**U.S.
      Securities and Exchange Commission**


**Washington,
      DC 20549**





**FORM
      10-QSB**





QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934








For
      the
      Quarterly period ended **September
      30, 2006**








Commission
      File Number **000-51229**








**TRADESTAR
      SERVICES, INC.**


(Name
      of
      small business issuer in its charter)


formerly
      known as Frontier Staffing, Inc.





**Nevada******
            **51-0482104**(State
                or other jurisdiction of
            (IRS
                Employerincorporation
                or organization)
            Identification
                No.)







**Three
      Riverway, Suite 1500, Houston, Texas 77056**


(Address
      of principal executive offices)





Registrant's
      telephone number: **(713)
      479-7000**





Check
      whether issuer is not required to file reports pursuant to Section 13 or 15(d)
      of the Exchange Act [ ]





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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 shell company (as defined in Rule
      12b-2 of the Exchange Act) Yes
      [
      ]    No **[X]**





The
      number
      of shares outstanding of our common stock, par value $.001 per share, as of
      September 30, 2006 was 23,490,000 common shares and the aggregate market value
      of such shares held by non-affiliates of the registrant (based upon the closing
      price of such shares as listed on the OTC Bulletin Board on November 10, 2006)
      was approximately $7,758,000.





Transitional
      Small Business Disclosure Format (check one): Yes [ ]   
No **[X]**











**** **TRADESTAR
      SERVICES, INC.**


**TABLE
      OF CONTENTS**








PART
                I. FINANCIAL INFORMATION
            PageItem
                1. Financial StatementsCondensed
                Consolidated Balance Sheets as of September 30, 2006 (Unaudited)
                andDecember
                31, 2005
            3Condensed
                Consolidated Statements of Operations for the three months endedSeptember
                30, 2006 and 2005 (Unaudited)
            4Condensed
                Consolidated Statements of Operations for the nine months endedSeptember
                30, 2006 and 2005 (Unaudited)
            5Condensed
                Consolidated Statements of Cash Flows for the nine months endedSeptember
                30, 2006 and 2005 (Unaudited)
            6Notes
                to Condensed Consolidated Financial
                Statements
            7Item
                2. Management's Discussion and Analysis or Plan of
                Operation
            13Item
                3. Controls and Procedures
            21PART
                II.OTHER INFORMATIONItem
                1. Legal Proceedings
            21Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            21Item
                3. Defaults Upon Senior
                Securities
            22Item
                4. Submission of Matters to a Vote of Security
                Holders
            22Item
                5. Other Information
            22Item
                6. Exhibits
            22Signatures
            23










PART
      I.  FINANCIAL
      INFORMATION





All
      references to "us," "we," or "the Company" refer to Tradestar Services, Inc.,
      and its subsidiaries.





ITEM
      1.  FINANCIAL
      STATEMENTS








2


**TRADESTAR
        SERVICES, INC.**
 **Condensed
        ConsolidatedBalance Sheets**
  **September
                  30, 2006 (Unaudited)**
              
              **December
                  31, 2005****Assets**Current
                  assets:Cash
                  and cash equivalents
              
              $
              58,272
              
              $
              759,750Accounts
                  receivable, less allowance of $136,453 and$185,152,
                  respectively
              
              
              9,314,395
              
              
              2,091,973Prepaid
                  expenses and other
              
              
              970,640
              
              
              -Total
                  current assets
              
              
              10,343,307
              
              
              2,851,723Property
                  and equipment:Oil
                  and
                  gas properties (full cost method)
              
              
              16,877,552
              
              
              -Other
                  property and equipment
              
              
              856,382
              
              
              136,61617,733,934
              
              
              136,616Less:
                  Accumulated depreciation, depletion &
                  amortization
              
              
              (525,120
              )
              
              (63,682
              )Net
                  property and equipment
              
              
              17,208,814
              
              
              72,934Other
                  assets:Goodwill
              
              
              7,066,838
              
              
              -Other
              
              
              301,891
              
              
              13,025Total
                  other assets
              
              
              7,368,729
              
              
              13,025Total
                  assets
              
              $
              34,920,850
              
              $
              2,937,682**Liabilities
                  and Stockholders’ Equity**Current
                  liabilities:Current
                  portion of long-term debt
              
              $
              7,308,541
              
              $
              -Accounts
                  payable
              
              
              1,872,834
              
              
              185,147Accrued
                  liabilities
              
              
              1,440,520
              
              
              1,130,004Income
                  taxes payable
              
              
              43,640
              
              
              -Total
                  current liabilities
              
              
              10,665,535
              
              
              1,315,151Long-term
                  debt, net of current portion
              
              
              11,608,253
              
              
              1,467,768Deferred
                  income taxes
              
              
              4,937,390
              
              
              -Total
                  liabilities
              
              
              27,211,178
              
              
              2,782,919Stockholders’
                  equity:Preferred
                  stock, $.01 par value per share, 1,000,000
                  authorized,None Issued
              
              
              -
              
              
              -Common
                  stock, $.001 par value per share, 50,000,000 authorized,23,490,000
                  and 10,950,000 shares issued and outstanding, respectively
              
              
              23,490
              
              
              10,950Additional
                  paid
                  in capital
              
              
              8,909,581
              
              
              1,494,830Accumulated
                  deficit
              
              
              (1,223,399
              )
              
              (1,351,017
              )Total
                  stockholders’ equity
              
              
              7,709,672
              
              
              154,763Total
                  liabilities and stockholders’ equity
              
              $
              34,920,850
              
              $
              2,937,682




See
      accompanying notes to condensed consolidated financial
      statements.


*Return
          to Table of Contents*
 3


**TRADESTAR
        SERVICES, INC.**
 **Condensed
        ConsolidatedStatements of
        Operations**
 **(Unaudited)**


**Three
                  Months Ended September 30,****2006**
              
              **2005**Revenues:Staffing servicesConstruction
              
              
              
              
              $
              4,953,523
              
              $
              2,394,278Petroleum
                  engineering
              
              
              
              
              
              6,333,879
              
              
              -Oil and gas sales
              
              
              
              
              
              1,107,385
              
              
              -Other
              
              
              
              
              
              3,813
              
              
              -12,398,600
              
              
              2,394,278Expenses:Cost of staffing servicesConstruction
              
              
              
              
              
              4,041,357
              
              
              2,051,039Petroleum
                  engineering
              
              
              
              
              
              4,720,089
              
              
              -Lease operating expense
              
              
              
              
              
              467,633
              
              
              -Depreciation, depletion & amortization
              
              
              
              
              
              353,138
              
              
              6,287Workover expense
              
              
              
              
              
              312,708
              
              
              -Selling, general and administrative
              
              
              
              
              
              2,086,012
              
              
              450,921Interest expense
              
              
              
              
              
              416,077
              
              
              22,59412,397,014
              
              
              2,530,841Income
                  (loss) before income taxes
              
              
              
              
              
              1,586
              
              
              (136,563
              )Provision
                  for income taxes
              
              
              
              
              
              539
              
              
              -Net income (loss)
              
              
              
              
              $
              1,047
              
              $
              (136,563
              )Net
                  income (loss) per share, basic and diluted
              
              
              
              
              $
              0.00
              
              $
              (0.01
              )Weighted
                  average shares outstanding, basic
              
              
              
              
              
              23,490,000
              
              
              10,950,000Weighted
                  average shares outstanding, diluted
              
              
              
              
              
              24,263,257
              
              
              10,950,000


See
      accompanying notes to condensed consolidated financial
      statements.


