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 June 30, 2003.

|_|   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: 32,093 shares of common stock,
no par value, at June 30, 2003.

      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>
                                                            June 30,       December 31,
                                                              2003              2002
                                                           (Unaudited)       (Audited)
                                                           -----------     ------------
<S>                                                        <C>             <C>
                                  ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                $ 1,004,602     $ 1,032,734
  Temporary investments                                        409,964         459,059
  Accounts receivable                                          619,585         835,667
  Current portion of note receivable                           144,000         116,000
  Interest receivable                                           50,453          68,053
  Prepaid income taxes                                          87,939              --
  Inventories                                                  108,163          91,114
  Other                                                        127,513          85,025
                                                           -----------     -----------
                                                             2,552,219       2,687,652
                                                           -----------     -----------

OTHER NONCURRENT ASSETS
  Long-term investments                                      3,104,108       3,136,576
  Other investments:
    Investments in unconsolidated affiliates at equity       3,616,019       3,454,159
    Nonmarketable equity securities at cost                    853,581         807,564
  Goodwill                                                     896,812         896,812
  Intangibles                                                    1,556           1,556
  Note receivable                                              308,398         512,792
                                                           -----------     -----------
                                                             8,780,474       8,809,459
                                                           -----------     -----------

PROPERTY AND EQUIPMENT                                       5,438,933       5,190,176
                                                           -----------     -----------

    TOTAL ASSETS                                           $16,771,626     $16,687,287
                                                           ===========     ===========
</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>
                                                                  June 30,      December 31,
                                                                    2003           2002
                                                                (Unaudited)      (Audited)
                                                                -----------     ------------
<S>                                                             <C>             <C>
                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of long-term debt                             $   139,506     $   134,981
  Accounts payable                                                  190,639         262,544
  Accrued taxes                                                     134,636         167,079
  Other                                                             124,935         174,534
                                                                -----------     -----------
                                                                    589,716         739,138
                                                                -----------     -----------

LONG-TERM DEBT, less current portion                              1,706,741       1,777,644
                                                                -----------     -----------

DEFERRED CREDITS                                                    216,610         105,534
                                                                -----------     -----------

STOCKHOLDERS' EQUITY
  Common stock - no par value, 5,000,000 shares authorized,
    32,093 and 33,000 shares issued and outstanding
    at $303 and $280 stated value, respectively                   9,724,179       9,240,000
  Retained earnings                                               4,534,380       4,824,971
                                                                -----------     -----------
                                                                 14,258,559      14,064,971
                                                                -----------     -----------

                TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $16,771,626     $16,687,287
                                                                ===========     ===========
</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 Six Months Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                           For the Three Months Ended         For the Six Months Ended
                                             2003             2002              2003            2002
                                          -----------      -----------      -----------      -----------
<S>                                       <C>              <C>              <C>              <C>
OPERATING REVENUES                        $ 1,517,356      $ 1,374,693      $ 3,207,999      $ 2,813,724
                                          -----------      -----------      -----------      -----------

OPERATING EXPENSES
  Cost of services                            656,528          548,236        1,320,362        1,089,817
  Depreciation and amortization               244,690          262,780          505,157          514,506
  Selling, general and administration         429,488          423,555          922,515          935,200
                                          -----------      -----------      -----------      -----------
                                            1,330,706        1,234,571        2,748,034        2,539,523
                                          -----------      -----------      -----------      -----------

OPERATING INCOME                              186,650          140,122          459,965          274,201
                                          -----------      -----------      -----------      -----------

OTHER INCOME (EXPENSES)
  Interest and dividend income                 59,083           59,878          115,761          124,874
  Interest expense                            (34,540)         (36,935)         (69,684)         (74,491)
  Income from equity investments              118,927          229,758          406,924          528,441
  Other, net                                   (2,809)         (10,096)          (6,061)          (8,563)
                                          -----------      -----------      -----------      -----------
                                              140,661          242,605          446,940          570,261
                                          -----------      -----------      -----------      -----------

INCOME BEFORE INCOME TAXES                    327,311          382,727          906,905          844,462
                                          -----------      -----------      -----------      -----------

INCOME TAXES                                  122,217          148,489          344,384          312,940
                                          -----------      -----------      -----------      -----------

INCOME BEFORE CUMULATIVE
  EFFECT OF ACCOUNTING
  CHANGE                                      205,094          234,238          562,521          531,522
                                          -----------      -----------      -----------      -----------

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

NET INCOME                                $   205,094      $   234,238      $   562,521      $   460,754
                                          ===========      ===========      ===========      ===========

NET INCOME PER COMMON SHARE
  BEFORE CUMULATIVE EFFECT
  OF ACCOUNTING CHANGE                    $      6.30      $      6.79      $     17.20      $     15.33

CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE, NET
  OF TAX                                           --               --               --            (2.04)
                                          -----------      -----------      -----------      -----------

NET INCOME PER COMMON
  SHARE                                   $      6.30      $      6.79      $     17.20      $     13.29
                                          ===========      ===========      ===========      ===========
</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, 2001 (Audited)     35,025     $ 9,036,450      $ 4,475,000      $ 13,511,450

  Comprehensive Income:
    Net income                                                           1,218,421         1,218,421

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

  Common stock redeemed, net               (2,025)       (560,686)                          (560,686)

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

Balance at December 31, 2002 (Audited)     33,000       9,240,000        4,824,971        14,064,971

  Comprehensive Income:
    Net income                                                             562,521           562,521

  Dividends paid                                                           (98,436)          (98,436)

  Common stock redeemed, net                 (907)       (270,497)                          (270,497)

  Stated value stock adjustment                           754,676         (754,676)
                                           ------     -----------      -----------      ------------

Balance at June 30, 2003 (Unaudited)       32,093     $ 9,724,179      $ 4,534,380      $ 14,258,559
                                           ======     ===========      ===========      ============
</TABLE>

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


                                       4
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                 2003            2002
                                                                             -----------      -----------
<S>                                                                          <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                 $   562,521      $   460,754
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization                                              505,157          514,506
      Amortization of investment tax credits                                      (4,884)          (4,884)
      Deferred income taxes                                                       63,626          (35,764)
      Cumulative effect of accounting change                                          --          119,945
      Note receivable discount                                                    (7,606)          (8,910)
      Equity income in unconsolidated affiliates, net of distributions
         received of $245,564 and $84,992 in 2003 and 2002, respectively        (161,360)        (443,449)
      Changes in operating assets and liabilities:
            (Increase) decrease in assets                                        246,206         (116,297)
            Increase (decrease) in liabilities                                  (153,947)         138,541
                                                                             -----------      -----------
      Net cash provided by operating activities                                1,049,713          624,442
                                                                             -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES
    Capital expenditures                                                        (753,916)        (431,704)
    Cost of removing plant, net of salvage                                            --            3,553
    Purchase of investments                                                     (380,012)        (786,134)
    Proceeds from the sale of investments                                        461,575          384,832
    Proceeds from note receivable                                                 24,000               --
    Purchase of equity investments                                                  (500)              --
    Sale in other investments                                                      6,319            7,333
                                                                             -----------      -----------
      Net cash used in investing activities                                     (642,534)        (822,120)
                                                                             -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Dividends paid                                                               (98,436)        (104,214)
    Common stock redeemed                                                       (270,497)        (275,646)
    Repayment of long-term debt                                                  (66,378)         (62,141)
                                                                             -----------      -----------
      Net cash used in financing activities                                     (435,311)        (442,001)
                                                                             -----------      -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                        (28,132)        (639,679)
                                                                             -----------      -----------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                               1,032,734        1,797,415
                                                                             -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                   $ 1,004,602      $ 1,157,736
                                                                             ===========      ===========

SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION
    Cash paid during the period for:
      Interest                                                               $    69,684      $    74,491
      Income taxes                                                           $   406,500      $   340,000
</TABLE>

   The accompanying notes are an integral part of these condensed 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
      June 30, 2003 and December 31, 2002 and the results of operations and
      changes in cash flows for the three and six months ended June 30, 2003 and
      2002.

      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, 2002 audited financial statements. The results
      of operations for the period ended June 30, 2003 are not necessarily
      indicative of the operating results of the entire year.

