UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

      For the quarterly period ended September 30, 2002.

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

      For the transition period from ________________ to ___________________

                         Commission file number: 0-26525

                              BREDA TELEPHONE CORP.
        (Exact name of small business issuer as specified in its charter)

                Iowa                                         42-0895882
     (State or other jurisdiction                        (I.R.S. Employer
   of incorporation or organization)                    Identification No.)

                  112 E. Main, P.O. Box 190, Breda, Iowa 51436
                    (Address of principal executive offices)

                                 (712) 673-2311
                          (Issuer's telephone number)

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 33,414 shares of common stock,
no par value, at September 30, 2002.

      Transitional Small Business Disclosure Format (Check one) Yes |_| No :|X|

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                          September 30,   December 31,
                                                              2002            2001
                                                                         (As restated)
                                                          -------------  -------------
<S>                                                       <C>             <C>
                            ASSETS

CURRENT ASSETS
  Cash and cash equivalents                               $ 1,251,748     $ 1,797,415
  Temporary investments                                       286,772         636,169
  Accounts receivable                                         562,977         536,378
  Current portion of note receivable                           60,000              --
  Interest receivable                                          76,743          75,058
  Prepaid income taxes                                             --          51,280
  Inventories                                                 125,099          93,028
  Other                                                        11,366         100,265
                                                          -----------     -----------
                                                            2,374,705       3,289,593
                                                          -----------     -----------

OTHER NONCURRENT ASSETS
  Long-term investments                                     3,186,803       2,494,073
  Other investments:
   Investments in unconsolidated affiliates at equity       3,246,802       2,489,639
   Long-term investments at cost                              804,164         811,497
  Intangibles, net of accumulated amortization                898,368       1,018,313
  Note receivable                                             404,693         451,502
                                                          -----------     -----------
                                                            8,540,830       7,265,024
                                                          -----------     -----------

PROPERTY AND EQUIPMENT                                      5,468,042       5,609,292
                                                          -----------     -----------

     TOTAL ASSETS                                         $16,383,577     $16,163,909
                                                          ===========     ===========
</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                       1
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               September 30,   December 31,
                                                                   2002            2001
                                                                               (As restated)
                                                               -------------   -------------
<S>                                                             <C>             <C>
           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of long-term debt                             $   126,365     $   126,365
  Accounts payable                                                  243,303         199,675
  Accrued taxes                                                     109,403         141,439
  Other                                                             144,508         157,791
                                                                -----------     -----------
                                                                    623,579         625,270
                                                                -----------     -----------

LONG-TERM DEBT, less current portion                              1,818,636       1,912,625
                                                                -----------     -----------

DEFERRED CREDITS                                                    176,380         114,564
                                                                -----------     -----------

STOCKHOLDERS' EQUITY
  Common stock - no par value, 5,000,000 shares authorized,
   33,414 and 35,025 shares issued and outstanding
   at $280 and $258 stated value, respectively                    9,355,920       9,036,450
  Retained earnings                                               4,409,062       4,475,000
                                                                -----------     -----------
                                                                 13,764,982      13,511,450
                                                                -----------     -----------

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $16,383,577     $16,163,909
                                                                ===========     ===========
</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                       2
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
         For the Three and Nine Months Ended September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                            For the Three Months Ended        For the Nine Months Ended
                                              2002            2001             2002             2001
                                                          (As restated)                     (As restated)
                                          -----------     -------------     -----------     -------------
<S>                                       <C>              <C>              <C>              <C>
OPERATING REVENUES                        $ 1,443,988      $ 1,495,995      $ 4,257,712      $ 4,582,438
                                          -----------      -----------      -----------      -----------

OPERATING EXPENSES
  Cost of services                            544,040          604,381        1,633,857        1,710,489
  Depreciation and amortization               260,996          282,848          775,502          837,483
  Selling, general and administration         390,813          477,315        1,326,013        1,502,970
                                          -----------      -----------      -----------      -----------
                                            1,195,849        1,364,544        3,735,372        4,050,942
                                          -----------      -----------      -----------      -----------

OPERATING INCOME                              248,139          131,451          522,340          531,496
                                          -----------      -----------      -----------      -----------

OTHER INCOME (EXPENSES)
  Interest and dividend income                 55,931           68,234          180,805          182,491
  Interest expense                            (36,352)         (38,572)        (110,843)        (117,322)
  Income from equity investments              354,072          287,495          882,513          692,043
  Other, net                                   (3,374)          (1,274)         (11,937)           8,705
                                          -----------      -----------      -----------      -----------
                                              370,277          315,883          940,538          765,917
                                          -----------      -----------      -----------      -----------

INCOME BEFORE INCOME TAXES                    618,416          447,334        1,462,878        1,297,413
                                          -----------      -----------      -----------      -----------

INCOME TAXES                                  276,658          159,521          589,598          482,230
                                          -----------      -----------      -----------      -----------

INCOME BEFORE CUMULATIVE
  EFFECT OF ACCOUNTING CHANGE                 341,758          287,813          873,280          815,183
                                          -----------      -----------      -----------      -----------

CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE, NET OF TAX                                                 (70,768)
                                          -----------      -----------      -----------      -----------

NET INCOME                                $   341,758      $   287,813      $   802,512      $   815,183
                                          ===========      ===========      ===========      ===========

NET INCOME PER COMMON SHARE               $     10.20      $      8.10      $     23.41      $     22.39
                                          ===========      ===========      ===========      ===========
</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                       3
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                   Common Stock             Retained
                                               Shares        Amount         Earnings           Total
                                               ------     -----------      -----------      ------------
<S>                                            <C>        <C>              <C>              <C>
Balance at December 31, 2000 (as restated)     37,241     $ 8,751,635      $ 4,289,997      $ 13,041,632

    Comprehensive Income:
       Net income, as restated                                               1,147,573         1,147,573

    Dividends paid                                                            (111,087)         (111,087)

    Common stock redeemed, net                 (2,216)       (566,668)                          (566,668)

    Stated value stock adjustment                             851,483         (851,483)
                                               ------     -----------      -----------      ------------

Balance at December 31, 2001 (as restated)     35,025       9,036,450        4,475,000        13,511,450

    Comprehensive Income:
       Net income                                                              802,512           802,512

    Dividends paid                                                            (104,214)         (104,214)

    Common stock redeemed, net                 (1,611)       (444,766)                          (444,766)

    Stated value stock adjustment                             764,236         (764,236)
                                               ------     -----------      -----------      ------------

Balance at September 30, 2002                  33,414     $ 9,355,920      $ 4,409,062      $ 13,764,982
                                               ======     ===========      ===========      ============
</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.


                                       4
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Nine Months Ended September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                  2002             2001
                                                                              -----------      -----------
<S>                                                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income, as restated                                                     $   802,512      $   815,183
  Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation and amortization                                                775,502          837,483
     Amortization of investment tax credits                                        (7,327)          (7,327)
     Deferred income taxes                                                         69,143          113,516
     Cumulative effect of accounting change                                       119,945               --
     Note receivable discount                                                     (13,191)          (6,576)
     Equity income in unconsolidated affiliates, net of distributions
         received of $120,349 and $388,898 in 2002 and 2001, respectively        (757,164)        (303,145)
     Changes in operating assets and liabilities:
         (Increase) decrease in assets                                             79,824            6,358
         Increase (decrease) in liabilities                                        (1,691)        (169,577)
                                                                              -----------      -----------
     Net cash provided by operating activities                                  1,067,553        1,285,915
                                                                              -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES
    Capital expenditures                                                         (637,804)        (299,937)
    Cost of removing plant, net of salvage                                          3,553            8,113
    Purchase of investments                                                      (882,978)        (281,095)
    Proceeds from the sale of investments                                         539,645          148,312
    Issuance of note receivable                                                        --         (440,000)
    Purchase of other investments                                                      --          (60,000)
    Sale of other investments                                                       7,333          314,692
                                                                              -----------      -----------
      Net cash used in investing activities                                      (970,251)        (609,915)
                                                                              -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Dividends paid                                                               (104,214)        (111,087)
    Common stock redeemed                                                        (444,766)        (451,084)
    Repayment of long-term debt                                                   (93,989)         (87,989)
                                                                              -----------      -----------
      Net cash used in financing activities                                      (642,969)        (650,160)
                                                                              -----------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             (545,667)          25,840
                                                                              -----------      -----------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                1,797,415        1,104,577
                                                                              -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    $ 1,251,748      $ 1,130,417
                                                                              ===========      ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
    Cash paid during the period for:
      Interest                                                                $   110,843      $   117,322
      Income taxes                                                            $   415,678      $   217,241
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       5
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      In the opinion of management, the accompanying condensed consolidated
      financial statements contain all adjustments (consisting of only normal
      recurring items) necessary to present fairly the financial position as of
      September 30, 2002 and December 31, 2001 and the results of operations and
      changes in cash flows for the three and nine months ended September 30,
      2002 and 2001. As explained in the first quarter, the Company has adopted
      the equity method of accounting for certain investments, accordingly the
      2001 financial statements have been restated in accordance with accounting
      principles generally accepted in the United States of America.

      Certain information and footnote disclosures normally included in annual
      financial statements prepared in accordance with accounting principles
      generally accepted in the United States of America have been condensed or
      omitted. It is suggested that these financial statements be read in
      conjunction with the financial statements and notes thereto included in
      the Company's December 31, 2001 audited financial statements. The results
      of operations for the period ending September 30, 2002 are not necessarily
      indicative of the operating results of the entire year.

      Certain reclassifications have been made to the 2001 financial statements
      to conform with the 2002 presentations.