*Return
          to Table of Contents*
 4


**TRADESTAR
      SERVICES, INC.**


**Condensed
          ConsolidatedStatements of
          Operations**
 **(Unaudited)**
  **Nine
                    Months Ended September 30,****2006**
                
                **2005**Revenues:Staffing
                  servicesConstruction
                
                
                
                
                $
                12,381,960
                
                $
                5,206,327Petroleum engineering
                
                
                
                
                
                8,280,830
                
                
                -Oil
                    and gas sales
                
                
                
                
                
                1,450,346
                
                
                -Other
                
                
                
                
                
                65,724
                
                
                -22,178,860
                
                
                5,206,327Expenses:Cost of staffing servicesConstruction
                
                
                
                
                
                10,112,762
                
                
                4,371,410Petroleum
                    engineering
                
                
                
                
                
                6,011,789
                
                
                -Lease operating expense
                
                
                
                
                
                619,466
                
                
                -Depreciation, depletion & amortization
                
                
                
                
                
                494,302
                
                
                16,427Workover expense
                
                
                
                
                
                402,068
                
                
                -Selling, general and administrative
                
                
                
                
                
                3,748,775
                
                
                1,028,593Interest expense
                
                
                
                
                
                596,305
                
                
                44,43521,985,467
                
                
                5,460,865Income
                    (loss) before income taxes
                
                
                
                
                
                193,393
                
                
                (254,538
                )Provision
                    for income taxes
                
                
                
                
                
                65,775
                
                
                -Net income (loss)
                
                
                
                
                $
                127,618
                
                $
                (254,538
                )Net
                    income (loss) per share, basic and diluted
                
                
                
                
                $
                0.01
                
                $
                (0.02
                )Weighted
                    average shares outstanding, basic
                
                
                
                
                
                16,921,429
                
                
                10,290,659Weighted
                    average shares outstanding, diluted
                
                
                
                
                
                17,517,340
                
                
                10,290,659




See
      accompanying notes to condensed consolidated financial
      statements.


*Return
          to Table of Contents*
 5


**TRADESTAR
      SERVICES, INC.**


**Condensed
      ConsolidatedStatements of Cash
      Flows**


**(Unaudited)**


**Nine
                  Months Ended September 30,****2006**
              
              **2005****Cash
                  flows (used in) operating activities:**Net
                  income (loss)
              
              
              
              
              $
              127,618
              
              $
              (254,538
              )Adjustments
                  to reconcile net income(loss)
                  to cash (used in) operations:Depreciation,
                  depletion & amortization
              
              
              
              
              
              494,302
              
              
              16,427Deferred
                  income taxes
              
              
              
              
              
              65,775
              
              
              -Services
                  contributed by officers
              
              
              
              
              
              25,000
              
              
              37,500Other
                  changes, net
              
              
              
              
              
              (94,332
              )
              
              39,799Changes
                  in current assets and liabilities:Accounts receivable
              
              
              
              
              
              (1,980,373
              )
              
              (1,379,686
              )Other current assets
              
              
              
              
              
              (724,716
              )
              
              (455
              )Accounts payable and accrued liabilities
              
              
              
              
              
              (1,204,178
              )
              
              415,574Income taxes payable
              
              
              
              
              
              37,450
              
              
              -Net
                  cash (used in) operating activities
              
              
              
              
              
              (3,253,454
              )
              
              (1,125,379
              )**Cash
                  flows (used in) investing activities:**Purchase
                  of subsidiary
              
              
              
              
              
              (2,000,000
              )
              
              -Purchase
                  of property and equipment
              
              
              
              
              
              (823,089
              )
              
              (58,357
              )Increase
                  in other assets
              
              
              
              
              
              (82,322
              )
              
              -Net
                  cash (used in) investing activities
              
              
              
              
              
              (2,905,411
              )
              
              (58,357
              )**Cash
                  flows from (used in) financing activities:**Proceeds
                  from long term debt
              
              
              
              
              
              5,335,285
              
              
              688,750Payments
                  of long term debt
              
              
              
              
              
              (402,898
              )
              
              -Net
                  proceeds of stockholder advances
              
              
              
              
              
              525,000
              
              
              (53,102
              )Proceeds
                  from issuance of common stock
              
              
              
              
              
              -
              
              
              600,000Net
                  cash from financing activities
              
              
              
              
              
              5,457,387
              
              
              1,235,648Net
                  (decrease) increase in cash and cash equivalents
              
              
              
              
              
              (701,478
              )
              
              51,912Cash
                  and equivalents at beginning of period
              
              
              
              
              
              759,750
              
              
              142,807Cash
                  and equivalents at end of period
              
              
              
              
              $
              58,272
              
              $
              194,719





See
      accompanying notes to condensed consolidated financial
      statements.


*Return
          to Table of Contents*
 6


**TRADESTAR
      SERVICES, INC.**


**Notesto
      Condensed Consolidated Financial
      Statements**


**(Unaudited)**





**(1)**  **Basis
      of Presentation**





The
      accompanying condensed consolidated financial statements have been prepared
      by
      the Company without audit, pursuant to the rules and regulations of the
      Securities and Exchange Commission and in accordance with accounting principles
      for interim financial information. In the opinion of management, these condensed
      consolidated financial statements contain all adjustments (consisting only
      of
      normal recurring adjustments) necessary to fairly state the financial position
      of the Company as of September 30, 2006 and the results of its operations and
      cash flows for the three month and nine month periods ended September 30, 2006
      and 2005. Certain information and footnote disclosures normally included in
      financial statements prepared in accordance with generally accepted accounting
      principles have been condensed or omitted. Interim results of operations are
      not
      necessarily indicative of results for subsequent interim periods or the
      remainder of the full year. These financial statements should be read in
      conjunction with our Annual Report on Form 10-KSB for the year ended December
      31, 2005.





Since
      the
      issuance of its financial statements for the second quarter of 2006, the Company
      has changed the classification of certain expenses related to “Cost of staffing
      services - Petroleum engineering.” As a result of this change, salaries of
      employed engineers in the amount of $174,569, which were incurred in the three
      months ended June 30, 2006, were retroactively reclassified from “Selling,
      general and administrative” expenses to Cost of staffing services - Petroleum
      engineering” in the nine month period ended September 30, 2006. Such
      reclassification had no effect on the previously reported net income for the
      three months ended June 30, 2006, nor was there any effect on prior year amounts
      as the Company did not begin offering petroleum engineering services until
      the
      acquisition of The CYMRI Corporation on May 23, 2006 (see Note 2).





