**UNITED
                STATES**
              **SECURITIES
                AND EXCHANGE COMMISSION****Washington,
                D.C. 20549****FORM** **10-KSB/A**
              (Amendment
                No. 1)**[X]****ANNUAL REPORT UNDER
                SECTION****13
                OR 15(d) OF THE
                SECURITIES****EXCHANGE
                ACT OF 1934****For
                the fiscal year ended December 31, 2006****[
                 ]****TRANSITIONAL REPORT
                UNDER SECTION****13
                OR
                15(d)****OF
                THE SECURITIES
                EXCHANGE ACT OF 1934****For
                the transition period
                from**   _______ **to** _______**Commission
                file number 000-08356****XEDAR
                CORPORATION**(Name
                of small business issuer as specified in its charter)**COLORADO**
            
            **84-0684753**(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)**8310
                South Valley Highway, Suite 220**
              **Englewood,
                CO 80112**(Address
                of principal executive offices)**(303)
                377-0033**(Issuer’s
                telephone number)Securities
                registered under Section 12(b) of the Exchange Act:**None**Securities
                registered under Section 12(g) of the Exchange Act:Common
                Stock, no par value





Check
      whether the 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 Securities Exchange
      Act during past 12 months, and (2) has been subject to such filing requirements
      for the past 90 days. Yes  **[X]**No  [
      ]




Check
      if there is no disclosure of
      delinquent filers in response to Item 405 of Regulation S-B contained in this
      form, and no disclosure will be contained, to the best of registrant’s
      knowledge, in definitive proxy or information statements incorporated by
      reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
      **[X]**





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b–2 of the Exchange Act). Yes  [ ]   No
**[X]**














State
      the
      issuer’s revenues for its most recent fiscal year: $6,237,339




As
      of
      January 31, 2007, there were 19,590,518 shares of the issuer’s no par value
      common stock outstanding and the aggregate market value of the common stock
      (based upon the average bid and asked prices on such date) of the issuer held
      by
      non-affiliates was approximately $28,351,497.




Transitional
      Small Business Disclosure Format. Yes  [ ]   No 
**[X]**





DOCUMENTS
      INCORPORATED BY REFERENCE





The
      information required by Part III of this report, to the extent not set
      forth herein, is incorporated by reference from the registrant’s definitive
      proxy statement relating to the annual meeting of stockholders anticipated
      to be
      held on April 24, 2007, which definitive proxy statement will be filed with
      the
      Securities and Exchange Commission within 120 days after the end of the
      year to which this report relates.





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            2
            -*





Explanatory
      Note





We  are
      filing this Amendment No. 1 to our Form 10-KSB for the year ended December
      31,
      2006, for the following reason.  Subsequent to filing the Form 10-KSB,
      we entered into agreements to acquire Atlantic Systems Corporation and Pixxures,
      Inc.  We are also in the process of registering on behalf of certain
      selling shareholders certain outstanding shares of our common stock which are
      currently restricted from trading.  We are preparing an amendment to
      our registration statement on Form SB-2 in connection therewith.  The
      Form SB-2 includes the financial statements for the two years ended December
      31,
      2006.  As we have prepared the Form SB-2, we have concluded that in
      the financial statements we should disclose certain events which occurred
      subsequent to December 31, 2006, and subsequent to our preparation of the
      financial statements in the December 31, 2006 Form 10-KSB as originally
      filed.  As we have prepared the financial statements for the SB-2, we
      have also identified information in the Form 10-KSB which we could have
      disclosed with more precision.  We have therefore concluded that we
      need to make certain changes to the disclosures in the Form SB-2 based on
      disclosures which we made in the Form 10-KSB.





We
      have
      prepared this Amendment No. 1 to provide the disclosures discussed
      above.  The financial statements in this Amendment No. 1 report all
      material events which occurred subsequent to December 31, 2006, through the
      date
      of the enclosed Independent Auditor’s Report.  We have not updated
      other parts of the Form 10-KSB.  For additional information on
      subsequent events the reader should refer to the Forms 10-QSB and 8-K we have
      filed in 2007.





This
      Amendment No. 1 amends Items 1, 1.A, 6, 7 and 8 as discussed below.





Changes
      made in this amendment include:





**Item
      1. Description of business**





Company
      History





We
      expand
      the detail of the description of our operations between 1974 and
      present.  We provide additional information regarding acquisitions and
      dispositions of our divisions as it relates to parties involved and
      consideration paid or received.





Geographical
      Information Systems Segment





We
      provide explanation to the industry-specific terms “open federal acres” and
      split estate land.





Product
      Development and Technology





We
      provide specific information about technologies we use and define industry
      specific terms to which we refer.





Governmental
      Approval





No
      government approval is required for any of our products or
      services.





Government
      Regulations





We
      are
      not aware of any current or prospective government regulations, nor of any
      changes to existing regulations, that will impact our business.





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Customers





We
      provide additional information about our largest customers and governmental
      agencies and entities we do business with.





Suppliers





We
      provide expanded information on our suppliers.





Sales
      and Marketing





We
      revise
      our previous disclosure to make it more specific, and we define
      industry-specific terms to which we refer.





Competition





We
      expand
      disclosure of our competition and the ways we differentiate
      ourselves.





Intellectual
      Property





We
      add
      specific detail about registered intellectual property we own and intellectual
      property for registration for which we applied.





**Item
      1.A. Risk Factors**





We
      provide specific disclosure in our risk factors of how our business and
      operations would be affected by third party database content agreements and
      by
      customer renewals of subscriptions.





We
      add a
      disclosure of an additional risk factor of loss of revenue due to contract
      termination, loss of revenue due to reduced government spending, concentration
      of ownership and continued loss generation based on recent
      performance.





**Item
      6.  Management's Discussion and Analysis of Plan of
      Operations.**





We
      expand
      our management discussion and analysis of plan of operations with additional
      disclosure of opportunities, challenges and risks, known trends , events,
      demands, commitments and uncertainties and key performance
      indicators.





Revenue
      Recognition





We
      revise
      our disclosure of service sales revenue recognition to address the issue of
      bundled services sales.  We do not sell bundled services.





Stock-Based
      Compensation





We
      added
      a disclosure of actual amounts of compensation cost recognized in connection
      with adoption of SFAS 123R.





Liquidity
      and Capital Resources





We
      revise
      our disclosure to give additional detail about sources of financing we used
      in
      2006.





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            4
            -*





Net
      Cash from Continuing Operations – Financing Activity





We
      revise
      our disclosure to give the specific name of related parties involved in our
      financing activity.





We
      evaluate amounts and certainty of cash flows.





Results
      of Operations





We
      discuss changes in our Net Loss.





We
      identify federal contracts that have expired and have not been
      renewed.





We
      provide additional information about the sale of our customer relationships
      segment.





**Item
      7.  Financial Statements**





Our
      independent auditors revised the date of their report to reflect the appropriate
      date of audit procedures performed on revised disclosures and
      presentation.





Consolidated
      Statements of Operations





We
      sold
      CustomerSoft, our customer relationship management segment, in November
      2006.  As originally filed, in the Consolidated Statements of
      Operations we classified the operations of the customer relationship management
      segment in regular operations.  In this amendment we have reclassified
      the operations of our customer relationship management segment as discontinued
      operations, in accord with Statement of Financial Accounting Standard No.
      144.





Consolidated
      Statements Of Changes In Stockholders’ Equity





We
      have
      modified the presentation of our shares outstanding in the Statement of
      Stockholders Equity to be consistent with the recapitalization associated with
      the reverse acquisition of Xedar Corporation by Premier Data Service,
      Inc.





Note
      1, Concentration of Credit Risk


We
      added
      a disclosure about customers whose revenue exceeded 10% of total revenue in
      accordance with SOP 94-6 and paragraph (39) of SFAS No. 131.





Note
      1, Revenue Recognition, Sales of Services


We
      revise
      our disclosure of service sales revenue recognition to address the issue of
      bundled services sales.  We do not sell bundled services.





Note
      1, Stock-Based Compensation, third paragraph


We
      changed the Note reference from Note 9 to Note 10 here and in other places
      because we added a new Note 8, changing the numeration of all Notes after the
      new Note 8.





Note
      4


At
      the
      end of Note 4 - Related Party Transactions, we added a reference to a
      related-party discussion in Note 5.





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            5
            -*





Note
      8


We
      added
      Note 8 to report Discontinued Operations.





Note
      9


We
      provided clarification on the details of the reverse acquisition of Xedar
      Corporation by Premier Data Service, Inc.





Note
      12


After
      the
      first table in Note 12 we added a paragraph to provide a disclosure about
      customers whose revenue exceeded 10% of total revenue in accordance with SOP
      94-6 and paragraph (39) of SFAS No. 131.





Note
      13


We
      added
      a discussion at the end of Note 13, Subsequent Events, of our acquisitions
      of
      Atlantic Systems Corporation and Pixxures, Inc.





**A
      NOTE ABOUT FORWARD-LOOKING STATEMENTS**


The
      statements included in this report, other than statements of historical fact,
      are forward-looking statements. Forward-looking statements generally can be
      identified by the use of forward-looking terminology such as “may,” “will,”
“expect,” “intend,” “estimate,” “anticipate,” “plan,” “seek,” or
“believe.”  These forward-looking statements, which are subject to
      risks, uncertainties, and assumptions, may include projections of our future
      financial performance based on our growth strategies and anticipated trends
      in
      our business. These statements are only predictions based on our current
      expectations about future events. There are important factors that could cause
      our actual results, level of activity, performance, or achievements to differ
      materially from the results, level of activity, performance, or achievements
      expressed or implied by the forward looking statements. In particular, you
      should consider the risks outlined under "Risk Factors."  Although we
      believe the expectations reflected in the forward-looking statements are
      reasonable, we cannot guarantee future results, level of activity, performance,
      or achievements. You should not rely upon forward-looking statements as
      predictions of future events. These forward-looking statements apply only as
      of
      the date of this report; as such, they should not be unduly relied upon as
      circumstances change.  Except as required by law, we are not
      obligated, and we undertake no obligation, to release publicly any revisions
      to
      these forward-looking statements that might reflect events or circumstances
      occurring after the date of this report or those that might reflect the
      occurrence of unanticipated events.








**Part
      I**





**Item
      1.  Description of Business.**





Overview


We
      have
      two primary lines of business.





First,
      we
      obtain federal geographical and land information ownership data from the Bureau
      of Land Management and state and county geographical and land information data
      from various states and counties and convert this information into databases
      that are sold to oil and gas companies, as well as several agencies of the
      federal government, along with browser software that allows users to easily
      access ownership information about specific parcels of land.  This
      service is offered both on compact disc and through an Internet
      site.  Nearly all sales are on an annual or quarterly subscription
      basis.  We also offer production mapping services to a number of
      clients.





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Second,
      we provide information technology systems and enterprise assurance and security
      analysis services to various federal government agencies.  We use an
      internally-developed systems security analysis tool to improve the efficiency
      of
      our consultants, which allows us to bid more competitively for new
      work.





We
      have
      over 200 commercial and government customers.  Approximately 75% of
      our revenue is derived from government customers, which include the Department
      of State, the National Park Service, the Internal Revenue Service, the Bureau
      of
      Land Management, the Bureau of Reclamation, and the U.S. Forest
      Service.  Our commercial customers include most of the major domestic
      petroleum companies including: Anadarko Petroleum, BP America, ConocoPhillips,
      Devon Energy, EnCana, Shell, Williams Production, and Yates
      Petroleum.





Our
      principal executive offices are located at 8310 South Valley Highway, Suite
      220,
      Englewood, Colorado 80112 and our telephone number is 303-377-0033. We also
      maintain an Internet site at www.xedarinc.com.  Our common
      stock trades in the Over-the-Counter market (OTC.BB) under the ticker symbol
      “XDRC.OB.”





Company
      History


We
      are a
      Colorado corporation, incorporated in 1974 for the purpose of designing,
      developing, fabricating and selling high technology electro-optical equipment
      and related electrical equipment, including devices such as cameras, video
      systems, video amplifiers, image systems, electro-optical transmissions and
      electrical test equipment.  We were quoted for trading on the
      Electronic Bulletin Board from 1975 until November 28, 2001, when we filed
      a
      Form 15, Certification and Notice of Termination of Registration with the
      Securities and Exchange Commission and terminated our quotation on the Bulletin
      Board.  We engaged in minimal operations until October 1, 2004 (the
      date of our new development stage), when we commenced activities to become
      current in reporting with the Commission as a shell company.




Effective
      December 31, 2006, through a wholly owned subsidiary formed specifically for
      that purpose, we merged with Premier Data Services, Inc., a Delaware
      corporation, as reported in our Current Report on Form 8-K filed on January
      5,
      2007.  Before the merger there was no material relationship between
      us, our affiliates, and Premier.  In accordance with the terms of the
      merger agreement, we issued 14,082,871 shares of our common stock in
      exchange for (i) 13,685,018 shares of the common stock of Premier, and (ii)
      2,685,253 shares of the Series A preferred stock of
      Premier.  Immediately after the merger transaction, the former
      stockholders of Premier owned approximately 85% of the issued and outstanding
      shares of our common stock, and the management and board of directors designated
      by Premier were appointed as our officers and directors.  The
      conversion of Premier shares into our shares of common stock has been accounted
      for as a reverse acquisition, since the stockholders of Premier obtained control
      of us.  The following discussion includes the historical book values
      and results of operations of Premier.





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Premier
      was formed in 1994 by four partners, Robert Johnson, Brad Taggart, Mark Chase,
      and Gary Kerr, three of whom remain with us today (Robert Johnson, Brad Taggart,
      and Mark Chase).  We issued a string of land database and mapping
      products, including ClaimFinder® in 1995, LeaseFinder® in 1996, LotFinder® and
      CartéView® in 1997, Lease Sale System in 1998, Land Link® in 1999, PDS Studio®
in 2001, Launch Pad in 2002, Map Layout Express in 2003, Map Server in 2004
      and
      the Historical Lease Sale database in 2006.  Also, we developed a
      number of custom applications for selected Federal Government clients, such
      as
      the BLM Lease Sale System, Mining Claim ADP, and OG Map II software. These
      custom applications expanded our base of development experience, allowing us
      to
      transfer technology from our custom design work into packaged software
      products.




We
      targeted initial sales efforts primarily at the mining industry, followed by
      the
      oil & gas industry and then the federal government market, with sales to the
      Bureau of Land Management (BLM), Bureau of Reclamation, and U.S. Forest
      Service.





We
      acquired FuGEN, Inc., a Maryland-based software development and systems
      consulting company, in early 2002.  This gave us an expanded foothold
      in the federal government marketplace, which has led to major information
      technology systems and enterprise security consulting projects with the
      Department of State, the Veterans Administration, the Bureau of Land Management,
      and the National Park Service.  FuGEN was also founded in
      1994.  The founder, Martin Terwilliger, and the initial two members of
      FuGEN’s executive staff, Michelle Beiga and Mitchell Gross, are still active in
      our day-to-day operations.  Mr. Terwilliger serves as the President of
      our wholly owned FuGEN subsidiary, is an employee at will, and receives an
      annual salary of $185,000.  Ms. Beiga serves as the Vice President –
Human Resources of our wholly owned FuGEN subsidiary, is an employee at will,
      and receives an annual salary of $108,000.  Mr. Gross serves as the
      Vice President – Consulting Services of our wholly owned FuGEN subsidiary, is an
      employee at will, and receives an annual salary of $138,000. Premier acquired
      FuGEN for a purchase price of (i) 2,239,652 shares of Premier's common stock
      and
      (ii) a cash payment of $100,000 and delivery of a contingent promissory note
      payable to Jack Baum or his affiliates in a principal amount not to exceed
      $700,000 (Mr. Baum was a controlling shareholder of FuGEN at the time of the
      acquisition).  The acquisition of FuGEN was negotiated by our CEO,
      Hugh H. Williamson, III, who, at the time of the acquisition, served as chairman
      of the board of directors of Premier, Mr. Terwilliger, then President of FuGEN,
      and Mr. Baum, a controlling shareholder of FuGEN. Premier had no material
      relationship with FuGEN or its shareholders prior to its acquisition of
      FuGEN.





