U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  Form 10-KSB/A

            |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended: December 31, 2003.

             |_| 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                                       42-0895882
       (State or other jurisdiction of                       (I.R.S. Employer
        incorporation or organization)                      Identification No.)

   112 East Main, P.O. Box 190, Breda, Iowa                        51436
   (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number: (712) 673-2311

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 (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 |_|

      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|

      State registrant's revenues for its most recent fiscal year: $6,197,297

      State the aggregate market value of the voting and non-voting common
equity held by non-affiliates: $9,480,870, as of March 1, 2004. 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 $303
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: 31,599 shares of common
stock, no par value, at March 1, 2004.

      Transitional Small Business Disclosure Format: Yes |_| No |X|

<PAGE>

                                EXPLANATORY NOTE

      This Form 10-KSB/A is being filed by Breda Telephone Corp. (the "Company")
to amend the Form 10-KSB filed by the Company on or about March 26, 2004 (the
"Original Filing") by substituting the following "Item 7 Financial Statements"
for the material contained under Item 7 in the Original Filing and, more
specifically, to amend the report of the Company's independent auditors,
Kiesling Associates LLP, and to include the reports of PricewaterhouseCoopers
LLP with respect to its audits of the financial statements of Iowa RSA No. 9
Limited Partnership on which Kiesling Associates LLP relied in expressing its
opinion on the Company's financial statements as described in the report of
Kiesling Associates LLP.

      This Form 10-KSB/A does not attempt to modify or update other disclosures
set forth in the Original Filing and this Form 10-KSB/A does not purport to
provide a general update for discussion of any other developments at the Company
subsequent to the Original Filing.

Item 7. Financial Statements.

                           BREDA TELEPHONE CORPORATION
                                AND SUBSIDIARIES
                                   BREDA, IOWA

                        CONSOLIDATED FINANCIAL STATEMENTS
                     Years Ended December 31, 2003 and 2002


                                        2
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                                    Contents

<TABLE>
<CAPTION>
                                                                                     Page
                                                                                     ----
<S>                                                                                <C>
Report of Independent Registered Public Accounting Firm                                  4

Consolidated Financial Statements:

      Consolidated Balance Sheets                                                    5 - 6

      Consolidated Statements of Income                                                  7

      Consolidated Statements of Stockholders' Equity                                    8

      Consolidated Statements of Cash Flows                                         9 - 10

      Notes to Consolidated Financial Statements                                   11 - 27

Report of Independent Auditors--2003 Iowa RSA No. 9 Limited Partnership                 28

Report of Independent Accountants--2002 Iowa RSA No. 9 Limited Partnership              29
</TABLE>


                                       3
<PAGE>

             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, 2003 and
2002, 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. We did not audit the financial statements of RSA No. 9 L.P. limited
partnership, the investment in which, as discussed in Note Four to the
consolidated financial statements, is accounted for by the equity method of
accounting. The investment in this limited partnership was $704,737 and $860,493
as of December 31, 2003 and 2002, respectively, and the equity in its net income
was $185,918 and $374,110 for the years ended December 31, 2003 and 2002,
respectively. The financial statements of RSA No. 9 L.P. were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for RSA No. 9. L.P., is based solely on the
reports of the other auditors.

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. 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 and the reports of other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, 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, 2003 and 2002, 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, Iowa
January 30, 2004


                                       4
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                  2003               2002
                                                             -------------      -------------
<S>                                                          <C>                <C>
                           ASSETS
CURRENT ASSETS
     Cash and cash equivalents                               $   1,205,550      $   1,032,734
     Temporary investments                                         361,543            459,059
     Accounts receivable                                           563,542            835,667
     Interest receivable                                            52,742             68,053
     Current portion of notes receivable                           144,000            116,000
     Inventory, at average cost                                    108,007             91,114
     Other                                                          25,407             86,581
                                                             -------------      -------------
                                                                 2,460,791          2,689,208
                                                             -------------      -------------

OTHER NONCURRENT ASSETS
     Marketable securities                                       3,928,354          3,136,576
     Investments in unconsolidated affiliates at equity          3,942,275          3,454,159
     Other investments at cost                                     857,147            807,564
     Goodwill                                                      896,812            896,812
     Notes receivable, less current portion                        291,134            512,792
                                                             -------------      -------------
                                                                 9,915,722          8,807,903
                                                             -------------      -------------

PROPERTY, PLANT AND EQUIPMENT                                    5,141,009          5,190,176
                                                             -------------      -------------

