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

                                   FORM 10-QSB

(Mark One)

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

               For the quarterly period ended September 30, 2001.

[_]  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: 35,473 shares of common stock,
no par value, at September 30, 2001.

      Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

<PAGE>


                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements.


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                             CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS
                                 For the Periods
                        Ended September 30, 2001 and 2000
                      and the Year Ended December 31, 2000










                                       2
<PAGE>


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                    September 30,   December 31,
                                                        2001           2000
                                                     (Unaudited)     (Audited)
                                                     -----------    -----------
                                  ASSETS

CURRENT ASSETS
  Cash and cash equivalents                          $ 1,130,417    $ 1,104,577
  Temporary investments                                  586,572        269,840
  Accounts receivable                                    613,102        703,468
  Interest receivable                                     69,888         50,800
  Prepaid income taxes                                   177,663        336,465
  Inventories                                            121,857         92,058
  Other                                                  199,306          5,383
                                                     -----------    -----------
                                                       2,898,805      2,562,591
                                                     -----------    -----------

OTHER NONCURRENT ASSETS
  Long-term investments                                2,704,551      2,888,500
  Other investments                                    2,551,415      2,806,107
  Intangibles, net of accumulated amortization         1,040,642      1,107,625
  Note receivable                                        446,576             --
  Deferred income taxes                                  131,696        113,595
                                                     -----------    -----------
                                                       6,874,880      6,915,827
                                                     -----------    -----------

PROPERTY AND EQUIPMENT                                 5,697,758      6,176,434
                                                     -----------    -----------

     TOTAL ASSETS                                    $15,471,443    $15,654,852
                                                     ===========    ===========


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


                                       3
<PAGE>


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                            September 30,  December 31,
                                                                2001          2000
                                                             (Unaudited)    (Audited)
                                                             -----------   -----------
<S>                                                          <C>           <C>
                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of long-term debt                          $   118,300   $   118,300
  Accounts payable                                               201,964       364,232
  Accrued taxes                                                   95,459       134,611
  Other                                                          202,513       170,670
                                                             -----------   -----------
                                                                 618,236       787,813
                                                             -----------   -----------

LONG-TERM DEBT, less current portion                           1,951,001     2,038,990
                                                             -----------   -----------

STOCKHOLDERS' EQUITY
  Common stock - no par value, 5,000,000 shares authorized,
    35,473 and 37,241 shares issued and outstanding
    at $258 and $235 stated value, respectively                9,152,034     8,751,635
Retained earnings                                              3,750,172     4,076,414
                                                             -----------   -----------
                                                              12,902,206    12,828,049
                                                             -----------   -----------

                TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $15,471,443   $15,654,852
                                                             ===========   ===========
</TABLE>


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


                                       4
<PAGE>


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

              UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
         For the Three and Nine Months Ended September 30, 2001 and 2000


<TABLE>
<CAPTION>
                                       For the Three Months Ended    For the Nine Months Ended
                                          2001           2000           2001           2000
                                       -----------    -----------    -----------    -----------
<S>                                    <C>            <C>            <C>            <C>
OPERATING REVENUES                     $ 1,495,995    $ 1,568,476    $ 4,582,438    $ 4,420,282
                                       -----------    -----------    -----------    -----------

OPERATING EXPENSES
  Cost of services                         604,381        556,122      1,710,489      1,639,330
  Depreciation and amortization            282,848        285,476        837,483        815,160
  Selling, general and administration      477,315        444,987      1,502,970      1,438,031
                                       -----------    -----------    -----------    -----------
                                         1,364,544      1,286,585      4,050,942      3,892,521
                                       -----------    -----------    -----------    -----------

OPERATING INCOME                           131,451        281,891        531,496        527,761
                                       -----------    -----------    -----------    -----------

OTHER INCOME (EXPENSES)
  Interest and dividend income              68,234        105,618        182,491        263,956
  Loss on sale of investments                   --           (375)            --         (3,183)
  Gain on sale of cellular investment           --        117,755             --      5,018,714
  Interest expense                         (38,572)      (118,166)      (117,322)      (381,799)
  Income from cellular investments          50,000        349,440        344,689        432,775
  Income from Alpine investment                 --             --         44,209         23,508
  Other, net                                (1,274)        (1,520)         8,705          2,602
                                       -----------    -----------    -----------    -----------
                                            78,388        452,752        462,772      5,356,573
                                       -----------    -----------    -----------    -----------

INCOME BEFORE INCOME TAXES                 209,839        734,643        994,268      5,884,334
                                       -----------    -----------    -----------    -----------

INCOME TAXES                                62,148        319,974        357,940      2,324,783
                                       -----------    -----------    -----------    -----------

NET INCOME                             $   147,691    $   414,669    $   636,328    $ 3,559,551
                                       ===========    ===========    ===========    ===========

NET INCOME PER COMMON SHARE            $      4.15    $     11.09    $     17.48    $     94.69
                                       ===========    ===========    ===========    ===========

DIVIDENDS PER COMMON SHARE             $        --    $        --    $      3.00    $      3.00
                                       ===========    ===========    ===========    ===========
</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 STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                Common Stock                            Retained
                                                  Shares              Amount            Earnings             Total
                                             ----------------    ----------------   ----------------   -----------------
<S>                                                    <C>            <C>                <C>                 <C>
Balance at December 31, 1999                           37,682         $ 5,614,618        $ 3,440,131         $ 9,054,749

  Comprehensive Income:
    Net income                                                                             3,989,981           3,989,981

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

  Common stock redeemed, net                             (441)           (103,635)                              (103,635)

  Stated value stock adjustment                                         3,240,652         (3,240,652)
                                             ----------------    ----------------   ----------------   -----------------

Balance at December 31, 2000                           37,241           8,751,635          4,076,414          12,828,049

  Comprehensive Income:
    Net income                                                                               636,328             636,328

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

   Common stock redeemed, net                          (1,768)           (451,084)                              (451,084)

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

Balance at September 30, 2001                          35,473         $ 9,152,034        $ 3,750,172        $ 12,902,206
                                             ================    ================   ================   =================
</TABLE>


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


                                       6
<PAGE>


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Nine Months Ended September 30, 2001 and 2000


<TABLE>
<CAPTION>
                                                              2001           2000
                                                           -----------    -----------
<S>                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                               $   636,328    $ 3,559,551
  Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation and amortization                             837,483        815,160
     Amortization of investment tax credits                     (7,327)        (7,327)
     Deferred income taxes                                     (10,774)        37,691
     Note receivable discount                                   (6,576)            --
     Gain on sale of cellular investment                            --     (5,018,714)
     Changes in operating assets and liabilities:
          (Increase) decrease in assets                          6,358        398,394
          Increase (decrease) in liabilities                  (169,577)       108,569
                                                           -----------    -----------
     Net cash provided by (used in) operating activities     1,285,915       (106,676)
                                                           -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Capital expenditures                                        (299,937)      (562,485)
  Cost of removing plant, net of salvage                         8,113             --
  Purchase of investments                                     (281,095)      (287,201)
  Proceeds from the sale of investments                        148,312        140,442
  Issuance of note receivable                                 (440,000)            --
  Purchase of other investments                                (60,000)            --
  Sale in other investments                                    314,692         41,357
  Proceeds from sale of cellular investment                         --      5,226,034
                                                           -----------    -----------
     Net cash provided by (used in) investing activities      (609,915)     4,558,147
                                                           -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Dividends paid                                              (111,087)      (113,046)
  Common stock redeemed                                       (451,084)      (103,165)
  Repayment of long-term debt                                  (87,989)    (2,839,019)
                                                           -----------    -----------
     Net cash used in financing activities                    (650,160)    (3,055,230)
                                                           -----------    -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                       25,840      1,396,241
                                                           -----------    -----------

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             1,104,577        411,341
                                                           -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $ 1,130,417    $ 1,807,582
                                                           ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for:
     Interest                                              $   117,322    $   381,799
     Income taxes                                          $   217,241    $ 1,700,000
</TABLE>


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


                                       7
<PAGE>


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

          In the opinion of management,  the  accompanying  unaudited  condensed
          consolidated financial statements contain all adjustments  (consisting
          of only  normal  recurring  items)  necessary  to  present  fairly the
          financial  position as of September 30, 2001 and December 31, 2000 and
          the  results  of  operations  and  changes in cash flows for the three
          months and nine months ended September 30, 2001 and 2000.