In
      November 2006 we sold the Customer Relationship Management segment of our
      information technologies consulting business.  We sold this segment in
      exchange for  contingent consideration of $800,000.  The
      sale amount represents the approximate total anticipated profit from what was
      at
      the time the segment’s only identified prospective sale (Starscape
      Communications Private Limited), and was contingent upon consummation of that
      sale.  To date nothing has been paid as the sale has not been
      closed.  The time period for consummation of the sale was 12 months
      from the date of the sale of the company, or until October 31, 2007, after
      which
      no consideration will be due.  As we do not consider this sale to be
      probable, no amounts have been recorded in the accompanying financial statements
      related to the contingent consideration.








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On
      January 1, 2007, we, through our subsidiary PDS GIS/LIS, Inc., a Delaware
      corporation, acquired Land Links Company Ltd., a New Mexico Limited Liability
      Company.  We purchased Land Links from its two members for a purchase
      price of 360,000 shares of our common stock, 180,000 shares paid to David M.
      King and 180,000 shares paid to Glen W. Thurow.  The terms of the Land
      Links acquisition were negotiated by the President and CEO of our Premier and
      PDS GIS/LIS subsidiaries, Richard V. Souders, and the two members of Land Links,
      and Glen W. Thurow and David M. King.  Subsequent to the acquisition,
      Mr. Thurow became a co-manager of our wholly owned Land Links subsidiary, with
      an annual salary of $100,000 and Mr. King became a co-manager of our wholly
      owned Land Links subsidiary, with an annual salary of $100,000.  Both
      Mr. Thurow and Mr. King are employees at will.  We had no material
      relationship with Land Links or its members prior to our acquisition of Land
      Links.  This acquisition expanded our foothold in the geographic
      information systems arena.





Capital
      Structure


Our
      authorized common stock consists of 50,000,000 shares of common stock, no par
      value per share.  Each owner of our common stock has equal right to
      dividends and voting and there are no preemptive rights associated
      therewith.





Geographical
      Information Systems Segment


Our
      Geographical Information Systems (“GIS”) segment provides government and oil and
      gas customers with a combination of land database products and production
      services related to the creation or enhancement of land records.  In
      2006, our GIS segment’s client base included the Bureau of Land Management, the
      Bureau of Reclamation, the National Park Service, and more than 200 commercial
      oil and gas customers.  Approximately 50% of our GIS segment’s
      revenues come from subscriptions to its database products, and 50% from its
      GIS
      production services.  There is typically a modest decline in revenues
      related to GIS production services during the fourth quarter of each year,
      due
      to reduced client activity levels and a smaller number of business days than
      in
      other quarters.





Customers
      who use the land database products can access information through an internet
      site or by compact disc.  The database products provide database
      queries, reports, and digital maps for over 13,000,000 Bureau of Land Management
      and state land records in the Rocky Mountain area of the United
      States.  Users can investigate such land information as competitor
      activity, federal and state lease ownership, lot and tract survey data, open
      federal acres (i.e., land available for lease), and split estate lands (i.e.,
      land in which surface ownership is not by the federal government, but the
      underlying mineral ownership is reserved to the federal
      government).





In
      the
      area of production services, our GIS segment provides data editing and
      enhancement, scanning, data conversion, data integration, and custom
      mapping.  The typical customer uses these services to convert existing
      GIS data into a digital format, or to integrate disparate data
      sets.





Information
      Technology Consulting Segment


Our
      consulting segment provides independent verification and validation and
      information assurance on large projects within several federal
      agencies.  In 2006, our consulting segment’s client base included the
      National Park Service as a prime contractor, and the Internal Revenue Service,
      USAID and the Department of State as a subcontractor.  The Department
      of State contract represents 46% of the segment’s revenues.  There is
      typically a modest decline in consulting revenues during the fourth quarter
      of
      each year, due to a smaller number of business days than in other quarters
      that
      is driven by a high concentration of mandatory federal government
      holidays.








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            9
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Other
      Segments


Our
      customer relationship management segment provided software maintenance support,
      and was sold in November 2006. Our justice information systems segment created
      and installed court case management systems, and was sold to Justice Systems,
      Inc. in February 2007.





Product
      Development and Technology


Our
      product development efforts and use of technology focus on the collection,
      management, and delivery of critical information to our customers through our
      database offerings.  The management and expansion of our databases are
      central to our product development efforts.  We continuously update
      and refine our databases through proprietary methods and the use of technology
      encompassing the following steps:




·
              Gathering
                  content from outside sources;
 ·
              Authenticating
                  the content based on error-checking
                  routines;
 ·
              Translating
                  this information into useable
                  formats;
 ·
              Tagging
                  the information for multiple attributes and indexing for retrieval
                  purposes;
 ·
              Posting
                  to our Internet site for access by customers, or writing the information
                  to compact discs for delivery to
                  customers.




It
      is our
      ability to gather data from disparate sources, and the use of our proprietary
      software and data management capabilities, which allow improved access to this
      data, coupled with our authentication and error-checking routines, that
      differentiates the services we offer.





We
      use a
      variety of software routines that were developed in-house to index critical
      information in a variety of ways, such as broad field categories, document
      type,
      and document title.  We base some of our products and databases on the
      software products of ESRI, Inc., for which we pay approximately $30,000 in
      annual maintenance fees.  There is no contract associated with the
      invoice for the ESRI maintenance fees. We employ a group of networked computer
      servers that are housed in one location, referred to as a server
      farm.  Server farm streamlines internal processes by distributing the
      workload between the individual components of the farm and expedites computing
      processes by harnessing the power of multiple servers.  Our server
      farm uses uninterruptible power supplies to ensure that critical information
      is
      highly available to our customers.  Our processes allow for updating
      as soon as new information becomes available.





We
      do not
      consider any of our data collection or data management design efforts to be
      research and development (R&D) activities.  Consequently, we
      incurred no R&D expense during the last two years.





Governmental
      Approval


No
      government approval is required for any of our products or
      services.





Government
      Regulations


We
      are
      not aware of any current or prospective government regulations, nor of any
      changes to existing regulations, that will impact our business.








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Customers


We
      have a
      diverse customer base that includes many of the largest companies or government
      entities in the industries we serve.  Our government customers include
      counties, states, and the federal government.  The majority of our GIS
      customers are large multi-national and national oil and exploration
      companies.  In 2006, our largest two customers were BearingPoint, Inc.
      and IBM, through whom we acted as subcontractors to the Department of State
      and
      Internal Revenue Service, respectively.  Both customers are customers
      of our FuGEN, Inc. subsidiary, and generated 37% of our total
      revenue.





We
      sell
      our products and services to various government agencies and
      entities.  One contract, through a prime contractor with the
      Department of State, produced 29% of our total 2006 revenue.  The
      prime contractor is BearingPoint, Inc., which bills the government on our behalf
      and disburses funds to us on net 45 day terms.  Our government
      contracts are subject to terms that would allow for termination at the election
      of the government.  With the exception of the Department of State
      contract, we believe that no termination of any contract or subcontract at
      the
      election of the government would have a material adverse impact on our financial
      results.





In
      addition to the BearingPoint arrangement, our FuGEN subsidiary subcontracts
      through IBM for a project with the Internal Revenue Service, through both
      ManTech, Inc. and General Dynamics for projects with the Department of State,
      and also through Open System Sciences for a project with USAID.  Our
      Atlantic Systems Corporation subsidiary subcontracts through BearingPoint for
      a
      project with the National Security Agency, and through ADDX for a project with
      the Secretary of the Air Force.  None of these prime contractors are
      affiliates.





Suppliers


We
      obtain
      periodic updates to the case recordation database and various lease sale
      databases from the Bureau of Land Management under the Freedom of Information
      Act.  We also obtain lease sale and land ownership information from
      the state governments of Colorado, Wyoming, Utah, North Dakota, South Dakota,
      Montana, Nevada, New Mexico, Oregon, Washington, and California.  We
      pay no fees to any of these government entities.  Instead, data is
      either given to us under no obligation, or under a data sharing arrangement
      where the state governments obtain free access to our databases for their
      internal use.





Sales
      and Marketing


We
      have
      two full time sales people, and we have eight other employees with a large
      portion of their focus and responsibilities connected to sales.


Our
      marketing efforts  include a well maintained, functional and
      attractive web site, a quarterly e-news letter to all clients, attendance at
      selected trade shows, participation in selected trade associations and an
      assortment of collateral materials.





Federal
      land data customers are easy to identify because any government agency involved
      with land use in the western United States must have access to information
      such
      as that available through our products.  In most cases, such as the
      Bureau of Land Management, there is already an in-house staff that is reviewing
      land data and creates maps, but it does so mostly by hand.  The value
      proposition presented in these instances focuses on labor savings, improved
      customer service, time reduction and the improved accuracy to be realized by
      implementing our products.  The main obstacles in closing government
      sales involve the allocation of funds (which frequently lengthens the sales
      cycle into the following year), the lengthy approval process to which most
      government purchases are subjected and the tendency for internal development
      versus outsourcing.








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            11
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Our
      commercial oil and gas customers are easily identified, because they appear
      in
      the databases provided by the Bureau of Land Management as current federal
      land
      leaseholders or bidders for land that is being made available.  Our
      commercial sales staff contacts potential customers based on this information,
      which is prioritized by the number of lease holdings per
      customer.  One-on-one meetings, which include product demonstrations,
      follow initial contacts with potential customers. Customers are also identified
      at trade shows, which are attended by our sales staff on a regular
      basis.  The full sales cycle for oil and gas customers is in the range
      of three to four months.





Federal
      systems security projects require considerable face-to-face discussion with
      the
      senior information technology managers of a federal department, agency, or
      bureau.  The emphasis in these meetings is on the technical approach
      to be taken by us, which calls for in-depth discussions of client
      needs.  After initial approval, these projects are given to a
      contracting manager, who determines the funding vehicles to be used, reviews
      the
      proposals, and assigns contracts.  In some cases, we do not have
      access to a particular pre-approved government schedule of products, services
      and fees,, and so we have managed projects from the position of a subcontractor
      to another entity who has obtained the appropriate pre-approved schedule of
      products, services and fees..  Our strategy to expand by acquisition,
      as discussed further below, should give us sufficient mass to bid directly
      on a
      larger proportion of major government systems security projects, thereby
      allowing us to act as the prime contractor and potentially garner a larger
      share
      of the revenue from each project.





The
      sales
      cycle for systems security projects ranges from three months to a year, with
      very large projects occasionally requiring a longer sales cycle.





Customer
      Support


Our
      customer support program includes customer service, training, and
      surveys:




·
              Customer
                  service.  We maintain a customer service desk at our Colorado
                  location, which is open during regular business hours to assist
                  customers
                  using our land databases.
 ·
              Customer
                  training.  We have posted our training manuals on our Internet
                  site, and also periodically release training tips to all registered
                  users
                  of our products.
 ·
              Customer
                  surveys.  We periodically issue an Internet-based survey to our
                  customers to determine what types of land databases they would
                  like to see
                  us produce, and the priority in which those databases should be
                  released.


All
      customer contacts handled through the customer service desk are tracked using
      a
      customer relationship management database.  This database is
      periodically reviewed and summarized on a monthly basis, with key issues being
      brought to the attention of managers for further action.





Competition


The
      dominant player in the GIS marketplace is Environmental Systems Research
      Institute (ESRI), which is the largest GIS company in the world.  ESRI
      is a privately held company.  ESRI’s target market is top-level major
      GIS systems.  We are an ESRI Business Partner that builds extensions
      to ESRI products to integrate with its client’s specific business
      processes.  We rarely compete with ESRI; rather, our product offerings
      are complementary.  Our land database products and related production
      services compete with offerings from InfoPipe Inc., Divestco Inc., Geographic
      Technologies Group, LandWorks, Inc., and WhiteStar, Inc.  In addition,
      the Federal government itself can be considered a competitor, since it is making
      an increasing amount of land data available to the public via the Internet
      and
      other means.  Thus far, the competitive threat posed by the Federal
      government has not been significant due to the primitive format in which the
      government provides data, as well as the lack of any tools to browse or easily
      search such data.





*-
            12
            -*





Our
      consulting segment competes against a large number of companies, and has
      subcontracted with several of them.  Competitors include CACI, SCS,
      SAIC, STG, Inc., ITS Services, NCI Information Services and Stanley
      Associates.  These companies all compete by retaining the services of
      people having a combination of various levels of security clearances and
      technical skills, and bidding their services to the federal government in
      response to specific requests for proposals.  The company offering a
      combination of the required level of security clearances and technical skills,
      combined with a competitive price, will generally be awarded a contract by
      the
      government.  In some cases, a company will subcontract selected work
      to a competitor whose employees may have a specific combination of security
      clearances and technical skills, in order to improve its chances of winning
      a
      contract.





We
      differentiate ourselves by delivering high quality service.  Our staff
      has a high level of expertise in the areas in which we consult.  We
      are highly responsive to problems encountered by our clients on which they
      request our consultation:  On request we rapidly evaluate the issues
      applicable to the problem, develop and propose a solution, and implement the
      solution upon approval.





Intellectual
      Property


We
      rely
      heavily on intellectual property, including intellectual property we own and
      intellectual property licensed from third parties. We regard our trademarks,
      copyrights, licenses, and other intellectual property as valuable assets and
      use
      intellectual property laws, as well as license and confidentiality agreements
      with our employees, dealers, and others, to protect our rights. In addition,
      we
      exercise reasonable measures to protect our intellectual property rights and
      enforce these rights when we become aware of any potential or actual violation
      or misuse.





Intellectual
      property licensed from Applied Geologic Studies, Inc. (AGS) constitutes a core
      component of our ClaimFinder product, which generated $12,000 in revenue in
      2006.  We have paid an annual fee of approximately $600 to AGS in each
      of the past three years, which was based on sales of the ClaimFinder product
      during each of those years.  If AGS were to cancel the agreement, we
      might no longer be able to offer the ClaimFinder product for
      sale.  This is not a material contract, based on the history of
      minimal royalty payments and the insignificant sales decline that might occur
      if
      the royalty agreement were to be cancelled.





We
      have
      trademarked, or applied for trademarks, on the names of many of our products,
      and we have exercised reasonable measures to protect our intellectual property
      rights and enforce these rights when we become aware of any potential or actual
      violations or misuse.  Our products having current trademarks are
      ClaimFinder, CarteView, LeaseFinder, Land Link, PDS Studio, and
      LotFinder.  On October 17, 2007, we received from the U.S. Patent and
      Trademark Office official Notice of Acceptance of Statement of Use for our
      Map
      Layout Express product.





Employees


As
      of
      December 31, 2006, we had approximately 45 total employees, of which 4 were
      part
      time employees, and all of whom are located within the United
      States.  None of the employees are represented by a collective
      bargaining agreement and we consider our employee relations to be
      good.








*-
            13
            -*





Available
      Information


Our
      annual report on Form 10-KSB, quarterly reports on Form 10-QSB, current reports
      on Form 8-K, and amendments to those reports are available, without charge,
      on
      our website, www.xedarinc.com, as soon as reasonably practicable after they
      are
      filed electronically with the SEC.  We have also posted our code of
      conduct and code of ethics on our website.  In addition, you may read
      and copy any materials that we file with the SEC at the SEC's Public Reference
      Room at 450 Fifth Street, N.W., Washington, DC 20549 and you may obtain
      information on the operation of the Public Reference Room by calling the SEC
      at
      1-800-SEC-0330.  Further the SEC maintains a website at
www.sec.gov that contains copies of our reports, proxy and information
      statements, and other information concerning us.  Copies of our
      reports, proxy and information statements are also available, without charge,
      when requested in writing from Xedar Corporation, attn: Secretary, 8310 South
      Valley Highway, Suite 220, Englewood, CO 80112.





