UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                  -------------


|X|  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended July 31, 2005


|_|  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. 0-25312

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

        Colorado                                       84-1286576
        --------                                       ----------
(State of incorporation)                 (I.R.S. Employer Identification Number)

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

                                 (203) 762-2499
                                 --------------
              (Registrant's telephone number, including area code)


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

     Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act). Yes |_| No |X|

     As of September 15, 2005, the registrant had outstanding 23,077,136 shares
of Common Stock.


<PAGE>

                       STARTECH ENVIRONMENTAL CORPORATION

                                TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION                                              PAGE
------------------------------                                              ----

Item 1.  Financial Statements (unaudited)

         Condensed consolidated balance sheets - July 31, 2005
         and October 31, 2004                                                3

         Condensed consolidated statements of operations for the
         three and nine months ended July 31, 2005 and 2004                  4

         Condensed consolidated statements of cash flows for the
         nine months ended July 31, 2005 and 2004                            5

         Notes to condensed consolidated financial statements               6-15

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                               16-23

Item 3.  Quantitative and Qualitative Disclosure about Market Risk          23

Item 4.  Controls and Procedures                                            24

PART II - OTHER INFORMATION
---------------------------

Item 1.  Legal Proceedings                                                  25
Item 2.  Changes in Securities and Use of Proceeds                          25
Item 3.  Defaults Upon Senior Securities                                    25
Item 4.  Submission of Matters to a Vote of Security Holders                25
Item 5.  Other Information                                                  25
Item 6.  Exhibits                                                           25
Signatures                                                                  26



<PAGE>
<TABLE>
<CAPTION>

                                  PART I - FINANCIAL INFORMATION
                                  ------------------------------
                                   ITEM 1. FINANCIAL STATEMENTS
                                STARTECH ENVIRONMENTAL CORPORATION
                               CONDENSED CONSOLIDATED BALANCE SHEETS
                                            (UNAUDITED)

ASSETS                                                                    July 31,       October 31,
                                                                            2005            2004
                                                                        ------------    ------------
                             Current assets:
<S>                                                                     <C>             <C>
         Cash and cash equivalents ..................................   $  1,331,701    $  2,401,061
         Notes receivable ...........................................        100,000          50,000
         Inventories ................................................        324,767         584,226
         Prepaid expenses ...........................................         15,000          15,000
         Other current assets .......................................          7,008           5,508
                                                                        ------------    ------------

                  Total current assets ..............................      1,778,476       3,055,795

         Property and equipment, net ................................      2,006,571       1,625,053

         Other assets ...............................................        276,420         276,420
                                                                        ------------    ------------

                  Total assets ......................................   $  4,061,467    $  4,957,268
                                                                        ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
                           Current liabilities:
         Accounts payable ...........................................   $    384,328    $    223,817
         Capital lease - short-term .................................            594           4,073
         Customer deposits and deferred revenue .....................      1,109,743         771,777
         Other accrued expenses .....................................        327,787         335,725
                                                                        ------------    ------------
                  Total current liabilities .........................      1,822,452       1,335,392
                  Long-term liability:
         Capital lease payable  net of current portion ..............              0             242
                                                                        ------------    ------------

                  Total liabilities .................................   $  1,822,452    $  1,335,634
                                                                        ------------    ------------

Commitments:

Stockholders' equity:
         Preferred stock, no par value, 10,000,000 shares authorized;
         none issued and outstanding ................................              0               0
         Common stock, no par value, 800,000,000 shares authorized;
         Shares issued and outstanding: 18,113,260 at July 31, 2005
         and 17,560,887 at October 31, 2004 .........................     23,858,729      22,442,333
         Additional paid-in capital .................................      1,742,745       1,742,745
         Accumulated deficit ........................................    (23,362,459)    (20,563,444)
                                                                        ------------    ------------
         Total stockholders' equity .................................      2,239,015       3,621,634
                                                                        ------------    ------------
                  Total liabilities and stockholders' equity ........   $  4,061,467    $  4,957,268
                                                                        ============    ============


              See accompanying notes to condensed consolidated financial statements.

                                              3
<PAGE>

                                    STARTECH ENVIRONMENTAL CORPORATION
                              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                (UNAUDITED)



                                         Three Months Ended   Three Months Ended   Nine Months Ended   Nine Months Ended
                                            July 31, 2005        July 31, 2004       July 31, 2005       July 31, 2004
                                            -------------        -------------       -------------       -------------

Revenue ..................................   $     96,064         $     68,576        $    162,034        $  1,629,196

Cost of sales ............................              0               31,250                   0             604,506
                                             ------------         ------------        ------------        ------------

Gross profit .............................         96,064               37,326             162,034           1,024,690
                                             ------------         ------------        ------------        ------------

Operating expenses
       Selling expenses ..................        253,024              234,070             690,178             673,703
       Research and development ..........         80,474               82,372             250,664             241,838
       General and administrative expenses        710,745              736,062           2,323,539           1,893,285
                                             ------------         ------------        ------------        ------------

Total operating expenses .................   $  1,044,243            1,052,504        $  3,264,381        $  2,808,826
                                             ------------         ------------        ------------        ------------

Loss from operations .....................       (948,179)          (1,015,178)         (3,102,347)         (1,784,136)
                                             ------------         ------------        ------------        ------------

Other income (expense):
Other income .............................        103,060                    0             307,052                   0
Interest income ..........................          5,303                8,077              16,668              22,599
Interest expense .........................            (29)                (309)               (221)             (1,486)
                                             ------------         ------------        ------------        ------------
Total other income .......................        108,334                7,768             323,499              21,113
                                             ------------         ------------        ------------        ------------


Loss before income taxes .................       (839,845)          (1,007,410)         (2,778,848)         (1,763,023)
                                             ------------         ------------        ------------        ------------

Income tax expense .......................          5,169                3,633              20,164               6,411
                                             ------------         ------------        ------------        ------------

Net loss .................................   $   (845,014)        $ (1,011,043)       $ (2,799,012)       $ (1,769,434)
                                             ============         ============        ============        ============


Basic and diluted net loss per share .....   $      (0.05)        $      (0.06)       $      (0.16)       $      (0.11)
                                             ============         ============        ============        ============

Weighted average common
shares outstanding .......................     17,919,337           17,505,736          17,858,828          16,710,763
                                             ============         ============        ============        ============


                  See accompanying notes to condensed consolidated financial statements.