NOTE 2. OPERATING SEGMENTS

      The Company organizes its business into three reportable segments: local
      exchange carrier (LEC) services, broadcast services and internet service
      provider (ISP) services. The LEC services segment provides telephone, data
      services and other services to customers in local exchanges. The broadcast
      services segment provides cable television services to customers in Iowa
      and Nebraska. The ISP services segment provides internet access to
      customers within the local exchanges and the surrounding areas. The
      Company also had telemarketing services that do not meet the quantitative
      threshold for a reportable segment. These services were discontinued
      during fourth quarter 2001.

      The Company's reportable business segments are strategic business units
      that offer different products and services. Each reportable segment is
      managed separately primarily because of different products, services and
      regulatory environments. LEC segments have been aggregated because of
      their similar characteristics.

      The segments' accounting policies are the same as those described in the
      summary of significant accounting policies.

<TABLE>
<CAPTION>
                                          Local                       Internet
                                         Exchange                     Service
                                         Carrier      Broadcast       Provider       Other         Total
                                       ----------     ---------      ---------      -------      ----------
            Nine months ended
            September 30, 2002
            ------------------
<S>                                    <C>            <C>            <C>            <C>          <C>
      Revenues
           External customers          $2,967,734     $ 733,075      $ 556,903      $    --      $4,257,712
           Intersegment                        --            --             --           --              --
             Segment profit (loss)        959,774      (146,116)        (8,389)      (2,757)        802,512
</TABLE>


                                       6
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. OPERATING SEGMENTS, (Continued)

<TABLE>
<CAPTION>
                                         Local                       Internet
                                       Exchange                      Service
                                       Carrier       Broadcast       Provider        Other          Total
                                      ----------     ---------      ---------      ---------      ----------
              Nine months ended
              September 30, 2001
                (As restated)
              ------------------
<S>                                     <C>            <C>            <C>            <C>            <C>
      Revenues
          External customers            $3,087,569     $ 763,424      $ 566,232      $ 165,213      $4,582,438
          Intersegment                          --            --             --             --              --
            Segment profit (loss)          941,479       (75,459)       (32,403)       (18,434)        815,183

              Three months ended
              September 30, 2002

      Revenues
          External customers            $1,014,457     $ 244,643      $ 184,888      $      --      $1,443,988
          Intersegment                          --            --             --             --              --
            Segment profit (loss)          363,355       (19,196)        (2,582)           181         341,758

           Three months ended
           September 30, 2001
             (As restated)

      Revenues
          External customers            $1,052,736     $ 254,047      $ 180,355      $   8,857      $1,495,995
          Intersegment                          --            --             --             --              --
            Segment profit (loss)          347,075       (24,266)       (20,570)       (14,426)        287,813

<CAPTION>
              Reconciliation of
              Segment Information
              -------------------                Three months ended                 Nine months ended
                                             September 30,  September 30,    September 30,    September 30,
                                                 2002            2001            2002              2001
                                                            (As restated)                     (As restated)
                                             -------------  -------------    -------------    -------------
<S>                                           <C>            <C>              <C>              <C>
      REVENUES:
        Total revenues and sales
          for reportable Segments             $1,443,988     $ 1,487,138      $ 4,257,712      $ 4,417,225
           Other revenues                             --           8,857               --          165,213
        Elimination of intersegment
          revenues                                    --              --               --               --
                                              ----------     -----------      -----------      -----------
            Consolidated Revenues             $1,443,988     $ 1,495,995      $ 4,257,712      $ 4,582,438
                                              ==========     ===========      ===========      ===========

      PROFIT:
        Total profit for reportable
          segments                            $  341,577     $   302,239      $   805,269      $   833,617
        Other profit (loss)                          181         (14,426)          (2,757)         (18,434)
                                              ----------     -----------      -----------      -----------
               Net Income                     $  341,758     $   287,813      $   802,512      $   815,183
                                              ==========     ===========      ===========      ===========
</TABLE>


                                       7
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. NET INCOME PER SHARE OF COMMON STOCK

      Net income per common share for the three and nine months ended September
      30, 2002 and 2001 was computed by dividing the weighted average number of
      shares of common stock outstanding into the net income. The weighted
      average number of shares of common stock outstanding for the three and
      nine months ended September 30, 2002 and 2001 are 33,493 and 35,549, and
      34,278, and 36,410, respectively.

NOTE 4. STOCK VALUE ADJUSTMENT

      During May 2001, the board of directors authorized a $23 increase in the
      stated value of each share of common stock from $235 to $258. There were
      37,021 shares outstanding at the time of the value adjustment, which
      reduced retained earnings by $851,483.

      During May 2002, the board of directors authorized a $22 increase in the
      stated value of each share of common stock from $258 to $280. There were
      34,738 shares outstanding at the time of the value adjustment, which
      reduced retained earnings by $764,236.


                                       8
<PAGE>

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

            Nine Months Ended September 30, 2002 Compared to Nine Months Ended
            September 30, 2001.

            There was a decrease in total operating revenues for the nine-month
            period ended September 30, 2002, when compared to the same period in
            2001, of $324,726, or 7.1%. The segments making up total operating
            revenue are: local exchange carrier services, broadcast services,
            Internet services and other services revenue.

            Local exchange carrier services revenue decreased $119,835, or 3.9%,
            for the nine-month period ended September 30, 2002, when compared to
            the nine-month period ended September 30, 2001. Local exchange
            carrier services revenue includes local network services, network
            access services, long distance services, billing and collection
            services and miscellaneous revenue. These revenue components are
            discussed below.

            Local network services revenue decreased $479, or 0.1%, for the
            nine-month period ended September 30, 2002, when compared to the
            same nine-month period in 2001. This decrease resulted partially
            from the closure of the Pacific Junction Telemarketing Center in
            July 2001. This closure reduced the number of local subscribers by
            almost 60 lines, and this revenue was included in the nine-month
            period ended September 30, 2001, and for which there is no
            corresponding revenue in the nine-month period ended September 30,
            2002.

            Network access revenue decreased $145,701, or 7.6%, when comparing
            the nine-month period ended September 30, 2002, to the nine-month
            period ended September 30, 2001. This decrease was due primarily to
            the reduction of access revenue for the nine-month period ended
            September 30, 2002, which resulted from the closing of Pacific
            Junction's telemarketing center in July 2001. Pacific Junction's
            telemarketing calls had generated an average of approximately $4,400
            per month in access revenues for Breda. Breda, Prairie Telephone and
            Westside Independent also wrote off $87,415 in network access
            revenue during the period ended September 30, 2002, because of the
            Chapter 11 bankruptcy filings by Global Crossing on January 28,
            2002, and WorldCom on July 21, 2002.

            The remaining network access revenue decrease is the result of
            Breda, Prairie Telephone and Westside Independent no longer
            receiving access revenue from Qwest for traffic originating with a
            wireless carrier that uses Qwest to deliver the traffic back to a
            number served by those local exchange carriers that participate in
            use of the switching and network facilities offered by Iowa Network
            Services (INS). Breda, Prairie Telephone and Westside Independent
            are local exchange carriers using switching and network facilities
            offered by INS. In September 1999, Qwest sent a


                                       9
<PAGE>

            memo informing affected parties that Qwest would be making
            adjustments related to wireless originating minutes for intraMTA
            calls on the access bills of the INS participating companies, and
            that the participating companies would receive no compensation for
            terminating this traffic. Qwest filed a Petition for Declaratory
            Order on May 19, 2000 with the Iowa Utilities Board (IUB),
            requesting that the Iowa Utilities Board establish rules,
            requirements and obligations that local exchange carriers, such as
            Breda, and wireless carriers must follow when using Qwest as a
            transit provider for the exchange of traffic between them. On March
            18, 2002, the IUB affirmed its proposed decision and order issued in
            November 2001. The consequence of this order, unless the courts on
            judicial review would change it, was that Qwest would not be
            required to make the payments that it unilaterally withheld from
            companies such as Breda, for the wireless phone traffic that it
            unilaterally pushed through its toll trunks at INS. The IUB also
            denied Qwest's request for a refund of payments it had paid before
            April 1999. During the nine-month period ended September 30, 2002,
            Breda, Prairie Telephone, and Westside Independent had a decrease in
            access revenue because of the Qwest action of almost $30,000, when
            compared to the nine-month period ended September 30, 2001.

            Long distance services increased $49,928, or 160.2%, when comparing
            the nine-month period ended September 30, 2002, to the nine-month
            period ended September 30, 2001. This increase was due primarily to
            increased marketing and promotion of this service which resulted in
            a 91.8% increase in the customer base for long distance services for
            the nine-month period ended September 30, 2002, when compared to the
            same nine-month period a year ago.

            Billing and collection service revenue is a function of the amount
            of billing and collection services provided by Breda to other
            carriers such as AT&T. The billing and collection services revenues
            decreased $18,479, or 36.8%, for the nine-month period ended
            September 30, 2002, when compared to the nine-month period ended
            September 30, 2001. The decrease reflects not only that carriers,
            such as AT&T, are performing more of their own billing and
            collection work, but also that more customers are switching to
            Breda's long distance calling plans.

            Miscellaneous revenue decreased $5,104, or 0.8%, for the nine-month
            period ended September 30, 2002, when compared with the nine-month
            period ended September 30, 2001. The decrease in miscellaneous
            revenue was primarily the result of decreased cellular service
            commissions. The overall volume increase for the nine-month period
            ended September 30, 2002 was 232 units, when compared to the
            nine-month period ended September 30, 2001. However, that net
            increase coupled with a lower ratio of new customer contracts, which
            carry higher commissions, and a higher ratio of retention contracts,
            which carry lower commissions, caused the overall commission revenue
            to decrease. The decrease in cellular related revenues was, however,
            partially offset by revenues generated from new services, such as
            the sale of key systems for business applications, and the increase
            in customer premise equipment rental.