**(2)**  **Acquisition
      of The CYMRI Corporation**





Pursuant
      to an Agreement and Plan of Merger executed between the Company and The CYMRI
      Corporation (“CYMRI”), a wholly-owned subsidiary of the Company acquired all of
      CYMRI’s outstanding common stock on May 23, 2006. CYMRI and its subsidiaries
      perform petroleum engineering services for customers in North and South America
      and are engaged in the exploration and production of oil and natural gas from
      properties located in Texas and Louisiana. The merger agreement provided for
      the
      Company: (a) To pay $2,000,000 in cash; (b) To issue its 10% secured notes
      payable in the amount of $3,075,000; and (c) To issue 12,540,000 shares of
      its
      common stock, which had an average 30 day pre-announcement closing price of
      $0.58 per share, for total equity value of $7,273,200, all as consideration
      to
      CYMRI’s common stockholders. The Company has accounted for the acquisition of
      CYMRI as a purchase with Tradestar treated as the acquirer. The following is
      a
      condensed balance sheet showing the fair values of the assets acquired and
      liabilities assumed from CYMRI as of the date of the acquisition (including
      merger related costs of $250,000):





Current
                assets
            
            $
            5,237,973Property
                and equipment
            
            
            16,774,229Goodwill
                arising in the acquisition
            
            
            7,066,838Other
                assets
            
            
            77,453Current
                liabilities
            
            
            (2,958,571
            )Long-term
                debt(see
                Note 3)
            
            
            (8,666,639
            )Deferred
                income taxes
            
            
            (4,933,083
            )$
            12,598,200





*Return
          to Table of Contents*
 7




**TRADESTAR
      SERVICES, INC.**


**Notes
      to Condensed Consolidated Financial Statements**


**(Unaudited)**








Since
      the
      date of the acquisition, the Company has reflected the results of operations
      of
      CYMRI in its consolidated financial statements, after giving effect to the
      purchase accounting adjustments. The deemed effective date of the acquisition
      for accounting purposes was May 31, 2006, and the effect of including CYMRI’s
      results of operations in the Company’s consolidated financial statements since
      that date was to increase revenues for the nine months ended September 30,
      2006
      by $9,792,000 and to increase net income for the nine months ended September
      30,
      2006 by $154,000 ($0.01 per share).




**(3)**  **Long-Term
      Debt**





As
      of
      September 30, 2006, the Company had the following long-term debt obligations,
      including amounts assumed or incurred in the acquisition of the outstanding
      common stock of CYMRI (see Note 2):





$20,000,000
                line of credit with a bank, principal payable $95,000 per month beginning
                in October 2006 through maturity in November 2007, interest at 1.0%
                above
                prime payable monthly, secured by CYMRI’s oil and gas properties and
                deposits held by stockholders
            
            $
            6,275,000$5,000,000
                line of credit with a bank, interest at 1.0% above prime payable
                monthly
                through maturity in May 2009, secured by accounts receivable of petroleum
                and construction staffing services businesses
            
            
            4,429,918Notes
                payable to former CYMRI shareholders, bearing interest at 10%, payable
                in
                total monthly installments of $65,335 beginning in June 2006 through
                maturity at May 2007, and secured by substantially all assets, subject
                to
                liens on oil and gas properties
            
            
            2,914,165Notes
                payable to 8 individuals, incurred in acquisition of CYMRI, bearing
                interest at 10%, interest only payable monthly beginning in July
                2006
                through maturity at May 2007, unsecured
            
            
            2,250,000Notes
                payable to 3 individuals, incurred by CYMRI in acquisition of a
                subsidiary, bearing interest at 8%, payable in total monthly installments
                of $54,219 beginning in March 2005 through maturity at February 2010,
                secured by subsidiary’s oil and gas properties
            
            
            1,939,497Advances
                from stockholders, bearing interest at 10%, interest only payable
                monthly
                through maturity at May 2009, unsecured
            
            
            617,903Short
                term note payable for general liability insurance
            
            
            490,31118,916,794Current
                portion of long term debt
            
            
            (7,308,541
            )$
            11,608,253


*Return
          to Table of Contents*
 8


**TRADESTAR
      SERVICES, INC.**


**Notes
      to Condensed Consolidated Financial Statements**


**(Unaudited)**








Borrowings
      under the bank credit agreement secured by CYMRI’s oil and gas properties are
      subject to a borrowing base, which is periodically redetermined, and amounted
      to
      $6,300,000 as of September 30, 2006. The terms of the bank credit agreement,
      as
      amended, require CYMRI to maintain certain financial covenants regarding working
      capital ratio, interest coverage level and the ratio of loan balance to loan
      balance plus stockholders’ equity. The Company was in compliance with such
      financial covenants as of September 30, 2006.





The
      terms
      of the bank credit agreement secured by accounts receivable of the petroleum
      and
      construction staffing services businesses provide for a current borrowing
      base equal to the $5,000,000 credit limit and require the Company’s petroleum
      and construction staffing subsidiaries to maintain certain financial covenants
      with regard to minimum net worth, minimum net income, maximum capital
      expenditures and maximum affiliate distributions. The Company was not in
      technical compliance with the minimum net worth covenant of its construction
      staffing subsidiary as of September 30, 2006, however, the Company is in
      discussions with the bank regarding an amendment of the credit agreement with
      respect to such covenant. The Company anticipates that it will reach an
      agreement with the bank to amend the credit agreement prior to the issuance
      of
      its 2006 year-end financial statements. As of September 30, 2006, the Company
      classified the outstanding debt obligation in its consolidated balance sheet
      in
      accordance with the original scheduled maturities.







**(4)**  **Net
      Earnings (Loss) Per Share**





Basic
      earnings (loss) per common share is computed by dividing the net income or
      loss
      by the weighted average number of shares of common stock outstanding during
      the
      period, after giving effect to the issuance of 12,540,000 shares of common
      stock
      to the former stockholders of CYMRI on May 23, 2006 (see Note 2).





Diluted
      earnings (loss) per common share is computed by dividing net income or loss
      by
      the weighted average number of shares of common stock outstanding during the
      period and potentially dilutive common share equivalents, consisting of stock
      options and warrants. The effects of potential common stock equivalents are
      not
      included in computations when their effect is anti-dilutive. Because of the
      net
      loss for the three month and nine month periods ended September 30, 2005, the
      basic and diluted average outstanding shares are considered the same, since
      including the potential common stock equivalent shares would have an
      antidilutive effect on the loss per share calculation. For the three month
      and
      nine month periods ended September 30, 2006, the potential common stock
      equivalents have a dilutive effect on the Earnings Per Share and are included
      in
      the diluted average outstanding shares using the Treasury Stock
      Method.








*Return
          to Table of Contents*
 9


**TRADESTAR
      SERVICES, INC.**


**Notes
      to Condensed Consolidated Financial Statements**


**(Unaudited)**








**(5)**  **Stock-Based
      Compensation**





The
      Company has a stock-based compensation plan which was approved by the
      stockholders in October 2005 and amended in October 2006. Under the plan, as
      amended, a maximum of 2,400,000 shares may be awarded to directors and employees
      in the form of stock options, restricted stock or stock appreciation rights
      (to
      date, only stock options have been issued under the plan). The exercise price,
      terms and other conditions applicable to each stock option grant are generally
      determined by the Board of Directors. The exercise price of stock options is
      set
      on the grant date and may not be less than the fair market value of the
      Company’s common stock on that date. The stock options generally become
      exercisable over a three year period and expire after five years.





Effective
      January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), *Share-Based
      Paymen* t
      ("SFAS
      123R") requiring that compensation expense related to share-based payment
      transactions with employees be recognized in the financial statements. The
      cost
      is measured at the grant date, based on the calculated fair value of the award,
      and is recognized as an expense over the employee’s requisite service period
      (generally, the vesting period of the award). Prior to January 1, 2006, the
      Company accounted for share-based compensation to employees in accordance with
      Accounting Principles Board Opinion No. 25, *Accounting
      for Stock Issued to Employees* (“APB
      25”) and related interpretations. The Company adopted SFAS 123R using the
      modified prospective method, accordingly, financial statement amounts for prior
      periods have not been restated.