      Certain reclassifications have been made to the 2002 financial statements
      to conform with the 2003 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'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 segment's 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
                                          --------      ---------      --------        -----         -----
<S>                                      <C>            <C>            <C>            <C>          <C>
            Six months ended
             June 30, 2003
            ----------------

      Revenues
           External customers            $2,421,578     $ 466,345      $ 320,076      $    --      $3,207,999
           Intersegment                          --            --             --           --              --
             Segment profit (loss)          705,245       (84,010)       (58,714)          --         562,521

            Six months ended
             June 30, 2002
            ----------------

      Revenues
           External customers            $1,953,277     $ 488,432      $ 372,015      $    --      $2,813,724
           Intersegment                          --            --             --           --              --
            Segment profit (loss)           596,419      (126,920)        (5,807)      (2,938)        460,754
</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
                                              ----------     ---------      ---------      -------      ----------
<S>                                           <C>            <C>            <C>            <C>          <C>
           Three months ended
             June 30, 2003
           ------------------

      Revenues
           External customers                 $1,130,774     $ 227,687      $ 158,895      $    --      $1,517,356
           Intersegment                               --            --             --           --              --
             Segment profit (loss)               262,206       (37,626)       (19,486)          --         205,094

           Three months ended
             June 30, 2002
           ------------------

      Revenues
           External customers                 $  940,642     $ 244,050      $ 190,001      $    --      $1,374,693
           Intersegment                               --            --             --           --              --
             Segment profit (loss)               263,975       (17,991)       (11,359)        (387)        234,238

<CAPTION>
       Reconciliation of Segment Information               Three months ended              Six months ended
       -------------------------------------            June 30,        June 30,        June 30,       June 30,
                                                          2003            2002            2003           2002
                                                       ----------     -----------      ----------     -----------
<S>                                                    <C>            <C>              <C>            <C>
      REVENUES:
           Total revenues and sales for reportable
             segments                                  $1,517,356     $ 1,374,693      $3,207,999     $ 2,813,724
           Other revenues                                                      --              --              --
           Elimination of intersegment revenues                                --              --              --
                                                       ----------     -----------      ----------     -----------
               Consolidated Revenues                   $1,517,356     $ 1,374,693      $3,207,999     $ 2,813,724
                                                       ==========     ===========      ==========     ===========

      PROFIT:
           Total profit for reportable segments        $  205,094     $   234,625      $  562,521     $   463,692
           Other profit (loss)                                 --            (387)             --          (2,938)
                                                       ----------     -----------      ----------     -----------
               Net Income                              $  205,094     $   234,238      $  562,521     $   460,754
                                                       ==========     ===========      ==========     ===========
</TABLE>


                                       7
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. NET INCOME PER COMMON STOCK

      Net income per common share for the three and six months ended June 30,
      2003 and 2002 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 six
      months ended June 30, 2003 and 2002 are 32,572 and 32,710, and 34,498, and
      34,671, respectively.

NOTE 4. STOCK VALUE ADJUSTMENT

      In 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.

      In May 2003, the board of directors authorized a $23 increase in the
      stated value of each share of common stock from $280 to $303. There were
      32,812 shares outstanding at the time of the value adjustment, which
      reduced retained earnings by $754,676.

               [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


                                       8
<PAGE>

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

      Breda organizes its business into three reportable segments. Those
      segments are local exchange carrier services, broadcast services, and
      Internet service provider services.

      The local exchange carrier services segment provides telephone, data
      services, and other services to customers in the local exchanges served by
      Breda. Breda also provides long distance services to its customers in the
      local exchanges and in the Carroll, Iowa market area through BTC, Inc. The
      broadcast services segment provides cable television services to customers
      in a total of seventeen towns in Iowa and one town in Nebraska. The
      Internet service provider services segment provides Internet access to
      customers in the local exchanges and the surrounding areas and in the
      Carroll, Iowa market area through BTC, Inc.

      The subsidiaries of Breda and the segments in which they operate are as
      follows:

                  Local Exchange Carrier
                           Prairie Telephone Co., Inc.
                           Westside Independent Telephone Company
                           BTC, Inc., which is a competitive local exchange
                           carrier presently providing long distance services

                  Broadcast Services
                           Tele-Services, Ltd.

                  Internet Service Provider
                           BTC, Inc.

      BTC, Inc. is a subsidiary of Prairie Telephone.

      Breda and its subsidiaries all conduct business under the names "W.I.N."
      or "Western Iowa Networks".

      The following table reflects, on a consolidated basis for Breda and its
      subsidiaries, the approximate percentage of Breda's and its subsidiaries'
      aggregate revenue which was derived from the three segments described
      above and from investments as of the close of, respectively, the second
      quarter of 2002 and the second quarter of 2003:


                                       9
<PAGE>

                                                   January-            January-
                                                   June                June
                                                   2002                2003

            Local Exchange Carrier (1)              69.4%               75.5%

            Broadcast (2)                           17.4%               14.5%

            Internet Service Provider (3)           13.2%               10.0%
                                                   -----               -----
                       Total                       100.0%              100.0%

(1)   This segment includes (i) flat monthly fees charged to subscribers by
      Breda, Prairie Telephone and Westside Independent for basic local
      telephone services, (ii) universal services funding amounts and access
      charges payable by long distance carriers for intrastate and interstate
      exchange services provided to those long distance carriers, (iii) fees
      from long distance providers for billing and collection services for long
      distance calls made by subscribers, (iv) per minute rates and calling
      plans rates for long distance services, and (v) monthly cellular
      commissions, advertising fees, and miscellaneous revenues.

(2)   This segment includes monthly fees charged for basic and premium cable
      services.

(3)   This segment includes monthly fees charged for internet services.

Six-months ended June 30, 2003 Compared to Six-months ended June 30, 2002

Net Income

Consolidated net income for the six-month period ended June 30, 2003 was
$562,521, which was a $101,767, or 22.1%, increase when compared to the $460,754
of consolidated net income for the six-month period ended June 30, 2002.

The $101,767 increase in net income resulted from the following four factors:

      1)    Consolidated operating income, which is Operating Revenues less
            Operating Expenses, generated from the local exchange carrier
            segment, the broadcast services segment, and the Internet service
            provider segment increased $185,764, or 67.7%, for the six-month
            period ended June 30, 2003, when compared to the six-month period
            ended June 30, 2002.


                                       10
<PAGE>

      2)    Other income (expense), which includes such items as interest and
            dividend income, income from equity investments, interest expense,
            and gains (losses) on the sale of investments and property,
            decreased $123,321, or 21.6%, for the six-month period ended June
            30, 2003, when compared to the six-month period ended June 30, 2002.

      3)    Income taxes increased $31,444, or 10.0%, for the six-month period
            ended June 30, 2003, when compared to the six-month period ended
            June 30, 2002.

      4)    The cumulative effect of an accounting change, net of tax, of
            $70,768 during the six-month period ended June 30, 2002, reflects an
            impairment of goodwill from the implementation of Statement of
            Financial Accounting Standard 142 on January 1, 2002. There were no
            accounting changes during the six-month period ended June 30, 2003.

Operating Revenues

There was an increase in total operating revenues for the six-month period ended
June 30, 2003, when compared to the six-month period ended June 30, 2002, of
$394,275, or 14.0%. The segments making up total operating revenues and their
contributions to the $394,275 increase between the two periods are as follows:
local exchange carrier services - $468,301; broadcast services - ($22,087); and
Internet services - ($51,939).

Local Exchange Carrier Services - $468,301

Local exchange carrier services revenue accounted for 75.5% of the operating
revenue in the six-month period ended June 30, 2003. The components of and their
contributions to the $468,301 increase in local exchange carrier services
revenue for the six-months ended June 30, 2003, when compared to the six-months
ended June 30, 2002, are as follows: local network services - ($826); network
access services - $16,367; long distance services - $3,863; billing and
collection services - ($7,992); cellular services - $366,397; and miscellaneous
- $90,492.

Both local network services and network access services revenue were nearly
identical for the six-month periods ended, respectively, June 30, 2003 and June
30, 2002, with a 0.3% decrease and 1.4% increase, respectively, in the six-month
period ended June 30, 2003, when compared to the same six-month period in 2002.
The access revenue increase is volume related, and Breda has not experienced an
adverse effect from the implementation in 2002 of different methodologies for
the support payment funding regulated by the FCC. Breda has, however, had lower
access revenue in both 2002 and 2003 because Qwest no longer pays access revenue
for traffic originating with a wireless carrier that uses Qwest to deliver the
traffic back to a number served by local exchange carriers, such as Breda,
Prairie Telephone, and Westside Independent, who participate in the use of the
switching and network facilities offered by Iowa Network Services. Access
charges 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


                                       11
<PAGE>

charge rates by the FCC. Breda anticipates continuing pressure for the lowering
of state and federal access charge rates, so future reductions in access charge
rates are likely.

