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, 2002.

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

      For the transition period from ____________________ to __________________

                         Commission file number: 0-26525

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

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

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

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

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 34,018 shares of common stock,
no par value, at June 30, 2002.

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

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                             CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS
                                 For the Periods
                          Ended June 30, 2002 and 2001
                      and the Year Ended December 31, 2001

<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                          December 31,
                                                           June 30,          2001
                                                             2002        (As restated)
                                                          -----------    ------------
                              ASSETS
<S>                                                       <C>             <C>
CURRENT ASSETS
  Cash and cash equivalents                               $ 1,157,736     $ 1,797,415
  Temporary investments                                       105,311         636,169
  Accounts receivable                                         581,208         536,378
  Interest receivable                                          83,241          75,058
  Prepaid income taxes                                         86,870          51,280
  Inventories                                                 104,789          93,028
  Other                                                       116,198         100,265
                                                          -----------     -----------
                                                            2,235,353       3,289,593
                                                          -----------     -----------

OTHER NONCURRENT ASSETS
  Long-term investments                                     3,426,233       2,494,073
  Other investments:
   Investments in unconsolidated affiliates at equity       2,928,087       2,489,639
   Long-term investments at cost                              804,164         811,497
  Intangibles, net of accumulated amortization                898,368       1,018,313
  Note receivable                                             460,412         451,502
                                                          -----------     -----------
                                                            8,517,264       7,265,024
                                                          -----------     -----------

PROPERTY AND EQUIPMENT                                      5,522,938       5,609,292
                                                          -----------     -----------

     TOTAL ASSETS                                         $16,275,555     $16,163,909
                                                          ===========     ===========
</TABLE>

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


                                       2
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS

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

CURRENT LIABILITIES
  Current portion of long-term debt                             $   126,365     $   126,365
  Accounts payable                                                  328,480         199,675
  Accrued taxes                                                     138,321         141,439
  Other                                                             165,645         157,791
                                                                -----------     -----------
                                                                    758,811         625,270
                                                                -----------     -----------

LONG-TERM DEBT, less current portion                              1,850,484       1,912,625
                                                                -----------     -----------

DEFERRED CREDITS                                                     73,916         114,564
                                                                -----------     -----------

STOCKHOLDERS' EQUITY
  Common stock - no par value, 5,000,000 shares authorized,
    34,018 and 35,025 shares issued and outstanding
    at $280 and $258 stated value, respectively                   9,525,040       9,036,450
  Retained earnings                                               4,067,304       4,475,000
                                                                -----------     -----------
                                                                 13,592,344      13,511,450
                                                                -----------     -----------

               TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $16,275,555     $16,163,909
                                                                ===========     ===========
</TABLE>

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


                                       3
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
            For the Three and Six Months Ended June 30, 2002 and 2001


<TABLE>
<CAPTION>
                                           For the Three Months Ended         For the Six Months Ended
                                             2002             2001             2002             2001
                                                          (As restated)                     (As restated)
                                          -----------     -------------     -----------     -------------
<S>                                       <C>              <C>              <C>              <C>
OPERATING REVENUES                        $ 1,374,693      $ 1,517,006      $ 2,813,724      $ 3,086,443
                                          -----------      -----------      -----------      -----------

OPERATING EXPENSES
  Cost of services                            548,236          507,736        1,089,817        1,106,108
  Depreciation and amortization               262,780          275,977          514,506          554,635
  Selling, general and administration         423,555          488,238          935,200        1,025,655
                                          -----------      -----------      -----------      -----------
                                            1,234,571        1,271,951        2,539,523        2,686,398
                                          -----------      -----------      -----------      -----------

OPERATING INCOME                              140,122          245,055          274,201          400,045
                                          -----------      -----------      -----------      -----------

OTHER INCOME (EXPENSES)
  Interest and dividend income                 59,878           63,011          124,874          114,257
  Interest expense                            (36,935)         (39,110)         (74,491)         (78,750)
  Income from equity investments              229,758          214,767          528,441          404,548
  Other, net                                  (10,096)           9,734           (8,563)           9,979
                                          -----------      -----------      -----------      -----------
                                              242,605          248,402          570,261          450,034
                                          -----------      -----------      -----------      -----------

INCOME BEFORE INCOME TAXES                    382,727          493,457          844,462          850,079
                                          -----------      -----------      -----------      -----------

INCOME TAXES                                  148,489          198,433          312,940          322,709
                                          -----------      -----------      -----------      -----------

INCOME BEFORE CUMULATIVE
  EFFECT OF ACCOUNTING
  CHANGE                                      234,238          295,024          531,522          527,370
                                          -----------      -----------      -----------      -----------

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

NET INCOME                                $   234,238      $   295,024      $   460,754      $   527,370
                                          ===========      ===========      ===========      ===========

NET INCOME PER COMMON SHARE               $      6.79      $      8.05      $     13.29      $     14.31
                                          ===========      ===========      ===========      ===========
</TABLE>

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


                                       4
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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

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

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

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

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

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

    Comprehensive Income:
     Net income                                                       460,754           460,754

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

     Common stock redeemed, net       (1,007)       (275,646)                          (275,646)

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

Balance at June 30, 2002              34,018     $ 9,525,040      $ 4,067,304      $ 13,592,344
                                     =======     ===========      ===========      ============
</TABLE>

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


                                       5
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                                            2002              2001
                                                                         -----------      -----------
<S>                                                                      <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income, as restated                                                $   460,754      $   527,370
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                                            514,506          554,635
    Amortization of investment tax credits                                    (4,884)          (4,884)
    Deferred income taxes                                                    (35,764)          (7,030)
    Cumulative effect of accounting change                                   119,945               --
    Note receivable discount                                                  (8,910)              --
    Equity income in unconsolidated affiliates, net of distributions
     received of $84,992 and $338,898 in 2002 and 2001, respectively        (443,449)         (65,650)
    Changes in operating assets and liabilities:
      (Increase) decrease in assets                                         (116,297)         250,683
      Increase (decrease) in liabilities                                     138,541         (132,537)
                                                                         -----------      -----------
    Net cash provided by operating activities                                624,442        1,122,587
                                                                         -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures                                                     (431,704)        (195,786)
   Cost of removing plant, net of salvage                                      3,553            4,505
   Purchase of investments                                                  (786,134)        (125,745)
   Proceeds from the sale of investments                                     384,832          100,652
   Issuance in note receivable                                                               (440,000)
   Purchase of other investments                                                              (60,000)
   Sale in other investments                                                   7,333          314,692
                                                                         -----------      -----------
    Net cash used in investing activities                                   (822,120)        (401,682)
                                                                         -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Dividends paid                                                           (104,214)        (111,087)
   Common stock redeemed                                                    (275,646)        (336,532)
   Repayment of long-term debt                                               (62,141)         (58,174)
                                                                         -----------      -----------
    Net cash used in financing activities                                   (442,001)        (505,793)
                                                                         -----------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        (639,679)         215,112
                                                                         -----------      -----------

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

CASH AND CASH EQUIVALENTS AT END OF PERIOD                               $ 1,157,736      $ 1,319,689
                                                                         ===========      ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   Cash paid during the period for:
    Interest                                                             $    74,491      $    78,750
    Income taxes                                                         $   340,000      $   120,000
</TABLE>