TOTAL ASSETS                                                 $  17,517,522      $  16,687,287
                                                             =============      =============
</TABLE>

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


                                       5
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                               2003               2002
                                                                           ------------      ------------
<S>                                                                        <C>               <C>
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Current portion of long-term debt                                     $    144,183      $    134,981
     Accounts payable                                                           233,802           262,879
     Accrued taxes                                                              106,592           166,744
     Other                                                                      137,042           174,534
                                                                           ------------      ------------
                                                                                621,619           739,138
                                                                           ------------      ------------

LONG-TERM DEBT, less current portion                                          1,633,461         1,777,644
                                                                           ------------      ------------

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES                               497,795           105,534
                                                                           ------------      ------------

STOCKHOLDERS' EQUITY
     Common stock - no par value, 5,000,000 shares authorized, 31,694
        and 33,000 shares issued and outstanding at $303 and $280
        stated values, respectively                                           9,603,282         9,240,000
     Retained earnings                                                        5,161,365         4,824,971
                                                                           ------------      ------------
                                                                             14,764,647        14,064,971
                                                                           ------------      ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $ 17,517,522      $ 16,687,287
                                                                           ============      ============
</TABLE>

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


                                       6
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                        CONSOLIDATED STATEMENTS OF INCOME
                     Years Ended December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                   2003              2002
                                                                               -----------       -----------
<S>                                                                            <C>               <C>
OPERATING REVENUES                                                             $ 6,197,297       $ 5,988,405
                                                                               -----------       -----------

OPERATING EXPENSES
     Cost of services                                                            2,604,184         2,325,632
     Depreciation and amortization                                               1,057,290         1,070,569
     Selling, general, and administrative                                        1,821,600         1,772,184
                                                                               -----------       -----------
                                                                                 5,483,074         5,168,385
                                                                               -----------       -----------

OPERATING INCOME                                                                   714,223           820,020
                                                                               -----------       -----------

OTHER INCOME (EXPENSES)
     Interest and dividend income                                                  277,690           299,276
     Interest expense                                                             (136,909)         (146,571)
     Income from equity investments                                              1,039,402           918,511
     Other, net                                                                      5,288            90,213
                                                                               -----------       -----------
                                                                                 1,185,471         1,161,429
                                                                               -----------       -----------

INCOME BEFORE INCOME TAXES                                                       1,899,694         1,981,449
                                                                               -----------       -----------

INCOME TAXES                                                                       710,188           692,260
                                                                               -----------       -----------

INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                             1,189,506         1,289,189
                                                                               -----------       -----------

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

NET INCOME                                                                     $ 1,189,506       $ 1,218,421
                                                                               ===========       ===========

NET INCOME PER COMMON SHARE BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE      $     36.89       $     37.95

CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX                                      --             (2.08)
                                                                               -----------       -----------

NET INCOME PER COMMON SHARE                                                    $     36.89       $     35.87
                                                                               ===========       ===========
</TABLE>


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


                                       7
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                           December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                            Common Stock
                                     ----------------------------         Retained
                                       Shares            Amount           Earnings           Total
                                     ----------       -----------       -----------       -----------
<S>                                      <C>          <C>               <C>               <C>
Balance at December 31, 2001             35,025       $ 9,036,450       $ 4,475,000       $13,511,450

  Comprehensive income:

     Net income                                                           1,218,421         1,218,421

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

  Common stock redeemed, net             (2,025)         (560,686)                           (560,686)

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

Balance at December 31, 2002             33,000         9,240,000         4,824,971        14,064,971

  Comprehensive income:

     Net income                                                           1,189,506         1,189,506

  Dividends paid                                                            (98,436)          (98,436)

  Common stock redeemed, net             (1,306)         (391,394)                           (391,394)

  Stated value stock adjustment                           754,676          (754,676)
                                     ----------       -----------       -----------       -----------

Balance at December 31, 2003             31,694       $ 9,603,282       $ 5,161,365       $14,764,647
                                     ==========       ===========       ===========       ===========
</TABLE>