                                       10
<PAGE>

            Broadcast services revenue decreased $30,349, or 4.0%, when
            comparing the nine-month period ended September 30, 2002, to the
            nine-month period ended September 30, 2001. This decrease was
            directly attributable to a 2.9% decrease in the customer base when
            comparing the two nine-month periods, and is attributable to
            competition from satellite dish providers and declining population
            bases in the small rural communities where some of Breda's broadcast
            systems are located.

            There was a decrease in Internet services for the nine-month period
            ended September 30, 2002, when compared to the same period in 2001,
            of $9,329, or 1.6%. Breda's Dial-up internet customer base increased
            3.4%, and its High-speed internet customer base increased 88.6%, for
            the nine-month period ended September 30, 2002, when compared to the
            nine-month period ended September 30, 2001, but the revenue decrease
            is attributable to Breda reducing its pricing of monthly dial-up
            Internet services by $3.05/customer/month for those customers not
            receiving bundled services, and to Breda's bundling of Internet
            services with its long distance services at a discounted price in
            August of 2001. This 12.2% reduction in monthly Internet service
            fees for non-bundled services was taken for competitive reasons. As
            is discussed elsewhere in this report, Breda switched to a new
            underlying Internet service provider in October of 2001 in order to
            allow Breda to further reduce costs. While Breda has lost Internet
            customers because of competition, Breda's overall Internet
            operations have continued to grow.

            Telemarketing services revenue is reported as other revenue, and it
            decreased $165,213, or 100.0%, when comparing the nine-month period
            ended September 30, 2002, to the same period in 2001. The decrease
            is attributable to the closing of Pacific Junction's Telemarketing
            Center in July 2001. The telemarketing call center has not been
            operational since that date, and it is unlikely that the
            telemarketing center will again become operational.

            There was a decrease in total operating expenses of $315,570, or
            7.8%, for the nine-month period ended September 30, 2002, when
            compared to the nine-month period ended September 30, 2001. The
            components making up operating expenses relate to cost of services,
            depreciation and amortization, and selling, general and
            administration expenditures.

            Cost of services expenses decreased $76,632, or 4.5%, for the
            nine-month period ended September 30, 2002, when compared to the
            nine-month period ended September 30, 2001. The cost of services
            components, which are plant specific operations, plant non-specific
            operations, long distance costs, programming, and Internet costs,
            are explained below.

            There was a decrease of $64,171, or 6.7%, in plant specific
            operations expense when comparing the nine-month period ended
            September 30, 2002, to the nine-month period ended September 30,
            2001. While there was no plant specific expense for Pacific Junction
            for the nine-month period ended September 30, 2002, as compared to


                                       11
<PAGE>

            the $24,114 in such expense for Pacific Junction in the nine-month
            period ended September 30, 2001, there were increases caused by
            labor and benefit increases, and the addition of costs for key
            system sales. However, there was an overall decrease in repair
            expense for buildings and facilities, and some of the costs
            previously allocated only to plant specific operations, such as
            facility rent are now also allocated to Internet services. As noted
            previously, Pacific Junction's telemarketing center has not been in
            operation since July 2001.

            Plant nonspecific operating expense decreased $29,056, or 32.9%, for
            the nine-month period ended September 30, 2002, when compared to the
            nine-month period ended September 30, 2001. This decrease resulted
            from a company wide decrease in provisioning expenses. The
            provisioning expense decrease resulted from less transmission power
            used during this nine-month period and because the company
            implemented a process called cass certification to reduce its
            postage expense for the mailing of its customer invoices. The cass
            certification process, which allows for the in-house performance of
            functions usually done by the postal system such as sorting and
            bundling, was implemented in the second quarter of 2001, so the
            nine-month period ended September 30, 2001, shows some first-class
            postage expense, versus cass certification rates which are shown in
            the nine-month period ended September 30, 2002. Other paper
            supplies, and billing expenditures were decreased when the company
            began billing for multiple services on one invoice where customers
            had more than one service.

            There was an increase of $27,582, or 114.6%, in cost of long
            distance when comparing the nine-month period ended September 30,
            2002, with the nine-month period ended September 30, 2001. The
            increase was the result of the corresponding, underlying carrier
            costs of providing long distance service to a customer base which
            increased 91.8% when comparing the two nine-month periods.

            There was an increase of $7,501, or 3.0%, in programming expense for
            cable TV services when comparing the nine-month period ended
            September 30, 2002, with the nine-month period ended September 30,
            2001. The programming increase was the result of programming fee
            increases.

            The cost of Internet decreased by $18,488, or 4.6%, for the
            nine-month period ended September 30, 2002, when compared to the
            nine-month period ended September 30, 2001. As noted previously, on
            October 31, 2001, Breda changed its underlying Internet service
            provider in order to reduce its costs to provide Internet service.

            Depreciation and amortization expense decreased $61,981 or 7.4%, for
            the nine-month period ended September 30, 2002, when compared to the
            same period in 2001. Breda allocated part of the purchase price paid
            for Westside Independent Telephone Company and its cable TV
            subsidiary in 1998 to goodwill. Effective January 1, 2002, however,
            generally accepted accounting principles established by the
            Financial Accounting Standards Board no longer allow the expensing,
            or amortizing, of a


                                       12
<PAGE>

            portion of this goodwill over a fifteen-year period. Approximately
            all of the $61,981 decrease in depreciation and amortization expense
            for the nine-month period ended September 30, 2002, is attributable
            to the termination of this expense amortization. There was also a
            $6,083 decrease in depreciation and amortization expense which is
            attributable to the fact that there was no depreciation expense for
            Pacific Junction during the nine months ended September 30, 2002
            since Pacific Junction's telemarketing center was not in operation
            during that time period. The overall depreciation and amortization
            expense increased in the other telephone, cable TV, and Internet
            operations because of new equipment and capital items being
            depreciated which offset the decrease in the depreciation and
            amortization expense attributable to the closure of the
            telemarketing center in July 2001.

            Selling, general and administrative expenses decreased $176,957, or
            11.8%, for the nine-month period ended September 30, 2002, when
            compared to the same period in 2001. The customer operations
            component decreased $49,909, or 8.4%, when comparing these two
            nine-month time periods, and mainly resulted from the closure of the
            Pacific Junction Telemarketing Center in July 2001. There was no
            customer operations expenditures related to the Pacific Junction
            Telemarketing Center reported in the nine-month period ended
            September 30, 2002 when compared to the $119,339 in expenditures
            during the nine-month period ended September 30, 2001. Increases in
            wages, benefits, advertising expenditures, and training expenditures
            offset the telemarketing customers operations decrease for a net
            overall $49,909 decrease in customer operations expenditures during
            the nine-month period September 30, 2002. Corporate operations
            decreased $117,757, or 14.6%, during the nine-month period ended
            September 30, 2002 when compared to the nine-month period ended
            September 30, 2001. The decrease in corporate operations resulted
            from the elimination of a supervisory position in early 2002, and a
            reduction in professional fees. General taxes paid by Breda
            decreased $9,291, or 8.9%, for the nine-month period ended September
            30, 2002, when compared to the nine-month period ended September 30,
            2001, and resulted from decreased tax rates levied by the taxing
            authorities in the various counties.

            The net result of the operating services revenue and operating
            expenses was a decrease of $9,156, or 1.7%, in operating income for
            the nine-month period ended September 30, 2002, when compared to the
            same nine-month period in 2001.

            Other income (expense) increased $174,621, or 22.8%, during the
            nine-month period ended September 30, 2002, when compared to the
            same nine-month period in 2001. Interest and dividend income
            decreased $1,686, or 0.9%, when comparing the nine-month periods.
            The decrease in interest and dividend income was mainly the result
            of decreased funds drawing interest in long-term investments and
            lower interest income rates. Interest expense decreased $6,479, or
            5.5%, when comparing the same nine-month periods. The decrease in
            interest expense was the result of the quarterly principal payments
            reducing the overall debt on which interest is paid in the following


                                       13
<PAGE>

            quarters. Breda did not undertake any additional debt during the
            nine-month period ended September 30, 2002.

            Income from equity investments increased $190,470, or 27.5%, during
            the nine-month period ended September 30, 2002, when compared to the
            same nine-month period in 2001. In the first quarter 2002, Breda
            began to report its cellular investments and its Alpine investment
            on the equity method. The corresponding nine-month period ended
            September 30, 2001, has been restated in accordance with generally
            accepted accounting principles as discussed below in this report.
            The income from equity investments reported on Breda's financial
            statements is Breda's pro-rata share of the net income or net loss
            of each equity investment, based on Breda's percentage of ownership
            in each equity investment. The increase in equity investments
            reported on Breda's income statement for the nine-month period ended
            September 30, 2002, when compared to the nine-month period ended
            September 30, 2001, is a reflection of the overall increase in the
            net operating income of these investments. The other income, net, is
            a negative $11,937 for the nine-month period ended September 30,
            2002, as compared to a positive $8,705 for the nine-month period
            ended September 30, 2001, and is mainly composed of director fee
            revenues from cellular investments and the corresponding labor costs
            for time spent managing these investments. Westside's investment in
            Quad Co., which is Westside's pro-rata share of Quad's Co.'s
            estimated nine-month net operating loss of $9,597, is also included
            in the other revenue, net.