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


                                       6
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

NOTE 2. OPERATING SEGMENTS

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

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

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

<TABLE>
<CAPTION>
                                         Local                      Internet
                                       Exchange                     Service
                                        Carrier      Broadcast      Provider        Other         Total
                                      ----------     ---------      ---------      -------      ----------
          Six months ended
           June 30, 2002
          ----------------
<S>                                   <C>            <C>            <C>            <C>          <C>
      Revenues
        External customers            $1,953,277     $ 488,432      $ 372,015      $    --      $2,813,724
        Intersegment                          --            --             --           --              --
          Segment profit (loss)          596,419      (126,920)        (5,807)      (2,938)        460,754
</TABLE>


                                       7
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. OPERATING SEGMENTS, (Continued)

<TABLE>
<CAPTION>
                                                      Local                            Internet
                                                     Exchange                          Service
                                                      Carrier         Broadcast        Provider           Other           Total
                                                    -----------      -----------      -----------      -----------      ----------
           Six Months ended
            June 30, 2001
            (As restated)
           ----------------
<S>                                                 <C>              <C>              <C>              <C>              <C>
      Revenues
           External customers                       $ 2,034,833      $   509,377      $   385,877      $   156,356      $3,086,443
           Intersegment                                      --               --               --               --              --
            Segment profit (loss)                       594,404          (51,193)         (11,833)          (4,008)        527,370

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

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

<CAPTION>
          Three months ended
            June 30, 2001
             As restated
          ------------------

      Revenues
<S>                                                 <C>              <C>              <C>              <C>              <C>
           External customers                       $   988,053      $   256,696      $   196,698      $    75,559      $1,517,006
           Intersegment                                      --               --               --               --              --
             Segment profit (loss)                      319,902          (24,377)           1,257           (1,758)        295,024

<CAPTION>
       Reconciliation of Segment Information
       -------------------------------------                Three months ended                 Six months ended
                                                          June 30,       June 30,          June 30,        June 30,
                                                            2002           2001              2002            2001
                                                                       (As restated)                     (As restated)
                                                        -----------    -------------      -----------    -------------
<S>                                                     <C>              <C>              <C>              <C>
      REVENUES:
           Total revenues and sales for reportable
             segments                                   $ 1,374,693      $ 1,441,447      $ 2,813,724      $ 2,930,087
           Other revenues                                        --           75,559               --          156,356
           Elimination of intersegment revenues                  --               --               --               --
                                                        -----------      -----------      -----------      -----------
               Consolidated Revenues                    $ 1,374,693      $ 1,517,006      $ 2,813,724      $ 3,086,443
                                                        ===========      ===========      ===========      ===========

      PROFIT:
           Total profit for reportable segments         $   234,625      $   296,782      $   463,692      $   531,378
           Other profit (loss)                                 (387)          (1,758)          (2,938)          (4,008)
                                                        -----------      -----------      -----------      -----------
               Net Income                               $   234,238      $   295,024      $   460,754      $   527,370
                                                        ===========      ===========      ===========      ===========
</TABLE>


                                       8
<PAGE>

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. NET INCOME PER COMMON SHARE

        Net income per common share for the three and six months ended June 30,
        2002 and 2001 was computed by dividing the weighted average number of
        shares of common stock outstanding into the net income. The weighted
        average number of shares of common stock outstanding for the three and
        six months ended June 30, 2002 and 2001 are 34,498 and 34,671, and
        36,653, and 36,841, respectively.

NOTE 4. STOCK VALUE ADJUSTMENT

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

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


                                       9
<PAGE>

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

            Six-months ended June 30, 2002 Compared to Six-months ended June 30,
            2001.

            There was an decrease in total operating revenues for the six-month
            period ended June 30, 2002, when compared to the same period in
            2001, of $272,719, or 8.8%. The segments making up total operating
            revenue are: local exchange carrier services, broadcast services,
            Internet services and other services revenue.

            Local exchange carrier services revenue decreased $81,556, or 4.0%,
            for the six-month period ended June 30, 2002, when compared to the
            six-month period ended June 30, 2001. Local exchange carrier
            services revenue includes local network services, network access
            services, billing and collection services and miscellaneous income.
            These revenue components are discussed below.

            Local network services revenue decreased $893, or 0.3%, for the
            six-month period ended June 30, 2002, when compared to the same
            six-month period in 2001. This decrease resulted primarily from the
            closure of the Pacific Junction Telemarketing Center in July 2002.
            This closure reduced the number of local subscribers by almost 60
            lines, and this revenue was included in the six months period ended
            June 30, 2001, and for which there is no corresponding income in the
            six-month period ended June 30, 2002.

            Network access revenue decreased $47,774, or 3.8%, when comparing
            the six-month period ended June 30, 2002, to the six-month period
            ended June 30, 2001. This decrease was due primarily to the
            reduction of access revenue for the six-month period ended June 30,
            2002, which resulted from the closing of Pacific Junction's
            telemarketing center on July 26, 2001. Pacific Junction's
            telemarketing calls had generated an average of approximately $4,400
            per month in access revenues for Breda.

            The remaining network access revenue decrease is the result of
            Breda, Prairie Telephone and Westside Independent no longer
            receiving access revenue from Qwest for traffic originating with a
            wireless carrier that uses Qwest to deliver the traffic back to a
            number served by those local exchange carriers that participate in
            use of the switching and network facilities offered by Iowa Network
            Services ("INS"). Breda, Prairie Telephone and Westside Independent
            are local exchange carriers using switching and network facilities
            offered by INS. In September 1999, Qwest sent a memo informing
            affected parties that Qwest would be making adjustments related to
            wireless originating minutes for intraMTA calls on the access bills
            of the INS participating companies, and that the participating
            companies would receive no compensation for terminating this
            traffic. Qwest filed a Petition for Declaratory Order on May 19,
            2000 with the Iowa Utilities Board ("IUB"), requesting that the IUB
            establish rules, requirements and obligations that local exchange
            carriers, such


                                       10
<PAGE>

            as Breda, and wireless carriers must follow when using Qwest as a
            transit provider for the exchange of traffic between them. On March
            18, 2002, the IUB affirmed its proposed decision and order issued in
            November 2001. The consequence of this order, unless the courts on
            judicial review would change it, was that Qwest would not be
            required to make the payments that it unilaterally withheld from
            companies such as Breda, for the wireless phone traffic that it
            unilaterally pushed through its toll trunks at INS. The IUB also
            denied Qwest's request for a refund of payments it had paid before
            April 1999. During the six-month period ended June 30, 2002, Breda,
            Prairie Telephone, and Westside Independent had a decrease in access
            revenue because of the Qwest action of almost $16,000, when compared
            to the same six-month period ended June 30, 2001.

            Billing and collection service revenue is a function of the amount
            of billing and collection services provided by Breda to other
            carriers such as AT&T. The billing and collection services revenues
            decreased $11,404, or 34.5%, for the six-month period ended June 30,
            2002, when compared to the six-month period ended June 30, 2001. The
            decrease reflects not only that carriers, such as AT&T, are
            performing more of their own billing and collection work, but also
            that more customers are switching to Breda's long distance calling
            plans.

