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

                                   FORM 10-QSB

(Mark One)

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

                              For the quarterly period ended September 30, 2000.

[_]  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                         (IRS Employer
 of incorporation or organization)                    Identification No.)

                Highway 217 East, 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: 37,243 shares of common stock,
no par value, at September 30, 2000.

     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
                              FINANCIAL STATEMENTS
                                 For the Periods
                        Ended September 30, 2000 and 1999
                      and the Year Ended December 31, 1999

<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA



                                    Contents
                                    --------
                                                                         Page

Unaudited Condensed Consolidated Financial Statements:

     Balance Sheets                                                     3 - 4

     Statements of Income                                                 5

     Statements of Stockholders' Equity                                   6

     Statements of Cash Flows                                             7

     Notes to Unaudited Condensed Consolidated Financial
       Statements                                                       8 - 10


                                      -2-
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                         September 30,
                                                              2000        December 31,
     ASSETS                                               (Unaudited)         1999
     ------                                               -----------     -----------
<S>                                                       <C>             <C>
CURRENT ASSETS
     Cash and cash equivalents                            $ 1,807,582     $   411,341
     Current portion of investments                           114,872          94,810
     Accounts receivable                                      788,712         681,675
     Income taxes refundable                                       --         542,330
     Interest receivable                                       74,981          67,580
     Inventories                                              108,515          88,479
     Other                                                     86,988          77,527
                                                          -----------     -----------
                                                            2,981,650       1,963,742
                                                          -----------     -----------


OTHER NONCURRENT ASSETS
     Investments, less current portion                      4,544,321       4,417,624
     Other investments                                      2,476,811       2,725,488
     Intangibles, net of accumulated amortization           1,153,446       1,222,372
     Deferred income taxes                                         --          11,360
                                                          -----------     -----------
                                                            8,174,578       8,376,844
                                                          -----------     -----------


PROPERTY AND EQUIPMENT, NET                                 6,163,772       6,340,193
                                                          -----------     -----------


TOTAL ASSETS                                              $17,320,000     $16,680,779
                                                          ===========     ===========
</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 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                    September 30,
                                                                                         2000           December 31,
     LIABILITIES AND STOCKHOLDERS' EQUITY                                            (Unaudited)             1999
     ------------------------------------                                            -----------         -----------
<S>                                                                                  <C>                 <C>
CURRENT LIABILITIES
     Current portion of long-term debt                                               $   218,759         $   608,412
     Accounts payable                                                                    231,854             239,787
     Accrued taxes                                                                       167,108             125,643
     Other                                                                               179,295             104,258
                                                                                     -----------         -----------
                                                                                         797,016           1,078,100
                                                                                     -----------         -----------


LONG-TERM DEBT, less current portion                                                   4,098,564           6,547,930
                                                                                     -----------         -----------


DEFERRED CREDITS                                                                          26,331                  --
                                                                                     -----------         -----------


STOCKHOLDERS' EQUITY
     Common stock - no par value, 5,000,000 shares authorized and 37,243 and
         37,682 shares issued and outstanding at $235 and $149
         stated value, respectively                                                    8,752,105           5,614,618
     Retained earnings                                                                 3,645,984           3,440,131
                                                                                     -----------         -----------
                                                                                      12,398,089           9,054,749
                                                                                     -----------         -----------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                           $17,320,000         $16,680,779
                                                                                     ===========         ===========
</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 INCOME
         For the Three and Nine Months Ended September 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                                 For the Three Months Ended             For the Nine Months Ended
                                                                   2000               1999               2000               1999
                                                               -----------        -----------        -----------        -----------
<S>                                                            <C>                <C>                <C>                <C>
OPERATING REVENUES
     Local network services                                    $   141,585        $   126,120        $   421,264        $   367,498
     Network access services                                       673,513            549,890          1,819,929          1,729,845
     Cable television services                                     262,173            267,613            791,881            791,556
     Telemarketing services                                         78,040            106,030            205,408            326,951
     Internet services                                             166,299            103,008            471,422            284,841
     Billing and collection services                                22,621             15,711             65,799             59,217
     Miscellaneous                                                 221,386            110,278            644,579            425,690
                                                               -----------        -----------        -----------        -----------
                                                                 1,565,617          1,278,650          4,420,282          3,985,598
                                                               -----------        -----------        -----------        -----------

OPERATING EXPENSES
     Plant specific operations                                     451,219            329,616          1,337,898            957,116
     Plant nonspecific operations                                   23,497             21,865             75,522             67,179
     Cost of programming                                            78,547             45,330            225,910            180,581
     Depreciation and amortization                                 285,476            263,918            815,160            746,625
     Customer operations                                           187,138            175,676            581,627            528,153
     Corporate operations                                          205,443            183,627            735,882            648,735
     General taxes                                                  52,406             49,411            120,522            114,240
                                                               -----------        -----------        -----------        -----------
                                                                 1,283,726          1,069,443          3,892,521          3,242,629
                                                               -----------        -----------        -----------        -----------

OPERATING INCOME                                                   281,891            209,207            527,761            742,969
                                                               -----------        -----------        -----------        -----------

NON-OPERATING INCOME (EXPENSE)
     Interest and dividend income                                  105,618             74,004            263,956            287,792
     Interest expense                                             (118,166)          (127,072)          (381,799)          (374,866)
     Loss on sale of investments                                      (375)           (35,304)            (3,183)           (41,423)
     Gain on sale of DBS investment                                     --                 --                 --          7,436,415
     Gain on sale of cellular investment                           117,755                 --          5,018,714                 --
     Income from cellular partnerships                             349,440                 --            432,775                 --
     Income from Alpine partnership                                     --                 --             23,508                 --
     Other                                                          (1,520)            (1,547)             2,602            (21,795)
                                                               -----------        -----------        -----------        -----------
                                                                   452,752            (89,919)         5,356,573          7,286,123
                                                               -----------        -----------        -----------        -----------

INCOME BEFORE INCOME TAXES                                         734,643            119,288          5,884,334          8,029,092
                                                               -----------        -----------        -----------        -----------

INCOME TAXES                                                       319,974             40,845          2,324,783          3,008,258
                                                               -----------        -----------        -----------        -----------

