----

----

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

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

| Nevada(State or Other Jurisdiction of Incorporation or Organization)                               | 74-2849995(IRS Employer Identification No.) |
|----------------------------------------------------------------------------------------------------|---------------------------------------------|
|                                                                                               |                                        |
| 3201 Cherry Ridge, Building C, Suite 300San Antonio, Texas(Address of Principal Executive Offices) |  78230(Zip Code)                       |
|                                                                                               |                                        |

| Large accelerated filer   ̈     |   | Accelerated filer         |  ̈ |
|-----------------------------------------------|--------|---------------------------|--------|
| Non-accelerated filer    ̈ |   | Smaller reporting company | x      |

----

----

----

|           |                                                                                                               | Page   |
|----------------|--------------------------------------------------------------------------------------------------------------------|--------|
| PART I         |
| Item 1.        | Business                                                                                                           | 3      |
| Item 1A.       | Risk Factors                                                                                                       | 10     |
| Item 1B.       | Unresolved Staff Comments                                                                                          | 12     |
| Item 2.        | Properties                                                                                                         | 12     |
| Item 3.        | Legal Proceedings                                                                                                  | 12     |
| Item 4.        | (Removed and Reserved)                                                                                             | 12     |
|           |                                                                                                               |   |
| PART II        |
|           |                                                                                                               |   |
| Item 5.        | Market for Registrant’s Common Equity; Related Stockholder Matters and Issuer Purchases of Equity Securities | 12     |
| Item 6.        | Selected Financial Data                                                                                            | 13     |
| Item 7.        | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 13     |
| Item 7A.  | Quantitative and Qualitative Disclosures about Market Risk                                                         | 17     |
| Item 8.        | Financial Statements and Supplementary Data                                                                        | 18     |
| Item 9.        | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures                         | 33     |
| Item 9A.       | Controls and Procedures                                                                                            | 33     |
| Item 9B.       | Other Information                                                                                                  | 33     |
|           |                                                                                                               |   |
| PART III       |
|           |                                                                                                               |   |
| Item 10.       | Directors, Executive Officers and Corporate Governance                                                             | 34     |
| Item 11.       | Executive Compensation                                                                                             | 36     |
| Item 12.       | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     | 40     |
| Item 13.       | Certain Relationships and Related Transactions, and Director Independence                                          | 41     |
| Item 14.       | Principal Accountant Fees and Services                                                                             | 42     |
|           |                                                                                                               |   |
| PART IV        |
|           |                                                                                                               |   |
| Item 15.       | Exhibits, Financial Statement Schedules                                                                            | 42     |
|           |                                                                                                               |   |
| SIGNATURES     |

----

|   | · | Simplification:  An integrated infrastructure that supports all forms of communication allows more standardization, a smaller equipment complement, and less equipment management. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Network Efficiency:  The integration of voice and data fills up the data communication channels efficiently, thus providing bandwidth consolidation and reduction of the costs associated with idle bandwidth.  This combined infrastructure can support dynamic bandwidth optimization and a fault tolerant design.  The differences between the traffic patterns of voice and data offer further opportunities for significant efficiency improvements. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Co-existence with traditional communication mediums:  IP telephony can be used in conjunction with existing PSTN switches, leased and dial-up lines, PBXs and other customer premise equipment (CPE), enterprise LANs, and Internet connections.  IP telephony applications can be implemented through dedicated gateways, which in turn can be based on open standards platforms for reliability and scalability. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Cost reduction: Under the VoIP network, the connection is directly to the Internet backbone and as a result the telephony access charges and settlement fees are avoided. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | An expanding global market for voice communications growing at approximately 10% per year |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | Deregulation and demonopolization of government-owned telecommunication companies in foreign countries |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | Global proliferation of communications devices such as mobile and VoIP phones |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | Growth in ethnic communities in the United States; approximately 90 million people belong to an ethnic minority group |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Increase in global trade and travel |
|--------|--------|-------------------------------------|

|   | · | Declining rates for communication services as a result of increased competition |
|--------|--------|---------------------------------------------------------------------------------|

