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 January 31, 2006


|_|  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, 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 17, 2006, 18,773,367 shares of common stock were outstanding.

<PAGE>

                       STARTECH ENVIRONMENTAL CORPORATION

                                TABLE OF CONTENTS


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

Item 1.  Financial Statements (unaudited)

         Condensed consolidated balance sheets - January 31, 2006
         and October 31, 2005                                                1

         Condensed consolidated statements of operations for the
         three months ended January 31, 2006 and 2005                        2

         Condensed consolidated statements of cash flows for the
         three months ended January 31, 2006 and 2005                        3

         Notes to condensed consolidated financial statements               4-9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                         10-16

Item 3.  Quantitative and Qualitative Disclosure about Market Risk          17

Item 4.  Controls and Procedures                                           17-18

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

Item 1.  Legal Proceedings                                                  19
Item 1A. Risk Factors                                                       19
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds        19
Item 3.  Defaults Upon Senior Securities                                    19
Item 4.  Submission of Matters to a Vote of Security Holders                19
Item 5.  Other Information                                                  19
Item 6.  Exhibits                                                           19
Signatures                                                                  20



<PAGE>
<TABLE>
<CAPTION>

                                       PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                                     STARTECH ENVIRONMENTAL CORPORATION
                                    Condensed Consolidated Balance Sheets

                                                                                   January 31,      October 31,
                                                                                      2006             2005
                                                                                   (unaudited)
                                                                                   ------------    ------------
                                     Assets
                                     ------
<S>                                                                                <C>             <C>
Current assets:
   Cash and cash equivalents                                                       $  2,353,472    $  2,489,529
   Accounts receivable                                                                  157,925          56,106
   Inventory                                                                            326,392         326,392
   Prepaid expenses and other current assets                                              4,008          40,008
                                                                                   ------------    ------------

Total current assets                                                                  2,841,797       2,912,035

Equipment and leasehold improvements, net                                             2,229,869       2,141,755

Deferred financing costs, net                                                           179,721         251,610
Deferred offering costs                                                                 239,595         239,595
Other assets                                                                             89,266          89,266
                                                                                   ------------    ------------


Total assets                                                                       $  5,580,248    $  5,634,261
                                                                                   ============    ============

                      Liabilities and Stockholders' Equity
                      ------------------------------------

Current liabilities:
   Accounts payable                                                                $    201,071    $    109,225
   Other accrued expenses                                                               389,396         363,351
   Convertible notes, net of deferred debt discount of $1,355,123 and $1,897,871
     respectively                                                                       944,877         402,129
   Detachable warrants                                                                  460,098         819,884
   Conversion option on convertible notes                                               402,054       1,098,758
   Customer deposits and deferred revenue                                             1,522,720       1,187,796
   Capital lease - short-term                                                              --               242
                                                                                   ------------    ------------

      Total current liabilities                                                       3,920,216       3,981,385
                                                                                   ------------    ------------


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; 25,970,267 issued
  and 18,773,367 outstanding at January 31, 2006; 23,121,569 issued and
  18,641,569 outstanding at October 31, 2005                                         25,374,721      25,142,363
Additional paid-in-capital                                                            1,957,005       1,742,745
Deferred offering costs                                                                (990,000)       (990,000)
Accumulated deficit                                                                 (24,681,694)    (24,242,232)
                                                                                   ------------    ------------

      Total stockholders' equity                                                      1,660,032       1,652,876
                                                                                   ------------    ------------
Total Liabilities and Stockholders' Equity                                         $  5,580,248    $  5,634,261
                                                                                   ============    ============


                 See accompanying notes to the condensed consolidated financial statements.