NET INCOME                                                     $   414,669        $    78,443        $ 3,559,551        $ 5,020,834
                                                               ===========        ===========        ===========        ===========

NET INCOME PER SHARE (Note 3)                                  $     11.09        $      2.08        $     94.69        $    133.10
                                                               ===========        ===========        ===========        ===========
</TABLE>

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


                                      -5-
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                          Common Stock                   Retained
                                                  Shares               Amount             Earnings               Total
                                               -----------          -----------          -----------          -----------
<S>                                                 <C>             <C>                  <C>                  <C>
Balance at December 31, 1998                        37,722          $ 2,414,208          $ 1,693,818          $ 4,108,026

    Total comprehensive income:
        Net income                                                                         5,065,849            5,065,849

    Dividends paid                                                                          (113,166)            (113,166)

    Common stock redeemed, net                         (40)              (5,960)                                   (5,960)

    Stock value adjustment                                            3,206,370           (3,206,370)
                                               -----------          -----------          -----------          -----------

Balance at December 31, 1999                        37,682            5,614,618            3,440,131            9,054,749

    Total comprehensive income:
        Net income                                                                         3,559,551            3,559,551

    Dividends paid                                                                          (113,046)            (113,046)

    Common stock redeemed, net                        (439)            (103,165)                                 (103,165)

    Stock value adjustment                                            3,240,652           (3,240,652)
                                               -----------          -----------          -----------          -----------

Balance at September 30, 2000                       37,243          $ 8,752,105          $ 3,645,984          $12,398,089
                                               ===========          ===========          ===========          ===========
</TABLE>

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


                                      -6-
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Nine Months Ended September 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                                               2000               1999
                                                                           -----------        -----------
<S>                                                                        <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                            $ 3,559,551        $ 5,020,834
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Depreciation and amortization                                         815,160            746,625
         Amortization of investment tax credits                                 (7,327)            (7,327)
         Deferred income taxes                                                  37,691            (52,093)
         Gain on sale of DBS investment                                             --         (7,436,415)
         Gain on sale of cellular investment                                (5,018,714)                --
         Changes in operating assets and liabilities:
              Decrease in assets                                               398,394             31,442
              Increase (decrease) in liabilities                               108,569           (221,547)
                                                                           -----------        -----------
         Net cash used in operating activities                                (106,676)        (1,918,481)
                                                                           -----------        -----------


CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                     (562,485)          (923,714)
     Cost of removing plant, net of salvage                                         --             10,677
     Purchase of investments                                                  (287,201)        (6,003,790)
     Sale of investments                                                       140,442          1,969,677
     (Increase) decrease in other investments                                   41,357           (104,231)
     Proceeds from sale of DBS investment                                           --          8,038,197
     Proceeds from sale of cellular investment                               5,226,034                 --
                                                                           -----------        -----------
         Net cash provided by investing activities                           4,558,147          2,986,816
                                                                           -----------        -----------


CASH FLOWS FROM FINANCING ACTIVITIES
     Common stock redeemed, net                                               (103,165)                --
     Repayment of line of credit                                                    --           (750,000)
     Repayment of long-term debt                                            (2,839,019)          (438,360)
     Dividends paid                                                           (113,046)          (113,166)
                                                                           -----------        -----------
         Net cash used in financing activities                              (3,055,230)        (1,301,526)
                                                                           -----------        -----------


NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                                                1,396,241           (233,191)
                                                                           -----------        -----------


CASH AND CASH EQUIVALENTS AT BEGINNING OF
  PERIOD                                                                       411,341            782,959
                                                                           -----------        -----------


CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 $ 1,807,582        $   549,768
                                                                           ===========        ===========


SUPPLEMENTAL DISCLOSURES OF CASH
  FLOW INFORMATION
     Cash paid during the year for:
         Interest                                                          $   381,799        $   374,866
         Income taxes                                                      $ 1,700,000        $ 2,990,528
</TABLE>

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


                                      -7-
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     In  the  opinion  of  management,   the  accompanying  unaudited  condensed
     consolidated  financial  statements contain all adjustments  (consisting of
     only normal  recurring  items)  necessary to present  fairly the  financial
     position as of September  30, 2000 and December 31, 1999 and the results of
     operations  for the three months and nine months ended  September  30, 2000
     and 1999 and change in cash flows for the nine months ended  September  30,
     2000 and 1999.

     Certain  information and footnote  disclosures  normally included in annual
     financial   statements  prepared  in  accordance  with  generally  accepted
     accounting  principles 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, 1999
     audited  financial  statements.  The results of  operations  for the period
     ending  September 30, 2000 are not necessarily  indicative of the operating
     results of the entire year.

NOTE 2. OPERATING SEGMENTS

     Breda  Telephone  Corporation  organizes its business  into two  reportable
     segments: local exchange carrier (LEC) services and broadcast services. The
     LEC services segment  provides  telephone and data services to customers in
     local  exchanges  located in central Iowa. The broadcast  services  segment
     provides  cable  television  to  customers  in  Iowa  and  Nebraska.  Breda
     Telephone  Corporation  also has  operations in internet and  telemarketing
     services  that do not  meet  the  quantitative  thresholds  for  reportable
     segments.

<TABLE>
<CAPTION>
                                                          Local
                                                        Exchange
                                                        Carriers         Broadcast           Other             Total
                                                       -----------      -----------       -----------       -----------
<S>                                                    <C>              <C>               <C>               <C>
     Nine months ended September 30, 2000
     ------------------------------------
     Revenues and sales
            External customers                         $ 2,951,571      $   791,881       $   676,830       $ 4,420,282
            Intersegment                                        --               --                --                --
     Segment profit (loss)                               3,692,210          (83,866)          (48,793)        3,559,551

     Nine months ended September 30, 1999
     ------------------------------------
     Revenues and sales
             External customers                        $ 2,582,250      $   791,556       $   611,792       $ 3,985,598
             Intersegment                                       --               --                --                --
     Segment profit (loss)                                 377,985        4,630,223            12,626         5,020,834
</TABLE>


                                      -8-
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2. OPERATING SEGMENTS, (Continued)