----

|   | · | Demand for a lower cost alternative to traditional telephone service; |
|--------|--------|-----------------------------------------------------------------------|

|   | · | Improved quality and reliability of VoIP calls due to technological advances, increased network development and greater bandwidth capacity; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | New product innovations that can be provided by VoIP services providers, but not currently offered by traditional telephone companies. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | · | Maintain approximately $10 million in registered and subscribed capital. |
|--------|--------|--------------------------------------------------------------------------|

|   | · | Install and operate a network in Mexico according to an operating plan approved by the Mexican government. |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | Continuously develop and conduct training programs for its staff. |
|--------|--------|-------------------------------------------------------------------|

|   | · | Designate an individual responsible for the technical functions to operate the concession. |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | Provide continuous and efficient services at all times to its customers. |
|--------|--------|--------------------------------------------------------------------------|

|   | · | Establish a complaint center and correction facilities center and report to the Mexican government on a monthly basis the complaints received and the actions taken to resolve the problems. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Invoice its customer only tariffs rates that have been approved by the Mexican government. |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | Provide audited financial statements on a yearly basis that include a detailed description of the fixed assets utilized in the network and reporting by region and location of where the services are being provided. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide quarterly reports and updates on the expansion of the network in Mexico and a description of the training programs and research and development programs. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide statistical reports of traffic, switching capacity and other parameters in the network. |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | Post a bond/insurance policy for approximately $500,000 payable to the Mexican Federal Treasury Department in the event the concession is revoked for failure to perform any of the requirements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Many of our customers are not obligated to route a minimum amount of traffic over our system and the amount of traffic we handle may decline if our customers elect to route traffic over systems they operate or systems operated by other providers; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increased competition from other telecommunication service providers or from service companies in related fields that offer telecommunication services may adversely affect the amount we can charge for traffic routed over our system; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we may be required to reduce our charges for routing traffic to maintain high utilization of our equipment; |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | the termination fees, connection fees and other charges from our suppliers; |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | fraudulently sent or received traffic for which we are obligated to pay but which we are unable to bill to any customer; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | changes in call volume among the countries to which we complete calls; |
|--------|--------|------------------------------------------------------------------------|

|   | · | technical difficulties or failures of our network systems or third party delays in expansion or provisioning system components; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our ability to manage our traffic on a constant basis so that routes are profitable. |
|--------|--------|--------------------------------------------------------------------------------------|

| We are subject to downward pricing pressures and a continuing need to renegotiate overseas rates.  As a result of numerous factors, including increased competition and global deregulation of telecommunications services, prices for international long distance calls have been decreasing.  This downward trend of prices to end-users has caused us to lower the prices we charge communication service providers for call completion on our network.  If this downward pricing pressure continues, we may not be able to offer VoIP services at costs lower than or competitive with, the traditional voice network services with which we compete.  Moreover, in order for us to lower our prices, we have to renegotiate rates with our foreign service providers who complete calls for us.  We may not be able to renegotiate these terms favorably enough, or fast enough, to allow us to continue to offer services in a particular country on a cost-effective basis.  The continued downward pressure on prices and our inability to renegotiate favorable terms in a particular country could have a material adverse effect on our ability to operate our network. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | unexpected changes in tariffs, trade barriers and regulatory requirements relating to Internet access or VoIP; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | economic weakness, including inflation, or political instability in particular foreign economies and markets; |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | difficulty in collecting accounts receivable; |
|--------|--------|-----------------------------------------------|

|   | · | tax, consumer protection, telecommunications, and other laws; |
|--------|--------|---------------------------------------------------------------|

|   | · | foreign currency fluctuations, which could result in increased operating expenses and reduced revenues; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | unreliable government power to protect our rights. |
|--------|--------|----------------------------------------------------|

|   | · | user privacy; |
|--------|--------|---------------|

|   | · | pricing controls and termination costs; |
|--------|--------|-----------------------------------------|

|   | · | characteristics and quality of products and services; |
|--------|--------|-------------------------------------------------------|

|   | · | qualification to do business; |
|--------|--------|-------------------------------|

|   | · | consumer protection; |
|--------|--------|----------------------|

|   | · | cross-border commerce, including laws that would impose tariffs, duties and other import restrictions; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | copyright, trademark and patent infringement; and |
|--------|--------|---------------------------------------------------|

|   | · | claims based on the nature and content of Internet materials, including defamation, negligence and the failure to meet necessary obligations. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
|---------|---------------------------------------------------------------------------------------------------------------------|