          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, 2000 audited
          financial statements. The results of operations for any interim period
          are not necessarily  indicative of the operating results of the entire
          year.

          Certain  reclassifications  have  been  made  to  the  2000  financial
          statements to conform with the 2001 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 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 has telemarketing services that do
          not meet the quantitative threshold for reportable segments.

          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  operations  have  been
          aggregated because of their similar characteristics.

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


                                       8
<PAGE>


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2.  OPERATING SEGMENTS, (Continued)

<TABLE>
<CAPTION>
                                               Local                    Internet
                                              Exchange                  Service
                                              Carrier    Broadcast      Provider       Other         Total
                                            ----------   ----------    ----------    ----------    ----------
<S>                                         <C>          <C>           <C>           <C>           <C>
     Nine months ended September 30, 2001

     Revenues and sales
          External customers                $3,087,569   $  763,424    $  566,232    $  165,213    $4,582,438
          Intersegment                              --           --            --            --            --
     Segment profit (loss)                     762,624      (75,459)      (32,403)      (18,434)      636,328

     Nine months ended September 30, 2000

     Revenues and sales
          External customers                $2,949,937   $  793,515    $  471,422    $  205,408    $4,420,282
          Intersegment                              --           --            --            --            --
     Segment profit (loss)                   3,694,044      (83,866)      (18,462)      (32,165)    3,559,551
</TABLE>

<TABLE>
<CAPTION>
                                               Local                    Internet
                                              Exchange                  Service
                                              Carrier    Broadcast      Provider       Other         Total
                                            ----------   ----------    ----------    ----------    ----------
<S>                                         <C>          <C>           <C>           <C>           <C>
     Three months ended September 30, 2001

     Revenues and sales
          External customers                $1,052,736   $  254,047    $  180,355    $    8,857    $1,495,995
          Intersegment                              --           --            --            --            --
     Segment profit (loss)                     206,953      (24,266)      (20,570)      (14,426)      147,691

     Three months ended September 30, 2000

     Revenues and sales
          External customers                $1,057,471   $  266,666    $  166,299    $   78,040    $1,568,476
          Intersegment                              --           --            --            --            --
     Segment profit (loss)                     434,750      (18,638)          175        (1,618)      414,669
</TABLE>


                                       9
<PAGE>


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2.   OPERATING SEGMENTS, (Continued)

<TABLE>
<CAPTION>
                                            Three months ended             Nine months ended
        Reconciliation of Segment              September 30,                  September 30,
          Information                       2001           2000           2001           2000
                                         -----------    -----------    -----------    -----------
<S>                                      <C>            <C>            <C>            <C>
     REVENUES:
          Total revenues and sales for
            reportable segments          $ 1,487,138    $ 1,490,436    $ 4,417,225    $ 4,214,874
          Other revenues                       8,857         78,040        165,213        205,408
          Elimination of intersegment
            revenues                              --             --             --             --
                                         -----------    -----------    -----------    -----------
              Consolidated Revenues      $ 1,495,995    $ 1,568,476    $ 4,582,438    $ 4,420,282
                                         ===========    ===========    ===========    ===========

     PROFIT:
          Total profit for reportable
            segments                     $   162,117    $   416,287    $   654,762    $ 3,591,716
          Other profit (loss)                (14,426)        (1,618)       (18,434)       (32,165)
          Non-operating segment                   --             --             --             --
          Minority interest                       --             --             --             --
                                         -----------    -----------    -----------    -----------
              Net Income                 $   147,691    $   414,669    $   636,328    $ 3,559,551
                                         ===========    ===========    ===========    ===========
</TABLE>

NOTE 3.   NET INCOME PER COMMON SHARE

          Net income per common share for the three and nine month periods ended
          September  30, 2001 and 2000 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 months and nine months ended  September 30,
          2001  and  2000  were  35,549  and  36,410,  and  37,408  and  37,591,
          respectively.

NOTE 4.   STATED VALUE STOCK ADJUSTMENT

          During May 2000,  the board of directors  authorized a $31 increase in
          the  stated  value of each  share of common  stock  from $149 to $180.
          There  were  37,682  shares  outstanding  at the  time  of  the  value
          adjustment, which reduced retained earnings by $1,168,142.

          During June 2000, the board of directors  authorized an additional $55
          increase in the stated  value of each share of common  stock from $180
          to $235. There were 37,682 shares outstanding at the time of the value
          adjustment, which reduced retained earnings by $2,072,510.

          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.


                                       10
<PAGE>


                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5.   INTANGIBLES

          In 2001, the Financial Accounting Standards Board Issued Statements of
          Financial Accounting Standards No. 141 "Business Combinations" and No.
          142 "Goodwill and Other Intangible  Assets" effective for fiscal years
          beginning  after  December 31, 2001.  Under the new rules goodwill and
          intangible  assets deemed to have  indefinite  lives will no longer be
          amortized  but  will  be  subject  to  periodic  impairment  tests  in
          accordance with the Statements.  Other intangible assets will continue
          to be amortized  over their useful lives.  The Statement also requires
          business  combinations  initiated  after June 30, 2001 to be accounted
          for using the purchase method of accounting, and broadens the criteria
          for recording intangible assets separate from goodwill.

          The  nonamortization  provisions  of the  Statement  will  not  impact
          amortization  expense related to acquisitions  initiated prior to June
          30, 2001, but any goodwill or indefinite  lived  intangibles  acquired
          subsequent to June 30, 2001 will not be amortized.  Effective  January
          1, 2002, all  amortization  expense on goodwill and intangible  assets
          with  indefinite  lives will stop.  The Company  anticipates  that the
          application of the  nonamortization  provisions  will increase  income
          before income taxes by approximately  $89,000 per year.  During fiscal
          2002,  the Company will  perform the first of the required  impairment
          tests of goodwill and indefinite lived intangible assets as of January
          1, 2002.  The Company has not yet  determined  what effect these tests
          will have on net income and the financial position of the Company.


                                       11
<PAGE>


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

         Nine Months  Ended  September  30, 2001  Compared to Nine Months  Ended
         September 30, 2000.

         There was an increase in total  operating  revenues for the  nine-month
         period ended  September  30, 2001,  when compared to the same period in
         2000,  of $162,156,  or 3.7%.  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  increased  $135,998,  or 4.6%,
         for the nine-month  period ended  September 30, 2001,  when compared to
         the nine-month  period ended September 30, 2000. The components  making
         up local exchange carrier services revenue are local network  services,
         network  access   services,   billing  and   collection   services  and
         miscellaneous  revenue.  Those four  components  are  discussed  in the
         following four paragraphs.

         Local network  services  revenue  increased  $11,539,  or 2.7%, for the
         nine-month  period ended  September 30, 2001, when compared to the same
         nine-month  period in 2000. The increase resulted from a small increase
         in the overall custom calling feature  revenues and a small increase in
         the number of local service subscribers.

         Network  access  services  revenue  increased  $85,106,  or 4.7%,  when
         comparing  the  nine-month  period ended  September  30,  2001,  to the
         nine-month  period ended  September  30, 2000.  The increase was due to
         more lines generating ongoing SS7 connectivity  revenues and to ongoing
         NECA pool settlement revenues.

         Billing and collection  services 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
         $15,562,  or 23.7%, for the nine-month period ended September 30, 2001,
         when compared to the  nine-month  period ended  September 30, 2000. The
         decrease is attributable to the fact that other carriers, such as AT&T,
         are performing more of their own billing and collection services.