                                                 4
<PAGE>

                            STARTECH ENVIRONMENTAL CORPORATION
                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (UNAUDITED)

                                                         Nine Months Ended   Nine Months Ended
                                                           July 31, 2005       July 31, 2004
                                                           -------------       -------------

Cash flows from operating activities:
Net loss                                                    $(2,799,012)        $(1,769,434)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation                                                    160,011             155,846
401K plan match made by the issuance of shares                   44,651              43,416
Common stock issued for services                                      0              42,000
(Increase) decrease in notes receivable                         (50,000)                  0
(Increase) decrease in inventories                                    0             (16,485)
(Increase) decrease in prepaid and other current assets          (1,500)             (3,917)
Increase (decrease) in accounts payable                         160,511              17,578
Increase (decrease) in customer deposits                        337,966            (688,591)
Increase (decrease) in accrued expense                           (7,938)            (38,744)
                                                            -----------         -----------

Net cash used in operating activities                        (2,155,311)         (2,258,331)
                                                            -----------         -----------

Cash flows used in investing activities:
Capital expenditures                                           (282,074)           (132,548)
                                                            -----------         -----------



Cash flows from financing activities:
Payment for capital leases                                       (3,721)            (13,634)
Proceeds from options, warrants and common stock issuance     1,371,746           2,751,570
                                                            -----------         -----------
Net cash provided by financing activities                     1,368,025           2,737,936
                                                            -----------         -----------

Net (decrease) increase in cash and cash equivalents         (1,069,360)            347,057
Cash and cash equivalents at beginning of period              2,401,061           2,601,558
                                                            -----------         -----------

Cash and cash equivalents at end of period                  $ 1,331,701         $ 2,948,615
                                                            ===========         ===========
Supplemental disclosure- taxes paid                         $    20,164         $     6,411
                                                            ===========         ===========


          See accompanying notes to condensed consolidated financial statements.

                                          5
</TABLE>
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 1. Basis of Presentation and Management Liquidity Plans
------------------------------------------------------------

Basis of Presentation - The accompanying unaudited condensed 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 which
contemplate continuation of the Company as a going concern. 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, 2004. Operating results for the nine months period ended July 31, 2005 are
not necessarily indicative of the results that may be expected for the fiscal
year ending October 31, 2005.

Management's Liquidity Plans - As of July 31, 2005, the Company had cash and
cash equivalents of $1,331,701 and working capital of $43,976. During the nine
months ended July 31, 2005, our cash decreased by $1,069,358. The decrease in
cash resulted primarily from the operations of the Company.

The Company has suffered significant recurring operating losses and needs to
raise additional capital in order to be able to accomplish its objectives. These
circumstances, if not rectified in the near future, raise substantial doubt
about the Company's ability to continue as a going concern.

The Company has historically satisfied its capital needs primarily by the sale
of equity securities. We are currently in discussions with several funding
sources to raise additional capital through the issuance of equity securities
(See Note 10).

On September 16, 2005 the Company entered into a Securities Purchase Agreement
and a Standby Equity Distribution Agreement with Cornell Capital Partners and
its affiliates (collectively referred to as "Cornell"). The Securities Purchase
Agreement provides for Cornell to purchase up to $2,300,000 of Secured
Convertible Debentures (the "Debentures") of which $1,150,000 is to be funded
within five business days of the agreement and the balance to be funded within
two days of the Company filing a registration statement with the Securities and
Exchange Commission ("SEC"). The Debentures, maturing September 2006, require
monthly payments of interest at a rate of 10% per annum and monthly principal
payments commencing January 2006. The Company can prepay the Debentures at
anytime with 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. The Debentures are secured by substantially all of the assets of
the Company and shares of the Company's common stock as discussed below.

The Securities Purchase Agreement requires the Company to file a registration
within 30 days of this agreement and to use its best efforts have the
registration statement declared effective by the SEC within 120 days. In the
event the registration statement is not filed or declared effective the Company
will be required to pay liquidated damages as defined under the agreement.

The Debentures are convertible by Cornell at any time at a conversion price of
$1.84 per share of common stock that may be adjusted. This will result in a
beneficial conversion feature and will be amortized to interest expense through
the maturity date of the Debentures.

In connection with the issuance of the Debentures, the Company will issue to
Cornell warrants to purchase 650,000 shares of the Company's common stock for a
period of three years with an exercise price of $2.53. A portion of the proceeds
received will be allocated to the fair value of the warrants that will result in
a discount to the face value of the debentures. This discount will be amortized
to interest expense through the maturity date of the Debentures.

The Company has agreed to pay a fee equal to 10% of the purchase price and
structuring fees equal to $30,000. These fees will be recorded as deferred
financing costs and charged to interest expense through the maturity date of the
Debentures.

                                       6
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


To secure full payment under the securities purchase agreement the Company has
agreed to pledge 3,600,000 of its shares and the president of the Company has
agreed to pledge 900,000 of his personal shares. Such shares are to be held in
escrow.

The purchase price of the Debentures is to be held in escrow until satisfaction
of the terms and conditions of the Securities Purchase Agreement.

The Standby Equity Distribution Agreement ("Agreement") 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 million.
The Company will issue to Cornell 386,956 of the Company's common stock as a fee
for entering into the Agreement and will issue 4,348 shares to the placement
agent. Cornell is to receive a fee equal to 5% of each advance and structuring
and due diligence fess aggregating $25,000.

The amount of capital available under the equity line of credit is not dependent
on the price or volume of the Company's common stock. Cornell may not own more
than 9.9% of the outstanding common stock at any time.

In addition to the proceeds from equity securities, management plans to reduce
its cash outflows during 2005 by implementing reductions of administrative
overhead expenses where necessary and feasible while continuing to emphasize its
sales and marketing efforts. There are currently several near-term sales
opportunities that are in the final stages of closure, and these sales, in
addition to the three implemented distributorship agreements, would add
significantly to a positive cash flow.

There is no assurance that financing will be available when needed or that
management will be able to obtain financing on terms acceptable to the Company
and whether the Company will be able to turn into a profitable position and
generate positive operating cash flow. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

Note 1a. Inventories
--------------------

Inventories consist of raw materials and work in process, and are stated at
lower of cost or market. Cost is determined by the first-in, first-out method.
Inventory consists of the following at July 31, 2005 and October 31, 2004:

                                               July 31, 2005       Oct. 31, 2004
                                               -------------       -------------

Raw materials                                     $324,767            $324,766
Work in process                                          0             259,460
                                                  --------            --------
Total inventory                                   $324,767            $584,226
                                                  ========            ========


The work in process inventory was reclassified to construction in progress
during January 2005.