            Income before income taxes increased $165,465, or 12.8%, for the
            nine-month period ended September 30, 2002, when compared to the
            nine-month period ended September 30, 2001. Income taxes increased
            $107,368 for the nine-month period ended September 30, 2002, when
            compared to the same period in 2001. Net income before cumulative
            effect of accounting change increased $58,097, or 7.1%, for the
            nine-month period ended September 30, 2002, when compared to the
            nine-month period ended September 30, 2001.

            The cumulative effect of an accounting change, net of tax, decreased
            Breda's income by $70,768 during the nine-month period ended
            September 30, 2002, when compared to the nine-month period ended
            September 30, 2001. This net of tax item reflects an impairment of
            goodwill for which there was no corresponding entry during the
            nine-month period ended September 30, 2001. The Financial Accounting
            Standards Board issued Financial Accounting Statement No. 142 in
            August 2001 relating to the treatment of goodwill, and these
            accounting principles are incorporated into Breda's financial
            statement beginning January 1, 2002. As noted previously in the
            discussion on the decrease in Breda's depreciation and amortization
            expense for the nine-month period ended September 30, 2002 as
            compared to the nine-month period ended September 30, 2001, Breda is
            no longer able to expense over a fifteen-year period the portion of
            the Westside purchase price, which had been allocated to goodwill.
            The goodwill is now reviewed for impairment, that is, written down
            and expensed against earnings, only in the periods in which the
            recorded value of goodwill is more than its fair value. Financial
            Accounting Statement No. 142 requires that Breda recognize an


                                       14
<PAGE>

            impairment loss when the carrying amount of goodwill is greater than
            its implied fair value. These tests have been applied to the
            goodwill and intangible assets of Breda and its subsidiaries, and
            the net-of-tax, impairment expense is Breda's estimate of the
            expense to offset earnings for the carrying amount of the Westside
            purchase goodwill attributable to broadcast services which is in
            excess of the fair value of that asset based on discounted cash flow
            valuation.

            Net income decreased $12,671, or 1.6%, for the nine-month period
            ended September 30, 2002, when compared to the same period in 2001.

            Liquidity and Capital Resources at Year Ended December 2001.

            Breda's net working capital was a positive $2,664,323 at December
            31, 2001. Breda had an increase of $727,002 in current assets during
            the twelve-month period ended December 31, 2001. The increase
            resulted from a $692,838 increase in cash and cash equivalents, and
            a $366,329 increase in temporary investments. These funds were being
            held for the possible redemption of additional shares of stock in
            Breda during the normal course of business, and for the payment of
            the construction of Breda's new corporate headquarters, which was
            nearing completion by September 30, 2002. While inventories
            increased $970, and other current assets increased $94,882, those
            items were offset by a $167,090 decrease in accounts receivable and
            a $285,185 decrease in prepaid income taxes. The increase in other
            current assets of $94,882 reflected the prepayment of first quarter
            2002 employee benefit premiums, which had been paid at year-end
            2001. There was a decrease in accounts receivable that was
            attributable to the receipt of National Exchange Carrier Association
            reimbursements, and the one-time write-off of Qwest access
            underpayments because of the strong likelihood that those access
            fees would never be received. The amount written off by Breda and
            its subsidiaries as of December 31, 2001 with respect to Qwest's
            underpayment of access charges was $67,671. Qwest filed a Petition
            for Declaratory Order on May 19, 2000, with the Iowa Utilities Board
            with respect to adjustments Qwest had made related to wireless
            participating companies in Iowa. The Iowa Utilities Board ruled in
            Qwest's favor, but that decision was appealed by some rural Iowa
            independent telephone associations. In March 2002, however, the Iowa
            Utilities Board issued an order affirming its earlier decision. The
            consequence of this order is that Qwest will not be required to make
            the payments that it unilaterally withheld from Breda for the
            wireless phone traffic that it unilaterally pushed through its toll
            trunks in Iowa.

            Breda is now reporting its cellular investment holdings and its
            Alpine investment on the equity method for those investments in
            which Breda has a 20% interest and for those investments where Breda
            does not have at least a 20% equity interest, but for which Breda
            has determined that Breda currently has significant influence with
            respect to the investment. This accounting change is discussed
            further below. The comparative balance sheet included in this report
            for the twelve-month period ended December 31, 2001, has been
            restated to reflect Breda's cellular investments and the


                                       15
<PAGE>

            Alpine investment on the equity method as of December 31, 2001. The
            net effect of the equity method is a $536,472 increase to other
            noncurrent assets net of the deferred income taxes as of December
            31, 2001, as opposed to a decrease of $187,275 during the twelve
            month period ended December 31, 2001, as was the case previously.

            Breda's net working capital was a positive $2,664,323 at December
            31, 2001. The $889,545 increase in working capital for the
            twelve-month period ended December 31, 2001, resulted mainly from
            the $164,557 decrease in accounts payable and the net increase in
            current assets as explained above. The accounts payable decrease for
            the twelve-month period ended December 31, 2001, resulted primarily
            because a $116,794 plant under construction payable on December 31,
            2000, was paid before December 31, 2001, and because of a $31,070
            payment to the National Exchange Carrier Association during the
            twelve months ended December 31, 2001.

            Common stock had a net increase of $284,815 during the twelve-month
            period ended December 31, 2001. The increase resulted primarily from
            two items. One was the $23 per share increase in outstanding shares
            value on May 16, 2001, and the other was a decrease in the number of
            outstanding shares through the redemption of 2,216 shares of common
            stock by Breda during the twelve-month period ended December 31,
            2001. Breda's December 31, 2001, financial statements reported
            retained earnings of $4,053,092, which was a $23,322 decrease from
            twelve-month period ended December 31, 2000. The decrease in
            retained earnings during the twelve-month period ended December 31,
            2001, was the net effect of the stated value stock adjustment of
            $851,483, the dividends paid in 2001 of $111,087, and the
            year-to-date net income as of December 31, 2001. Breda's
            comparative, restated balance sheet for December 31, 2001, included
            in this filing and stating the effect of the use of the equity
            method for its cellular and Alpine investments, reports a $421,908
            increase in retained earnings, after netting deferred tax credits of
            $114,564.

            Liquidity and Capital Resources at Nine Months Ended September 30,
            2002.

            Breda had a decrease of $914,888 in current assets during the
            nine-month period ended September 30, 2002, when compared to the
            year ended December 31, 2001. This resulted from a $545,667 decrease
            in cash and cash equivalents, and a $349,397 decrease in temporary
            investments. These funds were applied to the construction costs of
            Breda's new corporate office, to the redemption of $444,766 in Breda
            Telephone Corp. stock, to the payment of a shareholder dividend of
            $104,214, to additional investment in long-term investments and to
            the purchase of equipment and other capital improvements.
            Inventories increased $32,071, which were mostly cable purchases in
            preparation for major fourth-quarter construction projects. The
            decrease in other current assets of $88,899 occurred because
            employee retirement benefits and health and life insurance benefit
            premiums for fourth quarter 2002 were paid at the beginning of the
            fourth quarter 2002, instead of at the end of third quarter 2002,
            which would have been reflected as a prepaid expense. The increase
            in accounts


                                       16
<PAGE>

            receivable is attributable to the increase in accounts receivable
            due from cellular commissions, exchange carriers, and key system
            projects that were in progress as of September 30, 2002. The current
            portion of note receivable was increased to reflect the portion of
            our note receivable from Desktop Media LLC that became current in
            the third quarter 2002. The Desktop note receivable is discussed in
            more detail below. There was a $51,280 decrease in prepaid income
            taxes.

            Noncurrent assets, which mainly consist of longer-term investments,
            increased $1,275,806 during the nine-month period ended September
            30, 2002, when compared to year-end December 31, 2001. Long term
            investments such as municipal bonds, U.S. Treasury notes and
            governmental securities increased $692,730 during the nine-month
            period ended September 30, 2002, and reflects the transfer of cash
            on hand into longer-term investments during this time period as well
            as positive adjustments to the fair market value of some of these
            investments. Breda's other investments increased $757,163, during
            the nine-month period ended September 30, 2002, as compared to the
            restated financial statements included in this filing for the
            twelve-month period ended December 31, 2001. As discussed above,
            Breda is now reporting its investments in Alpine Communications,
            L.C. and its cellular investments in RSA#1, RSA#7, RSA#8, and RSA#9
            on the equity method. Breda has made this change because it believes
            that it exercises significant influence over the operations and
            financial policies of Alpine and the referenced cellular investments
            within the meaning of Accounting Principles Board Opinion No. 18,
            and that it therefore must report these investments on the equity
            method. Breda previously reported these investments at their cost,
            which was Breda's actual cash outlay to purchase these investments,
            in the other investments section on its balance sheet. Any cash
            distributions were correspondingly included in other income when the
            distributions were received. Because Breda owns more than 20% of
            Quad County Communications, Carroll County Wireless, L.L.C. and The
            Guthrie Group, L.L.C., Breda's interest in these entities were
            already being reported on the equity method. On May 2, 2001, Breda
            entered into a contractual agreement through its subsidiary, Prairie
            Telephone Co., Inc., to advance $500,000 to Desktop Media, L.L.C.
            This transaction is shown as a discounted Note Receivable for
            $404,693 at September 30, 2002. Breda also has a 10% equity interest
            in Desktop Media, L.L.C., which is included in other investments.
            Breda is continuing to report this Desktop Media, L.L.C. investment
            on the cost basis since Breda's ownership is a 10% equity interest,
            and control of the entity remains with the 70% owner, who is also
            the manager.