Breda's long distance services revenue continues to grow because of the increase
in its customer base for those services. Breda believes that long distance
services should continue to be a growth area for Breda in 2003 as Breda
continues to market this service as both a stand-alone service and as part of a
package with other services, such as Internet. The six-month period ended June
30, 2003, reflected a 7.1% increase in long distance services revenues when
compared to the six-month period ended June 30, 2002. The increase is a direct
reflection of the 28% increase in Breda's long distance customer base.

Breda expanded its cellular retail location in Carroll, Iowa by taking over the
management of a U.S. Cellular kiosk located in the Wal-Mart store in Carroll,
Iowa, on August 1, 2002. The $366,397, or 117.6%, increase in cellular services
revenue for the six-month period ended June 30, 2003, when compared to the
six-month period June 30, 2002, reflects the increased sales generated through
Breda's two Carroll, Iowa locations and the increased sales generated through
the efforts of outside sales staff, who travel and make direct contact with
potential customers.

Miscellaneous revenue increased $90,492, or 108.5%, for the six-month period
ended June 30, 2003, when compared to the six-month period ended June 30, 2002.
Three items made up most of this increase for the six-month period ended June
30, 2003. The first item was the performance of fiber installation contractual
work for an outside corporation, which generated $50,000 in miscellaneous
revenue, before materials, equipment and labor costs. The second item was the
receipt of a Qwest refund on co-location expenditures of approximately $28,229.
Breda also performed boring and related services for neighboring telephone
companies which generated almost $15,000 in miscellaneous revenue.

Broadcast Services ($22,087)

Broadcast services revenue decreased $22,087, or 4.5%, for the six-month period
ended June 30, 2003, when compared to the six-month period ended June 30, 2002.
Breda's subsidiary, Tele-Services, continues to face competition from satellite
providers that can now include local channels in their package offerings.
Tele-Services experienced an 8.4% decrease in its customer base when comparing
the six-month period ended June 30, 2003, to the six-month period ended June 30,
2002. Another factor faced by Tele-Services is the declining population base in
the small rural communities served by Tele-Services, which adversely affects
Tele-Services' current and prospective customer base.

Internet Services ($51,939)

Internet services revenue decreased $51,939, or 14.0%, for the six-month period
ended June 30, 2003, when compared to the six-month period ended June 30, 2002.
This decrease in revenue is directly attributable to the decrease in BTC, Inc.'s
Internet service


                                       12
<PAGE>

customer base, which decrease is the result of the intense competition among
multiple suppliers in the Carroll, Iowa, market area. Breda began bundling
Internet services with long distance services and lowered its pricing of its
Internet services in 2001 in response to competitive pressures. Breda has
continued with those programs in 2002 and 2003. The programs have, however,
resulted in reduced Internet services revenue in both 2002 and 2003 given the
lower pricing by Breda for Internet services under those programs.

Operating Expenses

There was an increase in total operating expenses of $208,511, or 8.2%, for the
six-month period ended June 30, 2003, when compared to the six-month period
ended June 30, 2002. The components making up operating expenses are as follows:
cost of services; depreciation and amortization; and selling, general and
administration expenditures.

Cost of services increased $230,545, or 21.2%, for the six-month period ended
June 30, 2003, when compared to the six-month period ended June 30, 2002. Most
of the increase was caused by increased Internet provision costs of $15,620, and
increased cellular services costs of $233,096. As noted previously, cellular
revenue had increased $366,397, or 117.6%, for the six-month period ended June
30, 2003, as compared to the six-month period ended June 30, 2002. Cellular
service costs increased 104.3%, however, as part of providing those increased
services during the six-month period ended June 30, 2003.

Depreciation and amortization expense decreased $9,349, or 1.8%, for the
six-month period ended June 30, 2003, when compared to the six-month period
ended June 30, 2002. Most of the $9,349 decrease in depreciation and
amortization expense for the six-month period ended June 30, 2003 is
attributable to the fact that Breda has expended funds for facilities and
equipment which are not yet operational and therefore are not being depreciated
until the assets are put into use. Other assets have reached their maximum
depreciable life, and while still in use, there is no further depreciation
expense that can be taken on those assets.

Selling, general and administration expenses decreased $12,685, or 1.4%, for the
six-month period ended June 30, 2003, when compared to the same six-month period
in 2002. The decrease was the result of a reduction in labor related to
telephone customer service work and more efforts focused on the heavier volume
customer service areas of cellular, long distance, and Internet services.

Operating Income

The net result of the operating revenue and operating expenses was an increase
of $185,764, or 67.7%, in operating income for the six-month period ended June
30, 2003, when compared to the same six-month period in 2002.


                                       13
<PAGE>

Other Income (Expense)

Other income (expense) decreased $123,321, or 21.6%, during the six-month period
ended June 30, 2003, when compared to the same six-month period in 2002. The
decrease was mainly attributable to two items. The first item is interest and
dividend income, which decreased $9,113, or 7.3%, when comparing the six-month
period ended June 30, 2003 to the six-month period ended June 30, 2002. The
decrease in interest and dividend income was mainly due to lower interest income
rates available on investments during the six-month period ended June 30, 2003,
as compared to the rates available during the six-month period ended June 30,
2002. The second item is income from equity investments, which decreased
$121,517, or 23.0%, during the six-month period ended June 30, 2003, when
compared to the same six-month period in 2002. 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 decrease in equity
investments reported on Breda's income statement for the six-month period ended
June 30, 2003 is a reflection of the net increases and decreases in the net
operating income of these investments.

Income Before Income Taxes

Income before income taxes increased $62,443, or 7.4%, for the six-month period
ended June 30, 2003, when compared to the six-month period ended June 30, 2002.
The $62,443 increase was the result of the $185,764 increase in operating income
and the $123,321 decrease in other income (expense).

Net Income

Income taxes increased $31,444, or 10.0%, for the six-month period ended June
30, 2003, when compared to the same six-month period in 2002. The increase is a
direct reflection of the increased income generated in the six-month period
ended June 30, 2003. The effective tax rate in 2003 was 38.0%, versus 37.1% in
2002. These effective tax rates differ from the U.S. statutory rate primarily
due to state income taxes, and the proportion of investments with state tax
exemptions.

The cumulative effect of an accounting change, net of tax, of $70,768 during the
six-month period ended June 30, 2002, reflects an impairment of goodwill, for
which there was no corresponding entry during the six-month period ended June
30, 2003. The Financial Accounting Standards Board issued Financial Accounting
Statement No. 142 in August 2001 relating to the treatment of goodwill, and
those new accounting principles were incorporated into Breda's financial
statement beginning January 1, 2002. Under those accounting principles, 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 at January
1, 2002 was Breda's estimate of the expense to offset earnings for the carrying
amount of the Westside purchase goodwill attributable to broadcast services
which was in excess of the fair value of that asset based on discounted cash
flow valuation upon implementation of SFAS 142.

Net income increased $101,767, or 22.1%, for the six-month period ended June 30,
2003, when compared to the same period in 2002.

Liquidity and Capital Resources at Twelve-months ended December 31, 2002

Cash Flows

Cash flows from operations were a steady source of funds for Breda in 2002. Cash
provided from operations was $1,650,381 in 2002. Cash flows from operations in
2002 were primarily attributable to a positive net income of $1,218,421, plus
the addition of non-cash expenses of $1,070,569 from depreciation and
amortization, which were then offset by $721,247 (net of cash distributions
received of $197,264) of non-cash, equity income in unconsolidated affiliates.

Cash used in investing activities was $1,623,797 in 2002, and capital
expenditures relating to ongoing business were $754,895 in 2002. A new corporate
office building was constructed in 2002 at a cost, including furnishings and
fixtures, of $480,000. Capital used in investing activities in 2002 included an
additional $248,273 investment in Alpine Communications L.C., the issuance of a
$160,000 note to the purchaser of the prior corporate office building which was
sold on contract on October 1, 2001, and the purchase of investments with excess
cash during the normal course of operations.

Cash used in financing activities was $791,265 in 2002. Breda used cash in 2002
to repay $126,365 of borrowings from the Rural Telephone Finance Cooperative, to
redeem common stock for $560,686, and to pay dividends of $104,214. Breda funds
the redemption of its stock from cash flows from operations. Breda redeemed
2,025 shares during 2002, for an aggregate amount of $560,686.

Working Capital

Working capital was $1,948,514 as of December 31, 2002, compared to working
capital of $2,664,323 as of December 31, 2001. The ratio of current assets to
current liabilities was 3.6 to 1.0 as of December 31, 2002, as compared to 5.3
to 1.0 as of December 31, 2001.

