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, 2006.  o

        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. Employerof 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)  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x

        No  o
  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).      YesoNox  State the number of shares outstanding of each of the issuers classes of common equity, as of the
latest practicable date: 31,023 shares of common stock, no par value, at July 1, 2006.  Transitional Small Business Disclosure Format (Check one):     Yes o
               No    x
      PART I - FINANCIAL INFORMATION






Item 1.

        Financial Statements.














Breda Telephone Corporation


And Subsidiaries


Breda, IA











Condensed Consolidated Financial Statements


For the Periods


Ended June 30, 2006 and 2005


And the Year Ended December 31, 2005








2







BREDA TELEPHONE
CORPORATION AND SUBSIDIARIES
BREDA, IOWA


CONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED) June 30, 2006
and December 31, 2005


June 30,
2006 (Unaudited)
     
     December 31,
2005 (Unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
     $1,523,605
        
     $739,741Marketable securities
     649,076
        
     635,409Accounts receivable
     845,085
        
     952,579Interest receivable
     79,187
        
     107,229Current portion of note receivable
     144,000
        
     144,000Inventory, at average cost
     148,304
        
     122,953Prepaid income taxes
     13,480
        
     Other
     29,338
        
     42,196Deferred income taxes
     11,415
        
     22,7943,443,490
        
     2,766,901OTHER NONCURRENT ASSETSMarketable securities
     6,176,296
        
     5,463,298Investments in unconsolidated affiliates at equity
     6,042,208
        
     5,519,572Other investments at cost
     618,430
        
     790,066Goodwill
     896,812
        
     896,812Note receivable, less allowance of $219,691 in each 2006 and 2005
     76,283
        
     75,46913,810,029
        
     12,745,217PROPERTY, PLANT AND EQUIPMENT
     4,673,613
        
     5,215,291TOTAL ASSETS
     $21,927,132
        
     $20,727,409LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
     $170,029
        
     $164,513Accounts payable
     200,190
        
     428,211Accrued taxes
     
        
     378,871Other
     95,845
        
     143,582466,064
        
     1,115,177LONG-TERM DEBT, less current portion
     1,228,519
        
     1,314,935OTHER NONCURRENT LIABILITIES
     1,118,508
        
     855,542STOCKHOLDERS EQUITYCommon stock - no par value, 5,000,000 shares authorized, 31,023shares issued and outstanding at $357
     11,075,211
        
     11,075,211Retained earnings
     8,038,830
        
     6,366,54419,114,041
        
     17,441,755TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
     $21,927,132
        
     $20,727,409The accompanying notes
are an integral part of these condensed consolidated financial statements.












3







BREDA TELEPHONE
CORPORATION AND SUBSIDIARIES
BREDA, IOWA


CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED) For the Three and Six
Months Ended June 30, 2006 and 2005


For the Three Months Ended
     
     For the Six Months Ended2006
     
     2005
     
     2006
     
     2005OPERATING REVENUES
     
     
     $2,020,627
        
     $1,752,678
        
     $4,043,509
        
     $3,680,905OPERATING EXPENSESCost of services
     953,389
        
     871,202
        
     1,847,342
        
     1,714,778Depreciation and amortization
     245,928
        
     220,590
        
     488,677
        
     465,616Selling, general, and administrative
     588,756
        
     500,923
        
     1,101,523
        
     990,6041,788,073
        
     1,592,715
        
     3,437,542
        
     3,170,998OPERATING INCOME
     232,554
        
     159,963
        
     605,967
        
     509,907OTHER INCOME (EXPENSES)Interest and dividend income
     75,736
        
     100,688
        
     169,565
        
     197,999Gain or (loss) on sale of investments
     1,163,437
        
     (3,057
        )
     1,163,398
        
     (3,057
        )Loss on disposal of assets
     (21,714
        )
     
        
     (21,714
        )
     Interest expense
     (26,448
        )
     (29,325
        )
     (53,633
        )
     (59,340
        )Income from equity investments
     393,218
        
     263,855
        
     1,054,297
        
     510,243Other, net
     3,650
        
     (6,792
        )
     3,311
        
     (6,954
        )1,587,879
        
     325,369
        
     2,315,224
        
     638,891INCOME BEFORE INCOME TAXES
     1,820,433
        
     485,332
        
     2,921,191
        
     1,148,798INCOME TAXES
     680,202
        
     166,085
        
     1,031,744
        
     404,498NET INCOME
     $1,140,231
        
     $319,247
        
     $1,889,447
        
     $744,300NET INCOME PER COMMON SHARE
     $36.75
        
     $10.26
        
     $60.90
        
     $23.89The accompanying notes
are an integral part of these condensed consolidated financial statements.











4







BREDA TELEPHONE
CORPORATION AND SUBSIDIARIES BREDA, IOWA


CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY


Common Stock
     
     RetainedShares
     
     Amount
     
     Earnings
     
     TotalBalance at December 31, 2004 (Audited)
     
     
     31,170
        
     $10,161,420
        
     $5,736,268
        
     $15,897,688Comprehensive income:Net Income
     
        
     
        
     1,814,736
        
     1,814,736Dividends paid
     
        
     
        
     (218,190
        )
     (218,190
        )Common stock redeemed, net
     (147
        )
     (52,479
        )
     
        
     (52,479
        )Stated value stock adjustment
     
        
     966,270
        
     (966,270
        )Balance at December 31, 2005 (Unaudited)
     31,023
        
     11,075,211
        
     6,366,544
        
     17,441,755Comprehensive income:Net Income
     
        
     
        
     1,889,447
        
     1,889,447Dividends paid
     
        
     
        
     (217,161
        )
     (217,161
        )Balance at June 30, 2006 (Unaudited)
     31,023
        
     $11,075,211
        
     $8,038,830
        
     $19,114,041The accompanying notes
are an integral part of these condensed consolidated financial statements.











5







BREDA TELEPHONE
CORPORATION AND SUBSIDIARIES BREDA,
IOWA


CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six
Months Ended June 30, 2006 and 2005


2006
     
     2005CASH FLOWS FROM OPERATING ACTIVITIESNet income
     $1,889,447
        
     $744,300Adjustments to reconcile net incometo cash provided by operating activities:Depreciation and amortization
     488,677
        
     465,616Deferred income taxes
     274,345
        
     (50,383
        )Amortization of investment tax credits
     
        
     (2,805
        )Amortization of investment premium/discount - net
     28,014
        
     34,178Equity income in unconsolidated affiliates, net of distributionsreceived of $531,661 and $557,634 in 2006 and 2005,respectively
     (522,636
        )
     47,391Note receivable discount
     (814
        )
     (3,473
        )Gain on sale of investments - at cost
     (1,170,211
        )
     Changes in assets and liabilities:(Increase) Decrease in assets:
     109,563
        
     (24,614
        )Increase (Decrease) in liabilities:
     (669,049
        )
     201,674Net cash provided by operating activities
     427,336
        
     1,411,884CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
     (48,826
        )
     (384,632
        )Proceeds from the sale of assets
     116,247
        
     Purchase of marketable securities
     (1,307,553
        )
     (759,641
        )Purchase of equity investments
     
        
     (290,000
        )Purchase of other investments - at cost
     (1,854
        )
     Proceeds from the sale of marketable securities
     552,874
        
     340,409Proceeds from the sale of other investments - at cost
     1,343,701
        
     7,209Net cash provided by investing activities
     654,589
        
     (1,086,655
        )CASH FLOWS FROM FINANCING ACTIVITIESRepayment of long term debt
     (80,900
        )
     (75,737
        )Common stock redeemed, net
     
        
     (43,554
        )Dividends paid
     (217,161
        )
     (218,190
        )Net cash used in financing activites
     $(298,061
        )
     $(337,481
        )Net Increase (Decrease) in Cash and Cash Equivalents
     $783,864
        
     $(12,252
        )Cash and Cash Equivalents at Beginning of Period
     739,741
        
     1,036,804Cash and Cash Equivalents at End of Period
     $1,523,605
        
     $1,024,552Supplemental Disclosures of Cash Flow InformationCash paid during the period for:Interest
     $53,633
        
     $59,340Income taxes
     $1,148,298
        
     $355,000The accompanying notes
are an integral part of these condensed consolidated financial statements.











6







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, 2006 and December 31, 2005 and the results of operation and changes in
cash flows for the three and six months ended June 30, 2006 and 2005.





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, 2005 10-KSB as filed on April 17, 2006.  The results of operations for the three- and six-month
period ended June 30, 2006 are not necessarily indicative of the operating results of the entire year.





Certain reclassifications have been made to the 2005 financial statements to conform with the 2006
presentations.






NOTE 2.

        NONCASH INVESTING ACTIVITIES





Noncash investing activities included $14,420 and $328,777 during the six months ended June 30, 2006
and June 30, 2005, respectively, relating to plant and equipment additions under construction during the period, which are reflected in accounts payable at June 30, 2006 and June 30, 2005.






NOTE 3.

        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 the 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.





7







BREDA TELEPHONE CORPORATION AND SUBSIDIARIES


BREDA, IOWA





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS






NOTE 3.

