UNITED STATESSECURITIES
AND EXCHANGE COMMISSION

Washington,
D. C. 20549

FORM
10-Q

|[ x ] | Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
quarterly period ended January 31, 2007
|----- | ---------------------------------------------------------------------------------------------------------------------------------------

|[   ] | Transition
report pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934 for the
transition period from  _____________________to ___________________
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commission
file number 0-25312

STARTECH
ENVIRONMENTAL CORPORATION(Exact name of registrant as specified in its charter)

|Colorado                 | 84-1286576
|------------------------ | ----------
|(State of incorporation) |           
|                         |           
|                         |           

15 Old
Danbury Road, Suite 203Wilton, Connecticut 06897(Address of principal executive offices, including zip code)

(203)
762-2499 (Registrants telephone number, including area code)

Securities
registered under Section 12(b) of the Act:   None

Securities
registered under Section 12(g) of the Act:   Common Stock, no par value

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

Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the
Exchange Act.

Large
Accelerated Filer [   ]     Accelerated Filer  [   ]
     Non-accelerated filer  [ X ]

Indicate
by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of
the Act). YES [   ]    NO [ x ]

As
of March 23, 2007, 21,465,919 shares of common stock were outstanding.



---

STARTECH ENVIRONMENTAL
CORPORATION

TABLE
OF CONTENTS

|PART I - FINANCIAL INFORMATION                                                 | PAGE
|------------------------------------------------------------------------------ | ----
|Item 1.   Financial Statements (unaudited)                                     |     
|                                                                               |     
|Condensed consolidated balance sheets  January 31, 2007  and October 31, 2006 |     
|                                                                               |     
|Condensed consolidated statements of operations for the three months ended     |     
|January 31, 2007 and 2006                                                      |     
|                                                                               |     
|Condensed consolidated statements of cash flows for the three months ended     |     
|January 31, 2007 and 2006                                                      |     
|                                                                               |     
|Notes to condensed consolidated financial statements                           |     
|                                                                               |     
|Item 2.   Management's Discussion and Analysis of Financial Condition and      |     
|Results of Operations                                                          |     
|                                                                               |     
|Item 3.   Quantitative and Qualitative Disclosure about Market Risk            |     
|                                                                               |     
|Item 4.   Controls and Procedures                                              |     
|                                                                               |     
|PART II  OTHER INFORMATION                                                    |     
|                                                                               |     
|Item 1.   Legal Proceedings                                                    |     
|Item 1A.   Risk Factors                                                        |     
|Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds          |     
|Item 3.   Defaults Upon Senior Securities                                      |     
|Item 4.   Submission of Matters to a Vote of Security Holders                  |     
|Item 5.   Other Information                                                    |     
|Item 6.   Exhibits                                                             |     
|Signatures                                                                     |     
|                                                                               |     



---

PART
I  FINANCIAL INFORMATION

Item 1. Financial
Statements.

STARTECH
ENVIRONMENTAL CORPORATIONCondensed Consolidated Balance Sheets

|                                                             | January 31,2007(unaudited) | October 31,2006     
|------------------------------------------------------------ | -------------------------- | --------------------
|Assets                                                       |                            |                     
|Current assets:                                              |                            |                     
|Cash and cash equivalents                                    |                            | $        1,242,767  
|Note receivable                                              |                            | 385,000             
|Inventories                                                  |                            | 334,579             
|Prepaid expenses and other current assets                    |                            | 9,508               
|                                                             |                            |                     
|                                                             |                            |                     
|Total current assets                                         |                            | 1,971,854           
|                                                             |                            |                     
|Equipment and leasehold improvements, net                    |                            | 2,089,908           
|                                                             |                            |                     
|Deferred financing costs, net                                |                            | 10,187              
|Other assets                                                 |                            | 146,212             
|                                                             |                            |                     
|                                                             |                            |                     
|Total assets                                                 |                            | $        4,218,161  
|                                                             |                            |                     
|                                                             |                            |                     
|Liabilities and Stockholders Equity                         |                            |                     
|                                                             |                            |                     
|Current liabilities:                                         |                            |                     
|Accounts payable                                             |                            | $             92,491
|Other accrued expenses                                       |                            | 60,338              
|Convertible notes, net of deferred debt discount of          |                            |                     
|$82,040 and $101,858, respectively                           |                            | 430,639             
|Detachable warrants                                          |                            |                    
|Conversion option on convertible notes                       |                            |                    
|Customer deposits and deferred revenue                       |                            | 1,943,816           
|                                                             |                            |                     
|                                                             |                            |                     
|Total current liabilities                                    |                            | 2,527,284           
|                                                             |                            |                     
|                                                             |                            |                     
|Commitments and Contingencies                                |                            |                     
|                                                             |                            |                     
|Stockholders equity:                                        |                            |                     
|Preferred stock, no par value, 10,000,000 shares authorized; |                            |                     
|none issued and outstanding                                  |                            |                    
|Common stock; no par value; 800,000,000 shares authorized;   |                            |                     
|25,204,364 issued and 20,724,364 outstanding at              |                            |                     
|January 31, 2007; 27,915,287 issued and                      |                            |                     
|20,718,387 outstanding at October 31, 2006                   |                            | 28,944,882          
|Additional paid-in-capital                                   |                            | 4,822,182           
|Deferred offering costs                                      |                            | (341,551            
|Accumulated deficit                                          |                            | (31,734,636         
|                                                             |                            |                     
|Total stockholders equity                                   |                            | 1,690,877           
|                                                             |                            |                     
|Total Liabilities and Stockholders Equity                   |                            | $        4,218,161  
|                                                             |                            |                     
|                                                             |                            |                     

See
accompanying  notes to the condensed consolidated financial statements.

1



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STARTECH
ENVIRONMENTAL CORPORATIONCondensed Consolidated Statements of Operations(Unaudited)

|                                                             | Three Months EndedJanuary 31, |                      
|------------------------------------------------------------ | ----------------------------- | ---------------------
|
|Revenue                                                      |                               | $             65,976 
|                                                             |                               |                      
|Cost of sales                                                |                               | 51,257               
|                                                             |                               |                      
|                                                             |                               |                      
|Gross profit                                                 |                               | 14,719               
|                                                             |                               |                      
|Operating Expenses:                                          |                               |                      
|Selling expenses                                             |                               | 164,818              
|Research and development expenses                            |                               | 85,524               
|General and administrative expenses                          |                               | 537,911              
|Depreciation and amortization expenses                       |                               | 45,372               
|                                                             |                               |                      
|Total operating expenses                                     |                               | 833,625              
|                                                             |                               |                      
|                                                             |                               |                      
|Loss from operations                                         |                               | (818,906             
|                                                             |                               |                      
|Other income (expense):                                      |                               |                      
|Interest income                                              |                               | 14,748               
|Interest expense                                             |                               | (16,045              
|Amortization of deferred financing costs                     |                               | (3,596               
|Amortization of deferred debt discount                       |                               | (29,727              
|Change in value of warrants and conversion option            |                               | (107,826             
|Other income                                                 |                               | 92,256               
|                                                             |                               |                      
|Total other income (expense)                                 |                               | (50,190              
|                                                             |                               |                      
|                                                             |                               |                      
|Net loss before income taxes                                 |                               | (869,096             
|                                                             |                               |                      
|Income tax  expense                                          |                               | 3,601                
|                                                             |                               |                      
|                                                             |                               |                      
|Net loss                                                     |                               | ($         872,697   
|                                                             |                               |                      
|Per share data:                                              |                               |                      
|Net loss per share-basic and diluted                         |                               | ($               0.04
|                                                             |                               |                      
|Weighted average common shares outstanding-basic and diluted |                               | 20,720,401           
|                                                             |                               |                      
|                                                             |                               |                      
|                                                             |                               |                      

See
accompanying  notes to the condensed consolidated financial statements.

