supply for a majority of its
raw materials.  However,  certain  components used in our products are available
from only a limited number of sources,  and other  components are only available
from a single source.  Despite the risk associated with limited or single source
suppliers, the benefits of higher quality goods and timely delivery minimize and
often limit any  potential  risk and can  eliminate  problems with part failures
during production.

Sales Backlog

At September 14, 2004, the Company's backlog was approximately $14.0 million.
The total backlog at June 30, 2004 was approximately $15.4 million as compared
to approximately $21.4 million at June 30, 2003. The Company's backlog is
discussed in greater detail in Management's Discussion and Analysis of Financial
Condition and Results of Operations, contained in Item 7 below.

It is presently anticipated that a minimum of $15.2 million of orders comprising
the June 30, 2004 backlog will be filled during the fiscal year ending June 30,
2005. The minimum of $15.2 million does not include any shipments, which may be
made against orders subsequently received during the fiscal year ending June 30,
2005. The estimate of the June 30, 2004 backlog to be shipped in fiscal 2005 is
subject to future events, which may cause the amount of the backlog actually
shipped to differ from such estimate.

Marketing and Competition

The  Company  markets  its  products  primarily  through  its own  direct  sales
organization.  Business is solicited  from large  industrial  manufacturers  and
defense companies,  the government of the United States and foreign  governments
and major  foreign  electronic  equipment  companies.  In certain  countries the
Company has  external  sales  representatives  to help  solicit  and  coordinate
foreign  contracts.  The Company is also on the eligible list of  contractors of
many  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.


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<PAGE>

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 U.S. and
foreign government  appropriations and program allocations,  the competition for
available   military  business,   and  government   termination  of  orders  for
convenience.

The Company's business is not considered to be of seasonal nature.

Research and Development

The  Company's  expenditures  for research and  development  were  approximately
$150,000, $100,000, and $335,000, in 2004, 2003 and 2002, respectively.  Some of
the Company's  engineers and technicians spend varying degrees of time on either
development of new products or improvement of existing products.

Employees

The Company had 181 employees as of September 14, 2004.  Some of these employees
are  represented by the  International  Brotherhood of Electrical  Workers Local
#1799. The current collective bargaining agreement expires on June 30, 2008. The
contract  includes a 3.75% annual pay increase in the fiscal period 2004 through
2007, and no increase for 2008.  Relations  with the Union are considered  good.
Union membership at September 14, 2004 was 78 people.

Government Regulations

Compliance  with federal,  state and local  provisions that have been enacted or
adopted  to  regulate  the  discharge  of  materials  into the  environment,  or
otherwise relating to the protection of the environment, did not in fiscal 2004,
and the Company  believes  will not in fiscal  year 2005 have a material  effect
upon the  capital  expenditures,  net  income,  or  competitive  position of the
Company.

Item 2. Properties

The  Company's  manufacturing  and  engineering  facilities  are at its plant in
Saratoga Springs, New York.

The  Saratoga  Springs  plant,  which the  Company  owns,  consists  of  various
adjoining one-story  buildings.  The plant has a sprinkler system throughout and
contains  approximately  151,000 square feet of floor space,  of which 90,000 is
used  for  manufacturing,  24,000  for  engineering,  33,000  for  shipping  and
climatically secured storage,  and 4,000 for offices.  The offices,  engineering
and some manufacturing  areas are  air-conditioned.  In addition to assembly and
wiring  operations,  the plant  includes  facilities  for  varnishing,  potting,
plating, impregnation and spray-painting operations. The manufacturing operation
also includes a complete machine shop, with welding and sheet metal  fabrication
facilities  adequate for substantially all of the Company's current  operations.
Besides normal test equipment,  the Company  maintains a  sophisticated  on-site
environmental  test  facility.  In  addition  to  meeting  all of the  Company's
in-house  needs,  the plating,  machine shop and  environmental  facilities  are
available to other companies on a contract basis.

Item 3. Legal Proceedings.

On June 3, 2004, the Company was informed by the American Stock  Exchange,  Inc.
("AMEX")  that its review of events that had  occurred at the  Company's  annual
meeting on November 13, 2003 had been  completed and that no further  action was
warranted.

At the annual  meeting,  a vote was taken on a shareholder  proposal,  to remove
certain incumbent  directors,  that had not been included in the Company's proxy
material  sent to  shareholders  in advance of the  meeting.  AMEX  informed the
Company in January 2004 that it would be  conducting a review of such  incident.
The Board of  Directors  engaged  special  counsel to  investigate  whether  any
directors  or officers of the Company had engaged in  misconduct  in  connection
with  the  shareholder  proposal  presented  at  the  meeting.  Special  counsel
subsequently  reported to the Board of  Directors  that no such finding had been
made, and that action taken on the shareholder  proposal presented at the annual
meeting was inappropriate.


3
<PAGE>

In April 2004,  the Board of  Directors  adopted  various  corporate  governance
modifications,  including  the creation of a nominating  committee  comprised of
independent directors and various other corporate by-law amendments. The results
of special counsel's  reports and the corporate  governance  modifications  were
supplied to AMEX incidental to its review.

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

        None

                                     PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
        Matters.

Price Range of Common Stock

The table below shows the range of high and low prices for the Company's  common
stock on the American Stock  Exchange,  the principal  market for trading in the
common stock, for each quarterly period for the last two fiscal years ended June
30:

         2004                             High                        Low
         First Quarter                    23.00                      17.60
         Second Quarter                   27.35                      22.99
         Third Quarter                    26.00                      24.60
         Fourth Quarter                   27.14                      21.00

         2003                             High                        Low
         First Quarter                    20.50                      18.48
         Second Quarter                   19.75                      18.65
         Third Quarter                    20.75                      17.55
         Fourth Quarter                   18.49                      17.70

Holders

The  approximate  number of  holders  of record of the  common  stock was 141 on
September  14,  2004  according  to records  of the  Company's  transfer  agent.
Included  in this  number are shares held in  "nominee"  or  "street"  name and,
therefore, the number of beneficial owners of the common stock is believed to be
substantially in excess of the foregoing number.

Dividends

The Company paid cash dividends on the common stock of $1.50, $.35, and $.30 per
share for the fiscal years ended June 30, 2004, 2003 and 2002, respectively. The
Board of Directors  has  authorized  the payment of a fiscal 2005 first  quarter
dividend of $.15 payable September 30, 2004.

See also Item 12 for a discussion of Securities  Authorized  for Issuance  under
Equity Compensation plans.

During  fiscal 2004 the Company sold common  stock to certain  employees as they
exercised  existing  stock options  granted under a shareholder  approved  plan.
8,500  shares were sold at various  times  during the year at prices that ranged
from  $13.25 a share to $19.85 a share.  The  securities  were sold for cash and
were made without  registration  under the  Securities  Act in reliance upon the
exemption from registration afforded under Section 4(2) of the Securities Act of
1933. Proceeds were used for general working capital purposes.

There were no purchases of equity securities in the fiscal 2004 fourth quarter.


4
<PAGE>

Item 6. Selected Financial Data.

<TABLE>
<CAPTION>
                                                                          ESPEY MFG. & ELECTRONICS CORP.
                                                                          Five Years Ended June 30, 2004
                                             ---------------------------------------------------------------------------------------
Selected Income Statement Data                  2004                2003               2002               2001               2000
                                             -----------        -----------        -----------        -----------        -----------
<S>                                          <C>                <C>                <C>                <C>                <C>
Net Sales ...........................        $22,507,199        $19,773,411        $18,405,213        $17,251,640        $14,719,818
Operating Income ....................          1,178,723          1,146,386            549,139          1,169,271            733,617
Other income ........................            121,894            139,880            179,615            305,833            459,326
                                             -----------        -----------        -----------        -----------        -----------
         Net income .................            960,826            964,700            545,754          1,033,069            782,943

Income per common share:
  Basic .............................        $       .95        $       .94        $       .53        $      1.00        $       .75
   Diluted ..........................        $       .94        $       .94        $       .53        $      1.00        $       .75
                                             ===========        ===========        ===========        ===========        ===========

Selected Balance Sheet Data

Current Assets ......................         26,030,744         26,528,434         25,008,710         23,736,991         22,540,316
Current Liabilities .................            965,038          1,639,755          1,158,439          1,063,497          1,329,171
Working Capital .....................         25,065,706         24,888,679         23,850,271         22,673,494         21,211,145
Total Assets ........................         29,131,260         29,795,497         28,332,962         27,228,881         26,118,037

Stockholders' equity ................         27,841,906         27,953,508         27,054,442         26,165,384         24,788,866

Cash dividends declared and
  paid per common share .............        $      1.50        $       .35        $       .30        $       .20        $       .20
                                             ===========        ===========        ===========        ===========        ===========
</TABLE>


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<PAGE>

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

Business Outlook

During fiscal year 2004, while net sales  increased,  new orders received by the
Company did not keep pace with backlog  relieved.  Thus, while the sales backlog
of  approximately  $15.4 million at June 30, 2004 gives the Company a solid base
of future  sales,  the Company  anticipates  that the  reduction  of backlog may
result in a reduction of sales during fiscal 2005. Management also anticipates a
concurrent reduction in costs.  Management believes that existing customers have
been delayed in placing orders for additional products, but anticipates that new
orders will be received in the current  calendar  year which should  result in a
significant  increase in backlog.  Many  potential  orders are  currently  being
discussed and  negotiated  with our customers.  In addition to the backlog,  the
Company  currently  has  outstanding  quotations  representing  in excess of $40
million in the aggregate for both repeat and new programs. Based on management's
communications with customers, the Company expects to receive substantial orders
for spare  parts on the  various  types of  transmitters  which are  already  in
service, a number of contracts for further  development and manufacture of power
supplies,  transformers and additional contracts for pre-engineered hardware. We
expect these contracts to substantially increase sales in years beyond 2005.

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.

Results of Operations

Net Sales for fiscal years ended June 30, 2004, 2003 and 2002, were $22,507,199,
$19,773,411, and $18,405,213,  respectively.  The 13.8% increase in net sales in
2004 as  compared  to 2003,  is the result of  increased  transmitter  component
shipments  on two  of the  Company's  products.  In  fiscal  2004,  the  Company
continued to realize the benefits of increased  business with existing customers
and  continued  to  establish  new  customer  relationships.  Enhanced  customer
relationships  and the quality of our products  have  provided for the continued
increase in sales that has occurred over the last five years.  The sales backlog
at June 30, 2004, as discussed  above includes  significant  orders for land and
shipboard  high  voltage  radar  power  supply/transmitters,   industrial  power
supplies,  and contracts to manufacture  certain customer products in accordance
with pre-engineered requirements.  The increase in net sales in 2003 as compared
to 2002 was the result of  increased  shipments of small  transformers,  certain
power supplies, and shipments made on build to print orders.

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
than with respect to the 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.  For fiscal years ended June 30, 2004,  2003 and 2002 gross  profits
were $3,714,865, $3,097,861, and $2,300,994, respectively. The increase in gross
profit between 2004, 2003 and 2002 was  predominately  due to an increase in net
sales and  favorable  product mix.  Gross  profit as a  percentage  of sales was
16.5%,  15.7%,  and  12.5%  for  fiscal  2004,  2003,  and  2002,  respectively.
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  performed.  Employment at June 30, 2004 was
181 people compared to 192 people at June 30,2003.