        OPERATING SEGMENTS (Continued)








Six Months Ended
June 30, 2006
     Local
Exchange
Carrier
     
     Broadcast
     
     Internet
Service
Provider
     
     TotalRevenuesExternal customers
     $3,357,218
        
     $368,650
        
     $317,641
        
     $4,043,509Segment profit (loss)
     2,252,703
        
     (109,720
        )
     (253,536
        )
     1,889,447Six Months Ended
June 30, 2005
     Local
Exchange
Carrier
     
     Broadcast
     
     Internet
Service
Provider
     
     TotalRevenuesExternal customers
     $2,981,680
        
     $413,852
        
     $285,373
        
     $3,680,905Segment profit (loss)
     970,126
        
     (96,821
        )
     (129,005
        )
     744,300Three Months Ended
June 30, 2006
     Local
Exchange
Carrier
     
     Broadcast
     
     Internet
Service
Provider
     
     TotalRevenuesExternal customers
     $1,680,336
        
     $182,649
        
     $157,642
        
     $2,020,627Segment profit (loss)
     1,333,388
        
     (67,896
        )
     (125,261
        )
     1,140,231Three Months Ended
June 30, 2005
     Local
Exchange
Carrier
     
     Broadcast
     
     Internet
Service
Provider
     
     TotalRevenuesExternal customers
     $1,402,059
        
     $207,280
        
     $143,339
        
     $1,752,678Segment profit (loss)
     445,449
        
     (45,924
        )
     (80,278
        )
     319,247



NOTE 4.

        NET INCOME PER COMMON SHARE





Net income per common share for June 30, 2006 and 2005 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, 2006 and 2005 were
31,023 and 31,023 and 31,129 and 31,150, respectively.






NOTE 5.

        STOCK VALUE ADJUSTMENT





During July 2006 and subsequent to these financial statements, the board of directors authorized a
$37 increase in the stated value of each share of common stock from $357 to $394.  There were 31,023 shares outstanding at the time of the value adjustment, which will reduce retained earnings by
$1,147,851.





During May 2005, the board of directors authorized a $31 increase in the stated value of each share
of common stock from $326 to $357.  There were 31,170 shares outstanding at the time of the value adjustment, which reduced retained earnings by $966,270.





8







Item 2.

        Managements Discussion and Analysis of Financial Condition and Results of
Operations.






Various discussions and statements in this quarterly report contain forward-looking statements,
which can be identified by the use of forward-looking terminology such as expects, estimates, plans, anticipates, forecasts, predicts, projects, believes, should, could, or other
similar expressions or variations of those words, or by discussions of strategy.  No assurance can be given that the future results covered by the forward-looking statements will be achieved.  Some
of the matters set forth in the Cautionary Statement on Forward Looking Statements section of Bredas Annual Report on Form 10-KSB for the year ended December 31, 2005 constitute cautionary
statements identifying factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to vary materially from the future results
indicated in such

forward-looking statements.  Other factors could also cause actual results to vary materially from the future results indicated in such forward-looking statements.





Overview





General





Breda is a small provider of telecommunication services to residential and business customers in the
west central region and the southwest region of rural Iowa.  Breda and its subsidiaries, Prairie Telephone Co., Inc., Westside Independent Telephone Company, Tele-Services, Ltd. and BTC, Inc., all
conduct business under the names W.I.N. or Western Iowa Networks.





Breda and its subsidiaries operate seven telephone exchanges as the incumbent or historical local
exchange carrier (ILEC).  BTC, Inc. began in October 2003 to offer competitive local exchange carrier services (CLEC) to residential and business customers in Carroll, Iowa, where Qwest is the
incumbent local exchange carrier.  Other telecommunications services provided include long distance services, dial-up and high speed Internet services, cable TV services, and satellite Internet
services.





Operating Segments





Breda organizes its business into three reportable segments.  Those segments are local exchange
carrier services, broadcast services, and Internet service provider services.  Breda has organized its business into those segments because the segments are each strategic business units that are
managed separately and that offer different products and services in different regulatory environments.





Local Exchange Carrier Services.This segment provides telephone,
data services, and other services to customers in the local exchanges served by Breda and its telephone subsidiaries.  Breda also provides long distance services to its customers in all of its ILEC
and CLEC exchanges, and surrounding areas.





Broadcast Services.This segment provides cable television
services to customers in a total of seventeen towns in Iowa and one town in Nebraska.  Tele-Services, Ltd. sold its Neola, Iowa cable TV system to Walnut Telephone Co. in September 2005, so
Tele-Services, Ltd. now provides cable TV service to seventeen, instead of eighteen, towns in Iowa.





9







Internet Services.This 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 segments in which Breda and its subsidiaries operate are as follows:





Local Exchange Carrier


Breda


Prairie Telephone Co., Inc.


Westside Independent Telephone Company


BTC, Inc. (competitive local exchange carrier)





Broadcast Services


Tele-Services, Ltd.





Internet Service Provider


BTC, Inc.





Factors Affecting Bredas Operating Performance





Breda believes that a number of industry and company-specific factors are affecting and will
continue to affect Bredas results of operations.  These factors include the following:








        The effect on Bredas revenues of declining numbers of access lines caused by
younger customer migration to cell phone usage only; technology advances allowing the provisioning of Internet (data) services on the same access line as voice service; technology advances
provisioning residential and business voice services over data circuits (VOIP); and the declining population base in the rural areas served by Breda.






Bredas strategic response to this trend includes efforts to introduce and provide enhanced local
services and additional services like voice mail, dial-up and DSL Internet access, long distance services, and to provide cellular services through its agency agreement with U.S. Cellular.  Breda
additionally seeks to maximize its telecom industry offerings by partnering with surrounding telcos in wireless service ventures and through investment in cellular partnerships within the state of
Iowa and surrounding states.  Breda has additionally undertaken to compete with Qwest for voice, long distance, and Internet service customers in the county seat of Carroll, Iowa.








        The effect on Bredas revenues from current and potential future changes in
access rate regulation at the state and federal levels.









        The effect on Bredas revenues from rate and pricing structure, caused by the
competition of multiple providers in the Carroll, Iowa market.  The incumbent local exchange carrier (Qwest), the local cable TV provider (Mediacom) and additional outside competitors have all
partnered with telecommunication providers that can bring additional service components to complete a bundled service offering to the customer in what is known in the industry as the triple play.
Customers receive local phone service, blocks of long distance service minutes, Internet services, and video services (cable TV or satellite TV) for a






10







competitive price.  Breda now competes with the triple play bundled services offerings from both
Qwest and Mediacom.





Breda has implemented new switching capabilities for the Carroll, Iowa market that allows Breda to
offer another flavor of high-speed Internet services, in addition to its voice, long distance and present Internet services.  The new switching capabilities will also allow Breda to look at bringing
fiber to the home, which would be an overbuild of the Carroll market, and would allow Breda to be self-reliant in providing communication services to that community by no longer needing to lease
access lines from Qwest to provide services.





Breda continues to modify its package offerings, and to evaluate and adjust its pricing structures
in order to attempt to remain competitive.








        The effect on Bredas revenues from decreased customer counts for dial-up
Internet as well as cable TV services.  Competition and bundled services, declining population bases in some of Bredas rural service areas, and cost of technology upgrades play a role in the
competition for and retention of customers.  Breda continues to consolidate cable TV programming transmission equipment in its communities where it is geographically feasible, in order to reduce
system and service costs which are incurred to provide the cable TV services.









        The effect on Bredas revenues from decreased access revenue caused by a
decrease in the number of long distance calls originating from, or terminating to, an access line in one of Bredas telephone exchanges.  The proliferation of wireless (cell) phone usage, and the
designation of new technology by the FCC as data services, instead of voice services, has not only decreased the minutes of use on Bredas networks, which results in less access revenue, but it has
caused the industry access payment structure to be renegotiated by the new technology providers and wireless providers.






Breda has negotiated an interconnection agreement with five wireless carriers and continues to work
with industry associations in order to receive some form of payment for the use of its networks.  Breda also implemented tandem switching capabilities on September 1, 2005, with the installation of
its new switch in Carroll, Iowa, and since January 2006 has been able to receive payments for consolidating and switching its own traffic.  Breda is presently finalizing agreements to also
consolidate and switch the traffic of two surrounding telcos.  Breda continues to investigate new opportunities in the industry that the installation of the soft switch in Carroll now allows because
of its capacity to handle significant amounts of traffic that were not possible with Bredas older technology switches.





11







Revenues





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 for the three-month periods ended,
respectively, June 30, 2006, and June 30, 2005:







Three Months Ended
June 30,
     
     % of Total Revenues
for the Three Months
Ended June 30,2006
     
     2005
     
     2006
     
     2005OPERATING REVENUESLocal exchange carrier services
     $1,680,336
        
     $1,402,060
        
     83.2
        %
     80.0
        %Broadcast services
     182,649
        
     207,280
        
     9.0
        %
     11.8
        %Internet services
     157,642
        
     143,338
        
     7.8
        %
     8.2
        %$2,020,627
        
     $1,752,678
        
     100.0
        %
     100.0
        %


The following table summarizes Bredas revenues on a consolidated basis from these same sources for
the six-month periods ended, respectively, June 30, 2006, and June 30, 2005:







Six Months Ended
June 30,
     
     % of Total Revenues
for the Six Months
Ended June 30,2006
     
     2005
     
     2006
     
     2005OPERATING REVENUESLocal exchange carrier services
     $3,357,218
        
     $2,981,680
        
     83.0
        %
     81.0
        %Broadcast services
     368,650
        
     413,852
        
     9.1
        %
     11.2
        %Internet services
     317,641
        
     285,373
        
     7.9
        %
     7.8
        %$4,043,509
        
     $3,680,905
        
     100.0
        %
     100.0
        %


Local Exchange Carrier Services.Bredas revenue in this segment comes
from the following sources:






1.