Note 1b. Notes Receivable
-------------------------

On March 2, 2005 a promissory note was executed with Ercole Marelli HiTech Srt,
of Italy for $200,000 in connection with the sale of a distributor agreement.
The first payment of $100,000 was received on May 31, 2005 and the remaining
$100,000 payment is currently due.

                                       7
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 2. Capital Lease Obligation
--------------------------------

The Company has entered into capital lease obligations for computer equipment.
The term of the leases range from 36 to 48 months, with principal and interest
due in aggregate monthly installments of $860 at interest rates ranging from
13.75% to 16.98%. The equipment was capitalized at $19,503 and is being
depreciated over five years. Depreciation expense for the nine months ended July
31, 2005 was $2,925.


Note 3. Equity Transactions
---------------------------

Loss per Share

Diluted earnings per share is computed using the weighted average number of
shares of common stock outstanding during the period, plus the dilutive effect
of potential future issuances of common stock relating to stock option programs
and other potentially dilutive securities. In calculating diluted earnings per
share, the dilutive effect of stock options is computed using the average market
price for the period. Shares related to the Company's outstanding stock options
and warrants were excluded because they were not dilutive; however, these shares
could be dilutive in the future.

At July 31, 2005, there were approximately 4.2 million shares of common stock
potentially issuable with respect to stock options and warrants, which could
dilute basic earnings per share in the future.

Stock Options

At July 31, 2005, we had two stock-based employee compensation plans, which are
described more fully in Note 7. We have adopted the disclosure provisions
allowed by Statement of Financial Accounting Standards ("SFAS") No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure -- An
Amendment of FASB Statement No. 123." In addition, we have elected to continue
using the intrinsic value method to measure the compensation costs of
stock-based awards granted to employees in accordance with Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees"; as a
result, we recognize compensation expense for employee stock options granted at
a price less than the market value of our common stock on the date of grant. The
following table illustrates the effect on net loss and net loss per share had
stock-based employee compensation been recorded based on the fair value method
under SFAS No. 123.










                                        8
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 3. Equity Transactions (Cont'd)
------------------------------------
<TABLE>
<CAPTION>

                                                   Three Months   Three Months    Nine Months    Nine Months
                                                       Ended          Ended          Ended          Ended
                                                   July 31, 2005  July 31, 2004  July 31, 2005  July 31, 2004
                                                   -------------  -------------  -------------  -------------
<S>                                                 <C>            <C>            <C>            <C>
Net loss, as reported                               $  (845,014)   $(1,011,043)   $(2,799,012)   $(1,769,434)

Less: stock-based employee compensation                       0       (397,238)       (48,900)      (437,642)
                                                    -----------    -----------    -----------    -----------
expense determined under the fair
value-based method

Pro forma net loss                                     (845,014)    (1,408,281)    (2,847,912)    (2,207,076)
                                                    ===========    ===========    ===========    ===========

Basic and Diluted net loss per share, as reported   $      (.05)   $      (.06)   $      (.16)   $      (.11)
                                                    ===========    ===========    ===========    ===========

Pro forma Basic and Diluted net loss per share      $      (.05)   $      (.08)   $      (.16)   $      (.13)
                                                    ===========    ===========    ===========    ===========
</TABLE>

Option valuation models require highly subjective assumptions, including the
expected stock price volatility, which may be significantly different from those
of traded options. Because changes in subjective assumptions can materially
affect the fair value estimate, it is the opinion of management that the
existing models do not necessarily provide a reliable single measure of the fair
value of stock-based awards. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options, which have no
vesting restrictions and are fully transferable. The pro forma stock-based
employee compensation was estimated using the Black-Scholes option pricing model
with the following weighted average assumptions for each year:



                                                  2005              2004
                                                  ----              ----
     Risk-free interest rate                      4.20%             4.60%
     Expected life of options - years             10.00             10.00
     Expected stock price volatility               52%              123%
     Expected dividend yield                       N/A               N/A

Warrants

There were 512,869 warrants issued during the nine months ended July 31, 2005.
There were 10,577 shares exercised during the nine months ended July 31, 2005,
with gross proceeds from the exercise of warrants at $3.34 per share totaling
$35,327.


                                        9
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Private Placements
------------------

There were 512,872 shares issued during the nine months ended July 31, 2005,
with gross proceeds for the private placements totaling $1,329,009, including
costs of $14,640. Additionally there were 308,094 warrants issued that will
expire on various dates through June, 2008 with exercise prices ranging between
$4.57 and $8.57 per share..


Options
-------

For the nine months ended July 31, 2005, 15,000 options were exercised for gross
proceeds of $22,050.


Note 4. Cash Flow
-----------------

During the nine months ended July 31, 2005 and 2004, the Company had non-cash
transactions. The following is a listing of these transactions and the dollar
value of these transactions.

Nine months ended:                                July 31, 2005   July 31, 2004
------------------                                -------------   -------------
Non-cash financing activity;
Series "A" convertible preferred stock
  converted to common stock                          $      0       $ 26,453
401(k) plan match                                      44,651         43,416
Non-cash Investing activity;
Reclassification of inventories to
  property & equipment                                259,460              0
Common stock issued for services                            0         42,000


Note 5. Revenue Recognition
---------------------------

The Company recognizes revenue on the sale of its manufactured products at the
date of shipment. Revenues earned from consulting and design services are
recognized when the services are completed. For distributorship agreements,
revenue is recognized for services and training upon completion and the
distribution rights are amortized over a three year period. During the nine
months and the three months ended July 31, 2005, revenues totaling $162,034 and
$96,064 respectively, were recognized representing two separate distributorship
agreements. Revenue for the nine months and the three months ended July 31, 2004
were from the sale of parts to one customer.


Note 6. Employee Benefits Plan
------------------------------

Contributions for the three months ended July 31, 2005 were $18,715, which
represents the issuance of approximately 6,344 shares of our common stock.
Contributions for the nine months ended July 31, 2005 were $44,651, which
represents the issuance of approximately 13,924 shares of our common stock.


Note 7. Stockholders' Equity
----------------------------

Stock Options

1995 Stock Option Plan

In November 1995, the Company registered with the Securities and Exchange
Commission 2,000,000 shares of common stock, issuable upon exercise of stock
options granted by the Company under its 1995 Non-qualifying Stock Option Plan
(the "1995 Plan") to employees, directors and other persons associated with the
Company whose services have benefited the Company. The options must be issued
within 10 years from November 20, 1995. Determination of the option price per
share and exercise date is at the sole discretion of the compensation committee
of the Company's board of directors.