Net income for fiscal 2004,  was $960,826 or $.95 and $.94 per share,  basic and
diluted,  respectively,  compared to $964,700 or $.94 per share,  both basic and
diluted,  for  fiscal  2003.  The  change  in net  income  per  share was due to
increased sales and improved gross profit offset  primarily by one loss contract
and higher selling,  general and administrative  expenses. Net income for fiscal
2003,  was $964,700 or $.94 per share compared to net income of $545,754 or $.53
per share for  fiscal  2002.  The  increase  in net  income per share was due to
decreased expenditures made on engineering  development contracts,  higher sales
and favorable product mix. The decrease in engineering development  expenditures
occurred  naturally as the related  programs moved from the  engineering  design
phase into the production phase of the associated contracts. The increase in net
income  was   partially   offset  by  an  increase   in  selling,   general  and
administrative expenses.

Selling,  general and  administrative  expenses were $2,536,142,  for the fiscal
year ended June 30, 2004,  an increase of $584,667,  or 30.0% as compared to the
prior year. This


6
<PAGE>

increase is primarily due to an increase in professional  fees,  insurance costs
and administrative salaries. The increase in professional fees was attributable,
in part, to legal fees incurred relating to the review conducted by the American
Stock Exchange  following the Company's  Annual Meeting in November 2003 and the
implementation of corporate governance modifications, including the amendment of
the  corporate  by-laws.  Selling,  general and  administrative  expenses were $
1,951,475 for the year ended June 30, 2003, an increase of $199,620, or 11.4% as
compared to the prior year. This increase is mainly  attributable to an increase
in insurance premiums and increased selling expenses.

Other  income for fiscal 2004  decreased as compared to fiscal 2003 due to lower
dividend  and  interest  income.  The  Company  does not  believe  that there is
significant risk associated with its investment  policy,  since at June 30, 2004
all  of  the  investments  are  primarily   represented  by  short-term   liquid
investments including  certificates of deposit and money market accounts.  Total
other income in fiscal 2003,  as compared to 2002  declined as expected,  as the
Company sold its higher  interest  bearing  preferred  securities,  and interest
rates continued to decline.

The  effective  income tax rate was 26.1% in 2004,  25.0% in 2003,  and 25.1% in
2002.  The  effective tax rate is less than the statutory tax rate mainly due to
the foreign exportation benefit the Company receives on its foreign sales.

Liquidity and Capital Resources

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.
Management has available a $3,000,000 line of credit to help fund further growth
or working capital needs, if necessary, but does not anticipate the need for any
borrowed funds in the foreseeable future.

The  Company's  working  capital  as  of  June  30,  2004,  2003  and  2002  was
$25,065,706,  $24,888,679, and $23,850,271,  respectively. During 2004, 2003 and
2002 the Company repurchased 13,625, 15,918, and 0 shares, respectively,  of its
common stock from the Company's Employee  Retirement Plan and Trust ("ESOP") and
in other open  market  transactions,  for a total  purchase  price of  $272,329,
$311,468, and $0, respectively. Under existing authorizations from the Company's
Board of Directors, as of June 30, 2004, management is authorized to purchase an
additional $542,566 of Company stock.

The table below presents the summary of cash flow information for the fiscal
year indicated:

<TABLE>
<CAPTION>
                                                                         2004          2003
                                                                     -----------    -----------
<S>                                                                  <C>            <C>
Net cash provided by operating activities ........................   $ 3,874,800    $ 1,936,468
Net cash (used) provided by investing activities .................      (910,855)       523,370
Net cash used in financing activities ............................     1,649,456        656,317
</TABLE>

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, purchases of inventory, receipt of progress payments, level
of sales and payments of accounts payable. Net cash (used) provided by investing
activities  changed in fiscal 2004 due to slightly lower  additions of plant and
equipment and the purchase of short-term investments.  The increase in cash used
in  financing  activities  is due  primarily  to the  increase  in the amount of
dividends paid during 2004 as compared to 2003.

The Company believes that the cash generated from operations and when necessary,
from  existing  cash  and  cash  equivalents,  will be  sufficient  to meet  its
long-term funding requirements for the foreseeable future.

Management  believes  that the  Company's  reserve  for bad  debts of  $3,000 is
adequate given the customers with whom the Company does business.  Historically,
bad debt expense has been minimal.

During fiscal year 2004 and 2003,  the Company  expended  $413,517 and $438,481,
respectively, for plant improvements and new equipment. The Company has budgeted
approximately  $450,000 for new equipment and plant improvements in fiscal 2005.
Management presently  anticipates that the funds required will be available from
current operations.

The Company has entered into standby letters of credit agreements with financial
institutions  primarily  relating  to the  guarantee  of future  performance  on
certain  contracts.  Contingent  liabilities on outstanding  standby  letters of
credit  agreements  aggregated  approximately  $190,000  at June 30,  2004.  The
Company does not expect to fund any of the amounts under the standby  letters of
credit.


7
<PAGE>

The Company has an operating lease for $500 a month which expires June 1, 2008.

Critical Accounting Policies and Estimates

Our  significant  accounting  policies are  described in Note 2 to the financial
statements.  We believe our most critical  accounting  policies  include revenue
recognition and cost estimation on our contracts.

Revenue Recognition and Estimates

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 contract  costs could be recorded if different
assumptions were used, based on changes in  circumstances,  in the estimation of
cost at  completion.  When a change in expected sales value or estimated cost is
determined, changes are reflected in current period earnings.

Other Matters

An Employee  Retirement Plan and Trust ("ESOP") was established for the eligible
non-union employees of the Company,  effective as of July 1, 1988. The ESOP used
the proceeds of a loan from the Company made on June 5, 1989 to purchase 316,224
shares of the  Company's  common  stock  for  approximately  $8,400,000  and the
Company contributed  approximately  $400,000 in 1989 to the ESOP, which was used
by the ESOP to purchase an  additional  15,000  shares of the  Company's  common
stock.

Each year the Company makes  contributions  to the ESOP,  which are used to make
loan interest and principal  payments.  With each loan and interest  payment,  a
portion of the common stock is allocated to participating  employees. As of June
30,  2004,  there were  240,749  shares  allocated  to  participants.  Dividends
attributable to allocated  shares were likewise  allocated to the  participants'
accounts,  whereas the dividends on unallocated shares were used toward the loan
repayment, thus reducing the Company's required contribution.

The loan from the Company to the ESOP was  repayable in annual  installments  of
$1,039,605,  including interest through June 30, 2004. Interest was payable at a
rate of 9% per annum.  The  Company's  receivable  from the ESOP is  recorded as
common stock subscribed in the accompanying balance sheet as of June 30, 2003.

Effective  June 30,  2004 the loan from the Company to the ESOP was paid in full
and all shares have been allocated to participant's accounts.

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

It  should  be  noted  that in this  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations are  "forward-looking  statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the  Securities  Exchange Act of 1934,  as amended,  and are made
pursuant to the safe harbor  provisions  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,  as well as supply and  manufacturing  constraints  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.


8
<PAGE>

Item 8. Financial Statements

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Espey Mfg. & Electronics Corp.:

We have audited the accompanying balance sheet of Espey Mfg. & Electronics Corp.
as of  June  30,  2004,  and  the  related  statements  of  income,  changes  in
stockholders'  equity,  and cash flows for the year then ended.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements.  An audit also includes assessing
the accounting principles used and significant estimates made by management,  as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Espey Mfg. & Electronics Corp.
as of June 30, 2004,  and the results of its  operations  and its cash flows for
the year then ended,  in  conformity  with U.S.  generally  accepted  accounting
principles.


/s/ KPMG LLP
-----------------
KPMG LLP
Albany, New York
August 6, 2004

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Espey Mfg. & Electronics Corp.  :

In our  opinion,  the 2003 and 2002  financial  statements  listed  in the index
appearing under Item 15(a)(1)  present  fairly,  in all material  respects,  the
financial  position of Espey Mfg. & Electronics  Corp. (the Company) at June 30,
2003,  and the results of its  operations and its cash flows for each of the two
years in the period ended June 30, 2003 in conformity with accounting principles
generally accepted in the United States of America.  These financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted  our  audits of these  financial  statements  in  accordance  with the
standards of the Public  Company  Accounting  Oversight  Board (United  States).
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.


/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Albany, New York
August 1, 2003


9
<PAGE>
<TABLE>
<CAPTION>
Espey Mfg. & Electronics Corp.
Balance Sheets
June 30, 2004 and 2003
-------------------------------------------------------------------------------------------------------------------------


                                                                                            2004                  2003
                                                                                        ------------         ------------
<S>                                                                                     <C>                  <C>
ASSETS
     Cash and cash equivalents .................................................        $ 12,310,972         $ 10,996,483
     Short term investments ....................................................           1,056,000                   --
     Trade accounts receivable, net ............................................           2,140,397            3,470,895
     Other receivables .........................................................               1,809               11,638

     Inventories:
              Raw materials and supplies .......................................           1,543,930            1,570,028
              Work in Process ..................................................           3,390,133            3,020,081
              Costs related to contracts in process,
              net of progress payments of $905,646
              in 2004 and $3,314,816 in 2003 ...................................           5,151,234            7,246,158
                                                                                        ------------         ------------
              Total inventories ................................................          10,085,297           11,836,267
                                                                                        ------------         ------------
     Deferred income taxes .....................................................              76,876               88,643
     Prepaid expenses and other current assets .................................             359,393              124,508
                                                                                        ------------         ------------
              Total current assets .............................................          26,030,744           26,528,434
                                                                                        ------------         ------------
     Property, plant and equipment, net ........................................           3,100,516            3,267,063
                                                                                        ------------         ------------
                  Total Assets .................................................        $ 29,131,260         $ 29,795,497
                                                                                        ============         ============
LIABILITIES AND STOCKHOLDERS'EQUITY

     Accounts payable ..........................................................        $    250,675         $    647,597
     Accrued expenses:
              Salaries, wages and commissions ..................................              44,519               88,287
              Employee insurance costs .........................................               7,487                7,038
              Vacation .........................................................             451,516              465,815
              Other ............................................................              50,370               42,361
     Payroll and other taxes withheld and accrued ..............................              26,000               38,425
     Income taxes payable ......................................................             134,471              350,232
                                                                                        ------------         ------------
                  Total current liabilities ....................................             965,038            1,639,755
                                                                                        ------------         ------------
     Deferred income taxes .....................................................             324,316              202,234
                                                                                        ------------         ------------
                  Total liabilities ............................................           1,289,354            1,841,989
                                                                                        ------------         ------------
     Common stock, par value $.33-1/3 per share
              Authorized 10,000,000 shares; Issued 1,514,937
              shares in 2004 and 2003, outstanding 1,014,618
              and 1,019,643 shares in 2004 and 2003 ............................             504,979              504,979
     Capital in excess of par value ............................................          10,411,915           10,459,278
     Retained Earnings .........................................................          24,911,920           25,458,400
                                                                                        ------------         ------------
                                                                                          35,828,814           36,422,657
     Less common stock subscribed ..............................................                  --             (558,662)

              Cost of 500,319 and 495,294 shares of
              common stock in treasury in 2004
              and 2003, respectively ...........................................          (7,986,908)          (7,910,487)
                                                                                        ------------         ------------
                  Total stockholders' equity ...................................          27,841,906           27,953,508
                                                                                        ------------         ------------
                  Total liabilities and
                  stockholders' equity .........................................        $ 29,131,260         $ 29,795,497
                                                                                        ============         ============
</TABLE>

The accompanying notes are an integral part of the financial statements.