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


                                       8
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                    2003              2002
                                                                                -----------       -----------
<S>                                                                             <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                                 $ 1,189,506       $ 1,218,421
       Adjustments to reconcile net income to net cash provided by
       operating activities:
        Depreciation and amortization                                             1,057,290         1,070,569
        Deferred income taxes                                                       349,694               739
        Amortization of investment tax credits                                       (9,769)           (9,769)
        Equity income in unconsolidated affiliates, net of distributions
          received of $676,786 and $197,264 in 2003 and 2002, respectively         (362,616)         (721,247)
        Note receivable discount                                                    (14,342)          (17,290)
        Gain on sale of building                                                         --           102,611
        Cumulative effect of accounting change                                           --           119,945
     Changes in assets and liabilities:
        (Increase) Decrease in:
            Receivables                                                             287,437          (292,284)
            Prepayments                                                              61,174            66,520
            Inventory                                                               (16,893)            1,914
        Increase (Decrease) in:
            Accounts payable                                                        (29,077)           67,869
            Accrued taxes                                                           (60,152)           25,640
            Other                                                                   (37,492)           16,743
                                                                                -----------       -----------
        Net cash provided by operating activities                                 2,414,760         1,650,381
                                                                                -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                        (1,008,124)         (754,895)
     Purchase of investments                                                     (1,747,160)       (1,464,892)
     Purchase of other investments - at equity                                     (125,500)         (248,273)
     Purchase of other investments - at cost                                         (3,566)           (3,400)
     Issuance of notes receivable                                                        --          (160,000)
     Proceeds from the sale of investments                                        1,052,898           999,499
     Proceeds from the sale of other investments - at cost                            6,319             7,333
     Repayment of notes receivable                                                  208,000                --
     Cost of removing plant, net of salvage                                              --               831
                                                                                -----------       -----------
        Net cash used in investing activities                                    (1,617,133)       (1,623,797)
                                                                                -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Repayment of long term debt                                                   (134,981)         (126,365)
     Common stock redeemed, net                                                    (391,394)         (560,686)
     Dividends paid                                                                 (98,436)         (104,214)
                                                                                -----------       -----------
        Net cash used in financing activities                                   $  (624,811)      $  (791,265)
                                                                                -----------       -----------
</TABLE>

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


                                       9
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                              2003             2002
                                                          -----------      -----------
<S>                                                       <C>              <C>
Net Increase (Decrease) in Cash and Cash Equivalents      $   172,816      $  (764,681)

Cash and Cash Equivalents at Beginning of Year              1,032,734        1,797,415
                                                          -----------      -----------

Cash and Cash Equivalents at End of Year                  $ 1,205,550      $ 1,032,734
                                                          ===========      ===========
</TABLE>

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


                                       10
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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, 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 company 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 Company,
            Tele-Services, Ltd., and Westside Independent Telephone Company,
            (herein referred to as "the Company"). All material intercompany
            transactions have been eliminated in consolidation.

            Cash and Cash Equivalents

            All highly liquid investments with a maturity of three months or
            less at the time of purchase are considered cash equivalents.

            Investments

            Certificates of deposit bought and held by the Company until
            maturity are carried at cost, which approximates market.

            Debt and marketable 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. Debt and marketable
            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.


                                       11
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

            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 FIFO 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 and employee benefits.

            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 together with removal cost 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.


                                       12
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

            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 property and equipment,
            partnership interests 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 which 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 tariffed and contracted rates.


                                       13
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

            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 the customer signs up
            for service.

            The Company uses the reserve method to recognize uncollectible
            customer accounts.

            Reclassifications

            Certain reclassifications have been made to the 2002 consolidated
            financial statements to conform with the 2003 presentation.

NOTE 2.     TEMPORARY INVESTMENTS AND MARKETABLE SECURITIES

            The amortized cost and fair value of certificates of deposits and
            investments classified as held-to-maturity are as follows:

<TABLE>
<CAPTION>
                                                            Gross            Gross
                                        Amortized        Unrealized        Unrealized          Fair
                                           Cost             Gains            Losses            Value
                                       -----------      -----------       -----------       -----------
<S>                                    <C>              <C>               <C>               <C>
           December 31, 2003

      Held-to-Maturity:
            Municipal bonds            $ 4,070,876      $   127,532       $   (34,429)      $ 4,163,979
            Government securities          219,021                             (3,830)          215,191
                                       -----------      -----------       -----------       -----------
                                       $ 4,289,897      $   127,532       $   (38,259)      $ 4,379,170
                                       ===========      ===========       ===========       ===========

           December 31, 2002

      Certificates of deposit          $   275,000      $                 $                 $   275,000

      Held-to-Maturity:
            Municipal bonds              2,971,671          134,022            (4,449)        3,101,244
            Government securities          348,964              858            (2,436)          347,386
                                       -----------      -----------       -----------       -----------
                                       $ 3,595,635      $   134,880       $    (6,885)      $ 3,723,630
                                       ===========      ===========       ===========       ===========