<TABLE>
<CAPTION>
                                                               Local
                                                             Exchange
                                                             Carriers         Broadcast          Other            Total
                                                            -----------      -----------      -----------      -----------
<S>                                                         <C>              <C>              <C>              <C>
     Three months ended September 30, 2000
     -------------------------------------
     Revenues and sales
           External customers                               $ 1,059,105      $   262,173      $   244,339      $ 1,565,617
           Intersegment                                              --               --               --               --
     Segment profit (loss)                                      465,923          (18,638)         (32,616)         414,669

     Three months ended September 30, 1999
     -------------------------------------
     Revenues and sales
           External customers                               $   801,999      $   267,613      $   209,038      $ 1,278,650
           Intersegment                                              --               --               --               --
     Segment profit (loss)                                       49,782            8,890           19,771           78,443

<CAPTION>
       Reconciliation of Segment Information                     Three months ended               Nine months ended
       -------------------------------------                        September 30,                    September 30,
                                                                2000             1999             2000             1999
                                                            -----------      -----------      -----------      -----------
<S>                                                         <C>              <C>              <C>              <C>
     REVENUES AND SALES:
          Total revenues and sales for reportable
          segments                                          $ 1,321,278      $ 1,069,612      $ 3,743,452      $ 3,373,806
          Other revenues                                        244,339          209,038          676,830          611,792
          Elimination of intersegment revenues
            and sales                                                --               --               --               --
                                                            -----------      -----------      -----------      -----------
              Consolidated Revenues                         $ 1,565,617      $ 1,278,650      $ 4,420,282      $ 3,985,598
                                                            ===========      ===========      ===========      ===========

     PROFIT:
          Total profit for reportable segments              $   447,285      $    58,672      $ 3,608,344      $ 5,008,208
          Other profit (loss)                                   (32,616)          19,771          (48,793)          12,626
          Non-operating segment                                      --               --               --               --
          Minority interest                                          --               --               --               --
                                                            -----------      -----------      -----------      -----------
              Net Income                                    $   414,669      $    78,443      $ 3,559,551      $ 5,020,834
                                                            ===========      ===========      ===========      ===========
</TABLE>


                                      -9-
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3. NET INCOME PER COMMON STOCK

     Net income per common share for September 30, 2000 and 1999 was computed by
     dividing the weighted average number of shares of common stock  outstanding
     into the net income.  The weighted average number of shares of common stock
     outstanding  for the three and nine  months  ended  September  30, 2000 are
     37,408 and 37,591,  respectively.  For both the three and nine months ended
     September 30, 1999,  the weighted  average number of shares of common stock
     outstanding were 37,722.

NOTE 4. DISPOSITION OF CELLULAR AND DBS INVESTMENTS

     On May 12,  2000,  the  Company  sold all of their  outstanding  shares  of
     Central Iowa Cellular, Inc. (CIC). The Company received cash of $5,108,279,
     which  included  the  majority  of the  Company's  share of the  Tower  Net
     Proceeds.  The  transaction  resulted  in a gain of  $4,900,959,  which was
     included in  operations  during the second  quarter of 2000.  During  third
     quarter 2000, certain events occurred which made final certain terms of the
     sale  resulting  in the receipt of  $117,755,  which was  classified  as an
     additional  gain on the sale of the  cellular  investment.  In  total,  the
     completed  transaction  amounted  to  cash  received  of  $5,226,034  and a
     recorded gain on the sale of $5,018,714.

     On January 11, 1999, the Company sold  substantially  all of its assets and
     liabilities related to the Direct Broadcast Satellite (DBS) investment. The
     Company received cash of $8,038,197 and the transaction  resulted in a gain
     of $7,436,415, which was included in operations during the first quarter of
     1999.

NOTE 5. RECLASSIFICATIONS

     Certain  reclassifications  have been made to the 1999 financial statements
     to conform with the 2000 presentation.


                                      -10-
<PAGE>

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

     Nine  Months  Ended  September  30,  2000  compared  to Nine  Months  ended
     September 30, 1999.

     There was an increase in total operating revenues for the nine-month period
     ended  September  30, 2000,  when  compared to the same period in 1999,  of
     $434,684, or 10.9%.

     Local  network  services  revenue  increased  $53,766,  or  14.6%,  for the
     nine-month  period  ended  September  30, 2000,  when  compared to the same
     period in 1999. Approximately $20,076 of the $53,766 increase was caused by
     additional  revenue generated by the addition of calling features as switch
     conversions  were completed in 1999. The remaining  increase  resulted from
     the  addition of 116  telephone  customers  and the effect of having a full
     nine months of the rate increase implemented April 1, 1999, recorded in the
     nine-month  period  ended  September  30,  2000.   Network  access  revenue
     increased  $90,084,  or 5.2%,  when comparing the  nine-month  period ended
     September 30, 2000, to the nine-month period ended September 30, 1999. This
     increase was due to additional  lines and  facilities in the Yale telephone
     exchange  now being  eligible  for NECA pool  reimbursements,  and  because
     Breda, Prairie Telephone Company,  Inc. and Westside Independent  Telephone
     Company had a retroactive one-time adjustment to estimated SS7 connectivity
     revenues.

     Cable  television   services   revenues  were  static  when  comparing  the
     nine-month  period ended September 30, 2000, to the nine-month period ended
     September 30, 1999.

     Telemarketing services revenue decreased $121,543, or 37.2%, when comparing
     the period  ended  September  30,  2000,  to the same  period in 1999.  The
     decrease  is  attributable  to the  decline in the volume of  telemarketing
     calls made by Breda's subsidiary,  Pacific Junction  Telemarketing  Center,
     Inc. The decline in the volume of  telemarketing  calls is  attributable to
     Pacific Junction  Telemarketing  Center,  Inc. receiving less telemarketing
     leads from the company  Pacific  Junction  Telemarketing  Center,  Inc. has
     contracted with to provide it with  telemarketing  leads,  which is Results
     Telemarketing,   Inc.  Pacific  Junction   Telemarketing  Center,  Inc.  is
     considering licensing some of its telemarketing  representatives as a means
     to increase the availability of calling numbers, because some telemarketing
     programs require a licensed agent. Pacific Junction  Telemarketing  Center,
     Inc.  also  continues  to  seek   supplemental   programs  to  augment  the
     telemarketing leads provided by Results Telemarketing, Inc.