----

| Fiscal 2010 |   | Low |   |   | High   |   |
|------------------|--------|-----|--------|--------|--------|--------|
| FirstQuarter     |   | $   | 0.03   |   |   | $      | 0.05 |   |
| Second Quarter   |   | $   | 0.03   |   |   | $      | 0.05 |   |
| Third Quarter    |   | $   | 0.03   |   |   | $      | 0.07 |   |
| Fourth Quarter   |   | $   | 0.03   |   |   | $      | 0.05 |   |

| Fiscal 2011 |   | Low |   |   | High   |   |
|------------------|--------|-----|--------|--------|--------|--------|
| FirstQuarter     |   | $   | 0.02   |   |   | $      | 0.04 |   |
| Second Quarter   |   | $   | 0.03   |   |   | $      | 0.05 |   |
| Third Quarter    |   | $   | 0.05   |   |   | $      | 0.12 |   |
| Fourth Quarter   |   | $   | 0.04   |   |   | $      | 0.09 |   |

|                                                       |   | Number of Securities to beIssued Upon Exercise ofOutstanding Options,Warrants and Rights |       |   | Weighted-Average ExercisePrice of OutstandingOptions, Warrants andRights |   |   | Number of SecuritiesRemaining Available forFuture Issuance UnderEquity Compensation Plans |   |
|------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|------------|--------|---------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                       |   |                                                                                                                                       |       |   |                                                                                              |   |   |                                                                                                                              |   |
| Equity Compensation plans approved by security holders     |   |                                                                                                                                       | -0-        |   |                                                                                              |   | N/A    |                                                                                                                              |   |   | -0- |   |
|                                                       |   |                                                                                                                                       |       |   |                                                                                              |   |   |                                                                                                                              |   |   |   |   |
| Equity Compensation Plans not approved by security holders |   |                                                                                                                                       | 11,924,000 |   |                                                                                              | $      | .05    |                                                                                                                              |   |   | 6,001,000 |   |
|                                                       |   |                                                                                                                                       |       |   |                                                                                              |   |   |                                                                                                                              |   |   |   |   |
| Total                                                      |   |                                                                                                                                       | 11,924,000 |   |                                                                                              | $      | .05    |                                                                                                                              |   |   | 6,001,000 |   |

| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
|---------|----------------------------------------------------------------------------------------------|

----

|                                                                                   |   | Years ended July 31, |   |
|----------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                   |   | 2011                                |   |   | 2010 |   |   | Variances |   |   | % |   |
| OPERATING REVENUES:                                                                    |   |                                |   |   |   |   |   |   |   |   |   |   |
| Global VoIP services                                                                   |   | $                                   | 14,970 |   |   | $ | 20,873 |   |   | $ | (5,903 | ) |   |   | -28 | % |
| Cloud-based hosted services                                                            |   |                                | 257    |   |   |   | 66 |   |   |   | 191 |   |   |   | 289 | % |
|                                                                                   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating revenues                                                               |   |                                | 15,227 |   |   |   | 20,939 |   |   |   | (5,712 | ) |   |   | -27 | % |
|                                                                                   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of services (exclusive of depreciation and amortization, shown below)             |   |                                | 14,061 |   |   |   | 19,379 |   |   |   | (5,318 | ) |   |   | -27 | % |
| GROSS MARGIN                                                                           |   |                                | 1,166  |   |   |   | 1,560 |   |   |   | (394 | ) |   |   | -25 | % |
|                                                                                   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expense (exclusive of legal and professional fees) |   |                                | 2,146  |   |   |   | 1,398 |   |   |   | 748 |   |   |   | 54 | % |
| Legal and professional fees                                                            |   |                                | 304    |   |   |   | 272 |   |   |   | 32 |   |   |   | 12 | % |
| Bad debt                                                                               |   |                                | 40     |   |   |   | - |   |   |   | 40 |   |   |   | 100 | % |
| Depreciation and amortization expense                                                  |   |                                | 100    |   |   |   | 165 |   |   |   | (65 | ) |   |   | -39 | % |
| OPERATING PROFIT (LOSS)                                                                |   |                                | (1,424 | ) |   |   | (275 | ) |   |   | (1,149 | ) |   |   | 418 | % |
|                                                                                   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE):                                                                |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss on debt extinguishment                                                            |   |                                | (100   | ) |   |   | - |   |   |   | (100 | ) |   |   | 100 | % |
| Gain on forgiveness of accrued interest                                                |   |                                | 92     |   |   |   | - |   |   |   | 92 |   |   |   | 100 | % |
| Interest expense                                                                       |   |                                | (205   | ) |   |   | (144 | ) |   |   | (61 | ) |   |   | 42 | % |
| Total other expense, net                                                               |   |                                | (213   | ) |   |   | (144 | ) |   |   | (69 | ) |   |   | 48 | % |
|                                                                                   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                                               |   | $                                   | (1,637 | ) |   | $ | (419 | ) |   | $ | (1,218 | ) |   |   | 291 | % |