**Item
      1A.  Risk Factors**





*You
      should carefully consider the following risks and all of the other information
      set forth in this report . If any of the events or developments described below
      actually occurs, our business, financial condition, and results of operations
      may suffer. In that case, the trading price of our common stock may decline
      and
      you could lose all or part of your investment.*





**Risk
      Related to Our Business**





**Our
      operations have generated significant losses, which may
      continue.**





Our
      operations generated a loss of $610,000 in the year ended December 31, 2006,
      compared to net income of $13,000 in the year ended December 31,
      2005.  We may not be able to reverse this trend, increase revenue, or
      cut cost to a sufficient extent to avoid losses in future
      periods.  This is because:


·
              We
                  depend on database content obtained through agreements with third
                  parties,
                  and the failure to maintain these agreements could result in the
                  elimination of some products, or more expensive data collection
                  alternatives.
 ·
              Our
                  financial results could weaken if we cannot consistently obtain
                  customer
                  renewal of database subscriptions or product maintenance
                  agreements.
 ·
              In
                  2006, 37% of our total revenue was generated by sales to our two
                  largest
                  customers pursuant to contracts that may be terminated or are subject
                  to
                  renewal at the election of such customers.  Termination of such
                  contracts would eliminate a substantial portion of the revenues
                  generated
                  by our FuGEN subsidiary.
 ·
              Our
                  growth strategy may prove
                  unsuccessful.
 ·
              We
                  may be unable to identify potential acquirees, complete acquisitions,
                  or
                  integrate acquisitions into our
                  operations.
 ·
              We
                  are affected by conditions and trends in our targeted industries,
                  which
                  may inhibit our ability to grow or otherwise adversely affect our
                  business.
 ·
              The
                  federal government has substantially reduced its spending in order
                  to
                  channel funding into various war efforts, resulting in funding
                  reductions
                  on several system security
                  projects.
 ·
              The
                  loss of key personnel could impair our future
                  success.
 ·
              We
                  operate in competitive markets, which may adversely affect our
                  market
                  share and financial results.
 ·
              We expect to continue amortizing intangible assets associated
                with existing acquisitions for the next five to eight
                years. ·
              We
                  could experience system failures, which could interrupt customer
                  access to
                  our Internet site, shut down various databases linked to our Internet
                  site, or prevent us from distributing information to our customers
                  by
                  other means.






*-
            14
            -*








We
      discuss each of the above matters in more depth below.





**We
      depend on database content obtained through agreements with third parties,
      and
      the failure to maintain these agreements could result in the elimination of
      some
      products, or more expensive data collection alternatives.**





A
      significant proportion of the content we use in our database products is
      obtained from either commercial or government entities under licensing
      agreements or requests under the Freedom of Information Act.  In
      particular, information obtained from government entities cannot be obtained
      elsewhere.  If the government entities restrict or withdraw their
      content from us, some of our products would be cancelled, which would result
      in
      the elimination of up to $650,000 of recurring revenue.





**Our
      financial results could weaken if we cannot consistently obtain customer renewal
      of database subscriptions or product maintenance
      agreements.**





In
      2006,
      we obtained approximately 24% of our revenue from subscriptions to our database
      products.  Our results depend on our ability to achieve and sustain
      high annual renewal rates on existing subscriptions and to enter into new
      subscription arrangements on commercially acceptable terms.  A 1%
      decline in subscription renewal rates equates to an annual profit reduction
      of
      about $15,000.





**In
      2006, we generated 37% of our total revenue by sales to our two largest
      customers pursuant to contracts that may be terminated or are subject to renewal
      at the election of such customers.  Termination of such contracts
      would eliminate a substantial portion of the revenue generated by our FuGEN
      subsidiary.**





While
      we
      have a diverse customer base that includes many large companies and government
      entities, our two largest customers generated 37% of our total revenue in
      2006.  One government contact, initiated in 2003 through a prime
      contractor with the Department of State, produced 29% of our total 2006
      revenue.  This contract was transferred to a new prime contractor,
      BearingPoint, Inc.,  in 2006, and has since been renewed for the 2007
      calendar year.  It is subject to an annual renewal
      provision.  The following risks are inherent in government
      contracts:




·
              Because
                  federal laws permit government agencies to terminate a contract
                  for
                  convenience, our government clients may terminate or decide not
                  to renew
                  our contracts with little or no prior
                  notice.
 
 ·
              Government
                  clients may audit contract payments we receive for several years
                  after
                  these payments are made. Based on these audits, the clients may
                  adjust or
                  demand repayment of payments we have previously received.  None
                  of the audits performed to date on our government contracts have
                  resulted
                  in any significant adjustments to our financial statements.  It
                  is possible, however, that an audit in the future could have an
                  adverse
                  effect on our consolidated financial
                  statements.
 
 ·
              Government
                  contract regulations provide that any company convicted of a crime
                  or
                  indicted on a violation of statutes related to federal contracting
                  may
                  lose its right to receive future contract awards or
                  extensions.


*-
            15
            -*




·
              Our
                  ability to earn revenues from our existing and future U.S. federal
                  government projects will depend upon the availability of funding
                  from U.S.
                  federal government agencies. We cannot control whether those clients
                  will
                  fund or continue funding our outstanding
                  projects.
 
 ·
              Our
                  ability to secure new government contracts and our revenues from
                  existing
                  government contracts could be adversely affected by any one or
                  a
                  combination of the factors listed
                  above.


**Our
      growth strategy may prove unsuccessful.**





Our
      growth strategy involves broadening our database product line, as well as
      expanding the range of geographic information systems services offerings, and
      increasing our penetration into the federal government system security
      market.  Land databases are difficult to acquire and make commercially
      viable, while the addition of new geographical information systems services
      are
      highly dependent on our ability to acquire other companies.  Further,
      increased penetration into the systems security market requires the addition
      of
      experienced sales staff, who are difficult to acquire and retain.  If
      we are unable to surmount these issues, our operating performance, including
      our
      ability to generate additional revenues on a profitable basis, may be adversely
      affected.





**We
      may be unable to identify potential acquirees, complete acquisitions, or
      integrate acquisitions into our operations.**





We
      intend
      to selectively pursue acquisitions to complement our internal
      growth.  There can be no assurance that we will be able to identify
      suitable candidates for successful acquisitions at acceptable
      prices.  In addition, our ability to achieve the expected returns and
      synergies from our past and future acquisitions depends substantially on our
      ability to integrate the offerings, technology, administrative functions, and
      personnel of these businesses into our business in an efficient and effective
      manner.  We can provide no assurance that we will be successful in
      integrating acquired businesses or that acquired businesses will perform at
      anticipated levels.  In addition, our past and future acquisitions may
      subject us to unanticipated risks or liabilities or disrupt our operations
      and
      divert management’s attention from day-to-day operations.





**We
      are affected by conditions and trends in our targeted industries, which may
      inhibit our ability to grow or otherwise adversely affect our
      business.**





We
      derive
      substantially all of our revenue from customers in the oil and gas industry
      and
      the federal government.  As a result, our business, financial
      condition, and results of operations depend upon conditions and trends affecting
      these industries generally.  For example, there is an ongoing
      consolidation trend in the oil and gas industry that has resulted in a reduction
      of many database subscriptions as our subscribers combine their
      operations.  Also, the federal government has substantially reduced
      its spending in order to channel funding into various war efforts, resulting
      in
      funding reductions on several system security projects.  Thus, if
      continued, these trends could have a material adverse effect on our
      business.  A failure to maintain revenues and margins would have a
      material adverse effect on our business, financial condition, and operating
      results.








*-
            16
            -*





**The
      federal government has substantially reduced its spending in order to channel
      funding into various war efforts, resulting in funding reductions on several
      system security projects.**





The
      federal government has repeatedly shifted funding out of its established
      programs to fund its various war efforts.  These funding reductions
      have repeatedly reduced the budgets of several system security projects in
      which
      our staff were involved.  If the war effort continues, we can expect
      to see reduced staffing levels on many federal projects in which we are
      involved, as well as the risk of outright program
      cancellation.  Continued funding reductions may reduce or eliminate
      the revenue generated by our FuGEN and Atlantic subsidiaries, which derive
      much
      of their business from the federal government





**The
      loss of key personnel could impair our future success.**





Our
      future success depends in part on the continued service of our executive
      officers and other key management, sales, consulting, and operations personnel
      and on our ability to continue to attract, motivate, and retain additional
      highly qualified employees.  The loss of the services of one or more
      of our key personnel, officers or directors, or our inability to recruit
      replacements for such personnel or to otherwise attract, motivate, or retain
      qualified personnel could have an adverse effect on our business, operating
      results, and financial condition.





**We
      operate in competitive markets, which may adversely affect our market share
      and
      financial results.**





Our
      competitors have significant financial and information-gathering resources,
      recognized brands, technological expertise, and market
      experience.  These competitors are continuously enhancing their
      products and services, developing new products and services, and investing
      in
      technology to better serve the needs of their existing customers and to attract
      new customers.





Our
      land
      database products compete with offerings from InfoPipe Inc., Divestco Inc.
      and
      WhiteStar, Inc.  In addition, the federal government itself can be
      considered a competitor, since it is making an increasing amount of land data
      available to the public via the Internet and other means.  Our
      consulting segment competes against a number of companies, and has subcontracted
      with several of them.  Competitors include CACI, CSC, SAIC, STG, Inc.,
      ITS Services, NCI Information Services and Stanley Associates.





We
      may
      also face competition from organizations and businesses that have not
      traditionally competed with us but that could adapt their products and services
      to meet the demands of our customers.  Increased competition may
      require that we reduce the prices of our offerings or make additional capital
      investments, which could adversely affect our margins.  If we are
      unable or unwilling to do so, we may lose market share in our target markets
      and
      our financial results may be adversely affected.





**We
      could experience system failures, which could interrupt customer access to
      our
      Internet site, shut down various databases linked to our Internet site, or
      prevent us from distributing information to our customers by other
      means.**





Our
      ability to protect our data center against damage from fire, power loss,
      telecommunications failure, or other disasters is critical.  Any
      delays or failures in our systems or errors in the technology that we use to
      store and deliver content to our customers would harm our
      business.  The growth of our customer base may also strain our systems
      in the future.  In addition, our products could be affected by
      failures of third-party technology used in our products and internet site,
      and
      we may have no control over remedying such failures.  Any failures or
      problems with our systems could force us to incur significant costs to remedy
      such failures or problems, decrease customer demand for our products, tarnish
      our reputation, and harm our business.





*-
            17
            -*





**Shares
      eligible for future sale could depress the price of our
      shares.**





Sales
      of
      substantial amounts of our common stock in the public market, or the perception
      that such sales could occur, could adversely affect the market price of our
      shares.  As of December 31, 2006, we had 18,030,518 shares of common
      stock outstanding.  Our principal stockholders are entitled to require
      us to register such shares under the Securities Act of 1933 and, in some cases,
      are subject to the lock-up agreements described below.  Any sales of
      common stock by us or our principal stockholders, or the perception that such
      sales might occur, could have a material adverse effect on the price of our
      shares.





Substantially
      all of our shareholders have agreed not to sell or otherwise dispose of their
      shares of common stock until July 2007, with the exception of two shareholders
      who own approximately 2,230,000 shares, and who may sell those shares at any
      time, subject to applicable securities law.  However, upon the
      expiration of the lock-up periods, a significant number of shares of our common
      stock will, subject to applicable securities law, become freely tradable, which
      could depress the market price of our stock.





**The
      price of our common stock may be volatile and may be affected by market
      conditions beyond our control.**





Our
      share
      price is likely to fluctuate in the future because of the volatility of the
      stock market in general and a variety of factors, many of which are beyond
      the
      our control, including:


·
              Quarterly
                  variations in actual or anticipated results of
                  operations;
 ·
              Changes
                  in financial estimates by securities
                  analysts;
 ·
              Actions
                  or announcements by us or our
                  competitors;
 ·
              Regulatory
                  actions;
 ·
              Litigation;
 ·
              Loss
                  or gain of major customers or content
                  providers;
 ·
              Additions
                  or departures of key personnel; and
 ·
              Future
                  sales of our common stock.




Market
      fluctuations could result in volatility in the price of our common stock, which
      could cause a decline in the value of your investment.  In addition,
      if our operating results fail to meet the expectations of stock analysts or
      investors, we may experience an immediate and significant decline in the trading
      price of our common stock.





**Our
      directors, executive officers and affiliates will continue to exert significant
      control over our future direction, which could reduce our sale
      value.**




Members
      of our Board of Directors and our executive officers, together with their
      affiliates, own a significant number of shares of our outstanding common stock.
      Accordingly, these stockholders, if they act together, will be able to control
      all matters requiring approval of our stockholders, including the election
      of
      directors and approval of significant corporate transactions. The concentration
      of ownership, which could result in a continued concentration of representation
      on our Board of Directors, may delay, prevent or deter a change in control
      and
      could deprive our stockholders of an opportunity to receive a premium for their
      common stock as part of a sale of our assets.








*-
            18
            -*





**Investors
      should not anticipate receiving cash dividends on our common
      stock.**




We
      have
      never declared or paid any cash dividends or distributions on our common stock
      and intend to retain future earnings, if any, to support our operations and
      to
      finance expansion. Therefore, we do not anticipate paying any cash dividends
      on
      the common stock in the foreseeable future.








**Item
      6.  Management's Discussion and Analysis or Plan of
      Operations.**





*The
      following discussion and analysis should be read in conjunction with our
      financial statements and related notes thereto included elsewhere in this report
      and is qualified in its entirety by reference to such financial statements
      and
      related notes. This discussion contains forward-looking statements that involve
      risks and uncertainties. Our actual results could differ materially from those
      anticipated in the forward-looking statements as a result of certain factors,
      including those risks discussed in the section titled “Risk
      Factors”.*





Overview





We
      have
      two primary lines of business.





First,
      our Geographical Information Systems (“GIS”) segment obtains federal
      geographical and land information ownership data from the BLM and state and
      county geographical and land information data from various states and counties
      and converts this information into databases which we sell to oil and gas
      companies, as well as several agencies of the federal government, along with
      browser software that allows users to easily access ownership information about
      specific parcels of land.  This service is offered both on compact
      disc and through an Internet site.  Nearly all sales are on an annual
      or quarterly subscription basis.  We also offer production mapping
      services to a number of clients.





Second,
      our Consulting segment provides information technology systems and enterprise
      assurance and security analysis services to various federal government
      agencies.  We use an internally-developed systems security analysis
      tool to improve the efficiency of our consultants, which allows us to bid more
      competitively for new work.





We
      have
      over 200 commercial and government customers.  Approximately 75% of
      our revenue is derived from government customers, which include the Department
      of State, the National Park Service, the Internal Revenue Service, the BLM,
      the
      Bureau of Reclamation, and the U.S. Forest Service.  Our commercial
      customers include most of the major domestic petroleum companies including:
      Anadarko Petroleum, BP America, ConocoPhillips, Devon Energy, EnCana, Shell,
      Williams Production, and Yates Petroleum.





**Opportunities,
      challenges and risks**





Key
      opportunities include our


·
              Use
                of recent and prospective acquisitions to qualify for bidding
                on larger government contracts; ·
              Use
                  of additional employee skills gained from recent and prospective
                  acquisitions to gain a higher review rating on more government
                  contracts; ·
              To take advantage of the opportunities, our Land Links and Premier
                Data Services subsidiaries are now jointly bidding on many GIS contract
                proposals; ·
              Similarly, our FuGEN and Atlantic subsidiaries have jointly bid
                on
                several contracts, and routinely swap sales lead
                information.