                                      -11-
<PAGE>

     There was an increase in Internet  services for the nine-month period ended
     September 30, 2000,  when compared to the same period in 1999, of $186,581,
     or 65.5%.  This  increase was due to an increase in the customer base of an
     additional 738 Internet  lines,  which was a 49.9% increase in lines,  when
     comparing the two nine-month periods.

     Another significant component of the overall operating revenue increase was
     an increase of $218,889,  or 51.4%, in miscellaneous revenue when comparing
     the nine-month  period ended September 30, 2000, with the nine-month period
     ended  September  30,  1999.  The  increase  in  miscellaneous  revenue was
     primarily the result of increased cellular service commissions.

     There was an increase in total operating expenses of $649,892,  or 20%, for
     the  nine-month  period  ended  September  30, 2000,  when  compared to the
     nine-month  period ended  September 30, 1999.  All of the components of the
     operating expenses increased when comparing the two nine-month periods.

     There was a  $380,782,  or 39.8%,  increase  in plant  specific  operations
     expense when comparing the nine-month  period ended  September 30, 2000, to
     the nine-month period ended September 30, 1999. Of this $380,782  increase,
     approximately  $109,091 was additional  facility operating  expenditures to
     support the increase of the 738 new Internet  customers,  $56,631 was cable
     TV  generated   expenses  for  head-end  equipment  and  underground  cable
     maintenance performed during the summer months, and approximately  $187,500
     was  additional  cellular  operating   expenses,   such  as  inventory  and
     advertising expenses.

     Plant  nonspecific  operating  expense  increased $8,343, or 12.4%, for the
     nine-month period ended September 30, 2000, when compared to the nine-month
     period ended  September 30, 1999. The increase was  attributable  mainly to
     additional furnishings,  office supplies and expenditures to outfit Breda's
     retail outlet in Carroll, Iowa, which opened in April 2000.

     There was a $45,329, or 25.1%, increase in programming expense for cable TV
     services when  comparing the  nine-month  period ended  September 30, 2000,
     with the  nine-month  period  ended  September  30, 1999.  The  programming
     increase  was the  result  of  programming  fee  increases  and the  timing
     differences of free programming promotion offers between the two nine-month
     time periods.

     Depreciation and amortization  expense increased $68,535,  or 9.2%, for the
     nine-month  period  ended  September  30, 2000,  when  compared to the same
     period in 1999. The switches in Breda's,  Prairie Telephone Company, Inc.'s
     and  Westside  Independent   Telephone  Company,   Inc.'s  seven  telephone
     exchanges were replaced  during 1998 and 1999. The nine-month  period ended
     September 30, 2000 reflected depreciation on all seven new switches,  while
     the time period ended  September  30,  1999,  only  reflected  partial year
     depreciation on the new switches that had been


                                      -12-
<PAGE>

     installed by that date.

     Customer  operations  expense for the nine-month period ended September 30,
     2000,  increased $53,474,  or 10.1%, when compared to the nine-month period
     ended  September 30, 1999.  The  telemarketing  services  customer  service
     expenses for labor,  supplies and telephone expense decreased,  however, by
     $60,895 during the nine-month  period ended September 30, 2000, as compared
     to the nine-month  period ended  September 30, 1999.  This decrease was due
     primarily  to the  decrease  in the number of  telemarketing  calls made by
     Pacific  Junction  Telemarketing  Center,  Inc.  Customer  service expenses
     increased  for all other  services  by  $114,369,  when  comparing  the two
     nine-month time periods.  Eight staff members have been added since October
     1999 for customer service assistance, computer and billing services, and to
     staff the  retail  store  that  opened in  Carroll,  Iowa on April 6, 2000.
     Salary  increases  also  became  effective  January  1,  2000.  A  software
     conversion  was also done for the cable TV system in the second  quarter of
     2000, and those conversion costs and related  consultant costs are included
     in the nine-month  period ended September 30, 2000. There also continues to
     be increased  customer  service  expense  generated  by increased  customer
     correspondence, newsletters, notification of cable channel line-up changes,
     area code prefix changes,  billing  procedure  changes and similar customer
     notifications.

     There was an increase of $87,147, or 13.4%, in corporate operations expense
     for the  nine-month  period ended  September  30, 2000,  as compared to the
     nine-month period ended September 30, 1999. This increase partially relates
     to  wage  increases  effective  January  1,  2000,  additional  information
     technology staff members, and legal, accounting and other expenses incurred
     with respect to Breda's continuing obligations as a reporting company under
     the Securities Exchange Act of 1934. The legal and accounting fees incurred
     during the nine-month  period ended  September 30, 2000,  included fees for
     the  preparation of Breda's proxy  statement,  and the annual report to the
     shareholders,  which were first-time expenses that were not incurred in the
     nine-month period ended September 30, 1999. First time consultant fees were
     also incurred during the nine-month period ended September 30, 2000 for new
     business venture research and for job descriptions,  organization structure
     work and personnel  evaluation  program work.  Other  corporate  operations
     expenses  incurred  during the nine-month  period ended September 30, 2000,
     were fees and  expenditures to investigate the use of trademarks and logos.
     Information  system  expenses also increased  during the nine-month  period
     ended  September  30, 2000,  when compared to the  nine-month  period ended
     September  30,  1999.  These  expenses  resulted  from work on software and
     hardware  upgrades and the resultant new operating lease  expenditures  for
     the additional  hardware needed to accommodate Breda's and its subsidiaries
     growth. Some hardware is now leased for the headquarters office,  satellite
     offices and the retail outlet.

     Non-operating  income  decreased  by  $1,929,550,   or  26.5%,  during  the
     nine-month  period  ended  September  30, 2000,  when  compared to the same
     period in 1999.