<CAPTION>
                                           2003             2002
                                       -----------      -----------
<S>                                    <C>              <C>
      Amounts classified as:
            Current                    $   361,543      $   459,059
            Noncurrent                   3,928,354        3,136,576
                                       -----------      -----------
               Total                   $ 4,289,897      $ 3,595,635
                                       ===========      ===========
</TABLE>


                                       14
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

            Certificates of deposit and investments classified as
            held-to-maturity at December 31, 2003 are summarized below by
            contractual maturity date:

<TABLE>
<CAPTION>
                                                            Amortized Cost      Fair Value
                                                            --------------     ------------
<S>                                                          <C>               <C>
               Due in one year or less                       $    361,543      $    364,441
               Due after one year through three years             815,953           858,441
               Due after three years through five years           954,994           990,420
               Due after five years                             2,157,407         2,165,868
                                                             ------------      ------------
                                                             $  4,289,897      $  4,379,170
                                                             ============      ============
</TABLE>

NOTE 3.     NOTES RECEIVABLE

            Notes receivable consist of the following:

<TABLE>
<CAPTION>
                                                        2003              2002
                                                    ------------      ------------
<S>                                                 <C>               <C>
            Desktop Media, L.L.C  -  13%            $    435,134      $    468,792
            Toyne, Inc.           -   7%                      --           160,000
                                                    ------------      ------------
                                                         435,134           628,792
                Less current portion                     144,000           116,000
                                                    ------------      ------------
                                                    $    291,134      $    512,792
                                                    ============      ============
</TABLE>

            The note with Desktop Media, L.L.C., has an original balance of
            $500,000, matures in 2006 and reflects interest at 13%. The note is
            shown net of unamortized discounts of $16,866 and $31,208 at
            December 31, 2003 and 2002, 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 Media, L.L.C. to defer principal payments due
            in the months of September through December 2003.

            During September 2001, the Company entered into a contract with
            Toyne, Inc. to sell its corporate building for $200,000. The Company
            received a cash deposit of $20,000 and the contract established
            payment terms. On October 15, 2002, the Company received a
            promissory note for the $180,000 at a rate of 7%. The transaction
            resulted in a before tax gain of $102,611 in 2002. The note was paid
            in full during 2003.


                                       15
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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:

                                                        2003             2002
                                                    -----------      -----------

            Alpine Communications, L.C              $ 1,300,446      $   988,228
            RSA #1, Ltd.                                836,306          693,328
            RSA #7, Ltd.                                275,062          244,490
            RSA #8, Ltd.                                704,972          534,867
            RSA #9, Ltd                                 704,737          860,493
            Quad County Communications                   86,350           98,738
            Carroll County Wireless, L.L.C               25,273           24,886
            Guthrie Group, L.L.C                          9,129            9,129
                                                    -----------      -----------
                                                    $ 3,942,275      $ 3,454,159
                                                    ===========      ===========

            The Company continues to have a 17.42% ownership interest in Alpine
            Communications, L.C. (Alpine). The Alpine group operates several
            telephone exchanges in eastern Iowa.

            The Company's percentage ownership interests in RSA #1, Ltd., RSA
            #7, Ltd., RSA #8, Ltd. and RSA #9, Ltd. are 9.1%, 7.1%, 11.7% and
            16.7%, respectively, at December 31, 2003.

            Additionally, Westside Independent Telephone Company, a wholly-owned
            subsidiary of Breda Telephone Corporation, has a 33.33% ownership
            interest in Quad County Communications (Quad County). This entity
            owns and operates a fiber optic network.

            The Company's percentage interests in Carroll County Wireless,
            L.L.C. and Guthrie Group, L.L.C. are 33.33% and 25%, respectively.
            Both companies have purchased the licenses to provide personal
            communication services (PCS); however, neither company has begun
            providing PCS services as of December 31, 2003. The operations of
            these entities are immaterial to the consolidated financial
            statements.

            Investments with less than a 20% ownership are carried at equity due
            to the level of influence the Company has with respect to each
            investment.