2



---

STARTECH
ENVIRONMENTAL CORPORATIONCondensed Consolidated Statements of Cash Flows(Unaudited)

|                                                    | Three Months EndedJanuary 31, |                   
|--------------------------------------------------- | ----------------------------- | ------------------
|
|Cash flows from operating activities:               |                               |                   
|Net loss                                            |                               | $         (872,697
|Adjustments to reconcile net loss to net cash       |                               |                   
|used in operating activities:                       |                               |                   
|Stock based compensation                            |                               | 109,240           
|401(k) match through issuance of common stock       |                               | 15,350            
|Depreciation and amortization                       |                               | 45,372            
|Amortization of deferred financing costs            |                               | 3,596             
|Amortization of deferred debt discount              |                               | 29,727            
|Change in value of warrants and conversion          |                               | 107,826           
|option                                              |                               |                   
|Changes in operating assets and liabilities:        |                               |                   
|Accounts receivable                                 |                               |                  
|Prepaid expense and other current assets            |                               | (6,501            
|Inventory                                           |                               | 4,096             
|Other assets                                        |                               | (56,946           
|Accounts payable                                    |                               | (60,951           
|Customer deposits and deferred revenue              |                               | (65,976           
|Accrued expenses                                    |                               | (30,105           
|                                                    |                               |                   
|Net cash used in operating activities               |                               | (777,969          
|                                                    |                               |                   
|                                                    |                               |                   
|Cash flows used in investing activities:            |                               |                   
|Purchase of equipment                               |                               | (70,827           
|                                                    |                               |                   
|Net cash used in investing activities               |                               | (70,827           
|                                                    |                               |                   
|                                                    |                               |                   
|Cash flows from financing activities:               |                               |                   
|Proceeds from exercise of options, warrants         |                               |                   
|and common stock issuance                           |                               |                  
|Repayments of convertible debentures                |                               | (188,351          
|Repayment of capital lease payable                  |                               |                  
|                                                    |                               |                   
|Net cash (used in) provided by financing activities |                               | (188,351          
|                                                    |                               |                   
|                                                    |                               |                   
|Net decrease in cash and cash equivalents           |                               | (1,037,147        
|                                                    |                               |                   
|Cash and cash equivalents, beginning                |                               | 2,279,914         
|                                                    |                               |                   
|                                                    |                               |                   
|Cash and cash equivalents, ending                   |                               | $        1,242,767
|                                                    |                               |                   
|                                                    |                               |                   

See
accompanying  notes to the condensed consolidated financial statements.

3



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STARTECH
ENVIRONMENTAL CORPORATIONNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1
 Basis of Presentation and Management Liquidity Plans.

Basis of
Presentation

The
accompanying unaudited condensed consolidated financial statements of Startech
Environmental Corporation (the Company or Startech) have
been prepared in accordance with accounting principles generally accepted in the
United States of America (GAAP) for interim financial information.
In the opinion of management, such statements include all adjustments
(consisting only of normal recurring adjustments) necessary for the fair
presentation of the Companys financial position, results of operations and
cash flows at the dates and for the periods indicated. Pursuant to the
requirements of the Securities and Exchange Commission (the SEC)
applicable to quarterly reports on Form 10-Q, the accompanying financial
statements do not include all the disclosures required by GAAP for annual
financial statements. While the Company believes that the disclosures presented
are adequate to make the information not misleading, these unaudited interim
condensed financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the
Companys Annual Report on Form 10-K for the year ended October 31, 2006.
Operating results for the three months ended January 31, 2007 are not
necessarily indicative of the results that may be expected for the fiscal year
ending October 31, 2007, or any other interim period.

The
accompanying condensed consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern and
the realization of assets and the satisfaction of liabilities in the normal
course of business. The carrying amounts of assets and liabilities presented in
the financial statements do not purport to represent realizable or settlement
values. The Company has no significant recurring revenues, has suffered
significant recurring operating losses and needs to raise additional capital in
order to be able to accomplish its business plan objectives. These conditions
raise substantial doubt about the Companys ability to continue as a going
concern.

The
Company has historically satisfied its capital needs primarily from the sale of
equity securities. On September 16, 2005, the Company entered into a Securities
Purchase Agreement (the Purchase Agreement) with Cornell Capital
Partners, L.P. and its affiliates (Cornell). The Purchase Agreement
provides for Cornell to purchase up to $2,300,000 of Secured Convertible
Debentures (the Debentures) maturing on October 18, 2007 (as
amended). This entire amount was funded during September and October 2005. On
April 22, 2006, Cornell converted $1,000,000 of the Debentures into 543,478
shares of common stock. From March 2006 through January 31, 2007, the Company
has made principal payments of approximately $808,000 towards the Debentures. On
February 12, 2007, Cornell converted $499,263 of the Debentures into 271,339
shares of common stock and as of February 15, 2007, the Debentures have been
paid in full. In addition, in March 2007, the Company received net cash proceeds
of approximately $759,000 from investors for the sale of 308,334 shares of
common stock pursuant to two private placement transactions.

Management
of the Company is continuing its efforts to secure additional funds through
equity and/or debt instruments. If the Company is unable to raise sufficient
additional funds, it will have to develop and implement a plan to extend
payables and reduce overhead until sufficient additional capital is raised to
support further operations. There can be no assurance that such a plan will be
successful. These condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

4



---

Note 2
 Stock-Based Compensation.

Effective
November 1, 2005, the Company adopted the fair value recognition provisions
of SFAS 123R, using the modified prospective transition method and
therefore did not restate prior periods results. Stock-based compensation
expense for all share-based payment awards granted after November 1, 2005
is based on the grant-date fair value estimated in accordance with the
provisions of SFAS 123R. The Company recognizes these compensation costs
over the requisite service period of the award, which is generally the option
vesting term. For the three months ended January 31, 2007 and 2006 the Company
incurred stock- based compensation expense of $109,240 and $214,260,
respectively.

