|                                                                           
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|UNITED STATES SECURITIES AND EXCHANGE COMMISSION
    Washington, D.C. 20549
|                                                                           
|Form 10-KSB/A
    Amendment No. 1                                          
|                                                                           
|(Mark One)                                                                 
|                                                                           

|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|- | ----------------------------------------------------------------------------------
|  |                                                                                   
|  | For the fiscal year ended: December 31, 2005                                      
|  |                                                                                   
|o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  |                                                                                   
|  | For the transition period from ______________ to ______________.                  
|  |                                                                                   

|Commission file number: 0-26525                                     
|--------------------------------------------------------------------
|                                                                    
|BREDA TELEPHONE CORP.
(Name of small business issuer in its charter)
|                                                                    

|Iowa
    (State or other jurisdiction of 
    incorporation or organization)                                                              |  | 42-0895882
    (I.R.S. Employer 
     Identification No.)
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------
|                                                                                                                                          |  |                                                          
|112 East Main, P.O. Box 190, Breda, Iowa
     (Address of principal executive offices) 
    Registrants telephone number: (712) 673-2311 |  | 51436
     (Zip Code)                                    
|                                                                                                                                          |  |                                                          

|Securities registered under Section 12(b) of the Exchange Act: NONE
    Securities registered under Section 12(g) of the Exchange Act:
|--------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                      
|Common Stock, no par value
    (Title of class)                                                                                       

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Check whether the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Exchange Act.  o
Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained
in this form, and no disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).  Yes o  No x
State registrants revenues for its most recent fiscal year: $7,452,514.

|
|



|State the aggregate market value of the voting and non-voting common equity held by non-affiliates:
$11,039,868, as of March 1, 2006. The registrants stock is not listed on any exchange or otherwise
publicly traded, and the value of the registrants stock for this purpose has been based upon
the current $357 per share redemption price of the registrants stock as determined by its board
of directors. In determining this figure, the registrant has assumed that all of its directors and
officers and its chief operations officer and chief financial officer are affiliates, but this assumption
shall not apply to or be conclusive for any other purpose.
State the number of shares outstanding of each of the registrants classes of common equity, as
of the latest practicable date: 31,023 shares of common stock, no par value, at March 1, 2006.
Transitional Small Business Disclosure Format (check one):   Yes o  No x
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|



|EXPLANATORY NOTE
Breda Telephone Corp. (Breda) is filing this Amendment No. 1 to its Annual Report on Form
10-KSB for the fiscal year ended December 31, 2005 which was filed with the Securities and Exchange
Commission on April 17, 2006 (the Original 10-KSB) to amend the Original 10-KSB by substituting
the following Item 7 Financial Information for the financial statements contained in
Item 7 in the Original 10-KSB and, more specifically, to add and include the qualified audit opinion
of Kiesling Associates LLP. Other than the addition of the referenced audit opinion, all of the information
in the financial statements, and the other information in the Original 10-KSB, remains unchanged
and is not otherwise amended hereby.
At the time of the filing of the Original 10-KSB, certain portions of the audit of Bredas financial
statements for the fiscal year ended December 31, 2005 were not complete.
Breda has investments in certain limited partnerships that it accounts for using the equity method.
Because of the materiality of these investments at December 31, 2005, Kiesling Associates LLP was
required to perform certain audit procedures or rely on the audits of other auditors to obtain reasonable
assurance that the investments and related equity income were presented fairly, in all material respects,
in the consolidated financial statements of Breda as of and for the year ended December 31, 2005.
Kiesling Associates LLP has performed the necessary audit procedures or relied on the audits of other
auditors to obtain reasonable assurance that the investments and related equity income were presented
fairly in all material respects for two out of the three outstanding limited partnerships for the
year ended December 31, 2005.
Breda received a letter dated August 29, 2007 from the remaining limited partnership, Iowa RSA No.
9 Limited Partnership, stating that the audited financial statements for December 31, 2005 originally
expected to be completed by the end of August 2007, would be delayed approximately one month due
to the amount of time required to prepare audit analyses requested by their external auditors, as
well as the necessary auditor review time. As of the date of this filing, however, Breda has yet
to receive the audited financial statements for December 31, 2005 for Iowa RSA No. 9 Limited Partnership.
Bredas auditor, Kiesling Associates LLP, has been informed that while the financial information
is not expected to change from what has been included in Bredas consolidated financial statements
for the year ended December 31, 2005, the auditor for Iowa RSA No. 9 Limited Partnership is
planning to issue a qualified opinion on that entity. Given that fact, and because of the materiality
of this outside investment to Bredas financial statements for the year ended December 31, 2005,
Bredas auditors have now issued a qualified audit opinion on the consolidated financial statements
for Breda for the year ending December 31, 2005. The qualified audit opinion and financial statements
are set out below. As noted above, although the financial statements are included in this Form 10-KSB/A,
none of the information in the financial statements as included in the Original 10-KSB is amended
hereby, with the purpose of this Form 10-KSB/A being to add the qualified audit opinion of Kiesling
Associates LLP as discussed above.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|



|This Form 10-KSB/A does not modify or update other information in the Original 10-KSB and does not
purport to provide an update of any developments regarding Breda subsequent to the filing of the
Original 10-KSB.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                    
|                                                                                                                                                                                                                    
|                                                                                                                                                                                                                    
|[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]                                                                                                                                                                 

|2
|-



|Item 7.                    Financial Statements                                 
|--------------------------------------------------------------------------------
|                                                                                
|                                                                                
|Breda Telephone Corp.
And Subsidiaries
Breda, IA                                
|                                                                                
|                                                                                
|Consolidated Financial Statements
For the Years
Ended December 31, 2005 and 2004

|3
|-



|BREDA TELEPHONE CORP. AND SUBSIDIARIES
    BREDA, IOWA
|------------------------------------------------------
|                                                      
|Contents                                              
|                                                      

|                                   |                                                 | **Page**
|---------------------------------- | ----------------------------------------------- | --------
|                                   |                                                 |         
|                                   |                                                 |         
|Independent Auditors Report       | 5                                              
|                                   |                                                 |         
|Consolidated Financial Statements: |                                                
|                                   |                                                 |         
|                                   | Consolidated Balance Sheets                     | 6       
|                                   |                                                 |         
|                                   | Consolidated Statements of Income               | 7       
|                                   |                                                 |         
|                                   | Consolidated Statements of Stockholders Equity | 8       
|                                   |                                                 |         
|                                   | Consolidated Statements of Cash Flow            | 9       
|                                   |                                                 |         
|                                   | Notes to Consolidated Financial Statements      | 10-27   

|4
|-



|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Breda Telephone Corporation and Subsidiaries
Breda, Iowa
We have audited the accompanying consolidated balance sheets of Breda Telephone Corporation (an Iowa
corporation) and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements
of income, stockholders equity and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Companys management. Our responsibility
is to express an opinion on these consolidated financial statements based on our audits.
Except as discussed in the following paragraph, we conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. The Company is not required to have, nor were we engaged
to perform an audit of its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing the audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Companys internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as, evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
We were unable to obtain audited financial statements for 2005 supporting the Companys investment
in RSA No. 9 Limited Partnership stated at $820,284 at December 31, 2005, or its equity in earnings
in such Limited Partnership of $367,568, which is included in net income for the year ended as described
in Note 4 to the financial statements; nor were we able to satisfy ourselves about the carrying value
of the investment or the equity in its earnings by other auditing procedures. We were able to obtain
and review the audited financial statements for the stated Limited Partnership for 2004.
In our opinion, except for the effects of such adjustments, if any, as might have been determined to
be necessary had we been able to examine evidence regarding the investment and earnings of RSA No.
9 Limited Partnership, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Breda Telephone Corporation and subsidiaries as
of December 31, 2005 and 2004, and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Kiesling Associates LLP
West Des Moines, IowaJanuary 27, 2006, except forWest Iowa Cellular, Inc. and RSA #7,Ltd. described in Note 4, for whichthe date is August 23, 2007
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5
|-



|**BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA CONSOLIDATED BALANCE SHEETS 
      December 31, 2005 and 2004**
|--------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                