         Miscellaneous  revenue increased  $54,915,  or 8.5%, for the nine-month
         period ended  September 30, 2001,  when  compared  with the  nine-month
         period ended September 30, 2000. The increase in miscellaneous  revenue
         was primarily the result of increased cellular service  commissions and
         cellular accessories revenue.  Breda opened a retail outlet in Carroll,
         Iowa in early April 2000, which has  significantly  expanded its market
         penetration  in the cellular  services  arena.  There was no comparable
         revenue  stream from the retail store for the first three months of the
         nine-month period ended September 30, 2000.


                                       12
<PAGE>


         Broadcast services revenue decreased  $28,457,  or 3.6%, when comparing
         the  nine-month  period ended  September  30, 2001,  to the  nine-month
         period ended  September 30, 2000.  The decrease was  attributable  to a
         5.4%  decrease in the customer base when  comparing the two  nine-month
         periods.  The decrease in the customer base  resulted from  competition
         from satellite dish  providers and a declining  population  base in the
         small rural communities served by Tele-Services, Ltd.

         There was an increase in Internet  services for the  nine-month  period
         ended  September 30, 2001, when compared to the same period in 2000, of
         $94,810,  or 20.1%.  The increase  was due to an 11.2%  increase in the
         customer base when comparing the two nine-month periods. There was also
         a 35.5%  increase  in the  associated  expenditures  to  provide  those
         services to the additional Internet customers,  however, resulting in a
         less  than  positive  impact  on  operating  income.   Breda  has  been
         experiencing  price-point  competition for Internet  services from Iowa
         Telecom in three  communities since late fourth quarter 2000. Breda had
         been the sole provider of Internet  services in those communities until
         that time.  Iowa Telecom  purchased the  telephone  exchanges for those
         communities  in 1999 and began  operating them on June 1, 2000. In late
         2000, Iowa Telecom expanded the services  offered in those  communities
         to include  Internet  services  and at a lower price than is offered by
         Breda.  Breda  reduced its pricing of  Internet  services,  and bundled
         Internet services with its long distance services, in August of 2001 in
         order to  attempt  to  compete  at a lower  price  point  for  Internet
         services.  In October 2001, Breda switched to a new underlying Internet
         service  provider and help desk provider in order to attempt to further
         reduce  costs.  While  Breda has lost  Internet  customers  because  of
         competition,  Breda's  overall  Internet  operations  have continued to
         grow.  There is not,  however,  any  assurance  that  Breda's  Internet
         operations will continue to grow in the future.

         Telemarketing  services  revenue is reported  as a  component  of other
         services  revenue,  and is generated by Prairie  Telephone Co.,  Inc.'s
         subsidiary, Pacific Junction Telemarketing, Inc. Telemarketing services
         revenue  decreased  $40,195,  or 19.6%,  when  comparing the nine-month
         period  ended  September  30,  2001,  to the same  period in 2000.  The
         decrease is  attributable  to the fact that on July 26,  2001,  Pacific
         Junction's telemarketing call number supplier notified Pacific Junction
         that it no longer had numbers to provide to Pacific Junction. Breda and
         Pacific   Junction  have  not  been  able  to  locate  new  sources  of
         telemarketing calling numbers, so Pacific Junction's telemarketing call
         center  has not  been  operational  since  July  26,  2001.  Breda  has
         determined   that  it  is  very   unlikely   that  Pacific   Junction's
         telemarketing  center  will ever be  reopened.  The  closing of Pacific
         Junction's telemarketing center also had the effect of lowering Breda's
         network access services revenue because the telemarketing calls made by
         Pacific Junction were a source of access revenue for Breda.


                                       13
<PAGE>


         There was an increase in total operating expenses of $158,421, or 4.1%,
         for the nine-month  period ended  September 30, 2001,  when compared to
         the nine-month  period ended September 30, 2000. The components  making
         up  operating   expenses  are  cost  of  services,   depreciation   and
         amortization,  and selling,  general and  administration  expenditures.
         Those components are discussed in the following paragraphs.

         Cost  of  services  expenses  increased  $71,159,   or  4.3%,  for  the
         nine-month  period  ended  September  30,  2001,  when  compared to the
         nine-month  period ended  September 30, 2000. The components  making up
         cost of services  are plant  specific  operations,  plant  non-specific
         operations,  programming,  and Internet costs, and those components are
         discussed in the following four paragraphs.

         There was a decrease of $30,088,  or 2.6%, in plant specific operations
         expense when comparing the nine-month  period ended September 30, 2001,
         to the  nine-month  period ended  September 30, 2000.  The decrease was
         primarily attributable to decreased cellular operating expense for such
         items as inventory,  personnel  costs, and other expense which had been
         generated in the  nine-month  period ended  September  30, 2000 for the
         start-up of Breda's retail outlet. Repairs for central office equipment
         also decreased for the nine-month period ended September 30, 2001, when
         compared to the nine-month period ended September 30, 2000.

         Plant nonspecific  operations expense increased $12,726,  or 16.9%, for
         the nine-month  period ended  September 30, 2001,  when compared to the
         nine-month  period ended  September  30,  2000.  The increase is mainly
         accounted for by rate and volume increases in utilities and postage.

         There was an increase of $22,252,  or 9.8%, in programming  expense for
         cable TV services when comparing the nine-month  period ended September
         30, 2001,  with the  nine-month  period ended  September 30, 2000.  The
         increase resulted from increases in programming fees.

         Internet  costs  increased  by $66,269,  or 35.5%,  for the  nine-month
         period ended September 30, 2001, when compared to the nine-month period
         ended   September  30,  2000.  The  increase  is  attributable  to  the
         additional  costs  of  providing  Internet  services  to the  increased
         customer base. The additional costs include  additional rental of fiber
         lines,  help  desk and  customer  services  fees  from  the  underlying
         Internet  service  provider,  and  internal  costs to provide  customer
         service  and  billing  service to the  additional  customers.  As noted
         previously,  in October of 2001, Breda changed its underlying  Internet
         service  provider  in order to  attempt  to reduce its costs to provide
         Internet service.

         Depreciation and amortization  expense increased $22,323,  or 2.7%, for
         the nine-month  period ended  September 30, 2001,  when compared to the
         same period in 2000. The increase reflects increased depreciation rates
         on depreciable  equipment associated with new technology services,  and
         the proportionate net overall depreciation of capital improvements made
         during the year  2000.  Boring  equipment,


                                       14
<PAGE>


         vehicles, and underground plant/sonnet ring were also purchased and put
         into operation  during the nine-month  period ended September 30, 2001,
         which increased the depreciation expense.

         Selling,  general and administration  expenses  increased  $64,939,  or
         4.5%, for the nine-month period ended September 30, 2001, when compared
         to the same period in 2000. The customer operations component increased
         $12,559, or 2.2%, when comparing these two nine-month time periods, and
         mainly   resulted  from  increased  labor  and  benefit  costs.  A  new
         supervisory   position  was  also  added  to  the  customer  operations
         department in August of 2001.  Breda also received a 13.0%  increase in
         its health plan premiums for the year 2001.  The  corporate  operations
         component  increased  $68,982,  or 9.4%,  during the nine-month  period
         ended  September 30, 2001 when compared to the nine-month  period ended
         September  30,  2000.  The  increase  was not  attributable  to any one
         particular  item,  but  rather  included  wage and  benefit  increases,
         management  bonuses,  consulting  services  for  special  projects  and
         acquisition   opportunities,   continued   SEC   filing   expenditures,
         advertising  and promotions for the new mark and logo adopted by Breda,
         and  increased  expenditures  for  national  meetings  and  educational
         seminars  attended by board members and management.  General taxes paid
         by Breda decreased  $16,602,  or 13.8%, for the nine-month period ended
         September  30,  2001,  when  compared to the  nine-month  period  ended
         September 30, 2000, 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 an  increase  of  $3,735,  or 0.7%,  in  operating  income  for the
         nine-month  period ended  September 30, 2001, when compared to the same
         nine-month period in 2000.