        Local Network Services.These revenues include
monthly subscription charges for basic service and enhanced calling features, such as voice mail and caller ID, which are billed to individual residential and business customers.







2.

        Network Access Services.These revenues are
generated from charges established to compensate Breda for the origination, transport and termination of calls generated by the customers of long distance carriers and for calls transported and
terminated to the customers of wireless carriers.  These revenues are received from carriers such as AT&T, Verizon, MCI, and Sprint.  Breda also receives federally administered universal service
support, as a result of the interstate switched access support provisions put into place by the Federal Communications Commission.  The Universal Service Fund was started as a mechanism to promote
phone service accessibility for everyone at affordable rates and comparable service.  The access charges for long distance services within Iowa are based on rates approved by the Iowa Utilities
Board.  Switched

and special access charges for interstate and international services are based on rates approved by the Federal Communications Commission.  The transport and termination charges paid by wireless
carriers are specified in interconnection agreements negotiated with each individual wireless carrier.






12







3.

        Long Distance Services.Breda generates revenues
for providing long distance services to its customers.  This revenue category includes fees related to the provision of directory assistance and operator assistance services.







4.

        Cellular Services.Breda is an agent for the U.S.
Cellular service area in Iowa.  As an agent for U.S. Cellular, Breda generates commission revenue from the sale of the wireless calling plans offered by U.S. Cellular to its customers.  Breda also
generates revenue from the sale of phones and accessories needed to receive wireless phone service.







5.

        Billing and Collection Services.Breda receives
revenue for performing billing and collection services for long distance carriers.  Breda receives a minimal percentage of the long distance call dollars that Breda receives and processes through its
customer billing system.  The customer receives one bill, which includes both local and long distance charges, instead of receiving a separate bill from their long distance carrier.







6.

        Miscellaneous.Phone-related services generated by
Breda include revenues from directory publishing, directory advertising, inside line care, the sale and maintenance of customer premise equipment, the sale and maintenance of phone systems, and the
sale of pager services.  A significant revenue source is the rental of Bredas fiber optic toll trunks to other telecommunication providers.






Broadcast Services.Revenues are generated in this segment from the
monthly fees charged to customers for basic and premium cable TV services.





Internet Services.Monthly dial-up and high-speed Internet access
services fees billed to residential and business customers generate the bulk of this segments revenue.  Revenues are also generated from the sale of Internet equipment modems and routers, and from
customer trouble-shooting and maintenance support fees.  Revenue generated through the offering of a new satellite-based Internet service in September 2005 is also included in Internet Services
revenues.





Operating Expenses





Operating Expense Categories.





Bredas operating expenses are categorized as cost of services; depreciation and amortization; and
selling, general and administration.





Cost of Services.This category includes expense for salaries and wages
relating to plant operation and maintenance; network access costs; long distance provisioning costs; salary, wage, equipment, training, and advertising costs for cellular and retail services;
postage; utilities; and Internet service provisioning costs.





Depreciation and amortization. This category of costs includes
depreciation of the telecommunication equipment and network; Internet services equipment; cable TV programming equipment and transmission equipment; buildings; and amortization of intangible assets.





13







Selling, General and Administration.This category includes expenses for
legal and accounting services; wages and benefits; contract service payments; travel, meals and lodging; investment fees; board of director fees and expense reimbursements; insurance premiums;
supplies; advertising and promotion costs; dues and subscriptions; property taxes; and all customer service operations, marketing and sales operations, and administrative operations costs.





Results of Operations





The following table sets forth certain items reflected in Bredas consolidated statements of
operations for the periods indicated, expressed as a percentage of total revenues:







Three Months Ended
June 30,
     
     Six Months Ended
June 30,2006
     
     2005
     
     2006
     
     2005Operating revenues
     
     
     100
        %
     100
        %
     100
        %
     100
        %Cost of services
     47
        %
     50
        %
     46
        %
     47
        %Depreciation and amortization
     12
        %
     13
        %
     12
        %
     13
        %Selling, general and administrative
     29
        %
     29
        %
     27
        %
     27
        %Operating income
     12
        %
     8
        %
     15
        %
     13
        %Other income (expenses)
     79
        %
     19
        %
     57
        %
     17
        %Income taxes
     34
        %
     9
        %
     26
        %
     11
        %Net income
     57
        %
     18
        %
     46
        %
     19
        %


Three Months Ended June 30, 2006 and 2005





The table below sets forth the components of Bredas revenues for the three months ended June 30,
2006, compared to the same period in 2005.







Three Months Ended
June 30,
     
     Change2006
     
     2005
     
     Amount
     
     PercentageOPERATING REVENUESLocal Exchange CarrierLocal network services
     $222,930
        
     $206,364
        
     $16,566
        
     8.0
        %Network access services
     1,001,832
        
     747,680
        
     254,152
        
     34.0
        %Long distance services
     73,204
        
     29,415
        
     43,789
        
     148.9
        %Cellular services
     341,848
        
     342,734
        
     (886
        )
     -0.3
        %Billing and collection services
     4,614
        
     4,864
        
     (250
        )
     -5.1
        %Miscellaneous
     35,908
        
     71,003
        
     (35,095
        )
     -49.4
        %$1,680,336
        
     $1,402,060
        
     $278,276
        
     19.8
        %Broadcast Services
     $182,649
        
     $207,280
        
     $(24,631
        )
     -11.9
        %Internet services
     $157,642
        
     $143,338
        
     $14,304
        
     10.0
        %$2,020,627
        
     $1,752,678
        
     $267,949
        
     15.3
        %


There was an increase in total operating revenues for the three-month period ended June 30, 2006,
when compared to the three-month period ended June 30, 2005, of $267,949, or 15.3%.





14







Local Exchange Carrier Services - $278,276





Local exchange carrier services revenues accounted for 83.2% of all operating revenue in the
three-month period ended June 30, 2006.  There was a $278,276, or 19.8%, increase in local exchange carrier services revenues for the three-month period ended June 30, 2006, when compared to the
three-month period ended June 30, 2005.





Local network services revenues increased $16,566, or 8.0%, for the three months ended June 30,
2006, as compared to the same period in 2005, primarily because of the increased number of customers taking phone service from BTC, Inc. in Carroll, Iowa.  Bredas long distance services revenue
increased $43,789, or 148.9%, for the three months ended June 30, 2006, as compared to the three-month period ended June 30, 2005, for the same reason.  Breda has received a good response to its
package offerings that include local and long distance service from both residential and business customers.





Network access services increased $254,152, or 34.0%, for the three-month period ended June 30,
2006, when compared to the three-month period ended June 30, 2005.  This increase mainly resulted from increased originating and terminating access revenues received on toll traffic generated by
Bredas Internet service subscribers in Bredas southern Iowa exchanges to reach Bredas Internet service equipment in Breda, Iowa.  This method of provisioning allows Breda to offer its own Internet
services to these customers instead of reselling the Iowa Network Services Internet product.  Breda also negotiated wireless agreements with five wireless carriers in the first quarter of 2005, and
is now billing and receiving payments from those carriers; although the overall wireless payment rate is significantly less than what Breda originally received in access revenues from interexchange
carriers for

this traffic.  Bredas access revenue has also increased because, as noted previously, BTC, Inc. installed a new switch in its Carroll, Iowa location, and is now able to receive tandem switching
payments for consolidating and switching its traffic from six of Bredas own seven telephone exchanges. There is no corresponding tandem switching revenue for the three-month period ended June
30, 2005. There was also some increase in Bredas access revenue because of its increased customer base taking its long distance services.  These customers generate access revenue when they use
Bredas networks to make long distance calls.





Cellular services decreased $886, or 0.3%, for the three-month period ended June 30, 2006, when
compared to the three-month period ended June 30, 2005.  Breda began offering two-year contracts, instead of one-year contracts in August 2002, when U.S. Cellular revamped its commission structure to
encourage two-year contracts.  This change in contract length causes a delay every other year in new contract sign-ups for retentionable customers.  Customers may migrate to new contracts without
penalty, once they have fulfilled eighty percent of the original contract term, so Breda anticipated that the first customers obtaining 24-month contracts in 2004 would be eligible for new contracts
beginning in May and June of 2006.  Breda anticipates that retention commissions will continue gradually increasing to their customary level.