                                                      1
<PAGE>

                            STARTECH ENVIRONMENTAL CORPORATION
                      Condensed Consolidated Statements of Operations
                                        (Unaudited)


                                                                    Three Months Ended
                                                                        January 31,
                                                               ----------------------------
                                                                   2006            2005
                                                               ------------    ------------

Revenue                                                        $    364,197    $     32,985

Cost of sales                                                        53,103            --
                                                               ------------    ------------

Gross profit                                                        311,094          32,985
                                                               ------------    ------------


Operating Expenses:
Selling expenses                                                    197,068         205,692
Research and development expenses                                    78,222          85,210
General and administrative expenses                                 879,142         723,611
Depreciation and amortization expenses                               47,769          52,959
                                                               ------------    ------------
Total operating expenses                                          1,202,201       1,067,472
                                                               ------------    ------------

Loss from operations                                               (891,107)     (1,034,487)

Other income (expense):
  Interest income                                                    15,736           6,311
  Interest expense                                                  (57,977)           (130)
  Amortization of deferred financing costs                          (71,889)           --
  Amortization of deferred debt discount                           (542,748)           --
  Change in value of warrants and conversion option               1,056,490            --
  Other income                                                       52,033          49,796
                                                               ------------    ------------
     Total other income(expense)                                    451,645          55,977
                                                               ------------    ------------

Income tax  expense                                                    --            10,076
                                                               ------------    ------------

Net loss                                                       ($   439,462)   ($   988,586)
                                                               ============    ============

Per share data:
Net loss per share-basic and diluted                           ($      0.02)   ($      0.06)
                                                               ============    ============
Weighted average common shares outstanding-basic and diluted     18,651,890      17,837,406
                                                               ============    ============


        See accompanying notes to the condensed consolidated financial statements.

                                             2
</TABLE>
<PAGE>

                       STARTECH ENVIRONMENTAL CORPORATION
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

                                                         Three Months Ended
                                                             January 31,
                                                     --------------------------
                                                         2006           2005
                                                     -----------    -----------
Cash flows from operating activities:
   Net loss                                          $  (439,462)   $  (988,586)
   Adjustments to reconcile net loss to net cash
   used in operating activities:
     Stock based compensation                            214,260           --
     401(k) match through issuance of common stock        16,358         14,422
     Depreciation and amortization                        47,769         52,959
     Amortization of deferred financing costs             71,889           --
     Amortization of deferred debt discount              542,748           --
     Change in value of warrants and conversion       (1,056,490)          --
     option
Changes in operating assets and liabilities
     Accounts receivable                                (101,819)          --
     Prepaid expense and other current assets             36,000         (1,282)
     Accounts payable                                     91,846       (181,856)
     Customer deposits and deferred revenue              334,924        (32,985)
     Accrued expenses                                     26,045        (86,051)
                                                     -----------    -----------
Net cash used in operating activities                   (215,932)    (1,223,379)
                                                     -----------    -----------

Cash flows used in investing activities:
     Purchase of equipment                              (135,883)      (154,842)
                                                     -----------    -----------
Net cash used in investing activities                   (135,883)      (154,842)
                                                     -----------    -----------

Cash flows from financing activities:
     Proceeds from exercise of options, warrants
     and common stock issuance                           216,000        841,890
Repayment of capital lease payable                          (242)        (2,449)
                                                     -----------    -----------
Net cash provided by financing activities                215,758        839,441
                                                     -----------    -----------

Net decrease in cash and cash equivalents               (136,057)      (538,780)

Cash and cash equivalents, beginning                   2,489,529      2,401,061
                                                     -----------    -----------

Cash and cash equivalents, ending                    $ 2,353,472    $ 1,862,281
                                                     ===========    ===========


   See accompanying notes to the condensed consolidated financial statements.

                                        3
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES 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, 2005. Operating results for the three months ended January 31, 2006 are not
necessarily indicative of the results that may be expected for the fiscal year
ending October 31, 2006.

     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 revenues, 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") and a Standby Equity
Distribution Agreement (the "Standby 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. This entire
amount was funded during September and October 2005. The Standby Agreement
requires Cornell, at the Company's option, to purchase up to an aggregate of
$20,000,000 of the Company's common stock, subject to certain limitations as
discussed in Note 6, over a two-year period commencing on the effective date of
a registration statement filed with the Securities and Exchange Commission
("SEC").

     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.

Note 2 - Stock-Based Compensation.
----------------------------------

     For the three months ended January 31, 2006, the Company incurred
stock-based compensation expense of $214,260. Prior to November 1, 2005, the
Company accounted for those plans under the recognition and measurement
provisions of Accounting Principles Board Opinion No. 25 ("APB 25").
Accordingly, the Company generally recognized compensation expense only when it
granted options with a discounted exercise price. Any resulting compensation
expense was recognized ratably over the associated service period, which was
generally the option vesting term. Prior to November 1, 2005, the Company
provided pro-forma disclosure amounts in accordance with SFAS No. 148,
"Accounting for Stock-Based Compensation--Transition and Disclosure" ("SFAS
148"), as if the fair value method defined by SFAS 123 had been applied to its
stock-based compensation.