*-
            19
            -*





Material
      challenges and risks include




·
              The
                  acquisition of a number of acquirees sufficient to create a cash
                  flow
                  neutral or positive position, which we estimate will be at a total
                  revenue
                  level of between $21 million and $25 million, depending on the
                  cash flow
                  of individual acquirees.
 ·
              If
                  we do not reach this revenue level by the end of 2007, we will
                  use all
                  cash available to us under our existing line of credit, and will
                  then need
                  additional sources of funding.
 ·
              To
                  overcome these issues, we are focusing on acquiring companies whose
                  shareholders require the highest proportion of our stock as payment
                  and
                  the least amount of cash, combined with the highest possible level
                  of cash
                  flow.
 ·
              Conversely,
                  we are delaying acquisitions where acquiree shareholders insist
                  on a large
                  percentage of cash as part of the closing price, or where their
                  cash flow
                  is too low to offset our current cash
                  requirements.
 ·
              An
                  additional challenge and risk relates to the decline in our revenue
                  due to
                  decreases in contracts and customers.  Our information
                  technology consulting segment experienced a revenue decline from
                  $4,888,000 in 2005 to $3,299,000 in 2006, which was a decrease
                  of
                  33%.  This decrease was due to the expiration of several
                  short-term consulting contracts with the federal
                  government.  Current government contracts supporting this
                  segment’s revenue are expected to continue through 2007.  Though
                  our consulting segment is bidding on several new projects, it is
                  not
                  possible to predict changes in 2007 revenue and net income (loss)
                  at this
                  time.
 ·
              Our
                  financial results could weaken if we cannot consistently obtain
                  customer
                  renewal of database subscriptions or product maintenance
                  agreements.  In 2006, 37% of our total revenue was generated by
                  sales to our two largest customers pursuant to contracts that may
                  be
                  terminated or are subject to renewal at the election of such
                  customers.  Termination of such contracts would eliminate a
                  substantial portion of the revenue generated by our FuGEN
                  subsidiary.  One government contact, initiated in 2003 through a
                  prime contractor with the Department of State, produced 29% of
                  our total
                  2006 revenue.  This contract was transferred to a new prime
                  contractor, BearingPoint, Inc., in 2006, and has since been renewed
                  for
                  the 2007 calendar year.  It is subject to an annual renewal
                  provision.
 ·
              In
                  2006, we obtained approximately 24% of our revenue from annual
                  subscriptions to our database products.  Our results depend on
                  our ability to achieve and sustain high annual renewal rates on
                  existing
                  subscriptions and to enter into new subscription arrangements on
                  commercially acceptable terms.  A 1% decline in subscription
                  renewal rates equates to an annual profit reduction of about
                  $15,000.
 ·
              The
                  federal government has substantially reduced its spending in order
                  to
                  channel funding into various war efforts, resulting in funding
                  reductions
                  on several system security projects.  These funding reductions
                  have repeatedly reduced the budgets of several system security
                  projects in
                  which our staff were involved.  If the war effort continues, we
                  can expect to see reduced staffing levels on many federal projects
                  in
                  which we are involved, as well as the risk of outright program
                  cancellation.  Continued funding reductions may reduce or
                  eliminate the revenues generated by our FuGEN and Atlantic subsidiaries,
                  which derive much of their business from the federal
                  government.
 **Known
        Trends, Events, Demands, Commitments and
        Uncertainties**





Our
      business plan is contingent upon the completion of several acquisitions during
      2007 and 2008 in order to achieve a cash flow neutral or positive
      situation.  Given our current limited cash resources, it is unlikely that
      we will be able to complete the necessary number of acquisitions unless we
      can
      demonstrate an ongoing capability to expeditiously register the stock we have
      thus far paid to former acquirees.





*-
            20
            -*





Within
      our GIS segment, we have experienced a gradual increase over the last three
      years of approximately 15% growth in the number of database subscriptions sold
      each year.  It is uncertain if this trend will continue, since it
      depends on the availability of new databases to sell to our customers, their
      price sensitivity in buying additional databases or renewing current ones,
      and
      the presence of competing databases from competitors.  Trends are
      highly variable within our IT security segment, where sales levels can change
      dramatically, based on the supply of federal funding for security projects
      in
      which we are involved.  For example, the funded staffing level for our
      Department of State project has varied between five and 25 employees over the
      past three years.  Thus, we find that the level of uncertainty is
      significantly greater in our IT security segment than in our GIS
      segment.





**Key
      Performance Indicators**





In
      addition to the data in our financial statements, we carefully track and monitor
      certain other key performance indicators.  These include:





12/31/06General:Total
                backlog (000s)
            
            $
            2,496Total
                headcount
            
            
            40Consulting:Total
                backlog (000s)
            
            $
            2,136Sales
                per person, annualized (000s)
            
            $
            139%
                Consulting hours billed (last quarter)
            
            
            73GIS:Backlog
                (000s)
            
            $
            360Sales
                per person, annualized (000s)
            
            $
            134Annual
                subscriptions (000s)
            
            $
            1,344Subscription
                loss rate
            
            
            6





We
      particularly focus on backlog, percentage utilization, total annual
      subscriptions, and the subscription loss rate.





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            21
            -*





Critical
      Accounting Policies and Estimates





Our
      Management’s Discussion and Analysis or Plan of Operation section discusses our
      financial statements, which have been prepared in accordance with accounting
      policies generally accepted in the United States of America.  The
      preparation of the financial statements requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period.  On an on-going basis,
      management evaluates its estimates and judgments, including those related to
      revenue recognition, recoverability of intangible assets, and contingencies
      and
      litigation.  Management bases its estimates and judgments on
      historical experience and on various other factors that are believed to be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying value of assets and liabilities that are
      not
      readily apparent from other sources.  Actual results may differ from
      these estimates under different assumptions or conditions.  The most
      significant accounting estimates inherent in the preparation of our consolidated
      financial statements include estimates as to the appropriate carrying value
      of
      certain assets and liabilities which are not readily apparent from other
      sources, primarily the valuation of intangible assets.  The methods,
      estimates and judgments used by us in applying these most critical accounting
      policies have a significant impact on the results we report in our consolidated
      financial statements.





Revenue
      Recognition


We
      recognize revenue when all of the following criteria have been met: (a)
      persuasive evidence of an arrangement exists, (b) delivery has occurred or
      services have been rendered, (c) the price to the customer is fixed or
      determinable, and (d) collectability is reasonably assured. Our revenue
      recognition policies are based on the guidance in Staff Accounting Bulletin
      (SAB) No. 104, *Revenue Recognition*, and Statement of Position (SOP)
      97-2, *Software Revenue Recognition*.





*Sales
      of critical information and decision-support tools*





A
      significant proportion of our revenue is derived from the sale of subscriptions
      to our oil and gas database, which is recognized ratably as delivered over
      the
      subscription period.





*Sales
      of services*





We
      provide consulting and GIS production services primarily on a time and materials
      basis.  We recognize revenue related to services performed under time
      and materials contracts in the period performed, at standard billing
      rates.  We recognize revenue associated with fixed-price contracts
      upon completion of each specified performance obligation under the terms of
      the
      contract.  If the contract includes acceptance contingencies, we
      recognize revenue in the period in which we receive documentation of acceptance
      from the customer.





The
      Company does not sell bundled products.  We sell software and
      databases, and each package has a maintenance contract associated with
      it.  Therefore, there are no bundled services, other than the
      maintenance aspect related to the software and database.  We also sell
      maintenance separately on existing software and database
      contracts.  Accordingly, there are no bundled services that would have
      to be accounted for under EITF 00-21.  Under SOP 97-2, because we sell
      maintenance on a separate basis, not just with the sale of software and
      databases, we break out the maintenance aspect of the sale and recognize that
      revenue separately and ratably over the maintenance period.





*-
            22
            -*





Stock-Based
      Compensation


Prior
      to
      January 1, 2006, Premier Data Services, Inc. accounted for its stock option
      program under the recognition and measurement provisions of APB Opinion No.
      25
      (“APB 25”), *Accounting for Stock Issued to Employees*, and related
      Interpretations, as permitted by FASB Statement No. 123 (“SFAS 123”),
*Accounting for Stock-Based Compensation*. No stock based compensation
      cost was recognized in the Statement of Operations for the years ended December
      31, 2005 and 2004, as all options Premier Data Services, Inc. granted had an
      exercise price equal to the market value of the underlying common stock on
      the
      date of grant.




During
      2006, Premier Data Services, Inc. adopted the provisions of and accounted for
      stock-based compensation in accordance with SFAS 123R, which replaced SFAS
      123
      and supersedes APB 25. Under the fair value recognition provisions of this
      statement, stock-based compensation cost is measured at the grant date based
      on
      the fair value of the award and is recognized as expense on a straight-line
      basis over the requisite service period, which is the vesting period. Premier
      Data Services, Inc. elected the modified-prospective method, under which prior
      periods are not revised for comparative purposes. The valuation provisions
      of
      SFAS 123R apply to new grants and to grants that were outstanding as of the
      effective date and are subsequently modified. Estimated compensation for grants
      that were outstanding as of the effective date will be recognized over the
      remaining service periods using the compensation cost estimated for the SFAS
      123
      pro forma disclosures.  Compensation expense for warrants granted to
      non-employees has been determined in accordance with SFAS No. 123R as the fair
      value of the consideration received or the fair value of the equity instruments
      issued, whichever is more reliably measured.





The
      adoption of SFAS 123R resulted in the recognition of $30,883 of compensation
      cost during the year ended December 31, 2006.  The amount of
      unrecognized compensation cost relating to options issued but not yet vested
      amounted to $13,729 as of December 31, 2006, all of which is expected to be
      expended during 2007.  See Note 10 for further information regarding
      stock-based compensation assumptions and expenses, including pro forma
      disclosures for the year ended December 31, 2005 and 2004 as if Premier Data
      Services, Inc. had recorded stock-based compensation expense.





Recent
      Accounting Pronouncements


In
      September 2006, the FASB issued SFAS No. 157, *"Fair Value
      Measurements,"* which enhances existing guidance for measuring assets and
      liabilities at fair value. SFAS No. 157 defines fair value, establishes a
      framework for measuring fair value and expands disclosure about fair value
      measurements. SFAS No. 157 is effective for us beginning in 2007. We are
      currently assessing the impact of the adoption of SFAS No. 157, but do not
      expect that it will have a significant impact on our financial position or
      results of operations.





In
      September 2006, the SEC issued Staff Accounting Bulletin ("SAB")
      No. 108, "*Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements.*" SAB
      No. 108 requires that companies utilize a "dual-approach" to assessing the
      quantitative effects of financial statement misstatements. The dual approach
      includes both an income statement focused and balance sheet focused assessment.
      SAB No. 108 is applicable beginning in 2007. We are currently assessing the
      impact of the adoption of SAB No. 108, but do not expect that it will have
      a significant impact on our financial position or results of
      operations.





In
      June 2006, the FASB issued FIN No. 48, *"Accounting for Uncertainty
      in Income Taxes—an interpretation of FASB Statement No. 109."*This
      Interpretation prescribes a comprehensive model for the financial statement
      recognition, measurement, presentation and disclosure of uncertain tax positions
      taken or expected to be taken in income tax returns. FIN No. 48 is
      effective for us beginning in 2007. We are currently assessing the impact of
      the
      adoption of FIN No. 48, but do not expect that it will have a significant impact
      on our financial position or results of operations.





*-
            23
            -*





Identifiable
      Intangible Assets and Goodwill


We
      account for our business acquisitions using the purchase method of accounting.
      It allocates the total cost of an acquisition to the underlying net assets
      based
      on their respective estimated fair values. As part of this allocation process,
      we identify and attribute values and estimated lives to the intangible assets
      acquired.





Identifiable
      intangible assets with finite lives are amortized on a straight-line basis
      over
      their respective lives.





We
      review
      the carrying values of identifiable intangible assets with indefinite lives
      and
      goodwill at least annually to assess impairment because these assets are not
      amortized. Additionally, we review the carrying value of any intangible asset
      or
      goodwill whenever events or changes in circumstances indicate that its carrying
      amount may not be recoverable. We assess impairment by comparing the fair value
      of an identifiable intangible asset or goodwill with its carrying value.
      Impairments are expensed when incurred.





Liquidity
      and Capital Resources


We
      had
      cash and cash equivalents of $1,354,652 at December 31, 2006.  Our
      total current assets at December 31, 2006 were equal to
      $2,061,414.  We also had the following long-term assets: $1,246,904 in
      goodwill; $215,088 in computer hardware and software, net; $73,891 in office
      equipment, furniture and fixtures, and leasehold improvements,
      net.  Our total assets as of December 31, 2006 were
      $3,597,297.





Our
      total
      current liabilities were $1,520,021 at December 31, 2006, which were represented
      by $578,073 of unrecognized subscription revenue, short-term notes payable
      to
      related parties of $383,338, accounts payable of $40,347, a payable to
      shareholder of $400,000, and other accrued expenses of $118,263.





We
      have
      financed our operations primarily through internally generated cash flow and
      from the sale of our securities to Battersea Capital, Inc. and Underwood Family
      Partners, Ltd. for $1,330,000.  We also have outstanding two notes
      payable, whose principal and interest totaled $383,338 as of December 31,
      2006.  The notes accrue interest at 8.5% per annum.  The
      notes are secured by substantially all of our assets.  The notes were
      issued to Jack Baum and Sagebrook Technology Partners in March 2002, as partial
      payment for their earlier investment in the FuGEN, Inc.
      subsidiary.  We pay a total of $10,000 per month on these notes, as
      well as the net proceeds of any asset sales.





In
      December 2006, Premier completed a reverse acquisition transaction with
      us.  We were a public shell company.  In accordance with the
      terms of the merger agreement, we issued 14,082,871 shares of our common stock
      for 13,685,018 shares of the common stock and 2,685,253 shares of the Series
      A
      preferred stock of Premier.  Immediately after the merger transaction,
      the former stockholders of Premier owned approximately 85% of our issued and
      outstanding shares, and the management and, later, a board of
      directors,  designated by Premier have been appointed as our officers
      and directors.   The conversion of Premier shares into our shares
      has been accounted for as a reverse acquisition under the purchase method of
      accounting since the stockholders of Premier obtained control of
      us.







*-
            24
            -*





Net
      Cash from Continuing Operations – Operating Activity


During
      the year ended December 31, 2006, our operating activity used $40,045 of
      cash.  This reflected a $610,000 net loss, a $53,000 use of cash that
      was caused by a reduction in accrued liabilities, and a $10,000 use of cash
      from
      other activities; these cash reductions were offset by $292,000 of depreciation,
      a $17,000 source of cash that was caused by an increase in accounts payable,
      and
      a $278,000 source of cash that was caused by a reduction in accounts
      receivable.  During the same period in 2005, our operating activities
      provided $481,000 of cash.  This reflected a $13,000 net profit, which
      was increased by $312,000 of depreciation.  Increases of $126,000 of
      accrued liabilities and $81,000 of deferred subscription revenue were primary
      sources of cash.





Net
      Cash from Continuing Operations – Investing Activity


Net
      cash
      used in our investing activity was $54,000 and $155,000 for the years ended
      December 31, 2006 and 2005, respectively.  In both cases, we purchased
      computer hardware and software to bolster our GIS server operation, as well
      as
      to replace existing computer and copier equipment.





Net
      Cash from Continuing Operations – Financing Activity


Net
      cash
      provided by our financing activity was $1,252,000 for the year ended December
      31, 2006, while $290,000 was used by our financing activities for the year
      ended
      December 31, 2005.  During 2006, we obtained $82,000 of short-term
      financing from our GIS segment president, Richard V. Souders , and paid it
      back,
      including $752 of interest.  Also, see the above discussion of
      Battersea Capital and Underwood Family Partners.  During 2006 we paid
      down $78,000 of debt (all of which was principal) to Jack Baum and Sagebrook
      Technology Partners.  During 2005, we obtained $100,000 of short-term
      financing from Richard V. Souders, and both paid it back as well as $200,000
      previously owed to the same party.  In addition, we paid down $90,000
      of debt to Jack Baum and Sagebrook Technology Partners.





Evaluation
      of amounts and certainty of cash flows:  Of our cash flows, $1.4
      million originates from database subscriptions that are primarily billed to
      large oil and gas exploration and production companies.  We consider
      these cash flows to be very reliable, given that 94% of all subscriptions are
      renewed each year.  Of our remaining cash flows, nearly all are from
      the federal government or large prime contractors through whom we do business
      with the federal government.  The cash inflows associated with the
      federal government are generally paid within 30 to 60 days of the original
      invoice dates, with immaterial amounts of bad debts.  The primary
      uncertainty surrounding governmental cash flows is that projects are not renewed
      for additional option years, usually due to funding shortfalls within the
      federal government.




**Results
      of Operations**


Net
      loss


In
      the
      year ended December 31, 2006, we incurred a net loss of $610,000, compared
      to
      net income of $13,000 in the year ended December 31, 2005.  We
      incurred the net loss because our gross profit decreased by $901,000 and our
      loss from our customer relationship segment increased by $137,000 from 2005
      to
      2006.  These were offset by a $147,000 decline in selling and
      administrative compensation expense and a $181,000 decline in general and
      administrative expenses.  Additionally, we had lower interest and
      taxes of $38,000 and $49,000, respectively.  These variances are
      discussed in more detail below.