                                       16
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

            Condensed consolidated financial data for the twelve months ended
            September 30, 2003 and 2002 for Alpine, RSA #1, RSA #7, RSA #8, RSA
            #9, and Quad County is as follows:

<TABLE>
<CAPTION>
                                                                        2003               2002
                                                                    ------------      ------------
<S>                                                                 <C>               <C>
            Revenues                                                $ 42,408,080      $ 41,987,013
            Expenses                                                  30,407,082        30,542,190
                                                                    ------------      ------------
            Net Income                                              $ 12,000,998      $ 11,444,823
                                                                    ============      ============

            Current assets                                          $ 13,948,541      $ 13,208,958
            Non-current assets                                        35,863,771        35,823,617
            Current liabilities                                        4,417,295         4,753,174
            Non-current liabilities                                   14,693,369        16,845,194
</TABLE>

            LONG-TERM INVESTMENTS AT COST

            Long-term investments at cost include nonmarketable equity
            securities and certificates as follows:

<TABLE>
<CAPTION>
                                                                        2003               2002
                                                                    ------------      ------------
<S>                                                                 <C>               <C>
            NECA Services, Inc. - stock                             $    300,000      $    300,000
            Rural Telephone Finance Cooperative - certificates           189,317           192,070
            Rural Telephone Bank - stock                                 165,789           165,789
            Iowa Network Services - stock                                 78,705            78,705
            Desktop Media, L.L.C                                          60,000            60,000
            NRTC Patronage Capital - certificates                         52,336                --
            Other                                                         11,000            11,000
                                                                    ------------      ------------
                                                                    $    857,147      $    807,564
                                                                    ============      ============
</TABLE>

            The NRTC declares and Breda Telephone Corporation receives a yearly
            patronage dividend based on the NRTC's profitability. Of the total
            dividend, 30% is received in cash and 70% is distributed in the form
            of NRTC patronage capital certificates, which will be redeemed in
            cash at a future date at the discretion of the NRTC. The Company has
            recorded an asset and an offsetting deferred income liability for
            the noncash portion of the patronage dividend. The deferred income
            is recognized as revenue when cash distributions are declared by the
            NRTC. Deferred revenue included in other liabilities was $52,336 at
            December 31, 2003.


                                       17
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

NOTE 5.     GOODWILL

            Goodwill consists of the following:

                                                       2003             2002
                                                   -----------      -----------

            Balance, Beginning of Year             $   896,812      $ 1,016,757
                Goodwill acquired                           --               --
                Goodwill impairment                         --         (119,945)
                                                   -----------      -----------
            Balance, End of Year                   $   896,812      $   896,812
                                                   ===========      ===========

            In accordance with SFAS 142, the Company annually assesses its
            recorded balances of goodwill. The Company determined an impairment
            of $119,945, related to goodwill, existed on January 1, 2002. It was
            determined that the goodwill related to the purchase price of
            Westside Communications, Inc., which is a component of the broadcast
            segment, was impaired. Fair value was determined using a discounted
            cash flow method. The impairment loss of $70,768, net of tax, is
            presented in the income statement as a cumulative effect of an
            accounting change.


                                       18
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

NOTE 6.     PROPERTY, PLANT AND EQUIPMENT

            Property, plant and equipment includes the following:

<TABLE>
<CAPTION>
                                                                 2003              2002
                                                              -----------      -----------
<S>                                                           <C>              <C>
            Telephone plant in service:
                 Land                                         $    41,508      $    41,508
                 Buildings                                      1,580,697        1,210,087
                 Other general support assets                   1,571,269        1,465,661
                 Central office assets                          2,618,151        2,256,252
                 Cable and wire facilities                      4,452,624        4,448,036
                 Other plant and equipment                        838,091          788,148
                                                              -----------      -----------
                                                               11,102,340       10,209,692
                                                              -----------      -----------

            Cable television plant in service:
                 Land                                               6,086            6,086
                 Buildings                                        127,937          127,938
                 Other plant and equipment                        180,098          177,445
                 Towers, antennas and head end equipment        1,516,105        1,509,394
                 Cable and wire facilities                      1,573,524        1,573,524
                 Franchises                                        32,992           32,992
                                                              -----------      -----------
                                                                3,436,742        3,427,379
                                                              -----------      -----------

                 Total property, plant and equipment           14,539,082       13,637,071
                 Less accumulated depreciation                  9,468,930        8,468,035
                                                              -----------      -----------
                                                                5,070,152        5,169,036
                 Plant under construction                          70,857           21,140
                                                              -----------      -----------
                                                              $ 5,141,009      $ 5,190,176
                                                              ===========      ===========
</TABLE>

            Telephone cable and wire facilities of approximately $675,000 and
            cable television head end equipment of approximately $525,000 was
            fully depreciated in 2003. Depreciation on depreciable property
            resulted in composite rates of 7.5% and 8.1% for 2003 and 2002,
            respectively.