Miscellaneous Revenues decreased $35,095, or 49.4%, for the three-month period ended June 30, 2006,
when compared to the three-month period ended June 30, 2005.  The main component of miscellaneous revenue is the receipt of rent from other telephone companies or industry carriers for the lease of
capacity over fiber optic rings owned by Breda, or owned jointly with neighboring telephone companies.  During the three-month period ended June 30, 2006, a one-time payment in the amount of $142,936
was made to a partner of a jointly-owned





15







ring after a true-up of fiber optic revenue proceeds had been jointly undertaken.  There was no
corresponding entry during the three-month period ended June 30, 2005, and no future payments are due because all telephone companies owning the ring are currently being paid directly from the
leasing company.





Broadcast Services  ($24,631)





Broadcast services decreased $24,631, or 11.9%, for the three-month period ended June 30, 2006, when
compared to the three-month period ended June 30, 2005.  As noted previously in this quarterly report, Bredas subsidiary, Tele-Services, Ltd., sold its Neola, Iowa cable system in September
2005, so there is no revenue for the Neola customers for the three-month period ending June 30, 2006, when compared to the same three-month period ended June 30, 2005.  Tele-Services continues to
lose customers and to face stiff competition from satellite providers, who are able to provide extensive channel line-up packages, and who are now able to also include local channels in their package
offerings.  Tele-Services completed a fiber construction project during the quarter ended September 30, 2005, and another project during quarter ended June 30, 2006, which allowed it to combine cable
TV head

ends. Breda continues to explore other consolidation opportunities in Tele-Services cable TV communities in order to reduce operating costs through consolidation of equipment and maintenance costs.
Rate increases were implemented in November 2005 for the one community that received additional channels from the consolidation of head ends.  Tele-Services upgraded its software and operating
systems on its local channel equipment during the third quarter of 2005 and therefore was able to implement a paid advertising program for businesses and individuals on the local channels in the
communities that have the local channels.  Breda hopes to generate some customer loyalty through this avenue of information on local community events, as well as the weather and local news.  Another
factor faced by Tele-Services is the declining population base in the small rural communities served by Tele-Services.





Internet Services  $14,304





Internet services revenue increased $14,304, or 10.0%, for the three-month period ended June 30,
2006, when compared to the three-month period ended June 30, 2005.  The increase is directly attributable to the increase in high-speed Internet customers, which offset the decrease in BTC, Inc.s
dialup Internet service customer base.  The decrease in dialup Internet customers is the result of the intense competition by multiple suppliers in the Carroll, Iowa market area.  Breda is gaining
high-speed Internet customers in the Carroll, Iowa area because BTC, Inc. is offering bundled services packages that include Internet services, as well as local telephone and other communication
services.  Breda also began offering high speed satellite Internet service in the fourth quarter of 2005 to its rural and other customers who were not able to access Bredas other high speed Internet
products

because of distance constraints. Some of the Internet services increase for the three-month period ended June 30, 2006 is the result of this new high speed satellite Internet offering, and for which
there was no corresponding revenue for the three-month period ended June 30, 2005.  With the advent of newer technologies that expand the range for high speed Internet services from the central
office, Breda is now beginning to offer those high speed Internet services in its outlying ILEC communities, that previously were not able to receive those services from Breda.





16







OPERATING EXPENSES





The table below sets forth the components of Bredas operating costs for the three months ended June
30, 2006, compared to the same period in 2005.







Three Months Ended
June 30,
     
     Change2006
     
     2005
     
     Amount
     
     PercentageOPERATING EXPENSESCost of services
     $953,389
        
     $871,202
        
     $82,187
        
     9.4
        %Depreciation and amortization
     245,928
        
     220,590
        
     25,338
        
     11.5
        %Selling, general and administration
     588,756
        
     500,923
        
     87,833
        
     17.5
        %$1,788,073
        
     $1,592,715
        
     $195,358
        
     12.3
        %


Cost of Services - $82,187





Cost of services increased $82,187, or 9.4%, for the three-month period ended June 30, 2006, when
compared to the three-month period ended June 30, 2005.  The increased costs primarily reflected increased labor costs from rate increases implemented in 2006, and increased provisioning costs for
the new satellite, high-speed Internet product rolled out in fourth quarter 2005, and for which there were no corresponding costs for the three-month period ended June 30, 2005.  Bredas costs also
increased for the provisioning of Bredas own Internet service now offered in its southern Iowa exchanges as more customers bundled their Internet with other services that they were already receiving
from Breda.  Cost of long distance also increased as a greater number of customers continue to use Bredas long distance service.  Breda also incurred additional costs for repair and maintenance

expenditures for its central offices, equipment and buildings and grounds during the three-month period ended June 30, 2006, when compared to the three-month period ended June 30, 2005.
Tele-Services overall customer growth for cable TV services declined, so Tele-Services programming costs decreased in spite of increases in the programming rates paid by Tele-Services in order
to offer its cable TV offerings.  Breda is allocating a portion of shared provisioning costs between BTC, Inc.s CLEC operation and its Internet services operation.





Depreciation and Amortization  $25,338





Depreciation and amortization expense increased $25,338, or 11.5%, for the three-month period ended
June 30, 2006, when compared to the three-month period ended June 30, 2005. Breda added over $1,000,000
in new switch plant assets in its Carroll, Iowa operations and Emergency Alert Equipment in
its cable TV operations, both of which became operational in the fourth quarter of 2005, and which
are generating additional depreciation expense now that the equipment has been placed into service.





Selling, General and Administration  $87,833





Selling, general and administration expenses increased $87,833, or 17.5%, for the three-month period
ended June 30, 2006, when compared to the three-month period ended June 30, 2005.  While labor and benefits decreased during the three-month period ended June 30, 2006, when compared to the same
period in 2005, because of reduced full time equivalents in the Customer Service Department and the Marketing Department, this decrease was offset by an increase in administrative expense and legal
expense to oversee the process of hiring a new CEO and a





17







COO, as well as an increase in outside legal, consulting, and accounting services to facilitate the
preparation of SEC filings and to pursue new business opportunities in the industry.





OTHER INCOME (EXPENSE)





The table below sets forth the components of other income (expense) for the three-month period ended
June 30, 2006, compared to the same period in 2005.







Three Months Ended
June 30,
     
     Change2006
     
     2005
     
     Amount
     
     PercentageOTHER INCOME (EXPENSE)Interest and dividend income
     $75,736
        
     $100,688
        
     $(24,952
        )
     -24.8
        %Gain on sale of investments
     1,163,437
        
     (3,057
        )
     1,166,494
        
     38158.1
        %Loss on disposal of assets
     (21,714
        )
     
        
     (21,714
        )
     -100.0
        %Interest expense
     (26,448
        )
     (29,325
        )
     2,877
        
     9.8
        %Income from equity investments
     393,218
        
     263,855
        
     129,363
        
     49.0
        %Other, net
     3,650
        
     (6,792
        )
     10,442
        
     153.7
        %$1,587,879
        
     $325,369
        
     $1,262,510
        
     388.0
        %


Interest and Dividend Income.Interest and dividend income decreased
$24,952, or 24.8%, for the three-month period ended June 30, 2006, when compared to the three-month period ended June 30, 2005.  This is attributable to a decrease in dividend income received from
Iowa Network Services for the three-month period ended June 30, 2006, when compared to the three-month period ended June 30, 2005.





Gain on sale of investments.The $1,166,494 increase in gain on sale of
investments for the three-month period ended June 30, 2006, when compared to the three-month period ended June 30, 2005, is mainly the result of the gain from the Rural Telephone Bank stock sale in
April 2006, for which there is no corresponding entry in the same three-month period in 2005.





Loss on disposal of assets.The $21,714 loss on disposal of assets for
the three-month period ended June 30, 2006, represents the loss from the sale of a building at 526 N. Carroll Street, Carroll, Iowa, in May 2006, for which there is no corresponding entry in the same
three-month period in 2005.





Interest Expense.The $2,877, or 9.8%, decrease in interest expense for
the three-month period ended June 30, 2006, when compared to the three-month period ended June 30, 2005, is the result of the reduction of the Rural Telephone Finance Cooperative loan balance on
which interest is calculated because of the payment of the scheduled principal payments on the loan.  There has been no change in interest rate and no additional loan proceeds have been obtained.





Income from Equity Investments.Income from equity investments increased
$129,363, or 49.0%, for the three-month period ended June 30, 2006, when compared to the three-month period ended June 30, 2005.  The equity investments income shown on Bredas financial statements
is Bredas pro-rata share of the net income or net loss of each equity investment, based on Bredas percentage of ownership in each equity investment.  The increase in equity investments income
reported on Bredas income statement for the three-month period ended June 30, 2006 is a reflection of the net increases and decreases in the net operating income of Bredas equity investments. Most
of Bredas equity investments are in cellular partnerships.  Some of these cellular investments now receive universal service funding which has increased their overall operating revenue.  Breda also
had

additional equity investment income in the





18







three-month period ended June 30, 2006 resulting from Prairie Telephones purchase of additional
ownership interests in Bug Tussel Wireless, LLC in July 2005, and for which there is no additional equity investment income for the three-month period ended June 30, 2005.  An additional source of
income from equity investments arises from Bredas ownership interest in Alpine Communications, L.C., an operating telephone company in northeastern Iowa.