                                       10
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 7. Stockholders Equity (Cont'd)
------------------------------------

During the fiscal years ended October 31, 2004, 2003 and 2002, the Company
granted 0, 0 and 10,000 stock options, respectively. The options have an
exercise price of $3.38 per share. On the grant dates, the market value was the
same as the exercise price; therefore, no compensation expense was recorded. As
of July 31, 2005, 8,089 options were available to be granted under the 1995
Plan. As of July 31, 2005 there were 1,207,500 options outstanding, all of which
were exercisable and vested.

                         Options outstanding - 1995 Plan

                              Fiscal Year Ended October 31,          Nine Months
                                                                        Ended
                         2001       2002        2003        2004       7/31/05
                      ---------   ---------   ---------   ---------   ---------
Options granted            --        10,000           0           0           0
Options cancelled          --             0           0           0           0
Options exercised          --             0           0           0           0
                      ---------   ---------   ---------   ---------   ---------
Total outstanding     1,197,500   1,207,500   1,207,500   1,207,500   1,207,500
                      =========   =========   =========   =========   =========


2000 Stock Option Plan

The Company's 2000 Stock Option Plan (the "2000 Plan") was adopted by the board
of directors in January 2000 and was approved by the stockholders in February
2000. The 2000 Plan authorizes the issuance of up to 1,000,000 shares of the
Company's common stock. The 2000 Plan provides for the grant of incentive stock
options intended to qualify under Section 422 of the Internal Revenue Code and
non-statutory stock options. Officers, directors, employees and consultants, and
employees and consultants of the Company's majority-owned affiliated companies,
are eligible to receive awards under the 2000 Plan.

The options may be granted at an exercise price greater than or equal to the
fair market value of the Company's common stock on the date of grant or not less
than 110% of the fair market value in the case of incentive stock options
granted to persons holding more than 10% of the voting power of the Company.
Fair market value for purposes of the 2000 Plan is the closing market price of
the Company's common stock on the relevant date.

During the nine months ended July 31, 2005, there were 30,000 options granted
under the 2000 Plan at an average exercise price of $3.30 per share and 15,000
options were exercised at an average exercise price of $1.47 per share. During
the fiscal year ended October 31, 2004, 130,000 options were granted at an
average exercise price of $3.98 per share and no options were cancelled. During
the fiscal year ended October 31, 2004, 152,000 options were exercised at an
average price of $1.81. On the issuance dates, the market value was the same as
the exercise price; therefore, no compensation expense was recorded. As of July
31, 2005, 290,000 options were available to be granted. A total of 537,000
options under the 2000 Plan have been granted at an average exercise price of
$3.77 per share.

                         Options outstanding - 2000 Plan

                               Fiscal Year Ended October 31,         Nine months
                                                                        Ended
                          2001       2002       2003        2004       7/31/05
                        --------   --------   --------    --------    --------
Options granted             --      277,000    100,000     130,000     105,000
Options cancelled           --            0    (20,000)          0           0
Options exercised           --            0          0    (152,000)    (15,000)
                        --------   --------   --------    --------    --------
Total outstanding              0    277,000    357,000     335,000     425,000
                        ========   ========   ========    ========    ========


                                       11
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 7. Stockholders Equity (Cont'd)
------------------------------------

2000 Compensation Plan

At July 31, 2005, there were 416,089 shares of common stock reserved for
issuance upon the exercise of outstanding options and 408,000 shares available
for grant of options under the 2000 Compensation Plan. For the nine months ended
July 31, 2005 the Company granted a total of 105,000 options to directors under
the 2000 Compensation Plan.

The 2000 Compensation Plan is administered by the Compensation Committee of our
board of directors. The Compensation Committee has the authority to adopt, amend
and repeal the administrative rules, guidelines and practices relating to the
2000 Compensation Plan and to interpret its provisions. The Compensation
Committee selects the recipients of awards and determines the number of shares
of common stock covered by the options and the dates upon which the options
become exercisable and terminate, subject to provisions of the 2000 Compensation
Plan. Incentive stock options must terminate within ten years of the grant.
Non-statutory options must terminate within fifteen years of the date of grant.
The Compensation Committee has the right to alter the terms of any option when
granted or while outstanding, pursuant to the terms of the 2000 Compensation
Plan, except the option price.

All options automatically become exercisable in full in the event of a change in
control, as defined in the 2000 Compensation Plan, death or disability of the
option holder or as decided by the Compensation Committee. Upon retirement,
options held for at least one year prior thereto become exercisable in full. If
an option holder's employment with us is terminated for any reason, except upon
death, disability or retirement, the option holder has three months in which to
exercise an option, but only to the extent exercisable immediately after
termination, unless the option by its terms expires earlier. Termination or
other changes in employment status may affect the exercise period.


Note 8. Commitments
-------------------

License Agreement

Startech has a licensing agreement for the development, hardware manufacture and
technology exploitation within the waste and non-waste industry application for
Hydrogen Selective Membranes. This agreement provides for the exclusive right to
utilize this Hydrogen Selective Membrane technology for all applications in the
principles of plasma arc technology. This agreement was effective July 8, 2001
and extends for a period of 20 years.

DOE Grant

Startech has 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 was initiated in October 2004 and is scheduled to be
completed by September 2005. 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 nine months and the three months ended July
31, 2005 the Company received $307,051 and $103,060 respectively.


                                       12
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 9. Recently Issued Accounting Standards
--------------------------------------------

In January 2003, Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
This interpretation of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements," provides guidance for identifying a controlling interest
in a variable interest entity ("VIE") established by means other than voting
interest. FIN 46 also required consolidation of a VIE by an enterprise that
holds such controlling interest. In December 2003, the FASB completed its
deliberations regarding the proposed modifications to FIN 46 and issued
Interpretation Number 46R, "Consolidation of Variable Interest Entities - an
Interpretation of ARB 51" ("FIN 46 R"). The decisions reached included a
deferral of the effective date and provisions for additional scope exceptions
for certain types of variable interests. Application of FIN 46R is required in
financial statements of public entities that have interests in VIEs or potential
VIEs commonly referred to as special-purpose entities for periods ending after
March 2004. Adoption of this pronouncement did not have a material impact on our
consolidated financial statements.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment
of ARB No. 43, Chapter 4," which adopts wording from the IASB IAS No. 2
"Inventories" in an effort to improve the comparability of cross-border
financial reporting. The FASB and IASB both believe the standards have the same
intent; however, an amendment to the wording was adopted to avoid inconsistent
application. The new standard indicates that abnormal freight, handling costs,
and wasted materials (spoilage) are required to be treated as current period
charges rather than as a portion of inventory cost. Additionally, the standard
clarifies that fixed production overhead should be allocated based on the normal
capacity of a production facility. The statement is effective for the Company
beginning in fiscal year 2007. Adoption of this pronouncement is not expected to
have a material impact on our consolidated earnings.