                                       19
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

NOTE 7.     INCOME TAXES

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

<TABLE>
<CAPTION>
                                                                2003            2002
                                                             -------------------------
<S>                                                          <C>             <C>
            Federal income taxes:
                 Current tax expense                         $ 238,562       $ 503,880
                 Deferred tax expense (benefit)                264,048            (531)
                 Amortization of investment tax credits         (9,769)         (9,769)
            State income taxes:
                 Current tax expense                           131,701         198,888
                 Deferred tax expense (benefit)                 85,646            (208)
                                                             ---------       ---------
            Total income tax expense                         $ 710,188       $ 692,260
                                                             =========       =========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                2003            2002
                                                             ---------       ---------
<S>                                                          <C>             <C>
            Deferred Tax Liabilities
                Federal                                      $ 426,338       $ 269,312
                State                                          139,907          79,530
                                                             ---------       ---------
                    Total Deferred Tax Liabilities             566,245         348,842
                                                             ---------       ---------

            Deferred Tax Assets
                Federal                                         90,324         197,347
                State                                           44,934          70,202
                                                             ---------       ---------
                    Total Deferred Tax Assets                  135,258         267,549
                                                             ---------       ---------

                Net Deferred Tax Liability                   $ 430,987       $  81,293
                                                             =========       =========

            Current Portion                                  $      --       $      --
            Long-term Portion                                  430,987          81,293
                                                             ---------       ---------
                Net Deferred Tax Liability                   $ 430,987       $  81,293
                                                             =========       =========
</TABLE>

            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 2003 and
            2002 totaled $425,260 and $566,317, respectively.


                                       20
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

                                                             2003       2002
                                                           -------     -------

            Statutory federal income tax rate                 34.0%       34.0%
            State income taxes, net of federal benefit        10.1%        9.6%
            Amortization of investment tax credits            (0.1)%      (0.1)%
            Dividends received deduction                      (1.4)%      (1.5)%
            Tax exempt interest                               (3.7)%      (3.9)%
            Other                                             (1.5)%      (3.2)%
                                                           -------     -------
                 Effective income tax rate                    37.4%       34.9%
                                                           =======     =======

            The Company files consolidated tax returns including their
            subsidiaries, Prairie Telephone Company, Inc., Westside Independent
            Telephone Company and Tele-Services, Ltd.

NOTE 8.     LONG-TERM DEBT

            Long-term debt consists of:

                                                         2003            2002
                                                     -----------     -----------
            Rural Telephone Finance Cooperative
               7.35% (Fixed Rate)                    $ 1,777,644     $ 1,912,625
                 Less current portion                    144,183         134,981
                                                     -----------     -----------
                                                     $ 1,633,461     $ 1,777,644
                                                     ===========     ===========

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

                         2004                          $144,183
                         2005                           154,013
                         2006                           164,513
                         2007                           175,729
                         2008                           187,710

            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.


                                       21
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

            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 December 1, 2005 at a
            rate of 4.65% at December 31, 2003. No funds were advanced under the
            line at December 31, 2003.

            In addition, Prairie Telephone Company, Inc. a wholly-owned
            subsidiary of Breda Telephone Corporation, has a line of credit with
            the RTFC for $500,000. This approved line of credit is available
            until November 30, 2005 at a rate of 4.65% at December 31, 2003. No
            funds were advanced under the line at December 31, 2003.

            Cash paid for interest net of amounts capitalized for 2003 and 2002
            totaled $136,909 and $146,571, 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.


                                       22
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

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

<TABLE>
<CAPTION>
                                                    Local                             Internet
                                                  Exchange                            Service
                        2003                       Carrier         Broadcast          Provider           Other             Total
            -------------------------------      -----------      -----------       -----------       -----------       -----------
<S>                                              <C>              <C>               <C>               <C>               <C>
            Revenues and sales                   $ 4,661,184      $   909,292       $   626,821       $        --       $ 6,197,297
            Intersegment income and sales                 --               --                --                --                --
            Interest income                          273,486            4,052               152                --           277,690
            Interest expense                         136,909               --                --                --           136,909
            Depreciation and amortization            680,483          257,039           119,768                --         1,057,290
            Income tax expense (benefit)             919,171         (100,238)         (108,745)               --           710,188
            Segment profit (loss)                  1,490,238         (144,246)         (156,486)               --         1,189,506
            Segment assets                        14,882,852        1,267,811         1,366,859                --        17,517,522
            Expenditures for segment assets          325,645           30,828           651,651                --         1,008,124