                                      -13-
<PAGE>

     One  factor  in this  decrease  was the  result of the  $7,436,415  gain on
     Breda's sale of the direct broadcast  satellite  operation in January 1999,
     and the  additional  interest  income on the funds invested from that sale.
     The proceeds of that one-time event are included for the nine-month  period
     ended  September  30, 1999.  On May 12, 2000,  however,  Prairie  Telephone
     Company,  Inc.  sold all of its shares of stock in Central  Iowa  Cellular,
     Inc. (CIC). This sale resulted in Prairie Telephone Company, Inc. receiving
     cash of  $5,226,034.  The gain on this sale of  $5,018,714  was included in
     non-operating income during the nine-month period ended September 30, 2000,
     and  there  was no  corresponding  entry for the  nine-month  period  ended
     September 30, 1999.  The  difference in the net gain on these two events in
     the two comparable  nine-month periods accounted for a $2,417,701  decrease
     in non-operating income for the nine-month period ended September 30, 2000,
     when compared to the nine-month period ended September 1999.

     There was also  income  from  cellular  partnerships  of  $432,775,  and of
     $23,508 from Alpine  Communications,  L.C.,  during the  nine-month  period
     ended  September  30,  2000.  There were no  corresponding  proceeds in the
     nine-month period ended September 30, 1999.

     The  remaining  $31,868  net  decrease  in net  operating  income  for  the
     nine-month  period  ended  September  30,  2000,  as  compared  to the same
     nine-month  period in 1999,  resulted from a combination of factors.  There
     was additional  miscellaneous income of $24,397, as compared to the figures
     for the  nine-month  period  ended  September  30, 1999,  which  included a
     one-time $23,287 loss on the disposal of a switch. There was also, however,
     a $23,836  decrease in interest and dividend  income,  a $6,933 increase in
     interest  expense,  and a  $38,240  decrease  in the  loss  on the  sale of
     investments  for the  nine-month  period ended  September  30,  2000,  when
     compared to the same period in the prior year.

     Income taxes  decreased by $683,475,  or 22.7%,  for the nine-month  period
     ended  September 30, 2000,  when  compared to the same period in 1999.  The
     decrease resulted primarily from the difference in taxable gain on the sale
     of the CIC stock in May 2000,  versus  the  broadcast  satellite  operation
     taxable gain in January 1999.

     Net income decreased  $1,461,283 for the nine-month  period ended September
     30,  2000,  when  compared to the same  period in 1999.  The  decrease  was
     attributable   to  the  noted   decreases  in  net  operating   income  and
     non-operating income as well as the decrease in income taxes.

     Liquidity and Capital Resources at Year Ended 1999.

     Breda's  net  working  capital  was a positive  $885,642 as of the close of
     December 1999. This represents a $1,311,164 increase in net working capital
     from year-end 1998.


                                      -14-
<PAGE>

     Liquidity and Capital Resources at Nine Months Ended September 30, 2000.

     Breda's net working  capital was a positive  $2,184,634 as of September 30,
     2000. This represents an increase of $1,298,992 in net working capital from
     year-end  December 1999.  Cash and cash  equivalents  increased  $1,396,241
     during the nine-month period ended September 30, 2000, when compared to the
     year ended  December 31, 1999.  This increase  resulted  primarily from the
     partial  receipt  of  $5,108,279  from the sale of the CIC stock on May 12,
     2000,  and the  subsequent  pay  down of  variable  rate  (8.05%  - 8.2% at
     September 30, 2000) long term debt of $2,564,378 and corresponding interest
     of $56,978 to Rural  Telephone  Finance  Cooperative  on June 30,  2000 and
     September  30,  2000.  The CIC stock sale  proceeds  were also used to make
     federal  estimated tax payments of $1,300,000  during the nine-month period
     ended September 2000.

     With the pay-off of long term debt,  the current  portion of long-term debt
     decreased by $389,653 as of the close of September 30, 2000,  when compared
     to year-end  December 31, 1999.  Both accrued  taxes and other  liabilities
     showed an increase as of  September  30,  2000,  when  compared to year-end
     December 1999, and were the result of timing differences on accrued payroll
     and benefits.

     Three Months Ended  September  30, 2000  Compared to the Three Months Ended
     September 30, 1999.

     There was an  increase  in total  operating  revenues  for the  three-month
     period ended  September 30, 2000, when compared to the same period in 1999,
     of $286,967, or 22.4%.

     Operating revenue increases  resulted  primarily from three sources:  (i) a
     $123,623,  or 22.5%,  increase in network access services revenues,  (ii) a
     $63,291,  or 61.4%,  increase in  Internet  service  revenues,  and (iii) a
     $111,108,  or 100.8%,  increase  in  miscellaneous  revenue.  The  Internet
     services  revenue  increase was a direct  result of an  increased  customer
     base. The miscellaneous  revenue increase resulted from increased  cellular
     sales commissions received from U.S. Cellular because of increased cellular
     sales. Network access service revenue increased due to additional lines and
     facilities in the Yale telephone  exchange now being eligible for NECA pool
     reimbursements,  and because Breda,  Prairie  Telephone  Company,  Inc. and
     Westside   Independent   Telephone  Company  had  a  retroactive   one-time
     adjustment from NECA for SS7 connectivity.

     One  component  which  caused a decrease  in  operating  revenues,  was the
     decrease in the revenue from telemarketing services. Telemarketing revenues
     decreased  $27,990,  or 26.4%, when comparing the three-month  period ended
     September 30, 2000,  to the  three-month  period ended  September 30, 1999.
     This decrease in telemarketing  revenues continues the trend in the decline
     in the volume of telemarketing  calls made by Breda's  subsidiary,  Pacific
     Junction Telemarketing Center, Inc. Pacific Junction


                                      -15-
<PAGE>

     Telemarketing   Center,   Inc.  is   considering   licensing  some  of  its
     telemarketing  representatives  in order to increase  the  availability  of
     calling  numbers,  because some  telemarketing  programs require a licensed
     agent. Pacific Junction  Telemarketing  Center, Inc. also continues to seek
     supplemental  programs  to augment  the  telemarketing  leads  provided  by
     Results Marketing, Inc.

     There was an  increase in local  network  services  revenue of $15,465,  or
     12.3%,  during the  three-month  period  ended  September  30,  2000,  when
     compared to the same period in 1999.  The increase was due  primarily to an
     increase in customers  requesting a second line for Internet services,  and
     to calling  feature rate increases  that were  implemented as switches were
     replaced  during 1999.  The  three-month  period ended  September 30, 2000,
     reflects calling feature revenue from all the exchanges,  while the calling
     feature  revenue in the  three-month  period ended September 30, 1999, only
     reflects  calling feature rate increases for the telephone  exchanges where
     the switches had been replaced before that date.