10
<PAGE>

Espey Mfg. & Electronics Corp.
Statements of Income
Years Ended June 30, 2004, 2003 and 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                            2004              2003              2002
                                                                        ------------      ------------      ------------
<S>                                                                     <C>               <C>               <C>
Net sales ...................................................           $ 22,507,199      $ 19,773,411      $ 18,405,213
Cost of sales ...............................................             18,792,334        16,675,550        16,104,219
                                                                        ------------      ------------      ------------
                Gross profit ................................              3,714,865         3,097,861         2,300,994

Selling, general and
     administrative expenses ................................              2,536,142         1,951,475         1,751,855
                                                                        ------------      ------------      ------------
                Operating income ............................              1,178,723         1,146,386           549,139

Other income (expense)
                Interest and dividend income ................                 94,655           140,000           199,050
                Other income (loss) .........................                 27,239              (120)          (19,435)
                                                                        ------------      ------------      ------------
                Total other income ..........................                121,894           139,880           179,615
                                                                        ------------      ------------      ------------

Income before income taxes ..................................              1,300,617         1,286,266           728,754

Provision for income taxes ..................................                339,791           321,566           183,000
                                                                        ------------      ------------      ------------
                Net income ..................................           $    960,826      $    964,700      $    545,754
                                                                        ============      ============      ============

Net Income per share:
     Basic ..................................................           $        .95      $        .94      $        .53
     Diluted ................................................           $        .94      $        .94      $        .53
                                                                        ------------      ------------      ------------

Weighted average number
     of shares outstanding
                Basic .......................................              1,013,663         1,025,200         1,030,556
                Diluted .....................................              1,022,344         1,027,686         1,034,904
                                                                        ============      ============      ============
</TABLE>

The accompanying notes are an integral part of the financial statements.


11
<PAGE>
<TABLE>
<CAPTION>
Espey Mfg. & Electronics Corp.
Statements of Changes in Stockholders' Equity
Years Ended June 30, 2004, 2003 and 2002
-------------------------------------------------------------------------------------------------------------------


                                                                                         Accumulated
                                                                                            Other
                                                                           Capital in    Comprehen-
                                                  Common                    Excess of    sive income      Retained
                                                  Shares        Amount      par Value       (Loss)        Earnings
                                               -----------   -----------   -----------   -----------    -----------
<S>                                              <C>         <C>           <C>           <C>            <C>
Balance as of June 30, 2001                      1,029,461   $   504,979   $10,496,287   $   (50,281)   $24,607,239
                                               -----------   -----------   -----------   -----------    -----------
Comprehensive income:
   Net income, 2002                                                                                         545,754
   Other comprehensive income,
     net of tax benefit of $9,940                                                             21,202

Comprehensive income

Stock option exercises                               5,100                     (30,409)

Dividends paid on common stock
   $.30 per share                                                                                          (309,176)

Tax effect of dividends on
   unallocated ESOP shares                                                                                    5,041

Purchase of treasury stock

Reduction of common stock subscribed
                                               -----------   -----------   -----------   -----------    -----------
Balance as of June 30, 2002                      1,034,561       504,979    10,465,878       (29,079)    24,848,858
                                               -----------   -----------   -----------   -----------    -----------
Comprehensive income:
   Net income, 2003                                                                                         964,700
   Other comprehensive income,
     net of tax benefit of $15,599                                                            19,589
   Reclassification adjustment                                                                 9,490

Comprehensive income

Stock option exercises                               1,000                      (6,600)

Dividends paid on common stock
   $.35 per share                                                                                          (358,099)

Tax effect of dividends on
   unallocated ESOP shares                                                                                    2,941

Purchase of treasury stock                         (15,918)

Reduction of common stock subscribed
                                               -----------   -----------   -----------   -----------    -----------
Balance as of June 30, 2003                      1,019,643       504,979    10,459,278            --     25,458,400
                                               -----------   -----------   -----------   -----------    -----------

Net income, 2004                                                                                            960,826

Stock option exercises                               8,600                     (53,122)

Dividends paid on common stock
   $1.50 per share                                                                                       (1,519,913)

Tax effect of stock options exercised                                            5,759

Tax effect of dividends on
   unallocated ESOP shares                                                                                   12,607

Purchase of treasury stock                         (13,625)

Reduction of common stock subscribed
                                               -----------   -----------   -----------   -----------    -----------
Balance as of June 30, 2004                      1,014,618   $   504,979   $10,411,915   $        --    $24,911,920
                                               ===========   ===========   ===========   ===========    ===========
</TABLE>


12
<PAGE>

<TABLE>
<CAPTION>
                                                        Common               Treasury Stock                Total
                                                        Stock          ---------------------------     Stockholders'
                                                      Subscribed         Shares           Amount          Equity
                                                     -----------       -----------     -----------      -----------
<S>                                                   <C>                  <C>          <C>              <C>
Balance as of June 30, 2001                           (1,675,987)          485,476     $(7,716,853)     $26,165,384
                                                     -----------       -----------     -----------      -----------
Comprehensive income:
                  Net income, 2002                                                                          545,754
                  Other comprehensive income,
                  net of tax benefit of $9,940                                                               21,202
                                                                                                        -----------
Comprehensive income                                                                                        566,956

Stock option exercises                                                      (5,100)         97,984           67,575

Dividends paid on common stock
   $.30 per share                                                                                          (309,176)

Tax effect of dividends on
   unallocated ESOP shares                                                                                    5,041

Reduction of common stock subscribed                     558,662                                            558,662

                                                     -----------       -----------     -----------      -----------
Balance as of June 30, 2002                           (1,117,325)          480,376      (7,618,869)      27,054,442
                                                     -----------       -----------     -----------      -----------

Comprehensive income:
                  Net income, 2003                                                                          964,700
                  Other comprehensive gain,
                    net of tax benefit of $15,599                                                            19,589
                  Reclassification adjustment                                                                 9,490
                                                                                                        -----------
Comprehensive income                                                                                        993,779

Stock option exercises                                                      (1,000)         19,850           13,250

Dividends paid on common stock
   $.35 per share                                                                                          (358,099)

Tax effect of dividends on
   unallocated ESOP shares                                                                                    2,941

Purchase of treasury stock                                                  15,918        (311,468)        (311,468)

Reduction of common stock subscribed                     558,663                                            558,663
                                                     -----------       -----------     -----------      -----------
Balance as of June 30, 2003                             (558,662)          495,294      (7,910,487)      27,953,508
                                                     -----------       -----------     -----------      -----------

Net income, 2004                                                                                            960,826

Stock option exercises                                                      (8,600)        195,908          142,786

Dividends paid on common stock
   $1.50 per share                                                                                       (1,519,913)

Tax effect on stock options exercised                                                                         5,759

Tax effect of dividends on
   unallocated ESOP shares                                                                                   12,607

Purchase of treasury stock                                                  13,625        (272,329)        (272,329)

Reduction of common stock subscribed                     558,662                                            558,662
                                                     -----------       -----------     -----------      -----------
Balance as of June 30, 2004                                   --           500,319     $(7,986,908)     $27,841,906
                                                     ===========       ===========     ===========      ===========
</TABLE>

The accompanying notes are an integral part of the financial statements.


13
<PAGE>

<TABLE>
<CAPTION>
Espey Mfg. & Electronics Corp.
Statements of Cash Flows
Years Ended June 30, 2004, 2003 and 2002
-------------------------------------------------------------------------------------------------------------------------

                                                                                2004             2003             2002
                                                                            -----------      -----------      -----------
<S>                                                                         <C>              <C>              <C>
Cash Flows From Operating Activities:
     Net income ..................................................          $   960,826      $   964,700      $   545,754

     Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:

     Tax effect of dividends on
     unallocated ESOP shares .....................................               12,607            2,941            5,043

     Tax effect on stock options exercised .......................                5,759               --               --

     Depreciation ................................................              557,943          495,670          513,470

     Loss on disposal of plant and equipment .....................               22,121               --           35,782

     Loss on sale of investment securities .......................                   --           15,817               --

     Deferred income tax .........................................              133,849           57,359          112,097

     Changes in assets and liabilities:

          Decrease (increase) in receivables .....................            1,340,327       (1,059,414)         145,370

          Decrease in inventories, net ...........................            1,750,970          904,528        2,191,882

          (Increase) decrease in prepaid
             expenses and other current assets ...................             (234,885)          73,553          (46,181)

          (Decrease) increase in accounts payable ................             (396,922)         150,143          162,682

          (Decrease) increase in accrued
             salaries, wages and commissions .....................              (43,768)           1,406          (37,200)

          Increase (decrease) in accrued
             employee insurance costs ............................                  449              150          (54,911)

          (Decrease) increase in vacation accrual ................              (14,299)          66,916           53,352

          Increase in other accrued expenses .....................                8,009              951            3,699

          (Decrease) increase in payroll and
             other taxes withheld and accrued ....................              (12,425)             482           (1,454)

          (Decrease) increase in income
             taxes payable .......................................             (215,761)         261,266           27,526
                                                                            -----------      -----------      -----------
                      Net cash provided by
                         operating activities ....................          $ 3,874,800      $ 1,936,468      $ 3,656,911
                                                                            -----------      -----------      -----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

                                                                     (Continued)


14
<PAGE>

<TABLE>
<S>                                                                      <C>               <C>               <C>
Cash Flows From Investing Activities:

     Proceeds from maturity of investment
       securities .............................................                    --           403,188           399,869

     Additions to property, plant and equipment ...............              (413,517)         (438,481)         (393,865)

     Purchase of short term investments .......................            (1,056,000)               --                --

     Proceeds on sale of plant and equipment ..................                    --                --            12,250

     Reduction of common stock subscribed .....................               558,662           558,663           558,662
                                                                         ------------      ------------      ------------
                      Net cash (used) provided by
                         investing activities .................              (910,855)          523,370           576,916
                                                                         ------------      ------------      ------------
Cash Flows From Financing Activities:

     Dividends on common stock ................................            (1,519,913)         (358,099)         (309,176)

     Purchase of treasury stock ...............................              (272,329)         (311,468)               --

     Proceeds from exercise of stock options ..................               142,786            13,250            67,575
                                                                         ------------      ------------      ------------
                      Net cash used in
                         financing activities .................            (1,649,456)         (656,317)         (241,601)
                                                                         ------------      ------------      ------------

Increase in cash and cash equivalents .........................             1,314,489         1,803,521         3,992,226

Cash and cash equivalents, beginning of the year ..............            10,996,483         9,192,962         5,200,736
                                                                         ------------      ------------      ------------
Cash and cash equivalents, end of the year ....................          $ 12,310,972      $ 10,996,483      $  9,192,962
                                                                         ============      ============      ============

Net Income Taxes Paid .........................................          $    403,337      $         --      $     62,238
                                                                         ============      ============      ============
</TABLE>

The accompanying notes are an integral part of the financial statements.