                                       4
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     Effective November 1, 2005, the Company adopted the fair value recognition
provisions of SFAS 123R, using the modified prospective transition method and
therefore has not restated prior periods' results. Under this transition method,
stock-based compensation expense for the first quarter of fiscal 2006 included
compensation expense for all stock-based compensation awards granted prior to,
but not yet vested as of, November 1, 2005, based on the grant date fair value
estimated in accordance with the original provisions of SFAS 123. 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.

     As a result of adopting SFAS 123R, the impact to the Consolidated Condensed
Financial Statements for the three months ended January 31, 2006 on net loss for
the three months ended January 31, 2006 was $214,260 greater than if we had
continued to account for stock-based compensation under APB 25. The impact on
both basic and diluted earnings per share for the three months ended January 31,
2006 was $0.01 per share.

     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 ended
                                                     January 31
                                                --------------------
                                                2006            2005
                                                ----            ----
           Risk-free interest rate              4.31%           4.70%
           Dividend yield                        N/A             N/A
           Expected volatility                   81%             123%
           Expected life in years                 6               10

     For the quarter ended January 31, 2005, there was no effect on net earnings
and basic and diluted net earnings per share by applying the fair value
recognition provisions of SFAS 123, since there was no pro forma expense
relating to this period.


Note 3 - Inventory.
-------------------

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

Note 4 - Equipment and Leasehold Improvements.
----------------------------------------------

     Equipment and leasehold improvements consist of the following:

                                      Useful Life     October 31,    October 31,
                                       (In years)        2006           2005
                                       ----------        ----           ----

Computer equipment                        3-5           $237,925       $236,851
Equipment                                 7-15         2,067,759      2,043,725
Furniture and fixtures                    3-7            144,383        144,383
Leasehold improvements                    4-7            109,993        108,096
Other                                     4-7             23,625         23,625
                                                          ------         ------
                                                       2,583,685      2,556,680
Less: accumulated depreciation                       (1,058,696)    (1,010,926)
                                                     -----------    -----------
                                                       1,524,989      1,545,754
Construction in progress                                 704,880        596,001
                                                         -------        -------
Total equipment and leasehold improvements            $2,229,869     $2,141,755
                                                      ==========     ==========

     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.

                                        5
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     Depreciation expense totaled $47,769 and $52,959 for the three months ended
January 31, 2006 and 2005, respectively.

Note 5 - Convertible Note.
--------------------------

     On September 15, 2005, the Company entered into a Purchase Agreement and a
Standby Equity Distribution Agreement with Cornell. The Purchase Agreement
provides for Cornell to purchase up to $2,300,000 of secured convertible
debentures of which $1,150,000 was funded within five business days of the date
of the Purchase Agreement and the balance was funded on October 19, 2005. The
Debentures, which mature in September 2006, require monthly interest payments at
a rate of 10% per annum and monthly principal payments commencing March 2006.
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.

     The Purchase Agreement requires the Company to file a registration
statement within 30 days of the date of the agreement and to use its best
efforts to have the registration statement declared effective by the SEC within
120 days of the date of the Purchase Agreement, which was extended to April 15,
2006. In the event the registration statement is not filed or declared effective
within the prescribed time periods, the Company will be required to pay
liquidated damages as defined under the Purchase Agreement.

     The debentures are convertible by Cornell at any time at a conversion price
of $1.84 per share of common stock.

     In connection with the issuance of the debentures, the Company issued to
Cornell 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 $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 was accounted for under EITF issue
No. 00-19 "Accounting for Derivative Financial Instruments Index to and
Potentially Settled in a Company's Own Stock" and EITF 05-4, view A "The effect
of a Liquidated Damages Clause on a Freestanding Financial Instrument". 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 embedded
conversion option will be marked to market through earnings at the end of each
reporting period. The warrants and the conversion option are valued using the
Black-Scholes valuation model. For the three months ended January 31, 2006, the
Company reflected a gain of $1,056,490 representing a change in the value of the
warrants and conversion option. The debt discount of $2,168,995 is being
accreted over a period of one year. Accordingly, the Company recorded a charge
$542,748 for the three months ended January 31, 2006.