In December 2004, the FASB issued SFAS No. 123R "Share Based Payment". This
statement is a revision of SFAS Statement No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and its related implementation guidance. SFAS 123R addresses all
forms of share based payment ("SBP") awards including shares issued under
employee stock purchase plans, stock options, restricted stock and stock
appreciation rights. Under SFAS 123R, SBP awards result in a cost that will be
measured at fair value on the awards' grant date, based on the estimated number
of awards that are expected to vest. This statement is effective for public
entities as of the beginning of the Company's interim reporting period that
begins on July 1, 2005. The transitional provisions of SFAS No. 123R will not
have a material effect on the Company's consolidated financial position or
results of operations as substantially all outstanding equity instruments vest
on or prior to June 30, 2005. The Company will utilize the fair value method for
any future instruments after the implementation date.

In December 2004, the FASB issued SFAS No. 153 "Exchanges of Nonmonetary
Assets". This Statement amends Opinion 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The provisions of this Statement are effective for nonmonetary
asset exchanges occurring in fiscal periods beginning after June 15, 2005.
Earlier application is permitted for nonmonetary asset exchanges occurring in
fiscal periods beginning after December 16, 2004. The provisions of this
Statement should be applied prospectively. The adoption of this pronouncement is
not expected to have material effect on the Company's financial statements.

                                       13
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Note 10. Subsequent Events
--------------------------

On August 11, 2005 the Company received $187,875 from Nutmeg Environmental LP in
exchange for 92,572 shares of common stock at a price of $2.03 which equaled a
discount of 21% to the market value. Additionally an equivalent number of three
year warrants were granted as follows: one-third of the warrants issued were
granted at an exercise price $4.03 per share; one-third granted at an exercise
price of $6.03 per share; and one-third granted at an exercise price $8.03 per
share.

On September 16, 2005 the Company entered into a Securities Purchase Agreement
and a Standby Equity Distribution Agreement with Cornell Capital Partners and
its affiliates (collectively referred to as "Cornell"). The Securities Purchase
Agreement provides for Cornell to purchase up to $2,300,000 of Secured
Convertible Debentures (the "Debentures") of which $1,150,000 was funded on
September 16, 2005 and the balance to be funded within two days of the Company
filing a registration statement with the Securities and Exchange Commission
("SEC"). The Debentures, maturing September 2006, require monthly payments of
interest at a rate of 10% per annum and monthly principal payments commencing
January 2006. The Company can prepay the Debentures at anytime with 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. The
Debentures are secured by substantially all of the assets of the Company and
shares of the Company's common stock as discussed below.

The Securities Purchase Agreement requires the Company to file a registration
within 30 days of September 16, 2005 and to use its best efforts have the
registration statement declared effective by the SEC within 120 days. In the
event the registration statement is not filed or declared effective the Company
will be required to pay liquidated damages as defined under the agreement.

The Debentures are convertible by Cornell at any time at an initial conversion
price of $1.84 per share of common stock that may be adjusted. This will result
in a beneficial conversion feature and will be amortized to interest expense
through the maturity date of the Debentures.

In connection with the issuance of the Debentures, the Company will issue to
Cornell warrants to purchase 650,000 shares of the Company's common stock for a
period of three years with an exercise price of $2.53. A portion of the proceeds
received will be allocated to the fair value of the warrants that will result in
a discount to the face value of the debentures. This discount will be amortized
to interest expense through the maturity date of the Debentures.

The Company has agreed to pay a fee to Cornell equal to 10% of the purchase
price and structuring fees equal to $30,000. These fees will be recorded as
deferred financing costs and charged to interest expense through the maturity
date of the Debentures.

To secure full payment under the securities purchase agreement the Company has
agreed to pledge 3,600,000 of its shares and the president of the Company has
agreed to pledge 900,000 of his personal shares. Such shares are to be held in
escrow.

The purchase price of the Debentures is to be held in escrow until satisfaction
of the terms and conditions of the Securities Purchase Agreement.

The Standby Equity Distribution Agreement ("Agreement") 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 million.
The Company will issue to Cornell 386,956 of the Company's common stock as a fee
for entering into the Agreement and will issue 4,348 shares to the placement
agent. Cornell is to receive a fee equal to 5% of each advance and structuring
and due diligence fess aggregating $25,000.

The amount of capital available under the equity line of credit is not dependent
on the price or volume of the Company's common stock. Cornell may not own more
than 9.9% of the outstanding common stock at any time.

                                       14
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


On September 1, 2005 the Company reached an agreement with its chief financial
officer ("CFO") that provides for additional compensation equal to $6,000 per
month through December 2005 and a severance package based on years of service.
The agreement also granted the CFO 30,000 options at an exercise price equal to
the closing price of the Company's common stock on August 31, 2005. The options
vest in various increments through January 30, 2007.








                                       15
<PAGE>

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(TM) 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)(TM) 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 nonhazardous 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 (TM) hydrogen separation technology. Working in conjunction
with our core product, the Plasma Converter(TM), StarCell(TM) 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.

                                       16
<PAGE>

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 and 2004
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 (TM) 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.

                                       17
<PAGE>

Recent Developments

The following provides updates to certain projects and other events that have
transpired since those announced in the Company's report on form 10Q for the
quarter ended April 30, 2005 and current report on Form 8K as filed with the SEC
on August 13, 2005.

Mihama Japan  -

Mihama and Toshiba are working together to re-commission the Startech Plasma
Converter System that was formerly located and formerly processing hazardous MSW
(Municipal Solid Waste) incinerator ash successfully in Fukuoka. The System has
been moved and the re-commissioning is taking place in the new Kobe facility.
We are assisting Mihama and Toshiba in Kobe now.

The report is that the new processing building has been completed, and that the
System will be back on-line in December '05. The new processing facility will be
central to Mihama's sales and marketing initiatives in Japan. Mihama is a
Startech Distributor.