Revenue


Our
      revenues decreased from $7,486,000 in 2005, to $6,055,000 in 2006, which was
      a
      decrease of 19%.  This decrease was almost entirely due to the
      expiration of several consulting contracts with the federal
      government.





*-
            25
            -*





Our
      geographical information systems segment experienced a revenue decline from
      $2,478,000 in 2005 to $2,434,000 in 2006, which was a decrease of
      1.8%.  This decrease was largely due to several non-recurring
      outsourced GIS production projects in 2005.  A bi-annual inflationary
      increase in database product prices in early 2007 is expected to increase
      revenues by $50,000.  However, continuing consolidation among
      commercial oil and gas customers is likely to offset this
      increase.  An acquisition that closed in early 2007 may contribute an
      additional $350,000 to our GIS segment revenues during 2007, with no significant
      change in profitability.





Our
      information technology consulting segment experienced a revenue decline from
      $4,888,000 in 2005 to $3,299,000 in 2006, which was a decrease of
      33%.  This decrease was due to the expiration of several short-term
      consulting contracts with the federal government.  The expiring
      contracts included information assurance projects with Perot Systems, the
      Veterans Health Administration, and the National Park
      Service.  Current government contracts supporting this segment’s
      revenues are expected to continue through 2007.  Though our consulting
      segment is bidding on several new projects, it is not possible to predict
      changes in 2007 revenues and profits at this time.





Our
      customer relationship management segment experienced a revenue decline from
      $374,000 in 2005 to $182,000 in 2006, which was a decline of 51%.  The
      revenue reduction was caused by an ongoing decline in the number of customers
      to
      whom the segment provides maintenance support.  This segment was sold
      in November 2006.  The segment was sold in exchange for no other
      consideration than a percentage of profits from new future sales generated
      by
      the segment, if any, not to exceed $800,000 in the aggregate.




The
      justice information systems (JIS) segment experienced a revenue increase from
      $120,000 in 2005 to $322,000 in 2006, which was a 169% increase.  This
      increase was caused by $250,000 billed under a single consulting services
      contract, while $66,000 was related to JIS projects.  The revenues
      generated by this segment are increasingly unrelated to justice systems, and
      it
      was consolidated into our consulting segment as of the end of
      2006.  This segment was sold in February 2007 and is presented in the
      statement of operations as a discontinued operation, net of expenses of $269,000
      and $323,000 in 2006 and 2005, respectively.





Operating
      Expenses


Our
      operating expenses were $6,540,000 and $7,398,000 in 2006 and 2005,
      respectively.  These expenses consisted of $5,172,000 and $5,849,000
      of compensation expenses in 2006 and 2005, respectively.  The $677,000
      decline in compensation expense from 2005 to 2006 was primarily caused by a
      reduction in those staff associated with several federal consulting projects
      that were completed during the period.  We also incurred general and
      administrative expenses of $1,368,000 and $1,550,000 in 2006 and 2005,
      respectively.  Bad debt was also reduced by $40,000 during 2006,
      primarily due to an unusually high bad debt expense in 2005 that was caused
      by
      the merger of several customers.  Travel and entertainment costs
      declined by $35,000 in 2006, in approximate proportion to the reduction in
      headcount during the year.  Income tax expense for the consulting
      division was reduced by $61,000 during 2006, due to the substantial decline
      in
      earnings from 2005.





The
      margin of our consulting segment declined to $175,000 from $1,085,000 for the
      years ended December 31, 2006 and 2005, respectively.  This $910,000
      reduction in margin was caused by the completion of a non-recurring federal
      project in late 2005, as well as a reduction in funding for other
      projects.  In addition, unbillable staff were retained in anticipation
      of new projects that have not yet occurred, so that the salaries expense did
      not
      decline in proportion to the lost revenue.








*-
            26
            -*





The
      margin of our GIS segment increased to $350,000 from $93,000 for the years
      ended
      2006 and 2005.  Of this $257,000 increase, $99,000 was caused by a
      reduction in the salaries expense, which in turn was caused by the delayed
      rehiring of two positions, whose occupants left us during the first half of
      2006.  There was also a decline of $51,000 in bad debt expenses during
      2006, which had been much higher in 2005 when several customers combined and
      merged the database subscriptions to which they were subscribing.  In
      addition, there was a net decrease of $106,000 in outside services, due to
      a
      decline in outsourced production projects in 2006 over 2005.





The
      margin of our customer relationship management segment declined to $(87,000)
      in
      2006 from $51,000 in 2005.  Of this $138,000 margin reduction, the
      primary cause was a revenue decline of $193,000 that was attributable to the
      departure of several customers, as well the sale of the business in early
      November 2006, which eliminated the final two months of 2006 revenue
      recognition.  Offsetting the revenue decline was a $19,000 decline in
      depreciation and a $34,000 salary reduction in 2006.





The
      margin of our justice information system segment improved to $(261,000) in
      2006
      from $(475,000) in 2005.  Of this $214,000 improvement, $131,000 was
      caused by an increase in revenues due to the continuation of a consulting
      services contract that began during the second half of 2005.





We
      expect
      our operating expenses to increase in the future as we execute our business
      plan.





Interest
      expense was $66,000 and $102,000 in 2006 and 2005, respectively.  This
      consisted of interest accrued on notes payable to related parties.





Plan
      of Operation


Our
      expansion will be driven by a combination of organic growth and acquisitions
      in
      both our GIS segment and our consulting segment.  We expect that
      growth in our GIS segment will be founded upon the acquisition of other
      companies that provide either related databases that can be combined with our
      GIS segment’s existing database products, or companies that provide related
      production services.  This should result in an expansion of the GIS
      segment’s customer base into additional federal and state agencies, most
      remaining large regional oil and gas production companies to which the segment
      does not already sell, and more product penetration into the existing customer
      base.





We
      expect
      that growth in the consulting segment will be founded upon the acquisition
      of
      other companies, so that we can use the acquired companies’ sales personnel to
      cross-sell services into existing customers, while also expanding the
      specialized skill base of all consultants to provide a greater range of services
      to customers.  This should result in both greater sales penetration
      into existing federal customers and an expansion into additional federal
      agencies.





Off-Balance
      Sheet Transactions


We
      have
      no off balance sheet arrangements that have or are reasonably likely to have
      a
      current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources that are material to investors.











*-
            27
            -*








**Item
      7.  Financial Statements.**





**INDEPENDENT
      AUDITORS' REPORT**











To
      the
      Board of Directors and Stockholders


Xedar
      Corporation


Denver,
      Colorado





We
      have
      audited the accompanying consolidated balance sheet of Xedar Corporation as
      of
      December 31, 2006, and the related consolidated statements of operations,
      stockholders’ equity and cash flows for the years ended December 31, 2006 and
      2005. These financial statements are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these financial
      statements and schedule based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit includes examining,
      on a test basis, evidence supporting the amounts and disclosures in the
      financial statements. An audit also includes assessing the accounting principles
      used and significant estimates made by management, as well as evaluating the
      overall financial statement presentation. We believe that our audits provide
      a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Xedar Corporation as of
      December 31, 2006, and the results of their operations and their cash flows
      for
      the years ended December 31, 2006 and 2005 in conformity with generally accepted
      accounting principles in the United States of America.





Ehrhardt
      Keefe Steiner & Hottman PC  Ehrhardt
      Keefe Steiner & Hottman PC





October
      22, 2007


Denver,
      Colorado





*-
            28
            -*





**Xedar
      Corporation**





**CONSOLIDATED
      BALANCE SHEET**




December
                  31,2006**ASSETS**Current
                  AssetsCash
                  and cash equivalents
              
              $
              1,354,652Trade
                  accounts receivable, net of allowance for doubtful accounts of
                  $6,230
              
              
              638,201Other
                  current assets
              
              
              68,561Total
                  Current Assets
              
              
              2,061,414Property
                  and equipment, net
              
              
              288,979Goodwill
              
              
              1,246,904Total
                  Assets
              
              $
              3,597,297
  **LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  LiabilitiesAccounts
                  payable
              
              $
              40,347Payable
                  to shareholders
              
              
              400,000Deferred
                  subscription revenue
              
              
              578,073Current
                  portion of convertible notes payable to related parties
              
              
              383,338Accrued
                  liabilities
              
              
              118,263Total
                  Current Liabilities
              
              
              1,520,021Stockholders’
                  EquityCommon
                  stock, no par value, 50,000,000 shares authorized; 18,030,518 shares
                  issued and outstanding at December 31, 2006
              
              
              3,542,525Accumulated
                  deficit
              
              
              (1,465,249
              )Total
                  Stockholders’ Equity
              
              
              2,077,276Total
                  Liabilities and Stockholders’ Equity
              
              $
              3,597,297




See
      notes
      to consolidated financial statements.


*-
          29
          -*




**Xedar
      Corporation**





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**






For
                  the Years EndedDecember
                  31,2006
              
              
              2005RevenueSales
              
              $
              6,055,398
              
              
              $
              7,486,152Cost
                  of sales (principally consulting compensation)
              
              
              2,832,885
              
              
              
              3,362,728Gross
                  profit
              
              
              3,222,513
              
              
              
              4,123,424Selling
                  and Administrative ExpensesCompensation
                  and payroll taxes
              
              
              2,339,204
              
              
              
              2,486,163Other
                  expenses
              
              
              1,368,339
              
              
              
              1,549,507Total
                  Selling and Administrative Expenses
              
              
              3,707,543
              
              
              
              4,035,670Net
                  Operating (Loss) Income
              
              
              (485,030
              )
              
              
              87,754Other
                  Income (Expenses)Interest
                  expense
              
              
              (65,942
              )
              
              
              (101,565
              )Interest
                  income
              
              
              10,960
              
              
              
              8,662Total
                  Other Expenses
              
              
              (54,982
              )
              
              
              (92,903
              )Income
                  (Loss) Before Income Tax
              
              
              (540,012
              )
              
              
              (5,149
              )Income
                  Tax Benefit (Expense)
              
              
              16,621
              
              
              
              (32,604
              )Income
                  (Loss) from continuing operations
              
              
              (523,391
              )
              
              
              (37,753
              )Discontinued
                  operations, net of income taxbenefit
                  (expense):Loss
                  from discontinued Customer RelationshipManagement
                  segment
              
              
              (86,574
              )
              
              
              51,000Net
                  (Loss) Income
              
              $
              (609,965
              )
              
              $
              13,247Net
                  Income (Loss) per Share - Basic:Loss per share continuing operations
              
              $
              (0.03
              )
              
              $
              0.001Loss per share discontinued operations
              
              $
              (0.01
              )
              
              $
              0.001Net
                  loss per share
              
              $
              (0.04
              )
              
              $
              0.001Net
                  Income (Loss) per Share – Diluted:Loss per share continuing operations
              
              $
              (0.03
              )
              
              $
              0.001Loss per share discontinued operations
              
              $
              (0.01
              )
              
              $
              0.001Net
                  loss per share
              
              $
              (0.04
              )
              
              $
              0.001Shares
                  Used in Computing Net Income (Loss) per Share:Basic – pro forma
              
              
              13,804,696
              
              
              
              9,437,692Diluted – pro forma
              
              
              13,804,696
              
              
              
              14,597,168


See
      notes
      to consolidated financial statements.





*-
            30
            -*





**Xedar
      Corporation**





**CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**


**For
      the Years Ended****December 31, 2006 and December 31,
      2005**





Series
                A ConvertiblePreferred
            
            
            Common
            
            
            Additional
            
            
            RetainedStock
            
            
            Stock
            
            
            Paid-In
            
            
            EarningsShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            (Deficit)
            
            
            TotalBalance
                – January 1, 2005
            
            
            3,162,941
            
            
            $
            3,163
            
            
            
            12,068,813
            
            
            $
            12,069
            
            
            $
            2,155,694
            
            
            $
            (868,531
            )
            
            $
            1,302,395Net
                income
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            13,247
            
            
            
            13,247Balance
                – December 31, 2005
            
            
            3,162,941
            
            
            
            3,163
            
            
            
            12,068,813
            
            
            
            12,069
            
            
            
            2,155,694
            
            
            
            (855,284
            )
            
            
            1,315,642Sale
                of Common Stock
            
            
            ---
            
            
            
            ---
            
            
            
            1,700,788
            
            
            
            1,701
            
            
            
            1,328,299
            
            
            
            ---
            
            
            
            1,330,000Issuance
                of 6,667 shares of Common Stock pursuant to stock option
                exercise
            
            
            ---
            
            
            
            ---
            
            
            
            6,667
            
            
            
            7
            
            
            
            1,619
            
            
            
            ---
            
            
            
            1,626Effect
                of issuance of common stock and recapitalization in a reverse acquisition
                transaction
            
            
            (3,162,941
            )
            
            
            (3,163
            )
            
            
            3,479,581
            
            
            
            3,488,775
            
            
            
            (3,485,612
            )
            
            
            ---
            
            
            
            ---Issuance
                of 409,090 shares pursuant to conversion of convertible
                debt
            
            
            ---
            
            
            
            ---
            
            
            
            409,090
            
            
            
            409,090
            
            
            
            ---
            
            
            
            ---
            
            
            
            409,090Distribution
                to controlling shareholders in reverse acquisition
                transaction
            
            
            ---
            
            
            
            ---
            
            
            
            (463
            )
            
            
            (400,000
            )
            
            
            ---
            
            
            
            ---
            
            
            
            (400,000
            )Recognition
                of stock option expense for exchange of options
            
            
            ---
            
            
            
            ---
            
            
            
            366,048
            
            
            
            30,883
            
            
            
            ---
            
            
            
            ---
            
            
            
            30,883Net
                loss
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            (609,965
            )
            
            
            (609,965
            )Balance
                – December 31, 2006
            
            
            ---
            
            
            $
            ---
            
            
            
            18,030,518
            
            
            $
            3,542,525
            
            
            $
            ---
            
            
            $
            (1,465,249
            )
            
            $
            2,077,276





See
      notes
      to consolidated financial statements.





*-
            31
            -*





**Xedar
      Corporation**





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**





For
                the Years EndedDecember
                  31,2006
            
            
            2005Cash
                Flows from Operating ActivitiesNet
                income (loss)
            
            $
            (609,965
            )
            
            $
            13,247Adjustments
                to reconcile net income (loss) to net cash provided by operating
                activitiesDepreciation
            
            
            292,028
            
            
            
            312,249Loss
                on disposal of property and equipment
            
            
            13,504
            
            
            
            --Stock
                issued for services
            
            
            32,509
            
            
            
            --Changes
                in current assets and liabilities:(Increase)
                decrease in:Trade
                accounts receivable
            
            
            278,226
            
            
            
            (36,050
            )Other
                current assets
            
            
            (22,456
            )
            
            
            (10,039
            )Increase
                (decrease) in:Accounts
                payable
            
            
            16,880
            
            
            
            (4,770
            )Accrued
                liabilities
            
            
            (53,217
            )
            
            
            125,836Deferred
                subscription revenue
            
            
            12,446
            
            
            
            80,504Net
                Cash Provided (Used) by Operating Activities
            
            
            (40,045
            )
            
            
            480,977Cash
                Flows from Investing ActivitiesAcquisition
                of property and equipment
            
            
            (54,795
            )
            
            
            (156,371
            )Proceeds
                from sale of equipment
            
            
            --
            
            
            
            1,050Net
                Cash Used by Investing Activities
            
            
            (54,795
            )
            
            
            (155,321
            )Cash
                Flows from Financing ActivitiesProceeds
                from short-term notes payable
            
            
            82,000
            
            
            
            100,000Payments
                on short-term notes payable
            
            
            (159,500
            )
            
            
            (300,000
            )Payments
                on long-term notes payable
            
            
            --
            
            
            
            (90,000
            )Proceeds
                from sale of common stock
            
            
            1,330,000
            
            
            
            ---Net
                Cash Provided (Used) by Financing Activities
            
            
            1,252,500
            
            
            
            (290,000
            )




Net
                Increase in Cash
            
            
            1,157,660
            
            
            
            35,656Cash
                and Cash Equivalents – Beginning of Year
            
            
            196,992
            
            
            
            161,336Cash
                and Cash Equivalents – End of Year
            
            $
            1,354,652
            
            
            $
            196,992Supplemental
                Cash Flow DisclosureCash
                paid for interest
            
            $
            752
            
            
            $
            37,223Cash
                paid for income taxes
            
            
            ---
            
            
            $
            26,152Payable
                to shareholders for common stock
            
            $
            400,000Conversion
                of
                debt and interest to common stock
            
            $
            409,090




See
      notes
      to consolidated financial statements.