Other, Net.The $10,442, or 153.7%, increase in other net income for the
three-month period ended June 30, 2006, when compared to the three-month period ended June 30, 2005, is mainly attributable to decreased partnership-related expenses.





Income Tax Expense.Income taxes increased $514,117, or 309.6%, for the
three-month period ended June 30, 2006, when compared to the same period in 2005.  The increase is a direct reflection of the increased income generated from operations and other income sources,
including the gain on the redemption of the Rural Telephone Bank stock.  The effective tax rate for the three-month period ended June 30, 2006 is 37.4%, compared to a 34.2% tax rate for the same
three-month period in 2005.  The effective tax rate differs from the U.S. statutory rate due to state income taxes and the proportion of income from investments which are exempt from income tax.





Net Income.Net income increased $820,894, or 257.2%, for the
three-month period ended June 30, 2006, when compared to the same period in 2005.





Six Months Ended June 30, 2006 and 2005





The table below sets forth the components of Bredas revenues for the six months ended June 30,
2006, compared to the same period in 2005.







Six Months Ended
June 30,
     
     Change2006
     
     2005
     
     Amount
     
     PercentageOPERATING REVENUESLocal Exchange CarrierLocal network services
     $441,762
        
     $409,753
        
     $32,009
        
     7.8
        %Network access services
     1,993,877
        
     1,534,590
        
     459,287
        
     29.9
        %Long distance services
     181,642
        
     118,977
        
     62,665
        
     52.7
        %Cellular services
     674,626
        
     749,512
        
     (74,886
        )
     -10.0
        %Billing and collection services
     7,758
        
     10,171
        
     (2,413
        )
     -23.7
        %Miscellaneous
     57,553
        
     158,677
        
     (101,124
        )
     -63.7
        %$3,357,218
        
     $2,981,680
        
     $375,538
        
     12.6
        %Broadcast Services
     $368,650
        
     $413,852
        
     $(45,202
        )
     -10.9
        %Internet services
     $317,641
        
     $285,373
        
     $32,268
        
     11.3
        %$4,043,509
        
     $3,680,905
        
     $362,604
        
     9.9
        %


There was an increase in total operating revenues for the six-month period ended June 30, 2006, when
compared to the six-month period ended June 30, 2005, of $362,604, or 9.9%.





Local Exchange Carrier Services - $375,538





Local exchange carrier services revenues accounted for 83.0% of all operating revenue in the
six-month period ended June 30, 2006.  There was a $375,538, or 12.6%, increase in local





19







exchange carrier services revenues for the six-month period ended June 30, 2006, when compared to
the six-month period ended June 30, 2005.





Local network services revenues increased $32,009, or 7.8%, for the six months ended June 30, 2006,
as compared to the same period in 2005, primarily because of the increased number of customers taking phone service from BTC, Inc. in Carroll, Iowa.  Bredas long distance services revenue increased
$62,665, or 52.7%, for the six months ended June 30, 2006, as compared to the six-month period ended June 30, 2005, for the same reason.  Breda has received a good response to its package offerings
that include local and long distance service from both residential and business customers.





Network access services increased $459,287, or 29.9%, for the six-month period ended June 30, 2006,
when compared to the six-month period ended June 30, 2005.  This increase mainly resulted from increased originating and terminating access revenues received on toll traffic generated by Bredas
Internet service subscribers in Bredas southern Iowa exchanges to reach Bredas Internet service equipment in Breda, Iowa.  This method of provisioning allows Breda to offer its own Internet
services to these customers instead of reselling the Iowa Network Services Internet product.  Breda also negotiated wireless agreements with five wireless carriers in the first quarter of 2005, and
is now billing and receiving payments from those carriers; although the overall wireless payment rate is significantly less than what Breda originally received in access revenues from interexchange
carriers for this

traffic.  Bredas access revenue has also increased because, as noted previously, BTC, Inc. installed a new switch in its Carroll, Iowa location, and is now able to receive tandem switching payments
for consolidating and switching its traffic from six of Bredas own seven telephone exchanges. There is no corresponding tandem switching revenue for the six-month period ended June 30, 2005.
There was also some increase in Bredas access revenue because of its increased customer base taking its long distance services.  These customers generate access revenue when they use Bredas
networks to make long distance calls.





Cellular services decreased $74,886, or 10.0%, for the six-month period ended June 30, 2006, when
compared to the six-month period ended June 30, 2005.  Breda began offering two-year contracts, instead of one-year contracts in August 2002, when U.S. Cellular revamped its commission structure to
encourage two-year contracts.  This change in contract length causes a delay every other year in new contract sign-ups for retentionable customers.  Customers may migrate to new contracts without
penalty, once they have fulfilled eighty percent of the original contract term, so Breda anticipated that the first customers obtaining 24-month contracts in 2004 would be eligible for new contracts
beginning in May and June of 2006.  Breda anticipates that retention commissions will gradually increase to their customary level.





Miscellaneous revenue decreased $101,124, or 63.7%, for the six-month period ended June 30, 2006,
when compared to the six-month period ended June 30, 2005.  The main component of miscellaneous revenue is the receipt of rent from other telephone companies or industry carriers for the lease of
capacity over fiber optic rings owned by Breda, or owned jointly with neighboring telephone companies.  During the six-month period ended June 30, 2006, a one-time payment in the amount of $142,936
was made to a partner of a jointly-owned ring after a true-up of fiber optic revenue proceeds had been jointly undertaken.  There was no corresponding entry during the six-month period ended June 30,
2005, and no future payments are due because all telephone companies owning the ring are currently being paid directly from the leasing company.





20







Broadcast Services  ($45,202)





Broadcast services decreased $45,202, or 10.9%, for the six-month period ended June 30, 2006, when
compared to the six-month period ended June 30, 2005.  As noted previously in this quarterly report, Bredas subsidiary, Tele-Services, Ltd., sold its Neola, Iowa cable system in September 2005,
so there is no revenue for the Neola customers for the six-month period ending June 30, 2006, when compared to the same six-month period ended June 30, 2005.  Tele-Services continues to lose
customers and to face stiff competition from satellite providers, who are able to provide extensive channel line-up packages, and who are now able to also include local channels in their package
offerings.  Tele-Services completed a fiber construction project during the quarter ended September 30, 2005, and again during the quarter ended June 30, 2006, which allowed it to combine cable TV
head ends. Breda

continues to explore other consolidation opportunities in Tele-Services cable TV communities in order to reduce operating costs through consolidation of equipment and maintenance costs.  Rate
increases were implemented in November 2005 for the one community that received additional channels from the consolidation of head ends.  Rates increases will be implemented on August 1, 2006 in the
latest town that received additional channels from the head end combination.  Tele-Services upgraded its software and operating systems on its local channel equipment during the third quarter of 2005
and therefore was able to implement a paid advertising program for businesses and individuals on the local channels in the communities that have the local channels.  Breda hopes to generate some
customer loyalty through this avenue of information on local community events, as well as the weather and local news.  Another factor faced by Tele-Services is the declining population base in the
small rural

communities served by Tele-Services.





Internet Services  $32,268





Internet services revenue increased $32,268, or 11.3%, for the six-month period ended June 30, 2006,
when compared to the six-month period ended June 30, 2005.  The increase is directly attributable to the increase in high-speed Internet customers, which offset the decrease in BTC, Inc.s dialup
Internet service customer base.  The decrease in dialup Internet customers is the result of the intense competition by multiple suppliers in the Carroll, Iowa market area.  Breda is gaining
high-speed Internet customers in the Carroll, Iowa area because BTC, Inc. is offering bundled services packages that include Internet services, as well as local telephone and other communication
services.  Breda also began offering high speed satellite Internet service in the fourth quarter of 2005 to its rural and other customers who were not able to access Bredas other high speed Internet
products because

of distance constraints. Some of the Internet services increase for the six-month period ended June 30, 2006 is the result of this new high speed satellite Internet offering, and for which there was
no corresponding revenue for the six-month period ended June 30, 2005.  Breda has completed testing and begun installation of some newer high speed Internet technology in its outlying ILEC telephone
exchanges.  This technology allows Breda to offer high speed Internet services in areas that it previously could not serve because of distance factors.





21







OPERATING EXPENSES





The table below sets forth the components of Bredas operating costs for the six months ended June
30, 2006, compared to the same period in 2005.







Six Months Ended
June 30,
     
     Change2006
     
     2005
     
     Amount
     
     PercentageOPERATING EXPENSESCost of services
     $1,847,342
        
     $1,714,778
        
     $132,564
        
     7.7
        %Depreciation and amortization
     488,677
        
     465,616
        
     23,061
        
     5.0
        %Selling, general and administration
     1,101,523
        
     990,604
        
     110,919
        
     11.2
        %$3,437,542
        
     $3,170,998
        
     $266,544
        
     8.4
        %


Cost of Services - $132,564





Cost of services increased $132,564, or 7.7%, for the six-month period ended June 30, 2006, when
compared to the six-month period ended June 30, 2005.  The increased costs primarily reflected increased labor costs from rate increases implemented in 2006, and increased provisioning costs for the
new satellite, high-speed Internet product rolled out in fourth quarter 2005, and for which there were no corresponding costs for the six-month period ended June 30, 2005.  Bredas costs also
increased for the provisioning of Bredas own Internet service now offered in its southern Iowa exchanges as more customers bundled their Internet with other services that they were already receiving
from Breda.  Cost of long distance also increased as a greater number of customers continue to use Bredas long distance service.  Breda also incurred additional costs for repair and maintenance
expenditures

for its central offices, equipment and buildings and grounds during the six-month period ended June 30, 2006, when compared to the six-month period ended June 30, 2005.  Tele-Services overall
customer growth for cable TV services declined, so Tele-Services programming costs decreased in spite of increases in the programming rates paid by Tele-Services in order to offer its cable TV
offerings.  Breda is allocating a portion of shared provisioning costs between BTC, Inc.s CLEC operation and its Internet services operation.