|                                                                                                                                                                                   | 2005 |            | 2004 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ---------- | ---- | -
|
|ASSETS                                                                                                                                                                             |      |            |      |  
|                                                                                                                                                                                  
|CURRENT ASSETS                                                                                                                                                                     |      |            |      |  
|Cash and cash equivalents                                                                                                                                                          | $    | 739,741    |      | $
|Marketable securities                                                                                                                                                              |      | 635,409    |      |  
|Accounts receivable                                                                                                                                                                |      | 952,579    |      |  
|Interest receivable                                                                                                                                                                |      | 107,229    |      |  
|Current portion of note receivable                                                                                                                                                 |      | 144,000    |      |  
|Inventory, at average cost                                                                                                                                                         |      | 122,953    |      |  
|Other                                                                                                                                                                              |      | 42,196     |      |  
|Deferred income taxes                                                                                                                                                              |      | 22,794     |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                   |      | 2,766,901  |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                  
|OTHER NONCURRENT ASSETS                                                                                                                                                            |      |            |      |  
|Marketable securities                                                                                                                                                              |      | 5,463,298  |      |  
|Investments in unconsolidated affiliates at equity                                                                                                                                 |      | 5,519,572  |      |  
|Other investments at cost                                                                                                                                                          |      | 790,066    |      |  
|Goodwill                                                                                                                                                                           |      | 896,812    |      |  
|Note receivable, less allowance of $219,691 and $172,974
              in 2005 and 2004, respectively                                                                              |      | 75,469     |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                   |      | 12,745,217 |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                  
|PROPERTY, PLANT AND EQUIPMENT                                                                                                                                                      |      | 5,215,291  |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                  
|TOTAL ASSETS                                                                                                                                                                       | $    | 20,727,409 |      | $
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                               |      |            |      |  
|                                                                                                                                                                                  
|CURRENT LIABILITIES                                                                                                                                                                |      |            |      |  
|Current portion of long-term debt                                                                                                                                                  | $    | 164,513    |      | $
|Accounts payable                                                                                                                                                                   |      | 428,211    |      |  
|Accrued taxes                                                                                                                                                                      |      | 378,871    |      |  
|Other                                                                                                                                                                              |      | 143,582    |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                   |      | 1,115,177  |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                  
|LONG-TERM DEBT, less current portion                                                                                                                                               |      | 1,314,935  |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                  
|DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES                                                                                                                                  |      | 855,542    |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                  
|STOCKHOLDERS EQUITY                                                                                                                                                               |      |            |      |  
|Common stock - no par value, 5,000,000 shares authorized, 31,023
              and 31,170 shares issued and outstanding at $357 and $326
              stated values, respectively |      | 11,075,211 |      |  
|Retained earnings                                                                                                                                                                  |      | 6,366,544  |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                   |      | 17,441,755 |      |  
|                                                                                                                                                                                   |      |            |      |  
|                                                                                                                                                                                  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                         | $    | 20,727,409 |      | $
|                                                                                                                                                                                   |      |            |      |  

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

|6
|-



|**BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA CONSOLIDATED STATEMENTS OF INCOME 
      Years Ended December 31, 2005 and 2004**
|--------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                  

|                                                                                                 | 2005 |           | 2004 |  
|------------------------------------------------------------------------------------------------ | ---- | --------- | ---- | -
|                                                                                                 |      |           |      |  
|                                                                                                
|OPERATING REVENUES                                                                               | $    | 7,452,514 |      | $
|                                                                                                 |      |           |      |  
|                                                                                                
|OPERATING EXPENSES                                                                               |      |           |      |  
|Cost of services                                                                                 |      | 3,535,861 |      |  
|Depreciation and amortization                                                                    |      | 931,294   |      |  
|Selling, general, and administrative                                                             |      | 1,957,493 |      |  
|                                                                                                 |      |           |      |  
|                                                                                                 |      | 6,424,648 |      |  
|                                                                                                 |      |           |      |  
|                                                                                                
|OPERATING INCOME                                                                                 |      | 1,027,866 |      |  
|                                                                                                 |      |           |      |  
|                                                                                                
|OTHER INCOME (EXPENSES)                                                                          |      |           |      |  
|Interest and dividend income                                                                     |      | 462,382   |      |  
|Interest expense                                                                                 |      | (105,409  | )    |  
|Loss on note receivable                                                                          |      |          |      |  
|Income from equity investments                                                                   |      | 1,237,722 |      |  
|Other, net                                                                                       |      | 20,751    |      |  
|                                                                                                 |      |           |      |  
|                                                                                                 |      | 1,615,446 |      |  
|                                                                                                 |      |           |      |  
|                                                                                                
|INCOME BEFORE INCOME TAXES AND CUMULATIVE
              EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |      | 2,643,312 |      |  
|                                                                                                 |      |           |      |  
|                                                                                                
|INCOME TAXES                                                                                     |      | 828,576   |      |  
|                                                                                                 |      |           |      |  
|                                                                                                
|INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
              ACCOUNTING PRINCIPLE                  |      | 1,814,736 |      |  
|                                                                                                 |      |           |      |  
|                                                                                                
|CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
              PRINCIPLE, NET OF TAX                    |      |          |      |  
|                                                                                                 |      |           |      |  
|                                                                                                
|NET INCOME                                                                                       | $    | 1,814,736 |      | $
|                                                                                                 |      |           |      |  
|                                                                                                
|INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
              ACCOUNTING PRINCIPLE PER COMMON SHARE | $    | 58.37     |      | $
|                                                                                                
|CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
              PRINCIPLE, NET OF TAX                    |      |          |      |  
|                                                                                                 |      |           |      |  
|                                                                                                
|NET INCOME PER COMMON SHARE                                                                      | $    | 58.37     |      | $
|                                                                                                 |      |           |      |  

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

|7
|-



|**BREDA TELEPHONE CORPORATION AND SUBSIDIARIES 
      BREDA, IOWA CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
      December 31, 2005 and 2004**
|----------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                    

|                              | Common Stock |        | Retained
      Earnings |   | Total      |  
|----------------------------- | ------------ | ------ | ----------------------- | - | ---------- | -
|
|
|                              |              |        |                         |   |            |  
|                             
|Balance at December 31, 2003  |              | 31,694 |                         | $ | 9,603,282  |  
|                             
|Comprehensive income:         |              |        |                         |   |            |  
|                             
|Net Income                    |              |        |                         |   |            |  
|                             
|Dividends paid                |              |        |                         |   |            |  
|                             
|Common stock redeemed, net    |              | (524   | )                       |   | (166,155   | )
|                             
|Stated value stock adjustment |              |        |                         |   | 724,293    |  
|                              |              |        |                         |   |            |  
|                             
|Balance at December 31, 2004  |              | 31,170 |                         |   | 10,161,420 |  
|                             
|Comprehensive income:         |              |        |                         |   |            |  
|                             
|Net Income                    |              |        |                         |   |            |  
|                             
|Dividends paid                |              |        |                         |   |            |  
|                             
|Common stock redeemed, net    |              | (147   | )                       |   | (52,479    | )
|                             
|Stated value stock adjustment |              |        |                         |   | 966,270    |  
|                              |              |        |                         |   |            |  
|                             
|Balance at December 31, 2005  |              | 31,023 |                         | $ | 11,075,211 |  
|                              |              |        |                         |   |            |  