Breda had a $601,941 decrease in current assets during the twelve-month period
ended December 31, 2002, when compared to the twelve-months ended December 31,
2001. The decrease in current assets was mainly attributable to a $941,791
decrease in cash and temporary investments and a $299,289 increase in accounts
receivable, resulting in a


                                       15
<PAGE>

corresponding increase in long-term investments. Customer accounts receivable as
of December 31, 2002 were comparable to customer accounts receivable as of
December 31, 2001. The $299,289 increase in accounts receivable was mainly
attributable to National Exchange Carrier Association pooling receivables,
unpaid access charges due from slow paying carriers, estimated post bankruptcy
payments from Global Crossing and WorldCom, and unpaid access payments from
Qwest for October, November and December 2002, while Qwest was making an
in-house billing software conversion. The Qwest software conversion involved
billing functions being reviewed and processed at new locations, so carrier
invoices sent to the prior billing locations were not processed until the local
telephone companies resubmitted their invoices to the new processing center. The
Qwest receivables were paid during the three-month period ended March 31, 2003.

During September 2001, Tele-Services entered into a contract with Toyne, Inc. to
sell its corporate building for $200,000. Tele-Services received a cash deposit
of $20,000 at the time of the contract, and another $20,000 at the time of
possession on October 1, 2002. The $160,000 remaining on this contract is shown
in the financials as $140,000 in long-term note receivables and $20,000 in
short-term note receivables. The remaining contract amount of $160,000 was,
however, paid in full on February 14, 2003.

Current liabilities increased $113,868 as of the end of the twelve-month period
ended December 31, 2002, when compared to the end of the same period in 2001.
Accounts payable and accruals increased $62,869. The increase was attributable
mainly to a 24-month over earnings National Exchange Carrier Association accrual
of approximately $82,200, and a $35,000 co-location invoice from Qwest, which
was received at year-end for work performed prior to year-end.

Common stock had a net increase of $203,550 during the twelve-month period ended
December 31, 2002, when compared to the twelve months ended December 31, 2001.
The increase resulted primarily from two items. One item was the $22 per share
increase in outstanding shares value which was announced at the annual
shareholders meeting which was held on May 21, 2002, and the other was a
decrease in the number of outstanding shares through the redemption of 2,025
shares of common stock by Breda during the twelve-month period ended December
31, 2002. The increase in retained earnings during the twelve-month period ended
December 31, 2002, when compared to the twelve months ended December 31, 2001,
was the net effect of the stated value stock adjustment of $764,236, the
dividends paid in 2002 of $104,214, and the year-to-date net income as of
December 31, 2002.

Liquidity and Capital Resources at Six-months ended June 30, 2003

Cash Flows

Cash provided from operations for the six-month periods ended June 30, 2003, and
June 30, 2002, was, respectively, $1,049,713 and $624,442. The cash flows from
operations for the six-month period ended June 30, 2003 was primarily
attributable to a positive net


                                       16
<PAGE>

income of $562,521, plus the addition of non-cash expenses such as depreciation,
amortization, deferred income taxes, note receivable discount, and amortization
of investment tax credits totaling $556,293, which were then offset by $161,360
(net of cash distributions received of $245,564) of non-cash, equity income in
unconsolidated affiliates. The positive changes in assets and liabilities of
$92,259 were also added to net income. The cash flows from operations for the
six-month period ended June 30, 2002 were primarily attributable to a positive
net income of $460,754, plus the addition of non-cash expenses of $514,506 from
depreciation and amortization, the addition of $119,945 from the cumulative
effect of an accounting change, and the net effect of a decrease in operating
assets and an increase in operating liabilities of $22,244, which were then
offset by $443,449 of non-cash equity income in unconsolidated affiliates.

Cash used in investing activities was $642,534 for the six-month period ended
June 30, 2003, and $822,120 for the six-month period ended June 30, 2002.
Capital expenditures relating to ongoing business were $753,916 for the
six-month period ended June 30, 2003, and $431,704 for the six-month period
ended June 30, 2002. A new corporate office building was constructed in 2002 at
a cost, including furnishings and fixtures, of $480,000. A building was
purchased for the relocation of Breda's Carroll, Iowa services for $246,000 in
January 2003, which is reflected in the increased capital expenditures for the
six-month period ended June 30, 2003, when comparing the two six-month periods.
As noted previously, Breda received $160,000 in February 2003, as an early
payoff of a building contract note receivable. Breda expects remaining capital
expenditures in 2003 to be at similar levels to those made in 2002. Capital used
in investing activities in 2002 included the additional $248,273 investment in
Alpine Communications L.C.

Cash used in financing activities was $435,311 for the six-month period ended
June 30, 2003, and $442,001 for the six-month period ended June 30, 2002. During
the six-month period ended June 30, 2003, cash was used to repay $66,378 of
borrowings from the RTFC, to pay dividends to the shareholders of $98,436, and
to redeem common stock for $270,497. During the six-month period ended June 30,
2002, cash was used to repay $62,141 of long-term debt, to pay dividends to the
shareholders of $104,214, and to redeem common stock for $275,646. Breda funds
the redemption of its stock from cash flows from operations.

Working Capital

Working capital was $1,962,503 as of June 30, 2003, compared to working capital
of $1,948,514 as of December 31, 2002. The ratio of current assets to current
liabilities was 4.3 to 1.0 as of June 30, 2003 and 3.6 to 1.0 as of December 31,
2002.

Breda had a $135,433 decrease in current assets during the six-month period
ended June 30, 2003, when compared to the year ended December 31, 2002. The
decrease in current assets was mainly attributable to a $77,227 decrease in cash
and temporary investments and a $216,082 decrease in accounts receivable.
Customer accounts receivable as of June 30, 2003 were comparable to customer
accounts receivable as of December 31, 2002. The $216,082 decrease in accounts
receivable was mainly attributable to the partial


                                       17
<PAGE>

receipt of NECA pooling receivables, the receipt of some of the unpaid access
charges due from slow paying carriers, and receipt of access payments from Qwest
for October, November and December 2002.

Noncurrent assets, which mainly consist of longer-term investments, decreased
$28,985 during the six-month period ended June 30, 2003, when compared to the
year ended December 31, 2002. On May 2, 2001, Prairie Telephone entered into a
contractual agreement to advance $500,000 to Desktop Media, L.L.C. This note is
shown net of unamortized discounts of $47,602 and $31,208 at, respectively, June
30, 2003 and December 31, 2002. $308,398 is included in long-term note
receivables, and $144,000 is included in short-term note receivables as of June
30, 2003. Investments in unconsolidated affiliates at equity increased $161,860
for the six-month period ended June 30, 2003, when compared to the year ended
December 31, 2002. This increase represents 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 during the six-month period ended June 30,
2003.

During September 2001, Tele-Services entered into a five-year contract with
Toyne, Inc. to sell its corporate building for $200,000. Tele-Services received
a cash payment on October 1, 2002, and the remaining balance of $160,000 was
shown partially in long-term and partially in short-term note receivables on
Breda's balance sheet as of December 31, 2002. As noted previously, the
remaining contract amount of $160,000 was paid in full on February 14, 2003.

Current liabilities decreased $149,422 for the six-month period ended June 30,
2003, when compared to the year ended December 31, 2002. Accounts payable
decreased $71,905. A $3.00 per share dividend, for an aggregate amount of
$98,436, was declared by Breda's board of directors to shareholders of record on
March 10, 2003, and paid on April 1, 2003. Accrued taxes decreased $32,443 for
the six-month period ended June 30, 2003, when compared to the year ended
December 31, 2002.

Common stock had a net increase of $484,179 during the six-month period ended
June 30, 2003, when compared to the year ended December 31, 2002. This increase
resulted from the decrease in the number of outstanding shares through the
redemption of 907 shares of common stock at a redemption price of $270,497, and
the restatement of the outstanding shares of stock on May 20, 2003 to a per
share price of $303, or a total adjustment of $754,676. The prior redemption
value had been $280 per share. The decrease of $290,591 in retained earnings
during the six-month period ended June 30, 2003, when compared to the year ended
December 31, 2002, is the net effect of the $98,436 in dividends paid on April
1, 2003, the year-to-date net income as of June 30, 2003, the redemption of
stock for $270,497, and the $754,676 stated value stock adjustment, as noted,
for the outstanding shares on May 20, 2003.

Breda anticipates that Breda's operational, investing and financing activities
during the remainder of 2003 will be similar to 2002, and will be funded
internally through operations and temporary investments.


                                       18
<PAGE>

Three-months ended June 30, 2003 Compared to Three-months ended June 30, 2002

Net Income

Consolidated net income for the three-month period ended June 30, 2003 was
$205,094, which was a $29,144, or 12.4%, decrease when compared to the $234,238
of consolidated net income for the three-month period ended June 30, 2002.