Depreciation and Amortization  $23,061





Depreciation and amortization expense increased $23,061, or 5.0%, for the six-month period ended
June 30, 2006, when compared to the six-month period ended June 30, 2005.  Breda added over $1,000,000 in new switch plant assets in its Carroll, Iowa operations and Emergency Alert Equipment in its
cable TV operations, both of which became operational in the fourth quarter of 2005, and which are generating additional depreciation expense now that the equipment has been placed into service.





Selling, General and Administration  $110,919





Selling, general and administration expenses increased $110,919, or 11.2%, for the six-month period
ended June 30, 2006, when compared to the six-month period ended June 30, 2005.  While labor and benefits decreased during the six-month period ended June 30, 2006, when compared to the same period
in 2005, because of reduced full time equivalents in the Customer Service Department and the Marketing Department, this decrease was offset by an increase in administrative expense and legal expense
to oversee the process of hiring a new CEO and a





22







COO, as well as an increase in outside legal, consulting, and accounting services to facilitate the
preparation of SEC filings and to pursue new business opportunities in the industry.





OTHER INCOME (EXPENSE)





The table below sets forth the components of other income (expense) for the six-month period ended
June 30, 2006, compared to the same period in 2005.







Six Months Ended
June 30,
     
     Change2006
     
     2005
     
     Amount
     
     PercentageOTHER INCOME (EXPENSE)Interest and dividend income
     $169,565
        
     $197,999
        
     $(28,434
        )
     -14.4
        %Gain on sale of investments
     1,163,398
        
     (3,057
        )
     1,166,455
        
     38156.9
        %Loss on disposal of assets
     (21,714
        )
     
        
     (21,714
        )
     -100.0
        %Interest expense
     (53,633
        )
     (59,340
        )
     5,707
        
     9.6
        %Income from equity investments
     1,054,297
        
     510,243
        
     544,054
        
     106.6
        %Other, net
     3,311
        
     (6,954
        )
     10,265
        
     147.6
        %$2,315,224
        
     $638,891
        
     $1,676,333
        
     262.4
        %


Interest and Dividend Income.Interest and dividend income decreased
$28,434, or 14.4%, for the six-month period ended June 30, 2006, when compared to the six-month period ended June 30, 2005.  This is almost entirely attributable to a decrease in dividend income
received from Iowa Network Services for the six-month period ended June 30, 2006, when compared to the six-month period ended June 30, 2005.





Gain on sale of investments.The $1,166,455 increase in gain on sale of
investments for the six-month period ended June 30, 2006, when compared to the six-month period ended June 30, 2005, is mainly the result of the gain from the Rural Telephone Bank stock sale in April
2006, for which there is no corresponding entry in the same six-month period in 2005.





Loss on disposal of assets.The $21,714 loss on disposal of assets for
the six-month period ended June 30, 2006, represents the loss from the sale of a building at 526 N. Carroll Street, Carroll, Iowa, in May 2006, for which there is no corresponding entry in the same
period in 2005.





Interest Expense.The $5,707, or 9.6%, decrease in interest expense for
the six-month period ended June 30, 2006, when compared to the six-month period ended June 30, 2005, is the result of the reduction of the Rural Telephone Finance Cooperative loan balance on which
interest is calculated because of the payment of the scheduled principal payments on the loan.  There has been no change in interest rate and no additional loan proceeds have been obtained.





Income from Equity Investments.Income from equity investments increased
$544,054, or 106.6%, for the six-month period ended June 30, 2006, when compared to the six-month period ended June 30, 2005.  The equity investments income shown on Bredas financial statements is
Bredas pro-rata share of the net income or net loss of each equity investment, based on Bredas percentage of ownership in each equity investment.  The increase in equity investments income reported
on Bredas income statement for the six-month period ended June 30, 2006 is a reflection of the net increases and decreases in the net operating income of Bredas equity investments. Most of Bredas
equity investments are in cellular partnerships.  Some of these cellular investments now receive universal service funding which has increased their overall operating revenue.  Breda also had
additional

equity investment income in the six-month period





23







ended June 30, 2006, resulting from Prairie Telephones purchase of additional ownership interests
in Bug Tussel Wireless, LLC in July 2005, and for which there is no additional equity investment income for the six-month period ended June 30, 2005.  An additional source of income from equity
investments arises from Bredas ownership interest in Alpine Communications, L.C., an operating telephone company in northeastern Iowa.





Other, Net.The $10,265, or 147.6%, increase in other net income for the
six-month period ended June 30, 2006, when compared to the six-month period ended June 30, 2005, is mainly attributable to decreased partnership-related expenses.





Income Tax Expense.Income taxes increased $627,246, or 155.1%, for the
six-month period ended June 30, 2006, when compared to the same period in 2005.  The increase is a direct reflection of the increased income generated from operations and other income sources,
including the gain on the redemption of the Rural Telephone Bank stock.  The effective tax rate for the six-month period ended June 30, 2006 is 35.3%, compared to a 35.2% tax rate for the same
six-month period in 2005.  The effective tax rate differs from the U.S. statutory rate due to state income taxes and the proportion of income from investments which are exempt from income tax.





Net Income.Net income increased $1,145,147, or 153.9%, for the
six-month period ended June 30, 2006, when compared to the same period in 2005.





Liquidity and Capital Resources





Bredas short-term and long-term liquidity requirements arise primarily from the following:
operations and working capital requirements; capital expenditures; interest payments on the long term financing from the Rural Telephone Finance Cooperative; dividend payments on Bredas common
stock; redemption of Bredas common stock; and potential industry-related acquisitions or investments.





Breda intends to fund the operations, working capital requirements, capital expenditures, interest
payments, dividend payments, and stock redemptions from cash from operations.  Breda also intends to fund smaller industry-related acquisitions or investments from cash from operations. For the six
months ended June 30, 2006 and 2005, cash provided by operating activities was $427,336 and $1,411,884, respectively.





To fund any significant future acquisitions or investments, Breda would consider the redemption of
its short-term and long-term marketable securities investments; the use of its revolving lines of credit with the Rural Telephone Finance Cooperative; or the addition of long-term debt from industry
lenders.  Breda presently has an unused line of credit with the Rural Telephone Finance Cooperative of $1,500,000, and Prairie Telephone has an unused line of credit with the Rural Telephone Finance
Cooperative of $500,000.  Bredas present revenues would be able to sustain the costs of additional debt if the need arose.  However, all potential acquisitions or investments would be evaluated on
their own merits for cash and revenue production, and if the return on investment was sufficient to incur the additional debt.





24







Breda has historically funded its operations and capital expenditure requirements primarily from
cash from operations.  The following table summarizes Bredas short-term liquidity, as of June 30, 2006, and December 31, 2005.







As ofJune 30,
2006
     
     December 31,
2005Short-Term LiquidityCurrent Assets
     $3,443,490
        
     $2,766,901Current Liabilities
     466,064
        
     1,115,177Net Working Capital
     $2,977,426
        
     $1,651,724Cash and Cash Equivalents
     $1,523,605
        
     $739,741Short Term Marketable Securities
     $649,076
        
     $635,409Available on Line of Credit
     $2,000,000
        
     $2,000,000


Current liabilities decreased $649,113 for the six-month period ended June 30, 2006, when compared
to the year ended December 31, 2005.  Accounts payable decreased $228,021 when comparing the two periods, which is mainly attributable to liabilities incurred as of December 31, 2005, for the
installation of the tandem switch, for which there are no corresponding liabilities at June 30, 2006.  Accrued taxes decreased $378,871 for the six-month period ended June 30, 2006, when compared to
the year ended December 31, 2005.  The decrease is attributable to additional estimated tax payments made in the second quarter of 2006 related to the gain on the Rural Telephone Bank stock
redemption, and for which there were no corresponding payments in 2005.  There was also a decrease of $40,247 in accrued payroll for the six-month period ended June 30, 2006, when compared to the
year ended December 31, 2005.





The following table summarizes Bredas sources and uses of cash for the six months ended June 30,
2006 and 2005.







For the Six Months Ended
June 30,2006
     
     2005Net Cash Provided (Used)Operating Activities
     $427,336
        
     $1,411,884Investing Activities
     654,589
        
     (1,086,655
        )Financing Activities
     (298,061
        )
     (337,481
        )


For the six months ended June 30, 2006 and 2005, cash provided by operating activities was $427,336
and $1,411,884, respectively.