            Miscellaneous revenue decreased $21,485, or 4.6%, for the six-month
            period ended June 30, 2002, when compared with the six-month period
            ended June 30, 2001. The decrease in miscellaneous revenue was
            primarily the result of decreased cellular service commissions. The
            overall volume decrease for the six-month period ended June 30, 2002
            was 42 units, when compared to the six-month period ended June 30,
            2001. However, that net decrease coupled with a change in ratio to
            fewer new customer contracts, which carry higher commissions, to a
            higher ratio of retention contracts, which carry lower commissions,
            caused the overall commission revenue to decrease. The decrease in
            cellular related revenues was, however, partially offset by revenues
            generated from new services, such as the sale of key systems for
            business applications, and long distance service. Breda believes the
            decrease is also attributable to the economic slowdown that occurred
            after the terrorist attacks on September 11, 2001.

            Broadcast services revenue decreased $20,945, or 4.1%, when
            comparing the six-month period ended June 30, 2002, to the six-month
            period ended June 30, 2001. This decrease was directly attributable
            to a 3.0% decrease in the customer base when comparing the two
            six-month periods, and is attributable to competition from satellite
            dish providers and declining population bases in the small rural
            communities where some of Breda's broadcast systems are located.

            There was a decrease in Internet services for the six-month period
            ended June 30, 2002, when compared to the same period in 2001, of
            $13,862, or 3.6%. Breda's Internet customer base increased 5.1% for
            the six-month period ended June 30, 2002, when compared to the
            six-month period ended June 30, 2001, but the revenue


                                       11
<PAGE>

            decrease is attributable to Breda reducing its pricing of monthly
            Internet services by $3.05/customer/month for those customers not
            receiving bundled services, and to Breda's bundling of Internet
            services with its long distance services at a discounted price in
            August of 2001. This 12.2% reduction in monthly Internet service
            fees for non-bundled services was taken for competitive reasons. As
            is discussed elsewhere in this report, Breda switched to a new
            underlying Internet service provider in October of 2001 in order to
            allow Breda to further reduce costs. While Breda has lost Internet
            customers because of competition, Breda's overall Internet
            operations have continued to grow.

            Telemarketing services revenue is reported as other revenue, and it
            decreased $156,356, or 100.0%, when comparing the six-month period
            ended June 30, 2002, to the same period in 2001. The decrease is
            attributable to the closing of Pacific Junction's Telemarketing
            Center on July 26, 2001. The telemarketing call center has not been
            operational since that date, and it is unlikely that the
            telemarketing center will again become operational.

            There was an decrease in total operating expenses of $146,875, or
            5.5%, for the six-month period ended June 30, 2002, when compared to
            the six-month period ended June 30, 2001. The components making up
            operating expenses relate to cost of services, depreciation and
            amortization, and selling, general and administration expenditures.

            Cost of services expenses decreased $16,291, or 1.5%, for the
            six-month period ended June 30, 2002, when compared to the six-month
            period ended June 30, 2001. The cost of services components, which
            are plant specific operations, plant non-specific operations,
            programming, and Internet costs, are explained below.

            There was an increase of $13,565, or 2.3%, in plant specific
            operations expense when comparing the six-month period ended June
            30, 2002, to the six-month period ended June 30, 2001. While there
            was no plant specific expense for Pacific Junction for the six-month
            period ended June 30, 2002, as compared to the $20,445 in such
            expense for Pacific Junction in the six-month period ended June 30,
            2001, increases were caused by labor and benefit increases, the
            addition of costs for key system sales, and repair expense when
            comparing the two six-month periods. As noted previously, Pacific
            Junction's telemarketing center has not been in operation since July
            26, 2001.

            Plant nonspecific operating expense decreased $26,546, or 40.8%, for
            the six-month period ended June 30, 2002, when compared to the
            six-month period ended June 30, 2001. This decrease resulted from a
            company wide decrease in provisioning expenses. The provisioning
            expense decrease resulted from less transmission power used during
            this six-month period and because the company implemented a process
            called cass certification to reduce its postage expense for the
            mailing of its customer invoices. The cass certification process,
            which allows for the in-house performance of functions usually done
            by the postal system such as sorting and bundling, was


                                       12
<PAGE>

            implemented in the second quarter of 2001, so the six-month period
            ended June 30, 2001, shows first-class postage expense, versus cass
            certification rates which are shown in the six-month period ended
            June 30, 2002. Other paper supplies, and billing expenditures were
            decreased when the company began billing for multiple services on
            one invoice where customers had more than one service.

            There was an increase of $19,838, or 131.2%, in cost of long
            distance when comparing the six-month period ended June 30, 2002,
            with the six-month period ended June 30, 2001. The increase was the
            result of the costs of providing long distance service to a customer
            base, which increased 114.1% when comparing the two six-month
            periods.

            There was an increase of $2,284, or 1.4%, in programming expense for
            cable TV services when comparing the six-month period ended June 30,
            2002, with the six-month period ended June 30, 2001. The programming
            increase was the result of programming fee increases.

            The cost of Internet decreased by $25,432, or 9.8%, for the
            six-month period ended June 30, 2002, when compared to the six-month
            period ended June 30, 2001. As noted previously, on October 31,
            2001, Breda changed its underlying Internet service provider in
            order to reduce its costs to provide Internet service.

            Depreciation and amortization expense decreased $40,129 or 7.2%, for
            the six-month period ended June 30, 2002, when compared to the same
            period in 2001. Breda allocated part of the purchase price paid for
            Westside Independent Telephone Company and its cable TV subsidiary
            in 1998 to goodwill. Effective January 1, 2002, however, generally
            accepted accounting principles established by the Financial
            Accounting Standards Board no longer allow the expensing, or
            amortizing, of a portion of this goodwill over a fifteen-year
            period. Approximately $40,742 of the decrease in depreciation and
            amortization expense for the six-month period ended June 30, 2002,
            is attributable to the termination of this expense amortization.
            There was also a $6,083 decrease in depreciation and amortization
            expense which is attributable to the fact that there was no
            depreciation expense for Pacific Junction during the six months
            ended June 30, 2002 since Pacific Junction's telemarketing center
            was not in operation during that time period. The overall
            depreciation and amortization expense increased in the other
            telephone, cable TV, and Internet operations because of new
            equipment and capital items being depreciated which offset the
            decrease in the depreciation and amortization expense attributable
            to the closure of the telemarketing center in July 2002.

            Selling, general and administrative expenses decreased $90,455, or
            8.8%, for the six-month period ended June 30, 2002, when compared to
            the same period in 2001. The customer operations component decreased
            $31,873, or 7.8%, when comparing these two six-month time periods,
            and mainly resulted from the closure of the Pacific Junction
            Telemarketing Center in July 2001. There was no customer operations


                                       13
<PAGE>

            expenditures related to the Pacific Junction Telemarketing Center
            reported in the six-month period ended June 30, 2002 when compared
            to the $119,339 in expenditures during the six-month period ended
            June 30, 2001. Increases in wages, benefits, advertising
            expenditures, and training expenditures offset the telemarketing
            customers operations decrease for a net overall $31,873 decrease in
            customer operations expenditures during the six-month period June
            31, 2002. Corporate operations decreased $47,217, or 8.7%, during
            the six-month period ended June 30, 2002 when compared to the
            six-month period ended June 30, 2001. The decrease in corporate
            operations resulted from the elimination of a supervisory position
            in early 2002, and the reduction in professional fees. General taxes
            paid by Breda decreased $11,365, or 15.0%, for the six-month period
            ended June 30, 2002, when compared to the six-month period ended
            June 30, 2001, and resulted from decreased tax rates levied by the
            taxing authorities in the various counties.