     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
charged to interest expense through the maturity date of the debentures.
Amortization expense for the three months ended January 31, 2006 amounted to
$71,889.

     In connection with the Purchase Agreement, the Company and its Chief
Executive Officer and President, agreed to pledge 3,580,000 shares and 900,000
shares, respectively, to secure payment of all the obligations due under the
convertible notes. Such shares are to be held in escrow until all amounts due
under the convertible notes are paid in full. The Company has issued 900,000
shares of restricted common stock to its President in place of the shares of
common stock being pledged pursuant to the Escrow Agreement. These shares will
be held in escrow and will only be released to the President in the event any of
the pledged shares are forfeited or released pursuant to the terms of the Escrow
Agreement.

                                        6
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 6 - Stockholders' Equity.
------------------------------

     On September 16, 2005, the Company entered into the Purchase Agreement and
a Standby Equity Distribution Agreement with Cornell. The Standby 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 issued to Cornell 386,956 shares of the Company's common
stock 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. These costs have been charged to deferred offering costs. Cornell
is to receive a fee equal to 5% of each advance and structuring and due
diligence fees 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. However, Cornell may not own more than 9.9% of the outstanding
common stock at any time. As of January 31, 2006, the Company has not issued any
shares under the Purchase Agreement.

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 has 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 will
have 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 have been placed in escrow. The Company has not yet
received any proceeds pursuant to the Mercatus Agreements.

Note 7 - Operating Leases,
--------------------------

     The Company leases office space, equipment, computers and vehicles under
non-cancelable operating leases expiring between 2006 and 2008.

     The Company's corporate headquarters is located in Wilton, Connecticut
where the Company leases 5,800 square feet of office space from CD Station, LLC
as landlord. The lease and taxes provides for monthly payments of $18,038 to
December 2006, when the lease expires. The Company's Product Showroom is located
in Bristol, Connecticut, where the Company leases 10,800 square feet of office
space from Tunxis Management as landlord. The lease provides for monthly
payments of $8,166 to June 2008, when the lease expires.

     The Company's Manufacturing facility is also located in Bristol,
Connecticut, where the Company leases 30,000 square feet of manufacturing space
from Gaski Leasing as landlord. The lease provides for monthly payments of
$5,750. This lease arrangement is on a month to month basis.

     Rent expense for the three months ended January 31, 2006 and 2005 was
$95,468 and $92,185, respectively. The following table shows the future lease
commitments for the corporate headquarters at Wilton, Connecticut, the Product
showroom in Bristol, Connecticut, and the Manufacturing facility in Bristol,
Connecticut:

         Fiscal Year       Annual Rent
         -----------       -----------
         2006               $278,285
         2007                175,100
         2008                122,300



                                        7
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


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

Employment Agreements

     On September 30, 2004, the Board of Directors approved the terms of an
employment agreement between Joseph F. Longo and the Company. Mr. Longo will
serve as the Chief Executive Officer and President and will be paid an annual
salary of $185,000. The term of the Employment Agreement is three years,
effective as of January 1, 2004, unless extended by the Company.

     On December 1, 2005, the Company reached an agreement with Ralph Dechiaro,
its Vice President of Business Operations, pursuant to which the Company agreed
to award Mr. Dechiaro options to purchase 25,000 shares of common stock at an
exercise price equal to the closing price of the Company's common stock on
December 14, 2005. One half of these options vested on January 1, 2006 and the
other half vest on June 30, 2006. In addition, the Company agreed to grant Mr.
Dechiaro a one-time bonus/incentive award of $20,000, payable in cash, less
applicable taxes, which was paid on December 23, 2005. The Company also agreed
to provide Mr. Dechiaro with a severance package, as defined. Should Mr.
Dechiaro voluntarily resign, severance pay would not apply.

     On December 13, 2005, the Company reached an agreement with its Chief
Financial Officer ("CFO"). Peter Scanlon. that provides for additional
compensation equal to $6,000 per month through May 2006 and a severance package
based on years of service.