----

----

----

|   | · | Digerati is the primary obligor in its arrangements, |
|--------|--------|------------------------------------------------------|

|   | · | Digerati has latitude in establishing pricing, |
|--------|--------|------------------------------------------------|

|   | · | Digerati changes the product or performs part of the service and is involved in the determination of the product or service specifications, |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Digerati has discretion in supplier selection; and |
|--------|--------|----------------------------------------------------|

|   | · | Digerati assumes credit risk for the amount billed to the customer |
|--------|--------|--------------------------------------------------------------------|

|                            |   | For the Years Ended July 31, |           |
|---------------------------------|--------|-------------------------------------------------------|----------------|
|                            |   | 2011                                                  |           |   | 2010 |   |
| Expected dividends yield        |   |                                                  | 0.00           | % |   |   | 0.00 | % |
| Expected stock price volatility |   |                                                  | 218.67%-223.86 | % |   |   | 0.00 | % |
| Risk-free interest rate         |   |                                                  | 2.04%-3.12     | % |   |   | 0.00 | % |
| Expected life of options        |   | 3.5-4.75 years                                        |           |   |   | N/A |   |

| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
|----------|-------------------------------------------------------------|

----

| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
|---------|---------------------------------------------|

|                                                                              | Page                                                                                                                             |
|-----------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|
|                                                                              |                                                                                                                             |
| Consolidated Financial Statements of Digerati Technologies, Inc. and Subsidiaries |                                                                                                                             |
|                                                                              |                                                                                                                             |   |
|                                                                              | Report of Independent Registered Public Accounting Firm                                                                          | 19 |
|                                                                              | Consolidated Balance Sheets as of July 31, 2011 and 2010                                                                         | 20 |
|                                                                              | Consolidated Statements of Operations for the Years Ended July 31, 2011 and 2010                                                 | 21 |
|                                                                              | Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for  the Years Ended July 31, 2011 and 2010 | 22 |
|                                                                              | Consolidated Statements of Cash Flows for the Years Ended July 31, 2011 and 2010                                                 | 23 |
|                                                                              | Notes to Consolidated Financial Statements                                                                                       | 24 |

----

| /s/ MALONEBAILEY, LLP |
|-----------------------|
| www.malonebailey.com  |
| Houston, Texas        |
|                  |
| October 31, 2011      |

----

|                                                                                            |   | July 31, |    |   | July 31, |   |
|-------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|---------------|--------|
|                                                                                            |   | 2011          |    |   | 2010          |   |
|                                                                                            |   |          |    |   |          |   |
| ASSETS                                                                                          |   |          |    |   |          |   |
| CURRENT ASSETS:                                                                                 |   |          |    |   |          |   |
| Cash and cash equivalents                                                                       |   | $             | 60      |   |          | $      | 73 |   |
| Accounts receivable, net of allowance for bad debt of $0 and $10, respectively                  |   |          | 562     |   |          |   | 526 |   |
| Prepaid and other current assets                                                                |   |          | 68      |   |          |   | 48 |   |
| Total current assets                                                                            |   |          | 690     |   |          |   | 647 |   |
|                                                                                            |   |          |    |   |          |   |   |   |
| LONG-TERM ASSETS:                                                                               |   |          |    |   |          |   |   |   |
| Deferred financing fees                                                                         |   |          | 34      |   |          |   | - |   |
| Intangible assets, net of accumulated amortization of $46 and $31, respectively                 |   |          | 104     |   |          |   | 119 |   |
|                                                                                            |   |          |    |   |          |   |   |   |
| Property and equipment                                                                          |   |          | 877     |   |          |   | 856 |   |
| Less - accumulated depreciation                                                                 |   |          | (812    | )      |          |   | (727 | ) |
| Net property and equipment                                                                      |   |          | 65      |   |          |   | 129 |   |
|                                                                                            |   |          |    |   |          |   |   |   |
| Total assets                                                                                    |   | $             | 893     |   |          | $      | 895 |   |
|                                                                                            |   |          |    |   |          |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                           |   |          |    |   |          |   |   |   |
| CURRENT LIABILITIES:                                                                            |   |          |    |   |          |   |   |   |
| Accounts payable                                                                                |   | $             | 841     |   |          | $      | 637 |   |
| Accrued liabilities                                                                             |   |          | 143     |   |          |   | 106 |   |
| Current portion of long term debt, net of unamortized discount of $0                            |   |          | 794     |   |          |   | 409 |   |
| Derivative liability                                                                            |   |          | 10      |   |          |   | 85 |   |
| Total current liabilities                                                                       |   |          | 1,788   |   |          |   | 1,237 |   |
|                                                                                            |   |          |    |   |          |   |   |   |
| LONG-TERM LIABILITIES:                                                                          |   |          |    |   |          |   |   |   |
| Long term debt, net of current portion                                                          |   |          | 647     |   |          |   | 639 |   |
| Customer deposits                                                                               |   |          | 125     |   |          |   | 16 |   |
| Total long-term liabilities                                                                     |   |          | 772     |   |          |   | 655 |   |
|                                                                                            |   |          |    |   |          |   |   |   |
| Total liabilities                                                                               |   |          | 2,560   |   |          |   | 1,892 |   |
|                                                                                            |   |          |    |   |          |   |   |   |
| STOCKHOLDERS' DEFICIT:                                                                          |   |          |    |   |          |   |   |   |
| Preferred stock, 16,063,000 shares authorized, none issued and outstanding                      |   |          | -       |   |          |   | - |   |
| Common stock, $0.001 par value, 150,000,000 shares authorized, 65,882,410 and 45,504,120 shares |   |          |    |   |          |   |   |   |
| issued and outstanding, respectively                                                            |   |          | 66      |   |          |   | 46 |   |
| Additional paid in capital                                                                      |   |          | 74,223  |   |          |   | 73,276 |   |
| Accumulated deficit                                                                             |   |          | (75,957 | )      |          |   | (74,320 | ) |
| Other comprehensive income                                                                      |   |          | 1       |   |          |   | 1 |   |
| Total stockholders' deficit                                                                     |   |          | (1,667  | )      |          |   | (997 | ) |
| Total liabilities and stockholders' deficit                                                     |   | $             | 893     |   |          | $      | 895 |   |