     Cable  television  services  revenue  decreased  $5,440,  or  2%,  for  the
     three-month period ended September 30, 2000, as compared to the three-month
     period ended September 30, 1999. This decrease is believed to be the result
     of competition from satellite dish services.


     There was an  increase  in total  operating  expenses  for the  three-month
     period ended  September 30, 2000, when compared to the same period in 1999,
     of $214,283, or 20%.

     Plant specific expenses increased by $121,603, or 36.9%, when comparing the
     two  three-month  periods.  The  increase  was  partially  attributable  to
     increased  cellular  and Internet  expenses  incurred to operate the retail
     outlet which was opened in April 2000 in Carroll,  Iowa,  to sell  cellular
     and Internet  services.  Internet related  expenditures also increased when
     comparing  the  three-month   period  ended  September  30,  2000,  to  the
     three-month  period ended September 30, 1999,  because of the growth in the
     number of  Internet  customers.  Another  component  of the plant  specific
     expense increase resulted from increased wage and benefit costs for outside
     technicians  and  cellular/internet  personnel  which  became  effective in
     January  2000.  Costs to operate  the retail  outlet  are  included  in the
     three-month  period ended  September  30,  2000,  which would not have been
     applicable to the three-month period ended September 30, 1999.

     Plant  nonspecific  operations  expense  increased $1,632, or 7.5%, for the
     three-month   period  ended  September  30,  2000,  when  compared  to  the
     three-month  period ended September 30, 1999. The increase was attributable
     mainly to  additional  furnishings,  office  supplies and  expenditures  to
     outfit additional  office space at Breda's retail outlet in Carroll,  Iowa.
     Programming costs increased  $33,217,  or 73.3%, for the three-month period
     ended  September 30, 2000,  when compared to the  three-month  period ended
     September 30, 1999.  The increase was caused  partially by rate  increases,
     but was  mainly  the  result of timing  differences  in the  reporting  and
     recording of these costs.


                                      -16-
<PAGE>

     Depreciation  and  amortization   increased  $21,558,   or  8.2%,  for  the
     three-month  period ended  September  30, 2000,  when  compared to the same
     period in 1999.  This  increase  was mainly  due to all seven new  switches
     being depreciated  during the three-month  period ended September 30, 2000,
     while only the switches  that had been  replaced in 1998 and the first nine
     months of 1999 were included in the three-month  period ended September 30,
     1999.

     There were also additional  expenditures included in the three-month period
     ended September 30, 2000, for additional supplies required by the increased
     number of staff members.

     Customer  operations expense for the three-month period ended September 30,
     2000,  increased $11,462,  or 6.5%, when compared to the three-month period
     ended  September 30, 1999. The increase  results from wage and benefit rate
     increases  that were  effective  in  January  2000.  Another  factor in the
     increase was the addition of four  full-time  equivalents  to staff the new
     retail store in Carroll, Iowa, which opened in April 2000.

     There was an increase of $21,816, or 11.9%, in corporate operations expense
     for the  three-month  period ended  September  30, 2000, as compared to the
     three-month  period ended September 30, 1999.  This increase  resulted from
     salary increases  effective in January 2000, as well as consultant fees for
     new business venture research.  Information  system expenses also increased
     during the three-month  period ended September 30, 2000, as compared to the
     three-month  period ended September 30, 1999,  because of computer hardware
     operating leases and software consultant fees.

     Non-operating income increased by $542,671 for the three-month period ended
     September 30, 2000, as compared to the  three-month  period ended September
     30, 1999. On May 12, 2000, Prairie Telephone Company,  Inc. sold all of its
     shares of stock in CIC.  This sale resulted in Prairie  Telephone  Company,
     Inc. receiving a partial payment of $5,108,279 on May 12, 2000. The partial
     payment   resulted  in  a  gain  of  $4,900,959,   which  was  included  in
     non-operating  income  during the  three-month  period ended June 30, 2000.
     With the  occurrence  of certain  events in the third  quarter,  additional
     terms of the sale were finalized,  and on August 8, 2000, Prairie Telephone
     Company,  Inc.  received an  additional  payment in the amount of $117,755,
     which was  classified as additional  gain from the sale of the CIC stock in
     the three-month  period ended  September 30, 2000.  There was no comparable
     entry during the three-month period ended September 30, 1999.

     Other non-operating  income increases resulted from the receipt of $349,440
     from cellular  partnership  investments during the three-month period ended
     September  30,  2000,  for  which  there  was no  comparable  entry  in the
     three-month  period ended September 30, 1999.  Interest and dividend income
     increased $31,614, or 42.7%, for the three-month period ended September 30,
     2000, when compared to the three-month period ended September 30, 1999. The
     increase  mainly resulted from the temporary  increase in investments  from
     the cash  received  on the sale of the CIC stock


                                      -17-
<PAGE>

     until  some of those sale  proceeds  were used for long term debt pay down.
     Interest expense  decreased  $8,906,  or 7%, during the three-month  period
     ended  September  30, 2000,  when  compared to the same period in the prior
     year.  While  the  variable  interest  rate  increased  in the year 2000 as
     compared to 1999,  there was less principal  outstanding,  and two variable
     rate loans had been paid off as of June 30, 2000.

     Loss on the sale of  investments  decreased  $34,929,  or 99%,  during  the
     three-month  period ended  September  30, 2000,  when  compared to the same
     three-month  period in 1999.  This  decrease  is the  result of  investment
     redemption timing and the market value at the time of the redemption.

     Income taxes increased  $279,129 for the three-month period ended September
     30, 2000, as compared to the  three-month  period ended September 30, 1999.
     The increase is  attributable  to the increase in net operating  income and
     the increase in non-operating income as discussed above.

     Net income  increased  $336,226 for the three-month  period ended September
     30,  2000,  when  compared to the same  period in 1999.  The  increase  was
     attributable  to the  $72,684  increase  in net  operating  income  and the
     increase  in  non-operating  income,  which  included  the income  from the
     cellular partnership investments and the additional gain on the sale of the
     CIC stock.  There were no  comparable  entries  in the  three-month  period
     ending September 30, 1999.