License Agreement

     The Company 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

     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 was initiated in October 2004 and was 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 three months ended January 31, 2006, the Company received
$52,033 under this grant. The Company has received approval to further develop
the hydrogen project. Such development should extend through 2006.



Concentration of Credit Risk

The Company's cash and cash equivalents consist of cash balances at two
financial institutions and short-term high quality liquid investments with
maturitiesof less than thirty days. The short-term investments are high quality
commercial paper, U.S. Treaury notes and U.S. Treasury bills. Unrealized gains
and losses were not material during the quarters ended January 31, 2006 and
2005. No realized gains or losses were recorded during the quarters ended
January 31, 2006 and 2005. 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, 2006, uninsured cash
balances were approximately $844,695. The Company believes it is not exposed to
any significant credit risk for cash.

                                       8
<PAGE>

STARTECH ENVIRONMENTAL CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


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, 2006 and 2005 were $16,358, and $14,422, respectively.
These contributions were paid through the issuance of 8,798, and 2,654 shares of
common stock, respectively.

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

     On March 15, 2006, the Company announced that it and Future Fuels, Inc.
(FFI), a subsidiary of Nuclear Solutions, Inc. (OTCBB: NSOL) of Washington,
D.C., have formed a Strategic Alliance Agreement to mutually obtain contracts
for waste-to-ethanol facilities. The Company has also received the Letter Of
Intent from FFI for FFI's purchase of a 100 ton-per-day Startech Plasma
Converter System (PCS) for installation in the first-of-its-kind
Waste-to-Ethanol Facility in Toms River scheduled to go on-line in late 2007.

















                                        9
<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.

                                       10
<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, 2004 and
2005 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.

                                       11
<PAGE>

Developments During the Three Months Ended January 31, 2006

The Mihama Plasma Converter in Japan

     The system, now owned by Mihama, has been installed in the Hiemji, Japan
facility and has been systemized. Mihama, Inc is acquiring the appropriate PCB
(polychlorinated byphenyls) laddened test material for the operating program.
Startech is preparing the training program for operator certification to
initiate the demonstration test program. The current plan is to dispatch our
field service technicians to the Hiemji site and to complete a final equipment
review, operator certification and the PCB processing. As the Company's Japan
distributor, Mihama will also use the system to support its Startech sales and
marketing operations and be able to demonstrate a Plasma Converter System in a
commercial operation to its customers.

Poland

     The initial contracts signed in Poland are still pending project funding
and remain in the financial development stage, however two of the contracts
previously announced are being modified to increase their size and designated
waste streams.

     o    The Eko Plasma project will be initiated and is expanding beyond a 10
          TPD Plasma Converter Processing Facility that will process various
          hazardous waste streams including Medical and Industrial waste from
          surrounding municipalities. The project has been submitted for
          financing and the site has been selected. All permits have been
          issued.

     o    The Ekologia project previously announced will be increased from 10
          TPD to 100 TPD Plasma Processing Facility that will process animal
          meal and hazardous waste. This Plasma Converter System will be
          operated to increase the selected output gas which will be sold to the
          neighboring chemical plant.

     o    The Chempol project previously announced is continuing with the
          initial 10 TPD Plasma Converter.

     The two 300 TPD Plasma Converter Processing Facilities contracts signed
with Eco Group of America, Inc. are undergoing financing and the structuring of
waste and power contracts within Poland. The contracted business entities have
changed project ownership and we are in discussion with Eco-Group of America for
contract scope modification and assignment. The project sites have been approved
as initially announced and remain the same.

     Multiple new projects are being developed in Poland to process wastes
ranging from MSW to Pesticides.

DOE StarCell Test Program

     Startech has issued the Phase I Test Report to DOE and is awaiting comment.
We have initiated the Phase II test program which was previously approved and
are preparing the planning and associated test protocols. During this test cycle
which is planned to be completed during 2006, Startech will implement the
lessons learned form the Phase I testing to augment the Plasma Converter System
and complete modifications to the StarCell ceramic membranes to enhance
performance and production yield.

Vitech

     The customer will be processing 20,000 pounds per day of Reverse Logistic
Pharmaceuticals. Reverse Logistic Pharmaceuticals are items such as expired
drugs and medications from retailers and manufacturers that must be destroyed.
Vitech expects to break ground on construction and place an order for their
first 10 ton per day system within a few months.