*-
            32
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








**Note
      1 - Description of Business and Summary of Significant Accounting
      Policies**


Nature
      of Business


Premier
      Data Services, Inc. began operation in 1994 as a Colorado
      partnership.  On January 19, 2001, Premier Data Services, Inc.
      reorganized as a Delaware corporation.  In December, 2006, it acquired
      Xedar Corporation in a reverse merger.  The transaction has been
      accounted for as a reverse acquisition of Xedar Corporation (the “Company”) by
      Premier Data Services, Inc. and Premier Data Services, Inc is deemed to be
      the
      purchaser and surviving company for accounting purposes. Accordingly, its assets
      and liabilities are included in the consolidated balance sheet at their
      historical book values and the results of operations of Premier Data Services,
      Inc. have been presented for the comparative prior period.  The
      historical cost of the net assets of Xedar Corporation that were acquired was
      $0. Pro forma information is not presented as the financial statements of Xedar
      Corporation are insignificant.





The
      geographical information systems (GIS) segment obtains federal land ownership
      data from the Bureau of Land Management and converts this into a database that
      is sold to oil and gas companies, as well as several agencies of the federal
      government, along with browser software that allows users to easily access
      ownership information about specific parcels of land.  This service is
      offered both on compact disc and through an Internet site.  Nearly all
      sales are on an annual or quarterly subscription basis.  Production
      mapping services are also offered to a number of clients.





The
      consulting segment provides contract computer programming and security analysis
      services to various governmental agencies.  These services involve the
      analysis, design, and implementation of computer systems for federal and local
      governmental units.





Principles
      of Consolidation and Basis of Presentation


The
      accompanying consolidated financial statements include the accounts of Xedar
      Corporation and its wholly owned subsidiaries, FuGEN, Inc., Premier Data
      Services, Inc. and Land Links Company Ltd.  All material inter-company
      accounts and transaction balances have been eliminated in
      consolidation.





Cash
      and Cash Equivalents


The
      Company considers all highly liquid instruments purchased with an original
      maturity of three months or less to be cash equivalents.  The Company
      continually monitors its positions with, and the credit quality of, the
      financial institutions with which it invests.  As of the balance sheet
      dates, and periodically throughout the year, the Company has maintained balances
      in various operating accounts in excess of federally insured
      limits.





Concentrations
      of Credit Risk


The
      Company grants credit in the normal course of business, primarily consisting
      of
      accounts receivable and subscriptions receivable.  The Company
      periodically performs credit analyses and monitors the financial condition
      of
      its major customers to reduce credit risk.








*-
            33
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








Two
      customers comprised 37% of the Company’s sales for the year ended December 31,
      2006, and comprised 45% of the Company’s accounts receivable at December 31,
      2006.  Additionally, one customer comprised 50% of the Company’s sales
      for the same period in 2005.  In 2006 our revenue from the two
      customers which exceeded 10% of total revenue was $1,528,000 and
      $796,000.  In 2005 our revenue from the one customer which exceeded
      10% of total revenue (a different customer) was $3,940,000.  The
      revenue from each of these three customers was in the consulting
      segment.





Trade
      Accounts Receivable


At
      the
      time the accounts receivable are originated, the Company considers an allowance
      for doubtful accounts.  The provision for uncollectible amounts is
      continually reviewed and adjusted to maintain the allowance at a level
      considered adequate to cover future losses.  The allowance is
      management's best estimate of uncollectible amounts and is determined based
      on
      historical performance that is tracked by the Company on an ongoing
      basis.  The losses ultimately incurred could differ materially in the
      near term from the amounts estimated in determining the allowance.





Property
      and Equipment


Property
      and equipment are stated at cost.  Depreciation is calculated
      utilizing the straight-line method over the estimated useful lives for owned
      assets or to the estimated salvage value, where appropriate, or over the related
      lease terms for leasehold improvements. Useful lives range from 2 to 10
      years.





Goodwill


Goodwill
      is the result of the Company’s acquisition of all the outstanding stock of
      FuGEN, Inc. in 2002.  Statement of Financial Accounting Standards
      (“SFAS”) No. 142*, Goodwill and Other Intangible Assets*, requires that
      goodwill be tested for impairment at least annually. These tests will be
      performed more frequently if there is a triggering event indicating potential
      impairment.





SFAS
      No.
      142 prescribes a two-step method for determining goodwill impairment. In the
      first step, the fair value of the reporting unit is determined using a
      discounted cash flows approach. If the net book value of the reporting unit
      exceeds the fair value, then the second part of the impairment test would be
      completed. This involves an allocation of the reporting unit’s fair value to all
      of its assets and liabilities in a manner similar to a purchase price
      allocation, with any residual fair value being allocated to goodwill. The fair
      value of the goodwill is then compared to its carrying amount to determine
      impairment. An impairment charge will be recognized only when the implied fair
      value of a reporting unit’s goodwill is less than its carrying
      amount.





The
      Company completed its annual goodwill tests, using discounted cash flows to
      establish the fair value of the reporting unit, and found no goodwill impairment
      for 2006 or 2005.





Long-Lived
      Assets


The
      Company reviews its long-lived assets for impairment whenever events or changes
      in circumstances indicate that the carrying amount of the asset may not be
      recovered.  The Company looks primarily to undiscounted future cash
      flows in its assessment of whether or not long-lived assets have been
      impaired.








*-
            34
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








Revenue
      Recognition


The
      Company recognizes revenue when all of the following criteria have been met:
      (a)
      persuasive evidence of an arrangement exists, (b) delivery has occurred or
      services have been rendered, (c) the price to the customer is fixed or
      determinable, and (d) collectability is reasonably assured. The Company’s
      revenue recognition policies are based on the guidance in Staff Accounting
      Bulletin (SAB) No. 104, *Revenue Recognition*, and Statement of Position
      (SOP) 97-2, *Software Revenue Recognition*.





*Sales
      of critical information and decision-support tools*





A
      significant proportion of the Company’s revenue is derived from the sale of
      subscriptions to the Company’s oil and gas database, which is recognized ratably
      as delivered over the subscription period.





*Sales
      of services*





The
      Company provides consulting and GIS production services primarily on a time
      and
      materials basis.    We recognize revenue related to services
      performed under time and materials contracts in the period performed, at
      standard billing rates.  We recognize revenue associated with
      fixed-price contracts upon completion of each specified performance obligation
      under the terms of the contract.  If the contract includes acceptance
      contingencies, we recognize revenue  in the period in which we receive
      documentation of acceptance from the customer.





The
      Company does not sell bundled products.  We sell software and
      databases, and each package has a maintenance contract associated with
      it.  Therefore, there are no bundled services, other than the
      maintenance aspect related to the software and database.  We also sell
      maintenance separately on existing software and database
      contracts.  Accordingly, there are no bundled services that would have
      to be accounted for under EITF 00-21.  Under SOP 97-2, because we sell
      maintenance on a separate basis, not just with the sale of software and
      databases, we break out the maintenance aspect of the sale and recognize that
      revenue separately and ratably over the maintenance period.





Advertising


The
      Company expenses advertising costs as they are incurred.  No
      advertising expense was incurred for the years ended December 31, 2006 and
      December 31, 2005.





Income
      Taxes


The
      Company provides for income taxes pursuant to the liability method as prescribed
      in SFAS No. 109, *Accounting for Income Taxes*. The liability method
      requires recognition of deferred income taxes based on temporary differences
      between financial reporting and income tax bases of assets and liabilities,
      using currently enacted income tax rates and regulations.








*-
            35
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








Income
      (Loss) Per Share


Income
      (loss) per share excludes any dilutive effects of options, warrants and dilutive
      securities. Income (loss) per share is computed using the weighted average
      number of common shares outstanding during the period. Diluted earnings per
      share is computed using the weighted average number of common and common stock
      equivalent shares outstanding during the period. Common equivalent shares of
      1,771,930 and 157,622 are excluded from the computation of diluted earnings
      per
      share for 2006 and 2005, respectively, because their effect is
      anti-dilutive.  The income (loss) per share are shown pro forma, as
      though the reverse acquisition took place on January 1, 2005.





Use
      of
      Estimates


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





Stock-Based
      Compensation


Prior
      to
      January 1, 2006, Premier Data Services, Inc. accounted for its stock option
      program under the recognition and measurement provisions of APB Opinion No.
      25
      (“APB 25”), *Accounting for Stock Issued to Employees*, and related
      Interpretations, as permitted by FASB Statement No. 123 (“SFAS 123”),
*Accounting for Stock-Based Compensation*. No stock based compensation
      cost was recognized in the Statement of Operations for the year ended December
      31, 2005, as all options granted under the plan had an exercise price equal
      to
      the market value of the underlying common stock on the date of
      grant.




During
      2006, Premier Data Services, Inc. adopted the provisions of and accounted for
      stock-based compensation in accordance with SFAS 123R, which replaced SFAS
      123
      and supersedes APB 25. Under the fair value recognition provisions of this
      statement, stock-based compensation cost is measured at the grant date based
      on
      the fair value of the award and is recognized as expense on a straight-line
      basis over the requisite service period, which is the vesting period. Premier
      Data Services, Inc. elected the modified-prospective method, under which prior
      periods are not revised for comparative purposes. The valuation provisions
      of
      SFAS 123R apply to new grants and to grants that were outstanding as of the
      effective date and are subsequently modified. Estimated compensation for grants
      that were outstanding as of the effective date will be recognized over the
      remaining service periods using the compensation cost estimated for the SFAS
      123
      pro forma disclosures.  Compensation expense for warrants granted to
      non-employees has been determined in accordance with SFAS No. 123R as the fair
      value of the consideration received or the fair value of the equity instruments
      issued, whichever is more reliably measured.





The
      adoption of SFAS 123R resulted in the recognition of $30,883 of compensation
      cost during the year ended December 31, 2006.  The amount of
      unrecognized compensation cost relating to options issued but not yet vested
      amounted to $13,729 as of December 31, 2006, all of which is expected to be
      expended during 2007.  See Note 10 for further information regarding
      stock-based compensation assumptions and expenses, including pro forma
      disclosures for the year ended December 31, 2006 and 2005 as if Premier Data
      Services, Inc. had recorded stock-based compensation expense.





*-
            36
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








Recent
      Accounting Pronouncements


In
      September 2006, the FASB issued SFAS No. 157, *"Fair Value
      Measurements,"* which enhances existing guidance for measuring assets and
      liabilities at fair value. SFAS No. 157 defines fair value, establishes a
      framework for measuring fair value and expands disclosure about fair value
      measurements. SFAS No. 157 is effective for the Company beginning in 2007.
      The Company is currently assessing the impact of the adoption of SFAS
      No. 157, but does not expect that it will have a significant impact on its
      financial position or results of operations.





In
      September 2006, the SEC issued Staff Accounting Bulletin ("SAB")
      No. 108, "*Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements.*" SAB
      No. 108 requires that companies utilize a "dual-approach" to assessing the
      quantitative effects of financial statement misstatements. The dual approach
      includes both an income statement focused and balance sheet focused assessment.
      SAB No. 108 is applicable beginning in 2007. The Company is currently
      assessing the impact of the adoption of SAB No. 108, but does not expect
      that it will have a significant impact on its financial position or results
      of
      operations.





In
      June 2006, the FASB issued FIN No. 48, *"Accounting for Uncertainty
      in Income Taxes—an interpretation of FASB Statement No. 109."*This
      Interpretation prescribes a comprehensive model for the financial statement
      recognition, measurement, presentation and disclosure of uncertain tax positions
      taken or expected to be taken in income tax returns. FIN No. 48 is
      effective for the Company beginning in 2007. The Company is currently assessing
      the impact of the adoption of FIN No. 48, but does not expect that it will
      have a significant impact on its financial position or results of
      operations.





**Note
      2 - Property and Equipment**


Property
      and equipment consist of the following:





December
                  31,2006Furniture
                and fixtures
            
            $
            71,796Office
                equipment
            
            
            66,306Computer
                equipment
            
            
            434,806Software
            
            
            434,218Leasehold
                improvements
            
            
            12,7951,019,921Less
                accumulated depreciation
            
            
            (730,942
            )$
            288,979





Depreciation
      and amortization expense for the years ended December 31, 2006 and 2005 was
      $292,028 and $312,249, respectively, and is included in other selling and
      administrative expenses of the statement of operations.





*-
            37
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**





**Note
      3 - Accrued Liabilities**


Accrued
      liabilities consist of the following:





December
                  31,2006Accrued
                compensation
            
            $
            95,803Other
                accrued liabilities
            
            
            22,460Totals
            
            $
            118,263





**Note
      4 - Related Party Transactions**


During
      2006, the Company borrowed $82,000 from an officer of the
      Company.  All amounts borrowed were paid in full by December 31,
      2006.  Interest expense incurred on the borrowings was $752 in
      2006.





As
      discussed in Note 9, the Company acquired shares from a shareholder for $400,000
      and the amount is included in accounts payable to shareholders in the
      accompanying consolidated balance sheet at December 31, 2006.  The
      balance was paid in January 2007.****See also the discussion
      of convertible notes payable to related parties in Note 5.





**Note
      5 – Convertible Notes Payable to Related Parties**


Convertible
      notes payable to related parties consist of:




December
                  31,2006Convertible
                Note Payable – Affiliated company of shareholder – due in monthly
                installments of $5,402 including interest at 8 1⁄2% per annum, maturing in
                2009.
            
            $
            207,079Convertible
                Note Payable – Shareholder, due in monthly installments of $4,598
                including interest at 8 1⁄2% per annum, maturing in 2009.
            
            
            176,259383,338Less
                current maturities
            
            
            383,338Long-term
                notes payable to related parties
            
            $
            --





The
      Company had notes payable to an affiliate company of a shareholder and a
      shareholder.  In December 2006, the holders of these notes converted a
      total of $309,927 of interest payable and $99,163 of principal into 409,090
      shares of common stock at $1.00 per share.  This conversion rate was
      based on the fair value of the stock after the recapitalization, in accordance
      with the original agreement.  The remaining balance on the notes was
      cancelled and the Company issued a new note payable for the remaining
      balance.  These notes payable are collateralized by a security
      interest in all assets of the Company.  The holders of these notes
      have the option to convert all remaining amounts due (both principal and
      interest) to common stock at $1.00 per share adjusted for all stock splits,
      stock dividends, combinations of shares, recapitalizations, reclassifications
      or
      similar events.  There was not a beneficial conversion feature when
      the notes were issued.





*-
            38
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**





**Note
      6 – Income Taxes**


The
      Company’s provision for income taxes is as follows:





12/31/2006
            
            
            12/31/2005Current
                provision:Federal
            
            
            ---
            
            
            
            ---State
                and local
            
            
            (16,621
            )
            
            
            32,604Total
                current provision
            
            
            (16,621
            )
            
            
            32,604Deferred
                tax expense (benefit):Federal
            
            
            ---
            
            
            
            ---State
                and local
            
            
            ---
            
            
            
            ---Total
                deferred tax expense (benefit)
            
            
            ---
            
            
            
            ---Income
                tax expense (benefit)
            
            
            (16,621
            )
            
            
            32,604





The
      provision for income taxes differs from that which would have resulted from
      the
      use of the federal statutory income tax rate as follows:





12/31/2006
            
            
            12/31/2005Federal
                income tax provision
              as
                statutory rate of 34%
            
            
            (213,089
            )
            
            
            25,217State
                income taxes, net of
              federal
                benefit
            
            
            (16,621
            )
            
            
            32,604Permanent
                items
            
            
            5,873
            
            
            
            7,799Change
                in valuation allowance
            
            
            207,166
            
            
            
            (33,016
            )(16,621
            )
            
            
            32,604





The
      significant items comprising the Company’s deferred tax assets and liabilities
      as of December 31, 2006 and December 31, 2005 are as follows:





12/31/2006
            
            
            12/31/2005Deferred
                tax assets (liabilities) – current:Accrued
                liabilities
            
            $
            27,124
            
            
            $
            29,254Allowance
                for doubtful accounts
            
            
            2,276
            
            
            
            7,994Net
                deferred tax asset (liability) - current
            
            
            29,399
            
            
            
            37,248Deferred
                tax assets (liabilities) – non-currentNet
                operating loss
            
            
            944,443
            
            
            
            807,094Amortization
                intangibles
            
            
            97,498
            
            
            
            107,489Fixed
                assets
            
            
            (38,811
            )
            
            
            (108,722
            )Net
                deferred tax liability non-current
            
            
            1,003,130
            
            
            
            805,861Valuation
                allowance
            
            
            (1,032,530
            )
            
            
            (843,109
            )Net
                deferred tax asset (liability)
            
            
            ---
            
            
            
            ---








*-
            39
            -*





**edar
      Corporation**


**Notes
      to Consolidated Financial Statements**











Effective
      January 31, 2001, the Company converted from partnership status and became
      a “C”
corporation for income tax reporting.  As a “C” corporation, the
      Company is subject to corporate income taxes.