         Other  income  (expense)  decreased  $4,893,801,  or 91.4%,  during the
         nine-month  period ended  September 30, 2001, when compared to the same
         nine-month  period in 2000.  The decrease is  attributable  to the fact
         that  there was no  transaction  during  the  nine-month  period  ended
         September 30, 2001, to  correspond to the  $5,018,714  gain which arose
         from the sale of a cellular  investment  during the  nine-month  period
         ended  September  30,  2000.  Interest and  dividend  income  decreased
         $81,465,  or 30.9%, for the nine-month  period ended September 30, 2001
         when  compared to the  nine-month  period  ended  September  30,  2000.
         Interest expense also decreased by $264,477,  or 69.3%,  when comparing
         those two  nine-month  periods.  While the  decrease  in  interest  and
         dividend income also decreased  other income,  the decrease in interest
         expense actually increased other income.  Both the decrease in interest
         and dividend income and the decrease in interest  expense resulted from
         Breda, Prairie Telephone Co., Inc. and Tele-Services,  Ltd. paying back
         $4,999,052 in long term debt to the Rural Telephone Finance Cooperative
         during the twelve  month period  ended  December 31, 2000.  Investments
         were redeemed to pay  approximately  $2,100,000 of the $4,999,052 debt,
         which  resulted in less interest and dividend  revenue being  generated
         for the nine-month  period ended  September 30, 2001,  when compared to
         the  nine-month   period  ended  September  30,  2000.  The  $4,999,052
         reduction  in  variable  rate  long-term  debt  also had the  effect of
         reducing Breda's interest expense by a significant amount.


                                       15
<PAGE>


         Income from cellular  investments  decreased $88,086,  or 20.4%, during
         the nine-month  period ended  September 30, 2001,  when compared to the
         same  nine-month  period in 2000. The decrease is  attributable  to the
         fact that three cellular  investment  distributions  totaling  $432,774
         were received  during the nine-month  period ended  September 30, 2000,
         while only two cellular investment distributions totaling $344,689 were
         received during the nine-month  period ended September 30, 2001. Income
         from the Alpine  investment  increased  $20,701,  or 88.1%,  during the
         nine-month  period ended  September 30, 2001, when compared to the same
         nine-month period in 2000. Other miscellaneous  income increased $6,103
         when  comparing the  nine-month  periods ended  September 30, 2001, and
         September 30, 2000.

         Income  taxes  decreased  $1,966,843  for the  nine-month  period ended
         September  30,  2001,  when  compared to the same  period in 2000.  The
         decrease resulted primarily from the fact that there was no transaction
         during the nine-month  period ended September 30, 2001 to correspond to
         the $5,018,714  taxable gain on the sale of a cellular  investment that
         occurred during the nine-month period ended September 30, 2000.

         Net income decreased  $2,923,223,  or 82.1%, for the nine-month  period
         ended September 30, 2001, when compared to the same period in 2000. The
         decrease  was again  primarily  attributable  to Breda not having a net
         after tax  reportable  gain on the sale of cellular  investments in the
         nine-month  period  ended  September  30,  2001,  as  Breda  had in the
         nine-month period ended September 30, 2000.

         Liquidity and Capital Resources at Year Ended December 2000.

         Breda's net working  capital was a positive  $1,774,778 at December 31,
         2000. The positive  working  capital at year-end 2000 was due mainly to
         three factors. Two of those factors were that cash and cash equivalents
         increased $693,236, and temporary investments increased $175,030 during
         the  twelve-month  period ended December 31, 2000. The third factor was
         that the current portion of long-term debt decreased by $490,112. These
         net working  capital  changes  resulted  primarily  from the receipt of
         $5,226,034  in cash from the sale by Prairie  Telephone  Co., Inc. of a
         cellular  investment  (the CIC stock) in May 2000,  and the  subsequent
         payoff of the  variable  rate (8.05% - 8.4% at December  31, 2000) long
         term debt of $4,695,968 to the Rural Telephone  Finance  Cooperative by
         payments  made on June 30, 2000,  September  30, 2000,  and October 16,
         2000. Other expenses  associated with the payoff of the Rural Telephone
         Finance Cooperative  variable rate debt were interest costs of $54,289,
         and prepayment  penalties of $17,262.  Long term  investments  totaling
         $2,100,000  were  liquidated  and used for the  payment of a portion of
         this long-term debt. The CIC stock sale proceeds were also used to make
         federal  estimated  tax  payments of  $2,435,069  during the year ended
         December 31, 2000.

         Long term  investments  decreased by $1,529,121.  As noted  previously,
         $2,100,000  in long term  investments  was redeemed to pay off variable
         rate  debt  owed  to  the  Rural  Telephone  Finance  Cooperative.  The
         difference  between  the  $2,100,000  and


                                       16
<PAGE>


         the  $1,529,121  decrease  in  long-term   investments   resulted  from
         additional long-term investments made by Breda.

         The  long-term  debt  decrease of $4,508,940 is the result of scheduled
         quarterly  principal  payments being paid in 2000 as well as the payoff
         of long term debt as noted previously.

         Liquidity  and Capital  Resources  at Nine Months Ended  September  30,
         2001.

         Breda  had an  increase  of  $336,214  in  current  assets  during  the
         nine-month  period ended  September 30, 2001, when compared to the year
         ended December 31, 2000. The increase  resulted from a $25,840 increase
         in cash and cash  equivalents,  and a $316,732  increase  in  temporary
         investments,  which are being held for the  anticipated  redemption  of
         additional  shares  of stock in  Breda  during  the  normal  course  of
         business. While inventories increased $29,799, and other current assets
         increased  $193,923,  those items were offset by a $90,366  decrease in
         accounts  receivable  and a $158,802  decrease in prepaid income taxes.
         The  increase  in  other  current  assets  of  $193,923   reflects  the
         prepayment  of  quarterly  employee  benefit  premiums  and a  $100,000
         deposit  which was being held as earnest money on a bid to purchase two
         independent  telephone  exchanges.  Breda was  notified  on November 7,
         2001,  however,  that Breda was not the successful bidder for either of
         those two telephone  exchanges.  The decrease in accounts receivable is
         attributable to the receipt of National  Exchange  Carrier  Association
         reimbursements.  The  $158,802  decrease  in  prepaid  income  taxes is
         attributable to the reduced  estimated taxable income for calendar year
         2001 because  there was no  transaction  during the  nine-month  period
         ended  September 30, 2001, to correspond to the $5,018,714  gain on the
         sale of a  cellular  investment  during  the  nine-month  period  ended
         September 30, 2000.

         Noncurrent  assets,  which mainly consist of  longer-term  investments,
         decreased  $40,947  during the  nine-month  period ended  September 30,
         2001,  when  compared to year-end  December 31,  2000.  On May 2, 2001,
         Prairie  Telephone  Co., Inc.,  one of Breda's  subsidiaries,  advanced
         $500,000 to Desktop Media,  L.L.C.  This transaction is shown as a Note
         Receivable  for $446,576 at September 30, 2001,  and for which there is
         no corresponding amount at September 30, 2000. The remaining $53,424 is
         reported  as a 10% equity  interest  in Desktop  Media,  L.L.C.  and is
         included in other  investments.  A corresponding  $183,949  decrease in
         long-term  investments  and a $254,692  decrease  in other  investments
         offset the Desktop  Media,  L.L.C.  transaction.  The  remainder of the
         overall decrease in noncurrent assets was caused by the amortization of
         intangibles and an increase in deferred income taxes.

         Breda's net working  capital was  $2,280,569  at September 30, 2001, as
         compared to $1,774,778 at December 31, 2000.  The $505,791  increase in
         working capital  between the two time periods  resulted mainly from the
         $162,268  decrease in accounts  payable and the net increase in current
         assets as explained in the preceding  paragraph.  The accounts  payable
         decrease between the nine-month period ended September 30, 2001 and the
         year ended December 31, 2000 resulted  primarily  because of a $116,794
         plant under  construction  payable on December 31, 2000, which was paid


                                       17
<PAGE>


         before September 30, 2001, and the $31,070  reduction in the amount due
         to the National Exchange Carrier  Association  because of payments made
         during the nine months ended September 30, 2001.