The $29,144 decrease in net income resulted from the following three factors:

            1)    Consolidated operating income, which is Operating Revenues
                  less Operating Expenses, generated from the local exchange
                  carrier segment, the broadcast services segment, and the
                  Internet service provider segment increased $46,528, or 33.2%,
                  for the three-month period ended June 30, 2003, when compared
                  to the three-month period ended June 30, 2002.

            2)    Other income (expense), which includes such items as interest
                  and dividend income, income from equity investments, interest
                  expense, and gains (losses) on the sale of investments and
                  property, decreased $101,944, or 42.0%, for the three-month
                  period ended June 30, 2003, when compared to the three-month
                  period ended June 30, 2002.

            3)    Income taxes decreased $55,416, or 14.5%, for the three-month
                  period ended June 30, 2003, when compared to the three-month
                  period ended June 30, 2002.

Operating Revenues

There was an increase in total operating revenues for the three-month period
ended June 30, 2003, when compared to the three-month period ended June 30,
2002, of $142,663, or 10.4%. The segments making up total operating revenues and
their contributions to the $142,663 increase between the two periods are as
follows: local exchange carrier services - $190,132; broadcast services -
($16,363); and Internet services - ($31,106).

Local Exchange Carrier Services - $190,132

Local exchange carrier services revenue accounted for 74.5% of the operating
revenue in the three-month period ended June 30, 2003. The components of and
their contributions to the $190,132 increase in local exchange carrier services
revenue for the three-months ended June 30, 2003, when compared to the
three-months ended June 30, 2002, are as follows: local network services -
($1,296); network access services - $23,699; long distance services - $1,996;
billing and collection services - ($4,521); cellular services -$141,495; and
miscellaneous - $28,759.


                                       19
<PAGE>

Local network services was nearly identical for the three-month periods ended
June 30, 2003 and June 30, 2002, with a .9% decrease in the three-month period
ended June 30, 2003, when compared to the same three-month period in 2002. The
access revenue increase of $23,699, or 4.1%, is volume related, and Breda has
not experienced an adverse effect from the implementation in 2002 of different
methodologies for the support payment funding regulated by the FCC. Breda has,
however, had lower access revenue in both 2002 and 2003 because Qwest no longer
pays access revenue for traffic originating with a wireless carrier that uses
Qwest to deliver the traffic back to a number served by local exchange carriers,
such as Breda, Prairie Telephone, and Westside Independent, who participate in
the use of the switching and network facilities offered by Iowa Network
Services. Access charges 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. Breda anticipates
continuing pressure for the lowering of state and federal access charge rates,
so future reductions in access charge rates are likely.

Breda's long distance services revenue continues to grow because of the increase
in its customer base for those services. Breda believes that long distance
services should continue to be a growth area for Breda in 2003 as Breda
continues to market this service as both a stand-alone service and as part of a
package with other services, such as Internet. Breda also anticipates additional
growth in its long distance services when it expands all of its services,
including telephone service, to the Carroll, Iowa market area through BTC, Inc.
during the third quarter of 2003.

Breda expanded its cellular retail location in Carroll, Iowa by taking over the
management of a U.S. Cellular kiosk located in the Wal-Mart store in Carroll,
Iowa, on August 1, 2002. The $141,495, or 99.3%, increase in cellular services
revenue for the three-month period ended June 30, 2003, when compared to the
three-month period June 30, 2002, reflects the increased sales generated through
Breda's two Carroll, Iowa locations and the increased sales generated through
the efforts of outside sales staff, who travel and make direct contact with
potential customers. There was no corresponding cellular services revenue from
the Wal-Mart location for the three-month period ended June 30, 2002, since the
Wal-Mart kiosk was opened under Breda's management on August 1, 2002.

Miscellaneous revenue increased $28,759, or 76.4%, for the three-month period
ended June 30, 2003, when compared to the three-month period ended June 30,
2002, and was mainly the result of a $28,000 refund of co-location expenditures
by Qwest, which had initially been generated as part of Breda's interface with
Qwest to offer voice services in the Carroll, Iowa, market.

Broadcast Services ($16,363)

Broadcast services revenue decreased $16,363, or 6.7%, for the three-month
period ended June 30, 2003, when compared to the three-month period ended June
30, 2002. Breda's subsidiary, Tele-Services, continues to face competition from
satellite providers that can


                                       20
<PAGE>

now include local channels in their package offerings. Tele-Services continued
to experience a decline in its customer base when comparing the three-month
period ended June 30, 2003, to the three-month period ended June 30, 2002.
Another factor faced by Tele-Services is the declining population base in the
small rural communities served by Tele-Services, which adversely affects
Tele-Services' current and prospective customer base.

Internet Services ($31,106)

Internet services revenue decreased $31,106, or 16.4%, for the three-month
period ended June 30, 2003, when compared to the three-month period ended June
30, 2002. This decrease in revenue is directly attributable to the decrease in
BTC Inc.'s Internet service customer base, which decrease is the result of the
intense competition by multiple suppliers in the Carroll, Iowa, market area.
Breda began bundling Internet services with long distance services and lowered
its pricing of the Internet services in 2001 in response to competitive
pressures. Breda has continued with these programs in 2002 and 2003. The
programs have, however, resulted in reduced Internet services revenue in both
2002 and 2003 given the lower pricing by Breda for Internet services under those
programs. Breda continues to acquire new high-speed Internet customers, but the
overall market base for these high-speed services is smaller.

Operating Expenses

There was an increase in total operating expenses of $96,135, or 7.8%, for the
three-month period ended June 30, 2003, when compared to the three-month period
ended June 30, 2002. The components making up operating expenses are as follows:
cost of services; depreciation and amortization; and selling, general and
administration expenditures.

Cost of services increased $108,292, or 19.8%, for the three-month period ended
June 30, 2003, when compared to the three-month period ended June 30, 2002. Most
of the increase was caused by increased cellular services costs of $114,303.
There was also a decrease of approximately $6,612 in Internet provision costs,
which reduced cost of services expense. As noted previously, cellular revenue
had increased $141,495, or 99.3%, for the three-month period ended June 30,
2003, as compared to the three-month period ended June 30, 2002. Cellular
service costs increased 109.4%, however, as part of providing those increased
services during the three-month period ended June 30, 2003.

Depreciation and amortization expense decreased $18,090, or 6.9%, for the
three-month period ended June 30, 2003, when compared to the three-month period
ended June 30, 2002. Most of the $18,090 decrease in depreciation and
amortization expense for the three-month period ended June 30, 2003 is
attributable to the fact that Breda has expended funds for facilities and
equipment which are not yet operational and therefore are not being depreciated
until the assets are put into use. Other assets have reached their maximum
depreciable life, and while still in use, there is no further depreciation
expense that can be taken on those assets. There is also reduced amortization
expense since new


                                       21
<PAGE>

accounting principles related to the treatment of goodwill were incorporated
into Breda's financial statement beginning January 1, 2002, and under which
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.

Selling, general and administration expenses increased $5,933, or 1.4%, for the
three-month period ended June 30, 2003, when compared to the same three-month
period in 2002. The increase was the result of labor costs and training costs to
hire and train additional staff in preparation for the roll-out of Internet,
long distance, and local telephone service in the Carroll, Iowa market in early
third quarter 2003.

Operating Income

The net result of the operating revenue and operating expenses was an increase
of $46,528, or 33.2%, in operating income for the three-month period ended June
30, 2003, when compared to the same three-month period in 2002.

Other Income (Expense)

Other income (expense) decreased $101,944, or 42%, during the three-month period
ended June 30, 2003, when compared to the same three-month period in 2002. The
decrease was mainly attributable to income from equity investments, which
decreased $110,831, or 48.2%, during the three-month period ended June 30, 2003,
when compared to the same three-month period in 2002. 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 decrease in equity
investments reported on Breda's income statement for the three-month period
ended June 30, 2003, is a reflection of the net increases and decreases in the
net operating income of these investments. Other miscellaneous expense decreased
$7,287, or 72.2%, during the three-month period ended June 30, 2003, when
compared to the same three-month period in 2002 and resulted from the netting of
cellular management fees revenue from outside investments, with the
corresponding expense for the direct management services provided by Breda's
management staff.

Income Before Income Taxes

Income before income taxes decreased $55,416, or 14.5%, for the three-month
period ended June 30, 2003, when compared to the three-month period ended June
30, 2002. The $55,416 decrease was the result of the $46,528 increase in
operating income and the $101,944 decrease in other income (expense).