            The remaining other noncurrent asset is intangibles, net of
            accumulated amortization, which showed a $119,945 decrease for the
            nine-month period ended September 30, 2002, when compared to the
            twelve-month period ended December 31, 2001. As discussed
            previously, Breda recognized an impairment loss of $119,945 (net of
            tax loss of $70,768) on the goodwill from its 1998 purchase of the
            cable TV system assets in its Westside purchase. This impairment
            loss was the entire remaining unamortized goodwill on Breda's
            records from the Westside cable TV system


                                       17
<PAGE>

            purchase. The corresponding reduction in the asset account is
            reflected in the intangibles.

            Breda's net working capital was a positive $1,751,126 at September
            30, 2002, as compared to $2,664,323 at December 31, 2001. The
            $913,197 decrease in working capital between the two time periods
            resulted mainly from the decrease in Breda's short-term cash as
            discussed above.

            Common stock had a net increase of $319,470 during the nine-month
            period ended September 30, 2002, when compared to the year ended
            December 31, 2001. This increase is the result of two items: a
            decrease in the number of outstanding shares (through redemption of
            stock by Breda) from 35,025 shares to 33,414 shares during the
            nine-month period ended September 30, 2002, and the $22/share
            increase in outstanding shares value on May 21, 2002. The decrease
            in the Retained Earnings during the nine-month period ended
            September 30, 2002, when compared to year-end December 31, 2001, is
            the net effect of the restated share value transaction, the
            year-to-date net income as of September 30, 2002, and shareholder
            dividend of $104,214 paid on May 2, 2002.

            Three Months Ended September 30, 2002 Compared to Three Months Ended
            September 30, 2001.

            There was a decrease in total operating revenues for the three-month
            period ended September 30, 2002, when compared to the same period in
            2001, of $52,007, or 3.5%. The segments making up total operating
            revenue are: local exchange carrier services, broadcast services,
            Internet services and other services revenue.

            Local exchange carrier services revenue decreased $38,279, or 3.6%,
            for the three-month period ended September 30, 2002, when compared
            to the three-month period ended September 30, 2001. Local exchange
            carrier services revenue includes local network services, network
            access services, long distance services, billing and collection
            services and miscellaneous income. These revenue components are
            discussed below.

            Local network services revenue increased $414, or 0.3%, when
            comparing the three-month period ended September 30, 2002, to the
            three-month period ended September 30, 2001.

            Network access revenue decreased $97,927, or 14.8%, when comparing
            the three-month period ended September 30, 2002, to the three-month
            period ended September 30, 2001. This decrease was attributable to
            the reduction of access revenue for the three-month period ended
            September 30, 2002, which resulted from the closing of Pacific
            Junction's telemarketing center in July 2001. Also as noted
            previously in this report, Breda, Prairie Telephone and Westside
            Independent are no longer receiving access revenue from Qwest for
            terminating wireless traffic that is considered "local"


                                       18
<PAGE>

            by Qwest. The amount that Breda did not receive for Qwest for the
            three-month period ending September 30, 2002, when comparing to the
            three-month period ended September 30, 2001, was approximately
            $14,300. As also noted previously in this report, Breda, Prairie and
            Westside also wrote off $87,415 in access revenue that is not
            collectible because of Chapter 11 bankruptcy filings by Global
            Crossing on January 28, 2002, and by WorldCom on July 21, 2002.

            Long distance services increased $14,987, or 125.6% when comparing
            the three-month period ended September 30, 2002, to the three-month
            period ended September 30, 2001. This increase was attributable to a
            62.6% increase in the customer base when comparing the two
            three-month periods.

            Billing and collection service revenue is a function of the amount
            of billing and collection services provided by Breda to other
            carriers such as AT&T. The billing and collection services revenues
            decreased $7,075, or 41.2%, for the three-month period ended
            September 30, 2002, when compared to the three-month period ended
            September 30, 2001. The decrease reflects not only that major
            carriers, such as AT&T, continue to perform more of their own
            billing and collection functions, but also that more customers are
            switching to Breda's long distance calling plans, which Breda is now
            aggressively marketing.

            Miscellaneous revenue increased $51,322, or 23.7%, for the
            three-month period ended September 30, 2002, when compared with the
            three-month period ended September 30, 2001. The increase in
            miscellaneous revenue was primarily the result of increased cellular
            service commissions and cellular accessories revenue. The increase
            in miscellaneous revenue was also attributable to increased revenues
            generated from new services, such as the sale of key systems for
            business applications. As noted in previous reports, Breda had
            experienced a reduction in its retail cellular sales for the
            three-month period ended September 30, 2001, when consumer spending
            slowed after the terrorist attack on September 11, 2001.

            Broadcast services revenue decreased $9,404, or 3.7%, when comparing
            the three-month period ended September 30, 2002, to the three-month
            period ended September 30, 2001. This decrease was directly
            attributable to the erosion in the customer base when comparing the
            two three-month periods, and is attributable to competition from
            satellite dish providers and a declining population base in some of
            the rural areas served by Tele-Services, Ltd.

            There was an increase in Internet services revenue for the
            three-month period ended September 30, 2002, when compared to the
            same period in 2001, of $4,533, or 2.5%. Breda's Dialup internet
            customer base increased 0.1% and its High speed internet customer
            base increased 60.7% for the three-month period ended September 30,
            2002, when compared to the three-month period ended September 30,
            2001. With the completion of some engineering and equipment upgrades
            in the three-month period ended June 30, 2002, Breda is now able to
            offer its customers a line-sharing


                                       19
<PAGE>

            product through Qwest. Since one line can be used for both phone
            service and high-speed Internet services, Breda is seeing increased
            customer participation in its high-speed Internet service offerings.

            Telemarketing services revenue is reported as other revenue and it
            decreased $8,857, or 100.0%, when comparing the three-month period
            ended September 30, 2002, to the same period in 2001. The decrease
            is attributable to the closing of Pacific Junction's Telemarketing
            Center in July 2001.

            There was a decrease in total operating expenses of $168,695, or
            12.4%, for the three-month period ended September 30, 2002, when
            compared to the three-month period ended September 30, 2001. The
            three components encompassing operating expenses are: cost of
            services, depreciation and amortization, and selling, general and
            administrative expenditures.

            Cost of services expenses decreased $60,341, or 10.0%, for the
            three-month period ended September 30, 2002, when compared to the
            three-month period ended September 30, 2001. The cost of services
            components, which are plant specific operations, plant non-specific
            operations, long distance costs, programming, and Internet costs,
            are explained below.

            There was a decrease of $42,426, or 12.1%, in plant specific
            operations expense when comparing the three-month period ended
            September 30, 2002, to the three-month period ended September 30,
            2001. There was a $3,660 decrease in plant specific expenses because
            of the closing of the Pacific Junction telemarketing center in July
            2001, and there was an overall decrease in repair and maintenance
            expenditures for the three-month period ended September 30, 2002.

            Plant nonspecific operating expense decreased $2,510, or 10.8%, for
            the three-month period ended September 30, 2002, when compared to
            the three-month period ended September 30, 2001. This decrease
            mainly resulted from less utility, postage and office supply
            expenses during the three-month period ended September 30, 2002,
            when compared to the three-month period ended September 30, 2001.

            There was an increase of $7,744, or 86.6%, in cost of long distance
            when comparing the three-month period ended September 30, 2002, with
            the three-month period ended September 30, 2001. Breda hired an
            outside salesperson in the last quarter of 2001 and is now
            aggressively marketing its long distance services as a stand-alone
            service, and in conjunction with its Internet services. These
            efforts have produced a significant increase in long distance
            customers, and consequently the cost of providing long distance
            service has also increased because of the increased customer base.

            There was an increase of $5,217, or 6.4%, in programming expense for
            cable TV services when comparing the three-month period ended
            September 30, 2002, with the


                                       20
<PAGE>

            three-month period ended September 30, 2001. The programming
            decrease was the result of programming fee decreases.

            The cost of Internet decreased by $28,366, or 20.4%, for the
            three-month period ended September 30, 2002, when compared to the
            three-month time period ended September 30, 2001. As noted
            previously, Breda changed its underlying Internet Service Provider
            in order to reduce its costs to provide competitive Internet service
            products.

            Depreciation and amortization expense decreased $21,852, or 7.7%,
            for the three-month period ended September 30, 2002, when compared
            to the same period in 2001. As a result of the impairment loss of
            $119,945 (net of tax loss of $70,768) on the goodwill from Breda's
            1998 purchase of the cable TV system assets, there is no
            corresponding amortization expense when compared to the same
            three-month period in 2001. The remaining decrease in depreciation
            and amortization expense is attributable to the fact that there was
            no depreciation expense for Pacific Junction during the three months
            ended September 30, 2002 since Pacific Junction's telemarketing
            center was not in operation during that time period.

            Selling, general and administrative expenses decreased $86,502, or
            18.1%, for the three-month period ended September 30, 2002, when
            compared to the same period in 2001. The customer operations
            component decreased $18,036, or 9.7%, when comparing these two
            three-month time periods, and mainly resulted from the reduction in
            the customer service staff by one full time equivalent. Corporate
            operations decreased $70,540, or 26.8%, during the three-month
            period ended September 30, 2002 when compared to the three-month
            period ended September 30, 2001. The decrease in corporate
            operations resulted from the elimination of a supervisory position
            in early 2002, the closure of the Pacific Junction telemarketing
            center, and a reduction in professional fees. General taxes paid by
            Breda increased $2,074, or 7.4%, for the three-month period ended
            September 30, 2002, when compared to the three-month period ended
            September 30, 2001, and resulted from increased tax rates levied by
            the taxing authorities in the various counties.