The
fair value of share-based payment awards was estimated using the Black-Scholes
option pricing model with the following assumptions and weighted average fair
values as follows:

|                              | Three months endedJanuary 31 |            
|----------------------------- | ---------------------------- | -----------
|
|Risk-free interest rate range |                              | 4.88%-5.09%
|Dividend yield                |                              | N/A        
|Expected volatility           |                              | 76%        
|Expected life in years        |                              | 6          

A
summary of option activity for the three months ended January 31, 2007
is as follows:

|Options                         | Shares | Weighted-AverageExercisePrice | Weighted-AverageRemainingContractualTerm | AggregateIntrinsicValue
|------------------------------- | ------ | ----------------------------- | ---------------------------------------- | -----------------------
|Outstanding at November 1, 2006 |        | 1,820,500                     |                                          | $     2.62             
|Granted                         |        |                              |                                          |                       
|Exercised                       |        |                              |                                          |                       
|Canceled                        |        |                              |                                          |                       
|Expired                         |        |                              |                                          |                       
|Outstanding at January 31, 2007 |        | 1,820,500                     |                                          | $     2.62             
|Exercisable at January 31, 2007 |        | 1,783,500                     |                                          | $     2.60             

A  summary of
the status of the Companys non-vested options as  of January 31, 2007,
and changes during the three months  ended January 31, 2007 is presented below:

|Non-vested Shares              | Shares | Weighted-AverageGrant Date Fair Value
|------------------------------ | ------ | -------------------------------------
|Non-vested at November 1, 2006 |        | 37,000                               
|Granted                        |        |                                     
|Vested                         |        |                                     
|Forfeited                      |        |                                     
|Non-vested at January 31, 2007 |        | 37,000                               
|                               |        |                                      

As
of January 31, 2007 the total unrecognized compensation costs on non-vested
options is $121,718.

5



---

Net Loss per
Share of Common Stock

Basic
net loss per share excludes dilution for potentially dilutive securities and is
computed by dividing net loss attributable to common shareholders by the
weighted average number of common shares outstanding during the period. 
Diluted loss per share reflects the potential dilution that could occur if
securities or other instruments to issue common stock were exercised or
converted into common stock.  Potentially dilutive securities realizable
for from the exercise of options, warrants and convertible notes of 7,289,450
and 5,455,111 at January 31, 2007 and 2006, respectively, are excluded from the
computation of diluted loss per share as their inclusion would be anti-dilutive.

Note 3
 Inventories.

Inventories
consist of raw materials and is stated at the lower of cost or market. Cost is
determined by the first-in, first-out method.

Inventories
consist of the following:

|                | January 31,2007 | October 31,2006        
|--------------- | --------------- | -----------------------
|Raw materials   |                 | $               281,392
|Work in process |                 | 53,187                 
|                |                 |                        
|                |                 | $               334,579
|                |                 |                        
|                |                 |                        

Note 4 -
Equipment and Leasehold Improvements.

Equipment
and leasehold improvements consist of the following:

|                                           | Useful Life(In years) | January 31,2007 | October 31,2006
|------------------------------------------ | --------------------- | --------------- | ---------------
|Computer equipment                         |                       | 3-5             |                
|Equipment                                  |                       | 7-15            |                
|Furniture and fixtures                     |                       | 3-7             |                
|Leasehold improvements                     |                       | 4-7             |                
|Other                                      |                       | 4-7             |                
|                                           |                       |                 |                
|                                           |                       |                 |                
|Less: accumulated depreciation             |                       |                 |                
|                                           |                       |                 |                
|                                           |                       |                 |                
|Construction in progress                   |                       |                 |                
|                                           |                       |                 |                
|Total equipment and leasehold improvements |                       |                 |                
|                                           |                       |                 |                
|                                           |                       |                 |                

Construction
in progress includes the costs of constructing the Companys proprietary
ceramic filtration system. Costs may include materials, labor, overhead and
permits. When construction is completed, the asset will be reclassified as
equipment and will be amortized when placed in service.

Depreciation
expense totaled $45,372 and $47,769 for the three months ended January 31, 2007
and 2006, respectively.

6



---

Note 5
 Convertible Note and Standby Equity Distribution Agreement.

On
September 15, 2005, the Company entered into a Securities Purchase Agreement and
a Standby Equity Distribution Agreement (SEDA) with Cornell. The
Securities Purchase Agreement provides for Cornell to purchase up to $2,300,000
of secured convertible debentures (the Debentures) which were funded
during the year ended October 31, 2005. The Debentures are convertible by
Cornell Capital Partners at any time at a conversion price of $1.84 per share of
common stock. The Debentures originally matured in September 2006, require
monthly interest payments at a rate of 10% per annum and monthly principal
payments commencing March 2006. On September 5, 2006, the Company received
notification from Cornell stating that the maturity date of the Debentures was
changed to October 18, 2007. The Company can prepay the Debentures at any time
upon three days written notice. If the Companys common stock is trading
above the conversion price at the time of the prepayment the Company must pay a
20% premium on the amount of the prepayment. The Debentures are secured by
substantially all of the Companys assets and shares of common stock as
discussed below. In connection with the issuance of the Debentures, in September
2005, the Company issued to Cornell Capital Partners a warrant to purchase
650,000 shares of the Companys common stock for a period of three years
with an exercise price per share of $2.53.

The
gross proceeds of the Debentures in the amount of $2,300,000 were recorded net
of a discount of $2,168,995. The debt discount consisted of a $897,121 value
related to the warrants and $1,271,874 value related to the embedded conversion
option. The warrants and the embedded conversion option were accounted for under
EITF 00-19 and EITF 05-4, View A. Due to certain factors and the liquidated
damage provision in the registration rights agreement, the Company determined
that the embedded conversion option and the warrants are derivative liabilities.
Accordingly the warrants and the conversion option are being marked to market
through earnings at the end of each reporting period. The warrants and
conversion option are valued using the Black-Scholes valuation model. For the
three months ended January 31, 2007 the Company reflected a loss of $229,616
representing the change in the value of the warrants and conversion option. For
the three months ended January 31, 2006, the Company reflected a gain of
$1,056,490 representing the change in the value of the warrants and conversion
option. The debt discount of $2,168,995 is being accreted over the term of the
note. Accordingly, the Company recorded a charge of $29,727 and $542,748 for the
three months ended January 31, 2007 and 2006, respectively.

The
Company paid a fee of $230,000 (10% of the purchase price), structuring fees
equal to $30,000 and other fees of $27,554 in connection with the Debentures.
These fees have been recorded as deferred financing costs and are being expensed
through the maturity date of the Debentures. Amortization expense for the three
months ended January 31, 2007 and 2006 amounted to $3,596 and $71,889,
respectively.

On
April 22, 2006, Cornell converted $1,000,000 of the Debentures into 543,478
shares of common stock. From March 2006 through January 31, 2007, the Company
has made principal payments aggregating approximately $808,000 towards the
Debentures. In accordance with EITF 00-19, upon these repayments and conversion,
the Company has reclassified $1,355,224 ($89,516 during the three months ended
January 31, 2007), representing the portion of the derivative liability, to
additional paid-in capital.

The
SEDA requires Cornell, at the Companys option, to purchase, from time to
time, up to an aggregate of $20,000,000 of the Companys common stock over
a two-year period commencing on the effective date of a registration statement
filed with the SEC. The purchase price for each share of common stock under the
Agreement is equal to 96% of the market price as defined. Each request by the
Company is limited to $2,000,000. The Company issued to Cornell 386,956 shares
of the Companys common stock a valued at $979,000 as a fee for entering
into the Agreement and issued 4,348 shares valued at $11,000 to the placement
agent. In addition, the Company incurred legal and various other costs of
$239,595 in connection with this transaction.