Net Income

Income taxes decreased $26,272, or 17.7%, for the three-month period ended June
30, 2003, when compared to the same period in 2002. The decrease is a direct
reflection of the decreased income generated in the three-month period ended
June 30, 2003. The


                                       22
<PAGE>

effective tax rate for the three-month period ended June 30, 2003, was 37.3%,
versus 38.8% for the three-month period ended June 30, 2002. These effective tax
rates differ from the U.S. statutory rate primarily due to state income taxes,
and the proportion of investments with state tax exemptions.

Net income decreased $29,144, or 12.4%, for the three-month period ended June
30, 2003, when compared to the same period in 2002.

Other Activities

Breda received notification from the FBI on April 15, 2003, that the FBI would
grant Breda, Prairie Telephone and Westside Independent an extension until June
30, 2004 for certain of their deployment schedules under the Communications
Assistance For Law Enforcement Act. The FCC decides whether or not to grant any
such extension. At the time of this filing, no further correspondence had been
received from the FCC, but Breda contemplates that the FCC will approve of the
FBI's determination.

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 became effective for Breda, Prairie Telephone, and Westside
Independent on July 1, 2002. Breda continues to believe that the FCC's order on
the plan will not have any materially adverse effects on Breda's or its
subsidiaries' revenues in 2003.

A primary source of consolidated revenue is generated from Tele-Services' cable
business. Tele-Services' operating revenues arise primarily from monthly fees
for basic and premium cable services provided to its cable subscribers.
Tele-Services' main competition is from satellite dish providers. The FCC now
allows satellite dish providers to provide local channels, which has had an
adverse effect on Tele-Services, given that its ability to provide local
channels was, in the past, one reason subscribers might choose Tele-Services'
cable services over a satellite dish. Other rulings and decisions by the FCC are
possible, and may provide satellite dish providers, or other providers as
changes in the telecommunications and cable industry occur, with equal or
greater advantages than Tele-Services can offer to its subscribers, which could
obviously have an adverse effect on Tele-Services' business. Changes in the
telecommunications and cable industry are continually occurring, and
technological advances may provide Tele-Services subscribers with other options.
For example, Iowa Network Services is offering cable services in Iowa over
existing telephone lines, and it is estimated that up to 70 independent
telephone companies in mostly rural Iowa will be able to offer cable television
programming over their telephone lines by 2005. This option, and others which
might arise through other changes or advancements in technology, could have
material adverse effects on Tele-Services in the future. Tele-Services is also
faced with a declining population base in its service areas, which results in a
lower potential customer base for Tele-Services, and with the need to upgrade
its plant, equipment and cables in order to add more channel lineups so that it
can stay competitive and continue to be able to obtain programming licenses.


                                       23
<PAGE>

Tele-Services is continuing to work with an engineering firm to review its
systems and to work on consolidating its head-end equipment with the goals being
that the equipment will then be able to serve two or more communities, instead
of just one community, as is currently the case, and to lower maintenance costs
for the equipment. There has not, however, been any immediate, economically
feasible option identified from these reviews up to this point. Tele-Services is
also evaluating the option of upgrading some of its cable TV systems and
installing additional equipment and electronics to be able to provide more
channel line-up options to its subscribers and to also possibly offer Internet
access services over a cable modem. The cost of upgrades in 2003, and of any
continuing or further head-end equipment consolidation, is estimated to be less
than $300,000.

Breda has determined to expand its core business of providing telephone services
into the Carroll, Iowa market area through BTC, Inc. BTC, Inc. is presently
offering Internet services in the Carroll, Iowa market area, but BTC, Inc. was
incorporated in 1997 primarily to explore the possibility of becoming a
competitive local exchange carrier in some Iowa communities which are not
served by Breda, Prairie Telephone or Westside Independent. A provider must
receive a Certificate of Public Convenience and Necessity from the Iowa Utility
Board ("IUB") before it can provide landline, local telephone service in Iowa.
In addition to the certificate requirement, a provider cannot provide local
service until it has received IUB approval for its tariffs and for maps and
other documentation showing the provider's proposed service territory. Although
the IUB's rules do not require interconnection agreements with other local
service providers in the service territory, an interconnection agreement is
usually necessary in order to provide the services the customers already have.
BTC, Inc. has finalized an interconnection agreement with Qwest.

On July 17, 1997, BTC, Inc. filed an application with the IUB for issuance of a
Certificate of Public Convenience and Necessity. The IUB issued an Order
Granting Application on August 26, 1997, to BTC, Inc. wherein it was noted that
the IUB found that BTC, Inc. has demonstrated that it has the necessary
technical, financial, and managerial ability to provide local exchange service
and that its application did serve the public interest. In the order, the IUB
stated that BTC, Inc. would be issued a certificate when BTC, Inc. obtained an
approved tariff setting forth the prices, terms, and conditions of local
exchange in Iowa. The IUB also approved the maps filed by BTC, Inc. on July 17,
1997.

On January 23, 2003, BTC, Inc. filed an amendment to its approved application
reflecting the fact that it will be doing business as "Western Iowa Networks".
BTC, Inc. also filed a proposed local exchange tariff on January 23, 2003, and
revisions to the tariff were filed on February 23, 2003. On March 7, 2003, the
IUB issued an order approving the amended application, approving the proposed
tariff and its revisions, and issuing a certificate of public convenience and
necessity. Breda has experienced technical delays during its interface process
with the present incumbent local exchange carrier serving the Carroll, Iowa,
market and now anticipates implementing its business plan for this market during
the third quarter of 2003.


                                       24
<PAGE>

Breda, Prairie Telephone, Westside Independent and BTC, Inc. continue to face
ever-increasing competition in providing dial-up and high-speed Internet access.
For example, Breda has been experiencing price-point competition for Internet
services from Iowa Telecom in three communities since the late fourth quarter
2000. Breda had been the sole provider of Internet services in those communities
until that time. Iowa Telecom purchased the telephone exchanges for those
communities in 1999 and began operating them on June 1, 2000. In late 2000, Iowa
Telecom expanded the services offered in those communities to include Internet
services and at a lower price than is offered by Breda. As a result, Breda has
lost Internet customers in the three communities. BTC, Inc. is experiencing
intense pricing and free services competition in providing Internet access in
its Carroll, Iowa market. There are at least five competitors in this relatively
small market area, and BTC, Inc. has experienced a 26.6% decline in its dial-up
customer base in this market since June 30, 2002.

Breda is pursuing additional marketing approaches to attempt to retain and
increase its Internet customer base, but Breda believes there will be continuing
competitive pressures to lower dial-up rates and to provide higher speed
Internet access.

One step that Breda had taken to lower Breda's underlying Internet costs was
through Prairie Telephone's acquisition in October of 2001 of a 10% ownership
interest in Desktop Media, L.L.C. Desktop Media, L.L.C. provided Internet
service provider support services to Prairie Telephone from approximately
November 1, 2001 through March 4, 2003, at which time Breda moved its end user
help-desk technical support to eCi Technical Support Solutions. Prairie
Telephone, however, retained its 10% ownership interest in Desktop Media, L.L.C.
Breda's desire to further lower its underlying Internet costs in order to
compete at a lower price point for Internet services was a critical factor in
the move to eCi. Two other factors were Breda's desire to offer its Internet
customers 24-hour a day, 7-day a week end user help-desk technical support, and
to be able to brand these services under its own name for customer service
continuity. Breda also reduced its pricing of Internet services and bundled
Internet services with its long distance services in August, 2001 in order to
attempt to compete at a lower price point for Internet services. Breda's
reduction of its pricing has led to a decrease in Breda's overall revenue from
Internet service fees. In order to attempt to provide a more competitively
priced, high speed Internet service, BTC, Inc. completed the process of
installing equipment in the Qwest central office in July of 2002 that allows
BTC, Inc. to use a product that Qwest offers called line sharing. Breda has also
prepared other bundled service packages which include Internet services, and
which will be offered through BTC, Inc.'s competitive local exchange carrier
operations, which Breda anticipates will commence during the third quarter of
2003.

Although Breda expects the overall potential customer base for Internet access
to continue to increase, it is becoming more difficult to predict what
increases, if any, Breda or its subsidiaries might experience in their Internet
customer base given the increasingly competitive pressures in this area. It is
also possible that Breda and its subsidiaries might continue to experience
declines in its Internet customer base. Also, as noted above,


                                       25
<PAGE>

competitive pressures regarding pricing may lead to little or no growth, or even
declines, in Internet service revenues, even if Breda is successful in
increasing its Internet customer base.