15
<PAGE>

Espey Mfg. & Electronics Corp.
Notes to Financial Statements
--------------------------------------------------------------------------------

Note 1. Nature of operations

Espey Mfg. & Electronics  Corp.  (the Company) is a  manufacturer  of electronic
equipment used primarily in military and industrial applications.  The principal
markets for the Company's products are companies that provide electronic support
to both  military  and  industrial  applications.  During  the year the  Company
dissolved Espey  International,  Inc, a wholly owned subsidiary.  The subsidiary
was an inactive foreign sales corporation.

Note 2. Summary of Significant Accounting Policies

Inventory  Valuation,  Cost Estimation and Revenue Recognition Raw materials are
valued at weighted average cost.

Inventoried  work relating to contracts in process and work in process is valued
at actual production cost,  including factory overhead incurred to date. Work in
process  represents  spare units,  parts and other  inventory  items acquired or
produced to service units previously sold or to meet anticipated  future orders.
The cost  elements  of  contracts  in  process  and work in  process  consist of
production  costs of goods and  services  currently  in  process  and  overhead.
Provision  for losses on  contracts  is made when the  existence  of such losses
becomes  evident.  The costs  attributed to units  delivered under contracts are
based on the  estimated  average  cost of all  units  expected  to be  produced.
Certain contracts are expected to extend beyond twelve months.

Revenue  is  recognized  on  contracts  in the  period  in which  the  units are
delivered and billed  (unit-of-delivery  method).  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 contract  costs could be recorded if different
assumptions were used, based on changes in  circumstances,  in the estimation of
cost at  completion.  When a change in expected sales value or estimated cost is
determined, changes are reflected in current period earnings.

Depreciation

Depreciation  of plant and equipment is computed on a  straight-line  basis over
the estimated useful lives of the assets.

Estimated useful lives of depreciable assets are as follows:

          Buildings and improvements                               10 - 25 years
          Machinery and equipment                                   3 - 10 years
          Furniture, fixtures and office equipment                      10 years

Income Taxes

The  Company  follows  the  provisions  of  Statement  of  Financial  Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes."

Under the provisions of SFAS No. 109,  deferred tax assets and  liabilities  are
recognized for the future tax consequences  attributable to differences  between
the financial  statement carrying amounts of existing assets and liabilities and
their  respective tax bases.  Deferred tax assets and  liabilities  are measured
using  enacted  tax rates  expected  to apply to taxable  income in the years in
which those temporary  differences are expected to be recovered or settled.  The
effect on deferred taxes and  liabilities of a change in tax rates is recognized
in earnings in the period that  includes the enactment  date. In addition,  SFAS
No. 109 requires that the tax benefit of tax-deductible dividends on unallocated
ESOP shares be recorded as a direct addition to retained earnings rather than as
a reduction of income tax expense.


16
<PAGE>

Espey Mfg. & Electronics Corp.
Notes to Financial Statements
--------------------------------------------------------------------------------

Note 2.  Summary of Significant Accounting Policies, Continued

Cash and Cash Equivalents

Cash and cash equivalents consist of cash in banks, certificates of deposit, and
money market accounts.  The Company considers all highly liquid investments with
original maturities of three months or less to be cash equivalents.

Short-term  investments include  certificates of deposit with maturities greater
than three months to a year.

Stock-Based Compensation

The intrinsic  value method of accounting is used for  stock-based  compensation
plans.  Under the intrinsic value method,  compensation  cost is measured as the
excess,  if any, of the quoted  market price of the stock at the grant date over
the amount an employee must pay to acquire the stock.

The Company has elected to account for its stock-based  compensation plans under
the intrinsic  value-based method of accounting as permitted by SFAS No. 123 and
as prescribed by Accounting  Principles Board ("APB") Opinion No. 25, Accounting
for Stock  Issued to  Employees,  and  related  interpretations  including  FASB
Interpretation  No. 44,  Accounting  for Certain  Transactions  Involving  Stock
Compensation  - An  Interpretation  of APB No. 25, in  accounting  for its fixed
stock option plans. Under this method, compensation expense would be recorded on
the date of grant  only if the  current  market  price of the  underlying  stock
exceeded  the  exercise  price.  In  December  2002,  the  Financial  Accounting
Standards  Board ("FASB")  issued  Statement of Financial  Accounting  Standards
("SFAS") No. 148, Accounting for Stock Based Compensation. SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value based
method of  accounting  for  stock-based  employee  compensation  and  amends the
disclosure   requirements   of  SFAS  No.  123,   Accounting   for  Stock  Based
Compensation,  to require more prominent  disclosures in both annual and interim
financial  statements  about the method of accounting for  stock-based  employee
compensation and the effect of the method used on reported results.  The Company
adopted  the  disclosure  requirements  of SFAS No.  123 and SFAS  No.  148,  as
required.

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

                                                 Year Ended June 30,
                                          2004            2003          2002
                                      -----------------------------------------
      Net income
      as reported                     $  960,826       $ 964,700      $ 545,754

      Deduct: Total stock-based
      employee compensation
      expense determined under
      fair value based method
      for all awards, net of
      related  tax effects               (31,460)        (36,912)       (36,080)
                                      ----------       ---------      ---------
      Pro forma net income            $  929,366       $ 927,788      $ 509,674
                                      ==========       =========      =========
      Net income per share:

         Basic-as reported            $      .95       $     .94      $     .53
                                      ==========       =========      =========
         Basic-pro forma              $      .92       $     .91      $     .49
                                      ==========       =========      =========

         Diluted-as reported          $      .94       $     .94      $     .53
                                      ==========       =========      =========
         Diluted-pro forma            $      .91       $     .91      $     .49
                                      ==========       =========      =========


17
<PAGE>

Espey Mfg. & Electronics Corp.
Notes to Financial Statements
--------------------------------------------------------------------------------

Note 2.  Summary of Significant Accounting Policies, Continued

Per Share Amounts

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 net income of the Company.

Comprehensive Income

Comprehensive  income in 2003 and 2002  consists  of net income  and  unrealized
gains  (losses)  on  securities  available-for-sale  and  is  presented  in  the
Statement of Changes in Stockholders'  Equity. In 2004,  comprehensive income is
equal to net income.

Use of Estimates

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

Investment Tax Credits

Investment tax credits are accounted for as a reduction of income tax expense in
the year taxes payable are reduced.

Reclassifications

Certain  reclassifications  may  have  been  made to the  prior  year  financial
statements to conform to the current year presentation.

Impairment of Long-Lived Assets

Long-lived assets,  including property,  plant, and equipment,  are reviewed for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  Recoverability of assets to
be held and used is measured by a comparison of the carrying  amount of an asset
to  estimated  undiscounted  future cash flows  expected to be  generated by the
asset.  If the carrying  amount of an asset  exceeds its  estimated  future cash
flows,  an  impairment  charge is recognized by the amount by which the carrying
amount of the asset  exceeds the fair value of the asset.  Assets to be disposed
of would be separately  presented in the balance sheet and reported at the lower
of the  carrying  amount or fair  value  less  costs to sell,  and are no longer
depreciated.  The assets and liabilities of a disposed group  classified as held
for sale would be presented  separately in the  appropriate  asset and liability
sections of the balance sheet.

Concentrations of Risk

The market for our  defense  electronics  products is largely  dependent  on the
availability of new contracts from the United States and foreign  governments to
prime contractors to which we provide components. Any decline in expenditures by
the United  States or  foreign  governments  may have an  adverse  effect on our
financial performance.

Also,  our  international  sales  are  denominated  in United  States  currency.
Consequently, changes in exchange rates that strengthen the United States dollar
could increase the price in local  currencies of our products in foreign markets
and make our products relatively more expensive than competitor's products.

Note 3. Contracts in Process

Contracts in process at June 30, 2004 and 2003 are as follows:

                                                    2004             2003
                                                 -----------     -----------

      Gross contract value                       $15,425,540     $21,370,490

      Costs related to contracts in process,
      net of progress payments of $905,646
      in 2004 and $3,314,816 in 2003             $ 5,151,234     $ 7,246,158


18
<PAGE>

Espey Mfg. & Electronics Corp.
Notes to Financial Statements
--------------------------------------------------------------------------------

Note 3. Contracts in Process, Continued

Included in costs relating to contracts in process at June 30, 2004 and 2003 are
costs of $1,237,135 and $1,460,338, respectively, relative to contracts that may
not be completed within the ensuing year. Under the unit-of-delivery method, the
related sale and cost of sales will not be reflected in the  statement of income
until the units under contract are shipped.

Note 4. Property, Plant and Equipment

A summary of the original cost of property, plant and equipment at June 30, 2004
and 2003 is as follows:

                                                       2004             2003
                                                   ------------    ------------

      Land                                         $     45,000    $     45,000
      Building and improvements                       4,040,155       3,981,689
      Machinery and equipment                         7,506,843       7,273,596
      Furniture, fixtures and office equipment          309,407         308,394
                                                   ------------    ------------
                                                     11,901,405      11,608,679
      Accumulated depreciation                       (8,800,880)     (8,341,616)
                                                   ------------    ------------
                                                   $  3,100,516    $  3,267,063
                                                   ============    ============

Depreciation expense was $557,943, $495,670, and $513,470 during the years ended
June 30, 2004, 2003, and 2002, respectively.

Note 5. Line of credit

At June 30, 2004, the Company has an uncommitted  and unused Line of Credit with
a financial  institution.  The agreement provides that the Company may borrow up
to $3,000,000.  The line provides for interest at the  borrower's  choice of (I)
prime minus .75% or (II) LIBOR plus 1.80% for periods of 1, 2, or 3 months.  Any
borrowing  under  the  line  of  credit  will  be   collateralized  by  accounts
receivable.

Note 6. Research and Development Costs

Research and  development  costs charged to cost of sales during the years ended
June  30,  2004,  2003 and  2002  were  approximately  $150,000,  $100,000,  and
$335,000, respectively.

Note 7. Pension Expense

Under terms of a  negotiated  union  contract,  the Company is obligated to make
contributions  to  a  union-sponsored  defined  benefit  pension  plan  covering
eligible  employees.  Such  contributions  are  based  upon  hours  worked  at a
specified rate and amounted to $91,265 in 2004,  $93,066 in 2003, and $83,778 in
2002.

The  Company  sponsors  a  401(k)  plan  with  employee  and  employer  matching
contributions.  The employer match is 10% of the employee  contribution  and was
$31,721, $29,030, and $25,744 for fiscal years 2004, 2003 and 2002 respectively.

Note 8. Provision for Income Taxes

A summary of the  components  of the  provision  for income  taxes for the years
ended June 30, 2004, 2003 and 2002 is as follows:

                                            2004           2003           2002
                                          --------       --------       --------
      Current tax expense - federal       $190,387       $252,961       $ 49,653
      Current tax expense - state           15,555         11,246          1,383
      Deferred tax expense                 133,849         57,359        131,964
                                          --------       --------       --------
                                          $339,791       $321,566       $183,000
                                          ========       ========       ========


19
<PAGE>
<TABLE>
<CAPTION>

Mfg. & Electronics Corp.
Notes to Financial Statements
-------------------------------------------------------------------------------------------------------


Note 8. Provision for Income Taxes, Continued

Deferred income taxes reflect the impact of "temporary  differences" between the
amount of assets and  liabilities  for  financial  reporting  purposes  and such
amounts measured by tax laws and regulations.  These "temporary differences" are
determined in accordance with SFAS No. 109.