            The net result of the operating services revenue and operating
            expenses was an increase of $116,688, or 88.8%, in operating income
            for the three-month period ended September 30, 2002, when compared
            to the same three-month period a year ago.

            Other income (expense) increased $54,394, or 17.2%, during the
            three-month period ended September 30, 2002, when compared to the
            same three-month period in 2001. Interest and dividend income
            decreased $12,303, or 18.0%, for the three-month period ended
            September 30, 2002 when compared to the three-month period ended
            September 30, 2001. This decrease resulted from the maturity and
            subsequent redemption of some long-term investments and an overall
            decline in interest rates. Interest expense decreased $2,220, or
            5.8%, when comparing the same three-month


                                       21
<PAGE>

            periods. The decrease in interest expense was the result of the
            quarterly principal payments reducing the overall debt on which
            interest is paid in the following quarters. Breda did not undertake
            any additional debt during the three-month period ended September
            30, 2002.

            Income from equity investments increased $66,577, or 23.2%, during
            the three-month period ended September 30, 2002, when compared to
            the same three-month period in 2001. In the first quarter 2002,
            Breda began to report its cellular investments and its Alpine
            investment on the equity method. The corresponding three-month
            period ended September 30, 2001, has been restated in accordance
            with generally accepted accounting principles as discussed below in
            this report. The income from equity investments reported on Breda's
            financial statements is Breda's pro-rata share of the net income or
            net loss of each equity investment, based on Breda's percentage of
            ownership in each equity investment. The increase in equity
            investments reported on Breda's income statement for the three-month
            period ended September 30, 2002, when compared to the three-month
            period ended September 30, 2001, is a reflection of the overall
            increase in the net operating income of these investments.

            Income before income taxes increased $171,082, or 38.2%, for the
            three-month period ended September 30, 2002, when compared to the
            three-month period ended September 30, 2001. Income taxes
            correspondingly increased for the three-month period ended September
            30, 2002, when compared to the same period in 2001.

            Net income increased $53,945, or 18.7%, for the three-month period
            ended September 30, 2002, when compared to the same period in 2001.

            Other Activities.

            Breda's primary ongoing capital investment activity will currently
            continue to be additions to property, plant and equipment. For
            example, Breda continues to make investments in state-of-the-art
            technology in order to try to offer subscribers the best possible
            service. Capital expenditures for 2001 were approximately $624,270,
            and are currently expected to be approximately $987,290 in 2002.

            As of June 30, 2002, Breda had approximately $1,945,001 outstanding
            on its loan from the Rural Telephone Finance Cooperative. The
            interest rate on the loan was fixed on July 17, 1998 at 7.35%. The
            loan has a fifteen-year term that matures in September, 2013. Breda
            and Prairie Telephone Company, Inc. also have lines of credit
            available from the Rural Telephone Finance Cooperative in the
            amounts of $1,500,000 and $500,000, respectively. Those lines of
            credit will expire in 2005. No amounts were outstanding under either
            of those lines of credit on June 30, 2002.

            Breda anticipates that substantial expenditures will be needed for
            software upgrades that will be necessary in order for Breda, Prairie
            Telephone and Westside Independent to become compliant with the
            requirements of the Communications


                                       22
<PAGE>

            Assistance for Law Enforcement Act ("CALEA"). CALEA was passed by
            Congress in 1994 and sets forth the assistance capabilities that
            telecommunications carriers need to maintain to support law
            enforcement in the conduct of lawfully authorized electronic
            surveillance. Pursuant to a court order or other lawful
            authorization, carriers must be able to 1) isolate all wire and
            electronic communications of a target transmitted by the carrier
            within its service territory; 2) isolate call-identifying
            information of a target; 3) provide the intercepted communications
            and call-identifying information of a target; 3) provide the
            intercepted communications and call-identifying information to law
            enforcement; 4) carry out the intercepts unobtrusively, so targets
            are not made aware of the electronic surveillance, and in a manner
            that does not compromise the privacy and security of other
            communications.

            Breda and all carriers were ordered to meet the J-Standard (basic)
            capabilities by June 30, 2000, and the "punch list" (six additional
            capabilities) by September 30, 2001. Breda filed a petition on June
            30, 2000, under Section 107(c) of CALEA, which permits a carrier to
            file a petition with the Federal Communications Commission (FCC) for
            a maximum extension of two years. Breda prepared a Flexible
            Deployment Assistance Guide that it sent to the Federal Bureau of
            Investigation (FBI) identifying its switch specific information and
            a deployed generic timeline that indicated when its switch would be
            CALEA compliant. The FBI reviewed the Flexible Deployment Guides and
            then recommended to the FCC that the FCC approve Breda's 107(c)
            Petition. Breda received an extension until June 30, 2002.

            On September 21, 2001, the FCC released an Order, which mandated
            that carriers implement two of the "punch list" items by September
            30, 2001. However, since the due date was so close, the FCC granted
            carriers until November 19, 2001 to be in compliance or ask for an
            extension. The FBI issued a Flexible Deployment Assistance guide for
            "Packet-Mode Communications" that dealt with carriers offering
            services such as DSL and ISDN. The FCC allowed carriers to file a
            packet-mode flex guide and amend their initial 107(c) Petitions to
            file for a two-year extension with a deadline of November 19, 2001.
            Breda was in compliance with the packet-mode requirements as of
            November 19, 2001. Upon the conversion to Desktop Media, L.L.C. as
            its internet service provider, Breda again reviewed the CALEA
            requirements, and based on information provided by the equipment
            vendors has determined that Breda's equipment is in compliance with
            the packet-mode requirements. Because of its interrelated systems of
            hardware and software, Breda continues to test these systems for
            CALEA compliance.

            On April 11, 2002, after review by the courts, the FCC ordered
            carriers to install the "punch list" capabilities by June 30, 2002.
            In May 2002, the FBI published the Third Edition Flexible Deployment
            Assistance Guide, which was intended to assist carriers submitting
            petitions to the FCC for extensions of the six missing technical
            capabilities compliance date.


                                       23
<PAGE>

            On June 25, 2002, Breda, Prairie Telephone and Westside Independent
            each filed with the Federal Communications Commission a supplement
            to the Section 107 ( c ) extension granted for their switches for a
            further two-year extension until June 30, 2004. They had also filed
            on June 11, 2002, the Third Edition Flexible Deployment Assistance
            Guide Template to the FBI. Breda, Prairie Telephone and Westside
            Independent have received acknowledgment that the CALEA
            Implementation Section of the FBI received the materials submitted
            by them in response to the Third Edition of the Flexible Deployment
            Assistance Guide. If the FBI, with the aid of the law enforcement
            community, determines that a carrier's proposed deployment schedule
            is consistent with law enforcement priorities, it may provide
            support for the carrier's petition under Section 107 ( c ) of CALEA.
            The FCC decides whether or not to grant any carrier's petition.
            While Breda has not received the official extension decision from
            the FCC, Breda has taken all steps to meet the guidelines as
            presented.

            The latest, revised estimate of the cost for upgrading Breda's,
            Prairie Telephone's and Westside Independent's software to become
            compliant with CALEA, once the software changes are available from
            the vendor, is $405,000.

            Breda and Prairie Telephone have purchased additional spectrum for
            providing personal communications services in the Breda, Lidderdale
            and Yale telephone exchange areas. "Spectrum" is the range of
            electromagnetic radio frequencies used in the transmission of voice,
            data and television. Prairie Telephone has also become a member in
            Guthrie Group, L.L.C. Guthrie Group, L.L.C. has purchased spectrum
            for providing personal communications services in some areas in
            Guthrie County, Iowa.

            Breda is a member in Carroll County Wireless, L.L.C., which has
            purchased spectrum for providing personal communications services in
            Carroll County, Iowa. Breda has transferred its personal
            communication services licenses for its Breda and Lidderdale
            exchange areas to Carroll County Wireless, L.L.C.

            Breda estimates that it will take at least 1 to 3 years for the
            surrounding areas to build out their personal communications systems
            to the point where Breda, Prairie Telephone, Guthrie Group, L.L.C.
            or Carroll County Wireless, L.L.C. could connect to these systems.

            Personal communications services are competitive with telephone and
            cellular services. Breda does not believe, however, that investments
            in personal communications services or in ventures which may be
            involved in personal communications services are inconsistent or in
            conflict with Breda's, Prairie Telephone's or Westside Independent's
            overall business. Breda also believes positioning itself to be able
            to offer personal communication services or investing in other
            ventures, which may offer personal communications services, are
            methods of


                                       24
<PAGE>

            attempting to diversify across the various telecommunications
            markets which are available today or may become important in the
            future.

            Breda is required to provide local number portability in its
            telephone exchanges that fall within the 100 largest metropolitan
            statistical areas (MSA's) in the United States. A MSA is the
            coverage area of a city as in a telephone network. Local Number
            Portability (LNP), a mandate of the Telecommunications Act of 1996,
            lets subscribers keep their phone numbers, and access to advanced
            calling features, after changing service providers. Two of the seven
            telephone exchanges serviced by Breda, Prairie Telephone and
            Westside Independent Telephone fall with one of the 100 largest
            MSA's in the United States. To date, Breda has received no requests
            from any competitive local exchange carrier for this service in
            either of its small exchanges. Breda estimates that requests for
            this service in its two applicable exchanges would be minimal. Breda
            is able to meet this requirement should a request be received for
            the service. The additional expense to provide this service would
            not be material for Breda.