The
Securities Purchase Agreement and the SEDA required that the Company file a
registration statement within 30 days of the date of the agreements and to use
its best efforts to have the registration statement declared effective by the
SEC within 120 days of the date of the agreement (extended to April 15, 2006).
In the event the registration statement was not filed or declared effective
within the prescribed time periods, the Company would be required to pay
liquidated damages as defined under the agreement. As of January 17, 2007, this
registration statement was not declared effective by the SEC. Accordingly, the
SEDA was not activated and was not available for use. The Company was informed
by Cornell that the liquidated damages provision in this agreement would not be
enforced.

7



---

On
January 17, 2007, the Company and Cornell agreed to terminate the SEDA and begin
negotiations on a SEDA with new terms. In addition, Cornell has agreed to waive
any and all liquidated damages that may be payable in connection with the
Registration Rights Agreement. In addition, Cornell agreed to return
approximately 135,000 of the 391,304 shares issued as offering costs in
connection with the SEDA.

On
January 26, 2007, the Company withdrew the aforementioned Registration Statement
by filing a Form RW with the SEC. Accordingly, deferred offering costs of
$239,595 were written off as of October 31, 2006. In addition, deferred offering
costs of $648,449, representing 251,956 shares of common stock issued to Cornell
and 4,348 shares issued to a placement agent, both of which will not be returned
to the Company in connection with the SEDA termination were charged to
Terminated Offering Costs as of October 31, 2006. Subsequent to January 31,
2007, approximately 135,000 shares were returned to the Company.

In accordance with EITF 00-19 and EITF 05-4, the Company reclassified the
remaining derivative liabilities in the amount of $843,230 to equity as of
January 17, 2007 due to the termination of the Registration Rights Agreement as
discussed above.

In
connection with the Securities Purchase Agreement, the Company and its President  agreed
to pledge 3,580,000 shares and 900,000 shares, respectively, to secure  payment of all
the obligations due under the Debentures. Such shares are to be  held in escrow until all
amounts due under the Debentures are paid in full. The  Company issued 900,000 shares of
restricted common stock to its President during  the year ended October 31, 2005 in place
of the shares of common stock being  pledged pursuant to the Escrow Agreement. On
February 12, 2007, Cornell  converted $499,263 of the Debentures into 271,339 shares of
common stock and as  of February 15, 2007, the Debentures have been paid in full. On
March 1, 2007,  the 3,580,000 pledged shares were returned to the Company and the 900,000
pledged shares were returned to its President. Consequently, management of the Company
has indicated that the  900,000 shares of restricted common stock issued to the President
will be returned to the Company.

Note 6
 Stockholders Equity.

On
November 22, 2005, the Company entered into the SICAV ONE Stock Purchase
Agreement and SICAV TWO Stock Purchase Agreement (collectively, the
Mercatus Agreements) with Mercatus & Partners, Limited
(Mercatus). Pursuant to the Mercatus Agreements, the Company agreed
to sell to Mercatus an aggregate of 2,716,900 shares of common stock (the
Mercatus Shares), no par value per share (Common Stock),
for an aggregate purchase price of $5,000,000. Mercatus had up to thirty days
from the date of the delivery of the Mercatus Shares to Brown Brothers Harriman,
the custodial bank, to tender the purchase price to the Company. The Mercatus
Shares were placed in escrow in November 2005. The Company did not receive any
proceeds pursuant to the Mercatus Agreements. In November 2006, Mercatus
returned 2,716,900 shares of common stock to the Company.

Note 7
 Operating Leases.

The
Company leases office space, equipment, computers and vehicles under
non-cancelable operating leases expiring between 2006 and 2009.

Our
corporate headquarters is currently located at 88 Danbury Road, Wilton,
Connecticut 06897-2525 where we lease 5,612 square feet of office space from
Furst Properties, LLC as landlord. The lease, electrical, and taxes provides for
monthly payments of $12,159 to December 2008, when the lease expires; however,
the Company has the option to extend it for another three years at the same
price.

Our
product showroom is located at 190 Century Drive, Bristol, Connecticut, 06010,
where we lease 10,800 square feet of office space from Tunxis Management as
landlord. The current lease provides for monthly payments of $8,166 to June
2008, when the lease expires.

Our
manufacturing facility is located at 545 Broad Street, Bristol, Connecticut,
06010, where we lease 30,000 square feet of manufacturing space from Gaski
Leasing as landlord. The lease provides for monthly payments of $5,775 and
expires on December 31, 2007. This lease arrangement is on a month to month
basis.

8



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The
following table shows the Companys future lease commitments under its
operating leases:

|Year  | Annual Rent
|----- | -----------
|2007  |            
|2008  |            
|2009  |            
|      |            
|Total |            

Note 8
 Commitments.

DOE Grant

The
Company received a grant from the Department of Energy (DOE) for the
development of a Startech Hydrogen Production Project which includes the  evaluation of
the viability of integrated hydrogen production from waste  materials. This program
consists of two test phases which evaluate the potential  hydrogen yield and volume which
can be obtained from Plasma Converter gas (PCG).  Phase I was initiated in October 2004
and was completed by September 2005. Phase  II was initiated in October 2005 and is
planned to be completed during the  3rd quarter of 2007. During this phase
Startech has incorporated  equipment enhancements and is currently finalizing the final
test report  providing technical test results to DOE. The grant is a reimbursement of
expenses incurred in connection with the project and is recorded as other  income in
the statement of operations when received. For the three months ended  January 31,
2007and 2006, the Company received $106,467 and $52,033 under this grant, respectively.

Concentration
of Credit Risk

The
Companys cash and cash equivalents consist of cash balances at one
financial institutions and short-term high quality liquid investments with
maturities of less than thirty days. The short-term investments are high quality
commercial paper, U.S. Treasury notes and U.S. Treasury bills. The cash balances
are insured by the Federal Deposit Insurance Corporation up to $100,000 per
institution. From time to time, the Companys balances may exceed these
limits. At January 31, 2007, uninsured cash balances were approximately
$1,169,000. The Company believes it is not exposed to any significant credit
risk for cash.

Note 9
 Employee Benefit Plan.

The
Company sponsors an employee savings plan designed to qualify under Section 401K
of the Internal Revenue Code. This plan is for all full-time employees who have
completed 30 days of service. Company contributions are made in the form of
common stock at the prevailing current market price and vest equally over a
three-year period. The Company will match the first six percent of the employee
contribution on a dollar for dollar basis up to the maximum contribution allowed
under Internal Revenue Code. Contributions for the three months ended January
31, 2007 and 2006 were $15,350, and $16,358, respectively. These contributions
were paid through the issuance of 5,977 and 8,798 shares of common stock,
respectively.

Note 10
 Recent Accounting Pronouncements.