The combined U.S. federal and state effective income tax rates of 26.1%,  25.0%,
and 25.1%,  for 2004,  2003 and 2002  respectively,  differed from the statutory
U.S. federal income tax rate for the following reasons:


                                                                       2004         2003         2002
                                                                      ------       ------       ------
<S>                                                                     <C>          <C>          <C>
            U.S. federal statutory income tax rate                      34.0%        34.0%        34.0%
            Increase (reduction) in rate
                 resulting from:
                     Dividends received deduction                         --         (1.0)        (1.0)
                     State franchise tax, net of federal
                          income tax benefit                             1.0          1.0          1.1
                     Foreign exportation benefit                        (7.7)        (5.0)        (7.3)
                     Other                                              (1.2)        (4.0)        (1.7)
                                                                      ------       ------       ------
            Effective tax rate                                          26.1%        25.0%        25.1%
                                                                      ======       ======       ======
</TABLE>

For the years  ended  June 30,  2004 and 2003  deferred  income  tax  expense of
$133,849  and  $57,359,  respectively,  result  from the  changes  in  temporary
differences  for each year. The tax effects of temporary  differences  that give
rise to deferred tax assets and deferred tax liabilities as of June 30, 2004 and
2003 are presented as follows:

<TABLE>
<CAPTION>
                                                                               2004               2003
                                                                             ---------         ---------
<S>                                                                          <C>               <C>
            Deferred tax assets:
                Common stock subscribed - due to difference
                     in interest recognition ..........................      $      --         $ 142,159
                Non-deductible accruals ...............................        108,485           105,443
                Other .................................................         15,428            16,875
                                                                             ---------         ---------
                              Total deferred tax assets ...............        123,913           264,477
                                                                             ---------         ---------
            Deferred tax liabilities:
                Property, plant and equipment - principally due
                     to differences in depreciation methods ...........        324,316           344,393
                Inventory - effect on uniform capitalization ..........         47,037            33,675
                                                                             ---------         ---------
                              Total deferred tax liabilities ..........        371,353           378,068
                                                                             ---------         ---------
            Net deferred tax liability ................................      $(247,440)        $(113,591)
                                                                             =========         =========
</TABLE>

In assessing  the  realizability  of deferred tax assets,  management  considers
whether it is more likely than not that some  portion or all of the deferred tax
assets will be  realized.  The  ultimate  realization  of deferred tax assets is
dependent  upon the  generation of future  taxable  income during the periods in
which those temporary  differences become deductible.  Management  considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning  strategies in making this assessment.  Based upon the level of
historical  taxable  income and  projection  for future  taxable income over the
period in which the deferred tax assets are deductible,  management  believes it
is more  likely  than not that the Company  will  realize the  benefits of these
temporary differences without consideration of a valuation allowance.


20
<PAGE>

Espey Mfg. & Electronics Corp.
Notes to Financial Statements
--------------------------------------------------------------------------------

Note 9. Significant Customers

A significant  portion of the Company's  business is the  production of military
and industrial  electronic equipment for use by the U.S. and foreign governments
and  certain  industrial  customers.  Sales to two  domestic  customers  and one
foreign customer accounted for 22%, 16%, and 18%,  respectively,  of total sales
in 2004. Sales to two domestic  customers and one foreign customer accounted for
25%, 19%, and 12%,  respectively,  of total sales in 2003. Sales to two domestic
customers and one foreign customer accounted for 26%, 21%, and 14% respectively,
of total sales in 2002.

Export sales aggregated approximately  $9,800,000,  $7,100,000,  and $6,600,000,
for the years ended June 30, 2004, 2003 and 2002, respectively.

Note 10. Stock Rights Plan

The Company has a  Shareholder  Rights Plan which  expires on December 31, 2009.
Under this plan,  common stock purchase rights were distributed as a dividend at
the rate of one right for each share of common stock outstanding as of or issued
subsequent  to April 14, 1989.  Each right  entitles  the holder  thereof to buy
one-half  share of common  stock of the Company at an exercise  price of $50 per
share  subject to  adjustment.  The rights are  exercisable  only if a person or
group acquires beneficial ownership of 15% or more of the Company's common stock
or commences a tender or exchange offer which, if  consummated,  would result in
the offer or,  together with all affiliates and  associates  thereof,  being the
beneficial owner of 15% or more of the Company's common stock.

If  a  15%  or  larger  shareholder   should  engage  in  certain   self-dealing
transactions  or a merger with the Company in which the Company is the surviving
corporation  and its shares of common  stock are not changed or  converted  into
equity  securities  of any other  person,  or if any  person  were to become the
beneficial owner of 15% or more of the Company's  common stock,  then each right
not owned by such  shareholder or related  parties of such  shareholder  (all of
which will be void) will  entitle its holder to  purchase,  at the right's  then
current  exercise price,  shares of the Company's common stock having a value of
twice the right's exercise price. In addition, if the Company is involved in any
other  merger  or  consolidation  with,  or sells  50% or more of its  assets or
earning  power to,  another  person,  each  right  will  entitle  its  holder to
purchase,  at the right's then current exercise price, shares of common stock of
such other person having a value of twice the right's exercise price.

The Company  generally is entitled to redeem the rights at one cent per right at
any time until the 15th day (or 25th day if extended by the  Company's  Board of
Directors)  following public  announcement that a 15% position has been acquired
or the  commencement of a tender or exchange offer which, if consummated,  would
result in the offer or,  together with all affiliates  and  associates  thereof,
being the beneficial owner of 15% or more of the Company's common stock.

Note 11. Employee Stock Ownership Plan

In 1989, the Company established an Employee Stock Ownership Plan (ESOP) with an
effective date of July 1, 1988, for eligible non-union employees.  The ESOP used
the  proceeds of a loan from the Company  made in June 1989 to purchase  316,224
shares of the  Company's  common  stock for  approximately  $8.4 million and the
Company contributed approximately $400,000 in 1989 to the ESOP which was used by
the ESOP to purchase an additional  15,000 shares of the Company's common stock.
Since inception of the Plan, the ESOP has sold or distributed  135,235 shares of
the Company's common stock to pay benefits to participants. At June 30, 2004 and
2003, the ESOP held a total of 240,749 and 251,574 shares, respectively,  of the
Company's common stock, of which 240,749 and 230,562 shares, respectively,  were
allocated to participants in the Plan.

The loan from the Company to the ESOP was  repayable in annual  installments  of
$1,039,605 including interest,  through June 30, 2004. Interest was payable at a
rate of 9% per annum. The Company's receivable from the ESOP at June 30, 2003 is
recorded as common stock  subscribed  in the  accompanying  balance  sheet.  The
Company  Espey  recognizes  the  principal  payments  of  the  ESOP  debt,  on a
straight-line basis over the term of the note, as compensation expense.


21
<PAGE>

Espey Mfg. & Electronics Corp.
Notes to Financial Statements
--------------------------------------------------------------------------------

Note 11. Employee Stock Ownership Plan, Continued

Each year,  the Company makes  contributions  to the ESOP which are used to make
loan  payments.  With  each  loan  payment,  a portion  of the  common  stock is
allocated to  participating  employees.  For the periods ended June 30, 2004 and
2003,  21,012  shares were  allocated to  participants.  In 2004,  the Company's
required contribution of $1,039,605 was reduced by $31,518, which represents the
dividends paid on unallocated ESOP shares.  The resulting  payment of $1,008,087
includes  $527,144  classified as compensation  expense.  In 2003, the Company's
required contribution of $1,039,605 was reduced by $14,708, which represents the
dividends paid on unallocated ESOP shares.  The resulting  payment of $1,024,897
includes  $543,954  classified as compensation  expense.  In 2002, the Company's
required contribution of $1,039,605 was reduced by $18,911, which represents the
dividends  paid  on the  unallocated  ESOP  shares.  The  resulting  payment  of
$1,020,694  includes  $539,752  classified as compensation  expense.  All shares
purchased by the ESOP are considered to be outstanding  for the income per share
computations.

Effective  June 30,  2004 the loan from the Company to the ESOP was paid in full
and all shares have been allocated to participants' accounts.

Note 12. Stock Based Compensation

During fiscal 2000,  the Board of Directors and  shareholders  approved the 2000
Stock Option Plan (the Plan). Under the Plan,  incentive and non-qualified stock
options  will be  granted to  purchase  shares of common  stock of the  Company.
Options  authorized for issuance under the Plan totaled 150,000.  As of June 30,
2004, the Plan was authorized to grant options to purchase  98,400 shares of the
Company's common stock.

Options  granted under the Plan have been granted with  exercise  prices at fair
market value at the grant date and vest over a period of two years.  All options
must be  exercised  within 10 years  from the date of grant and are  exercisable
anytime after the two year vesting period.

Information concerning the plans incentive and non-qualified stock options is as
follows:

                                         Option              Option Price
                                         Shares                Per Share
              ------------------------------------------------------------------
              June 30, 2001              24,000              $13.25 - 17.95
              ------------------------------------------------------------------
              Options granted            13,000                  19.85
              Options canceled             (500)             $13.25 - 17.95
              Options exercised          (5,100)                 13.25
              ------------------------------------------------------------------
              June 30, 2002              31,400              $13.25 - 19.85
              ------------------------------------------------------------------
              Options granted            15,100                  18.50
              Options canceled               --                    --
              Options exercised          (1,000)                 13.25
              ------------------------------------------------------------------
              June 30, 2003              45,500              $13.25 - 19.85
              ------------------------------------------------------------------
              Options granted                --                    --
              Options canceled               --                    --
              Options exercised          (8,500)             $13.25 - 19.85
              ------------------------------------------------------------------
              June 30, 2004              37,000              $13.25 - 19.85
              ==================================================================


22
<PAGE>
<TABLE>
<CAPTION>
Espey Mfg. & Electronics Corp.
Notes to Financial Statements
-----------------------------------------------------------------------------------------------------------------

Note 12. Stock Based Compensation, Continued

The table below summarizes information with respect to stock options outstanding
as of June 30, 2004:


                                                            Remaining                           Exercise Price of
                  Exercise               Options           Contractual          Options            Exercisable
                   Prices              Outstanding            Life            Exercisable            Options
              ---------------------------------------------------------------------------------------------------
<S>                                       <C>                 <C>               <C>                  <C>
                  $ 13.25                  1,600               6                 1,600               $ 13.25
                  $ 17.95                  8,500               7                 8,500               $ 17.95
                  $ 19.85                 11,800               8                11,800               $ 19.85
                  $ 18.50                 15,100               9                    --                    --
              ---------------------------------------------------------------------------
              Total                       37,000                                21,900
              ===========================================================================
</TABLE>

During 2004, no stock options were granted under the plan. The weighted  average
fair value of options  granted under the plans during fiscal years 2003 and 2002
was $4.31, and $3.93,  respectively.  The assumptions used for the Black-Scholes
model are as follows:

<TABLE>
<CAPTION>
                                                                                            2003           2002
                                                                                           ------          ------
<S>                                                                                       <C>             <C>
              Risk-free interest rate.................................                       3.5%            4.5%
              Expected term...........................................                    5 years         5 years
              Company's expected volatility...........................                      20.0%           20.0%
              Dividend yield..........................................                       2.5%            2.5%
</TABLE>

Note 13. Financial Instruments/Concentration of Credit Risk

The  carrying  amounts  of  financial  instruments,   including  cash  and  cash
equivalents, short term investments,  accounts receivable,  accounts payable and
accrued  expenses,  approximated fair value as of June 30, 2004 and 2003 because
of the relatively short maturities of these instruments.