Stock-based
      compensation expense for the nine months ended September 30, 2006 in the amount
      of $12,324 has been recognized as a non-cash charge to earnings in the
      accompanying Consolidated Financial Statements. As
      of
      September 30, 2006, total unrecognized compensation cost of $533,189 related
      to
      stock options is expected to be recognized over a weighted average period of
      approximately 2.95 years. The
      estimated fair value of the options granted to employees under the plan was
      calculated using a Black Scholes option pricing model. The
      following schedule reflects the various assumptions included in this model
      as it
      relates to the valuation of such options:





Expected
                volatility
            30%Expected
                risk free interest rate
            6%Expected
                dividend yield
            0%Expected
                option term (years)
            3





There
      were no employee options granted under the plan until the fourth quarter of
      2005. Accordingly, pro forma information as if stock-based compensation expense
      had been determined consistent with the requirements of SFAS 123R for the nine
      months ended September 30, 2005 is not required. Option activity with directors
      and employees under the Company’s plan as of September 30, 2006 and changes
      during the nine months ended September 30, 2006 were as follows (including
      a
      total of 680,000 options issued to directors outside of the
      plan):


*Return
          to Table of Contents*
 10


**TRADESTAR
      SERVICES, INC.**


**Notes
      to Condensed Consolidated Financial Statements**


**(Unaudited)**











**Number**
            
            **Wtd.****Avg.**
            
            **Wtd.****Avg.**
            
            **Aggregate****of**
            
            **Exercise**
            
            **Remaining**
            
            **Intrinsic****Shares**
            
            **Price**
            
            **Term
                (Yrs.)**
            
            **Value**Outstanding
                at January 1, 2006
            
            
            550,000
            
            $
            0.25Options
                granted
            
            
            1,144,100
            
            
            1.87Options
                exercised
            
            
            -
            
            
            -Options
                forfeited
            
            
            -
            
            
            -Outstanding
                at September 30, 2006
            
            
            1,694,100
            
            $
            1.34
            
            
            4.4
            
            $
            1,367,055Exercisable
                at September 30, 2006
            
            
            216,667
            
            $
            0.18
            
            
            2.1
            
            $
            425,834





The
      aggregate intrinsic value in the table above represents the total pre-tax
      intrinsic value (the difference between the Company’s closing stock price on the
      last trading day of the third quarter of 2006 and the exercise price, multiplied
      by the number of in-the-money options) that would have been received by the
      option holders had all option holders exercised their options on September
      30,
      2006. The amount of aggregate intrinsic value will change based on the fair
      market value of the Company’s stock.





**(6)**  **Stockholder
      Advances and Related Matters**





In
      the
      nine months ended September 30, 2006, the Company received net stockholder
      advances in the amount of $525,000, excluding amounts advanced to finance the
      cash portion of the CYMRI purchase price (see Note 2). In the nine months ended
      September 30, 2005, the Company repaid net stockholder advances in the amount
      of
      $53,000. Stockholder advances, excluding amounts advanced to finance the cash
      portion of the CYMRI purchase price, are reflected as unsecured long term debt
      obligations and accrue interest at a rate of 10% per annum.





The
      Company's former President was not paid any salary for full-time services
      rendered prior to his resignation in July 2006 (see Note 7). The Company
      estimated the value of the forgone salary at $12,500 per quarter through the
      second quarter of 2006, and recorded such amounts as an expense and as a
      contribution to capital in the respective periods.


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 11


**TRADESTAR
      SERVICES, INC.**


**Notes
      to Condensed Consolidated Financial Statements**


**(Unaudited)**








**(7)**  **Contingencies**





In
      the
      second quarter of 2006, the Company was notified by the Internal Revenue Service
      of penalty and interest charges for its failure to timely remit payroll taxes
      for the third and fourth quarters of 2005 applicable to the construction
      services business. The Company remitted these unpaid payroll taxes in full
      in
      the first quarter of 2006, however, the Internal Revenue Service has advised
      the
      Company of its intention to assess penalty and interest due to the failure
      to
      make timely payment. The Company is currently negotiating with the Internal
      Revenue Service regarding the amount of the penalty and interest and is seeking
      a waiver of the penalty and interest, therefore, the exact amount of the
      settlement cannot be determined at this time. A former officer and director
      of
      the Company has agreed to reimburse the Company for any and all of the penalty
      and interest charged to the Company by the Internal Revenue Service via a
      reduction of amounts owed by the Company to the former officer. Due to the
      reimbursement agreement with the former officer and director, the Company has
      not recognized a loss on this assessment.





Two
      of
      CYMRI’s subsidiaries are defendants in certain lawsuits arising in the normal
      course of business. At the present time, it is not practical to determine the
      amount or likelihood of an unfavorable outcome to the Company’s consolidated
      financial position or results of operations in any of these cases. However,
      management believes that CYMRI’s subsidiaries have meritorious defenses in each
      case and are vigorously defending these matters.


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 12


**ITEM
      2.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





The
      following discussion of our financial condition and results of operations should
      be read in conjunction with, and is qualified in its entirety by, the condensed
      consolidated financial statements and notes thereto included in Item 1 in this
      Quarterly Report on Form 10-QSB. This item contains forward-looking statements
      that involve risks and uncertainties. Actual results may differ materially
      from
      those indicated in such forward-looking statements.





**Forward-Looking
      Statements**





This
      Quarterly Report on Form 10-QSB and the documents incorporated herein by
      reference contain forward-looking statements that have been made pursuant to
      the
      provisions of the Private Securities Litigation Reform Act of 1995. Such
      forward-looking statements are based on current expectations, estimates, and
      projections about our industry, management beliefs, and certain assumptions
      made
      by our management. Words such as "anticipates," expects," "intends," "plans,"
      "believes," "seeks," "estimates," variations of such words, and similar
      expressions are intended to identify such forward-looking statements. These
      statements are not guarantees of future performance and are subject to certain
      risks, uncertainties, and assumptions that are difficult to predict; therefore,
      actual results may differ materially from those expressed or forecasted in
      any
      such forward-looking statements. Unless required by law, we undertake no
      obligation to update publicly any forward-looking statements, whether as a
      result of new information, future events, or otherwise. However, readers should
      carefully review the risk factors set forth in other reports and documents
      that
      we file from time to time with the Securities and Exchange Commission,
      particularly the Quarterly Reports on Form 10-QSB, and future Annual Reports
      on
      Form 10-KSB and any Current Reports on Form 8-K.





**Overview
      and History**





Tradestar
      Services, Inc. was incorporated in the State of Nevada on September 3, 2003
      under the name Frontier Staffing, Inc. We were formed to acquire Tradestar
      Construction Services, Inc., a New Mexico corporation, which is a wholly-owned
      subsidiary operating as an employment staffing service specializing in the
      placement of both long-term and short-term skilled and unskilled construction
      labor to the New Mexico construction market. In January 2004, we acquired
      Tradestar Construction Services, Inc. in a stock-for-stock exchange. We issued
      a
      total of 6,400,000 shares in connection with this transaction.





In
      the
      construction services business, we develop, own, and operate employment service
      centers in specific regional areas specializing in the placement of skilled
      construction labor. We provide both skilled commercial craftsmen and general
      unskilled labor to the construction markets located in these areas. We currently
      have operations located in Albuquerque, New Mexico; Phoenix and Tempe, Arizona;
      and Las Vegas, Nevada.





On
      July
      7, 2004, we filed a registration statement under cover of Form SB-2 with the
      SEC. This registration statement was declared effective by the SEC on February
      10, 2005. On March 30, 2005, we closed this public offering. We raised a total
      of $600,000 and sold a total of 2,000,000 common shares.