                                       12
<PAGE>

GlobalTech

     On October 3, 2005, the Company entered into an agreement with GlobalTech
Environmental Incorporated ("GlobalTech") of Central, Hong Kong, with offices in
Shanghai, Beijing and Changzhou in China as its exclusive distributor for the
Peoples Republic of China. The Company has received $250,000 as the cash fee
cash for that Distributorship. The Distributorship Agreement requires GlobalTech
to purchase its first 25 ton-per-day Plasma Converter System (PCS), or larger,
by June 30, 2006. The Agreement also requires GlobalTech to purchase $40 million
worth of Startech Plasma Converter Systems by March 27, 2007 and also $150
million worth of Plasma Converter Systems each year for the ten years following
as a minimum to maintain the Distributorship.

     GlobalTech will be managing the Distributorship with its principal
operating partner the Jingu Group. Jingu is a company with diversified
businesses in urban infrastructure development and planning, construction and
also environmental engineering. The Jingu world headquarters is located in
Changzhou, Jiangsu on the east coast of China near Shanghai.

Mercatus Stock Purchase Agreement

     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 has 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 will
have up to thirty days from the date of the delivery of the Mercatus Shares to
Brown Brothers Herriman, the custodial bank, to tender the purchase price to the
Company. The Mercatus Shares have been placed in escrow. The Company has not yet
received any proceeds pursuant to the Mercatus Agreements.

     In connection with the Mercatus Agreements, the Company has agreed to pay
to e3 Energy Company a one-time finder's fee consisting of the following: (a)
five year warrants to purchase shares of Common Stock for cash in an amount
equal to 5% of the number of Shares issued to Mercatus pursuant to the Mercatus
Agreements at an exercise price per share of $3.00, which warrants shall not be
exercisable for a period of one year following the date of issuance, (b) a cash
fee equal to 5% of the gross proceeds raised pursuant to the Mercatus
Agreements, and (c) restricted shares of Common Stock in an amount equal to 5%
of the number of Mercatus Shares issued to Mercatus pursuant to the Mercatus
Agreements.

     These issuances are exempt from registration by virtue of Regulation S of
the Securities Act of 1933, as amended, because Mercatus is not a U.S. Person
(as defined under Regulation S), is not purchasing the Shares for the account or
benefit of a U.S. Person, the purchase was made in an "offshore transaction" and
there were no "directed selling efforts" in the United States.

Ansaldo Energia S.p.A.

     On December 5, 2005, the Company announced that it has formed a Strategic
Alliance Agreement with Ansaldo Energia S.p.A. ("AEN"), having its principal
place of business at Genova, Via Nicola Lorenzi 8, Italy, to mutually obtain
commercial contracts that utilize Startech's and AEN's, resources, equipment,
expertise, know-how and experience to produce sales that include their mutual
capabilities.

     AEN and Startech have agreed that it is in their mutual interest to work
together to produce the joint development of initiatives, both technical and
commercial, for the sales of Startech's Plasma Converter Systems and/or turnkey
plants incorporating Startech's proprietary technology for waste destruction and
remediation, the production of energy by use of the fuel produced by Startech's
technology, the development of joint R&D programs to enhance the potential of
Startech's technology and the employment of AEN's financial resources.

     AEN is an energy and power generation company providing an entire power
generation spectrum including, financing, manufacturing, plant engineering,
full-turnkey project planning and development, engineering construction, plant
operations, field service and maintenance.

                                       13
<PAGE>

     With more than a hundred years of power generation experience and an
installed capacity exceeding 160,000 MW in over 90 countries, its major
strengths are its global reach, a full service organization and a flexible
approach to project developments. AEN is a subsidiary of the Finmecannica Group,
an engineering and aerospace/defense group based in Italy.

PlasTech Solutions

     On January 3, 2006, the Company announced that Plastech Solutions, Ltd.
paid Startech $703,000 to commence manufacturing for Plastech's purchase of a 10
ton-per-day Plasma Converter System. The Company announced that it would begin
the manufacturing process in early February, 2006 with the delivery scheduled
for a date later in the year. The contract calls for fixed scheduled payments to
be made during the 2006 manufacturing cycle. The $703,000 payment did not
include the $250,000 Plastech paid for the Distributorship.