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

|8
|-



|**BREDA TELEPHONE CORPORATION AND SUBSIDIARIES 
      BREDA, IOWA CONSOLIDATED STATEMENTS OF CASH FLOWS 
      Years Ended December 31, 2005 and 2004**
|-------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                       

|                                                                                                                                                                 | 2005 |            | 2004 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ---------- | ---- | -
|                                                                                                                                                                 |      |            |      |  
|                                                                                                                                                                
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                             |      |            |      |  
|Net income                                                                                                                                                       | $    | 1,814,736  |      | $
|Adjustments to reconcile net income
         to cash provided by operating activities:                                                                           |      |            |      |  
|Cumulative effect of change in accounting principle                                                                                                              |      |           |      |  
|Depreciation and amortization                                                                                                                                    |      | 931,294    |      |  
|Deferred income taxes                                                                                                                                            |      | 9,924      |      |  
|Amortization of investment tax credits                                                                                                                           |      | (4,701     | )    |  
|Amortization of investment premium/discount - net                                                                                                                |      | 64,521     |      |  
|Equity income in unconsolidated affiliates, net of distributions
               received of $847,902 and $578,077 in 2005 and 2004, 
               respectively |      | (389,819   | )    |  
|Realized gain on sale of property                                                                                                                                |      | (33,444    | )    |  
|Note receivable discount                                                                                                                                         |      | (5,609     | )    |  
|Loss on impairment of note receivable                                                                                                                            |      |           |      |  
|Changes in assets and liabilities:                                                                                                                               |      |            |      |  
|(Increase) Decrease in:                                                                                                                                          |      |            |      |  
|Receivables                                                                                                                                                      |      | (338,562   | )    |  
|Prepayments                                                                                                                                                      |      | 15,312     |      |  
|Inventory                                                                                                                                                        |      | (19,336    | )    |  
|Increase (Decrease) in:                                                                                                                                          |      |            |      |  
|Accounts payable                                                                                                                                                 |      | 126,048    |      |  
|Accrued taxes                                                                                                                                                    |      | 179,902    |      |  
|Other                                                                                                                                                            |      | 65,563     |      |  
|                                                                                                                                                                 |      |            |      |  
|Net cash provided by operating activities                                                                                                                        |      | 2,415,829  |      |  
|                                                                                                                                                                 |      |            |      |  
|                                                                                                                                                                
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                                             |      |            |      |  
|Capital expenditures                                                                                                                                             |      | (1,434,265 | )    |  
|Purchase of investments                                                                                                                                          |      | (1,100,603 | )    |  
|Purchase of equity investments                                                                                                                                   |      | (403,264   | )    |  
|Purchase of other investments - at cost                                                                                                                          |      | (3,340     | )    |  
|Issuance of notes receivable                                                                                                                                     |      |           |      |  
|Proceeds from the sale of property                                                                                                                               |      | 53,863     |      |  
|Proceeds from the sale of investments                                                                                                                            |      | 587,190    |      |  
|Proceeds from the sale of other investments - at cost                                                                                                            |      | 7,209      |      |  
|Repayment of notes receivable                                                                                                                                    |      | 5,000      |      |  
|                                                                                                                                                                 |      |            |      |  
|Net cash used in investing activities                                                                                                                            |      | (2,288,210 | )    |  
|                                                                                                                                                                 |      |            |      |  
|                                                                                                                                                                
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                             |      |            |      |  
|Repayment of long term debt                                                                                                                                      |      | (154,013   | )    |  
|Common stock redeemed, net                                                                                                                                       |      | (52,479    | )    |  
|Dividends paid                                                                                                                                                   |      | (218,190   | )    |  
|                                                                                                                                                                 |      |            |      |  
|Net cash used in financing activites                                                                                                                             | $    | (424,682   | )    | $
|                                                                                                                                                                 |      |            |      |  
|                                                                                                                                                                
|Net Increase (Decrease) in Cash and Cash Equivalents                                                                                                             | $    | (297,063   | )    | $
|                                                                                                                                                                
|Cash and Cash Equivalents at Beginning of Period                                                                                                                 |      | 1,036,804  |      |  
|                                                                                                                                                                 |      |            |      |  
|                                                                                                                                                                
|Cash and Cash Equivalents at End of Period                                                                                                                       | $    | 739,741    |      | $
|                                                                                                                                                                 |      |            |      |  

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

|9
|-



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
BREDA, IOWA             
|---------------------------------------------------------------------
|                                                                     
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004
|                                                                     
|NOTE 1.                SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    
|                                                                     

| | Nature of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The Breda Telephone Corporation (herein referred to as the Company) is a provider of telecommunications exchange and local access services, long distance services, cable television services and internet services in a service area located primarily in western Iowa. The company is also involved in retail sales of cellular equipment and service plans for cellular partnerships of which it owns interests, and sales of other telecommunications equipment.                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The accounting policies of the Company and its subsidiaries conform to accounting principles generally accepted in the United States of America. Management uses estimates and assumptions in preparing its consolidated financial statements. Those estimates and assumptions affect the reported amounts of assets,  liabilities, revenues, and expenses, and the disclosure of contingent revenues and expenses. Telephone  operations reflect practices appropriate to the telephone industry. The accounting records of the telephone  companies are maintained in accordance with the Uniform System of Accounts for Class A and B  Telephone Companies prescribed by the Federal Communications Commission (FCC) as modified by the  state regulatory authority.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The accounting records for the Companys cable television operations are maintained in accordance with the Uniform System of Accounts for CATV Companies prescribed by the National Association of Regulatory Utility Commissioners.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The consolidated financial statements include the accounts of the Company and its 100% owned subsidiaries, Prairie Telephone Co., Inc., Tele-Services, Ltd., and Westside Independent Telephone Company. All material intercompany transactions have been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | All highly liquid investments with a maturity of three months or less at the time of purchase are considered  cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Marketable debt and equity securities bought and held principally for selling in the near future are classified as trading securities and carried at fair value. Unrealized holding gains and losses on trading securities are reported in earnings. Marketable debt and equity securities classified as available-for-sale are carried at fair value with unrealized holding gains and losses recorded as a separate component of stockholders equity.                                                                                                                                                                                                                                                                                                               

|10
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA               
|-----------------------------------------------------------------------------
|                                                                             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004  
|                                                                             
|NOTE 1.                SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|                                                                             

| | Investments,  (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Debt securities for which the Company has both the positive intent and ability to hold to maturity are classified as held-to-maturity and are carried at amortized cost. The Company uses the specific identification method of computing realized gains and losses.                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Nonmarketable equity investments, over which the Company has significant influence or a 20% ownership, are reflected on the equity method. Other nonmarketable equity investments are stated at cost.                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Inventory includes both merchandise held for resale and material and supplies. Merchandise held for resale  is recorded at the lower of cost or market with cost determined by the average cost method. Materials and  supplies, used in the construction of the Companys facilities to provide telecommunications services, are recorded at average cost.                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Goodwill is deemed to have an indefinite life and is stated at the lower of cost or fair value. The asset is subject to periodic impairment tests.                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Property, Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Telephone and cable television plant are capitalized at original cost including the capitalized cost of salaries and wages, materials, certain payroll taxes, employee benefits and interest incurred during the construction period.                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The Company provides for depreciation for financial reporting purposes on the straight-line method by the application of rates based on the estimated service lives of the various classes of depreciable property. These estimates are subject to change in the near term.                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Renewals and betterments of units of property are charged to telephone and cable television plant in service. When plant is retired, its cost is removed from the asset account and charged against accumulated  depreciation less any salvage realized. No gains or losses are recognized in connection with routine  retirements of depreciable property. Repairs and renewals of minor items of property are included in plant specific operations expense.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Repairs of other property, as well as renewals of minor items of property are included in plant specific operations expense. A gain or loss is recognized when other property is sold or retired.                                                                                                                                                                                                                                                             

|11
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA               
|-----------------------------------------------------------------------------
|                                                                             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004  
|                                                                             
|NOTE 1.                SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|                                                                             

| | Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Company would provide for impairment losses on long-lived assets when indicators of impairment are  present and the undiscounted cash flows estimated to be generated by those assets are less than the assets  carrying amount. Based on current conditions, management does not believe any of its long-lived assets  are impaired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Income taxes are accounted for using a liability method and provide for the tax effects of transactions reported in the consolidated financial statements including both taxes currently due and deferred. Deferred  taxes are adjusted to reflect deferred tax consequences at current enacted tax rates. Deferred income taxes  reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the  Companys deferred taxes arise from differences between the book and tax basis of plant assets, certain  investments and goodwill. The deferred tax assets and liabilities represent the future tax return  consequences of those differences, which will either be taxable or deductible, when the assets and liabilities  are
recovered or settled.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Investment tax credits (ITC), which were deferred prior to the Tax Reform Act of 1986, are being amortized over the regulatory life of the plant that produced the ITC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Company recognizes revenues when earned regardless of the period in which they are billed. The Company is required to provide telephone service to subscribers within its defined service territory.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Local network, internet and cable television service revenues are recognized over the period a subscriber is  connected to the network.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Network access and long distance service revenues are derived from charges for access to the Companys  local exchange network. The interstate portion of access revenues is based on an average schedule  settlement formula administered by the National Exchange Carrier Association (NECA), which is regulated  by the FCC. The intrastate portion of access revenues is billed based upon the Companys tariff for access  charges filed with the Iowa Utilities Board (IUB). The charges developed from these tariffs are used to bill  the connecting long distance provider and revenues are recognized in the period the traffic is transported  based on the minutes of traffic carried. Long distance revenues are recognized at the time a call is placed  based on the minutes of traffic processed at contracted rates.                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Other revenues include contractually determined arrangements for the provision of billing and collecting services and are recognized in the period when the services are performed. Cellular sales and commission revenues are recognized at the time of customer activation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|12
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA               
|-----------------------------------------------------------------------------
|                                                                             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004  
|                                                                             
|NOTE 1.                SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|                                                                             