In
      October, 2005, our stockholders approved an amendment to our Articles of
      Incorporation to change our name to Tradestar Services, Inc.





On
      May
      23, 2006, a wholly-owned subsidiary of the Company acquired all of outstanding
      common stock of The CYMRI Corporation (“CYMRI”), pursuant to an Agreement and
      Plan of Merger between the parties. CYMRI performs petroleum engineering
      services for customers in North and South America and is also engaged in the
      exploration and production of oil and natural gas from properties located in
      Texas and Louisiana. The total purchase price paid for the acquisition of the
      outstanding common stock of CYMRI was $12,598,200 in a combination of cash,
      notes payable and common stock.


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 13








In
      accordance with purchase accounting rules, the Company has reflected the results
      of operations of CYMRI in its consolidated financial statements since the date
      of the acquisition. The deemed effective date of the acquisition for accounting
      purposes was May 31, 2006, and the effect of including CYMRI’s results of
      operations in the Company’s consolidated financial statements since that date
      was to increase revenues for the nine months ended September 30, 2006 by
      $9,792,000 and to increase net income for the nine months ended September 30,
      2006 by $154,000 ($0.01 per share).








**Results
      of Operations**





The
      acquisition of CYMRI has substantially changed the Company’s operating profile
      and shifted its focus from one of solely a construction services company to
      one
      of a company having a more diversified staffing segment with a fully developed
      petroleum engineering services business and a still developing construction
      services business. The acquired petroleum engineering services business is
      an
      established operation with a total staff of approximately 125 engineers and
      other personnel (both contractors and employees) who have performed a wide
      variety of long term and short term projects for clients throughout North and
      South America over a 36 year history. These projects tend to be of a more
      specialized, technical nature than the work performed in Tradestar’s traditional
      construction services business. Additionally, the CYMRI acquisition has given
      the Company a capital intensive petroleum exploration and production segment
      which is subject to the operational risks of oil and gas exploration as well
      as
      the financial risks of a commodity pricing environment. While much of the future
      financial and operational focus will be on petroleum engineering services and
      petroleum exploration and production, the Company will continue its efforts
      to
      grow its traditional construction services business by expanding services to
      clients in its existing markets and by opening new markets.





In
      its
      traditional construction services business, the Company has a limited operating
      history and experienced early period operating losses, similar to many startup
      ventures. However, the Company achieved its initial profitable operations in
      the
      construction services business in the quarter ended March 31. 2006, and this
      trend continued in the quarters ended June 30 and September 30, 2006. In the
      construction services business, our results of operations have been and may
      continue to be subject to variations. The results for a particular period may
      vary as a result of a number of factors including the overall state of the
      construction staffing segment of the economy, the demand for our services and
      products, economic conditions in our markets, and product enhancements by us
      or
      our competitors as well as other competitive conditions.





*Three
      months ended September 30, 2006 versus three months ended September 30, 2005* — Total
      revenues for the three months ended September 30, 2006
      were $12,399,000 compared to $2,394,000 for the three months ended September 30,
      2005.





Revenues
      from construction staffing services for
      the
      three months ended September 30, 2006
      were $4,954,000 compared to $2,394,000 for the three months ended September 30,
      2005. This increase is due primarily to the increase in customers in
      Albuquerque, New Mexico, and the opening of our branch offices in Las Vegas,
      Nevada, in August 2005 and Phoenix, Arizona, in February 2006 .





Revenues
      from petroleum engineering services for
      the
      three months ended September 30, 2006
      were $6,334,000, representing revenues of CYMRI’s staffing services
      business which we began reporting in
      our
      consolidated financial statements in June 2006. In the three months ended September 30,
      2006, CYMRI’s s taffing
      services subsidiary, P etroleum
      Engineers, Inc. (“PEI”), billed its customers in North and South America
      approximately 5,050 man days at an average billing rate of approximately $1,250
      per day.





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 14


Revenues
      from oil and gas sales for the three months ended September 30, 2006
      were $1,107,000, representing revenues of CYMRI’s oil and
      gas production operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006. In the three months ended September 30,
      2006, revenues from oil production were $849,000, reflecting volumes of 12,350
      barrels at an average price of $68.74 per barrel, while gas revenues
      were $258,000, reflecting volumes of 38,200 Mcf at an average price of $6.75
      per
      Mcf.





Cost
      of
      construction staffing services for the three months ended September  30,
      2006
      was $4,041,000 versus $2,051,000 for the three months ended September 30, 2005.
      Cost of construction staffing services includes wages for temporary employees,
      federal and state payroll taxes, workers compensation and other direct costs.
      Cost of construction services are generally consistent, except for payroll
      taxes
      where the maximum contribution has been met and for workers compensation, which
      vary with each job site. Cost of construction services decreased as a percentage
      of revenues to approximately 82% for the three months ended September 30, 2006,
      compared to approximately 86% for the three months ended September 30, 2005,
      due
      to an increase in billing rates. Included in the amount for the three months
      ended September 30, 2006 was a non-recurring charge of $71,200 related
      to a recent audit of the Company’s workers compensation expense in the State of
      New Mexico covering the period from July 2003 to July 2006.





Cost
      of
      petroleum engineering services for
      the
      three months ended September 30, 2006 were $4,720,000, representing the cost
      of CYMRI’s petroleum engineering staffing services
      business which we began reporting in
      our
      consolidated financial statements in June 2006. Such direct costs of
      services represented
      approximately 75% of revenues, consistent with the historical percentage
      experienced by CYMRI’s s taffing
      services subsidiary, PEI,
      after giving effect to the reclassification of employed
      engineers’ salaries, which were previously classified as “Selling, general and
      administrative” expenses (see Note 1, “Basis of Presentation”) .





Lease
      operating expenses (“LOE”), including production taxes, were $468,000 for
      the
      three months ended September 30, 2006, representing LOE of CYMRI’s oil
      and
      gas production operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006.





Depreciation,
      depletion and amortization (“DD&A”) expense for the three months ended
      September 30, 2006 was $353,000 versus $6,000 for the three months ended
      September 30, 2005. This
      substantial increase reflects  DD&A of CYMRI’s oil and
      gas production operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006.





Workover
      expenses amounted
      to $313,000
      for the three months ended September 30, 2006, representing CYMRI’s workover
      expenses applicable to its South Texas oil and gas properties, primarily the
      Spielhagen #3 well. W e
      began
      reporting such expenses in
      our
      consolidated financial statements in June 2006.





Selling,
      general and administrative (“SG&A”) expenses for
      the
      three months ended September 30, 2006 were $2,086,000 compared to $451,000
      for
      the three months ended September 30, 2005. This increase reflected SG&A
      expenses of $1,314,000 applicable to CYMRI’s exploration & production and petroleum engineering operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006,  plus
      an
      increase in SG&A
      expenses of $321,000 applicable
      to our traditional construction services business. The latter increase was due to
      the
      costs associated with opening and operating new centers in Las Vegas and
      Phoenix, plus an increase in overall bad debt expense in the amount of $70,000.
      The major components of SG&A expenses include professional fees, salaries
      and associated payroll costs, rent and telephone expenses.





Interest
      expense for the three months ended September 30, 2006 was $416,000 versus
      $23,000 for the three months ended September 30, 2005. This
      substantial increase reflects interest
      expense on CYMRI’s long
      term debt applicable
      to CYMRI’s oil and
      gas production operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006.