     Other Activities.

     Breda's primary ongoing capital investment activity will currently continue
     to be additions  to  property,  plant and  equipment.  For  example,  Breda
     continues to make  investments in  state-of-the-art  technology in order to
     try to offer  subscribers the best possible service.  Capital  expenditures
     for 1999 were  $1,249,414,  and are currently  expected to be approximately
     $628,000 in 2000.

     Breda  anticipates that substantial  expenditures  will need to be made for
     software  upgrades that will become  necessary in order for Breda,  Prairie
     Telephone  Company,  Inc. and  Westside  Independent  Telephone  Company to
     become compliant with the requirements of the Communications Assistance for
     Law  Enforcement  Act  ("CALEA").  CALEA was passed in 1994 in  response to
     rapid advances in telecommunications technology, such as the implementation
     of digital  technology  and wireless  services,  that have  threatened  the
     ability  of law  enforcement  officials  to conduct  authorized  electronic
     surveillance.  CALEA requires  telecommunications  carriers to modify their
     equipment,  facilities, and services to ensure that they are able to comply
     with  authorized   electronic   surveillance.   These   modifications  were
     originally  scheduled to be  completed  by October 25, 1998,  but in accord
     with an extension granted by the FCC, were generally to have been completed
     by June 30, 2000. However, for wireline,  cellular,  and broadband personal
     communications service carriers, implementation of a packet-mode capability
     and six Department of Justice/Federal  Bureau of Investigation "punch list"
     capabilities were to have been completed by September 30, 2001.


                                      -18-
<PAGE>

     On June 5,  2000,  however,  the CALEA  Implementation  Section  of the FBI
     informed Breda that,  based on the information  provided in accordance with
     the  Flexible  Deployment  Assistance  Guide,  the FBI  supports a two-year
     extension of the June 30, 2000,  compliance date under section 107 of CALEA
     for  Breda,  Prairie  Telephone  Company,  Inc.  and  Westside  Independent
     Telephone Company.

     Breda's  switch  vendor  is  preparing  estimates  for the cost to  upgrade
     Breda's,   Prairie  Telephone  Company,  Inc.'s  and  Westside  Independent
     Telephone  Company's  software as necessary to become compliant with CALEA,
     but, as  indicated,  Breda  anticipates  substantial  expenditures  will be
     necessary,  and that  those  expenditures  may be as much as  approximately
     $350,000.

     As of September  30, 2000,  Breda and its  subsidiaries  had  approximately
     $4,300,000  in  outstanding   loans  with  the  Rural   Telephone   Finance
     Cooperative  (the "RTFC").  Of the  outstanding  debt with the RTFC on that
     date,  $2,185,666  was at a fixed  interest  rate of 7.35% per  annum,  and
     carried a ten-year  term.  The variable  rates on the  remaining  RTFC debt
     exceed that fixed rate and could affect future borrowing  decisions and the
     allocation of outstanding debt between fixed and variable rates.  Breda and
     Prairie Telephone  Company,  Inc. also have a line of credit available from
     the RTFC until  January  2001 for  $1,000,000.  There  were no  outstanding
     advances on this line of credit at September  30,  2000.  Breda and Prairie
     Telephone Company, Inc. plan to increase the latter line of credit from the
     RTFC to $2,000,000,  and to extend the time frame to 60 months,  instead of
     12 months, effective January 1, 2001.

     On October 16, 2000, Breda paid off a variable rate (8.30% as of October 1,
     2000)  long-term  debt  to the  RFTC  of  $2,131,590.  Thus,  Breda's  only
     remaining  long-term debt as of October 16, 2000,  was $2,185,667  from the
     RFTC at a fixed rate of 7.35% per annum, and which carries a ten-year term.

     Breda also plans to  continue to consider  expanding  its core  business of
     providing  telephone  services  by looking at any  opportunities  which may
     arise to acquire additional telephone lines. For example,  Breda considered
     and pursued the  acquisition of the telephone lines sold by GTE and US West
     in 1999. Those telephone lines were,  however,  acquired by other telephone
     companies.  One of the purchasers of some of the telephone lines of GTE was
     Iowa Network Services,  Inc. Iowa Network  Services,  Inc. provides various
     services  to  telephone  companies,   including  Breda,  Prairie  Telephone
     Company,  Inc.  and Westside  Independent  Telephone  Company.  Although no
     definite plans exist, it is possible that Iowa Network  Services,  Inc. may
     consider  selling  some of  those  telephone  lines in the next two to five
     years. If that occurs,  Breda, Prairie Telephone Company, Inc. and Westside
     Independent  Telephone  Company will consider  pursuing the  acquisition of
     those telephone lines.  There is no assurance,  however,  that Iowa Network
     Services,  Inc.  will ever sell any of the  telephone  lines or if it does,
     that  Breda,  Prairie  Telephone  Company,  Inc.  or  Westside  Independent
     Telephone  Company will determine to pursue those  acquisitions  or will be
     successful  in acquiring  any lines even if they  determine to pursue them.
     Breda also has an interest in Alpine Communications, L.C., which was formed
     by several independent telephone


                                      -19-
<PAGE>

     companies.  Alpine  Communications,  L.C.  has  purchased  former  US  West
     telephone  properties in Iowa. Given the recent acquisitions of the GTE and
     US West telephone lines by other telephone companies,  Breda currently does
     not foresee the possibility of the acquisition of any additional  telephone
     lines,  other than perhaps from Iowa  Network  Services,  Inc. as discussed
     above.

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

     There are no current  plans to expand the cable  services  areas of, or the
     cable services provided by,  Tele-Services,  Ltd.  Tele-Services,  Ltd. is,
     however,  presently  upgrading  some of its plant,  equipment  and cable in
     order to add more  channel  line-ups  so that it can stay  competitive  and
     continue  to be able to  obtain  programming  licenses.  The  cost of those
     upgrades in the next twelve months,  however,  is estimated to be less than
     $50,000.

     Breda  and its  subsidiaries  have  and  will  continue  to  incur  capital
     expenditures in connection with upgrading their telephone,  cable and other
     equipment and systems.