            The net result of the operating services revenue and operating
            expenses was a decrease of $125,844, or 31.5%, in operating income
            for the six-month period ended June 30, 2002, when compared to the
            same six-month period in 2001.

            Other income (expense) increased $120,227, or 26.7% , during the
            six-month period ended June 30, 2002, when compared to the same
            six-month period in 2001. Interest and dividend income increased
            $10,617, or 9.3%, when comparing the six-month periods. The increase
            in interest and dividend income was mainly the result of increased
            funds drawing interest in long-term investments. Interest expense
            decreased $4,259, or 5.4%, when comparing the same six-month
            periods. The decrease in interest expense was the result of the
            quarterly principal payments reducing the overall debt on which
            interest is paid in the following quarters. Breda did not undertake
            any additional debt during the six-month period ended June 30, 2002.

            Income from equity investments increased $123,893, or 30.6%, during
            the six-month period ended June 30, 2002, when compared to the same
            six-month period in 2001. In the first quarter 2002, Breda began to
            report its cellular investments and its Alpine investment on the
            equity method. The corresponding six-month period ended June 30,
            2001, has been restated in accordance with generally accepted
            accounting principles as discussed below in this report. The income
            from equity investments reported on Breda's financial statements is
            Breda's pro-rata share of the net income or net loss of each equity
            investment, based on Breda's percentage of ownership in each equity
            investment. The increase in equity investments reported on Breda's
            income statement for the six-month period ended June 30, 2002, when
            compared to the six-month period ended June 30, 2001, is a
            reflection of the overall increase in the net operating income of
            these investments. The other income, net, is a negative $8,563 for
            the six-month period ended June 30, 2002, as compared to a positive
            $9,979 for the six-month period ended June 30, 2001, and is mainly
            composed of director fee revenues from cellular investments and the
            corresponding labor costs for time spent managing these investments.
            Westside's investment in Quad Co., which is Westside's pro-rata
            share of Quad's Co.'s estimated six-month net operating loss of


                                       14
<PAGE>

            $6,398, is also included in the other revenue, net.

            Income before income taxes decreased $5,617, or 0.7%, for the six
            month-period ended June 30, 2002, when compared to the six-month
            period ended June 30, 2001. Income taxes decreased $9,769 for the
            six-month period ended June 30, 2002, when compared to the same
            period in 2001. Income before cumulative effect of accounting change
            increased $4,152, or 0.8%, for the six-month period ended June 30,
            2002, when compared to the six-month period ended June 30, 2001.

            The cumulative effect of an accounting change, net of tax, decreased
            Breda's income by $70,768 during the six-month period ended June 30,
            2002, when compared to the six-month period ended June 30, 2001.
            This net of tax item reflects an impairment of goodwill for which
            there was no corresponding entry during the six-month period ended
            June 30, 2001. The Financial Accounting Standards Board issued
            Financial Accounting Statement No. 142 in August 2001 relating to
            the treatment of goodwill, and these accounting principles are
            incorporated into Breda's financial statement beginning January 1,
            2002. As noted previously in the discussion on the decrease in
            Breda's depreciation and amortization expense for the six-month
            period ended June 30, 2002 as compared to the six-month period ended
            June 30, 2001, Breda is no longer able to expense over a
            fifteen-year period the portion of the Westside purchase price which
            had been allocated to goodwill. The goodwill is now reviewed for
            impairment, that is, written down and expensed against earnings,
            only in the periods in which the recorded value of goodwill is more
            than its fair value. Financial Accounting Statement No. 142 requires
            that Breda recognize an impairment loss when the carrying amount of
            goodwill is greater than its implied fair value. These tests have
            been applied to the goodwill and intangible assets of Breda and its
            subsidiaries, and the $70,768 net-of-tax, impairment expense is
            Breda's estimate of the expense to offset earnings for the carrying
            amount of the Westside purchase goodwill attributable to broadcast
            services which is in excess of the fair value of that asset based on
            discounted cash flow valuation.

            Net income decreased $66,616, or 12.6%, for the six-month period
            ended June 30, 2002, when compared to the same period in 2001.

            Liquidity and Capital Resources at Year Ended December 2001.

            Breda's net working capital was a positive $2,664,323 at December
            31, 2001. Breda had an increase of $727,002 in current assets during
            the twelve-month period ended December 31, 2001. The increase
            resulted from a $692,838 increase in cash and cash equivalents, and
            a $366,329 increase in temporary investments. These funds were being
            held for the possible redemption of additional shares of stock in
            Breda during the normal course of business, and for the payment of
            the construction of Breda's new corporate headquarters, which is
            scheduled for completion by late third quarter 2002. While
            inventories increased $970, and other current assets increased
            $94,882, those items were offset by a $167,090 decrease in accounts
            receivable and a $285,185


                                       15
<PAGE>

            decrease in prepaid income taxes. The increase in other current
            assets of $94,882 reflected the prepayment of first quarter 2002
            employee benefit premiums, which had been paid at year-end 2001.
            There was a decrease in accounts receivable that was attributable to
            the receipt of National Exchange Carrier Association reimbursements,
            and the one-time write-off of Qwest access underpayments because of
            the strong likelihood that those access fees would never be
            received. The amount written off by Breda and its subsidiaries as of
            December 31, 2001 with respect to Qwest's underpayment of access
            charges was $67,671. Qwest filed a Petition for Declaratory Order on
            May 19, 2000, with the IUB with respect to adjustments Qwest had
            made related to wireless participating companies in Iowa. The IUB
            ruled in Qwest's favor, but that decision was appealed by some rural
            Iowa independent telephone associations. In March 2002, however, the
            IUB issued an order affirming its earlier decision. The consequence
            of this order, unless the courts on judicial review change it, is
            that Qwest will not be required to make the payments that it
            unilaterally withheld from Breda for the wireless phone traffic that
            it unilaterally pushed through its toll trunks in Iowa.

            Breda is now reporting its cellular investment holdings and its
            Alpine investment on the equity method for those investments in
            which Breda has a 20% interest and for those investments where Breda
            does not have at least a 20% equity interest, but for which Breda
            has determined that Breda currently has significant influence with
            respect to the investment. This accounting change is discussed
            further below. The comparative balance sheet included in this report
            for the twelve-month period ended December 31, 2001, has been
            restated to reflect Breda's cellular investments and the Alpine
            investment on the equity method as of December 31, 2001. The net
            effect of the equity method is a $536,472 increase to other
            noncurrent assets net of the deferred income taxes as of December
            31, 2001, as opposed to a decrease of $187,275 during the twelve
            month period ended December 31, 2001, as was the case previously.