BTC, Inc., was the successful bidder at an auction on December 23, 2002, for a
commercial building located in Carroll, Iowa. The closing date for the purchase
was January 20, 2003. The building has approximately 4,450 square feet, which is
over two times the space of the present location in Carroll. The new building
will allow BTC, Inc. and Breda to consolidate their present operations in the
Carroll, Iowa market, and afford Breda the opportunity to expand its service
offerings from the Carroll location. It is anticipated that the transfer of the
Carroll, Iowa operations from its present location to the new location will
occur at the end of third quarter 2003. Breda is presently renovating this
building to meet its customer service needs. Breda believes that the cost of the
renovations will not be material.

Breda continues to anticipate that it may need to enter into a new agency
agreement with U.S. Cellular some time in 2003. Breda continues to be hopeful,
based on its past negotiations with U.S. Cellular that any new agreement will,
at worst, have a neutral impact on Breda's cellular commissions revenue.

Breda, Prairie Telephone and Westside Independent continue to face competition
in the sale and lease of telephone, cellular and related equipment because there
are numerous competitors who sell and lease that equipment.

The cellular ventures in which Breda, Prairie Telephone and Westside Independent
have invested continue to face ever increasing and changing competition in
providing cellular services and equipment from the various competitors offering
cellular and personal communication services.

As noted previously, Breda anticipates continuing pressure for the lowering of
state and federal access charge rates. For example, concerns have been raised by
the Iowa Legislature as well as the Iowa Utility Board regarding intra-state
access rates, and whether alternative intrastate inter-carrier compensation
mechanisms should be investigated. A joint task force comprised of
representatives from the Iowa Telecom Association and the Rural Iowa Independent
Telephone Association has been formed to compile data from the local telephone
companies, such as Breda, in order to document not only the justification of the
present intra-state access rates received by local telephone companies, but also
to look at other revenue alternatives. Two industry consulting firms will be
working with the joint task force.

Breda does not believe that any increase in intra-state access rates will be
recommended by the joint task force, and that, at best, intra-state access rates
will stay the same. It is also possible, however, that intra-state access rates
will be lowered, and if that occurs, it will have a negative impact on Breda's
operating income. Breda does not believe, however, that it is possible to
predict at this time whether intra-state access rates will be lowered, or if
intra-state access rates are lowered, the amount of the decrease in those


                                       26
<PAGE>

rates. It is therefore uncertain at this time whether this issue will result in
an adverse effect on Breda's operating income.

Another industry issue that could have future, significant ramifications for
Breda and its subsidiaries is local number portability requirements. Presently,
carriers such as Breda must make number portability available within six months
of a request from another carrier if they are a wireline carrier and located in
one of the largest 100 Metropolitan Statistical Areas. Breda is able to meet
this requirement.

The FCC has, however, also mandated that all wireless carriers must implement
wireless local number portability by November 24, 2003, and that all networks
must also accommodate wireless-wireline local number portability. The cellular
industry has been unsuccessful to date in court appeals and in FCC actions in
seeking to delay the implementation of wireless local number portability by
November 24, 2003. National telecom associations have asked the FCC to clarify
that a wireless service provider must have an interconnection agreement in place
with the local telephone company before requesting local number portability and
that a number cannot be ported outside of a rural carrier's rate center. The FCC
has yet to rule on those requests for clarification, and it is not clear whether
local exchange carriers will be required to port numbers in those circumstances.

Breda is unable to determine at this time the potential number of requests Breda
might receive for wireless local number portability or otherwise what impact the
FCC's mandate will have on Breda's customer base, but Breda is continuing to
work with others in the industry to determine its responsibilities regarding
this issue and the potential effects on Breda. Breda has already received
requests for local number portability from wireless carriers in Breda's wireline
service areas, but given that the regulatory requirements surrounding this issue
are not yet resolved, Breda believes that these requests are not valid requests
and has responded accordingly.

Breda's primary ongoing capital investment activity will currently continue to
be additions to property, plant and equipment. Breda's capital requirements to
start up BTC, Inc.'s competitive local exchange carrier project in Carroll, Iowa
is estimated to be less than $300,000 and will be funded internally. Breda will
incur renovation costs for the building BTC, Inc. purchased in Carroll, Iowa,
but those costs are not expected to be material. Capital expenditures for 2002
were $754,895, and are currently expected to be approximately $877,350 in 2003.

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.


                                       27
<PAGE>

Cautionary Statement on Forward Looking Statements

This item and other items in this quarterly report are or 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 financial results and condition, anticipated future
trends in business, revenues or net income, projections concerning operations
and cash flow, business and growth and acquisition opportunities and strategies,
management's plans and intentions for the future, competitive position, and
other forecasts, projections and statements of expectation. Words such as
"expects," "estimates," "plans," "will," "anticipates," "contemplates,"
"forecasts," "predicts," "projects," "prospects," "possible," "hopeful,"
"intends," "believes," "seeks," "should," "thinks," "objectives" and other
similar expressions or variations thereof identify forward looking statements.
Forward looking statements are made based on numerous and varied 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
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
factors, risks and uncertainties, some that are known and some that are not, and
nearly all of which are beyond the control of Breda and its management. It is
not possible to predict or identify all such factors, risks and uncertainties,
but some of the factors, risks and uncertainties 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 or
            to the rules and other requirements regarding access charge rates or
            access charges, whether instituted by the applicable regulatory
            authorities or at the request or by reason of court or other actions
            taken by long distance carriers or other interested persons;

      o     technological advances in the telecommunications, cable and related
            industries, which are always occurring and at an ever increasing
            rate, and any one or more of which may replace or otherwise
            adversely affect in a material way the existing technologies
            utilized by Breda and its subsidiaries;

      o     changes in employee relations, including the loss of a key employee
            or employees;

      o     industry conditions and occurrences, including bankruptcies and
            insolvencies of long distance carriers (such as Global Crossing and
            Worldcom), and consolidations in the telecommunications, cable and


                                       28
<PAGE>

            related industries, which may result in competitors which are larger
            and better financed and with greater geographic reach, allowing them
            to compete more effectively;

      o     economic conditions at the national, regional and local levels,
            which are always somewhat uncertain given that so many different
            factors and occurrences affect the economy;

      o     political conditions at the international, national, regional and
            local levels, including threats and/or acts of terrorism or war, all
            of which were highly uncertain at the time of the preparation of
            this report;

      o     the general emotions and psychology of the economy, the markets and
            consumers, which can at times be totally unrelated to actual
            economic or market conditions or other more tangible factors;

      o     litigation;

      o     inaccurate assumptions or predictions by management;

      o     the ability to enter into and maintain agreements which are
            necessary to provide services, and on favorable terms;

      o     ever increasing costs and expenses which are necessary to Breda's
            and its subsidiaries' businesses but which are outside of Breda's
            control, such as health and other insurance costs;

      o     acts or omissions of existing and/or new competitors and other third
            parties, including offering lower prices or new or substitute
            products or services and their use of new marketing strategies and
            approaches or new third parties entering into Breda's or its
            subsidiaries' marketing or service areas;

      o     the risks associated with technological requirements, technology
            substitution and changes and other technological developments;

      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, cable and related industries, and
            in particular programs which aid providers of those services to
            rural areas;

      o     the availability and cost of financing, and on favorable terms, and
            the consequences of increased leverage; and


                                       29
<PAGE>

      o     the effects of ever increasing and ever changing competition and
            relationships with other carriers and other parties, including
            competition or relationships which require Breda or its subsidiaries
            to develop new pricing for services such as interexchange access
            charges and wireless access charges or new marketing strategies or
            new product offerings, and the related risk that Breda or its
            subsidiaries will not be able to respond on a timely or profitable
            basis to competitive changes and pressures.

      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.

Item 3. Controls and Procedures.

      The principal executive officer and principal financial officer of Breda
      have evaluated the effectiveness of the design and operation of Breda's
      disclosure controls and procedures as of the end of the period covered by
      this quarterly report, and they have concluded that the disclosure
      controls and procedures have been effective for the purposes for which
      they are intended.

      No change in Breda's internal control over financial reporting occurred
      during the period covered by this quarterly report that has materially
      affected, or is reasonably likely to materially affect, Breda's internal
      control over financial reporting.

                           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 for any routine litigation, if
      any, 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 April 1, 2003
      through June 30, 2003.

      Breda did not issue any shares of its common stock during the period of
      April 1, 2003 through June 30, 2003. As discussed in Item 5 below, Breda
      did redeem some shares of its common stock during the period of April 1,
      2003 through June 30, 2003.


                                       30
<PAGE>

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 April 1, 2003 through June 30, 2003.