Mihama will also be processing PCBs (Polychlorinated Byphenyls) in its new Kobe
facility. PCBs are a very hazardous waste stream.

EXIM Bank

The Startech Plasma Converter System (U.S.made capital equipment and
environmental equipment) has been qualified by the Export-Import Bank for EXIM
financing. The financing is for foreign credit-worthy customers only.

The normal procedure is that a bank (U.S. or foreign lender bank) will provide
the loans to a buyer for the purchase of the equipment whose payments to the
lender-bank will be guaranteed by the EXIM bank. The financing program is
available to public sector entities as well as to private sector entities.

Delay in receipt of Ercole Marelli Contract -

On June 29, 2005, Startech Environmental Corporation issued a press release
announcing that it signed a contract with Ercole Marelli HiTech srl (EMHT), a
distributor in Milan, Italy for a total of $47 million for the sale of multiple
Plasma Converter Systems for diverse industrial applications and in connection
therewith, that receipt of the initial contract payments were expected by July
29, 2005. The Company has not yet received the initial contract payment. This
delay has been caused by an additional modification to the scope of the original
contact. Finalization of the contract is expected shortly

CAFTA

The Central America-Dominican Republic-United States Free Trade Agreement, often
called The Central America Free Trade Agreement (CAFTA), passed the House of
Representatives on July 27, 2005. The Company believes CAFTA will be helpful to
its sales efforts. The Central America Nations included are Costa Rica, El
Salvador, Honduras, Guatemala, Nicaragua and also the Dominican Republic.
Startech has contracts in discussion and in active development in some of these
countries now. The Agreement eliminates tax and tariff barriers on many American
exports, especially on infrastructure and environmental capital equipment, as
best we can tell at the moment

                                       18
<PAGE>

The Agreement also provides for financing from the World Bank and the Inter
America Development Bank. The Export-Import Bank of the United States (EXIM
Bank) is now providing export financing on repayment terms of up to 15 years on
U.S.-made environmental capital equipment such as Startech Plasma Converter
Systems. Effective July 1st, the longer repayment terms became available in
accord with the agreement of the Organization for Economic Cooperation and
Development (OECD).

Collectively, CAFTA-DR is the second largest U.S. export market in Latin America
and the 13th largest export market worldwide. Significantly, it is a larger
market than Russia, India and Indonesia combined.

News Release on the DoE program

On August 3, 2005, the Company announced that Phase One of the Company's
StarCell(TM) contract with the Department of Energy (DOE) to demonstrate the
production of hydrogen from Municipal Solid Waste (MSW), and also coal,
processed through the Plasma Converter System(TM) is near successful completion.
The Company has received an approval for the additional $500,000 for Phase Two
of the Program to continue the demonstrations and development for optimization
and scale-up. The work for Phase Two has begun.

The Energy Bill becomes law

On August 8, 2005, President Bush signed The Energy Bill (Energy Policy Act of
2005) into law. The Bill includes $1.9 billion for fuel cell and
hydrogen-related research and development, $1.3 billion for programs that
demonstrate those technologies and $450 million for federal and state government
purchases of fuel cell products.

It also provides money for research and the development of technologies to
extract clean energy from coal

On August 3, 2005, we issued a news release that announced our second-phase
contract with the Department of Energy for further demonstrations and scale-up
of the Startech Hydrogen-From-Waste Program. Our Program also includes hydrogen
from coal.

The Company believes the Energy Bill has many aspects that will be significant
and advantageous to the Company.





                                       19
<PAGE>

Results of Operations

Comparison of three months ended July 31, 2005 and 2004

Revenues. Total revenues were $96,064 for the three months ended July 31, 2005,
as compared to $68,576 for the same period in 2004, a increase of $27,488. For
the three months ending July 31, 2005 a portion of the distributorship
agreements were recognized as revenue. 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. The revenue for the three months ending July
31, 2004 was related to upgrades and spare parts that were shipped to Mihama,
located in Japan, such aspects of the Company's business has not reoccurred in
fiscal 2005

Gross Profit. Gross profit was $96,064 for the three months ended July 31, 2005,
compared to a gross profit of $37,326 in the same period in 2004, or an increase
of $58,738 from the same period in 2004 or 157.4%. Gross margins were directly
impacted due to the revenue recognized from the distributorship agreements.

Selling Expenses. Selling expenses for the three months ended July 31, 2005 were
$253,024, an increase of $18,954, or 8.1%, for the same period in 2004. Selling
expenses increased as a result of higher marketing activity.

Research and Development Expenses. Research and development expenses for the
three months ended July 31, 2005 were $80,474, a decrease $1,898 or 2.3%, for
the same period in 2004. This decrease was related to a decrease in travel
expense.

General and Administrative Expenses. General and administrative expenses for the
three months ended July 31, 2005 were $710,745, compared to $736,062 for the
same period in 2004, a decrease of $25,317 or 3.4%, from the same period in
2004. This decrease was related to lower officer salaries and lower consulting
activity.

Interest Income. Interest income for the three months ended July 31, 2005 was
$5,303, compared to $8,077 in the same period in 2004, a decrease of 34.3%. The
decrease is due to lower average cash balances.

Income Taxes. During the three months ended July 31, 2005, corporate income
taxes were $5,169, as compared to $3,633 in the same period 2004. We have
minimal tax obligations due to the fact that we have not yet been profitable.
These taxes represent the state tax on capital.




                                       20
<PAGE>

Results of Operations

Comparison of nine months ended July 31, 2005 and 2004

Revenues. Total revenues were $162,034 for the nine months ended July 31, 2005,
as compared to $1,629,196 for the same period in 2004, a decrease of $1,467,162.
For the nine months ending July 31, 2005 a portion of the distributorship
agreements were recognized as revenue. 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 The revenue for the nine months ending July 31,
2004 was related to upgrades and spare parts that were shipped to Mihama,
located in Japan. Such aspects of the Company's business has not reoccurred in
fiscal 2005.

Gross Profit. Gross profit was $162,034 for the nine months ended July 31, 2005,
compared to a gross profit of $1,024,690 in the same period in 2004, or a
decrease of $862,656 from the same period in 2004 or 84.2%. Gross profit was
directly impacted due to the sale of upgrades and spare parts in fiscal 2004.

Selling Expenses. Selling expenses for the nine months ended July 31, 2005 were
$690,178, an increase of $16,475, or 2.4%, for the same period in 2004. Selling
expenses increased as a result of increased marketing activity.