|                                             | The Company uses the reserve method to recognize uncollectible customer accounts.                                             
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------
|                                             |                                                                                                                               
|                                             | Reclassifications                                                                                                             
|                                             |                                                                                                                               
|                                             | Certain reclassifications have been made to the 2004 consolidated financial statements to conform with the  2005 presentation.
|                                             |                                                                                                                               
|NOTE 2.                MARKETABLE SECURITIES
|                                             |                                                                                                                               
|                                             | The amortized cost and fair value of held-to-maturity securities are:                                                         
|                                             |                                                                                                                               

| |                        | Amortized
      Cost |           | Gross
      Unrealized
      Gains |   | Gross
      Unrealized
      Losses |  | Fair
      Value |        
| | ---------------------- | -------------------- | --------- | ---------------------------------- | - | ----------------------------------- |  | ---------------- | -------
| |                        |                      |           |                                    |   |                                     |  |                  |        
|
|
| | December 31, 2005      |                      |           |                                    |   |                                     |  |                  |        
|
| | Held-to-Maturity:      |                      |           |                                    |   |                                     |  |                  |        
| | Municipal bonds        | $                    | 4,735,425 |                                    | $ | 31,136                              |  | $                | (64,618
| | Government securities  |                      | 1,363,282 |                                    |   | 1,177                               |  |                  | (32,305
| |                        |                      |           |                                    |   |                                     |  |                  |        
| |                        | $                    | 6,098,707 |                                    | $ | 32,313                              |  | $                | (96,923
| |                        |                      |           |                                    |   |                                     |  |                  |        
| |                        |                      |           |                                    |  
|
| | December 31, 2004      |                      |           |                                    |   |                                     |  |                  |        
|
| | Held-to-Maturity:      |                      |           |                                    |   |                                     |  |                  |        
| | Municipal bonds        | $                    | 5,451,900 |                                    | $ | 84,889                              |  | $                | (33,005
| | Government securities  |                      | 197,915   |                                    |   | 394                                 |  |                  | (3,110 
| |                        |                      |           |                                    |   |                                     |  |                  |        
| |                        | $                    | 5,649,815 |                                    | $ | 85,283                              |  | $                | (36,115
| |                        |                      |           |                                    |   |                                     |  |                  |        
| |                        |                      |           |                                    |  
| |                        |                      |           |                                    |   |                                     |  |                  |        
| |                        |                      |           |                                    |   |                                     |  |                 
| |                        |                      |           |                                    |   |                                     |  |                  |        
| | Amounts classified as: |                      |           |                                    |   |                                     |  |                  |        
| | Current                | $                    | 635,409   |                                    | $ | 232,645                             |  |                  |        
| | Noncurrent             |                      | 5,463,298 |                                    |   | 5,417,170                           |  |                  |        
| |                        |                      |           |                                    |   |                                     |  |                  |        
| | Total                  | $                    | 6,098,707 |                                    | $ | 5,649,815                           |  |                  |        
| |                        |                      |           |                                    |   |                                     |  |                  |        
| |                        |                      |           |                                    |  
| |                        |                      |           |                                    |  
| |                        |                      |           |                                    |  

|                                                        
|--------------------------------------------------------
|NOTE 2.                MARKETABLE SECURITIES (Continued)
|                                                        
|                                                        
|                                                        

| |                                          | Amortized
      Cost |           | Fair Value |   |          
| | ---------------------------------------- | -------------------- | --------- | ---------- | - | ---------
| |                                          |                      |           |            |   |          
| | Due in one year or less                  | $                    | 635,409   |            | $ | 636,555  
| | Due after one year through three years   |                      | 1,068,235 |            |   | 1,068,608
| | Due after three years through five years |                      | 906,161   |            |   | 900,219  
| | Due after five years                     |                      | 3,488,902 |            |   | 3,428,716
| |                                          |                      |           |            |   |          
| |                                          | $                    | 6,098,707 |            | $ | 6,034,098
| |                                          |                      |           |            |   |          
| |                                          |                      |          

|13
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 3.                NOTE RECEIVABLE                                     
|                                                                           

| | Note receivable consists of the following:
| | ------------------------------------------
| |                                           

| |                               | 2005 |          | 2004 |   |         
| | ----------------------------- | ---- | -------- | ---- | - | --------
| |                               |      |          |      |   |         
|
|
| | Desktop Media, L.L.C. - 6.75% |      | 439,160  |      |   | 438,551 
| | Allowance                     |      | (219,691 | )    |   | (172,974
| |                               |      |          |      |   |         
| |                               |      | 219,469  |      |   | 265,577 
| | Less current portion          |      | 144,000  |      |   | 144,000 
| |                               |      |          |      |   |         
| |                               | $    | 75,469   |      | $ | 121,577 
| |                               |      |          |      |   |         

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The note with Desktop Media, L.L.C., (Desktop) had an original balance of $500,000 and matures in 2006. Interest on the note balance accrues at the rate of prime plus 1 percent (prime + 1%) per annum. The interest rate is adjusted on the anniversary of the note. The note is shown net of unamortized discounts of  $814 and $6,423 at December 31, 2005 and 2004, respectively. Principal payments of $12,000 plus interest  are due the first of each month beginning May of 2003 and shall be due each month thereafter until paid in  full. On September 17, 2003 the Company signed a principal deferral agreement with Desktop to defer  principal payments due in the months of September through December 2003.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | The Company has recorded allowances of $219,691 and $172,974 at December 31, 2005 and 2004, respectively due to the fact that it has not received the scheduled monthly principal payments required by the note agreement. In 2005, the Company recorded an additional allowance of $46,717 on the note receivable. The Companys ownership in Desktop Media, L.L.C. increased to 17% in 2004 when certain conditions of a loan deferral agreement were not met, and as a result, the Company subsequently began to report its Desktop investment on the equity basis. The additional allowance represents losses in excess of the Companys cost in the Desktop investment.                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | During 2005, the Company collected principal payments of $5,000. During 2004, the Company advanced an additional $45,307 to Desktop and received collections of $52,333. During 2005, the Company accrued interest on the note receivable at the 15% penalty rate as allowed per the Companys promissory note with Desktop. Principal and interest not paid when due shall draw interest at the rate of fifteen percent (15%) per annum.                                                                                                                                                                                                                                                                                    

|14
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 4.                OTHER INVESTMENTS                                   
|                                                                           

| | INVESTMENTS IN UNCONSOLIDATED AFFILIATES AT EQUITY                                                                                                
| | --------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                   
| | Investments in unconsolidated affiliates at equity include investments in partnerships, limited liability companies and joint ventures as follows:
| |                                                                                                                                                   

| |                                 | 2005 |           | 2004 |   |          
| | ------------------------------- | ---- | --------- | ---- | - | ---------
| |                                 |      |           |      |   |          
|
| | Alpine Communications, L.C.     | $    | 1,748,676 |      | $ | 1,596,610
| | West Iowa Cellular, Inc.        |      | 1,071,746 |      |   | 903,684  
| | RSA #1, Ltd.                    |      | 1,032,572 |      |   | 990,393  
| | RSA #7, Ltd.                    |      | 296,727   |      |   | 295,100  
| | RSA #9, Ltd.                    |      | 820,284   |      |   | 786,056  
| | Desktop Media, L.L.C.           |      |          |      |   |         
| | Quad County Communications      |      | 60,867    |      |   | 73,607   
| | Carroll County Wireless, L.L.C. |      | 62,492    |      |   | 25,193   
| | Guthrie Group, L.L.C.           |      | 57,612    |      |   | 9,129    
| | Bug Tussel, L.L.C.              |      | 368,596   |      |   |         
| |                                 |      |           |      |   |          
| |                                 | $    | 5,519,572 |      | $ | 4,679,772
| |                                 |      |           |      |   |          

| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has a 17.42% ownership interest in Alpine Communications, L.C. (Alpine) at December 31, 2005 and 2004. Alpine owns and operates several wireline telephone exchanges in northeastern Iowa, along with providing internet and cable television services in and around its wireline service territory.
| |                                                                                                                                                                                                                                                                                                                 
| | The following is a summary of condensed financial information pertaining to the company described above as of September 30, 2005 and 2004 and the twelve months then ended.                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                 

| |             | Alpine Communications, L.C. |            | 
| | ----------- | --------------------------- | ---------- | 
|
| |             |                             |            | 
|
|
| | Assets      | $                           | 18,616,925 | 
| | Liabilities |                             | 9,531,107  | 
| |             |                             |            | 
| | Equity      | $                           | 9,085,818  | 
| |             |                             |            | 
|
| |             |                             |           
|
| | Revenues    | $                           | 7,243,227  | 
| | Expenses    |                             | 5,187,526  | 
| |             |                             |            | 
| | Net Income  | $                           | 2,055,701  | 
| |             |                             |            | 
| |             |                             |           
| |             |                             |           

|15
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 4.                OTHER INVESTMENTS (Continued)                       
|                                                                           

| | The Companys percentage ownership interests in partnerships providing cellular telephone services within their respective service areas at December 31, 2005 and 2004 are as follows:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                       

| | West Iowa Cellular, Inc., |  | 25.0 | % | 
| | ------------------------- |  | ---- | - | 
| | RSA #1, Ltd.              |  | 10.3 | % | 
| | RSA #7, Ltd.              |  | 7.1  | % | 
| | RSA #9, Ltd.              |  | 16.7 | % | 

| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following is a summary of condensed financial information pertaining to the companies described above as of September 30, 2005 and 2004 and the twelve months then ended.
| |                                                                                                                                                                              

| |             |   |          
| | ----------- | - | ---------
|
|
| |             |   |          
|
| | Assets      | $ | 4,420,340
| | Liabilities |   | 133,360  
| |             |   |          
| | Equity      | $ | 4,286,980
| |             |   |          
| |             |   |          
|
| | Revenues    | $ | 975,441  
| | Expenses    |   | 87,745   
| |             |   |          
| | Net Income  | $ | 887,696  
| |             |   |          
| |             |   |          
| |             |   |          

| |             |   |          
| | ----------- | - | ---------
|
|
| |             |   |          
|
| | Assets      | $ | 3,876,815
| | Liabilities |   | 262,082  
| |             |   |          
| | Equity      | $ | 3,614,733
| |             |   |          
| |             |   |          
|
| | Revenues    | $ | 1,407,450
| | Expenses    |   | 612,604  
| |             |   |          
| | Net Income  | $ | 794,846  
| |             |   |          
| |             |   |          

|16
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 4.                OTHER INVESTMENTS (Continued)                       
|                                                                           

| | The Company has a 17% ownership in Desktop at December 31, 2005 and 2004. Desktop operates in southeastern Minnesota and is a provider of internet and telephone services.                                                                                                                                                                                                                                 
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                            
| | This investment is accounted for under the equity method with the Company recognizing their proportionate share of income and losses to the extent that the investment exceeds losses. Accordingly, the recorded investment amount in Desktop was eliminated at December 31, 2004. In 2005, additional losses in excess of the basis totaling $46,717 were applied against the outstanding note receivable.
| |                                                                                                                                                                                                                                                                                                                                                                                                            
| | The following is a summary of condensed financial information pertaining to the company described above as of December 31, 2005 and the twelve months then ended.                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                            

| |             | Desktop Media, L.L.C. |            |  
| | ----------- | --------------------- | ---------- | -
|
| |             |                       |            |  
|
|
| | Assets      | $                     | 541,973    |  
| | Liabilities |                       | 1,821,559  |  
| |             |                       |            |  
| | Equity      | $                     | (1,279,586 | )
| |             |                       |            |  
| |             |                       |           
|
| | Revenues    | $                     | 2,259,137  |  
| | Expenses    |                       | 2,478,617  |  
| |             |                       |            |  
| | Net Income  | $                     | (219,480   | )
| |             |                       |            |  
| |             |                       |           

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In January 2006, Jaguar Communications entered into an agreement to purchase Desktop Media, L.L.C. ofwhich the Company is a 17% owner. Closing of this transaction, which is expected to occur in thesecond quarter of 2006, is subject to certain conditions. The Company expects its portion of the proceedsfrom the sale to be $52,000. Upon sale of Desktop Media, L.L.C., the Company will also receive $439,160for the note and $39,097 in accrued interest as of December 31, 2005.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | The Company has a 33.33% ownership interest in Quad County Communications (Quad County) at December 31, 2005 and 2004. This entity owns and operates a fiber optic network.                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | The following is a summary of condensed financial information pertaining to the company described above as of December 31, 2005 and 2004 and the twelve months then ended.                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |             | Quad County Communications |         |  
| | ----------- | -------------------------- | ------- | -
|
| |             |                            |         |  
|
| | Assets      | $                          | 188,842 |  
| | Liabilities |                            | 7,818   |  
| |             |                            |         |  
| | Equity      | $                          | 181,024 |  
| |             |                            |         |  
| |             |                            |        
|
| | Revenues    | $                          | 12,250  |  
| | Expenses    |                            | 52,047  |  
| |             |                            |         |  
| | Net Income  | $                          | (39,797 | )
| |             |                            |         |  
| |             |                            |        

|17
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 4.                OTHER INVESTMENTS (Continued)                       
|                                                                           

| | The Companys percentage interests in Carroll County Wireless, L.L.C. and Guthrie Group, L.L.C. are each 33.33% at December 31, 2005 and 2004. Both companies have purchased the licenses to provide personal communication services (PCS); however, neither company has begun  providing PCS services as of December 31, 2005.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                
| | The following is a summary of condensed financial information pertaining to the companies described above as of December 31, 2005 and 2004 and the twelve months then ended.                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                

| |            
| | -----------
|
| |            
|
|
| | Assets     
| | Liabilities
| |            
| | Equity     
| |            
| |            
|
| | Revenues   
| | Expenses   
| |            
| | Net Income 
| |            
| |            

| |            
| | -----------
| | 2004       
|
| |            
|
| | Assets     
| | Liabilities
| |            
| | Equity     
| |            
| |            
|
| | Revenues   
| | Expenses   
| |            
| | Net Income 
| |            
| |            

| |                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has a 9.75% ownership interest in Bug Tussel Wireless LLC (Bug Tussel) at December 31, 2005. Bug Tussel has constructed a wireless network in rural Wisconsin, which provides roaming services to cellular carriers offering service in the state.
| |                                                                                                                                                                                                                                                               
| | The following is a summary of condensed financial information pertaining to the company described above as of September 30, 2005 and the nine months then ended.                                                                                              
| |                                                                                                                                                                                                                                                               

| |             | Bug Tussel
      L.L.C. 
      2005 |           |  |  |  | 
| | ----------- | ----------------------------------- | --------- |  |  |  | 
| |             |                                     |           |  |  |  | 
|
| | Assets      | $                                   | 3,471,397 |  |  |  | 
| | Liabilities |                                     | 914,871   |  |  |  | 
| |             |                                     |           |  |  |  | 
| | Equity      | $                                   | 2,556,526 |  |  |  | 
| |             |                                     |           |  |  |  | 
|
| | Revenues    | $                                   | 1,728,387 |  |  |  | 
| | Expenses    |                                     | 1,161,791 |  |  |  | 
| |             |                                     |           |  |  |  | 
| | Net Income  | $                                   | 566,596   |  |  |  | 
| |             |                                     |           |  |  |  | 

|18
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 4.                OTHER INVESTMENTS (Continued)                       
|                                                                           

| | Partnership investments above with less than a 20% ownership are carried at equity due to the level of influence the Company has with respect to each investment. Investments in limited liability companies are on the equity method if ownership is more than 3-5%.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                      
| | LONG-TERM INVESTMENTS AT COST                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                      
| | Long-term investments at cost include nonmarketable equity securities and certificates as follows:                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                      