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

            Common stock had a net increase of $284,815 during the twelve-month
            period ended December 31, 2001. The increase resulted primarily from
            two items. One was the $23 per share increase in outstanding shares
            value on May 16, 2001, and the other was a decrease in the number of
            outstanding shares through the redemption of 2,216 shares of common
            stock by Breda during the twelve-month period ended December 31,
            2001. Breda's December 31, 2001, financial statements reported
            retained earnings of


                                       16
<PAGE>

            $4,053,092, which was a $23,322 decrease from the twelve-month
            period ended December 31, 2000. The decrease in retained earnings
            during the twelve-month period ended December 31, 2001, was the net
            effect of the stated value stock adjustment of $851,483, the
            dividends paid in 2001 of $111,087, and the year-to-date net income
            as of December 31, 2001. Breda's comparative, restated balance sheet
            for December 31, 2001, included in this filing and stating the
            effect of the use of the equity method for its cellular and Alpine
            investments, reports a $421,908 increase in retained earnings, after
            netting deferred tax credits of $114,564.

            Liquidity and Capital Resources at Six-months ended June 30, 2002.

            Breda had a decrease of $1,054,240 in current assets during the
            six-month period ended June 30, 2002, when compared to the year
            ended December 31, 2001. This resulted from a $639,679 decrease in
            cash and cash equivalents, and a $530,858 decrease in temporary
            investments. These funds were applied to the construction costs of
            Breda's new corporate office, to the redemption of $275,646 in Breda
            Telephone Corp. stock, to the payment of a shareholder dividend of
            $104, 214, to additional investment in long-term investments and to
            the purchase of equipment and other capital improvements.
            Inventories increased $11,761, which were mostly cable purchases in
            preparation for major third-quarter construction projects. The
            increase in other current assets of $15,933 mainly reflects the
            9.71% premium increase in the 2002 cost of prepaid quarterly
            employee benefits as well as increased business insurance rates. The
            increase in accounts receivable is attributable to the increase in
            accounts receivable due from cellular commissions, exchange
            carriers, and key system projects that were in progress as of June
            30, 2002. There was a $35,590 increase in prepaid income taxes.

            Noncurrent assets, which mainly consist of longer-term investments,
            increased $1,252,240 during the six-month period ended June 30,
            2002, when compared to year-end December 31, 2001. Long term
            investments such as municipal bonds, U.S. Treasury notes and
            governmental securities increased $932,160 during the six-month
            period ended June 30, 2002, and reflects the transfer of cash on
            hand into longer-term investments during this time period as well as
            positive adjustments to the fair market value of some of these
            investments. Breda's other investments increased $438,448, during
            the six-month period ended June 30, 2002, as compared to the
            restated financial statements included in this filing for the
            twelve-month period ended December 31, 2001. As discussed above,
            Breda is now reporting its investments in Alpine Communications,
            L.C. and its cellular investments in RSA#1, RSA#7, RSA#8, and RSA#9
            on the equity method. Breda has made this change because it believes
            that it exercises significant influence over the operations and
            financial policies of Alpine and the referenced cellular investments
            within the meaning of Accounting Principles Board Opinion No. 18,
            and that it therefore must report these investments on the equity
            method. Breda previously reported these investments at their cost,
            which was Breda's actual cash outlay to purchase these investments,
            in the other investments section on its balance sheet. Any cash
            distributions were


                                       17
<PAGE>

            correspondingly included in other income when the distributions were
            received. Because Breda owns more than 20% of Quad County
            Communications, Carroll County Wireless, L.L.C. and The Guthrie
            Group, L.L.C., Breda's interests in these entities were already
            being reported on the equity method. On May 2, 2001, Breda entered
            into a contractual agreement through its subsidiary, Prairie
            Telephone Co., Inc., to advance $500,000 to Desktop Media, L.L.C.
            This transaction is shown as a discounted Note Receivable for
            $460,412 at June 30, 2002. Breda also has as a 10% equity interest
            in Desktop Media, L.L.C., which is included in other investments.
            Breda is continuing to report this Desktop Media, L.L.C. investment
            on the cost basis since Breda's ownership is a 10% equity interest,
            and control of the entity remains with the 70% owner, who is also
            the manager.

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

            Breda's net working capital was positive $1,476,542 at June 30,
            2002, as compared to $2,664,323 at December 31, 2001. The $1,187,781
            decrease in working capital between the two time periods resulted
            mainly from the decrease in Breda's short term cash as discussed
            above, along with a $128,805 increase in accounts payable. The
            increase in accounts payable is the result of timing differences in
            the receipt of new construction and other invoices for services
            received on or before June 30, 2002, but not received by Breda for
            payment until after June 30, 2002.

            Common stock had a net increase of $488,590 during the six-month
            period ended June 30, 2002, when compared to the year ended December
            31, 2001. This increase is the result of two items: a decrease in
            the number of outstanding shares (through redemption of stock by
            Breda) from 35,025 shares to 34,018 shares during the six-month
            period ended June 30, 2002, and the $22/share increase in
            outstanding shares value on May 21, 2002. The decrease in the
            Retained Earnings during the six-month period ended June 30, 2002,
            when compared to year-end December 31, 2001, is the net effect of
            the restated share value transaction, the year-to-date net income as
            of June 30, 2002, and shareholder dividend of $104,214 paid on May
            2, 2002.

            Three-months ended June 30, 2002 Compared to Three-months ended June
            30, 2001.

            There was a decrease in total operating revenues for the three-month
            period ended June 30, 2002, when compared to the same period in
            2001, of $142,313, or 9.4%. The segments making up total operating
            revenue are: local exchange carrier services, broadcast services,
            Internet services and other services revenue.


                                       18
<PAGE>

            Local exchange carrier services revenue decreased $47,411, or 4.8%,
            for the three-month period ended June 30, 2002, when compared to the
            three-month period ended June 30, 2001. Local exchange carrier
            services revenue includes local network services, network access
            services, billing and collection services and miscellaneous income.
            These revenue components are discussed below.

            Local network services revenue increased $1,297, or 0.9%, when
            comparing the three-month period ended June 30, 2002, to the
            three-month period ended June 30, 2001.

            Network access revenue decreased $33,073, or 5.4%, when comparing
            the three-month period ended June 30, 2002, to the three-month
            period ended June 30, 2001. This decrease was attributable to the
            reduction of access revenue for the three-month period ended June
            30, 2002, which resulted from the closing of Pacific Junction's
            telemarketing center on July 26, 2001. There was no access revenue
            being generated from calls made by Breda's telemarketing center
            after July 26, 2001 so there is no corresponding access revenue for
            the three-month period ended June 30, 2002, compared to the
            three-month period ended June 30, 2001. Also as noted previously in
            this report, Breda, Prairie Telephone and Westside Independent are
            no longer receiving access revenue from Qwest for terminating
            wireless traffic that is considered "local" by Qwest.

            Billing and collection service revenue is a function of the amount
            of billing and collection services provided by Breda to other
            carriers such as AT&T. The billing and collection services revenues
            decreased $6,475, or 38.7%, for the three-month period ended June
            30, 2002, when compared to the three-month period ended June 30,
            2001. The decrease reflects not only that major carriers, such as
            AT&T, continue to perform more of their own billing and collection
            functions, but also that more customers are switching to Breda's
            long distance calling plans, which Breda is now marketing.