         Common  stock had a net  increase  of  $400,399  during the  nine-month
         period  ended  September  30,  2001,  when  compared  to the year ended
         December 31,  2000.  The increase  resulted  primarily  from two items,
         those being the $23 per share increase in  outstanding  shares value on
         May 16,  2001,  and a  decrease  in the  number of  outstanding  shares
         through  redemption  of stock by Breda from  37,241  shares at year end
         December  2000 to 35,473  shares  during the  nine-month  period  ended
         September 30, 2001.  The decrease in the Retained  Earnings  during the
         nine-month  period ended  September 30, 2001, when compared to year-end
         December  31,  2000,  is the  net  effect  of the  stated  value  stock
         adjustment  of  $851,483,  the  dividends  paid  of  $111,087,  and the
         year-to-date net income as of September 30, 2001.

         Three Months Ended  September  30, 2001  Compared to Three Months Ended
         September 30, 2000.

         There was a decrease in total  operating  revenues for the  three-month
         period ended  September  30, 2001,  when compared to the same period in
         2000,  of $72,481,  or 4.6%.  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 $6,369, or 0.6%, for
         the  three-month  period ended September 30, 2001, when compared to the
         three-month  period ended September 30, 2000. The components  making up
         local exchange  carrier  services  revenue are local network  services,
         network  access   services,   billing  and   collection   services  and
         miscellaneous  revenue.  Those four  components  are  discussed  in the
         following four paragraphs.

         Local  network  services  revenue   increased  $3,605,  or  2.5%,  when
         comparing  the  three-month  period ended  September  30, 2001,  to the
         three-month period ended September 30, 2000.

         Network  access  services  revenue  decreased  $12,016,  or 1.8%,  when
         comparing  the  three-month  period ended  September  30, 2001,  to the
         three-month   period  ended   September  30,  2000.  The  decrease  was
         attributable  to no access  revenue being  generated from calls made by
         Pacific Junction Telemarketing,  Inc.'s telemarketing center after July
         26, 2001.  As noted  previously,  Pacific  Junction,  a  subsidiary  of
         Prairie  Telephone  Co.,  Inc.,  was  notified  by  Pacific  Junction's
         telemarketing  call number  provider that it would no longer be able to
         supply calling numbers to Pacific Junction after July 26, 2001.

         Billing and collection  services 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
         $5,455, or 24.1%, for the three-month  period ended September 30, 2001,
         when compared to the  three-month  period ended


                                       18
<PAGE>


         September 30, 2000. The decrease was caused by major carriers,  such as
         AT&T,  continuing  to perform more of their own billing and  collection
         functions.

         Miscellaneous  revenue  increased  $7,497, or 3.4%, for the three-month
         period ended  September 30, 2001,  when  compared with the  three-month
         period ended September 30, 2000. The increase in miscellaneous  revenue
         was primarily the result of increased cellular service  commissions and
         cellular accessory sales. Breda opened a retail outlet in Carroll, Iowa
         in early  April  2000,  which has  significantly  expanded  its  market
         penetration in the cellular services arena.

         Broadcast services revenue decreased  $10,985,  or 4.1%, when comparing
         the  three-month  period ended  September 30, 2001, to the  three-month
         period ended  September 30, 2000.  The decrease was  attributable  to a
         decrease  in the  customer  base  when  comparing  the two  three-month
         periods.  The decrease in the customer base  resulted from  competition
         from satellite dish providers and a declining  population  base in some
         of the rural areas served by Tele-Services, Ltd.

         There was an increase in Internet  services revenue for the three-month
         period ended  September  30, 2001,  when compared to the same period in
         2000,  of  $14,056,  or 8.5%.  The  increase  was due to a net  overall
         increase  in the  customer  base  when  comparing  the two  three-month
         periods.  There was also an increase in the associated  expenditures to
         provide those services to the additional Internet  customers,  however,
         resulting in a less than positive impact on operating income. Breda has
         been  experiencing  price-point  competition for Internet services from
         Iowa Telecom in three communities since late fourth quarter 2000. Breda
         had been the sole  provider of Internet  services in those  communities
         until that time.  Iowa Telecom  purchased the  telephone  exchanges for
         those  communities in 1999 and began operating them on June 1, 2000. In
         late  2000,  Iowa  Telecom  expanded  the  services  offered  in  those
         communities to include  Internet  services and at a lower price than is
         offered by Breda.  Breda  reduced its Internet  service  charges to its
         customers in August 2001,  and also began  bundling  Internet  services
         with its long  distance  services,  in order to attempt to compete at a
         lower price point for Internet  services.  On October 31,  2001,  Breda
         switched to a  different  help-desk  and  underlying  Internet  service
         provider  so that Breda  could  further  reduce its costs of  providing
         Internet  services  in order to attempt to allow  Breda to compete at a
         lower price point for Internet services.

         Telemarketing  services  revenue is reported  as a  component  of other
         revenue and is generated by Prairie  Telephone Co., Inc.'s  subsidiary,
         Pacific Junction  Telemarketing,  Inc.  Telemarketing  services revenue
         decreased  $69,183,  or 88.7%,  when comparing the  three-month  period
         ended  September 30, 2001, to the same period in 2000.  The decrease is
         attributable  to the fact  that on July 26,  2001,  Pacific  Junction's
         telemarketing  call  number  supplier  (Results  Telemarketing,   Inc.)
         notified  Pacific  Junction  that it would no longer be able to provide
         calling numbers to Pacific  Junction.  Breda and Pacific  Junction have
         not been able to locate new sources of  telemarketing  calling numbers,
         so the telemarketing center has not been operating since July 26, 2001.
         Breda has determined  that it is very unlikely that Pacific  Junction's
         telemarketing center will ever be reopened. As noted above, the closing
         of


                                       19
<PAGE>


         Pacific  Junction's  telemarketing  center  also  led to a  decline  in
         Breda's network access services revenue because the telemarketing calls
         made by  Pacific  Junction  were also a source of  access  revenue  for
         Breda.

         There was an increase in total operating expenses of $77,959,  or 6.1%,
         for the  three-month  period ended September 30, 2001, when compared to
         the three-month  period ended September 30, 2000. The three  components
         making up operating  expenses are cost of  services,  depreciation  and
         amortization,  and selling,  general and  administration  expenditures.
         Those components are discussed in the following paragraphs.

         Cost  of  services  expenses  increased  $48,259,   or  8.7%,  for  the
         three-month  period  ended  September  30, 2001,  when  compared to the
         three-month  period ended September 30, 2000. The components  making up
         cost of services  are plant  specific  operations,  plant  non-specific
         operations,  programming,  and Internet costs, and those components are
         discussed in the following four paragraphs.

         There was an increase of $14,573, or 3.7%, in plant specific operations
         expense when comparing the three-month period ended September 30, 2001,
         to the  three-month  period ended  September 30, 2000. The increase was
         attributable  to increased  repair expense on the outside plant and the
         central office equipment when comparing the two three-month periods.

         Plant nonspecific  operations  expense decreased $278, or 1.2%, for the
         three-month  period  ended  September  30, 2001,  when  compared to the
         three-month period ended September 30, 2000.

         There was an increase of $2,542,  or 3.2%, in  programming  expense for
         cable TV services when comparing the three-month period ended September
         30, 2001,  with the  three-month  period ended  September 30, 2000. The
         increase resulted from increases in programming fees.

         Internet  costs  increased by $31,422,  or 54.8%,  for the  three-month
         period ended  September  30,  2001,  when  compared to the  three-month
         period ended  September 30, 2000. The increase is  attributable  to the
         additional  costs  of  providing  Internet  services  to the  increased
         customer base. The additional costs include  additional rental of fiber
         lines,  help  desk and  customer  services  fees  from  the  underlying
         Internet  service  provider,  and  internal  costs to provide  customer
         service and billing service to the additional customers.