Research and Development Expenses. Research and development expenses for the
nine months ended July 31, 2005 were $250,664, an increase $8,826 or 3.6%, for
the same period in 2004. This increase was related to analysis of DOE test
programs.

General and Administrative Expenses. General and administrative expenses for the
nine months ended July 31, 2005 were $2,323,539, compared to $1,893,285 for the
same period in 2004, an increase of $430,254 or 18.5%, from the same period in
2004. This increase was related to higher auditing and accounting related
expenses, increased outside legal expenses, annual meeting expenses, and higher
public relations expenses.

Interest Income. Interest income for the nine months ended July 31, 2005 was
$16,668, compared to $22,599 in the same period in 2004, a decrease of 26.2%.
The decrease is due to lower average cash balances.

Income Taxes. During the nine months ended July 31, 2005, corporate income taxes
were $20,164, as compared to $6,411 in the same period 2004. We have minimal tax
obligations due to the fact that we have not yet been profitable. These taxes
represent the state tax on capital.





                                       21
<PAGE>

Liquidity and Capital Resources
-------------------------------

As of July 31, 2005, we had cash and cash equivalents of $1,331,701 and working
capital of $43,976. During the nine months ended July 31, 2005, our cash
decreased by $1,069,360 which were directly related to the following three areas
- Operational needs ($2.1) million, Capital expenditures ($.3) million offset by
common stock issuances $1.4 million.

The Company has historically satisfied its capital needs primarily by 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.

On September 16, 2005 the Company entered into a Securities Purchase Agreement
and a Standby Equity Distribution Agreement with Cornell Capital Partners and
its affiliates (collectively referred to as "Cornell"). The Securities Purchase
Agreement provides for Cornell to purchase up to $2,300,000 of Secured
Convertible Debentures (the "Debentures") of which $1,150,000 was funded on
September 16, 2005 and the balance to be funded within two days of the Company
filing a registration statement with the Securities and Exchange Commission
("SEC"). The Debentures, maturing September 2006, require monthly payments of
interest at a rate of 10% per annum and monthly principal payments commencing
January 2006. The Company can prepay the Debentures at anytime with 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. The
Debentures are secured by substantially all of the assets of the Company and
shares of the Company's common stock as discussed below.

The Securities Purchase Agreement requires the Company to file a registration
within 30 days of September 16, 2005 and to use its best efforts have the
registration statement declared effective by the SEC within 120 days. In the
event the registration statement is not filed or declared effective the Company
will be required to pay liquidated damages as defined under the agreement.

The Debentures are convertible by Cornell at any time at an initial conversion
price of $1.84 per share of common stock that may be adjusted. This will result
in a beneficial conversion feature and will be amortized to interest expense
through the maturity date of the Debentures.

In connection with the issuance of the Debentures, the Company will issue to
Cornell warrants to purchase 650,000 shares of the Company's common stock for a
period of three years with an exercise price of $2.53. A portion of the proceeds
received will be allocated to the fair value of the warrants that will result in
a discount to the face value of the debentures. This discount will be amortized
to interest expense through the maturity date of the Debentures.

The Company has agreed to pay Cornell a fee equal to 10% of the purchase price
and structuring fees equal to $30,000. These fees will be recorded as deferred
financing costs and charged to interest expense through the maturity date of the
Debentures.

To secure full payment under the securities purchase agreement the Company has
agreed to pledge 3,600,000 of its common shares and the President of the Company
has agreed to pledge 900,000 of his personal common shares. Such common shares
are to be held in escrow.

The purchase price of the Debentures is to be held in escrow until satisfaction
of the terms and conditions of the Securities Purchase Agreement.

The Standby Equity Distribution Agreement ("Agreement") 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 million.
The Company will issue to Cornell 386,956 of the Company's common stock as a fee
for entering into the Agreement and will issue 4,348 shares to the placement
agent. Cornell is to receive a fee equal to 5% of each advance and structuring
and due diligence fess aggregating $25,000.

                                       22
<PAGE>

The amount of capital available under the equity line of credit is not dependent
on the price or volume of the Company's common stock. Cornell may not own more
than 9.9% of the outstanding common stock at any time.

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.

Our investing activities have consisted primarily of short-term, high quality
liquid investments, with maturities of three months or less when purchased,
which are considered cash equivalents. The primary investments are high quality
commercial paper, U.S. treasury notes and Treasury-bills. Unrealized gains and
losses were not material during the quarter ended July 31, 2005 and 2004. No
realized gains or losses were recorded during the quarter ended July 31, 2005 or
2004.


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.





                                       23
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

The Company's principal executive officer and principal financial officer have
evaluated the effectiveness of the Company's "disclosure controls and
procedures," as such term is defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended, as of the end of the period covered by this
Quarterly Report on Form 10-Q. The evaluation process, including the inherent
limitations on the effectiveness of such controls and procedures is more fully
discussed in the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 2004. Based upon their evaluation, the principal executive officer
and principal financial officer concluded that the Company's disclosure controls
and procedures contained a material weakness.

This material weakness is the lack of the necessary corporate accounting
resources. This has led to a dependence on our Chief Financial Officer, the loss
of whom could impair our ability to ensure consistently complete and accurate
financial reporting, as well as disclosure controls and procedures. In order to
correct this deficiency, we are seeking to hire additional competent personnel
to assist in the segregation of duties with respect to financial reporting, and
with Section 404 of the Sarbanes-Oxley Act of 2002.

We believe that for the reasons described above we will be able to improve our
financial reporting and disclosure controls and procedures and remedy the
material weakness identified above. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, will be or have been
detected.

There were no significant changes in our internal controls over financial
reporting that occurred during the quarter ended July 31, 2005 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.





                                       24
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDING.

None.

ITEM 2. CHANGES IN SECURITES AND USE OF PROCEEDS.

On May 26, 2005 and June 29, 2005, the Company issued 101,010 shares of common
stock and 96,154 shares of common stock, respectively, to Financial Alchemy in
exchange for gross proceeds of $200,000 and $200,000, respectively, together
with an equivalent number of warrants to purchase shares of common stock. The
warrant terms are for 101,010 common shares that will expire on May 26, 2008 are
as follows a equal third of the warrants granted have a grant price of $4.5 per
share another equal third of the warrants granted have a grant price of $6.50
per share and a equal third of the warrants granted have a grant price of $8.5
per share. The warrant terms for 96,154 shares of common stock that will expire
on June 29, 2008 and a equal third of the warrants granted have a grant price of
$4.63 per share another equal third of the warrants granted have a grant price
of $6.63 per share and a equal third of the warrants granted have a grant price
of $8.63 per share. Each transaction was exempt from registration under Section
4(2) of the Securities Act of 1933, as amended.