Income
      taxes are provided for the tax effects of the transactions reported in the
      financial statements and consist of taxes currently due plus deferred taxes
      related primarily to temporary differences between the bases of certain assets
      and liabilities for financial and tax reporting.  The differences will
      be either deductible or taxable when the assets and liabilities are recovered
      or
      settled.





The
      Company has an income tax loss carryforward of approximately $2,130,000 as
      of
      December 31, 2006 that may be offset against future income taxes.  Of
      this amount $1,263,000 at December 31, 2006, is from a subsidiary, FuGEN, Inc.,
      and is subject to an annual limitation of $73,400, resulting from a change
      in
      ownership.  If not used, these loss carryforwards will expire in
      various amounts from 2020 to 2023.  A valuation allowance has been
      recorded against the expected future reduction in income tax from the tax loss
      carryforwards.





**Note
      7 - Commitments**


Operating
      Leases


The
      Company leases facilities under non-cancelable operating leases expiring in
      2008
      and 2009.  Rent expense for the years ended December 31, 2006 and 2005
      was $244,967 and $251,712, respectively.





Future
      minimum lease payments under these leases are approximately as follows (in
      thousands):





Year
                Ending December 31,
            
            Operating
                  Leases2007
            
            $
            259,3022008
            
            
            166,8142009
            
            
            41,6302010
            
            
            02011
            
            
            0Thereafter
            
            
            0Total
                at December 31, 2006
            
            $
            467,746








*-
            40
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








**Note
      8 – Discontinued Operations**


Sale
      of
      CustomerSoft





In
      November 2006 we sold CustomerSoft, our customer relationship management
      segment, which provided software maintenance support.  We sold
      CustomerSoft in order to reduce the number of our operating divisions, thereby
      allowing us to concentrate our monetary and management resources on developing
      the GIS and consulting segments.  The 2006 revenue of the Customer
      Relationship Management (CRM) segment was 2.9% of total revenue.  The
      operations of the CRM segment were insignificant, other than an intangible
      asset
      and the associated amortization expense, which amounts to $92,132 in
      2006.  We incurred a $13,000 loss on the sale of CustomerSoft,
      classified in selling and administrative expense.





**Note
      9 – Reverse Acquisition of Xedar**


Effective
      December 31, 2006 Premier agreed to acquire Xedar (a public shell) for $400,000
      cash, with the shareholders of Xedar prior to the acquisition retaining 10%
      ownership in the surviving entity.  This transaction was consummated
      by the parties simultaneously entering into the following two
      contracts.





Merger
      Agreement


Effective
      December 31, 2006, Premier entered into a merger agreement with
      Xedar.  Before the merger agreement there was no material relationship
      between Xedar and Premier.   Prior to the merger Xedar had
      2,500,072 shares of common stock outstanding.  Effective December 31,
      2006, Xedar issued, pursuant to the merger agreement with Premier, 14,082,871
      shares of its common stock for 13,685,018 shares of the common stock and
      2,685,253 shares of the Series A preferred stock of Premier, based upon a
      conversion ratio of 0.78199 shares of Xedar common stock for 1 share of Premier
      common stock, and 1.25922 shares of Xedar common stock for 1 share of the Series
      A preferred stock of Premier.  Also 34 Xedar shares were issued for
      rounding up of the fractional shares.  Immediately following the
      closing of the Merger Agreement there were 16,582,977 shares of Xedar common
      stock outstanding and Premier became a subsidiary of Xedar.





The
      remaining 91,244 shares of Premier common stock and 477,688 shares of Premier
      Series A preferred stock were subsequently converted to Xedar common stock
      using
      the same conversion ratios, resulting in additional 672,866 Xedar shares,
      bringing the total number of shares issued to effect the merger to 14,755,771
      shares and the number of Xedar shares outstanding post-merger to 17,255,843
      shares.





Further,
      options to purchase 65,500 Premier common shares are
      outstanding.  These options expire between 2011 and
      2015.    If the options are exercised, the owners of the
      resulting common stock would become minority owners in Premier.





*-
            41
            -*





Controlling
      Shareholder Agreement


Simultaneously
      with entering into, and as a condition of, the above merger agreement, Premier
      entered into an agreement with the controlling shareholders of
      Xedar.  The terms of the agreement were that Premier paid the
      controlling shareholders of Xedar $400,000 in exchange for 463 shares of Xedar
      common stock, and all of the shareholders of Xedar retained 10% ownership in
      the
      surviving entity.





The
      entire transaction has been accounted for as a reverse acquisition of Xedar
      by
      Premier, in accord with the provisions of FASB Statement 141, Business
      Combinations.  Premier is deemed to be the purchaser and surviving
      company for accounting purposes.  Accordingly, its assets and
      liabilities are included in the consolidated balance sheet at their historical
      book values and the results of operations of Premier have been presented for
      the
      comparative prior period.  The historical cost of the net assets of
      Xedar that were acquired was $0.  The $400,000 paid to the controlling
      shareholders of Xedar has been reported as a distribution in the consolidated
      statement of changes in stockholders’ equity.  Pro forma information
      is not presented as the financial statements of Xedar Corporation are
      insignificant.





**Note
      10 - Stock Option Plan**


Premier
      Data Services, Inc. established an incentive stock option plan for which
      2,000,000 shares of its common stock have been set aside.  The plan
      set the exercise price for employees who are less than 10% shareholders at
      $0.487694 for 2001; $0.243847 for 2002; $0.59567 for 2003; $0.91719 and $.66932
      for two separate grants during 2004; and $0.98747 for 2005; and for employees
      who are 10% and over shareholders at an exercise price that is 10%
      higher.  The option grants immediately vested.  The vesting
      schedule for remaining options granted prior to 2005 was 1/3 after one year,
      1/3
      after two years and the final 1/3 after the third year.  Retention
      options awarded in 2005 vested 1⁄2 after one year and 1⁄2 after two
      years.





Premier
      Data Services, Inc. granted 220,622 options during 2005.  There were
      254,298 options not yet granted as of December 31,
      2005.  Additionally, Premier Data Services, Inc. amended the plan on
      March 21, 2002, to grant its stock options for stock options of FuGEN, Inc.
      that
      employees of FuGEN, Inc. had previously received.  These newly amended
      options totaled 849,198 at a price of $0.68 per share and the same vesting
      schedule as previously issued stock options, giving benefit to all prior service
      of FuGEN, Inc. employees.





During
      December 2006, the Company exchanged 1,550,717 options and 333,360 warrants
      from
      the option and warrant holders, respectively, for 366,048 shares of the
      Company’s restricted common stock.  76,000 options remain
      outstanding.  All warrants have been exchanged.  As a result
      of this exchange, the Company recognized $30,833 of compensation expense which
      represents the remaining pro forma expense to be recognized as of the date
      of
      exchange.





For
      the
      year ended December 31, 2005, Premier Data Services, Inc. has adopted the
      disclosure-only provisions of Statement of Accounting Standards No. 123,
      Accounting for Stock-Based Compensation.  Accordingly, no compensation
      cost has been recognized for the stock option plans.  Had compensation
      costs for Premier Data Services, Inc.’s stock option plans been determined based
      on the fair value at the grant date for awards during the period ended December
      31, 2005 in accordance with the provisions of SFAS No. 123, the Company’s net
      loss and loss per share would have been increased to the pro forma amounts
      indicated below:





*-
            42
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








2005Net
                income – as reported
            
            $
            13,247Net
                loss – pro forma
            
            $
            (97,512
            )Basic
                income per share – as reported
            
            $
            0.001Basic
                loss per share – pro forma
            
            $
            (0.008
            )Fully
                diluted income per share – as reported
            
            $
            0.001Fully
                diluted loss per share – pro forma
            
            $
            (0.008
            )





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted-average
      assumptions used for grants in 2005; dividend yield of 0%, expected volatility
      of 216%; risk-free interest rate of 4.12%; and expected life of 5.29
      years.  The weighted average grant date fair value of options was
      $0.99 for 2005.





The
      following is a summary of stock option and warrant activity:





Option
                Price
              Per
                Share
            Weighted
                Average
              Exercise
                Price
            Number
                of SharesBalance,
                December 31, 2004
            $0.24
                to $0.92
            $0.60
            1,484,725Canceled
            $0.24
                to $0.68
            $0.65
            (24,645)Granted
            $0.99
            $0.99
            220,622Exercised
            ---
            $0.00
            ---Balance,
                December 31, 2005
            $0.24
                to $0.99
            $0.65
            1,680,702Canceled
            $0.68
                to $0.99
            $0.85
            (43,985)Repurchased
            $0.24
                to $0.99
            $0.64
            (1,550,717)Exercised
            $0.24
            $0.24
            (10,000)Balance,
                December 31, 2006
            $0.24
                to $0.99
            $0.65
            76,000





Stock
                Warrants
            Warrant
                Price
              Per
                Share
            Weighted
                Average
              Exercise
                Price
            Number
                of SharesBalance,
                December 31, 2003 through December 31, 2005
            $0.49
            $0.49
            333,360Repurchased
            $0.49
            $0.49
            (333,360)Balance,
                December 31, 2006
            
            
            ---








*-
            43
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








The
      weighted average exercise prices of stock options and warrants exercisable
      at
      each period end are as follows:





Option
                Price
              Per
                Share
            Weighted
                Average
              Exercise
                Price
            Number
                of
              SharesDecember
                31, 2005
            $0.24
                to $0.99
            $0.64
            1,617,702December
                31, 2006
            $0.68
                to $0.99
            $0.81
            61,250





The
      following is additional information with respect to those options outstanding
      at
      December 31, 2006:





Option
                Exercise
              Price
                per Share
            Weighted
                Average Contractual
              Life
                in Years
            Weighted
                Average Exercise Price
            Number
                of Shares$0.68
            5.2
            $0.68
            35,000$0.99
            8.4
            $0.99
            41,00076,000





During
      2006, Premier Data Services, Inc. adopted Statement of Financial Accounting
      Standards No. 123 (Revised).  This new statement requires that
      compensation expense be recorded for the value of stock options
      granted.  Premier Data Services, Inc. has elected to apply the
      modified prospective application whereby the financial statements for the years
      ended December 31, 2005 and 2004 have not been changed and the disclosures
      for
      those periods are consistent with Statement of Financial Accounting Standards
      No. 123.





No
      stock
      options were granted during 2006.  As a result, pro forma compensation
      expense for stock options relates to the prior years’ stock options granted but
      not yet vested at December 31, 2005.  The amount of unrecognized
      compensation cost relating to options granted but not yet vested amounted to
      $13,729 as of December 31, 2006, all of which is expected to be expended during
      2007.





**Note
      11 - Employee Benefit Plan**


The
      Company has a 401(k) plan, which covers most of the employees with over 90
      days
      of service.  The plan provides for full vesting after 90 days in the
      plan.  The Company’s contribution rate is 50% of employee
      contributions up to a limit of $1,000 per employee per year.  The
      Company follows the policy of funding the plan contributions as
      accrued.





Contributions
      to the plan by Premier Data Services, Inc. were approximately $42,000 and
      $40,000 for the years ended December 31, 2006 and 2005,
      respectively.








*-
            44
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**





**Note
      12 – Segment Information**





The
      Company managed its business and aggregates its operational and financial
      information in accordance with four reportable segments.  Its
      consulting segment provides independent verification and validation (IV&V)
      and information assurance on large projects within several federal
      agencies.  Its geographical information systems (GIS) segment provides
      government and oil and gas customers with a combination of land database
      products and production services related to the creation or enhancement of
      land
      records.  Its customer relationship management segment provided
      software maintenance support, and was sold in November 2006.  Its
      justice information systems segment created and installed court case management
      systems, and was folded into the consulting segment at the end of
      2006.


Financial
      information for the Company’s business segments was as follows (in
      thousands):





As
                  of December 312006
            
            
            2005Revenue:Consulting
            
            $
            3,299
            
            
            $
            4,888Geographical
                information systems
            
            
            2,434
            
            
            
            2,478Justice
                information systems
            
            
            322
            
            
            
            120Total
            
            $
            6,055
            
            
            $
            7,486In
                2006 our revenue from the two customers which exceeded 10% of total
                revenue was $1,528,000 and $796,000. In 2005 our revenue from the
                one
                customer which exceeded 10% of total revenue (a different customer)
                was
                $3,940,000. The revenue from each of these three customers was in
                the
                consulting segment.Income
                (Loss) from operations:Consulting
            
            $
            175
            
            
            $
            1,085Geographical
                information systems
            
            
            350
            
            
            
            93Justice
                information systems
            
            
            (261
            )
            
            
            (475
            )Corporate
                expenses
            
            
            (787
            )
            
            
            (741
            )Total
            
            $
            (523
            )
            
            $
            (38
            )Identifiable
                fixed assets:Consulting
            
            
            157
            
            
            $
            156Geographical
                information systems
            
            
            735
            
            
            
            710Justice
                information systems
            
            
            77
            
            
            
            75Other
            
            
            51
            
            
            
            52Less:
                accumulated depreciation
            
            
            (731
            )
            
            
            (870
            )Total
            
            $
            289
            
            
            $
            123Depreciation
                and amortization:Consulting
            
            $
            37
            
            
            $
            58Geographical
                information systems
            
            
            126
            
            
            
            131Other
            
            
            129
            
            
            
            123Total
            
            $
            292
            
            
            $
            312





*-
            45
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**





As
      discussed in Note 8, we sold our CRM segment in November
      2006.   For the year ended December 31, 2006, CRM revenue was
      approximately, $182,000, loss from operations was approximately $87,000 and
      identifiable fixed assets were zero.   For the year ended
      December 31, 2005, CRM revenue was approximately, $374,000, income from
      operations was approximately $51,000 and identifiable fixed assets were
      approximately $417,000.





Total
      asset data is not provided to the chief operating decision maker and therefore
      is not detailed above.





**Note
      13 – Subsequent Events**


On
      January 1, 2007, we acquired Land Links Company Ltd., which compiles information
      for and related to the geographic coordinate database, for 360,000 shares of
      common stock. This acquisition does not meet the significance tests and the
      financial statements are not included in this filing.





On
      March
      1, 2007, we completed the sale of our justice information systems (“JIS”)
      division to Justice Systems, Inc. for approximately $140,000 in cash, of which
      $75,000 was for the underlying business assets and $65,000 was for a six-month
      service contract to support the transition of the JIS division to Justice
      Systems, Inc.  There was no material relationship between the Company
      and Justice Systems, Inc. prior to the disposition of JIS division
      assets.





On
      January 9, 2007, we entered into consulting arrangements with Livestrong Venture
      Capital Partners, Inc., C.C.R.I. Corporation, and Capital Group Communications
      for a term of twelve months, pursuant to which we issued to 500,000 shares
      of
      our common stock to Livestrong Venture Capital Partners, Inc., 200,000 shares
      of
      our common stock to C.C.R.I. Corporation, and 500,000 shares of our common
      stock
      to Capital Group Communications as consideration for investor relations and
      financial consulting services to be provided.  These shares were
      valued at $0.90, the stock price at date of issuance, totaling
      $1,080,000.  We are recording consulting expense, a component of
      selling and administrative expense, as required services are
      rendered.