         Depreciation and amortization  expense  decreased  $2,628, or 0.9%, for
         the  three-month  period ended September 30, 2001, when compared to the
         same period in 2000.

         Selling,  general and administration  expenses  increased  $32,328,  or
         7.3%,  for the  three-month  period  ended  September  30,  2001,  when
         compared to the same period in 2000. The customer operations  component
         decreased  $1,672,  or 0.9%, when comparing these two three-month  time
         periods,  and mainly resulted from decreased


                                       20
<PAGE>


         phone service  expenditures  for  telemarketing.  Breda also received a
         13.0%  increase  in its health  plan  premiums  for the year 2001.  The
         corporate  operations component increased $58,236, or 28.3%, during the
         three-month  period  ended  September  30,  2001 when  compared  to the
         three-month  period ended  September  30, 2000.  The increase  resulted
         mainly from an increase in the costs of outside  legal,  accounting and
         consulting  services to investigate  new acquisition  options.  General
         taxes paid by Breda decreased  $24,236,  or 46.2%,  for the three-month
         period ended  September  30,  2001,  when  compared to the  three-month
         period ended  September 30, 2000, 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  $150,440,  or 53.4%,  in  operating  income for the
         three-month  period ended September 30, 2001, when compared to the same
         three-month period in 2000.

         Other  income  (expense)  decreased  $374,364,  or  82.7%,  during  the
         three-month  period ended September 30, 2001, when compared to the same
         three-month  period in 2000.  Interest  and dividend  income  decreased
         $37,384,  or 35.4%, for the three-month period ended September 30, 2001
         when  compared to the  three-month  period  ended  September  30, 2000.
         Interest expense also decreased $79,594, or 67.4%, when comparing those
         two  three-month  periods.  While the decrease in interest and dividend
         income also decreased  other income,  the decrease in interest  expense
         increased  other  income.  Both the  decrease in interest  and dividend
         income and the  decrease  in  interest  expense  resulted  from  Breda,
         Prairie  Telephone  Co.,  Inc.  and  Tele-Services,  Ltd.  paying  back
         $4,999,052 in long term debt to the Rural Telephone Finance Cooperative
         during the twelve  month period  ended  December 31, 2000.  Investments
         were redeemed to pay  approximately  $2,100,000 of the $4,999,052  debt
         which resulted in less interest and dividend income being generated, as
         well as less interest expense being incurred for the three-month period
         ended September 30, 2001, when compared to the three-month period ended
         September 30, 2000.  Other reductions in interest income were caused by
         decreased interest rates when comparing the three-month  periods ending
         September 30, 2001, and September 30, 2000, respectively.

         Income from cellular investments  decreased $299,440,  or 85.7%, during
         the  three-month  period ended September 30, 2001, when compared to the
         same  three-month  period in 2000. The decrease is  attributable to the
         fact that Breda only  received  one  cellular  investment  distribution
         during the three  month  period  ended  September  30,  2001,  while it
         received two cellular investment  distributions  during the three-month
         period ended September 30, 2000. Other  miscellaneous  income increased
         $246 when comparing the  three-month  periods ended September 30, 2001,
         and September 30, 2000. There was also a $117,755, or 100%, decrease in
         gain on the sale of cellular  investments during the three-month period
         ended September 30, 2001, when compared to the same three-month  period
         in 2000.  The  decrease is  attributable  to the fact that there was no
         transaction  in 2001 to correspond  to sale of the cellular  investment
         which occurred in the year 2000.


                                       21
<PAGE>


         Income  taxes  decreased  $257,826  for the  three-month  period  ended
         September  30,  2001,  when  compared to the same  period in 2000.  The
         decrease has a direct  correlation to the decrease in operating  income
         and the  decrease  in other  income for the  three-month  period  ended
         September 30, 2001,  when  compared to the same period in 2000.  Income
         taxes are calculated on an annualized  basis. The loss of telemarketing
         revenues and the related access  revenues on July 26, 2001 caused Breda
         to lower its estimated income tax for the year 2001.

         Net income decreased  $266,978,  or 64.4%,  for the three-month  period
         ended September 30, 2001, when compared to the same period in 2000.

         Other Activities.

         Breda's  primary  ongoing  capital  investment  activity will currently
         continue to be additions to property, plant and equipment. For example,
         Breda  continues to make  investments in new technology in order to try
         to offer subscribers better service. Capital expenditures for 2000 were
         approximately  $726,922,  and are expected to be approximately $777,151
         in 2001.

         Breda  anticipates that substantial  expenditures  will need to be made
         for  software  upgrades  that will be  necessary  in order  for  Breda,
         Prairie Telephone Co., Inc. and Westside Independent  Telephone Company
         to  become  compliant  with  the  requirements  of  the  Communications
         Assistance for Law Enforcement Act ("CALEA").  CALEA was passed in 1994
         in response to rapid advances in telecommunications technology, such as
         the implementation of digital  technology and wireless  services,  that
         have  threatened  the ability of law  enforcement  officials to conduct
         authorized electronic surveillance.  CALEA requires  telecommunications
         carriers to modify their equipment,  facilities, and services to ensure
         that they are able to comply with authorized  electronic  surveillance.
         The modifications  were originally  required to be completed by October
         25,  1998,  but in accord with an  extension  granted by the FCC,  were
         generally  to be  completed  by June 30,  2001.  Industry  associations
         requested  that the FCC extend the June 30, 2001  deadline for wireline
         carrier  compliance  with  CALEA  until  September  30,  2001.  For the
         wireline,  cellular,  and broadband  personal  communications  services
         carriers, implementation of a packet-mode capability and six Department
         of  Justice/Federal  Bureau of Investigation  "punch list" capabilities
         were  originally  required  to be  completed  by  September  30,  2001.
         Industry  associations,  on behalf of their  members,  had  requested a
         blanket  extension  from  the  FCC of the  CALEA  punchlist  compliance
         deadline of September 30, 2001. The industry  associations  argued that
         since  the FBI  has  not yet  completed  buy-out  agreements  with  all
         manufacturers to pay for CALEA capability  software and because the FCC
         had  not  begun  any   proceedings   relating  to  the   four-punchlist
         capabilities  recently  vacated  and  remanded  by the  D.C.  Court  of
         Appeals,  most carriers  would not be able to comply with the September
         30, 2001 deadline.

         Breda also took action on its own behalf regarding its CALEA compliance
         by  filing a  Petition  for  Extension  with the FCC on June 30,  2000,
         asking for a two-year  extension  of the CALEA  section 103  capability
         requirements.   The  extension  was


                                       22
<PAGE>


         referred to as a section 107c extension.  Breda's  petition  included a
         Flexible  Deployment  Guide,  which  provided  the  FBI  with  specific
         information about Breda's switch,  the deployed  generic,  the date the
         switch  will be  CALEA  compliant  and the  number  of law  enforcement
         interceptions  Breda has had over the last four  years.  The FBI made a
         recommendation to the FCC which supported Breda's petition, and the FCC
         has granted Breda an extension for complying with the CALEA section 103
         requirements until June 30, 2002.

         In August of 2001, the FBI released  additional CALEA  requirements for
         packet-mode  communications,  which  include  services  such as DSL and
         ISDN. On September  28, 2001,  the FCC released an order which sets out
         procedures  for  companies  to  supplement  their  CALEA  section  107c
         petitions  to  include  packet-mode  communications.  The  supplemental
         section  107c  petitions  need to be filed with the FCC by November 19,
         2001.

         Breda has  determined  that it will file for a two-year  extension  for
         packet-mode  communications services by the November 19, 2001 deadline.
         Although there are no assurances,  Breda currently anticipates that the
         extension will be granted.

         Given the terrorist  events of September 11, 2001, and the new focus on
         national security, however, Breda also anticipates that the FBI and FCC
         will push for nationwide CALEA compliance as early as possible.