            Miscellaneous revenue decreased $9,160, or 4.2%, for the three-month
            period ended June 30, 2002, when compared with the three-month
            period ended June 30, 2001. The decrease in miscellaneous revenue
            was primarily the result of decreased cellular service commissions
            and cellular accessories revenue. The decrease in cellular related
            revenues was, however, partially offset by revenues generated from
            new services, such as the sale of key systems for business
            applications. Breda believes the decrease is partially attributable
            to the economic slowdown that occurred after the terrorist attacks
            on September 11, 2001. Breda has also seen a shift to a greater
            percentage of retention contracts, instead of new contracts, for its
            cellular customers, and the retention contracts generate less
            revenue for Breda.

            Broadcast services revenue decreased $12,646, or 4.9%, when
            comparing the three-month period ended June 30, 2002, to the
            three-month period ended June 30, 2001.


                                       19
<PAGE>

            This decrease was directly attributable to the erosion in the
            customer base when comparing the two three-month periods, and is
            attributable to competition from satellite dish providers and a
            declining population base in some of the rural areas served by
            Tele-Services, Ltd.

            There was a decrease in Internet services revenue for the
            three-month period ended June 30, 2002, when compared to the same
            period in 2001, of $6,697, or 3.4%. Breda's Internet customer base
            increased 3.7% for the three-month period ended June 30, 2002, when
            compared to the three-month period ended June 30, 2001, but the
            revenue decrease is attributable to Breda reducing its pricing of
            monthly Internet services by $3.05/customer/month for those
            customers not receiving bundled services, and to Breda's bundling
            Internet services with its long distance services at a discounted
            price. With the completion of some engineering and equipment
            upgrades in the three-month period ended June 30, 2002, Breda is now
            able to offer its customers a line-sharing product through Qwest.
            Since one line can be used for both phone service and high-speed
            Internet services, Breda anticipates increased customer
            participation in its high-speed Internet service offerings.

            Telemarketing services revenue is reported as other revenue and it
            decreased $75,559, or 100.0%, when comparing the three-month period
            ended June 30, 2002, to the same period in 2001. The decrease is
            attributable to the closing of Pacific Junction's Telemarketing
            Center on July 26, 2001.

            There was an decrease in total operating expenses of $37,380, or
            2.9%, for the three-month period ended June 30, 2002, when compared
            to the three-month period ended June 30, 2001. The three components
            encompassing operating expenses are: cost of services, depreciation
            and amortization, and selling, general and administrative
            expenditures.

            Cost of services expenses increased $40,500, or 8.0%, for the
            three-month period ended June 30, 2002, when compared to the
            three-month period ended June 30, 2001. The cost of services
            components, which are plant specific operations, plant non-specific
            operations, programming, and Internet costs, are explained below.

            There was an increase of $47,142, or 18.2%, in plant specific
            operations expense when comparing the three-month period ended June
            30, 2002, to the three-month period ended June 30, 2001. While there
            was a $10,000 decrease in plant specific expenses because of the
            closing of the Pacific Junction telemarketing center on July 26,
            2001, there was a net overall increase in plant specific operations,
            which was attributable to rate increases for wage and benefits
            starting in January 2002, to increased repair and maintenance costs,
            and to the addition of costs incurred with the sale of key systems,
            which would be expenditures for which there would be no
            corresponding entry in the three-month period ended June 30, 2001.

            Plant nonspecific operating expense decreased $6,703, or 23.1%, for
            the three-month


                                       20
<PAGE>

            period ended June 30, 2002, when compared to the three-month period
            ended June 30, 2001. This decrease mainly resulted from less
            utility, postage and office supply expenses during the three-month
            period ended June 30, 2002, when compared to the three-month period
            ended June 30, 2001.

            There was an increase of $12,067, or 166.1%, in cost of long
            distance when comparing the three-month period ended June 30, 2002,
            with the three-month period ended June 30, 2001. Breda hired an
            outside salesman in the last quarter of 2001 and is now aggressively
            marketing its long distance services as a stand-alone service, and
            in conjunction with its Internet services. These efforts have
            produced a significant increase in long distance customers, and
            consequently the cost of providing long distance service has also
            increased because of the increased customer base.

            There was an increase of $1,412, or 1.7%, in programming expense for
            cable TV services when comparing the three-month period ended June
            30, 2002, with the three-month period ended June 30, 2001. The
            programming increase was the result of programming fee increases.

            The cost of Internet decreased by $13,418, or 10.5%, for the
            three-month period ended June 30, 2002, when compared to the
            three-month time period ended June 30, 2001. As noted previously,
            Breda changed its underlying Internet Service Provider in order to
            reduce its costs to provide competitive Internet service products.

            Depreciation and amortization expense decreased $13,197, or 4.8%,
            for the three-month period ended June 30, 2002, when compared to the
            same period in 2001. This decrease is primarily attributable to the
            impairment loss of $119,945 (net of tax loss of $70,768) as of June
            30, 2002, on the goodwill from Breda's 1998 purchase of the cable TV
            system assets in its Westside purchase. This impairment loss was the
            entire remaining unamortized goodwill on Breda's records from the
            Westside cable TV system purchase, and as a result of the
            impairment, there is no corresponding amortization expense when
            compared to the same three-month period in 2001. The remaining
            decrease in depreciation and amortization expense is attributable to
            the fact that there was no depreciation expense for Pacific Junction
            during the three months ended June 30, 2002 since Pacific Junction's
            telemarketing center was not in operation during that time period.

            Selling, general and administrative expenses decreased $64,683, or
            13.2%, for the three-month period ended June 30, 2002, when compared
            to the same period in 2001. The customer operations component
            decreased $41,662, or 20.9%, when comparing these two three-month
            time periods, and mainly resulted from no customer service labor
            expenditures for telemarketing services since the Pacific Junction
            telemarketing center closed on July 26, 2001. Corporate operations
            decreased $19,092, or 7.5%, during the three-month period ended June
            30, 2002 when compared to the three-month period ended June 30,
            2001. The decrease in corporate operations resulted from the
            elimination of a supervisory position in early 2002, the closure of
            the Pacific


                                       21
<PAGE>

            Junction telemarketing center, and the reduction in professional
            fees. General taxes paid by Breda decreased $3,929, or 10.9%, for
            the three-month period ended June 30, 2002, when compared to the
            three-month period ended June 30, 2001, and resulted from decreased
            tax rates levied by the taxing authorities in the various counties.

            The net result of the operating services revenue and operating
            expenses was a decrease of $104,933, or 42.8%, in operating income
            for the three-month period ended June 30, 2002, when compared to the
            same three-month period a year ago.

            Other income (expense) decreased $5,797, or 2.3%, during the
            three-month period ended June 30, 2002, when compared to the same
            three-month period in 2001. Interest and dividend income decreased
            $3,133, or 5.0%, for the three-month period ended June 30, 2002 when
            compared to the three-month period ended June 30, 2001. This
            decrease resulted from the maturity and subsequent redemption of
            some long-term investments and an overall decline in interest rates.
            Interest expense also decreased $2,175, or 5.6%, when comparing the
            same three-month periods. The decrease in interest expense was the
            result of the quarterly principal payments reducing the overall debt
            on which interest is paid in the following quarters. Breda did not
            undertake any additional debt during the three-month period ended
            June 30, 2002.