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

      The annual meeting of the shareholders of Breda was held on May 20, 2003.
      The only matters voted upon by the shareholders at the annual meeting were
      the election of three directors for Breda and the ratification of the
      appointment of Breda's auditors for the year 2003.

      Breda's board of directors consists of seven members, divided into three
      classes based upon the length of their term. Each member of the board of
      directors is elected to a three year term and until his or her successor
      is elected, and the terms of office of the directors are staggered so that
      three of the directors' terms expire in one year, two expire the next
      year, and two expire the following year.

      The terms of three of Breda's directors expired at the 2003 annual meeting
      of the shareholders of Breda. The directors whose terms expired at the
      annual meeting were Roger Nieland, Dean Schettler and John Wenck.

      There were three nominees for the three director positions to be filled at
      the 2003 annual meeting of the shareholders. The nominees were Roger
      Nieland, Dean Schettler and John Wenck.

      Roger Nieland, Dean Schettler and John Wenck were elected to serve as
      directors of Breda until the annual meeting of the shareholders of Breda
      to be held in the year 2006.

      The number of votes cast for, against or withheld, and the number of
      abstentions and broker non-votes, with respect to the three nominees for
      election as a director of Breda was as follows:

                                            Against                      Broker
      Name                      For      or Withheld     Abstentions   Non-Votes
      ----                      ---      -----------     -----------   ---------

      Roger Nieland             161           --              --          --
      Dean Schettler            164           --              --          --
      John Wenck                175           --              --          --

      The other directors whose term of office as a director continued after the
      annual meeting of the shareholders are the following individuals:


                                       31
<PAGE>

                       David Grabner            Clifford Neumayer
                       Larry Daniel             Charles Thatcher

      Roger Nieland passed away unexpectedly on July 8, 2003. Breda's board of
      directors has the authority to fill vacancies in the board of directors,
      and Breda anticipates that the vacancy created by Mr. Nieland's death will
      be filled by the board of directors at its August, 2003 meeting by the
      board of directors electing Rick Anthofer to serve as a director until the
      annual meeting of the shareholders held in 2004, at which time the
      shareholders will elect a director to serve for the remainder of the three
      year term that would have otherwise been served by Mr. Nieland.

      The only other matter voted upon by the shareholders at the annual meeting
      was the ratification of Kiesling Associates, LLP as Breda's auditors for
      the year 2003. The number of votes cast for, against or withheld, and the
      number of abstentions and broker non-votes, regarding this matter was as
      follows:

             For     Against or Withheld      Abstentions      Broker Non-Votes
             ---     -------------------      -----------      ----------------
             147              3                     54                --

Item 5. Other Information.

      During the period of April 1, 2003 through June 30, 2003, Breda redeemed
      719 shares of its common stock from six different shareholders at $303.00
      per share, for a total amount of $217,857. The $303.00 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 20, 2003
      annual meeting of the shareholders of Breda.

      There were two transfers of shares of Breda's common stock during the
      period of April 1, 2003 through June 30, 2003 with respect to which Breda
      did not exercise its right of first refusal to purchase those shares. The
      transfers involved an aggregate of four shares of Breda's common stock and
      two different shareholders.

      Breda's board of directors determines the purchase price payable for newly
      issued shares of Breda's common stock. Breda's board of directors also
      determines the redemption price that will be paid by Breda if Breda elects
      to redeem a shareholder's shares in any of the circumstances in which
      Breda has the right to purchase those shares. The board of directors has
      historically established the issuance price and the redemption price at
      approximately 75% of the book value of Breda. The board of directors has
      historically made this determination in March, April or May of each year,
      based upon Breda's then most recent year-end audited financial statements.
      Breda's fiscal year ends on December 31. The price is then generally
      announced and becomes effective at the annual shareholders meeting for
      that year. The issuance price and the redemption price as so determined by
      the board of directors then generally applies until the board of


                                       32
<PAGE>

      directors makes a new determination and announces the new price at the
      next annual shareholders meeting. The board of directors followed those
      historical practices and announced a new issuance price and redemption
      price of $303.00 per share at the May 20, 2003 annual meeting of the
      shareholders. The board of directors currently intends to continue to
      address this issue on an annual basis consistent with the above described
      historical practices of the board of directors. The board of directors
      has, however, departed from the above described historical practices from
      time to time in the past, and the board of directors may determine to
      again depart from those historical practices from time to time in the
      future.

      Breda entered into new employment agreements with Robert Boeckman and with
      Jane Morlok on July 1, 2003. The employment agreements were materially
      similar to Breda's prior employment agreements with Mr. Boeckman and with
      Ms. Morlok, with the exceptions that the new employment agreements
      included salary and bonus increases for both Mr. Boeckman and Ms. Morlok
      and are for a three year term (running from January 1, 2003), as opposed
      to the one year term that applied under the prior employment agreements.
      The salary adjustments under the new employment agreements were made
      retroactive to January 1, 2003.

      Roger Nieland, one of Breda's directors, passed away unexpectedly on July
      8, 2003. Breda's board of directors has the authority to fill vacancies in
      the board of directors, and Breda anticipates that the vacancy created by
      Mr. Nieland's death will be filled by the board of directors at its
      August, 2003 meeting by the board of directors electing Rick Anthofer to
      serve as a director until the annual meeting of the shareholders held in
      2004, at which time the shareholders will elect a director to serve for
      the remainder of the three year term that would have otherwise been served
      by Mr. Nieland.

      Mr. Anthofer has been the vice president of Breda Savings Bank, Breda,
      Iowa, since approximately September 15, 1999. He was an agricultural and
      commercial loan officer and an assistant vice president at Carroll County
      State Bank in Carroll, Iowa for approximately thirteen years prior to that
      time. Mr. Anthofer has also been a member of the Breda, Iowa City Council
      since 1988. Mr. Anthofer is 47 years old. Mr. Anthofer was a nominee for
      director of Breda in 2001.

      Clifford Neumayer was elected as the president of Breda, and Dean
      Schettler was elected as the vice president of Breda, at the June 9, 2003
      meeting of the board of directors. Mr. Neumayer had previously been the
      vice president of Breda, and Mr. Schettler had previously been the
      president of Breda. Breda does not believe that the change in offices was
      a material event given, among other things, that the day-to-day business
      of Breda is conducted and managed by Mr. Boeckman and Ms. Morlok, and it
      is not contemplated that the change in offices will have any material
      effect on, or result in any material change in, the management or the
      business or affairs of Breda or any of its subsidiaries.


                                       33
<PAGE>

      Effective as of June 1, 2003, each director will receive an additional
      $25.00 per meeting for each meeting of the board of directors. The
      increase also results in an increase in the amount received by directors
      for each outside meeting which lasts less than three hours, because the
      directors receive one-half of their regular meeting rate for such outside
      meetings. Outside meetings are not formal meetings of the board of
      directors, and examples of outside meetings include conventions and city
      council meetings. The directors also became entitled to receive local
      telephone service from Breda or its subsidiaries at no cost, effective as
      of June 1, 2003. The current estimated yearly value of local telephone
      service is $222.

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
            April 1, 2003 through June 30, 2003.

               [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


                                       34
<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: August 12, 2003.                By: /s/ Robert Boeckman
                                          --------------------------------------
                                          Robert Boeckman, Chief Operations
                                          Officer and Co-Chief Executive Officer


Date: August 12, 2003.                By: /s/ Jane Morlok
                                          --------------------------------------
                                          Jane Morlok, Chief Financial Officer
                                          and Co-Chief Executive officer


                                       35
<PAGE>

                                  EXHIBIT INDEX
                             Exhibits to Form 10-QSB
                        Three Months Ended June 30, 2003
                              BREDA TELEPHONE CORP.

Description of Exhibit                                                      Page

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.)

*10.  Material Contracts

      10.1  Employment Agreement dated July 1, 2003 between Breda            E-1
            and Robert Boeckman.

      10.2  Employment Agreement dated July 1, 2003 between Breda            E-7
            and Jane Morlok.

*31.  Rule 13a-14(a)/15d-14(a) Certifications

      31.1  Rule 13a-14(a) Certification of Chief Operations Officer        E-13
            and Co-Chief Executive Officer

      31.2  Rule 13a-14(a) Certification of Chief Financial Officer         E-14
            and Co-Chief Executive Officer

*32.  Section 1350 Certifications

      32.1  Section 1350 Certification of Chief Operations                  E-15
            Officer and Co-Chief Executive Officer.

      32.2  Section 1350 Certification of Chief Financial Officer           E-16
            and Co-Chief Executive Officer.

*Included with this filing.