Cash provided by investing activities increased $1,741,244 for the six-month period ended June 30,
2006, when compared to the six-month period ended June 30, 2005.  During the first quarter of 2005, Prairie Telephone purchased 5,000 units of Bug Tussel Wireless, L.L.C. for $200,000, and made
additional capital contributions to Carroll County Wireless, L.L.C. and Guthrie County Wireless, L.L.C., of $30,000 and $50,000, respectively.  There were no corresponding expenditures in the first
quarter of 2006.  There was also an increase in proceeds from the redemption of marketable securities of $212,465 for the six-month period ended June 30, 2006, when compared to the same period in
2005.  In addition, there was an increase in proceeds from the redemption of the Rural Telephone Bank stock as well as the sale of the building at 526 N. Carroll Street, in Carroll, Iowa.





25







Cash used in financing activities was $298,061 for the six-month period ended June 30, 2006, and
$337,481 for the six-month period ended June 30, 2005.  These amounts represent the cash used to repay Rural Telephone Finance Cooperative long-term debt, the cash used for the redemption of stock,
and the cash used to pay dividends to shareholders.





Long Term Debt





As of June 30, 2006, Breda had outstanding $1,398,548 of long-term debt with the Rural Telephone
Finance Cooperative.  This debt carries a fixed rate of interest of 7.35%.  Substantially all of the assets of Breda are pledged as security for the long-term debt.  The Rural Telephone Finance
Cooperative notes are to be paid in equal quarterly installments covering principal and interest until paid in full by the year 2013.





The security and loan agreements underlying the Rural Telephone Finance Cooperative notes contain
certain restrictions on distributions to stockholders, investment in, or loans to others, and payment of management fees or an increase in management fees.  Breda is restricted from making any
distributions, except as might be specifically authorized in writing in advance by the Rural Telephone Finance Cooperative note holders, unless Bredas net worth meets the minimum requirements set
forth in the loan agreement and distributions are limited to certain levels of prior year cash margins.  In addition, Breda is required to achieve a debt service coverage ratio of not less than 1.25
to 1 and a times interest earned ratio of not less than 1.5 to 1.





Obligations and Commitments





Bredas ongoing capital commitments include capital expenditures and debt service requirements.  For
the six months ended June 30, 2006, capital expenditures were $48,826.


Bredas contractual obligations as of June 30, 2006 are:







June - December 2006
     
     
     $83,6132007
     175,7292008
     187,7102009
     200,5072010
     214,1772011 and After
     536,812


Breda believes that cash provided by operations and current cash balances will be adequate to meet
Bredas foreseeable operational, capital expenditure, and debt service requirements.  However, Bredas actual cash needs and the availability of required funding may differ from Bredas expectations
and estimates, and those differences could be material.  Future capital requirements will depend on many factors, including, among others, the demand for Bredas services in Bredas existing markets
and regulatory, technological and competitive developments.





Off-Balance Sheet Risk and Concentration of Credit Risk





Breda has no off-balance sheet exposure or risk.





Breda has certain financial instruments which could potentially subject Breda to concentrations of
credit risk.  These financial instruments consist primarily of trade receivables and cash and temporary cash investments.





26







Breda adheres to its investment policy with respect to marketable securities, which allows
investments in:






a.

        Securities issued or guaranteed by the U.S. Government or its agencies.




b.

        Corporate or municipal bonds rated A or better by a major rating service.




c.

        Money market funds investing in U.S. Government, U.S. Agency or highly rated
municipal securities.






Recent Accounting Pronouncement





In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a replacement
of APB Opinion No. 20 and SFAS No. 3.  SFAS No. 154 requires retrospective application to prior periods financial statements of a voluntary change in accounting principle unless it is impracticable.
 SFAS No. 154s retrospective application requirement replaces APB No. 20s requirement to recognize most voluntary changes in accounting principle by including the cumulative effect of changing to
the new accounting principle in net income of the period of the change.  SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15,
2005 (as of January 1, 2006, for Breda).  Breda does not expect adoption of SFAS No. 154 to have a material effect on its results of operations or financial position.





Other Activities and Issues





Access charge revenues constitute a substantial part of Bredas consolidated revenues, and the
regulation of access charge rates by the Federal Communications Commission (FCC) and the Iowa Utilities Board (IUB) creates a material risk to Breda and its subsidiaries.





The FCC currently has an open docket on inter-carrier compensation, which was initiated to identify
a unified approach to intercarrier compensation.  The current intercarrier compensation system distinguishes between different types of carriers and services, such as local and long-distance or
wireless and wireline, and the FCC has indicated that the FCC plans to replace the current system with a unified intercarrier compensation system. The FCC initiated a rule making proceeding to
consider this matter and the questions that the FCC are examining include the effect that any change in the compensation system will have on consumers and the universal service fund. Breda continues
to work with two Iowa industry associations in reviewing and submitting comments on the various proposals before the FCC.





Breda believes that changes in access charges will likely occur, and that if any of the plans known
today are adopted, as currently proposed, there will be substantial reductions in access revenues.  Since access charge revenues constitute a substantial portion of Bredas total consolidated
revenues, this is an area of material risk to Breda and its subsidiaries.





Breda and its subsidiaries are also subject to risk regarding changes in intrastate access charge
rates because concerns have been raised by the Iowa legislature and the IUB regarding intrastate rates, and whether alternative intrastate intercarrier compensation mechanisms should be investigated.
 Breda does not believe, however, that it is possible to predict at this time whether intrastate access rates will be lowered, or if intrastate access rates are lowered, the amount of the decrease in
those rates.  It is therefore uncertain at this time whether this issue will result in an adverse effect on Bredas operating income.  Breda does, however, anticipate continuing pressure for the
lowering of intrastate access charge rates.





27







Universal service funding is also an important part of Bredas consolidated revenues, and the
regulation of universal service funding by the FCC is another area of material risk to Breda and its subsidiaries.  The universal service funds are also now being paid to more telecommunications
providers than in the past.  Breda anticipates that there may be changes in the future on how universal service funds are disbursed among the numerous eligible telecommunications providers.





In August 2005, the FCC opened an extremely broad comment proceeding on Universal Service Funding
(USF), in which it sought input on a variety of specific USF proposals offered by members of the Federal-State Joint Board on Universal Service.  State industry associations have been meeting with
FCC staff members and with various Washington legislative staff members to discuss proposed legislation preserving and improving USF, including how funds are expended and assessing levels of
broadband deployment in Iowa.    The issues at stake are both on how the revenue is assessed and generated for the universal service fund, and the criteria for the disbursement of funds from the
universal service pool.  Some of the suggested changes on the revenue side of the debate would be to have all current entities paying into the USF continue to pay into the fund; have any service
provider that uses

telephone numbers, IP (Internet Protocol) addresses or their functional equivalents to provide real-time voice communications pay into the fund; and any provider that offers a network connection for
a fee to the public, including DSL, cable modem connections, WiMax and broadband over power lines pay into the fund.  This would increase the revenue base to more than just carriers providing
telephone line services.





On the disbursement side, some proposals would limit the number of eligible telecommunication
carriers by specifying the criteria that must be met by recipients, including that the provider must provide service throughout their service area; remain functional in emergency situations; and
satisfy both consumer protection and service quality standards.  Unlike present USF payments, the proposals include that USF payments would allow recovery based on actual costs, rather than the
incumbent carriers costs. Breda believes that federal universal service fund changes will occur but is unable to determine an estimated time frame or estimated financial ramifications as of the date
of this filing





Telephone services providers like Breda, Prairie Telephone, Westside Independent and BTC, Inc. are
subject to competition from other providers.  As a result of the Telecommunications Act of 1996, telephone companies are no longer afforded exclusive franchise service areas.  Under that Act,
competitors can now offer telephone services to Bredas, Prairie Telephones, Westside Independents and BTC, Inc.s subscribers, and also request access to their lines and network facilities in
order to offer any type of service that can be provided through those lines and facilities.  The Act and the regulations promulgated by the FCC and state regulatory agencies to implement various
parts of the Act could have a material adverse effect on Breda, Prairie Telephone, Westside Independent and BTC, Inc. because they open up Breda, Prairie Telephone, Westside Independent and BTC, Inc.
to competition that

they were not subject to in the past.





There are numerous telephone companies which have filed to provide telephone services throughout all
of Iowa, and Breda anticipates that more of those types of filings will be made by other telephone companies.  To date, however, no company has chosen to compete in any of Bredas, Prairie
Telephones or Westside Independents service areas.  Breda does not know the plans of any companies, but Breda currently believes the possibility of any company entering any of those service areas
in 2006 is small.





28







BTC, Inc., however, provides telephone services in the Carroll, Iowa market area, and there are
already other companies providing telephone services in that area.  Breda also believes that there will be additional local exchange carriers entering the Carroll, Iowa market area in 2006.  For
example, Mediacom, which is the 9th largest cable television operator in the United States and the local cable provider in the Carroll, Iowa market, is now providing a phone service offering through
Mediacoms partnership with Sprint.  The IUB also granted Mediacom a certificate of public convenience to offer service in numerous areas throughout Iowa.