| |                                                    | 2005 |         | 2004 |   |        
| | -------------------------------------------------- | ---- | ------- | ---- | - | -------
| |                                                    |      |         |      |   |        
|
|
| | NECA Services, Inc. - stock                        | $    | 300,000 |      | $ | 300,000
| | Rural Telephone Finance Cooperative - certificates |      | 182,193 |      |   | 186,062
| | Rural Telephone Bank - stock                       |      | 165,789 |      |   | 165,789
| | Iowa Network Services - stock                      |      | 78,705  |      |   | 78,705 
| | NRTC Patronage Capital - certificates              |      | 52,379  |      |   | 52,379 
| | Other                                              |      | 11,000  |      |   | 11,000 
| |                                                    |      |         |      |   |        
| |                                                    | $    | 790,066 |      | $ | 793,935
| |                                                    |      |         |      |   |        
| |                                                    |      |        
| |                                                    |      |        

|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                | Other investments include $165,789 at December 31, 2005 and 2004, related to Rural Telephone Bank (RTB) Class B and C stock. The RTB Class B stock was purchased from the RTB as a condition of obtaining long-term financing. Holders of RTB Class B stock are entitled to patronage dividends in the form of additional Class B stock. Any Class C stock was obtained through purchase or at the Companys option, through the conversion of previously acquired Class B Stock as the related loans were repaid. In 2005, the RTB board announced plans to redeem the outstanding stock of the bank and liquidate the bank. Under the plan, the RTBs outstanding loans will be transferred to the RUS. The RTB stock held by the Company is expected to be redeemed after the execution of a redemption agreement with the RTB in early 2006. The RTB has notified the company that the Companys stock is
expected to be redeemed at par for approximately $1,336,000. Proceeds from the redemption are expected in the second quarter of 2006.
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|NOTE 5.                GOODWILL
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                | Goodwill consists of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| |                            | 2005 |         | 2004 |   |        
| | -------------------------- | ---- | ------- | ---- | - | -------
| |                            |      |         |      |   |        
|
| | Balance, beginning of year | $    | 896,812 |      | $ | 896,812
| | Goodwill acquired          |      |        |      |   |       
| | Goodwill impairment        |      |        |      |   |       
| |                            |      |         |      |   |        
| | Balance, end of year       | $    | 896,812 |      | $ | 896,812
| |                            |      |         |      |   |        

| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company annually assesses its recorded balances of goodwill and indefinite lived intangible assets. As a result, the Company determined no impairment needed to be recorded for the years ended December 31, 2005 and 2004.

|19
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 6.                PROPERTY, PLANT AND EQUIPMENT                       
|                                                                           

| | Property, plant and equipment includes the following:
| | -----------------------------------------------------
| |                                                      

| |                                         | 2005 |            | 2004 |   |           
| | --------------------------------------- | ---- | ---------- | ---- | - | ----------
| |                                         |      |            |      |   |           
|
| | Telephone plant in service:             |      |            |      |   |           
| | Land                                    | $    | 41,508     |      | $ | 41,508    
| | Buildings                               |      | 1,588,518  |      |   | 1,585,126 
| | Other general support assets            |      | 1,708,212  |      |   | 1,623,841 
| | Central office assets                   |      | 3,965,624  |      |   | 2,842,957 
| | Cable and wire facilities               |      | 4,670,268  |      |   | 4,666,076 
| | Other plant and equipment               |      | 902,127    |      |   | 872,009   
| |                                         |      |            |      |   |           
| |                                         |      | 12,876,257 |      |   | 11,631,517
| |                                         |      |            |      |   |           
|
| | Cable television plant in service:      |      |            |      |   |           
| | Land                                    | $    | 11,661     |      |   | 6,086     
| | Buildings                               |      | 132,673    |      |   | 127,937   
| | Other plant and equipment               |      | 159,304    |      |   | 156,799   
| | Towers, antennas and head end equipment |      | 1,592,410  |      |   | 1,583,090 
| | Cable and wire facilities               |      | 1,573,544  |      |   | 1,597,823 
| | Franchises                              |      | 30,092     |      |   | 32,992    
| |                                         |      |            |      |   |           
| |                                         |      | 3,499,684  |      |   | 3,504,727 
| |                                         |      |            |      |   |           
|
| | Total property, plant and equipment     |      | 16,375,941 |      |   | 15,136,244
| | Less accumulated depreciation           |      | 11,202,573 |      |   | 10,433,161
| |                                         |      |            |      |   |           
| |                                         |      | 5,173,368  |      |   | 4,703,083 
| | Plant under construction                |      | 41,923     |      |   |          
| |                                         |      |            |      |   |           
| |                                         | $    | 5,215,291  |      | $ | 4,703,083 
| |                                         |      |            |      |   |           

| |                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Telephone cable and wire facilities of approximately $675,000 and cable television head end equipment of approximately $500,000 were fully depreciated in 2004. Depreciation on depreciable property resulted in composite rates of 5.9% and 7.2% for 2005 and 2004, respectively.

|20
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 7.                INCOME TAXES                                        
|                                                                           

| | Income taxes reflected in the Consolidated Statements of Income consist of the following:
| | -----------------------------------------------------------------------------------------
| |                                                                                          

| |                                        | 2005 |         | 2004 |   |        
| | -------------------------------------- | ---- | ------- | ---- | - | -------
| |                                        |      |         |      |   |        
|
| | Federal income taxes:                  |      |         |      |   |        
| | Current tax expense                    | $    | 596,898 |      | $ | 323,950
| | Deferred tax expense                   |      | 4,434   |      |   | 299,445
| | Amortization of investment tax credits |      | (4,701  | )    |   | (9,769 
| | State income taxes:                    |      |         |      |   |        
| | Current tax expense                    |      | 226,451 |      |   | 88,466 
| | Deferred tax expense                   |      | 5,494   |      |   | 92,391 
| |                                        |      |         |      |   |        
| | Total income tax expense               | $    | 828,576 |      | $ | 794,483
| |                                        |      |         |      |   |        
| |                                        |      |        

| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | Deferred federal and state tax liabilities and assets reflected in the Consolidated Balance Sheets are summarized as follows:
| |                                                                                                                              

| |                                | 2005 |           | 2004 |   |         
| | ------------------------------ | ---- | --------- | ---- | - | --------
| |                                |      |           |      |   |         
|
| | Deferred tax liabilities       |      |           |      |   |         
| | Federal                        | $    | 783,568   |      | $ | 758,905 
| | State                          |      | 240,356   |      |   | 227,196 
| |                                |      |           |      |   |         
| | Total deferred tax liabilities |      | 1,023,924 |      |   | 986,101 
| |                                |      |           |      |   |         
| |                                |      |          
|
| | Deferred tax assets            |      |           |      |   |         
| | Federal                        |      | (143,679  | )    |   | (123,446
| | State                          |      | (47,497   | )    |   | (39,831 
| |                                |      |           |      |   |         
| | Total deferred tax assets      |      | (191,176  | )    |   | (163,277
| |                                |      |           |      |   |         
| |                                |      |          
|
| | Net deferred tax liabilities   | $    | 832,748   |      | $ | 822,824 
| |                                |      |           |      |   |         
| |                                |      |          
|
| | Current portion                | $    | (22,794   | )    | $ | (49,143 
| | Long-term portion              |      | 855,542   |      |   | 871,967 
| |                                |      |           |      |   |         
| | Net deferred tax liability     | $    | 832,748   |      | $ | 822,824 
| |                                |      |           |      |   |         
| |                                |      |          

| |                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The tax provision differs from the expense that would result from applying the federal statutory rates to income before income taxes as the result of state income taxes and the amortization of investment tax credits.
| |                                                                                                                                                                                                                         
| | Cash paid for income taxes and estimated income taxes for 2005 and 2004 totaled $696,676 and $310,375, respectively.                                                                                                    

|21
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 7.                INCOME TAXES (Continued)                            
|                                                                           

| | The following is a reconciliation of the statutory federal income tax rate of 34% to the Companys effective  income tax rate:
| | ------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                               