In
February 2007, the FASB issued Statement of Financial Accounting Standards No.
159, The Fair Value Option for Financial Assets and Financial Liabilities
(SFAS 159), to permit all entities to choose to elect, at specified
election dates, to measure eligible financial instruments at fair value. An
entity shall report unrealized gains and losses on items for which the fair
value option has been elected in earnings at each subsequent reporting date, and
recognize upfront costs and fees related to those items in earnings as incurred
and not deferred. SFAS 159 applies to fiscal years beginning after November 15,
2007, with early adoption permitted for an entity that has also elected to apply
the provisions of SFAS 157, Fair Value Measurements. An entity is prohibited
from retrospectively applying SFAS 159, unless it chooses early adoption. SFAS
159 also applies to eligible items existing at November 15, 2007 (or early
adoption date). The Company is currently evaluating the impact of adopting SFAS
159 on its financial statements and is currently not yet in a position to
determine such effects.

9



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In
December 2006, the FASB issued FASB Staff Position (FSP) EITF
00-19-2 Accounting for Registration Payment Arrangements (FSP
EITF 00-19-2) which specifies that the contingent obligation to make
future payments or otherwise transfer consideration under a registration payment
arrangement should be separately recognized and measured in accordance with FASB
Statement No. 5, Accounting for Contingencies.  Adoption
of FSP EITF 00-19-02 is required for fiscal years beginning after
December 15, 2006. The Company is currently evaluating the expected effect
of FSP EITF 00-19-02 on its consolidated financial statements and is currently
not yet in a position to determine such effects.

Note 11
 Litigation and Other Contingencies.

The
Company was sued in an action entitled Ann C. Ritson, et al
(Plaintiffs) v. Startech Environmental Corporation and other
parties, CV-06-5005444-S, in the Superior Court, Jurisdiction of Hartford,
Connecticut, commenced in or about July 2006 (the Primary Action)
relating to alleged misrepresentation in a private placement transaction The
Company has denied the allegations and has asserted certain defenses against the
Plaintiffs. At this time, the Company is unable to evaluate the
likelihood of an unfavorable outcome. In addition, in November 2006, the Company
filed a third party complaint against the private placement agent in the
aforementioned matter, The Company has alleged that if it is adjudged to be
liable to the Plaintiffs, they are entitled to indemnification in whole or
in part from the private placement agent pursuant to a written
agreement. This matter is still in the fact discovery phase.The
parties have agreed to mediate the dispute and are in the process of scheduling
the mediation.

Note 12
 Subsequent Events.

On
March 12, 2007 the Company issued 25,000 shares of Common Stock to a consultant
in connection with a private placement.

On  March 13,
2007, the Company received net proceeds of $500,002 from an investor  for the sale of
208,334 shares of common stock, the issuance of 208,334 warrants  exercisable at $3.40
per share and 208,334 warrants exercisable at  $4.40 per share. In addition, the Company
granted 20,834 shares of common stock,  warrants to purchase 20,834 shares of common
stock at an exercise price of $3.40  and warrants to purchase 20,834 shares of common
stock at an exercise price of  $4.40 to a placement agent in connection with this
transaction.

On
March 16, 2007, the Company received net proceeds of $259,200 from an investor
for the sale of 108,000 shares of common stock. The Company also issued warrants
to purchase 108,000 shares of common stock at an exercise price of $3.40 and
warrants to purchase 108,000 shares of common stock at an exercise price of
$4.40.  In addition, the Company granted 12,000 shares of common stock,
warrants to purchase 12,000 shares of common stock at an exercise price of $3.40
and warrants to purchase 12,000 shares of common stock at an exercise price of
$4.40 to a placement agent in connection with this transaction.

On
March 22, 2007, the Company received net proceeds of $555,555 from an investor
for the sale of 231,482 shares of common stock. The Company also issued warrants
to purchase 231,482 shares of common stock at an exercise price of $3.40 and
warrants to purchase 231,482 shares of common stock at an exercise price of
$4.40.  In addition, the Company paid a commission in the amount of $55,555
in cash proceeds as a finders fee to a placement agent.

10



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

This
quarterly report on Form 10-Q contains a number of forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended (the Securities Act), and Section 21E of the
Securities Exchange Act of 1934, as amended (the Exchange Act).
Specifically, all statements other than statements of historical facts included
in this quarterly report regarding our financial position, business strategy and
plans and objectives of management for future operations are forward-looking
statements. These forward-looking statements are based on the beliefs of
management, as well as assumptions made by and information currently available
to management. When used in this quarterly report, the words
anticipate, believe, estimate,
expect, may, will, continue and
intend, and words or phrases of similar import, as they relate to
our financial position, business strategy and plans, or objectives of
management, are intended to identify forward-looking statements. These
statements reflect our current view with respect to future events and are
subject to risks, uncertainties and assumptions related to various factors
including, without limitation, those described below the heading
Overview and in our registration statements and periodic reports
filed with the SEC under the Securities Act and the Exchange Act.

Although
we believe that our expectations are reasonable, we cannot assure you that our
expectations will prove to be correct. Should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove incorrect,
actual results may vary materially from those described in this Quarterly Report
as anticipated, believed, estimated, expected or intended.

In
this Item 2, references to the Company, Startech,
we, or us means Startech Environmental Corporation and
its wholly-owned subsidiary.

Overview

Startech
Environmental Corporation is an environmental technology company commercializing
its proprietary plasma processing technology known as the Plasma Converter
that achieves closed-loop elemental recycling that irreversibly destroys
hazardous and non-hazardous waste and industrial by-products while converting
them into useful commercial products. These products include a rich synthesis
gas called PCG (Plasma Converted Gas) surplus energy for power, hydrogen,
metals and silicates for use and for sale.

The
Companys activities during the four fiscal years beginning November 1,
1992 and ending October 31, 1995 consisted primarily of the research and
development of the Plasma Converter. On November 17, 1995, Kapalua Acquisitions,
Inc., a Colorado corporation, completed the acquisition of all of the issued and
outstanding shares of the common stock of Startech Corporation, a Connecticut
corporation, and then changed its name to Startech Environmental Corporation.

On
November 18, 1995, the board of directors of the Company unanimously approved a
change of the business purpose of Kapalua Acquisitions Inc. from one seeking an
acquisition candidate to one engaged in the business of manufacturing and
selling the Plasma Converter system to recover, recycle, reduce and remediate
hazardous and non-hazardous waste materials. From that time to the date of this
filing, the Company has maintained this as its principal focus.

In
2001, recognizing the increasing importance of alternative energy and power
sources in general, and hydrogen in particular, we expanded our product line to
include a StarCell  hydrogen separation technology. Working in conjunction
with our core product, the Plasma Converter, StarCell will provide a
green and renewable source of hydrogen for power and processing applications. In
2003, this brought significant change and, due to the factors mentioned above,
as well as the rising comfort level with plasma based technologies through our
educational and informational effort we are now being greeted by a much more
receptive marketplace. This change was dictated by the needs of our customers
and the demands of the marketplace. This change began in January 2002 and
continues to be integrated.