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 15


Income
      taxes were $539
      for
      the three months ended September 30, 2006 versus zero for the three months
      ended
      September 30, 2005, and reflect a provision of 34% on cumulative pre-tax
      earnings of $1,586 in the nine months ended September 30, 2006, compared to
      a
      pre-tax loss in the prior year period.





*Nine
      months ended September 30, 2006 versus nine months ended September 30, 2005* — Total
      revenues for the nine months ended September 30, 2006
      were $22,179,000 compared to $5,206,000 for the nine months ended September 30,
      2005.





Revenues
      from construction staffing services for
      the
      nine months ended September 30, 2006
      were $12,382,000 compared to $5,206,000 for the nine months ended September 30,
      2005. This increase is due primarily to the increase in customers in
      Albuquerque, New Mexico, and the opening of our branch offices in Las Vegas,
      Nevada, in August 2005 and Phoenix, Arizona, in February 2006 .





Revenues
      from petroleum engineering services for
      the
      nine months ended September 30, 2006 were $8,281,000, representing revenues
      of CYMRI’s staffing services
      business which we began reporting in
      our
      consolidated financial statements in June 2006 (a total of four months in this
      period). In the four months ended September 30,
      2006, CYMRI’s s taffing
      services subsidiary, P etroleum
      Engineers, Inc. (“PEI”), billed its customers in North and South America
      approximately 6,640 man days at an average billing rate of approximately $1,250
      per day.





Revenues
      from oil and gas sales for the nine months ended September 30, 2006
      were $1,450,000, representing revenues of CYMRI’s oil and
      gas production operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006 (a total of four months in this
      period). In the four months ended September 30,
      2006, revenues from oil production were $1,080,000, reflecting volumes of 15,950
      barrels at an average price of $67.72 per barrel, while gas revenues
      were $370,000, reflecting volumes of 49,150 Mcf at an average price of $7.53
      per
      Mcf.





Cost
      of
      construction staffing services for the nine months ended September 30, 2006
      was
      $10,113,000 versus $4,371,000 for the nine months ended September 30, 2005.
      Cost
      of construction staffing services includes wages for temporary employees,
      federal and state payroll taxes, workers compensation and other direct costs.
      Cost of construction services are generally consistent, except for payroll
      taxes
      where the maximum contribution has been met and for workers compensation, which
      vary with each job site. Cost of construction services decreased as a percentage
      of revenues to approximately 82% for the nine months ended September 30, 2006,
      compared to approximately 84% for the nine months ended September 30, 2005,
      due
      to an increase in billing rates. Included in the amount for the nine months
      ended September 30, 2006 was a non-recurring charge of $71,200 related
      to a recent audit of the Company’s workers compensation expense in the State of
      New Mexico covering the period from July 2003 to July 2006.





Cost
      of
      petroleum engineering services for
      the
      nine months ended September 30, 2006 were $6,012,000, representing the cost
      of CYMRI’s staffing services
      business which we began reporting in
      our
      consolidated financial statements in June 2006 (a total of four months in this
      period). Such direct costs of
      services represented
      approximately 73% of revenues, consistent with the historical percentage
      experienced by CYMRI’s s taffing
      services subsidiary, PEI,
      after giving effect to the reclassification of employed
      engineers’ salaries, which were previously classified as “Selling, general and
      administrative” expenses (see Note 1, “Basis of Presentation”) .





Lease
      operating expenses (“LOE”), including production taxes, were $619,000 for
      the
      nine months ended September 30, 2006, representing LOE of CYMRI’s oil
      and
      gas production operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006 (a total of four months in this
      period).





Depreciation,
      depletion and amortization (“DD&A”) expense for the nine months ended
      September 30, 2006 was $494,000 versus $16,000 for the nine months ended September 30,
      2005. This
      substantial increase reflects  DD&A of CYMRI’s oil and
      gas production operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006 (a total of four months in this
      period).


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 16





Workover
      expenses for the nine months ended September 30, 2006 were $402,000,
      representing CYMRI’s workover
      expenses applicable to its South Texas oil and gas properties, primarily the
      Spielhagen #3 well. W e
      began
      reporting such expenses in
      our
      consolidated financial statements in June 2006 (a total of four months in this
      period).





Selling,
      general and administrative (“SG&A”) expenses for
      the
      nine months ended September 30, 2006 were $3,749,000 compared to $1,029,000
      for
      the nine months ended September 30, 2005. This increase reflected SG&A
      expenses of $1,755,000 applicable to CYMRI’s exploration & production and petroleum engineering operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006 (a total of four months in this
      period),  plus
      an
      increase in SG&A
      expenses of $965,000 applicable
      to our traditional business. The latter increase was due to the costs associated with
      opening and operating new construction services centers in Las Vegas and Phoenix
      as well as an increase in bad debt and merger related expenses. The major
      components of SG&A expenses include professional fees, salaries and
      associated payroll costs, rent and telephone expenses.





Interest
      expense for the nine months ended September 30, 2006 was $596,000 versus $44,000
      for the nine months ended September 30, 2005. This
      substantial increase reflects interest
      expense on CYMRI’s long
      term debt applicable
      to CYMRI’s oil and
      gas production operations which
      we
      began reporting in
      our
      consolidated financial statements in June 2006 (a total of four months in this
      period).





Income
      taxes were $66,000
      for the nine months ended September 30, 2006 versus zero for the nine months
      ended September 30, 2005, and reflect a provision of 34% on cumulative pre-tax
      earnings of $193,000 in the nine months ended September 30, 2006, compared
      to a
      pre-tax loss in the prior year period.








**Liquidity
      and Capital Resources**




*Operating*  *activities.* Cash
      flow from operating activities for the nine months ended September 30, 2006
      reflected revenues, less direct operating expenses, in Tradestar’s traditional
      construction services business plus four months of cash flow from CYMRI’s
      acquired operations. Cash flow from operating activities was also impacted
      by
      changes in working capital. Net cash flow used in operating activities was
      $3,253,000 for the nine months ended September 30, 2006 versus $1,125,000 for
      the nine months ended September 30, 2005. These o perating
      cash flow amounts were net of changes in working capital, which resulted in
      net
      decreases of cash in the amounts of $3,872,000 and $964,000 in the nine months
      ended September 30 , 2006
      and
      2005, respectively.




*Investing*  *activities.* Net
      cash
      used in investing activities for
      the
      nine months ended September 30, 2006 was $2,905,000 compared to $58,000 for
      the
      nine months ended September 30, 2005. The 2006 amount reflected cash expended
      for: (a) Acquisition of CYMRI
      in
      the amount of $2,000,000; (b) CYMRI’s subsequent capital expenditures in the
      amount of $823,000, primarily for
      drilling and equipment costs incurred on its oil and gas properties since June
      2006, the initial month that CYMRI’s
      cash flow activities were
      reflected in our consolidated financial statements; and (c) A dditions
      to other assets in the
      amount of $82,000. Included in CYMRI’s
      capital expenditures since June 2006 was $395,000
      for the Company’s share of the drilling costs of a currently drilling
      non-operated well in South Louisiana, which is expected to be completed in
      the
      fourth quarter of 2006. The Company’s share of the total estimated drilling and
      completion costs of this well is approximately $900,000.