On June 7, 2005, the Company issued 25,000 shares of common stock to Bob Vujea
Revocable Trust in exchange for gross proceeds of $57,500, together with an
equivalent number of warrants to purchase shares of common stock,. Additionally
25,000 warrants were granted at a price of $3.20 per share and will expire on
June 07, 2008. This transaction was exempt from registration under Section 4(2)
of the Securities Act of 1933, as amended.

On June 10, 2005, the Company issued 15,000 shares of common stock to Petr Lisa
in exchange for gross proceeds of $27,750, together with an equivalent number of
warrants to purchase shares of common stock, Additionally 15,000 warrants were
granted at a price of $3.31 per share and will expire on June 10, 2008. This
transaction exempt from registration under Section 4(2) of the Securities Act of
1933, as amended.

In addition, during the quarter ended July 31, 2005, 6,344 shares of common
stock were issued for the 401(k) Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION.

On September 16, 2005 the Company entered into a Securities Purchase Agreement
and a Standby Equity Distribution Agreement with Cornell Capital Partners and
its affiliates (collectively referred to as "Cornell"). The Securities Purchase
Agreement provides for Cornell to purchase up to $2,300,000 of Secured
Convertible Debentures (the "Debentures") of which $1,150,000 was funded on
September 16, 2005t and the balance to be funded within two days of the Company
filing a registration statement with the Securities and Exchange Commission
("SEC"). The Debentures, maturing September 2006, require monthly payments of
interest at a rate of 10% per annum and monthly principal payments commencing
January 2006. The Company can prepay the Debentures at anytime with 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. The
Debentures are secured by substantially all of the assets of the Company and
shares of the Company's common stock as discussed below.

The Securities Purchase Agreement requires the Company to file a registration
within 30 days of September 16, 2005 and to use its best efforts have the
registration statement declared effective by the SEC within 120 days. In the
event the registration statement is not filed or declared effective the Company
will be required to pay liquidated damages as defined under the agreement.

The Debentures are convertible by Cornell at any time at an initial conversion
price of $1.84 per share of common stock that may be adjusted. This will result
in a beneficial conversion feature and will be amortized to interest expense
through the maturity date of the Debentures.

In connection with the issuance of the Debentures, the Company will issue to
Cornell warrants to purchase 650,000 shares of the Company's common stock for a
period of three years with an exercise price of $2.53. A portion of the proceeds
received will be allocated to the fair value of the warrants that will result in
a discount to the face value of the debentures. This discount will be amortized
to interest expense through the maturity date of the Debentures.

The Company has agreed to pay a fee to Cornell equal to 10% of the purchase
price and structuring fees equal to $30,000. These fees will be recorded as
deferred financing costs and charged to interest expense through the maturity
date of the Debentures.

To secure full payment under the securities purchase agreement the Company has
agreed to pledge 3,600,000 of its shares and the president of the Company has
agreed to pledge 900,000 of his personal shares. Such shares are to be held in
escrow.

The purchase price of the Debentures is to be held in escrow until satisfaction
of the terms and conditions of the Securities Purchase Agreement.

The Standby Equity Distribution Agreement ("Agreement") 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 million.
The Company will issue to Cornell 386,956 of the Company's common stock as a fee
for entering into the Agreement and will issue 4,348 shares to the placement
agent. Cornell is to receive a fee equal to 5% of each advance and structuring
and due diligence fess aggregating $25,000.

The amount of capital available under the equity line of credit is not dependent
on the price or volume of the Company's common stock. Cornell may not own more
than 9.9% of the outstanding common stock at any time.

On September 1, 2005 the Company reached an agreement with its chief financial
officer ("CFO") that provides for additional compensation equal to $6,000 per
month through December 2005 and a severance package based on years of service.
The agreement also granted the CFO 30,000 options at an exercise price equal to
the closing price of the Company's common stock on August 31, 2005. The options
vest in various increments through January 30, 2007.

ITEM 6. EXHIBITS.

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

     4.1       Secured Convertible Debentures dated September 15, 2005 issued by
               Startech Environmental Corporation to Cornell Capital Partners,
               LP. *

     4.2       Warrant to Purchase Common Stock dated September 15, 2005 issued
               by Startech Environmental Corporation to Cornell Capital
               Partners, LP. *

     10.1      Standby Equity Distribution Agreement dated as of September 15,
               2005 between Cornell Capital Partners, LP and Startech
               Environmental Corporation. *

     10.2      Investor Registration Rights Agreement dated as of September 15,
               2005 between Cornell Capital Partners, LP and Startech
               Environmental Corporation. *

     10.3      Placement Agent Agreement dated September 15, 2005 by and among
               Startech Environmental Corporation, Cornell Capital Partners, LP
               and Monitor Capital, Inc.. *

     10.4      Escrow Agreement dated September 15, 2005 by and among Startech
               Environmental Corporation, Cornell Capital Partners, LP and David
               Gonzalez, Esq. *

     10.5      Securities Purchase Agreement dated as of September 15, 2005
               between Cornell Capital Partners, LP and Startech Environmental
               Corporation. *

     10.6      Pledge and Escrow Agreement dated September 15, 2005 by and among
               Startech Environmental Corporation, Cornell Capital Partners, LP,
               David Gonzalez, Esq. and Joseph F. Longo. *

     10.7      Registration Rights Agreement dated as of September 15, 2005
               between Cornell Capital Partners, LP and Startech Environmental
               Corporation. *

     10.8      Escrow Agreement dated as of September 15, 2005 by and among
               Startech Environmental Corporation, Cornell Capital Partners, LP
               and David Gonzalez, Esq. *

     10.9      Security Agreement dated September 15, 2005 by and between
               Startech Environmental Corporation and Cornell Capital Partners,
               LP. *

     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

                                       25
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 19th day of
September 2005.


                                        STARTECH ENVIRONMENTAL CORPORATION
                                        (Registrant)

                                        BY: /S/ Joseph F. Longo
                                        -----------------------
                                        Joseph F. Longo
                                        Chief Executive Officer, President

                                        BY: /S/ Peter J. Scanlon
                                        ------------------------
                                        Peter J. Scanlon
                                        Chief Financial Officer, Vice President
                                        (Principal Financial Officer)











                                       26