            Income from equity investments increased $14,991, or 7.0%, during
            the three-month period ended June 30, 2002, when compared to the
            same three-month period in 2001. In the first quarter 2002, Breda
            began to report its cellular investments and its Alpine investment
            on the equity method. The corresponding three-month period ended
            June 30, 2001, has been restated in accordance with generally
            accepted accounting principles as discussed below in this report.
            The income from equity investments reported on Breda's financial
            statements is Breda's pro-rata share of the net income or net loss
            of each equity investment, based on Breda's percentage of ownership
            in each equity investment. The increase in equity investments
            reported on Breda's income statement for the three-month period
            ended June 30, 2002, when compared to the three-month period ended
            June 30, 2001, is a reflection of the overall increase in the net
            operating income of these investments.

            Income before income taxes decreased $110,730, or 22.4%, for the
            three month-period ended June 30, 2002, when compared to the
            three-month period ended June 30, 2001. Income taxes correspondingly
            decreased $49,944 for the three-month period ended June 30, 2002,
            when compared to the same period in 2001.

            Net income decreased $60,786, or 20.6%, for the three-month period
            ended June 30, 2002, when compared to the same period in 2001.

            Other Activities

            Breda's primary ongoing capital investment activity will currently
            continue to be


                                       22
<PAGE>

            additions to property, plant and equipment. For example, Breda
            continues to make investments in state-of-the-art technology in
            order to try to offer subscribers the best possible service. Capital
            expenditures for 2001 were approximately $624,270, and are currently
            expected to be approximately $1,341,490 in 2002.

            As of June 30, 2002, Breda had approximately $1,976,849 on its
            outstanding loan with the Rural Telephone Finance Cooperative. The
            interest rate on the loan was fixed on July 17, 1998 at 7.35%. The
            loan has a fifteen-year term that matures in September, 2013. Breda
            and Prairie Telephone Company, Inc. also have lines of credit
            available from the Rural Telephone Finance Cooperative in the
            amounts of, respectively, $1,500,000 and $500,000. Those lines of
            credit will expire in 2005. No amounts were outstanding under either
            of those lines of credit on June 30, 2002.

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

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

            On September 21, 2001, the FCC released an Order, which mandated
            that carriers implement two of the "punch list" items by September
            30, 2001. However, since the due date was so close the FCC granted
            carriers until November 19, 2001 to be in compliance or ask for an
            extension. The FBI issued a Flexible Deployment Assistance guide for
            "Packet-Mode Communications" that dealt with carriers


                                       23
<PAGE>

            offering services such as DSL and ISDN. The FCC allowed carriers to
            file a packet-mode flex guide and amend their initial 107(c)
            Petition to file for a two-year extension with a deadline of
            November 19, 2001. Breda was in compliance with the packet-mode
            requirements as of November 19, 2001. Upon the conversion to Desktop
            Media, L.L.C. as its internet service provider, Breda again reviewed
            the CALEA requirements, and based on information provided by the
            equipment vendors has determined that Breda's equipment is in
            compliance with the packet-mode requirements. Because of its
            interrelated systems of hardware and software, Breda is continuing
            to test these systems for CALEA compliance.

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

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

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

            Breda and Prairie Telephone have purchased spectrum for providing
            personal communications services in the Breda, Lidderdale and Yale
            telephone exchange areas. Prairie Telephone has also become a member
            in Guthrie Group, L.L.C. Guthrie Group, L.L.C. has purchased
            spectrum for providing personal communications services in some
            areas in Guthrie County, Iowa.

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


                                       24
<PAGE>

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

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

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

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

            Breda will be converting the financial and billing software utilized
            by Westside Independent Telephone to the same financial system
            software now utilized by Breda and its other subsidiaries in the
            third and fourth quarters of 2002. All customer service and
            accounting processes performed in the Westside, Iowa, location for
            the 348 customers in the Westside exchange will be moved to the
            Breda home office location on September 20, 2002. The costs of the
            upgrades and conversions will not be material to Breda.

            There are no current plans to expand the cable services areas of, or
            the cable services provided by, Tele-Services, Ltd. Tele-Services,
            Ltd. would be required to make significant capital expenditures to
            become compliant with new regulations requiring Emergency Alert
            System ("EAS") notification at the bottom of screen on all channels
            carried on its cable TV systems by October 1, 2002. It is estimated
            that these capital expenditures could cost $130,000. On June 14,
            2002, Tele-Services, Ltd. filed a request with the FCC for waiver of
            rules regarding the Emergency Alert Systems (EAS) for small cable
            television operators with fewer than 5,000 subscribers.
            Tele-Services, Ltd. anticipates that it will receive notification
            within 30 days from the FCC


                                       25
<PAGE>

            on whether the hardship waiver has been granted.

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

            Breda, Prairie Telephone and Westside Independent are providing
            dial-up and high speed Internet access to their customers. Breda
            anticipates that there will continue to be competitive pressure to
            lower the dial-up rates. Breda also anticipates that the number of
            potential customers will continue to increase and that Internet
            customers will continue to demand higher Internet speed. Until July
            2002, Breda was providing high-speed Internet access by leasing
            lines from Qwest. As of July 2002, Breda has completed the process
            of installing equipment in the Qwest central office that has allowed
            Breda to use a new product that Qwest offers called line sharing.
            Breda expects its customer base for high speed Internet to increase
            significantly during the remainder of 2002.

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

            On August 2, 2002, AT&T Communications of the Midwest, Inc. ("AT&T")
            filed an Amended Complaint and Petition for Rule Making with the
            Iowa Utilities Board ("IUB") regarding intra-state access rates.
            AT&T is requesting the IUB to significantly reduce the amount of
            intra-state access rates paid by AT&T to carriers such as Breda,
            Prairie Telephone and Westside Independent. While this petition is
            very recent and no action has been taken by the IUB at the date of
            this filing, Breda continues to anticipate actions of this type that
            will bring continuing pressure for the lowering of access charge
            rates. Access charge revenues constitute a substantial part of
            Breda's, Prairie Telephone's and Westside Independent's revenues,
            and a material


                                       26
<PAGE>

            risk to them arises from the regulation of access charge rates by
            the FCC and other regulatory authorities such as the IUB.

            Breda continues to anticipate that its new corporate office building
            will be completed in October of 2002, and within the estimated total
            cost budget of $500,000.

            Breda is continuing to operate under and receive commission
            reimbursements based on its Agency Contract dated June 1, 1999,
            between United States Cellular Corporation and Breda. The June 1,
            1999, contract states that the contract shall renew automatically
            for additional one-year terms on each June 1st unless and until
            either party gives the other party written notice of non renewal at
            least thirty days prior to the end of the then current term. The
            contract may be terminated at any time by either party immediately
            upon written notice to the other party upon the occurrence of any
            material breach of the Contract by the other party. Since a new
            contract between United States Cellular Corporation and Breda has
            not been negotiated, Breda continues to sell cellular phones and
            related service packages as a U.S. Cellular agent under the June 1,
            1999 contract.