            Breda plans to continue to consider expanding its core business of
            providing telephone services by looking at any opportunities which
            may arise to acquire additional telephone lines. There are no
            assurances, however, that any such opportunities will arise or that
            any such opportunities will fit into Breda's strategic plan.

            Breda, Prairie Telephone Company, Inc. and Westside Independent
            Telephone Company currently have no definite plans to provide any
            material additional or improved services to their subscribers. This
            determination may change quickly, however, given the rapidly
            changing technology in the telecommunications and cable industries.

            As of the date of this filing, Breda has converted the financial and
            billing software utilized by Westside Independent Telephone to the
            same financial system software now utilized by Breda and its other
            subsidiaries. All customer service and accounting processes
            performed in the Westside, Iowa, location for the 348 customers in
            the Westside exchange were moved to the Breda home office location
            on September 20, 2002. The costs of the upgrades and conversions
            were not material to Breda.

            There are no current plans to expand the cable services areas of, or
            the cable services provided by, Tele-Services, Ltd. Tele-Services,
            Ltd. would be required to make significant capital expenditures to
            become compliant with new regulations requiring Emergency Alert
            System ("EAS") notification at the bottom of screen on all channels
            carried on its cable TV systems by October 1, 2002. It is estimated
            that these capital expenditures could cost $130,000. On June 14,
            2002, Tele-Services, Ltd. filed a request with the FCC for waiver of
            rules regarding the EAS for small cable television operators with
            fewer than 5,000 subscribers. On October 21, 2002, Tele-Services,


                                       25
<PAGE>

            Ltd. received notification from the FCC that Tele-Services, Ltd. had
            been granted a waiver of Section 11.11(a) of the rules until October
            1, 2005 for each of its 17 captioned cable television systems.

            Breda has investigated and continues to explore re-engineering
            options and other help-desk and underlying Internet service provider
            options that would reduce Breda's costs in order to allow Breda to
            compete at a lower price point for Internet services. One step that
            Breda took to lower Breda's underlying Internet costs is through
            Prairie Telephone's acquisition of a 10% ownership interest in
            Desktop Media, L.L.C. Desktop Media, L.L.C. provides both dial-up
            and high-speed internet access in south central Minnesota, and is a
            full-scale internet service provider. Desktop Media, L.L.C. provides
            internet service provider support services to Prairie Telephone and
            the other telephone companies who have invested in Desktop Media,
            L.L.C. As indicated, one of the purposes of Prairie Telephone's
            relationship with Desktop Media, L.L.C. was to lower Breda's and its
            subsidiaries' costs of providing Internet services in order to
            compete at a lower price point for Internet services. Breda reduced
            its pricing of Internet services and bundled Internet services with
            its long distance services in August, 2001 in order to compete at a
            lower price point for Internet services.

            Breda, Prairie Telephone and Westside Independent are providing
            dial-up and high speed Internet access to their customers. Breda is
            continuing to face additional competition, especially in its
            Carroll, Iowa market. There are at least five providers in this
            relatively small market area either providing Internet access
            (dial-up, high-speed, or both) or gearing up to provide Internet
            access. Breda has experienced a 7% decline in its dial-up customer
            base in this location as customers try out the new services that
            promote a low introductory rate. While Breda continues to pursue
            additional marketing avenues to retain and increase this customer
            base, Breda anticipates that there will continue to be competitive
            pressure to lower the dial-up rates. Breda also anticipates that the
            number of potential high-speed customers will continue to increase
            and that Internet customers will continue to demand higher Internet
            speed. Until July 2002, Breda was providing high-speed Internet
            access by leasing lines from Qwest. As of July 2002, Breda had
            completed the process of installing equipment in the Qwest central
            office that has allowed Breda to use a new product that Qwest
            offers, called line sharing.

            The FCC's October 11, 2001 order on the Multi-Association Group plan
            regarding access charge rate reform and deregulation for non-price
            cap, incumbent local exchange carriers is now in effect for Breda,
            Prairie Telephone, and Westside Independent. Breda continues to
            believe that the FCC's order on the plan will not, at least in 2002,
            have any materially adverse effects on Breda's or its subsidiaries'
            revenues.

            On July 12, 2002, AT&T Communications of the Midwest (AT&T) filed a
            Complaint and Petition for Rule Making with the Iowa Utilities Board
            (IUB) with


                                       26
<PAGE>

            respect to "excessive rates for switched access services charged by
            certain independent telephone companies doing business in the state
            of Iowa." On August 2, 2002, AT&T filed an Amended Complaint and
            Petition for Rule Making with the IUB regarding intra-state access
            rates. AT&T was requesting the IUB to significantly reduce the
            amount of intra-state access rates paid by AT&T to carriers such as
            Breda, Prairie Telephone and Westside Independent. Because
            individual companies were also named in AT&T's petition to the IUB,
            one of those companies filed a petition for declaratory order with
            the IUB on August 20, 2002, regarding issues of rate regulation for
            local exchange carriers having fewer than 15,000 customers and fewer
            than 15,000 access lines. On October 18, 2002, the IUB granted the
            request for declaratory order filed by independent local exchange
            carrier and determined that: a) incumbent local exchange carriers
            having fewer than 15,000 customers and fewer than 15,000 access
            lines are exempted by Sec. 476.1 from the IUB's authority to set
            rates pursuant to Sec. 476.11, and b) exchange access services
            provided by incumbent local exchange carriers having fewer than
            15,000 customers and fewer than 15,000 access lines are exempt under
            Sec. 476.1 from the rate regulation provided in chapter 476. While
            this declaratory order appears to have negated AT&T's filing, Breda
            continues to anticipate actions of this type that will bring
            continuing pressure for the lowering of access charge rates. Access
            charge revenues constitute a substantial part of Breda's, Prairie
            Telephone's and Westside Independent's revenues, and a material risk
            to them arises from the regulation of access charge rates by the FCC
            and other regulatory authorities such as the IUB.

            Breda moved to its new corporate office building on September 13,
            2002. While wrap-up construction and landscaping items are still
            being completed, the final cost of this project will fall within the
            estimated total cost budget of $500,000.

            Breda is continuing to operate under and receive commission
            reimbursements based on its Agency Contract dated June 1, 1999,
            between United States Cellular Corporation and Breda. The June 1,
            1999, contract states that the contract shall renew automatically
            for additional one-year terms on each June 1st unless and until
            either party gives the other party written notice of non renewal at
            least thirty days prior to the end of the then current term. The
            contract may be terminated at any time by either party immediately
            upon written notice to the other party upon the occurrence of any
            material breach of the contract by the other party. Since a new
            contract between United States Cellular Corporation and Breda has
            not been negotiated, Breda continues to sell cellular phones and
            related service packages as a U.S. Cellular agent under the June 1,
            1999 contract. There has been no further action on this Agency
            Contract, and Breda does not expect any discussions on this contract
            during the remainder of 2002.

            On July 31, 2002, the RSA #9 partnership voted to allow Breda to
            take over operation of the U.S. Cellular Corporation kiosk located
            in the Walmart store in Carroll, Iowa, under this same Agency
            Contract. Previously, United States Cellular Corporation had
            directly operated this retail outlet in competition with Breda's
            retail


                                       27
<PAGE>

            store in Carroll, Iowa. Breda's results of operations are following
            its business plan after two months of operation at the Walmart
            location.

            Breda, Prairie Telephone, and Westside Independent utilize the
            networks of major carriers to provide national and worldwide calling
            access to their customers. Breda, Prairie Telephone and Westside
            Independent also receive access revenue from carriers such as Global
            Crossing and Worldcom for terminating toll calls in their exchanges.
            Global Crossing filed Chapter 11 bankruptcy under the United States
            Bankruptcy Code on January 28, 2002. WorldCom, Inc., which includes
            the MCI Group, filed Chapter 11 bankruptcy under the United States
            Bankruptcy Code on July 21, 2002. While both debtors continue to
            operate their business and manage their properties as debtors in
            possession under the Bankruptcy Code, Breda and its subsidiary
            telephone companies are at risk of non-payment for intra-state
            carrier access revenues owed to them by Global Crossing and
            WorldCom, Inc. as of the date of each of their bankruptcy filings.
            As members of the National Exchange Carrier Association pool, Breda,
            Prairie Telephone and Westside Independent may submit the interstate
            portion of any non-payment by Global Crossing and WorldCom, Inc. to
            the NECA pool for payment. As of November 1, 2002, Breda estimates
            that its consolidated risk of non-payment from Global Crossing and
            WorldCom themselves, or the NECA pool, is approximately $98,500.
            Breda and its telephone subsidiaries are considered "utilities" for
            purposes of the bankruptcy code, and may not disconnect services
            from these carriers subsequent to the bankruptcy dates unless there
            is a valid reason other than the bankruptcy filings. Breda, Prairie
            Telephone and Westside Independent have received payment from Global
            Crossing for services rendered after its January 28, 2002,
            bankruptcy filing.

            Breda believes that its present cash position along with its
            anticipated normal operating revenues will generate sufficient
            working capital for Breda and its subsidiaries to meet their current
            operating needs and maintain historical fixed asset addition levels.

            Cautionary Statement on Forward Looking Statements.

            This item and other items in this quarterly report contain forward
            looking statements that involve and are subject to various risks,
            uncertainties and assumptions. Forward looking statements include,
            but are not limited to, statements with respect to anticipated
            future trends in revenues and net income, projections concerning
            operations and cash flow, growth and acquisition opportunities,
            management's plans and intentions for the future, and other similar
            forecasts and statements of expectation. Words such as "expects,"
            "estimates," "plans," "anticipates," "contemplates," "predicts,"
            "intends," "believes," "seeks," "should," "thinks," "objectives" and
            other similar expressions or variations thereof are intended to
            identify forward looking statements. Forward looking statements are
            made based on estimates, projections, views, beliefs and assumptions
            made or existing at the time of such statements and are not
            guarantees of future results or performance. Breda


                                       28
<PAGE>

            disclaims any obligation to update or revise any forward looking
            statements based on the occurrence of future events, the receipt of
            new information, or otherwise.