11



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Startech
is an environmental technology corporation that manufactures, markets and sells
a recycling system called the Plasma Converter for the global marketplace. Until
January 2002, we were solely engaged in the manufacture and sale of equipment
for use by others. Thereafter, we have attempted to broaden the scope of our
available revenue opportunities. This change was brought about by
managements decision to expand its market penetration strategies and
opportunities. Rather than only market and sell our products for use by others,
we are now seeking opportunities to become directly involved in the operation
and use of our products. We reconsidered our stated philosophy of not engaging
in the processing of feedstock materials and/or waste and decided that it was
timely to seek out and include all possible market penetration strategies,
including build own operate, build own transfer of ownership, and joint
development projects.

By
concentrating on re-positioning the Company for long-term growth, we did not
achieve the sales goals we had anticipated would occur in the 2003, 2004, 2005
and 2006 fiscal years. However, we believe this new way of approaching the
market over time will help achieve maximum penetration in the shortest
timeframe.

We
believe specific events are driving demand for our Plasma Converter. They
include:

|o |  | Increases
in waste, and in particular hazardous wastes, due to rising  consumer/industrial
consumption and population growth in most nations;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Current
waste disposal and remediation techniques such as landfills and  incineration are
becoming regulatory, socially and environmentally unacceptable;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | A
need for critical resources such as power and water to sustain local economies;  and
|- |  | --------------------------------------------------------------------------------------

|o |  | The
emphasis being placed upon the production of distributed power and the need to  provide
alternatives to fossil fuels.
|- |  | -------------------------------------------------------------------------------------------------------------------------

Our
core plasma technology addresses these waste and resource issues by offering
remediation solutions that are integrated with a range of equipment solutions
and services. We believe these products will add value to our customers
business so they can realize revenue streams from disposal or processing fees, a
reduction in material disposal costs, as well as from the sale of resulting
commodity products and services. Alternatively, this will allow our customers to
generate a valuable product while at the same time using a zero cost basis, or
revenue generating source of raw material (waste). The costs of hazardous waste
treatment and disposal methods continue to rise, and now range from
approximately $900 to more than $2,000 per ton. This does not include the
additional processing, handling, packaging, insurance and management costs
sustained by the hazardous waste generator within its facility prior to final
disposal.

Since
1995, we have been actively educating and promoting to our customers the
benefits of the plasma converter over other forms of waste remediation
technologies. Ongoing education of the public and government is continuing. Like
most new technologies we have been met with varying degrees of resistance. A
rising comfort level with our plasma converter technology resulting in part from
our educational and informational efforts has created additional awareness in
the marketplace. We have taken steps to transform our business model from being
solely a seller of equipment to a total solutions provider, including facility
ownership or management. Our business model and its market development
strategies arise from our mission, which is to change the way the world views
and employs discarded materials; what many would now call waste we view as a
feedstock. We expect to achieve this objective by strategically marketing a
series of products and services emanating from the core Plasma Converter 
technology, resulting in saleable fossil fuel alternatives while providing a
safer and healthier environment. This strategy will be implemented through
Plasma Converter sales with after sales support and service, build own
operate/build own transfer of ownership facilities, joint development projects
and engineering services.

For
the three months ended January 31, 2007, the Company incurred a net loss of
$872,697, compared to a net loss of $439,462 for same period in 2006.

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Results of
Operations

Comparison of
three months ended January 31, 2007 and 2006

Revenues.
Total revenues were $65,976 for the three months ended January 31, 2007, as
compared to $364,197 for the same period in 2006, a decrease of $298,221. For
the three months ended January 31, 2007, all of our revenue was generated from
the amortization of portion of the distributorship agreements. These
distributorship agreements involve Plasteck Solutions Limited, representing
Australia and New Zealand, Plasmatech Caribbean Corporation representing Puerto
Rico and Materiales Renovados, Sl representing Spain, Additionally revenues were
derived from the completed installation in Mihama. For the three months ended
January 31, 2006, the Company recognized approximately $66,000 as revenue from
the amortization of the distributorship agreements. These distributorship
agreements were signed with Plasteck Solutions Limited, representing Australia
and New Zealand, Plasmatech Caribbean Corporation representing Puerto Rico and
Materiales Renovados, Sl representing Spain. Additionally, the balance of
revenues were derived from the overhaul project in Mihama during the three
months ended January 31, 2006.

Gross
Profit. Gross profit was $14,719 for the three months ended January 31,
2007, compared to a gross profit of $311,094 in the same period in 2006, or an
decrease of $296,375 from the same period in 2006 or 95.3%. Gross margins were
directly impacted due to the revenue recognized from the the overhaul project in
Mihama during the three months ended January 31, 2006.

Selling
Expenses. Selling expenses for the three months ended January 31, 2007 were
$164,818, compared to $197,068 for the same period in the prior year, a decrease
of $32,250, or 16.4%. Selling expenses decreased as a result of lower consulting
expenses and lower marketing activity.

Research
and Development Expenses. Research and development expenses for the three
months ended January 31, 2007 were $85,524, compared to $78,222 for the same
period in the prior year, a increase of $7,302 or 9.3%. This increase was
related to an increase in salary expenses.

General
and Administrative Expenses. General and administrative expenses for the
three months ended January 31, 2007 were $537,911, compared to $879,142 for the
same period in 2006, a decrease of $341,231 or 39%. This decrease was related to
lower interest expenses, lower legal and accounting expenses, and stock based
compensation in 2007.

Interest
Income. Interest income for the three months ended January 31, 2007 was
$14,748, compared to $15,736 in the same period in 2006, a decrease of 6.3%.

Liquidity
and Capital Resources

As
of January 31, 2007, we had cash and cash equivalents of $1,242,767 and a
working capital deficiency of $555,430.

The
Company has historically satisfied its capital needs primarily from the sale of
equity securities. We are currently in discussions with several funding sources
to raise additional capital through the issuance of additional equity
securities. The Company has been actively engaged in an effort to secure
financing from other investment sources. If we are unable to secure financing we
may not be able to maintain operations as presently conducted and may cease
operating as a going concern.

On
September 15, 2005, the Company entered into a Securities Purchase Agreement and
a Standby Equity Distribution Agreement (SEDA) with Cornell Capital
Partners. The Securities Purchase Agreement provides for Cornell Capital
Partners to purchase up to $2,300,000 of secured convertible debentures (the
Debentures) which were funded during the year ended October 31,
2005. The Debentures are convertible by Cornell Capital Partners at any time at
a conversion price of $1.84 per share of common stock. The Debentures originally
matured in September 2006, require monthly interest payments at a rate of 10%
per annum and monthly principal payments commencing March 2006. On September 5,
2006, the Company received notification from Cornell stating that the maturity
date of the Debentures was changed to October 18, 2007. The Company can prepay
the debentures at anytime upon three days written notice. If the Companys
common stock is trading above the conversion price at the time of the prepayment
the Company must pay a 20% premium on the amount of the prepayment. The
Debentures are secured by substantially all of the Companys assets and
shares of common stock as discussed below. In connection with the issuance of
the Debentures, in September 2005, the Company issued to Cornell Capital
Partners a warrant to purchase 650,000 shares of the Companys common stock
for a period of three years with an exercise price per share of $2.53.

13



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On
April 22, 2006, Cornell converted $1,000,000 of the Debentures into 543,478
shares of common stock. Through January 31, 2007, the Company has made principal
payments aggregating approximately $808,000 towards the Debentures. In
accordance with EITF 00-19, upon these repayments and conversion, the Company
has reclassified $1,355,224, representing the portion of the derivative
liability, to additional paid-in capital.