         Breda  anticipates that the cost to upgrade Breda's,  Prairie Telephone
         Co., Inc.'s and Westside  Independent  Telephone  Company's software to
         become  compliant  with  CALEA  may be as much as  $950,000.  Breda had
         previously  estimated  the  cost  to be  $200,000,  but  Breda  has now
         received  significantly  higher  quotes from the  software  vendors and
         service providers.

         As  of  September  30,  2001,   Breda  had   approximately   $2,069,301
         outstanding  on  its  one  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 Co., 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 on December  1, 2005 and  November  30,  2005.  No amounts  were
         outstanding  under  either of those  lines of credit on  September  30,
         2001.

         As  has   been   reported   in   previous   filings   by   Breda,   the
         Multi-Association  Group ("MAG") submitted an access charge rate reform
         and  deregulation  plan for non-price  cap,  incumbent  local  exchange
         carriers to the FCC in October of 2000.  The MAG plan is  designed,  in
         general, to modify interstate access charge rules and universal service
         support for non-price cap, incumbent local exchange carriers. Non-price
         cap,  incumbent local exchange  carriers  include most of the small and
         mid-size local exchange  carriers that serve rural and insular areas in
         the U.S.,  such as Breda,  Prairie  Telephone  Co.,  Inc.  and Westside
         Independent Telephone Company.


                                       23
<PAGE>


         It was originally thought that the FCC would act on the MAG plan within
         a time frame  such that  whatever  orders,  rules or  regulations  were
         issued or  promulgated  by the FCC based on or in  response  to the MAG
         plan would have taken effect on July 1, 2001. The FCC did not, however,
         act on the MAG plan by that date.

         The FCC did take some  action  regarding  the MAG plan on  October  11,
         2001, however,  when it issued an order setting out rules which address
         some  aspects of the MAG plan and also a notice of proposed  rulemaking
         regarding  other aspects of the MAG plan,  in particular  the incentive
         portions  of the  MAG  plan.  At the  time of the  preparation  of this
         quarterly  report,  however,  neither the FCC's order nor the notice of
         proposed  rulemaking  was  publicly  available,  and the  only  written
         information  that  Breda  had at the  time of the  preparation  of this
         quarterly  report  regarding  the  order  and the  notice  of  proposed
         rulemaking was a press release that was issued by the FCC regarding its
         adoption of the order and the notice of proposed rulemaking.  The press
         release is,  however,  only a summary outline of some components of the
         order and the notice of proposed rulemaking, so Breda has not been able
         to  analyze  the  details  of the  order  or  the  notice  of  proposed
         rulemaking.  Based upon the summary of the order in the press  release,
         however,  it appears that some of the provisions of the order,  such as
         the 11.25%  authorized  rate-of-return  for rural carriers,  may have a
         neutral effect on Breda's  revenues.  Other provisions of the order and
         the notice of  proposed  rulemaking  as  summarized  in the FCC's press
         release,  however, would significantly revamp other components of prior
         support  payments,  and  substantially  revise  the  MAG  plan  as  was
         discussed in some of Breda's prior filings.

         Breda is  therefore  unable to analyze with any  certainty  whether the
         FCC's  order and the rules  proposed  by the FCC's  notice of  proposed
         rulemaking will adversely affect Breda's revenues. Breda will, however,
         continue to evaluate the FCC's actions as further  information  becomes
         available from the FCC. Breda is aware that industry  associations  are
         urging  the FCC to use  caution,  in light of the  September  11,  2001
         terrorist  attacks,  in revamping prior support  payment  structures so
         that the communication  infrastructure critical to national security is
         not jeopardized.

         New NECA rates  relating to interstate  access went into effect on July
         1, 2001. There were not, however,  any material rate changes for Breda,
         Prairie Telephone Co., Inc. or Westside  Independent  Telephone Company
         arising from those new NECA rates.

         Breda has an agency agreement with U.S. Cellular, which allows Breda to
         sell  cellular  phones and related  packages  to the public,  and Breda
         receives  commissions on those sales.  U.S. Cellular had notified Breda
         that the  agreement  would be terminated  effective May 31, 2001.  U.S.
         Cellular had proposed a new agreement,  but Breda had serious  concerns
         about that  agreement,  including the fact that the new agreement would
         pay lower  commissions  to Breda.  Breda has  subsequently  received  a
         letter from U.S.  Cellular  stating that Breda's current  contract with
         U.S.  Cellular  would be extended  to  December  1, 2001,  to allow the
         parties  to  reach an  agreement  on the open  issues.  While  Breda is
         attempting  to  negotiate  a  more  favorable  agreement,  there  is no
         assurance Breda will be successful in its negotiations. If Breda


                                       24
<PAGE>


         is  unsuccessful,  the new  agreement  will have a  negative  impact on
         Breda's cellular commissions revenue.

         Breda also plans to continue to consider expanding its core business of
         providing  telephone services by looking at any opportunities which may
         arise to acquire  additional  telephone lines. There are no assurances,
         however,  that any such  opportunities will ever arise or that any such
         opportunities will fit into Breda's strategic plan or will otherwise be
         able to be realized by Breda.  For  example,  Breda  submitted a bid to
         acquire two independent  telephone  exchanges in September of 2001, but
         was notified on November 7, 2001 that it was not the successful  bidder
         for either of those exchanges.

         Breda, Prairie Telephone Co., 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. For example,
         as discussed in Breda's annual report on Form 10-KSB for the year ended
         December 31, 2000, it is possible that Breda or Prairie  Telephone Co.,
         Inc. may, either directly or through one of the companies in which they
         have invested,  begin to offer personal  communication  services in the
         next one to three years.  The area of personal  communication  services
         is, however, an uncertain area, and there is no assurance that Breda or
         Prairie  Telephone  Co., Inc. or any of the entities in which they have
         invested  will ever offer any personal  communication  services or that
         any  offering of any such  services  will be  successful  or  otherwise
         profitable.

         There are no current  plans to expand the cable  services  areas of, or
         the cable services provided by, Tele-Services, Ltd. Tele-Services, Ltd.
         is, however, continuing to work on consolidating its head-end equipment
         with the goal being that the  equipment  will then be able to serve two
         or more communities,  instead of just one community as is currently the
         case. It is hoped that this  consolidation  will reduce  Tele-Services,
         Ltd.'s maintenance costs for that equipment.  Tele-Services,  Ltd. also
         anticipates  that  it will  continue  to need  to  upgrade  its  plant,
         equipment  and cables in order to add more channel  line-ups so that it
         can stay  competitive  and  continue  to be able to obtain  programming
         licenses.  The costs of those  upgrades  in 2001,  and of any  head-end
         consolidations, are estimated to be less than $100,000.

         During  the month of July  2001,  Breda and its  subsidiaries  offering
         Internet  services  converted  feasible  service  areas  to  a  virtual
         internet  service product.  This conversion  allowed Breda to brand its
         Internet  services  as its  own  even  though  the  underlying  service
         provider had not  changed.  On October 31, 2001,  Breda  converted  its
         Internet  customers on the virtual  Internet  service  product to a new
         underlying Internet service provider, Desktop Media, L.L.C. As noted in
         succeeding  paragraphs,  Breda is a part owner of Desktop Media, L.L.C.
         Breda  believes  that these  changes  will allow Breda to compete  more
         effectively in the Internet  services  market through the generation of
         cost savings in transport costs and help desk costs.


                                       25
<PAGE>


         Breda and its  subsidiaries  have and will  continue  to incur  capital
         expenditures in connection with upgrading  their  telephone,  cable and
         other equipment and systems. For example,  Breda upgraded its financial
         system  software in the third  quarter of 2001,  and Breda  anticipates
         converting  the billing  and  financial  software  utilized by Westside
         Independent  in either the first or second quarter of 2002. The cost of
         those upgrades and conversions will not, however, be material to Breda.

         On May 2, 2001, a new company called Desktop Media,  L.L.C.  was formed
         by a corporation  named Desktop Media,  Prairie Telephone Co., Inc. and
         two other  telephone  companies.  Desktop Media,  L.L.C. is a Minnesota
         limited liability company.  Under agreements signed in conjunction with
         the formation of Desktop  Media,  L.L.C.,  Prairie  Telephone Co., Inc.
         became a 10% owner of Desktop Media, L.L.C.