Financial  instruments that potentially subject the Company to concentrations of
credit  risk  consist  principally  of cash and  cash  equivalents,  short  term
investments  and  accounts  receivable.  The  Company  maintains  cash  and cash
equivalents with various financial  institutions.  At times such investments may
be in excess of FDIC  insurance  limits.  As disclosed in Note 9, a  significant
portion of the Company's  business is the  production of military and industrial
electronic  equipment  for use by the U.S. and foreign  governments  and certain
industrial  customers.  The related accounts  receivable balance  represented by
three customers was 29% and 57% of the Company's total trade accounts receivable
balance at June 30, 2004 and 2003, respectively.

Although the Company's  exposure to credit risk  associated  with  nonpayment of
these balances is affected by the conditions or occurrences  within the U.S. and
foreign  governments,  the Company  believes that its trade accounts  receivable
credit risk exposure is limited. The Company performs ongoing credit evaluations
of its customer's financial conditions and requires collateral, such as progress
payments,  in certain  circumstances.  The Company  establishes an allowance for
doubtful  accounts  based upon factors  surrounding  the credit risk of specific
customers, historical trends and other information.

Note 14. Related Parties

The Company  paid a law firm in which a director of the Company is a partner,  a
total of $11,524,  $22,000,  and $24,000 for legal services  during fiscal years
ended June 30, 2004, 2003, and 2002, respectively.


23
<PAGE>
<TABLE>
<CAPTION>
Espey Mfg. & Electronics Corp.
Notes to Financial Statements
--------------------------------------------------------------------------------

Note 15. Commitments and Contingencies

The Company has entered into standby letters of credit agreements with financial
institutions  primarily  relating  to the  guarantee  of future  performance  on
certain  contracts.  Contingent  liabilities on outstanding  standby  letters of
credit  agreements  aggregated  approximately  $190,000  at June 30,  2004.  The
Company does not expect to fund any of the amounts under the standby  letters of
credit.

The Company also has an operating lease commitment for a copier machine for $500
per month which expires on June 1, 2008.

Note 16. Quarterly Financial Information (Unaudited)


                                                       First             Second              Third               Fourth
                                                      Quarter            Quarter             Quarter            Quarter
                                                    ----------         ----------          ----------         ----------
<S>                                                 <C>                <C>                 <C>                <C>
            2004
            Net Sales ....................          $5,095,317         $5,871,675          $6,116,221         $5,423,986
               Gross profit ..............             900,172            727,876             717,562          1,369,255
               Net income ................             280,965             61,430              54,008            564,423

            Net income per share -
             Basic ........................               0.28               0.06                0.05               0.56
             Diluted ......................               0.28               0.06                0.05               0.55

            2003
            Net Sales .....................         $4,491,359         $5,374,456          $5,707,503         $4,200,093
                Gross profit (loss) .......            789,221            (75,254)          1,223,106          1,160,788
                Net income (loss) .........            306,545           (417,334)            575,586            499,903

            Net income (loss)
             (per share - basic and
             diluted) .....................               0.30              (0.41)               0.56               0.49

            2002
            Net Sales .....................         $4,585,515         $5,199,517          $4,616,587         $4,003,594
                Gross profit ..............            607,585            593,569             700,016            399,824
                Net income ................            203,691             81,999             212,644             47,420

            Net income
             (per share - basic and
             diluted) .....................               0.20               0.08                0.20               0.05
</TABLE>


24
<PAGE>

Item 9. Changes in and disagreements with accountants on accounting and
        financial disclosure

None

Item 9A. 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  Annual  Report  on Form  10-K.  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.

Item 9B. Other information

None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Identification of Directors

<TABLE>
<CAPTION>
                                          Date Present Term                  Other Positions
                                          Expires and Period                 and Offices Held
         Name                             Served as Director                 With Registrant               Age
         -----                            ------------------                 ----------------              ---
<S>                                       <C>                                <C>                           <C>
         Paul J. Corr                     Annual Meeting in                  None                          60
                                          December 2005
                                          Director since 1992

         William P. Greene                Annual Meeting in                  None                          74
                                          December 2004
                                          Director since 1992

         Carl Helmetag                    Annual Meeting in                  None                          56
                                          December 2006
                                          Director since 1999

         Barry Pinsley                    Annual Meeting in                  Non-Executive                 62
                                          December 2005                      officer
                                          Director since 1994

         Howard Pinsley                   Annual Meeting in                  President and Chief           64
                                          December 2006                      Executive Officer
                                          Director since 1992

         Alvin O. Sabo                    Annual Meeting in                  None                          61
                                          December 2006
                                          Director since 1999

         Seymour Saslow                   Annual Meeting in                  None                          83
                                          December 2004
                                          Director since 1992

         Michael W. Wool                  Annual Meeting in                  None                          58
                                          December 2005
                                          Director since 1990
</TABLE>


25
<PAGE>

Identification of Executive Officers

<TABLE>
<CAPTION>

                                        Positions and
                                        Offices Held                     Period Served As
       Name                             With Company                     Executive Officer                    Age
       ----                             -----------------                -----------------                    ---
<S>                                     <C>                              <C>                                  <C>
       Howard Pinsley                   President and                    Served as Vice President-            64
                                        Chief Executive                  Special Power Supplies
                                        Officer                          from April 3, 1992 until
                                                                         being elected as Executive
                                                                         Vice President on December
                                                                         6, 1997. Elected to present
                                                                         office on December 10, 1998

       John J. Pompay, Jr.              Vice President-                  Since December 6, 1996               69
                                        Marketing and Sales              Retired April 5, 2004

       David A. O'Neil                  Treasurer & Principal            Since January 4, 2000.               39
                                        Financial Officer                Controller and Assistant
                                                                         Treasurer from December 11,
                                                                         1998 to January 3, 2000

       Peggy A. Murphy                  Secretary                        Since December 11, 1998              46

       Garry M. Jones                   Assistant Treasurer              Since August 4, 1988.                64
                                        & Principal Accounting           Principal Financial
                                        Officer                          Officer from August 4, 1988
                                                                         to September 10, 1993

       Timothy A. Polidore              Assistant Treasurer              Since December 8, 2000               44
</TABLE>

The terms of office of Mrs. Peggy A. Murphy, Mr. David A. O'Neil, Mr. Timothy A.
Polidore,  and Mr. Garry M. Jones are until the next annual meeting of the Board
of Directors  unless  successors are sooner appointed by the Board of Directors.
The terms of office of Mr. Howard Pinsley and Mr. John Pompay are subject to the
agreements  between  them  and  the  Company.  See  "Employment   Contracts  and
Termination of Employment."

Family Relationships

Barry Pinsley and Howard Pinsley are cousins.

Business Experience of Directors and Officers

Paul J. Corr is a  Certified  Public  Accountant  licensed  by the State of [New
York],  and has been a Professor  of  Business  at Skidmore  College in Saratoga
Springs,  NY since 1981.  Mr. Corr  currently  holds the  position of  Associate
Professor.  Mr. Corr is also a shareholder  in the Latham,  New York  accounting
firm of Rutnik, Matt & Corr, P.C.

William P. Greene, D.B.A. was vice president of operations for the Company until
December  31, 2000 when he retired.  Prior to joining the  Company's  management
team he was Vice  President of Finance for ComCierge,  LLC, San Diego,  CA since
August  1997.  Prior to that  position,  Dr.  Greene  held the  position of Vice
President Operations for Bulk Materials International,  Newtown, CT from 1993 to
July 1997. From 1991 to 1993, Dr. Greene was Associate  Professor of Finance and
International  Business at Pennsylvania State University Kutztown, PA. From 1985
to  1990,  he was  Associate  Dean of the  School  of  Business,  United  States
International  University,  San Diego, CA. From 1992 to 1995, he was Chairman of
the Department of Business, Skidmore College, Saratoga Springs, NY.

Barry  Pinsley is a  Certified  Public  Accountant  who for more than five years
acted  as  a  consultant   to  the  Company   prior  to  his  election  as  Vice
President-Special  Projects on March 25, 1994. On December 6, 1997,  Mr. Pinsley
was  elected to the  position  of Vice  President-Investor  Relations  and Human
Resources,  from which he  resigned  on June 9,  1998.  Mr.  Pinsley  has been a
practicing Certified Public Accountant in Saratoga Springs, New York since 1975.

Howard  Pinsley  for more than the past  five  years  has been  employed  by the
Company on a full-time basis first as a Program  Director prior to being elected
Vice President-Special Power Supplies on April 3, 1992. On December 6, 1996, Mr.
Pinsley was elected to the position of Executive Vice President. On June 9, 1998
he was elected to the positions of President  and Chief  Operating  Officer.  On
December 10, 1998 he became the President and Chief Executive Officer.


26
<PAGE>

Seymour  Saslow had been Senior Vice  President of the Company since December 6,
1996. Prior to being elected to Senior Vice President, Mr. Saslow served as Vice
President-Engineering  since April 3, 1992. Mr. Saslow  resigned as an executive
officer effective December 31, 1999.

Michael W. Wool is an attorney  engaged in the private  practice of law and as a
senior  partner  since  1982 in the law firm of  Langrock,  Sperry  & Wool  with
offices in Burlington and Middlebury, Vermont.

Alvin O. Sabo is an  attorney  engaged  in  private  practice  of law and Senior
Partner of the law firm of Donohue, Sabo, Varley & Armstrong, P.C. in Albany, NY
since 1980. Prior to that position, he was Assistant Attorney General,  State of
New York, Department of Law for eleven years.

Carl  Helmetag is currently  President and CEO of UVEX Inc. in  Providence,  RI.
From  1996 to 1999,  he was  President  and CEO of Head  USA Inc.  Prior to that
position,  Mr.  Helmetag was Executive  Vice  President,  and then  President at
Dynastar Inc.  from 1978 to 1996. He is an MBA graduate from the Wharton  School
of Business, University of Pennsylvania.

Peggy Murphy is Secretary of the Company since  December 11, 1998.  She has been
employed by the Company since 1978 and has served as Director of Human Resources
since October 1998.

David A. O'Neil is currently the Treasurer  and Principal  Financial  Officer of
the Company.  Mr. O'Neil is a Certified Public Accountant who joined the Company
as Controller and Assistant  Treasurer on November 6, 1998. Prior to joining the
Company, Mr. O'Neil was a Senior Manager at the accounting firm of KPMG LLP.