     On February 2, 2006, the Company, announced that the manufacturing of the
10 ton-per-day Plasma Converter System purchased by PlasTech Solutions, Ltd. has
been put into production. The commencement of the manufacturing process
scheduled for February 6, 2006, actually started two-weeks ahead of schedule on
January 24, 2006. Delivery is scheduled for a date later in the year.

     PlasTech Solutions, Ltd. of New South Wales, Australia is Startech's
exclusive distributor for Australia, New Zealand and Oceana. The
first-of-its-kind Startech 10 TPD Plasma Converter in the PlasTech territory
will be processing an assortment of industrial and institutional wastes. The
processing facility will also serve as the PlasTech demonstration facility to
support its Plasma Converter sales program. PlasTech plans to include two more
20,000 pound-per-day Plasma Converter Systems in the new facility.

Plasma Converter Puerto Rico Project

     Plasma Tech Caribbean Corp. is the Startech Distributor in the Caribbean.
On January 26, 2006, Plasma Tech announced, in a journal called Caribbean
Business, that it is planning to invest $40 million in the construction of a
Plasma Converter System (PCS) facility in Barceloneta, Puerto Rico. The site has
already been chosen and Plasma Tech is currently in acquisition arrangements.
The multipurpose facility in Barceloneta will consist of one PCS unit to be used
for research and development as well as for sales demonstrations, and two larger
PCS units to be used in the processing of discarded hazardous materials from the
pharmaceutical and biomedical industries for the production of clean,
alternative fuels such as methanol and propane. The facility will feature many
"green-building" technologies such as integrated photovoltaic cells, rainwater
harvesting, and others.

From Tires to Ethanol

     On March 15, 2006, the Company, announced that it and Future Fuels, Inc.,
(FFI) a subsidiary of Nuclear Solutions, Inc., (OTCBB: NSOL) of Washington,
D.C., have formed a Strategic Alliance Agreement to mutually obtain contracts
for waste-to-ethanol facilities and also for FFI's own $84 million
Waste-to-Ethanol Facility to be constructed in Toms River, New Jersey.

     The Company has also received the Letter Of Intent from FFI for FFI's
purchase of a 100 ton-per-day Startech Plasma Converter System (PCS) for
installation in the first-of-its-kind Waste-to-Ethanol Facility in Toms River,
scheduled to go on-line in late 2007. The PCS will safely and completely destroy
the tires in its process that results in a clean synthesis gas product called
Plasma Converted Gas (PCG)(TM). The Plasma Converter will be attached to the
front of the FFI system. PCG produced will be piped directly into the FFI system
to make commercial fuel-grade ethanol for sale. Plans also call for the Toms
River Facility expansion to include a series of additional Startech 100
ton-per-day modular Plasma Converter Systems.

     FFI is implementing its proprietary technology and process to convert
low-end carbonaceous waste materials such as used tires, petro-waste, waste
coal, wood wastes, raw sewage, discarded corn stalks, residential waste,
industrial waste and agricultural byproducts into ethanol; a clean renewable
fuel.

                                       14
<PAGE>

     The New Jersey Economic Development Authority announced that the resolution
for the preliminary approval of $84 million tax-exempt bond financing for FFI
has been fully executed and officially adopted by the State of New Jersey. The
tax-exempt bonds will be used for the design, construction and start-up of the
first-of-its-kind 52 million gallon per year waste-to-ethanol production
facility in Toms River, New Jersey. The official resolution approval enables FFI
to proceed with the bond rating, underwriting, and the placement process to
secure the funds.


Results of Operations

Comparison of three months ended January 31, 2006 and 2005

     Revenues. Total revenues were $364,197 for the three months ended January
31, 2006, as compared to $32,985 for the same period in 2005, an increase of
$331,212. For the three months ended January 31, 2006, 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, Additionally revenues were derived
from the completed installation in Mihama. The revenue for the three months
ending January 31, 2005 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 $311,094 for the three months ended January
31, 2006, compared to a gross profit of $32,985 in the same period in 2005, or
an increase of $278,109 from the same period in 2005 or 843.1%. Gross margins
were directly impacted due to the revenue recognized from the distributorship
agreements.