            Actual future performance, outcomes and results may differ
            materially from those expressed in forward looking statements as a
            result of numerous and varied risks, uncertainties and assumptions,
            nearly all of which are beyond the control of Breda and its
            management. The risks, uncertainties and assumptions affecting
            forward looking statements include, but are not limited to, the
            following:

                  o     adverse changes by the Federal Communications Commission
                        or other regulatory authorities to the access charge
                        rates that can be charged by Breda and its subsidiaries
                        to long distance carriers;

                  o     technological advances in the telecommunications and
                        cable industries which may replace or otherwise
                        adversely affect in a material way the existing
                        technologies utilized by Breda and its subsidiaries;

                  o     employee relations;

                  o     management's business strategies;

                  o     general industry conditions, including bankruptcies,
                        insolvencies and consolidations in the
                        telecommunications and cable industries;

                  o     general economic conditions at the national, regional
                        and local levels;

                  o     acts or omissions of competitors and other third
                        parties;

                  o     changes in or more governmental laws, rules, regulations
                        or policies;

                  o     reductions in or other changes to governmental programs
                        assisting or affecting the telecommunications and cable
                        industries, and in particular programs which aid
                        providers of those services to rural areas; and

                  o     continued availability of financing, and on favorable
                        terms.

            This section should also be read in conjunction with the financial
            statements and related notes included in Item 1 of Part I of this
            quarterly report.


                                       29
<PAGE>

Item 3.     Controls and Procedures.

            The principal executive officer and principal financial officer of
            Breda have evaluated the effectiveness of Breda's disclosure
            controls and procedures and have concluded that the disclosure
            controls and procedures are sufficient and have been effective for
            the purposes for which they are intended.

            There have not been any significant changes in Breda's internal
            controls or in other factors that could significantly affect Breda's
            internal controls subsequent to the date of the evaluation of
            Breda's internal controls.

                           PART II - OTHER INFORMATION

Item 1.     Legal Proceedings.

            As of the date of this quarterly report, Breda was not aware of any
            pending legal proceeding to which Breda was a party or to which any
            of Breda's property was subject, other than routine litigation that
            was incidental to its business. As of the date of this quarterly
            report, Breda was not aware that any governmental authority was
            contemplating any proceeding against Breda or any of its property.

Item 2.     Changes in Securities.

            No material modifications, limitations or qualifications of the type
            required to be reported under this Item were made to or placed upon
            the terms of Breda's shares of common stock during the period of
            July 1, 2002 through September 30, 2002.

            Breda did not issue any shares of its common stock during the period
            of July 1, 2002 through September 30, 2002. As discussed in Item 5
            below, Breda did redeem some shares of its common stock during the
            period of July 1, 2002 through September 30, 2002.

Item 3.     Defaults Upon Senior Securities.

            There was no material default or any material arrearage or
            delinquency by Breda of the type required to be reported under this
            Item during the period of July 1, 2002 through September 30, 2002.

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

            No matters were submitted to a vote of the shareholders of Breda
            during the period of July 1, 2002 through September 30, 2002.


                                       30
<PAGE>

Item 5.     Other Information.

            During the period of July 1, 2002 through September 30, 2002, Breda
            redeemed 604 shares of its common stock from 7 shareholders at
            $280.00 per share, for a total amount of $169,120. The $280.00 per
            share redemption price was the per share redemption price that was
            announced by the board of directors at, and which became effective
            at, the May 21, 2002 annual meeting of the shareholders of Breda.

            There were 8 transfers of shares of Breda's common stock during the
            period of July 1, 2002 through September 30, 2002 with respect to
            which Breda did not exercise its right of first refusal to purchase
            those shares. The transfers involved an aggregate of 143 shares of
            Breda's common stock.

Item 6.     Exhibits and Reports on Form 8-K.

            (a)   A list of the exhibits included as part of this quarterly
                  report is set forth in the Exhibit Index which immediately
                  precedes such exhibits and is incorporated herein by this
                  reference.

            (b)   Breda did not file any reports on Form 8-K during the period
                  of July 1, 2002 through September 30, 2002.


                                       31
<PAGE>

                                   SIGNATURES

      In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       BREDA TELEPHONE CORP.


Date: November 14, 2002.       By: /s/ Robert Boeckman
                                  ---------------------------------------------
                                         Robert Boeckman, Chief Operations
                                         Officer and Co-Chief Executive Officer


Date: November 14, 2002.       By:/s/ Jane Morlok
                                  ---------------------------------------------
                                         Jane Morlok, Chief Financial Officer
                                         and Co-Chief Executive officer

                                 CERTIFICATIONS

      I, Robert Boeckman, certify that:

      1. I have reviewed this quarterly report on Form 10-QSB of Breda Telephone
Corp.;

      2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

      4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

            (a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report is
      being prepared;


                                       32
<PAGE>

            (b) evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to the filing
      date of this quarterly report (the "Evaluation Date"); and

            (c) presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

            (a) all significant deficiencies in the design or operation of
      internal controls which could adversely affect the registrant's ability to
      record, process, summarize and report financial data and have identified
      for the registrant's auditors any material weaknesses in internal
      controls; and

            (b) any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      controls; and

      6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002.


                                       /s/ Robert Boeckman
                                       -----------------------------------------
                                       Robert Boeckman, Chief Operations Officer
                                       And Co-Chief Executive Officer

      I, Jane Morlok, certify that:

      1. I have reviewed this quarterly report on Form 10-QSB of Breda Telephone
Corp.;

      2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;


                                       33
<PAGE>

      4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

            (a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this quarterly report is
      being prepared;

            (b) evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to the filing
      date of this quarterly report (the "Evaluation Date"); and

            (c) presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

      5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

            (a) all significant deficiencies in the design or operation of
      internal controls which could adversely affect the registrant's ability to
      record, process, summarize and report financial data and have identified
      for the registrant's auditors any material weaknesses in internal
      controls; and

            (b) any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      controls; and

      6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

      Date: November 14, 2002.


                                            /s/ Jane Morlok
                                            ------------------------------------
                                            Jane Morlok, Chief Financial Officer
                                            And Co-Chief Executive Officer


                                       34
<PAGE>

                                  EXHIBIT INDEX
                             Exhibits to Form 10-QSB
                      Three Months Ended September 30, 2002
                              BREDA TELEPHONE CORP.

Description of Exhibit                                                     Page
----------------------                                                     ----

2.    Plan of Acquisition, Disposition,
      Reorganization, Arrangement,
      Liquidation or Succession

      (a)   Stock Purchase Agreement dated March 29, 2000,
            by and among AirTouch Iowa, LLC, Central Iowa
            Cellular, Inc., Prairie Telephone Company, Inc.,
            Panora Telecommunications, Inc., Walnut Creek
            Communications, Inc., Minburn Telephone Company,
            and Interstate Enterprises, Ltd. (Filed as
            Exhibit 2.1 to Breda's Form 8-K dated March
            29,2000 and filed April 12, 2000, and
            incorporated herein by this reference.)

      (b)   Des Moines Tower Proceeds Agreement dated as of
            March 29, 2000, by and among AirTouch Com-
            munications, Inc., Panora Telecommunications,
            Inc., Walnut Creek Communications, Inc., Minburn
            Telephone Company, Interstate Enterprises, Ltd.
            and Prairie Telephone Company, Inc., along with
            Exhibits A and B thereto. (Filed as Exhibit 2.2
            to Breda's Form 8-K dated March 29, 2000 and
            filed April 12, 2000, and incorporated herein by
            this reference.)

3.    Articles of Incorporation and Bylaws

            (a)   Amended and Restated Articles of
                  Incorporation of Breda Telephone Corp.
                  (Filed as Exhibit 3.1 to Breda's
                  Registration Statement on Form 10-SB, and
                  incorporated herein by this reference.)

            (b)   Amended and Restated Bylaws of Breda
                  Telephone Corp. (Filed as Exhibit 3.2 to
                  Amendment No. 1 to Breda's Registration
                  Statement on Form 10-SB, and incorporated
                  herein by this reference.)

<PAGE>

10.   Material Contracts

      (a)   Employment Agreement dated April 1, 2002 between
            Breda and Robert Boeckman. (Filed as Exhibit
            10(a) to Breda's Form 10-QSB for the quarterly
            period ended June 30, 2002 and filed August 14,
            2002, and incorporated herein by this
            reference.)

      (b)   Employment Agreement dated April 1, 2002 between
            Breda and Jane Morlok. (Filed as Exhibit 10(b)
            to Breda's Form 10-QSB for the quarterly period
            ended June 30, 2002 and filed August 14, 2002,
            and incorporated herein by this reference.)

*99.  Certification of Financial Information

      (a)   Certification of Chief Operations Officer and                E-1
            Co-Chief Executive Officer pursuant to 18
            U.S.C. Section 1350, as adopted pursuant to
            Section 906 of the Sarbanes-Oxley Act of 2002.

      (b)   Certification of Chief Financial Officer and                 E-2
            Co-Chief Executive Officer pursuant to 18 U.S.C.
            Section 1350, as adopted Pursuant to Section 906
            of the Sarbanes-Oxley Act of 2002.

*Included with this filing.


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