John J. Pompay,  Jr. for more than the past five years has been  employed by the
Company  on a  full-time  basis  as Vice  President-Marketing  and  Sales  since
December 6, 1996.  Effective  April 5, 2004,  Mr. Pompay retired as an executive
officer.

Timothy A. Polidore was the  Assistant  Treasurer of the Company.  Mr.  Polidore
joined  the  Company  on May 17,  1999.  Prior to  joining  the  Company  he was
Accounting  Manager  for  Brinks,  Inc.  Effective  August 6, 2004 Mr.  Polidore
resigned.

Garry M.  Jones  for more  than the past five  years  has been  employed  by the
Company on a full-time  basis since 1970, and has served as Assistant  Treasurer
and Principal Accounting Officer since August 4, 1988.

Directorships

Howard Pinsley serves as a director of All American Semiconductor Inc.

None of the other  directors  holds a  directorship  in any other company with a
class of  securities  registered  pursuant to Section 12 of the  Exchange Act or
subject  to the  requirements  of  Section  15 (d) of  that  Act or any  company
registered as an investment company under the Investment Company Act of 1940.

Legal Proceedings

None of the directors or executive  officers of the Company were involved during
the past five years in any legal  proceedings  specified  under  Item  401(f) of
Regulation S-K.

Procedures For Shareholders to Nominate Directors

The  information   regarding  this  item  is  included  under   "Procedures  For
Shareholders  to Nominate  Directors" in our Proxy Statement for our 2004 annual
meeting of shareholders.

Compliance with Section 16(a) of the Securities Exchange Act

The information  regarding this item is included under  "Compliance with Section
16(a) of the Securities Exchange Act" in our Proxy Statement for our 2004 annual
meeting of shareholders.

Code of Ethics

The Company has adopted a Code of Ethics  which is  available  on our website at
www.espey.com.
-------------


27
<PAGE>

Item 11. Executive Compensation

The following table  summarizes the annual  compensation  for each of the fiscal
years  ended June 30,  2004,  2003,  and 2002  received by the  Company's  Chief
Executive  Officer and the other highest paid executive  officers of the Company
that received over $100,000 in total compensation as of June 30, 2004.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                  Long Term
                                                                                 Compensation
                                                                                 ------------
                                                                                  Securities
Name and                              Fiscal        Annual                        Underlying          All Other
Principal Position                     Year         Salary         Bonus          Options(#)       Compensation(1)
------------------                    ------        ------         ------        ------------      ---------------
<S>                                     <C>          <C>           <C>              <C>               <C>
Howard Pinsley                          2004         $190,120      $20,000              0             $ 34,826
President and                           2003         $180,404      $12,500          2,000             $ 19,109
Chief Executive Officer                 2002         $173,120      $25,000          2,000             $ 11,841

John J. Pompay, Jr.(2)                  2004         $165,622      $25,000              0             $ 34,733
Vice President-Sales                    2003         $160,554      $25,000            800             $ 19,244
                                        2002         $154,340      $25,000            800             $ 12,134

David A. O'Neil                         2004         $112,250      $12,500              0             $ 13,101
Treasurer and Principal                 2003         $105,490      $10,000            800             $ 10,738
Financial Officer                       2002         $ 99,950      $12,500            800             $  9,899
</TABLE>

(1)  Represents  (a) the cash and market value of the shares  allocated  for the
     respective  fiscal  years under the  Company's  ESOP to the extent to which
     each  named  executive  officer  is  vested,  and  the  Company's  matching
     contribution under the 401K plan.

(2)  Mr. Pompay retired, effective April 5, 2004, as an executive officer.

                        OPTION GRANTS IN LAST FISCAL YEAR

There were no options granted during the year ended June 30, 2004.

The following table sets forth information  concerning  unexercised options held
on June 30, 2004 by the named executive officers:

     AGGREGATED OPTIONS AT FISCAL YEAR-END AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                       Number of Securities             Value of Unexercised
                        Shares                        Underlying Unexercised                In-the-Money
                       Acquired                             Options at                       Options at
                          On            Value           Fiscal Year-End (#)              Fiscal Year-End ($)
Name                   Exercise       Realized       Exercisable/Unexercisable        Exercisable/Unexercisable
-------------          ---------      ---------      -------------------------       --------------------------
<S>                       <C>            <C>                <C>                           <C>
Howard Pinsley             0              0                 4,000/2,000                   15,800/8,700

John J. Pompay Jr.*        0              0                   800/800                      2,400/3,480

David A. O'Neil            0              0                   800/800                      2,400/3,480
</TABLE>

In  accordance  with the 2000 Stock Option Plan the above  options have exercise
dates that range from March 1, 2002 through and expiring on March 1, 2013.

*Mr. Pompay retired, effective April 5, 2004, as an executive officer.

Insurance

The  executive  officers  and  directors  of the Company can elect to be covered
under the Company  sponsored  health plans which do not discriminate in favor of
the officers or directors  of the Company and which are  available  generally to
all  employees.  In addition,  the executive  officers are covered under a group
life plan, which does not discriminate, and is available to all employees.

The Company maintains  insurance  coverage,  as authorized by Section 727 of the
New York  Business  Corporation  Law,  providing  for (a)  reimbursement  of the
Company for payments it


28
<PAGE>

makes to  indemnify  officers and  directors of the Company,  and (b) payment on
behalf of officers and  directors of the Company for losses,  costs and expenses
incurred by them in any actions.

Employee Retirement Plan and Trust

Under the  Company's  ESOP,  approved by the Board of Directors on June 2, 1989,
effective  July 1, 1988, all non-union  employees of the Company,  including the
Company's executive and non-executive officers are eligible to participate.  The
ESOP is a non-contributory  plan which is designed to invest primarily in shares
of common stock of the Company.  Certain  technical  amendments  not  considered
material were adopted effective as of June 30, 1994 and July 1, 2002.

Of the 240,749 shares of common stock of the Company  allocated to  participants
of the ESOP as of June 30, 2004,  11,161 shares were allocated to John J. Pompay
Jr., 10,712 shares were allocated to Howard Pinsley, 2,382 shares were allocated
to David A. O'Neil and 3,369 shares were allocated to Barry Pinsley.

Compensation of Directors

The Company's standard  arrangement  compensates each director of the Company an
annual  fee in the  amount  of  $15,000  for  being a  member  of the  Board  of
Directors.  Each Director that also serves as a member of the Audit Committee is
compensated an additional  annual fee of $5,000.  Each director that serves as a
member of the Succession  Committee or the Mergers and Acquisition  Committee is
compensated an additional $2,500 for each committee. These fees are paid monthly
to the Directors.  Executive  officers that also serve on the Company's Board of
Directors do not receive director's fees.

Directors are also eligible to receive stock options under the 2000 Stock Option
Plan at the discretion of the stock option committee. The stock option committee
consists of three appointed board members.  For the year ended June 30, 2004 the
following  options remain  granted and  unexercised by the Board of Directors in
accordance with this Plan.

Name                           Number of Options          Exercise Price Range
----                          -----------------           --------------------
Seymour Saslow                      1,500                   $17.95 - 19.85
Barry Pinsley                       1,500                    13.25 - 19.85
Michael W. Wool                     1,500                    17.95 - 19.85
William P. Greene                     900                    17.95 - 19.85
Paul J. Corr                        1,600                    13.25 - 19.85
Alvin O. Sabo                       1,400                    13.25 - 19.85
Carl Helmetag                         800                    13.25 - 19.85
Howard Pinsley                      6,000                    17.95 - 19.85

The above options have exercise dates ranging from March 1, 2002 and expiring on
March 1, 2013.

Employment Contracts and Termination of Employment

The Company has an  employment  contract  with John J. Pompay Jr. in  connection
with  his  duties  as Vice  President-Marketing  and  Sales.  The  contract  was
effective as of January 1, 2003,  and allowed,  on April 5, 2004,  Mr. Pompay to
voluntarily resign as Vice President of Marketing and Sales and accept an option
under the  contract as a  non-executive  officer in which he will  receive  full
benefits  plus  full  compensation  for 13 weeks and then for the next 143 weeks
receive  $1,000 per week for services to be rendered.  This contract  expires on
April 5, 2007.

The Company  entered into an agreement  with Howard  Pinsley,  President and CEO
effective July 1, 2002. The contract  allows Mr. Pinsley upon his resignation or
termination  to become a  non-executive  officer of the  Company for a period of
thirty-six  months.  In consideration for services to be provided by Mr. Pinsley
for the equivalent of two days a month after his resignation or termination, and
to perform duties as reasonably  requested by the Company,  he will receive full
benefits  plus,  $15,000  per month for the first three  months,  and $4,333 per
month for the next thirty-three  consecutive  months.  This agreement expires on
December 31, 2005.


29
<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners

The  following  information  is  furnished  as of  September  14,  2004  (unless
otherwise  indicated) with respect to any person  (including any "group" as that
term is used in Section  13(d)(3)  of the Act) who is known to the Company to be
the  beneficial  owner of more than five  percent of any class of the  Company's
voting securities:

<TABLE>
<CAPTION>
                                                                   Amount and
                                                                   Nature of
Title                    Name and Address                          Beneficial                       Percent of
Class                    of Beneficial Owner                       Ownership                           Class
-----                    -------------------                       ---------                           -----
<S>                      <C>                                    <C>                                    <C>
Common Stock             Franklin Advisory                      78,000 - Direct (1)                     7.70%
                         Services, LLC
                         777 Mariners Island Blvd
                         P.O. Box 7777
                         San Mateo, CA 94403-7777

"                        The Adirondack Trust                  236,735 - Direct (2)                    23.42%
                         Company, as Trustee of
                         the Company's Employee
                         Retirement Plan and Trust
                         473 Broadway
                         Saratoga Springs, NY 12866

"                        Advisory Research, Inc.                70,700 - Direct (3)                     7.00%
                         180 North Stetson St.
                         Suite 5780
                         Chicago, IL 60601

"                        Howard Pinsley                         46,634 - Direct (4)                     5.65%
                         233 Ballston Avenue                    10,712 - Indirect (4)
                         Saratoga Springs, NY 12866
</TABLE>

(1)  The  information as to the number of shares of common stock and the percent
     of class ownership of the Company that may be deemed  beneficially owned by
     Franklin  Advisory  Services,  LLC  ("Franklin")  is from the Schedule 13G,
     dated February 4, 2004 filed with the SEC. The Franklin statement indicated
     that Franklin's  investment  "advisory  subsidiaries," have sole voting and
     dispositive  power with  respect to all of the shares of common stock shown
     in the table above for Franklin.  The Franklin statement indicates that the
     common  stock set forth in the table is  beneficially  owned by one or more
     open or closed-end investment companies or other managed accounts which are
     advised by direct and indirect Franklin investment  advisory  subsidiaries.
     The statement  also  indicated  that it filed the Schedule 13G on behalf of
     itself and Franklin's principal shareholders, Charles B. Johnson and Rupert
     H. Johnson,  Jr. (the  "Principal  Shareholders"),  all of which are deemed
     beneficial  owners of the shares of common  stock  shown in the above table
     for Franklin. Franklin and the Principal Shareholders disclaim any economic
     interest or  beneficial  ownership  in any of the common stock shown in the
     table for Franklin.