The
Company paid a fee of $230,000 (10% of the purchase price), structuring fees  equal to
$30,000 and other fees of $27,554 in connection with the convertible  note. These fees
have been recorded as deferred financing costs and are being  expensed through the
maturity date of the Debentures.

The
SEDA requires Cornell, at the Companys option, to purchase, from time to  time, up
to an aggregate of $20,000,000 of the Companys common stock over  a two-year period
commencing on the effective date of a registration statement  filed with the SEC. The
purchase price for each share of common stock under the  Agreement is equal to 96% of the
market price as defined. Each request by the  Company is limited to $2,000,000. The
Company issued to Cornell 386,956 shares  of the Companys common stock a valued at
$979,000 as a fee for entering  into the Agreement and issued 4,348 shares valued at
$11,000 to the placement  agent. In addition, the Company incurred legal and various
other costs of  $239,595 in connection with this transaction.

The
Securities Purchase Agreement and the SEDA required that the Company file a  registration
statement within 30 days of the date of the agreements and to use  its best efforts to
have the registration statement declared effective by the  Securities and Exchange
Commission, (the SEC) within 120 days of the  date of the agreement (extended
to April 15, 2006). In the event the  registration statement was not filed or declared
effective within the prescribed  time periods, the Company would be required to pay
liquidated damages as defined  under the agreement. As of January 17, 2007, this
registration statement was not  declared effective by the SEC. Accordingly, the SEDA was
been activated and was  not available for use. The Company was informed by Cornell that
the liquidated  damages provision in this agreement would not be enforced.

On
January 17, 2007, the Company and Cornell agreed to terminate the SEDA and begin
negotiations on a SEDA with new terms. In addition, Cornell has agreed to waive
any and all liquidated damages that may be payable in connection with the
Registration Rights Agreement. In addition, Cornell agreed to return
approximately 135,000 of the 391,304 shares issued as offering costs in
connection with the SEDA.

On
November 22, 2005, the Company entered into the SICAV ONE Stock Purchase
Agreement and SICAV TWO Stock Purchase Agreement (collectively, the
Mercatus Agreements) with Mercatus & Partners, Limited
(Mercatus). Pursuant to the Mercatus Agreements, the Company agreed
to sell to Mercatus an aggregate of 2,716,900 shares of common stock (the
Mercatus Shares), no par value per share (Common Stock),
for an aggregate purchase price of $5,000,000. Mercatus had up to thirty days
from the date of the delivery of the Mercatus Shares to Brown Brothers Harriman,
the custodial bank, to tender the purchase price to the Company. The Mercatus
Shares were placed in escrow in November 2005. The Company did not receive any
proceeds pursuant to the Mercatus Agreements. In November 2006, Mercatus
returned 2,716,900 shares of common stock to the Company.

On
May 23, 2006, the Company entered into a Stock Purchase and Registration Rights
Agreement (the FB Agreement) with FB U.S. Investments, L.L.C, (the  Investor),
pursuant to which the Investor purchased 1,300,000 shares  of the Companys common
stock, no par value (the Common Stock)  for aggregate gross proceeds of
$2,600,000. In addition to the shares of Common  Stock, the Company issued the Investor
warrants to purchase an aggregate of  2,600,000 additional shares of Common Stock (the
Investor Warrants).  Pursuant to the FB Agreement, the Company granted the
Investor piggyback  registration rights with respect to the shares of Common Stock
purchased by the  Investor as well as the shares of Common Stock issuable upon exercise
of the  Investor Warrants. In addition, the Company issued 65,000 shares of common stock
valued at $130,000, 130,000 warrants to purchase common stock, and paid cash to  the
placement agent of $130,000 with respect to this transaction.

14



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On
March 13, 2007, the Company received net proceeds of $500,002 from an investor
for the sale of 208,334 shares of common stock, the issuance of 208,334 warrants
exercisable at $3.40 per share and 208,334 warrants to purchase common stock
exercisable at $4.40 per share.

On
March 16, 2007, the Company received net proceeds of $259,200 from an investor
for the sale of 108,000 shares of common stock. The Company also issued warrants
to purchase 108,000 shares of common stock at an exercise price of $3.40 and
warrants to purchase 108,000 shares of common stock at an exercise price of
$4.40.

On
March 22, 2007, the Company received net proceeds of $555,555 from an investor
for the sale of 231,482 shares of common stock. The Company also issued warrants
to purchase 231,482 shares of common stock at an exercise price of $3.40 and
warrants to purchase 231,482 shares of common stock at an exercise price of
$4.40.  In addition, the Company paid a commission in the amount of $55,555
in cash proceeds as a finders fee

Working
capital has historically been provided from private placements, customer
deposits, and the Cornell Debenture. The Company has and will continue to be
dependent upon the deposits and progress payments from the sale of
distributorship agreements and the private sale of securities. It is anticipated
that our capital requirements for future periods will increase and our future
working capital needs will be obtained from the above sources as well as
additional private placements, demonstration and testing programs, joint
development programs, build own and operate facilities, and from cash generated
from the operations of our business.

The
Company believes that continuing operations for the longer term will be
supported primarily through anticipated growth in revenues and, if necessary,
through additional sales of the Companys securities. Management of the
Company is continuing its efforts to secure additional funds through equity
and/or debt instruments. If the Company is unable to raise sufficient additional
funds, it will have to develop and implement a plan to extend payables and
reduce overhead until sufficient additional capital is raised to support further
operations. There can be no assurance that such a plan will be successful. These
conditions raise substantial doubt about the Companys ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Item  3.
Qualitative and Quantitative Disclosures About Market Risk.

The
Company is primarily exposed to foreign currency risk, interest rate risk and
credit risk.

Foreign
Currency Risk We develop products in the United States and market our
products in North America, Japan, Europe, Asia, Africa, Middle East, South
America as well as other parts of the world. As a result, our financial results
could be affected by factors such as changes in foreign currency exchange rates
or weak economic conditions in foreign markets. Because a significant portion of
our revenues are currently denominated in U.S. dollars, a strengthening of the
dollar could make our products less competitive in foreign markets.

Interest
Rate Risk  Interest rate risk refers to fluctuations in the value of a
security resulting from changes in the general level of interest rates.
Investments that are classified as cash and cash equivalents have original
maturities of three months or less. Our interest income is sensitive to changes
in the general level of U.S. interest rates, particularly since the majority of
our investments are in short  term instruments. Due to the short-term
nature of our investments, we believe that there is not a material risk
exposure.

Credit
Risk  Our accounts receivables are subject, in the normal course of
business, to collection risks. We regularly assess these risks and have
established policies and business practices to protect against the adverse
effects of collection risks. As a result we do not anticipate any material
losses in this area.

15



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Item  4.
Controls and Procedures.

Disclosure
Controls and Procedures

The
Company maintains controls and procedures designed to ensure that it is able to
collect the information that is required to be disclosed in the reports filed
with the SEC, and to process, summarize and disclose this information within the
time period specified in the rules of the SEC. The Companys Chief
Executive and Chief Financial Officers are responsible for establishing,
maintaining and enhancing these procedures. They are also responsible, as
required by the rules established by the SEC, for the evaluation of the
effectiveness of these procedures.