| | 2005                                       |  |  | 2004 |   |   | 
| | ------------------------------------------ |  |  | ---- | - | - | 
| |                                            |  |  |      |   |   | 
|
| | Statutory federal income tax rate          |  |  | 34.0 |   | % | 
| | State income taxes, net of federal benefit |  |  | 10.1 |   | % | 
| | Amortization of investment tax credits     |  |  |     |   | % | 
| | Dividends received deduction               |  |  | (2.8 | ) | % | 
| | Tax exempt interest                        |  |  | (5.0 | ) | % | 
| | Other                                      |  |  | (4.9 | ) | % | 
| |                                            |  |  |      |   |   | 
| | Effective income tax rate                  |  |  | 31.4 |   | % | 
| |                                            |  |  |      |   |   | 

|                                      |                                                                                                                                                                     
|------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                      | The Company files consolidated tax returns including their subsidiaries, Prairie Telephone Co., Inc., Westside Independent Telephone Company and Tele-Services, Ltd.
|                                      |                                                                                                                                                                     
|NOTE 8.                LONG-TERM DEBT
|                                      |                                                                                                                                                                     
|                                      | Long-term debt consists of:                                                                                                                                         
|                                      |                                                                                                                                                                     

| |                                     |  | 2005 |           | 2004 |   |          
| | ----------------------------------- |  | ---- | --------- | ---- | - | ---------
|
|
| | Rural Telephone Finance Cooperative |  |      |           |      |   |          
| | 7.35% (Fixed Rate)                  |  | $    | 1,479,448 |      | $ | 1,633,461
| | Less current portion                |  |      | 164,513   |      |   | 154,013  
| |                                     |  |      |           |     
| |                                     |  | $    | 1,314,935 |      | $ | 1,479,448
| |                                     |  |      |           |     

| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | The annual requirements for principal payments on long-term debt for the next five years are as follows:
| |                                                                                                         

| | 2006 |  | $ | 164,513 | 
| | ---- |  | - | ------- | 
| | 2007 |  |   | 175,729 | 
| | 2008 |  |   | 187,710 | 
| | 2009 |  |   | 200,507 | 
| | 2010 |  |   | 214,177 | 

| |                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Substantially all assets of the Company are pledged as security for the long-term debt under certain loan agreements with the Rural Telephone Finance Cooperative (RTFC). These mortgage notes are to be repaid in equal quarterly installments covering principal and interest beginning two to three years after date of issue and expiring by the year 2013.

|22
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 8.                LONG-TERM (Continued)                               
|                                                                           

|                                                      | The security and loan agreements underlying the RTFC notes contain certain restrictions on distributions to  stockholders, investment in, or loans to others, and payment of management fees or an increase in  management fees. The Company is restricted from making any distributions, except as might be  specifically authorized in writing in advance by the RTFC noteholders, unless minimum net worth exceeds  40% and distributions are limited to certain levels of prior year cash margins. In addition, the Company is  required to achieve a debt service coverage ratio of not less than 1.25 and a times interest earned ratio of  not less than 1.5.
|----------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                      | The Company has a line of credit with the RTFC for $1,500,000. The approved line of credit is available  until November 15, 2010. The interest rate at December 31, 2005 is 8.2%. No funds were advanced under  the line at December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                      | In addition, the Company has a line of credit with the RTFC for $500,000. This approved line of credit is available until November 30, 2010. The interest rate at December 31, 2005 is 8.2%. No funds were advanced under the line at December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                      | Cash paid for interest for 2005 and 2004, net of amounts capitalized, totaled $116,809 and $126,737,respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|NOTE 9.                OPERATING SEGMENTS INFORMATION
|                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                      | The Company organizes its business into three reportable segments: local exchange carrier (LEC) services, broadcast services and internet service provider (ISP) services. The LEC services segment provides telephone, data services and other services to customers in local exchanges. The broadcast services segment provides cable television services to customers in Iowa and Nebraska. The ISP services segment  provides internet access to customers within the local exchanges and the surrounding areas.                                                                                                                                                
|                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                      | The Companys reportable business segments are strategic business units that offer different products and services. Each reportable segment is managed separately primarily because of different products, services and regulatory environments. LEC segments have been aggregated because of their similar characteristics.                                                                                                                                                                                                                                                                                                                                        

|23
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 9.                OPERATING SEGMENTS INFORMATION (Continued)          
|                                                                           

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

| | 2005                            |  | Local 
      Exchange
      Carrier |            | Broadcast |   | Internet
      Service
      Provider |   | Total |          
| | ------------------------------- |  | ----------------------------------- | ---------- | --------- | - | ------------------------------------- | - | ----- | ---------
|
|
| | Revenues and sales              |  |                                     | 6,069,890  |           |   | 803,561                               |   |       | 579,063  
| | Intersegment income and sales   |  |                                     |           |           |   |                                      |   |       |         
| | Interest income                 |  |                                     | 446,657    |           |   | 14,924                                |   |       | 801      
| | Interest expense                |  |                                     | 105,409    |           |   |                                      |   |       |         
| | Depreciation and amortization   |  |                                     | 644,533    |           |   | 187,918                               |   |       | 98,843   
| | Income tax expense (benefit)    |  |                                     | 959,373    |           |   | (118,130                              | ) |       | (12,667  
| | Segment profit (loss)           |  |                                     | 2,319,130  |           |   | (193,859                              | ) |       | (310,535 
| | Segment assets                  |  |                                     | 18,727,523 |           |   | 826,904                               |   |       | 1,172,982
| | Expenditures for segment assets |  |                                     | 738,485    |           |   | 153,022                               |   |       | 542,758  
| |                                 |  |                                     |            |          
| | **2004**                        |  |                                     |            |          
| |                                 |  |                                     |            |           |   |                                       |   |       |          
|
| | Revenues and sales              |  | $                                   | 5,320,184  |           | $ | 849,691                               |   | $     | 604,482  
| | Intersegment income and sales   |  |                                     |           |           |   |                                      |   |       |         
| | Interest income                 |  |                                     | 381,895    |           |   | 7,057                                 |   |       | 158      
| | Interest expense                |  |                                     | 126,737    |           |   |                                      |   |       |         
| | Depreciation and amortization   |  |                                     | 690,546    |           |   | 254,777                               |   |       | 78,476   
| | Income tax expense (benefit)    |  |                                     | 943,381    |           |   | (139,049                              | ) |       | (9,849   
| | Segment profit (loss)           |  |                                     | 1,610,939  |           |   | (208,573                              | ) |       | (8,691   
| | Segment assets                  |  |                                     | 16,391,555 |           |   | 1,063,416                             |   |       | 1,502,341
| | Expenditures for segment assets |  |                                     | 360,566    |           |   | 97,231                                |   |       | 128,076  

|                                                  
|--------------------------------------------------
|NOTE 10.               NET INCOME PER COMMON SHARE
|                                                  

|                                              | Net income per common share for 2005 and 2004 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 years ended December 31, 2005 and 2004 were 31,092 and 31,337, respectively.
|--------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                              |                                                                                                                                                                                                                                                                                                                     
|NOTE 11.               STOCK VALUE ADJUSTMENT
|                                              |                                                                                                                                                                                                                                                                                                                     
|                                              | During May 2005, the board of directors authorized a $31 increase in the stated value of each share of common stock from $326 to $357. There were 31,170 shares outstanding at the time of the value adjustment, which reduced retained earnings by $966,270.                                                       
|                                              |                                                                                                                                                                                                                                                                                                                     
|                                              | During May 2004, the board of directors authorized a $23 increase in the stated value of each share of common stock from $303 to $326. There were 31,491 shares outstanding at the time of the value adjustment, which reduced retained earnings by $724,293.                                                       

|24
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 12.               STOCK RESTRICTIONS                                  
|                                                                           

| | The Company has one class of common stock. Each shareholder is entitled to one vote regardless of the
  number of shares owned. Restrictions on the stock include the following:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                 