*Financing
      activities.* ** Net
      cash
      provided by financing activities for
      the
      nine months ended September 30, 2006 was $5,457,000 compared to $1,236,000
      for
      the nine months ended September 30, 2005. In
      t he
      nine
      months ended September 30 , 2006,
      proceeds from long term debt borrowings provided
      cash in the amount of $4,932,000 (net of payments) while stockholder advances
      provided net cash in the amount of $525,000. In t he
      nine
      months ended September 30 , 2005,
      net
      proceeds of long term debt borrowings and stockholder
      advances provided cash in the amount of $636,000 and
      a
      public stock offering provided
      cash in the amount of $600,000.





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 17


As
      result
      of the CYMRI acquisition, the Company’s capital expenditure profile has changed
      dramatically. In Tradestar’s traditional construction services business, capital
      expenditure requirements are relatively low, except for the periodic opening
      of
      new construction services centers. Likewise, capital expenditure requirements
      of
      CYMRI’s  s taffing
      services subsidiary, P etroleum
      Engineers, Inc. (“PEI”) are relatively
      low .
      However, CYMRI’s
      exploration and production business is highly capital intensive. In this
      business, expenditures for the drilling and equipping of oil and gas wells
      are
      typically required to maintain or increase existing production levels and
      production often declines in a relatively short period of time if maintenance
      capital is not invested timely. Further, such drilling and equipment
      expenditures must often be supplemented by the acquisition of additional lease
      acreage upon which to drill future oil and gas wells. As is the case with most
      companies in the exploration and production business, the Company expects to
      finance its capital expenditure requirements through a combination of cash
      flow
      from operations, secured bank borrowings and occasional injections of new
      equity.





In
      addition to the impact on the Company’s capital expenditure profile, the CYMRI
      acquisition has substantially increased the Company’s long term debt obligations
      (see Note 3, “Long Term Debt”). A substantial portion of the new long term debt
      is in the form of a bank credit facility secured by the Company’s producing oil
      and gas properties. Borrowings under the bank credit agreement are subject
      to a
      borrowing base, which is periodically redetermined, and amounted to $6,300,000
      as of September 30, 2006. The terms of the bank credit agreement, as amended,
      require CYMRI to maintain certain financial covenants regarding working capital
      ratio, interest coverage level and the ratio of loan balance to loan balance
      plus stockholders’ equity. The Company was in compliance with such financial
      covenants as of September 30, 2006. The Company’s periodic payment obligations
      under the bank credit facility are dependent upon a semi-annual evaluation
      of
      its producing oil and gas properties and its continued compliance with these
      financial covenants. As presently structured, borrowings outstanding under
      the
      bank credit facility in the amount of $6,275,000 are due in November 2007.





In
      conjunction with the CYMRI acquisition, the Company also established a working
      capital line of credit with another bank, which is secured by accounts
      receivable of the petroleum and construction staffing services businesses.
      This
      line of credit requires the Company’s petroleum and construction staffing
      subsidiaries to maintain certain financial covenants with regard to minimum
      net
      worth, minimum net income, maximum capital expenditures and maximum affiliate
      distributions. Borrowings outstanding under this line of credit as of September
      30, 2006 were approximately $4,430,000 and are presently scheduled to mature
      in
      May 2009. As discussed in Note 3, the Company was not in technical compliance
      with the minimum net worth covenant of its construction staffing subsidiary
      as
      of September 30, 2006, however, the Company is in discussions with the bank
      regarding an amendment of the credit agreement with respect to such covenant
      and
      anticipates that it will reach an agreement with the bank to amend the credit
      agreement prior to the issuance of its 2006 year-end financial statements.
      The
      Company did not assume any other long term contractual obligations as a result
      of the CYMRI acquisition, other than normal operating leases for office
      space.





In
      Tradestar’s traditional construction services, our principal source of liquidity
      has been stockholder advances, proceeds received from notes payable and the
      sale
      of common stock. Our operating cash flow is closely tied to the economy of
      each
      city where we have operations and the U.S. economy. Typically, construction
      activity slows down during the winter months, therefore, we attempt to operate
      with minimal overhead throughout the year. Our primary activity will be to
      seek
      to expand the number of our centers and, consequently, our revenues.





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Beginning
      in July 2005, we entered an agreement with a number of investors for the
      issuance of a total of $1,164,790 of 9% secured promissory notes, due along
      with
      any unpaid interest 18 months after issuance. Our Chairman and Chief Executive
      Officer was part of the investor group. Under the terms of the notes, we granted
      the lenders a security interest in our accounts receivable and any of our other
      assets as set forth in a security agreement. We also agreed to pay the lenders
      an origination fee of five percent (5%) of the principal amount of the notes,
      a
      total of $58,239, which was amortizable over the term of the notes. In addition,
      we granted the lenders warrants to purchase 116,479 shares of common stock.
      The
      warrants vested immediately, are exercisable at $0.30 per share and expire
      in
      2010. The estimated value of the warrants, $29,892, was recorded as a debt
      discount, which was amortizable over the term of the notes. The notes were
      paid
      off in conjunction with the May 2006 financing of the CYMRI acquisition (see
      Note 3, “Long Term Debt”) and the remaining unamortized costs of the origination
      fee and the debt discount were written off.








**Growth
      Plans**





The
      Company seeks to increase shareholder value through an approach focused on
      both
      organic growth and acquisition opportunities in the petroleum and construction
      industries. The Company believes that the CYMRI acquisition has given it a
      scaleable “platform” to penetrate the petroleum industry to increase staffing
      services as well as to expand the asset base. The management team has executive
      level contacts throughout the petroleum industry and the team members have
      experience in leveraging contacts in one industry sector to generate
      opportunities in other industry sectors, as well as expertise in closing and
      integrating acquisition opportunities.





While
      continuing its efforts to grow staffing services in the petroleum and
      construction industries through acquisitions and organic growth, the Company
      will consider making one or more asset acquisitions in the following areas
      of
      the petroleum industry: (a) Drilling of low risk development type oil and gas
      wells; (b) Acquisition of producing oil and gas properties; (c) Acquisition
      of
      gathering systems and/or related pipeline assets; (d) Acquisition of processing
      or treatment systems; and (e) Acquisition of seismic data in the U.S or Canada.
      In order to fund its growth plans as well as to meet short term liquidity needs,
      the Company is presently undertaking a private placement of up to $2,000,000
      of
      its common stock and is considering various other debt and equity financing
      alternatives.








**Recently
      Issued Accounting Pronouncements**





In
      September 2006, the Financial Accounting Standards Board ("FASB") issued
      Statement No. 158 " *Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans, an
      amendment of FASB Statements No. 87, 88, 106, and 132(R)* "
      ("SFAS
      158"), which requires companies to recognize the funded status of a defined
      benefit postretirement plan as an asset or liability in its balance sheet. 
SFAS 158 is effective for fiscal years ending after December 15, 2006. We have
      no defined benefit plans, therefore, we do not expect the adoption of SFAS
      158
      to have an impact on our consolidated financial position, results of operations
      or cash flows.





In
      September 2006, the FASB issued SFAS No. 157, " *Fair
      Value Measurements* "
      ("SFAS
      157"), which defines fair value, establishes a framework for measuring fair
      value in generally accepted accounting principles and expands disclosures about
      fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the FASB having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. SFAS 157 is effective for fiscal years beginning
      after December 15, 2007. We plan to adopt SFAS 157 beginning in the first
      quarter of fiscal 2008. We are currently evaluating the impact, if any, the
      adoption of SFAS 157 will have on our consolidated financial position, results
      of operations or cash flows .