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

            Breda, Prairie Telephone, and Westside Independent utilize the
            networks of major carriers to provide national and worldwide calling
            access to their customers. Breda, Prairie Telephone and Westside
            Independent also receive access revenue from carriers such as Global
            Crossing and Worldcom for terminating toll calls in their exchanges.
            Global Crossing filed a Chapter 11 bankruptcy under the United
            States Bankruptcy Code on January 28, 2002. WorldCom, Inc., which
            includes the MCI Group, filed a Chapter 11 bankruptcy under the
            United States Bankruptcy Code on July 21, 2002. While both debtors
            continue to operate their business and manage their properties as
            debtors in possession under the Bankruptcy Code, Breda and its
            subsidiary telephone companies are at risk of non-payment for
            intra-state carrier access revenues owed to them by Global Crossing
            and WorldCom, Inc. as of the date of each of their bankruptcy
            filings. As members of the National Exchange Carrier Association
            pool, Breda, Prairie Telephone and Westside Independent may submit
            the interstate portion of any non-payment by Global Crossing and
            WorldCom, Inc. to the NECA pool for payment. As of August 1, 2002,
            Breda estimates that its consolidated risk of non-payment from the
            carriers, themselves, or the NECA pool is approximately $16,000.
            Breda and its telephone subsidiaries are considered "utilities" for
            purposes of the bankruptcy code, and may not disconnect services
            from these carriers subsequent to the bankruptcy dates unless there
            is a valid reason other than the bankruptcy filings. Breda, Prairie
            Telephone and Westside Independent


                                       27
<PAGE>

            have received payment from Global Crossing for services rendered
            after its January 28, 2002, bankruptcy filing.

            During this quarter new employment agreements with each of Robert
            Boeckman, COO, and Jane Morlok, CFO, were negotiated by Breda. The
            term of each of these contracts is for a one-year period beginning
            on April 1, 2002. Other than compensation rates, there were no
            material changes from the previous employment agreements dated
            September 11, 2001.

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

            Cautionary Statement on Forward Looking Statements.

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

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

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

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


                                       28
<PAGE>

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

                  o     employee relations;

                  o     management's business strategies;

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

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

                  o     acts or omissions of competitors and other third
                        parties;

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

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

                  o     continued availability of financing, and on favorable
                        terms.

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

                           PART II - OTHER INFORMATION

Item  1.    Legal Proceedings. As of the date of this quarterly report, Breda
            was not aware of any pending legal proceeding to which Breda was a
            party or to which any of Breda's property was subject, other than
            routine litigation that was incidental to its business. As of the
            date of this quarterly report, Breda was not aware that any
            governmental authority was contemplating any proceeding against
            Breda or any of its property.

Item  2.    Changes in Securities.

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

            Breda did not issue any shares of its common stock during the period
            of April 1, 2002 through June 30, 2002, but as noted in Item 5
            below, during the three-month period ended June 30, 2002, Breda
            redeemed 763 shares of common stock.


                                       29
<PAGE>

Item 3.     Defaults Upon Senior Securities.

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

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

            The annual meeting of the shareholders of Breda was held on May 21,
            2002. The only matters voted upon by the shareholders at the annual
            meeting were the election of two directors for Breda and the
            ratification of the appointment of Breda's auditors for the year
            2002.

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

            The terms of two of Breda's directors expired at the 2002 annual
            meeting of the shareholders of Breda. The directors whose terms
            expired at the annual meeting were David Grabner and Clifford
            Neumayer.

            There were two nominees for the two director positions to be filled
            at the 2002 annual meeting of the shareholders. The nominees were
            David Grabner and Clifford Neumayer.

            David Grabner and Clifford Neumayer were elected to serve as
            directors of Breda until the annual meeting of the shareholders of
            Breda to be held in the year 2005.

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

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

            David Grabner             192       --           --           --
            Clifford Neumayer         175       --           --           --

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


                                       30
<PAGE>

                     Dean Schettler                 John Wenck
                     Roger Nieland                  Charles Thatcher
                     Larry Daniel

            The only other matter voted upon by the shareholders at the annual
            meeting was the ratification of Kiesling Associates, LLP as Breda's
            auditors for the year 2002. The number of votes cast for, against or
            withheld, and the number of abstentions and broker non-votes,
            regarding this matter was as follows:

                For     Against or Withheld     Abstentions    Broker Non-Votes
                ---     -------------------     -----------    ----------------
                160             10                   --               --

Item 5.     Other Information.

            During the period of April 1, 2002 through June 30, 2002, Breda
            redeemed 43 shares of its common stock from 1 shareholder at $258.00
            per share, for a total amount of $11,094.00 based on the redemption
            price per share previously established on May 16, 2001. Breda also
            redeemed 720 shares of its common stock from 11 different
            shareholders at $280.00 per share, for a total amount of
            $201,600.00. The $280.00 per share redemption price was the per
            share redemption price that was announced by the board of directors
            at, and which became effective at, the May 21, 2002 annual meeting
            of the shareholders of Breda.

            There were 5 transfers of shares of Breda's common stock during the
            period of April 1, 2002 through June 30, 2002 with respect to which
            Breda did not exercise its right of first refusal to purchase those
            shares. The transfers involved an aggregate of 26 shares of Breda's
            common stock.

            Breda's board of directors determines the purchase price payable for
            newly issued shares of Breda's common stock. Breda's board of
            directors also determines the redemption price that will be paid by
            Breda if Breda elects to redeem a shareholder's shares in any of the
            circumstances in which Breda has the right to purchase those shares.
            The board of directors has historically established the issuance
            price and the redemption price at approximately 75% of the book
            value of Breda. The board of directors has historically made this
            determination in March, April or May of each year, based upon
            Breda's then most recent year-end audited financial statements.
            Breda's fiscal year ends on December 31. The price is then generally
            announced and becomes effective at the annual shareholders meeting
            for that year. The issuance price and the redemption price as so
            determined by the board of directors then generally applies until
            the board of directors makes a new determination and announces the
            new price at the next annual shareholders meeting. The board of
            directors followed those historical practices and announced a new
            issuance price and redemption price of $280 per share at the May 21,
            2002 annual meeting of the shareholders. The board of directors
            currently intends to continue to address this


                                       31
<PAGE>

            issue on an annual basis consistent with the above described
            historical practices of the board of directors. The board of
            directors has, however, departed from the above described historical
            practices from time to time in the past, and the board of directors
            may determine to depart from those historical practices from time to
            time again in the future.

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

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

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


                                       32
<PAGE>

                                   SIGNATURES

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

                                           BREDA TELEPHONE CORP.


Date: August 14, 2002.                     By: /s/ Dean Schettler
                                               ---------------------------------
                                               Dean Schettler, President


Date: August 14, 2002.                     By: /s/ David Grabner
                                               ---------------------------------
                                               David Grabner, Treasurer


                                       33
<PAGE>

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

Description of Exhibit

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

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

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

3.    Articles of Incorporation and Bylaws

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

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

<PAGE>

10.   Material Contracts

      *(a)  Employment Agreement dated April 1, 2002 between Breda and Robert
            Boeckman.

      *(b)  Employment Agreement dated April 1, 2002 between Breda and Jane
            Morlok.

      *99   Certification of Financial Information

      *Filed with this report


                                       2