| |  | Individuals purchasing new shares of stock must be living within the service areas of the Breda Telephone
  Corporation and subscribe to its telephone services. In addition, new stockholders are limited to
  purchasing no more than thirty shares of stock directly from the Breda Telephone Corporation.                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                       
| |  | Stockholders are limited to ownership of not more than one percent of the outstanding shares of stock
  unless ownership was prior to the restated Articles of Incorporation.                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                       
| |  | Stockholders shall not sell any shares of stock owned unless the Company has been given first right
  of refusal.                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                       
| |  | In households with multiple individuals, only one person must be deemed the subscriber of Company services.                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                       
| |  | A one-time stock transfer to a family member (spouse, child, grandchild, parent, grandparent, or sibling)
  is allowed for shareholders of record for the shares they held in 1995 even if such transferee resides
  outside of the telephone exchange service area and is not a subscriber of the Breda Telephone Corporations
  telephone services.
| |   |                                                                                                                                                                                                                                                                                                                                                       
| |  | Stock transfers require consent of the board of directors.                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                       

| | The Company may adopt bylaws, which may further restrict the transfer or ownership of capital stock
of the Company.
| | -------------------------------------------------------------------------------------------------------------------

|                                        
|----------------------------------------
|NOTE 13.               EMPLOYEE BENEFITS
|                                        

| | The Company has a defined benefit pension plan covering most employees. The multi employer retirement
  program is with the National Telephone Cooperative Association (NTCA) and has been approved by the
  Internal Revenue Service. Pension costs expensed and capitalized for 2005 and 2004 were $149,427
  and $136,127, respectively. The Company makes annual contributions to the plan equal to amounts accrued
  for pension expense.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|25
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 14.               ASSET RETIREMENT OBLIGATION                         
|                                                                           

| | Generally accepted accounting principles require entities to record the fair value of a liability for
  legal obligations associated with an asset retirement in the period in which the obligations are
  incurred. When the liability is initially recorded, the entity capitalizes the cost of the asset
  retirement obligation by increasing the carrying amount of the related long-lived asset. Over time,
  the liability is accreted to its present value each period, and the capitalized cost is depreciated
  over the useful life of the related asset.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | The Company has determined it does not have a material legal obligation to remove long-term assets
  and accordingly, there have been no liabilities recorded for the years ended December 31, 2005 and
  2004.                                                                                                                                                                                                                                                                                                                                                     

|                                                 
|-------------------------------------------------
|NOTE 15.               RELATED PARTY TRANSACTIONS
|                                                 

| | The Company receives commission revenue from RSA #9, Ltd. Partnership (RSA #9) based on cellular service
  activation and retention. The Company has a 16.7% ownership interest in RSA #9. Commissions received
  by the Company for the years ended December 31, 2005 and 2004 were approximately $1,144,000 and $936,000,
  respectively. At December 31, 2005 and 2004, $125,260 and $120,301 were due from RSA #9 for commissions.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                    
|----------------------------------------------------
|NOTE 16.               CONCENTRATIONS OF CREDIT RISK
|                                                    

| | The Company grants credit to local service customers, all of whom are located in the service area,
  broadcast customers, internet customers and telecommunications intrastate and interstate long distance
  carriers.                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                      
| | The Company received 45% of its 2005 revenues from access revenues and assistance provided by the Federal
  Universal Service Fund. As a result of the Telecommunications Act of 1996, the manner in which access
  revenues and Universal Service Funds are determined is currently being modified by regulatory bodies.                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                      
| | Financial instruments that potentially subject the Company to concentrations of credit risk consist
  principally of cash and cash equivalents, along with both temporary and long-term investments. The
  Company places its cash, cash equivalents and investments in several financial institutions which
  limits the amount of credit exposure in any one financial institution.
| |                                                                                                                                                                                                                                                                                                                                                                                      
| | The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured
  limits. The Company has not experienced any losses in such accounts. The Company believes it is not
  exposed to any significant credit risk on cash and cash equivalents.                                                                                                   

|26
|--



|BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
      BREDA, IOWA             
|---------------------------------------------------------------------------
|                                                                           
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 2005 and 2004
|                                                                           
|NOTE 17.               CHANGE IN ACCOUNTING PRINCIPLE                      
|                                                                           

| | In March 2004, the Emerging Issues Task Force (EITF) modified guidance related to accounting for investments
  in limited liability companies with an effective date for periods beginning after June 15, 2004.
  Accordingly, July 1, 2004, the Company changed the method of accounting for its investment in Desktop
  from the cost method to the equity method.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                     
| | In connection with the change to the equity method, the Company recorded a cumulative adjustment that
  reduced net income by $38,593 in 2004, which is presented net of income taxes of $21,407. This represents
  the Companys proportionate share of losses in Desktop through June 30, 2004.                                                                   

|                                                   
|---------------------------------------------------
|NOTE 18.               NONCASH INVESTING ACTIVITIES
|                                                   

| | Noncash investing activities included $29,656 during the year ended December 31, 2005 relating to plant
  and equipment additions placed in service during 2005 which are reflected in accounts payable at
  year end.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   
|---------------------------------------------------
|[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

|27
|--



|Item 13.     Exhibits
A list of the exhibits included as part of this Form 10-KSB/A is set forth in the Exhibit Index which
immediately precedes such exhibits and is incorporated herein by this reference.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|28
|--



|SIGNATURES                                                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       
|In accordance with Section 13 or 15(d) 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:  December 20, 2007                                                                                                                                                      | By: /s/ Steve Frickenstein                 
|                                                                                                                                                                              |                                            
|                                                                                                                                                                              | Steve Frickenstein, Chief Executive Officer
|                                                                                                                                                                              |                                            
|                                                                                                                                                                              | By: /s/ Jane Morlok                        
|                                                                                                                                                                              |                                            
|                                                                                                                                                                              | Jane Morlok, Chief Financial Officer       
|                                                                                                                                                                              |                                            
|In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|                                                                                                                                                                              |                                            

|By: | /s/ Daniel Nieland                          | By: | /s/ Neil Kanne                           
|--- | ------------------------------------------- | --- | -----------------------------------------
|    |                                             |     |                                          
|    | Daniel Nieland, Director                    |     | Neil Kanne, Secretary and Director       
|    | Date:  December 20, 2007                    |     | Date: December 20, 2007                  
|    |                                             |     |                                          
|By: | /s/ Rick Anthofer                           | By: | /s/ Robert Buelt                         
|    |                                             |     |                                          
|    | Rick Anthofer, Treasurer and Director       |     | Robert Buelt, Director                   
|    | Date:  December 20, 2007                    |     | Date: December 20, 2007                  
|    |                                             |     |                                          
|By: | /s/ Clifford Neumayer                       | By: | /s/ Dave Grabner                         
|    |                                             |     |                                          
|    | Clifford Neumayer, Director                 |     | Dave Grabner, Vice President and Director
|    | Date:  December 20, 2007                    |     | Date: December 20, 2007                  
|    |                                             |     |                                          
|By: | /s/ Charles Thatcher                        | By: | /s/ Jane Morlok                          
|    |                                             |     |                                          
|    | Charles Thatcher, President and Director    |     | Jane Morlok, Chief Financial Officer     
|    | Date:  December 20, 2007                    |     | Date: December 20, 2007                  
|    |                                             |     |                                          
|By: | /s/ Steve Frickenstein                      |     |                                          
|    |                                             |     |                                          
|    | Steve Frickenstein, Chief Executive Officer |     |                                          
|    | Date: December 20, 2007                     |     |                                          

|29
|--



|EXHIBIT INDEX
Exhibits to Form 10-KSB/A of Breda Telephone Corp.
for the Fiscal Year Ended December 31, 2005
Description of Exhibit .
|-------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                     

|*31. |  | Rule 13a-14(a)/15d-14(a) Certifications |                                                               
|---- |  | --------------------------------------- | --------------------------------------------------------------
|     |  |                                         |                                                               
|     |  | 31.1                                    | Rule 13(a)-14(a) Certification of 
    Chief Executive Officer
|     |  |                                         |                                                               
|     |  | 31.2                                    | Rule 13(a)-14(a) Certification of Chief
    Financial Officer 
|     |  |                                         |                                                               
|*32. |  | Section 1350 Certifications             |                                                               
|     |  |                                         |                                                               
|     |  | 32.1                                    | Section 1350 Certification of Chief 
    Executive Officer    
|     |  |                                         |                                                               
|     |  | 32.2                                    | Section 1350 Certification of Chief 
  Financial Officer      
|     |  |                                         |                                                               

|* Included with this filing.
|----------------------------

|
|