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In
      July
      2006, the
      Financial Accounting Standards Board ("FASB") issued
      Financial Interpretation No. 48, " *Accounting
      for Uncertainty in Income Taxes - an interpretation of FASB Statement
      No. 109* "
      ("FIN
      48"), to clarify certain aspects of accounting for uncertain tax positions,
      including issues related to the recognition and measurement of those tax
      positions. This interpretation is effective for fiscal years beginning after
      December 15, 2006. We are in the process of evaluating the impact of the
      adoption of this interpretation on our consolidated financial position, results
      of operations or cash flows.





In
      March 2006, the FASB issued SFAS No.156, " *Accounting
      for Servicing of Financial Assets* "
      ("SFAS
      156"), which requires all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value. SFAS 156 permits, but does
      not
      require, the subsequent measurement of servicing assets and servicing
      liabilities at fair value. Adoption is required as of the beginning of the
      first
      fiscal year that begins after September 15, 2006. Early adoption is
      permitted. The adoption of SFAS 156 is not expected to have a material effect
      on
      our consolidated financial position, results of operations or cash flows.





In
      February 2006, the FASB issued SFAS No. 155, " *Accounting
      for Certain Hybrid Financial Instruments, an amendment of FASB Statements No.
      133 and 140* "
      ("SFAS
      155"). SFAS 155 clarifies certain issues relating to embedded derivatives and
      beneficial interests in securitized financial assets. The provisions of SFAS
      155
      are effective for all financial instruments acquired or issued after fiscal
      years beginning after September 15, 2006. We are currently assessing the impact
      that the adoption of SFAS 155 will have on our consolidated financial position,
      results of operations or cash flows.








**Critical
      Accounting Policies and Estimates**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based on consolidated financial statements which have been prepared in
      accordance with generally accepted accounting principles in the United States.
      The preparation of these financial statements requires us to make estimates
      and
      judgments that affect the reported amounts of assets, liabilities, revenues
      and
      expenses. We believe that certain accounting policies affect our more
      significant judgments and estimates used in the preparation of our consolidated
      financial statements. Our 2005 Annual Report on Form 10-KSB, includes a
      discussion of our critical accounting policies.





As
      result
      of the CYMRI acquisition, the Company has adopted certain new accounting
      policies with respect to CYMRI’s exploration and production operations beginning
      in May 2006. The most significant of these new policies relates to the “full
      cost” method of accounting for oil and gas properties. Under full cost
      accounting, all costs associated with acquisition, exploration, and development
      of oil and gas reserves, including directly related overhead costs, are
      capitalized. Other significant features of full cost accounting are as follows:





·
            All
                capitalized costs of oil and gas properties, including the estimated
                future costs to develop proved reserves, are amortized on the
                unit-of-production method using estimates of proved reserves. Investments
                in unproved properties and major development projects are not amortized
                until proved reserves associated with the projects can be determined
                or
                until impairment occurs. If the results of an assessment indicate
                that the
                properties are impaired, the amount of the impairment is added to
                the
                capitalized costs to be amortized.


·
            The
                capitalized costs are subject to a “ceiling test,” which basically limits
                such costs to the aggregate of the “estimated present value,” discounted
                at a 10-percent interest rate, of future net revenues from proved
                reserves, based on current economic and operating conditions, plus
                the
                lower of cost or fair market value of unproved
                properties.


·
            Sales
                of proved and unproved properties are accounted for as adjustments
                of
                capitalized costs with no gain or loss recognized, unless such adjustments
                would significantly alter the relationship between capitalized costs
                and
                proved reserves of oil and gas, in which case the gain or loss is
                recognized in income. Abandonments of properties are accounted for
                as
                adjustments of capitalized costs with no loss recognized.


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 20





For
      a
      complete discussion of the new accounting policies adopted by the Company as
      a
      result of the CYMRI acquisition, see the Company’s Form 8-K/A filed on August 9,
      2006, Exhibit 99.1, “The CYMRI Corporation - Notes to Consolidated Financial
      Statements,” beginning on page F-6.








**ITEM
      3.****CONTROLS
      AND PROCEDURES**





As
      of the
      date of this report, our Chief Executive Officer and our Chief Financial Officer
      evaluated the effectiveness of the design and operation of our disclosure
      controls and procedures pursuant to Rule 13a-15b under the Securities Exchange
      Act of 1934. Based on their review of our disclosure controls and procedures,
      they have concluded that our disclosure controls and procedures are effective
      in
      timely alerting each of them to material information relating to us that is
      required to be included in our periodic SEC filings. Further, there were no
      significant changes in the internal controls or in other factors that could
      significantly affect these disclosure controls after the evaluation date and
      the
      date of this report. Nor were there any significant deficiencies or material
      weaknesses in such disclosure controls and procedures requiring corrective
      actions. As a result, no corrective actions were taken.





Except
      for the continuing impact of the CYMRI acquisition described in Note 2 of the
      Condensed Consolidated Financial Statements, the Company has made no changes
      in
      its disclosure controls and procedures in the most recent quarterly reporting
      period. As a result of the CYMRI acquisition on May 23, 2006, the Company is
      continuing to evaluate its disclosure controls and procedures on a consolidated
      company basis. Upon completion of that evaluation, the Company expects that
      certain key controls underlying its disclosure controls and procedures will
      be
      enhanced or modified due to administrative efficiencies resulting from combining
      certain support operations in the construction and petroleum engineering
      staffing businesses.








**PART
      II.****OTHER
      INFORMATION**








**ITEM
      1.****LEGAL
      PROCEEDINGS**





See
      Note
      7 to Condensed Consolidated Financial Statements.





**ITEM
      2.****UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





Pursuant
      to an Agreement and Plan of Merger executed between the Company and The CYMRI
      Corporation (“CYMRI”), a wholly-owned subsidiary of the Company acquired all of
      CYMRI’s outstanding common stock on May 23, 2006. CYMRI and its subsidiaries
      perform petroleum engineering services for customers in North and South America
      and are engaged in the exploration and production of oil and natural gas from
      properties located in Texas and Louisiana. Included in the consideration paid
      to
      the shareholders of CYMRI was 12,540,000 shares of the Company’s common stock.
      In issuing such shares, the Company relied on an exemption from registration
      under Section 4(2) of the Securities Act of 1933, as amended.





Also
      on
      May 23, 2006, in connection with the Merger transaction, the Company issued
      warrants to purchase an aggregate of 1,136,043 shares of its common stock at
      an
      exercise price of $1.87 per share to various individual investors. The warrants
      are for the period commencing on May 23, 2006 and ending on May 23, 2009. In
      issuing the warrants, the Company relied on an exemption from registration
      under
      Section 4(2) of the Securities Act of 1933, as amended. The warrants are
      immediately exercisable, in whole or part, upon receipt of notice of
      exercise.







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 21


**ITEM
      3.****DEFAULTS
      UPON SENIOR SECURITIES**


None.





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


None.





**ITEM
      5.****OTHER
      INFORMATION**


None.





**ITEM
      6.****EXHIBITS**




31.1
            Certification
                of Chief Executive Officer pursuant to Rule
                13a-14(a)/15(d)-14(a)31.2
            Certification
                of Chief Financial Officer pursuant to Rule
                13a-14(a)/15(d)-14(a)32.1
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002







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**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.






**TRADESTAR
                SERVICES, INC.**Date: November 13, 2006
            By:
            /s/ Frederick
              A. HuttnerFrederick A. HuttnerChief
              Executive Oficer


Date: November
              13, 2006
            By:
            /s/ Kenneth
              L. ThomasKenneth L. ThomasChief
              Financial Officer






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