                        2002
            ------------------------------

            Revenues and sales                   $ 4,287,041      $   975,336       $   726,028       $        --       $ 5,988,405
            Intersegment income and sales                 --               --                --                --                --
            Interest income                          291,951            7,321                 4                --           299,276
            Interest expense                         146,571               --                --                --           146,571
            Depreciation and amortization            667,403          310,214            92,952                --         1,070,569
            Income tax expense (benefit)             810,014          (29,439)          (86,273)           (2,042)          692,260
            Segment profit (loss)                  1,384,318         (114,925)          (47,807)           (3,165)        1,218,421
            Segment assets                        14,345,956        1,463,418           828,015            49,898        16,687,287
            Expenditures for segment assets          596,549           14,136           144,210                --           754,895
</TABLE>


                                       23
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

            Reconciliation of Segment Information

<TABLE>
<CAPTION>
                                                                  2003              2002
                                                              ------------      ------------
<S>                                                           <C>               <C>
            REVENUES:
                 Total revenues for reportable segments       $  6,197,297      $  5,988,405
                 Other revenues                                         --                --
                                                              ------------      ------------
                     Consolidated Revenues                    $  6,197,297      $  5,988,405
                                                              ============      ============

            PROFIT:
                 Total Profit for reportable segments         $  1,189,506      $  1,221,586
                 Other profit (loss)                                    --            (3,165)
                                                              ------------      ------------
                     Net Income                               $  1,189,506      $  1,218,421
                                                              ============      ============
            ASSETS:
                 Total assets for reportable segments         $ 17,517,522      $ 16,637,389
                 Other assets                                           --            49,898
                 Elimination of intercompany receivables                --                --
                                                              ------------      ------------
                     Consolidated Assets                      $ 17,517,522      $ 16,687,287
                                                              ============      ============
</TABLE>

NOTE 10.    NET INCOME PER COMMON SHARE

            Net income per common share for 2003 and 2002 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,
            2003 and 2002 were 32,241 and 33,968, respectively.

NOTE 11.    STOCK VALUE ADJUSTMENT

            During May 2003, the board of directors authorized a $23 increase in
            the stated value of each share of common stock from $280 to $303.
            There were 32,812 shares outstanding at the time of the value
            adjustment, which reduced earnings by $754,676.

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


                                       24
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

NOTE 12.    STOCK RESTRICTIONS

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

            o 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.

            o 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.

            o Stockholders shall not sell any shares of stock owned unless the
            Company has been given first right of refusal.

            o In households with multiple individuals, only one person must be
            deemed the subscriber of Company services.

            o 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.

            o 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 adopted for its employees who have met certain
            eligibility requirements, a defined benefit retirement and security
            program sponsored by the National Telephone Cooperative Association
            (NTCA). The plan calls for the Company to contribute 8.6 % of each
            enrolled employees' annual gross salary. As a condition of
            participation, each participating employee must also contribute a
            minimum 3% of their annual gross salary. Contributions made by the
            Company totaled $92,016 and $88,860 for the years ended December 31,
            2003 and 2002, respectively.


                                       25
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

NOTE 14.    ASSET RETIREMENT OBLIGATION

            SFAS No. 143, "Accounting for Asset Retirement Obligations," was
            issued in June 2001, and became effective for the Company beginning
            January 1, 2003. SFAS No. 143 requires 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 adopted SFAS No. 143 effective January 1, 2003. The
            Company has determined it does not have a material legal obligation
            to remove long-lived assets as described by SFAS No. 143, and
            accordingly, adoption of SFAS No. 143 did not have a material impact
            on the Company's financial statements for the year ended December
            31, 2003.

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,
            2003 and 2002 were approximately $1,018,000 and $778,500,
            respectively. At December 31, 2003 and 2002, $102,754 and $111,755
            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 franchised service area, broadcast customers,
            internet customers and telecommunications intrastate and interstate
            long distance carriers.