     Breda  believes  that  the  funds  from the  sale of its  direct  broadcast
     satellite  operation in January of 1999, and the sale of Prairie  Telephone
     Company,  Inc.'s  shares  of  stock  in CIC in May  2000,  along  with  its
     anticipated  normal operating cash flows, will generate  sufficient working
     capital  for Breda and its  subsidiaries  to meet their  current  operating
     needs and maintain historical fixed asset addition levels.

     Cautionary Statement on Forward Looking Statements.

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


                                      -20-
<PAGE>

     and  assumptions,  nearly all of which are beyond the  control of Breda and
     its management.  The risks, uncertainties and assumptions affecting forward
     looking statements include, but are not limited to:

          o    the possible adverse effects to Breda and its subsidiaries  which
               may arise under the regulations  which will be promulgated  under
               the   Telecommunications   Act  of  1996,   including   increased
               competition;

          o    adverse changes by the Federal  Communications  Commission in the
               rates of the access  charges that can be charged by Breda and its
               subsidiaries to long distance carriers;

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

          o    employee relations;

          o    management's business strategies;

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

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

          o    acts or omissions of competitors and other third parties;

          o    changes in or more governmental regulations and policies; and

          o    continued availability of financing, and on favorable terms.

     The  discussion  of Breda's  financial  condition and results of operations
     should  also be read in  conjunction  with  the  financial  statements  and
     related notes included in Item 1 of this quarterly report.


                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

     Breda currently is not aware of any pending legal proceeding to which Breda
     is a party or to which any of  Breda's  property  is  subject,  other  than
     routine  litigation that is incidental to its business.  Breda currently is
     not aware that any governmental  authority is contemplating  any proceeding
     against Breda or any of its property.


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<PAGE>

Item 2. Changes in Securities.

     No material  modifications,  limitations or qualifications  were made to or
     placed upon the terms of Breda's  shares of common  stock during the period
     of July 1, 2000 through September 30, 2000.

     Breda did not issue any  shares of its  common  stock  during the period of
     July 1, 2000 through September 30, 2000.

Item 3. Defaults Upon Senior Securities.

     There has been no material default or any material arrearage or delinquency
     by Breda of the type required to be reported under this Item.

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

     No matters were submitted to a vote of the shareholders of Breda during the
     period of July 1, 2000 through September 30, 2000.

Item 5. Other Information.

     During the quarter ended  September 30, 2000,  Breda redeemed 439 shares of
     its common stock from thirteen  different  shareholders  at $235 per share,
     for a total amount of $103,165.  The $235 per share price is the redemption
     amount  which was last  established  by the board of  directors of Breda on
     June 12, 2000.

     There were  transfers of shares of Breda's  common stock during the quarter
     ended  September  30, 2000 with respect to which Breda did not exercise its
     right of first refusal on those shares.

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

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

     (b)  Breda did not file any  reports  on Form 8-K during the period of July
          1, 2000 through September 30, 2000.


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<PAGE>

                                   SIGNATURES

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

                                            BREDA TELEPHONE CORP.



Date: November 13, 2000.                    By: /s/ Dean Schettler
                                                -------------------------------
                                                Dean Schettler, President


Date: November 13, 2000.                    By: /s/ Scott Bailey
                                                -------------------------------
                                                Scott Bailey, Treasurer


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<PAGE>

                                  EXHIBIT INDEX
                             Exhibits to Form 10-QSB
                      Nine Months Ended September 30, 2000
                              BREDA TELEPHONE CORP.

Description of Exhibit                                               Page Number

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

     (a)  Stock Purchase Agreement dated May 22, 1998, by and between Arthur
          Zerwas and Mary Zerwas, Westside Independent Telephone Company, and
          Breda Telephone Corporation, along with the Amendment to the Stock
          Purchase Agreement dated May 22, 1998. (Filed as Exhibit 2.1 to
          Breda's Registration Statement on Form 10-SB, and incorporated herein
          by this reference.)

     (b)  Stock Purchase Agreement dated May 22, 1998, by and between Arthur
          Zerwas and Mary Zerwas, and Breda Tele-Services, Ltd., along with the
          Amendment to the Stock Purchase Agreement dated May 22, 1998. (Filed
          as Exhibit 2.2 to Breda's Registration Statement on Form 10-SB, and
          incorporated herein by this reference.)

     (c)  Asset Purchase Agreement dated October 6, 1998, by and between NewPath
          Communications, L.C. and Tele-Services, Ltd. (Filed as Exhibit 2.3 to
          Breda's Registration Statement on Form 10-SB, and incorporated herein
          by this reference.)

     (d)  Asset Purchase Agreement by and between Golden Sky Systems, Inc. and
          Breda Telephone Corporation dated as of November 30, 1998, along with
          the Amendment of Asset Purchase Agreement dated as of January 11,
          1999. (Filed as Exhibit 2.4 to Breda's Registration Statement on Form
          10-SB, and incorporated herein by this reference.)

     (e)  Stock Purchase Agreement dated March 29, 2000, by and among AirTouch
          Iowa, LLC, Central Iowa Cellular, Inc., Prairie Telephone Company,
          Inc., Panora Tele-


                                      -24-
<PAGE>

          communications, Inc., Walnut Creek Communications, Inc., Minburn
          Telephone Company, and Interstate Enterprises, Ltd. (Filed as Exhibit
          2.1 to Breda's Form 8-K dated March 29,2000 and filed April 12, 2000,
          and incorporated herein by this reference.)

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

3.   Articles of Incorporation and Bylaws

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

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

10.  Material Contracts

     (a)  Employment Agreement effective April 1, 2000 between Breda and Robert
          Boeckman. (Filed as Exhibit 10.1 to Breda's Form 10-QSB for the
          quarterly period ended March 31, 2000, and incorporated herein by this
          reference.)

     (b)  Employment Agreement effective April 1, 2000 between Breda and Jane
          Morlok. (Filed as Exhibit 10.2 to Breda's Form 10-QSB for the
          quarterly period ended March 31, 2000, and incorporated herein by this
          reference.)

*27. Financial Data Schedule
*    Included with this filing


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