(2)  The  information  as to the number of shares of common stock of the Company
     that may be deemed  beneficially  owned by The Adirondack Trust is from the
     Form 4 dated August 26, 2004 filed with the SEC by the Trustee on behalf of
     the Company's  ESOP. The ESOP Trustee has sole voting power with respect to
     unallocated  common  shares  owned by the Trust,  as  directed  by the ESOP
     Committee  appointed by the Company's Board of Directors.  As to the common
     shares allocated to participants, 236,735 shares as of August 26, 2004, the
     ESOP  Trustee  has the power to vote such  shares as  directed by such ESOP
     Committee to the extent the  participants do not direct the manner in which
     such shares are to be voted.

(3)  The  information as to the number of shares of common stock and the percent
     of class ownership of the Company that may be deemed  beneficially owned by
     advisory  clients  of  Advisory  Research,  Inc.  ("Advisory")  is from the
     Schedule 13G dated February 12, 2004 filed with the Securities and Exchange
     Commission  (the "SEC").  Advisory,  a registered  investment  advisor,  is
     deemed to have  beneficial  ownership  of 70,700  shares  of Espey  Mfg.  &
     Electronics  Corp.  stock as of February 12, 2004,  all of which shares are
     held in Advisory investment  companies,  trusts and accounts.  Advisory, in
     its role as investment  advisor and/or manager,  reported sole voting power
     with respect to 70,700 shares.


30
<PAGE>

(4)  This  information  is from  Form 4 dated  July 29,  2004.  Indirect  shares
     represent  stock  being held in the Company  ESOP.  Direct  shares  include
     options to acquire shares which are exercisable within 60 days.

Security Ownership

The  following  information  is  furnished  as of  September  14,  2004  (unless
otherwise  indicated),  as to each  class of equity  securities  of the  Company
beneficially  owned by all Directors and Executive Officers and by Directors and
Executive Officers of the Company as a Group:

<TABLE>
<CAPTION>
                                                                       Amount and
                                                                        Nature of
Title                           Name of                                Beneficial                     Percent of
Class                       Beneficial Owner                            Ownership                        Class
-----                      -------------------                        -------------                   ----------
<S>                        <C>                                    <C>                                  <C>
Common Stock

                           Paul J. Corr                            2,000 - Direct (1)                    *

        "                  William P. Greene                         700 - Direct (1)                    *

        "                  Carl Helmetag                           3,400 - Direct (1)                    *
                                                                     500 - Indirect (2)

        "                  Garry M. Jones                            400 - Direct (1)
                                                                   4,923 - Indirect (3)                  *

        "                  Peggy Murphy                              600 - Direct (1)
                                                                   3,644 - Indirect (3)                  *

        "                  David A. O'Neil                         3,200 - Direct (1)                    *
                                                                   2,382 - Indirect (3)

        "                  Barry Pinsley                          34,830 - Direct (1)                    3.78%
                                                                   3,370 - Indirect (3,4)

        "                  Howard Pinsley                         46,634 - Direct (1)                    5.65%
                                                                  10,712 - Indirect (3)

        "                  Alvin O. Sabo                           1,100 - Direct (1)                    *

        "                  Seymour Saslow                          8,559 - Direct (1)                    *

        "                  Michael W. Wool                         1,100 - Direct (1)                    *

        "                  Officers and Directors                102,523 - Direct (1)                   10.14%
                           as a Group (13 persons)                26,614 - Indirect (2,3,4)
</TABLE>

*     Less than one percent

(1)  Direct  shares  include  options to acquire  shares  which are  exercisable
     within 60 days as follows:

<TABLE>
<CAPTION>
      Name of                         Exercisable              Name of                           Exercisable
      Beneficial Owner                  Options                Beneficial Owner                   Options
      -----------------               ------------             -----------------                 ------------
<S>                                      <C>                   <C>                                  <C>
      Paul J. Corr                       1,000                 William P. Greene                      600
      Carl Helmetag                        400                 Garry M. Jones                         400
      Peggy Murphy                         600                 David A. O'Neil                        800
      Barry Pinsley                      1,000                 Howard Pinsley                       4,000
      Alvin O. Sabo                        900                 Seymour Saslow                       1,000
      Michael W. Wool                    1,000
</TABLE>

(2)  Includes 500 shares owned by the trust of Molly K. Helmetag.  As trustee of
     the trust,  Mr.  Helmetag is deemed  beneficial  owner,  as defined in rule
     13d-3,  of the shares held by the trust.  Excludes  806 shares owned by the
     spouse of Mr. Helmetag. Beneficial ownership is disclaimed by Mr. Helmetag.

(3)  Includes shares  allocated to named director or officer as of June 30, 2004
     as a participant in the Company's  ESOP.  Each such person has the right to
     direct the manner in which such  shares  allocated  to him or her are to be
     voted by the ESOP Trustee.


31
<PAGE>

(4)  Excludes  2,000  shares  owned by the spouse of Barry  Pinsley.  Beneficial
     ownership of the shares is disclaimed by Mr. Pinsley.

There are no arrangements known to the Company,  the execution of which may at a
subsequent date, result in change of control of the Company.

During fiscal 2000,  the Board of Directors and  shareholders  approved the 2000
Stock Option Plan (the Plan). Under the Plan,  incentive and non-qualified stock
options will be granted to purchase shares of common stock of the Company. As of
June 30,  2004,  the Plan was  authorized  to grant  options to purchase  98,700
shares of the Company's  common stock with a maximum grant of 15,000  options in
any one year.

The Stock Option Committee of the Board of Directors  administers the 2000 Plan.
The Committee may designate,  from time to time, the  individuals to whom awards
are made  under the 2000  Plan,  the  amount of any such award and the price and
other terms and  conditions  of any such award.  The  Committee has the full and
exclusive power to interpret the 2000 Plan and may, subject to the provisions of
the 2000 Plan, establish the rules for its operation.

       SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

<TABLE>
<CAPTION>
                                                                                          Number of Securities
                                                                                           remaining available
                            Number of securities                                           for future issuance
                              to be issued upon              Weighted-average                 under equity
                                 exercise of                 exercise price of              compensation plan
                            outstanding options,           outstanding options,           (excluding securities
Plan Category                warrants and rights            warrants and rights         reflected in column (a))
----------------------------------------------------------------------------------------------------------------
                                     (a)                            (b)                              (c)
----------------------------------------------------------------------------------------------------------------
<S>                                <C>                             <C>                           <C>
Equity compensation
   plans approved by
   security holders                37,000                          18.58                         98,400

Equity compensation
   plans not approved
   by security holders                 --                             --                             --
                                   ------                                                        ------
           Total                   37,000                                                        98,400
----------------------------------------------------------------------------------------------------------------
</TABLE>

Item 13 Certain Relationships and Related Transactions

As previously  reported,  the Company  established and sold to the ESOP Trust on
June 5,  1989,  331,224  shares of the  Company's  treasury  stock at a price of
$26.50 per share,  which  purchase price was funded by the Company making a cash
contribution  and loan. Each year, the Company makes  contributions to the ESOP,
which are used to make loan interest and principal payments to the Company. With
each such  payment,  a portion of the common stock held by the ESOP is allocated
to  participating  employees.  As of June 30, 2004,  there were  240,749  shares
allocated to participants. The loan from the Company to the ESOP is repayable in
annual installments of $1,039,605,  including  interest,  through June 30, 2004.
Effective  June 30, 2004 the loan was paid in full and all shares were allocated
to participants. Officers of the Company, (including Howard Pinsley) who is also
a director,  are eligible to participate in the ESOP and to have shares and cash
allocated to their accounts and distributed to them in accordance with the terms
of the ESOP.

The Company paid the law firm of Langrock,  Sperry & Wool,  of which  Michael W.
Wool,  a director  of the  Company,  is a partner,  a total of $11,524 for legal
services during the fiscal year ended June 30, 2004.

Item 14 Principal Accountant Fees and Services

The  information  required by this item is included in "Audit Fees" in our Proxy
Statement for our 2004 annual meeting of shareholders.


32
<PAGE>

                                     PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

          (a)  1. Financial Statements

               Included in Part II, Item 8, of this report:

                    Report of  Independent  Registered  Public  Accounting  Firm
                    2004

                    Report of  Independent  Registered  Public  Accounting  Firm
                    2003

                    Balance Sheets at June 30, 2004 and 2003

                    Statements of Income for the years ended June 30, 2004, 2003
                    and 2002

                    Statements of Changes in Stockholders'  Equity for the years
                    ended June 30, 2004, 2003 and 2002

                    Statements  of Cash Flows for the years ended June 30, 2004,
                    2003 and 2002

                    Notes to Financial Statements

               2. Financial Statement Schedules

                    Schedules  are omitted  because of the absence of conditions
                    under  which  they are  required  or  because  the  required
                    information  is given in the  financial  statements or notes
                    thereto.

               3. Exhibits

                    3.1  Certificate   of   incorporation   and  all  amendments
                         thereto(filed herewith)

                    3.2  By-laws  incorporated  by  reference  to Exhibit 3.2 to
                         Espey's March 31, 2004 Form 10-Q

                    4.1  Amended and Restated Rights Agreement,  dated March 31,
                         1989,  as amended  February  12, 1999 and  December 31,
                         1999,  between  Espey  Mfg.  &  Electronics  Corp.  and
                         Registrar   and  Transfer   Company   incorporated   by
                         reference to Espey's Form 8-K dated December 20, 1999

                    10.1 2000 Stock  Option Plan  incorporated  by  reference to
                         Espey's  Definitive  Proxy  Statement dated December 6,
                         1999 for the January 4, 2000 annual meeting

                    11.1 Statement  re:  Computation  of Per  Share  Net  income
                         (filed herewith)

                    14.1 Code of ethics  incorporated  by  reference  to Espey's
                         website www.espey.com
                                 -------------

                    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 (filed herewith)

                    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 (filed
                         herewith)

                    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 (filed
                         herewith)

                    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 (filed
                         herewith)


33
<PAGE>

                               S I G N A T U R E S

     Pursuant  to the  requirements  of Section 13 and 15 (d) 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/ Howard Pinsley                           President
---------------------------                  (Chief Executive Officer)
Howard Pinsley                               September 14, 2004

/s/ David A. O'Neil                          Treasurer
---------------------------                  (Principal Financial Officer)
David A. O'Neil                              September 14, 2004

/s/ Garry M. Jones                           Assistant Treasurer
---------------------------                  (Principal Accounting Officer)
Garry M. Jones                               September 14, 2004

/s/ Barry Pinsley                            Director
---------------------------                  September 14, 2004
Barry Pinsley

/s/ Seymour Saslow                           Director
---------------------------                  September 14, 2004
Seymour Saslow

/s/ William P. Greene                        Director
---------------------------                  September 14, 2004
William P. Greene

/s/ Michael W. Wool                          Director
---------------------------                  September 14, 2004
Michael W. Wool

/s/ Paul J. Corr                             Director
---------------------------                  September 14, 2004
Paul J. Corr

/s/ Alvin O. Sabo                            Director
---------------------------                  September 14, 2004
Alvin O. Sabo

/s/ Carl Helmetag                            Director
---------------------------                  September 14, 2004
Carl Helmetag


34