Based
on their evaluation of the Companys disclosure controls and procedures
which took place as of the end of the period covered by this report, the Chief
Executive Officer and the Chief Financial Officer concluded that these
disclosure controls and procedures were not effective at the reasonable
assurance level. These controls ensure that the Company is able to
collect, process and disclose the information required in the reports that the
Company files with the SEC within the required time period.

Internal
Controls

The
Company maintains a system of internal controls designed to provide reasonable
assurance that transactions are executed in accordance with managements
general or specific authorization; transactions are recorded as necessary to (1)
permit preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America, and (2) maintain
accountability for assets. Access to assets is permitted only in accordance with
managements general or specific authorization.

It
is the responsibility of the Companys management to establish and maintain adequate
internal control over  financial reporting. However, due to its small size and limited
financial resources the Companys Chief  Financial Officer, a member of management,
has been the only full time employee principally involved in  accounting and financial
reporting. The Board of Directors has recognized that as a result, there is no  formal
segregation of duties within the accounting function, leaving management of all aspects
of financial  reporting and physical control of cash and equivalents in the hands of the
CFO. Based on the integrity and  trustworthiness of the Companys Chief Financial
Officer, the Board of Directors has had confidence  that there have been no
irregularities in the Companys financial reporting or in the protection  of its
assets.

Our
independent auditors have reported to our Board of Directors certain matters
involving internal controls that our independent auditors considered to be a
reportable conditions and material weaknesses, under standards established by
the Public Company Accounting Oversight Board. The first material weakness we
identified relates to our limited segregation of duties. Segregation of duties
within our company is limited due to the small number of employees that are
assigned to positions that involve the processing of financial information.
Although we are aware that segregation of duties within our company is limited,
we believe (based on our current roster of employees and certain control
mechanisms we have in place), that the risks associated with having limited
segregation of duties are currently insignificant. The second material weakness
we identified is in our ability to ensure that the accounting for our debt and
equity-based transactions is accurate and complete. In recent years we have
consummated a series of complex debt and equity transactions involving the
application of highly specialized accounting principles. Although we believe
that these events are unique to our Company, we are evaluating certain
corrective measures we may take including the possibility of hiring an outside
consultant to provide us with the guidance we need at such times that we may
engage in these complex transactions.

Given
these reportable conditions and material weaknesses, management devoted
additional resources to resolving questions that arose during the three month
period ending January 31, 2007. As a result, we are confident that our financial
statements for the three months ended January 31, 2007 fairly present, in all
material respects, our financial condition and results of operations. Management
does not believe that the above reportable conditions and material weaknesses
affected the results for the three months ended January 31, 2007 or any prior
period.

16



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There
were no significant changes in our internal controls over financial reporting
that occurred during the three months ended January 31, 2007 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

PART
II  OTHER INFORMATION

Item  1. Legal
Proceedings.

None.

Item 1A.
Risk Factors.

There
have been no material changes to the Companys risk factors as set forth in
its Annual Report on Form 10-K for the fiscal year ended October 31, 2006.

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

On
December 31, 2006, the Company issued 5,977 shares of common stock to its 401(k)
plan as a matching contribution. On February 12, 2007 the Company issued 271,339
to an investor for a conversion of a debenture that is outstanding

On
March 12, 2007 the Company issued 25,000 shares of Common Stock to a consultant
in connection with a private placement.

On
March 13, 2007, the Company received net proceeds of $500,002 from an investor
for the sale of 208,334 shares of common stock, the issuance of 208,334 warrants
exercisable at $3.40 per share and 208,334 shares of common stock exercisable at
$4.40 per share. In addition, the Company granted 20,834 shares of common stock,
warrants to purchase 20,834 shares of common stock at an exercise price of $3.40
and warrants to purchase 20,834 shares of common stock at an exercise price of
$4.40 to a placement agent in connection with this transaction.

On
March 16, 2007, the Company received net proceeds of $259,200 from an investor
for the sale of 108,000 shares of common stock. The Company also issued warrants
to purchase 108,000 shares of common stock at an exercise price of $3.40 and
warrants to purchase 108,000 shares of common stock at an exercise price of
$4.40.  In addition, the Company granted 12,000 shares of common stock,
warrants to purchase 12,000 shares of common stock at an exercise price of $3.40
and warrants to purchase 12,000 shares of common stock at an exercise price of
$4.40 to a placement agent in connection with this transaction.

On
March 22, 2007, the Company received net proceeds of $555,555 from an investor
for the sale of 231,482 shares of common stock. The Company also issued warrants
to purchase 231,482 shares of common stock at an exercise price of $3.40 and
warrants to purchase 231,482 shares of common stock at an exercise price of
$4.40.  In addition, the Company paid a commission in the amount of $55,555
in cash proceeds as a finders fee to a placement agent.

17



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Item  3.
Defaults Upon Senior Securities.

None.

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

None.

Item  5.
Other Information.

None

Item  6. Exhibits.

The
following exhibits are attached to this report or are incorporated by reference
herein.

|31.1 |  | Certificate
of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
|---- |  | ------------------------------------------------------------------------------------------------------

|31.2 |  | Certificate
of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
|---- |  | ------------------------------------------------------------------------------------------------------

|32.1 |  | Certification
of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
|---- |  | --------------------------------------------------------------------------------------------------------

|32.2 |  | Certification
of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
|---- |  | --------------------------------------------------------------------------------------------------------

__________

*    
Filed herewith

18



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SIGNATURES

Pursuant
to the requirements of the Securities and Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 26th day of March, 2007.

| | STARTECH
ENVIRONMENTAL CORPORATION(Registrant)
| | ----------------------------------------------

| | BY:   
/S/  Joseph F. Longo Joseph F. Longo Chairman, Chief Executive Officer, President and
Director
| | -----------------------------------------------------------------------------------------------------

| | BY:   
/S/  Peter J. Scanlon Peter J. Scanlon Chief Financial Officer, Secretary, Vice
President, and Principal Financial Officer
| | ---------------------------------------------------------------------------------------------------------------------------------

KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Joseph F. Longo and Peter J. Scanlon, or either of
them, his or her attorneys-in-fact, for such person in any and all capacities,
to sign any amendments to this report and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that either of said
attorneys-in-fact, or substitute or substitutes, may do or cause to be done by
virtue hereof.

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the Company and in the
capacities and on this 26th day of March 2007.

|SIGNATURES                 | TITLE
|-------------------------- | -----
|/s/   Joseph F. Longo      |      
|Joseph F. Longo            |      
|                           |      
|/s/   John J. Fitzpatrick  |      
|John J. Fitzpatrick        |      
|                           |      
|/s/   Joseph A. Equale     |      
|Joseph A. Equale           |      
|                           |      
|/s/   Chase P. Withrow III |      
|Chase P. Withrow III       |      
|                           |      
|/s/   L Scott Barnard      |      
|L Scott Barnard            |      
|                           |      
|                           |      

19