            The Company received 39% of its 2003 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
<PAGE>

                  BREDA TELEPHONE CORPORATION AND SUBSIDIARIES
                                   BREDA, IOWA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2003 and 2002

NOTE 17.    WIRELESS TERMINATING ACCESS REVENUE

            The Iowa Utilities Board issued an order on November 26, 2001, which
            stated that Qwest Corporation would not be required to pay access
            charges for calls placed by a wireless customer to a wireline
            customer carried by Qwest. Sufficient information related to the
            calling party is not being provided to the Company by Qwest on the
            toll records. Accordingly, the Company is not able to ascertain
            whether the caller is a wireline or wireless customer and whether
            access charges are or are not due to the Company. As a result, the
            Company continues to bill Qwest access for all terminating minutes
            and has had to rely on Qwest to provide adjustments for their
            estimate of the wireless minutes. Qwest issued a bill to the Company
            asking for refunds of amounts paid to the Company during the period
            April 1999 through February 2002 that Qwest contends were mistakenly
            overpaid to the Company for access charges during that period. The
            Company has accrued this bill for $22,600 which is in accounts
            payable at December 31, 2003. During the years ended December 31,
            2003 and 2002, the Company has reduced its revenues approximately
            $169,000 and $72,000, respectively, related to Qwest estimated
            wireless terminating access that the Company has billed but to which
            Qwest has not paid.

NOTE 18.    CONTINGENCY

            Qwest Communications initiated an inquiry of twenty Iowa local
            exchange carriers. As a result of the inquiry, the Company found in
            October 2003 that Qwest had been inappropriately routing cellular
            phone traffic through the Company's toll facilities. Upon discovery
            of this, Qwest rerouted this cellular traffic so that it no longer
            goes through the Company's facilities. The Company has taken the
            position that this traffic was routed over its network and the
            access that Qwest has paid to them was appropriately billed.
            Accordingly, the Company believes that this issue will not effect
            prior periods. The Company has estimated that network access
            revenues will decrease by approximately $200,000 in 2004.


                                       27
<PAGE>

                         Report of Independent Auditors

To the Partners of
Iowa RSA No. 9 Limited Partnership

In our opinion, the accompanying balance sheet and the related statements of
operations, of cash flows and of changes in partners' capital (not presented
separately herein) present fairly, in all material respects, the financial
position of Iowa RSA No. 9 Limited Partnership (the "Partnership") (an Iowa
limited partnership), at December 31, 2003, and the results of its operations,
cash flows and changes in partners' capital for the year then ended in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

As discussed in Note 2, the Partnership changed the manner in which it accounts
for asset retirement costs as a result of the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement
Obligations," on January 1, 2003.


                                               /s/ PricewaterhouseCoopers LLP

Chicago, Illinois
April 5, 2004


                                       28
<PAGE>

                        Report of Independent Accountants

To the Partners of
Iowa RSA No. 9 Limited Partnership:

In our opinion, the accompanying balance sheet and the related statements of
operations, of cash flows and of changes in partners' capital (not presented
separately herein) present fairly, in all material respects, the financial
position of Iowa RSA No. 9 Limited Partnership (the "Partnership") (an Iowa
limited partnership) at December 31, 2002, and the results of its operations,
cash flows and changes in partners' capital for the year then ended in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Partnership's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

As discussed in Note 2, the Partnership changed the method by which it accounts
for direct incremental costs related to wireless customer activations on January
1, 2002. Also as discussed in Note 2, the Partnership changed the method by
which it accounts for activation fees charged with the sale of equipment and
service as a result of the adoption of Emerging Issues Task Force statement No.
00-21 "Accounting for Multiple Element Arrangements", on January 1, 2002.


                                            /s/ PricewaterhouseCoopers LLP

Chicago, Illinois
March 19, 2003


                                       29
<PAGE>

                                   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: June 28, 2004             By: /s/ Robert Boeckman
                                    --------------------------------------------
                                        Robert Boeckman, Chief Operations
                                        Officer and Co-Chief Executive Officer


Date: June 28, 2004             By: /s/ Jane Morlok
                                    --------------------------------------------
                                        Jane Morlok, Chief Financial Officer and
                                        Co-Chief Executive Officer


                                       30
<PAGE>

                                  EXHIBIT INDEX
               Exhibits to Form 10-KSB/A of Breda Telephone Corp.
                   for the Fiscal Year Ended December 31, 2003

Description of Exhibit.

      *31.  Rule 13a-14(a)/15d-14(a) Certifications

            31.1  Rule 13a-14(a) Certification of                   E-1
                  Chief Operations Officer and
                  Co-Chief Executive Officer

            31.2  Rule 13a-14(a) Certification of                   E-2
                  Chief Financial Officer and
                  Co-Chief Executive Officer

*Included with this filing.