         Desktop Media,  L.L.C.  provides both dial-up and  high-speed  Internet
         access  in  south  central  Minnesota.   Desktop  Media,  L.L.C.  is  a
         full-scale  Internet  Service  Provider,   which  also  sells  computer
         hardware  and  related  services.   Desktop  Media,  L.L.C.  has  filed
         applications to provide traditional telephone services as a competitive
         local exchange carrier. The overall business plan is based upon Desktop
         Media L.L.C.  providing data local exchange carrier  services.  Desktop
         Media,  L.L.C.  will  contract  to provide  Internet  Service  Provider
         support  services  to Prairie  Telephone  Co.,  Inc.  and the other two
         telephone companies who have invested in Desktop Media, L.L.C.

         Under the agreements,  Prairie Telephone Co., Inc. has advanced Desktop
         Media,  L.L.C.  $500,000 under a promissory  note dated May 2, 2001. No
         interest or principal  payments  are required  during the first year of
         the promissory note. In the second year of the promissory note, Desktop
         Media, L.L.C. will be required to pay interest only, which will include
         all  interest  deferred  during  the first year and  interest  accruing
         during the second  year.  On the first day of the 25th month  following
         May 2, 2001, a principal  payment of $12,000 plus  interest will be due
         by Desktop Media,  L.L.C. with a similar installment payment due on the
         first day of each  month  thereafter  until the  entire  principal  and
         interest  accruing  under  the  promissory  note has been paid in full.
         Desktop  Media,  L.L.C.  has the option of prepaying all or any part of
         the  principal  balance,  or  accrued  interest,  at any  time  without
         penalty.

         The  promissory  note has been  guaranteed  by the  manager  of Desktop
         Media,  L.L.C. The manager of Desktop Media, L.L.C. has also guaranteed
         the loans made by the other two  telephone  companies who have invested
         in Desktop Media,  L.L.C. There is also a management  agreement between
         the manager and Desktop Media, L.L.C.

         There is no assurance that Desktop Media, L.L.C. will perform according
         to its business  plan, and there is therefore no assurance that Prairie
         Telephone Co., Inc. will ever receive any debt repayments or returns or
         other value from its  investment in Desktop  Media,  L.L.C.  One of the
         intended  purposes of Prairie  Telephone Co., Inc.'s  relationship with
         Desktop Media,  L.L.C. is to try to lower Breda's and its subsidiaries'
         costs of providing Internet services in order to allow Breda to compete
         at a lower price point for Internet services.


                                       26
<PAGE>


         Breda entered into a new employment  agreement with Robert Boeckman and
         with  Jane  Morlok  on  September  11,  2001.  Each  of the  employment
         agreements  was made  effective,  however,  as of April  1,  2001.  The
         employment  agreements are not materially  different from Breda's prior
         employment  agreements with Mr. Boeckman and Ms. Morlok. The employment
         agreements did include compensation adjustments. Each of the employment
         agreements provide that the agreement will terminate on April 1, 2002.

         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.

         As previously  reported Breda filed an application to register the mark
         "W.I.N.  Western  Iowa  Networks"  with the  United  States  Patent and
         Trademark  Office,  and Breda was notified in late February 2001,  that
         the  Patent  Office  had  found no  conflicting  marks  in its  records
         regarding the mark. Based on legal advice  regarding this  information,
         Breda  determined  that there  would be minimal  risk in using the mark
         even though Breda had not received final  notification  of registration
         from the United States Patent and Trademark  office.  During the second
         quarter  2001,  Breda  accordingly  began  utilizing  the mark and some
         related logos in the general advertising and promotion of its business,
         including  on trucks and other  equipment.  Breda also  implemented  an
         advertising campaign to create awareness of the mark and to promote its
         general business and services. Breda hopes the use of the mark and logo
         will create an integrated,  unified  marketing  approach for all of the
         products and services of Breda and its  subsidiaries  and will increase
         awareness of those  products and  services.  Breda has not effected any
         change  in the  scope  or  nature  of  its or any of its  subsidiaries'
         business  in  connection  with the  adoption  and use of the mark.  The
         United States Patent and Trademark  Office has notified  Breda that the
         official  notice of publication of the mark took place on September 18,
         2001.  Any person can file  opposition to Breda's  registration  of the
         mark through October 18, 2001, but Breda is not aware of any filings in
         opposition to its registration.

         Tele-Services,  Ltd., a subsidiary of Breda, entered into a real estate
         contract on September 12, 2001, to sell the corporate  office  building
         located at 103 E. Main,  Breda,  Iowa.  The building is used as Breda's
         administrative   offices,   and  Breda   leases   the   building   from
         Tele-Services,  Ltd.  The total  purchase  price for the real estate is
         $200,000,  which  will be  paid in six  installments,  with  the  final
         installment due on October 15, 2006.

         Tele-Services,  Ltd. sold the corporate  office building  because Breda
         has determined to build a new corporate  office  building on land owned
         by Breda which is adjacent to Breda's central office building in Breda,
         Iowa. The central office building  houses Breda's switch.  The new site
         is   approximately   two  blocks  away  from  the  present  site.   The
         construction  of  the  new  corporate   office  building  is  currently
         anticipated to be completed in October of 2002, with an estimated total
         cost for the project not to exceed $500,000.


                                       27
<PAGE>


         Cautionary Statement on Forward Looking Statements.

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

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

               o    the possible  adverse effects to Breda and its  subsidiaries
                    which may arise  under the  regulations  which have been and
                    are still to be promulgated under the Telecommunications Act
                    of 1996, 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;

               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;


                                       28
<PAGE>


               o    acts or omissions of competitors and other third parties;

               o    changes in or more governmental regulations and 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 July 1,
         2001 through September 30, 2001.

         Breda did not issue any shares of its common stock during the period of
         July 1, 2001 through September 30, 2001.

Item 3. Defaults Upon Senior Securities.

         There was no material default or any material  arrearage or delinquency
         by Breda of the type required to be reported under this Item during the
         period of July 1, 2001 through September 30, 2001.

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

         No matters were submitted to a vote of the shareholders of Breda during
         the period of July 1, 2001 through September 30, 2001.


                                       29
<PAGE>


Item 5. Other Information.

         During the period of July 1, 2001 through  September  30,  2001,  Breda
         redeemed 444 shares of its common stock from 11 shareholders at $258.00
         per  share,  for a total  amount of  $114,552.  The  $258.00  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
         16, 2001 annual meeting of the shareholders of Breda.

         There were seven transfers of shares of Breda's common stock during the
         quarter  ended  September  30, 2001 with respect to which Breda did not
         exercise its right of first refusal on those shares.

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

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

         (b)      Breda did not file any  reports  on Form 8-K during the period
                  of July 1, 2001 through September 30, 2001.


                                       30
<PAGE>


                                   SIGNATURES

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

                                             BREDA TELEPHONE CORP.


Date:  November 13, 2001.                    By: /s/ Dean Schettler
                                                 -------------------------------
                                                 Dean Schettler, President


Date:  November 13, 2001.                    By: /s/   David Grabner
                                                 -------------------------------
                                                 David Grabner, Treasurer


                                       31
<PAGE>


                                  EXHIBIT INDEX
                             Exhibits to Form 10-QSB
                      Three Months Ended September 30, 2001
                              BREDA TELEPHONE CORP.

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

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

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

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

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

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

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


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

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

3. Articles of Incorporation and Bylaws

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

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

10. Material Contracts

      *(a)      Exhibit  10.1  -  Employment   Agreement             E-1
                effective  April 1, 2001  between  Breda
                and Robert Boeckman.

      *(b)      Exhibit  10.2  -  Employment   Agreement             E-7
                effective  April 1, 2001  between  Breda
                and Jane Morlok.

*Included with this filing.


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