Breda also anticipates that it will face new competition from other providers of newer VoIP (voice
over internet protocol) technologies, such as Vonage and Skype, in all of its exchanges.





Breda anticipates that Mediacoms and any such other offerings will result in a reduction of
revenue.  A reduction in revenue will also result if any other telephone companies at some point determine to provide services in any of Bredas, Prairie Telephones, Westside Independents or BTC,
Inc.s service areas.





Breda continues to investigate new technology and product offerings in the Internet field that it
can provide to its customers, or that could be considered value-added features to its already existing product.  For example, Breda now offers a dial-up accelerator product, which allows Internet
service providers, such as BTC, Inc., to deliver data services over their existing dial-up and wireless networks at up to six times the normal speed.  In May 2005, Breda began to offer its dial-up
and high-speed Internet customers a value-added product, which eliminates customer problems due to Internet security threats.  This product is fully-automated and integrated, and protects against
viruses, spyware, popups, and automatically installs tested Microsoft Security patches, and performs diskeeper functions.  Breda has had good response from its Internet customers for this product.





Breda is presently launching high speed Internet service offerings in all of its telephone exchanges
that currently do not have the capability to offer this type of service.  These offerings would utilize the Internet product technologies currently used by Breda, as well as new technologies that
allow customers outside the normal high speed service area to still receive a high bandwidth connection.  These customers normally cannot receive high speed Internet services using standard
provisioning equipment because of distance restrictions in most high speed Internet technologies.





Breda entered into a marketing and distribution agreement with the National Rural Telecommunications
Cooperative (NRTC) on May 13, 2004, for the distribution of satellite and high speed Internet service.  One reason Breda entered into this agreement was so that Breda would have a means to provide
high speed Internet service to its rural customers who may otherwise lack the opportunity to obtain high speed Internet service through existing broadband options, such as cable modem, DSL, and
wireless, because of distance and location factors.  NRTC has a master distribution agreement with WildBlue Communications, Inc., through which NRTC has obtained rights to market, promote, sell and
distribute satellite-based Internet access services and related products to end users in the continental United States, including through NRTCs eligible members, such as Breda.  Bredas marketing
campaign

originated on September 1, 2005, and Breda received good response to this service.  Breda and the other satellite Internet providers in WildBlues satellite Beam 26 were notified in January 2006 that
because of the huge success of this product, the capacity in Beam 26 was filling up, and no additional customers could be added once capacity reached a designated limit in order to not degrade the
service for the customers already using the service.  Breda subsequently stopped





29







taking applications for this service on March 13, 2006.  NRTC and WildBlue anticipate that
additional satellite capacity will be available in early 2007, at which time Breda will again be able to offer this service to its customers.


Breda still believes, however, that it will need to continue to pursue new marketing approaches in
order to attempt to retain and increase its Internet customer base, and that there will be continuing competitive pressures to lower dial-up rates and to provide higher speed Internet access.





Prairie Telephone became a 10% owner of Desktop Media, L.L.C. on May 2, 2001.    Prairie Telephone
also loaned $500,000 to Desktop Media, L.L.C. on May 2, 2001, and advanced an additional $45,307 on June 9, 2004 to fund operational expenses until service revenues were collected.  Prairie Telephone
signed a principal deferral agreement with Desktop Media, L.L.C. on September 17, 2003, which deferred the principal payments due in the months of September through December 2003, and which also
provided that Prairie Telephones ownership in Desktop Media, L.L.C. would be increased from 10% to 17% if at any time in the year 2004 Desktop Media, L.L.C. was not able to generate a minimum
sustainable monthly profit of $36,000, or was unable to make a regularly scheduled principal payment.  Both of these stipulations were not met in the first quarter of 2004, and Prairie Telephone
accordingly

acquired an additional 7% ownership of Desktop Media, L.L.C.  Prairie Telephone, along with the other owners of Desktop Media, L.L.C., is negotiating a purchase agreement to sell their interests in
this entity.  Breda anticipates that a sale may be finalized by early 2007.





Prairie Telephone purchased 5,000 units of Bug Tussel Wireless, L.L.C. for $200,000 in March 2005,
which gave Prairie Telephone a 7.87% ownership interest.  Prairie Telephone purchased an additional 2,462.264 units of Bug Tussel Wireless, L.L.C. in July 2005 for $113,264.15.  Prairie Telephone now
has a 9.75% interest in Bug Tussel Wireless, L.L.C.  Bug Tussel Wireless, L.L.C. is located in Green Bay, Wisconsin, and its operating plan involves erecting tower sites for wireless services.





At its quarterly meeting on August 4, 2005, the Board of Directors of the Rural Telephone Bank
approved the liquidation and dissolution of the Bank.  On November 10, 2005, the liquidation and dissolution process was initiated with the signing of the 2006 Agriculture Appropriations bill by
President Bush, which paved the way for all Bank stock to be redeemed.  Breda received liquidation funds on April 13, 2006, of $1,336,000, which was the par value of Bredas investment in the Bank
stock. Bredas net of tax gain on the liquidation of this investment is approximately $760,640.






Item 3.

        Controls and Procedures.





The principal executive officer and the principal financial officer of Breda have evaluated the
effectiveness 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.





30







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 Bredas 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 Bredas property.






Item 2.

        Unregistered Sales of Equity Securities and Use of Proceeds.





Breda did not issue any shares of its common stock during the period of April 1, 2006 through June
30, 2006.





Breda did not purchase any shares of its common stock from shareholders during the period of April
1, 2006 through June 30, 2006.





There were no transfers of shares of Bredas common stock during the period of April 1, 2006 through
June 30, 2006.






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, 2006 through June 30, 2006.






Item 4.

        Submission of Matters to a Vote of Security Holders.





No matters were submitted to a vote of the shareholders of Breda, through the solicitation of
proxies or otherwise, during the period of April 1, 2006 through June 30, 2006.






Item 5.

        Other Information.





Breda entered into an Employment Agreement with Steve Frickenstein on June 14, 2006, pursuant to
which Mr. Frickenstein became employed as the chief executive officer of Breda effective on July 1, 2006.





Breda also entered into an Employment Agreement with Charles J. Deisbeck on June 14, 2006, pursuant
to which Mr. Deisbeck became employed as the chief operations officer of Breda effective on July 1, 2006.





Breda generally holds its annual meeting of shareholders in May of each year.  Breda had not yet held
its annual meeting for 2006 as of the date of this quarterly report, however, because Bredas auditors have been unable to complete the audit of Bredas financial statements for 2005
because the auditors have been unable to obtain audited financial statements for 2005 supporting Bredas investments in RSA No. 7 Limited Partnership,





31







Iowa 8 Monona Limited Partnership and RSA No. 9 Limited Partnership, or Bredas equity in the
earnings of such limited partnerships, and the auditors have otherwise been unable to satisfy themselves about the carrying value of Bredas investments in, or Bredas equity in the
earnings of, such limited partnerships by other auditing procedures.  Breda and its auditors are continuing to work with those limited partnerships to attempt to obtain audited financial statements
for those limited partnerships or to establish processes and procedures by which Bredas auditors could otherwise satisfy themselves about the carrying value of Bredas investments in, and
Bredas equity in the earnings of, such limited partnerships by other auditing procedures.  Breda anticipates holding the annual meeting in September or October.





There were no materialchanges during the period of April 1, 2006 through June
30, 2006 to the procedures by which the shareholders of Breda may recommend nominees to Bredas board of directors.






Item 6.

        Exhibits.






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.





[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]





32







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 11, 2006.

        By:/s/ Steve Frickenstein


Steve Frickenstein, Chief Executive Officer






Date:  August 11, 2006.

        By:/s/ Jane Morlok




Jane Morlok, Chief Financial Officer











33







EXHIBIT INDEXExhibits to Form 10-QSBThree Months Ended June 30, 2006BREDA TELEPHONE CORP.




Description of Exhibit

        Page






3.

        Articles of Incorporation and Bylaws







3.1

        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.)3.2

        Amended and Restated Bylaws of Breda Telephone Corp. (Filed
as Exhibit 3.2 to Bredas Form 10-QSB for the quarterly period ended March 31, 2006 and filed May 12, 2006, and incorporated herein by this reference.)






10.

        Material Contracts







10.1

        Employment Agreement dated July 1, 2003 between Breda and
Jane Morlok (Filed as Exhibit 10.2 to Bredas Form 10-QSB for the quarterly period ended June 30, 2003 and filed August 12, 2003, and incorporated herein by this reference.)*10.2

        Employment Agreement dated June 14, 2006 between Breda and
Steve Frickenstein.

        E-1*10.3

        Employment Agreement dated June 14, 2006 between Breda and
Charles Deisbeck.

        E-5






*31.

        Rule 13a-14(a)/15d-14(a) Certifications






31.1

        Rule 13a-14(a) Certification of Chief Executive Officer

        E-931.2

        Rule 13a-14(a) Certification of Chief Financial Officer

        E-10






*32.

        Section 1350 Certifications






32.1

        Section 1350 Certification of Chief Executive Officer

        E-1132.2

        Section 1350 Certification of Chief Financial Officer

        E-12





*Included with this filing.