*-
            46
            -*





**Xedar
      Corporation**


**Notes
      to Consolidated Financial Statements**








On
      March
      22, 2007 we acquired all of the outstanding stock of Atlantic Systems
      Corporation, a Virginia corporation.  Atlantic develops software for
      the defense and intelligence agencies of the federal government, and provides
      technical assistance and training for other software systems implemented by
      the
      federal government. Additionally Atlantic provides strategy consulting services
      to those same agencies.  Further, Atlantic assists its clients in
      selling their products and services to the federal
      government.  Pursuant to the Stock Purchase Agreement between us,
      Atlantic, and Don W. Rakestraw, Jeffrey R. Grime, and J. O. McFalls, III (who
      together owned all of the outstanding stock of Atlantic prior to the
      transaction), dated March 22, 2007, as amended by the First Amendment to Stock
      Purchase Agreement, dated July 26, 2007, we purchased all of the outstanding
      Atlantic stock from the shareholders for (i) an initial payment of 1,380,802,
      (ii) a closing payment of 3,000,000 shares of our common stock, and (iii) a
      contingent payment not to exceed 2,000,000 shares of our common stock, to be
      made at our discretion, in the event Atlantic or its subsidiary receives
      one or more significant RFPs (Requests For Proposal), RFQs (Requests for
      Quotation) or SOWs (Statements of Work) from the federal government, or a
      significant industry participant, and responds to such requests with one or
      more
      proposals by December 31, 2007.  The terms of the Atlantic acquisition
      were negotiated by our CEO, Hugh H. Williamson, III, and the three shareholders
      of Atlantic, and Don W. Rakestraw, Jeffrey R. Grime, and J.O. McFalls, III.
      We
      had no material relationship with Atlantic or its shareholders prior to the
      purchase.  Subsequent to the acquisition, Don W. Rakestraw,
      Jeffrey R. Grime, and J.O. McFalls, III became employees at will with certain
      severance related rights.  Specifically, Mr. Rakestraw became the CEO
      of our wholly owned Atlantic subsidiary, with an annual salary of $230,000
      per
      year.  If Mr. Rakestraw is terminated without cause in his first year
      of employment, he is entitled to a payment of $820,000, if he is terminated
      without cause at any time thereafter, he is entitled to a payment of $500,000,
      and if he is terminated for cause at any time, he is not entitled to any
      severance. Mr. Grime became the President of our wholly owned Atlantic
      subsidiary, with an annual salary of $230,000 per year.  If Mr. Grime
      is terminated without cause in his first year of employment, he is entitled
      to a
      payment of $690,000, if he is terminated without cause at any time thereafter,
      he is entitled to a payment of $460,000 and if he is terminated for cause at
      any
      time, he is not entitled to any severance.  Mr. McFalls became the
      President of the NSA business unit of our wholly owned Atlantic subsidiary,
      with
      an annual salary of $210,000 per year.  If Mr. McFalls is terminated
      without cause, he is entitled to a payment of $420,000, and if he is terminated
      for cause at any time he is not entitled to any severance.  With the
      acquisition of Atlantic, we now provide strategic planning, business development
      services and program management to the federal government




On
      October 1, 2007 we acquired Pixxures, Inc., a Delaware corporation, in a stock
      for stock transaction.  We acquired Pixxures Inc. in order to expand
      our geospatial production and sales capabilities.  Pixxures employs a
      much larger number of geospatial production personnel than Xedar, allowing
      us to
      bid on larger geospatial projects that we would previously have needed to
      outsource to subcontractors.  Also, Pixxures operates in a lower-cost
      facility than Xedar, so the overhead cost applied to our bids will be
      reduced.  Further, Pixxures has three sales staff specializing in
      county-level and commercial customers, which complements our two sales staff
      who
      specialize primarily in federal government sales.  To facilitate the
      Pixxures acquisition, we formed Pixx Acquisition Corp., a Delaware
      corporation.  By the terms of the Agreement and Plan of Merger, dated
      September 26, 2007, between Xedar, Pixxures and Pixx Acquisition Corp. we
      purchased all of the issued and outstanding capital stock of Pixxures for a
      closing payment of 1,734,780 shares of Xedar common stock having a negotiated
      value of $5,115,000, based on the average daily closing price of Xedar common
      stock for the 20 trading days ending two days prior to the
      closing.  Subject to the terms of the agreement, additional shares may
      become payable by Xedar if the market price of Xedar common stock, for the
      60
      trading days following the date upon which the purchase payment shares are
      registered with the U.S. Securities and Exchange Commission, is less than the
      average closing price.  If the subsequent market price is less than
      the average closing price, additional shares will be issued, such that the
      total
      consideration received for the Pixxures capital stock in the transaction equals
      $5,115,000, calculated based on the subsequent market price.





*-
            47
            -*








**Item
      8.  Changes In and Disagreements With Accountants on Accounting and
      Financial Disclosure.**


None.





**Item
      8A.  Controls and Procedures.**


Introduction


"Disclosure
      Controls and Procedures" are defined in Securities Exchange Act of
      1934  Rules 13a-15(e) and 15d-15(e) as the controls and procedures of
      an issuer that are designed to ensure that information required to be disclosed
      by the issuer in the reports that it files or submits under the Exchange Act
      is
      recorded, processed, summarized and reported, within the time period specified
      by the SEC's rules and forms. Disclosure Controls and Procedures include, among
      other things, controls and procedures designed to ensure that information
      required to be disclosed by us in the reports that we file or submit under
      the
      Exchange Act is  accumulated and communicated to our management,
      including our principal executive and principal financial officers, as
      appropriate, to allow timely decisions regarding disclosure.





"Internal
      Control Over Financial Reporting" is defined in Exchange Act Rules 13a-15(f)
      and
      15d-15(f) as a process designed by, or under the supervision of, an issuer's
      principal executive and principal financial officers, or persons performing
      similar functions, and effected by an issuer's board of directors, management
      and other personnel, to provide reasonable assurance regarding the reliability
      of financial reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting principles. It
      includes those policies and procedures that (1) pertain to the maintenance
      of
      records that in reasonable detail accurately and fairly reflect the transactions
      and disposition of an issuer; (2) provide reasonable assurance that transactions
      are recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that receipts
      and
      expenditures of the issuer are being made only in accordance with authorizations
      of management and directors of the issuer; and (3) provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use or
      disposition of the issuer's assets that could have a material adverse effect
      on
      the financial statements.





Evaluation
      of Disclosure Controls and Procedures


Our
      management, with the participation of our Chief Executive Officer and Chief
      Financial Officer, has evaluated the effectiveness of our Disclosure Controls
      and Procedures as of the end of the period covered by this report. Based on
      this
      evaluation, our Chief Executive Officer and Chief Financial Officer have
      concluded that our Disclosure Controls and Procedures as of the end of the
      period covered by this report were designed to ensure that material information
      relating to us is made known to the Chief Executive Officer and Chief Financial
      Officer by others within us, particularly during the period in which this report
      was being prepared, and that our Disclosure Controls and Procedures were
      effective. There were no changes to our Internal Controls Over Financial
      Reporting during the year ended December 31, 2006 that have materially affected
      or are reasonably likely to materially affect our Internal Controls Over
      Financial Reporting.





**Item
      8B.  Other Information.**


None.





*-
            48
            -*








**Item
      13.  Exhibits**





Number
            Description2.1
            Agreement
                and Plan of Merger, effective December 31, 2006, by and among Xedar
                Corporation, a Colorado corporation, PDS Acquisition Corp., a Colorado
                corporation, and Premier Data Services, Inc., a Delaware corporation
                (incorporated by reference to Exhibit 2.1 of our Current Report on
                Form
                8-K filed January 5, 2007).3.1
            Articles
                of Incorporation of Xedar Corporation, dated May 6, 1974 (incorporated
                by
                reference to Exhibit 3.1 of our Current Report on Form 8-K filed
                January
                5, 2007)3.2
            Articles
                of Amendment of Xedar Corporation, dated November 26, 1974 (incorporated
                by reference to Exhibit 3.2 of our Current Report on Form 8-K filed
                January 5, 2007)3.3
            Articles
                of Amendment of Xedar Corporation, dated July 23, 1979 (incorporated
                by
                reference to Exhibit 3.3. of our Current Report on Form 8-K filed
                January
                5, 2007)3.4
            Articles
                of Amendment of Xedar Corporation, dated September 29, 2004 (incorporated
                by reference to Exhibit 3.4 of our Current Report on Form 8-K filed
                January 5, 2007)3.5
            Articles
                of Amendment of Xedar Corporation, dated December 12, 2005 (incorporated
                by reference to Exhibit 3.5 of our Current Report on Form 8-K filed
                January 5, 2007)3.6
            Articles
                of Amendment of Xedar Corporation, dated December 18, 2006 (incorporated
                by reference to Exhibit 3.6 of our Current Report on Form 8-K filed
                January 5, 2007)3.7
            Bylaws
                of Xedar Corporation, dated December 29, 2006 (incorporated by reference
                to Exhibit 3.7 of our Current Report on Form 8-K filed January 5,
                2007)10.1
            Interest
                Purchase Agreement, dated January 1, 2007, by and between David M.
                King,
                Glen W. Thurow, and PDS GIS/LIS, Inc.  (incorporated by
                reference to Exhibit 10.1 of our Current Report on Form 8-K filed
                January
                5, 2007)10.2
            Stock
                Purchase Agreement, dated December 29, 2006, by and among Underwood
                Family
                Partners, Ltd., Battersea Capital, Inc., Kanouff LLC, and Xedar
                Corporation (incorporated by reference to Exhibit 10.2 of our Current
                Report on Form 8-K filed January 5, 2007)10.3
            Purchase
                Agreement, dated February 20, 2007, by and between Premier Data Services,
                Inc., a Delaware corporation, and Justice Systems, Inc., a New Mexico
                corporation (incorporated by reference to Exhibit 10.1 of our Current
                Report on Form 8-K filed February 26, 2007)10.4
            Consulting
                Services Agreement, dated February 20, 2007, by and between Premier
                Data
                Services, Inc., a Delaware corporation, and Justice Systems, Inc.,
                a New
                Mexico corporation (incorporated by reference to Exhibit 10.1 of
                our
                Current Report on Form 8-K filed February 26, 2007)14.1
            Code
                of Ethics (incorporated by reference to Exhibit 14.1 of our Annual
                Report
                on Form 10-KSB for the Fiscal Year Ended December 31, 2006, filed
                March
                16, 2007)21.1
            Subsidiaries
                (incorporated by reference to Exhibit 21.1 of our Annual Report on
                Form
                10-KSB for the Fiscal Year Ended December 31, 2006, filed March 16,
                2007)


31.1*
            Certification
                of President and Chief Executive Officer required by Rule
                13a-14(a)31.2*
            Certification
                of Chief Financial Officer required by Rule 13a-14(a)32.1*
            Certification
                of President and Chief Executive Officer required by Section 906
                of the
                Sarbanes-Oxley Act of 200232.2*
            Certification
                of  Chief Financial Officer required by Section 906 of the
                Sarbanes-Oxley Act of 2002




*
      Filed
      herewith.





*-
            49
            -*





**Signatures**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.






**Xedar
              Corporation**Date: 
                November 2, 2007
            By:
            /s/ Hugh
              H. Williamson, IIIHugh
                H. Williamson, III
              President
                and Chief Executive Officer


In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.





Signature
            
            Title
            
            Date/s/  Hugh
                H. Williamson III
              Hugh
                H. Williamson, III
            
            President,
                Chief Executive Officer and Director (Chair)
            
            November
                2, 2007/s/  Steven
                M. Bragg
              Steven
                M. Bragg
            
            Chief
                Financial Officer, Treasurer and Secretary
            
            November
                2, 2007/s/  Samuel
                J. Camarata, Jr.
              Samuel
                J. Camarata, Jr.
            
            Director
            
            November
                2, 2007/s/  Jack
                H. Jacobs
              Jack
                H. Jacobs
            
            Director
            
            November
                2, 2007/s/
                Trusten A. McArtor
              Trusten
                A. McArtor
            
            Director
            
            November
                2, 2007/s/  John
                P. Moreno
              John
                P. Moreno
            
            Director
            
            November
                2, 2007/s/  Craig
                A. Parker
              Craig
                A. Parker
            
            Director
            
            November
                2, 2007/s/  Roger
                J. Steinbecker
              Roger
                J. Steinbecker
            
            Director
            
            November
                2, 2007








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            50
            -*





**Exhibit
      Index**





Number
            Description2.1
            Agreement
                and Plan of Merger, effective December 31, 2006, by and among Xedar
                Corporation, a Colorado corporation, PDS Acquisition Corp., a Colorado
                corporation, and Premier Data Services, Inc., a Delaware corporation
                (incorporated by reference to Exhibit 2.1 of our Current Report on
                Form
                8-K filed January 5, 2007).3.1
            Articles
                of Incorporation of Xedar Corporation, dated May 6, 1974 (incorporated
                by
                reference to Exhibit 3.1 of our Current Report on Form 8-K filed
                January
                5, 2007)3.2
            Articles
                of Amendment of Xedar Corporation, dated November 26, 1974 (incorporated
                by reference to Exhibit 3.2 of our Current Report on Form 8-K filed
                January 5, 2007)3.3
            Articles
                of Amendment of Xedar Corporation, dated July 23, 1979 (incorporated
                by
                reference to Exhibit 3.3. of our Current Report on Form 8-K filed
                January
                5, 2007)3.4
            Articles
                of Amendment of Xedar Corporation, dated September 29, 2004 (incorporated
                by reference to Exhibit 3.4 of our Current Report on Form 8-K filed
                January 5, 2007)3.5
            Articles
                of Amendment of Xedar Corporation, dated December 12, 2005 (incorporated
                by reference to Exhibit 3.5 of our Current Report on Form 8-K filed
                January 5, 2007)3.6
            Articles
                of Amendment of Xedar Corporation, dated December 18, 2006 (incorporated
                by reference to Exhibit 3.6 of our Current Report on Form 8-K filed
                January 5, 2007)3.7
            Bylaws
                of Xedar Corporation, dated December 29, 2006 (incorporated by reference
                to Exhibit 3.7 of our Current Report on Form 8-K filed January 5,
                2007)10.1
            Interest
                Purchase Agreement, dated January 1, 2007, by and between David M.
                King,
                Glen W. Thurow, and PDS GIS/LIS, Inc.  (incorporated by
                reference to Exhibit 10.1 of our Current Report on Form 8-K filed
                January
                5, 2007)10.2
            Stock
                Purchase Agreement, dated December 29, 2006, by and among Underwood
                Family
                Partners, Ltd., Battersea Capital, Inc., Kanouff LLC, and Xedar
                Corporation (incorporated by reference to Exhibit 10.2 of our Current
                Report on Form 8-K filed January 5, 2007)10.3
            Purchase
                Agreement, dated February 20, 2007, by and between Premier Data Services,
                Inc., a Delaware corporation, and Justice Systems, Inc., a New Mexico
                corporation (incorporated by reference to Exhibit 10.1 of our Current
                Report on Form 8-K filed February 26, 2007)10.4
            Consulting
                Services Agreement, dated February 20, 2007, by and between Premier
                Data
                Services, Inc., a Delaware corporation, and Justice Systems, Inc.,
                a New
                Mexico corporation (incorporated by reference to Exhibit 10.1 of
                our
                Current Report on Form 8-K filed February 26, 2007)14.1
            Code
                of Ethics (incorporated by reference to Exhibit 14.1 of our Annual
                Report
                on Form 10-KSB for the Fiscal Year Ended December 31, 2006, filed
                March
                16, 2007)21.1
            Subsidiaries
                (incorporated by reference to Exhibit 21.1 of our Annual Report on
                Form
                10-KSB for the Fiscal Year Ended December 31, 2006, filed March 16,
                2007)31.1*
            Certification
                of President and Chief Executive Officer required by Rule
                13a-14(a)31.2*
            Certification
                of Chief Financial Officer required by Rule 13a-14(a)32.1*
            Certification
                of President and Chief Executive Officer required by Section 906
                of the
                Sarbanes-Oxley Act of 200232.2*
            Certification
                of  Chief Financial Officer required by Section 906 of the
                Sarbanes-Oxley Act of 2002




*
      Filed
      herewith.





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            51
            -*