     Selling Expenses. Selling expenses for the three months ended January 31,
2006 were $197,068, compared to $205,692 for the same period in the prior year,
a decrease of $8,624, or 4.2%. 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, 2006 were $78,222, compared to $85,210 for
the same period in the prior year, a decrease of $6,988 or 8.2%. This decrease
was related to a decrease in travel expenses.

     General and Administrative Expenses. General and administrative expenses
for the three months ended January 31, 2006 were $879,142, compared to $723,611
for the same period in 2005, an increase of $155,531 or 21%. This increase was
related to higher interest expenses, higher legal and accounting expenses, and
stock based compensation in 2005.

     Interest Income. Interest income for the three months ended January 31,
2006 was $15,736, compared to $6,311 in the same period in 2005, an increase of
149.3%. The increase is due to higher returns on their investments and higher
average interest rates.

Liquidity and Capital Resources

     As of January 31, 2006, we had cash and cash equivalents of $2,353,472 and
a working capital deficiency of $1,078,419. During the three months ended
January 31, 2006, our cash and cash equivalents decreased by $136,057.

     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.

                                       15
<PAGE>

     On September 15, 2005, the Company entered into the Purchase Agreement and
Standby Agreement with Cornell. The Purchase Agreement provides for Cornell to
purchase up to $2,300,000 of secured convertible debentures of which $1,150,000
was funded within five business days of the date of the Purchase Agreement and
the balance was funded on October 19, 2005. The Debentures, which mature in
September 2006, require monthly interest payments at a rate of 10% per annum and
monthly principal payments commencing March 2006. 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.

     The Purchase Agreement requires the Company to file a registration
statement within 30 days of the date of the agreement and to use its best
efforts to have the registration statement declared effective by the Securities
and Exchange Commission within 120 days of the date of the agreement, which was
extended to April 15, 2006. In the event the registration statement is not filed
or declared effective within the prescribed time periods, 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.

     In connection with the Purchase Agreement, the Company and its Chief
Executive Officer and President, Joseph F. Longo, agreed to pledge 3,580,000
shares and 900,000 shares, respectively, to secure payment of all the
obligations due under the convertible notes. Such shares are to be held in
escrow until all amounts due under the convertible notes are paid in full. The
Company has issued 900,000 shares of restricted common stock to its President in
place of the shares of common stock being pledged pursuant to the Escrow
Agreement. These shares will be held in escrow and will only be released to the
President in the event any of the pledged shares are forfeited or released
pursuant to the terms of the Escrow Agreement.

     On September 16, 2005 the Company entered into a Purchase Agreement and a
Standby Agreement with Cornell. The Standby 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 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. As of January 31, 2006,
the Company has not issued any shares under this agreement.

     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 January
31, 2006 and 2005. No realized gains or losses were recorded during the quarter
ended July 31, 2005 or 2004.




                                       16
<PAGE>

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.


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.

                                       17
<PAGE>

     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 American Institute of Certified Public Accountants. 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. During the three
month period ended January 31, 2006, we 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, 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, 2006. As a result, we are confident that our
financial statements for the quarter ended January 31, 2006 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 quarter ended January 31, 2006 or any
prior period.

     There were no significant changes in our internal controls over financial
reporting that occurred during the quarter ended January 31, 2006 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.







                                       18
<PAGE>

                           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,
2005.

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

     On January 26, 2006, the Company received cash proceeds in the amount of
$216,000 from the exercise of warrants to purchase 120,000 shares of common
stock. Exemption from registration under the Securities Act of 1933, as amended,
was based upon the grounds that the issuance of such securities did not involve
a public offering within the meaning of Section 4(2) of the Securities Act of
1933, as amended.

     On December 31, 2005, the Company issued 8,798 shares of common stock to
its 401(k) plan as a matching contribution.

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


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<PAGE>



                                   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 21st day of March, 2006.


                                          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 21st day of March 2006.


SIGNATURES                        TITLE

/s/ Joseph F. Longo               Chairman, Chief Executive Officer,
-------------------               President  & Director
Joseph F. Longo


/s/ John J. Fitzpatrick           Director
-----------------------
John J. Fitzpatrick


/s/ Joseph A. Equale              Director
--------------------
Joseph A. Equale


/s/ Nicholas S. Perna             Director
---------------------
Nicholas S. Perna


/s/ L Scott Bernard               Director
-------------------
L Scott Bernard


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