----

|                                                                                   |   | Years ended July 31, |       |
|----------------------------------------------------------------------------------------|--------|-------------------------------------|------------|
|                                                                                   |   | 2011                                |       |   | 2010 |   |
| OPERATING REVENUES:                                                                    |   |                                |       |   |   |   |
| Global VoIP services                                                                   |   | $                                   | 14,970     |   |   | $ | 20,873 |   |
| Cloud-based hosted services                                                            |   |                                | 257        |   |   |   | 66 |   |
|                                                                                   |   |                                |       |   |   |   |   |   |
| Total operating revenues                                                               |   |                                | 15,227     |   |   |   | 20,939 |   |
|                                                                                   |   |                                |       |   |   |   |   |   |
| OPERATING EXPENSES:                                                                    |   |                                |       |   |   |   |   |   |
| Cost of services (exclusive of depreciation and amortization)                          |   |                                | 14,061     |   |   |   | 19,379 |   |
| Selling, general and administrative expense (exclusive of legal and professional fees) |   |                                | 2,146      |   |   |   | 1,398 |   |
| Legal and professional fees                                                            |   |                                | 304        |   |   |   | 272 |   |
| Bad debt                                                                               |   |                                | 40         |   |   |   | - |   |
| Depreciation and amortization expense                                                  |   |                                | 100        |   |   |   | 165 |   |
| Total operating expenses                                                               |   |                                | 16,651     |   |   |   | 21,214 |   |
|                                                                                   |   |                                |       |   |   |   |   |   |
| OPERATING INCOME (LOSS)                                                                |   |                                | (1,424     | ) |   |   | (275 | ) |
|                                                                                   |   |                                |       |   |   |   |   |   |
| OTHER INCOME (EXPENSE):                                                                |   |                                |       |   |   |   |   |   |
| Loss on debt extinguishment                                                            |   |                                | (100       | ) |   |   | - |   |
| Gain on forgiveness of accrued interest                                                |   |                                | 92         |   |   |   | - |   |
| Interest expense                                                                       |   |                                | (205       | ) |   |   | (144 | ) |
| Total other expense                                                                    |   |                                | (213       | ) |   |   | (144 | ) |
|                                                                                   |   |                                |       |   |   |   |   |   |
| NET LOSS                                                                               |   | $                                   | (1,637     | ) |   | $ | (419 | ) |
|                                                                                   |   |                                |       |   |   |   |   |   |
| LOSS PER SHARE - BASIC AND DILUTED                                                     |   | $                                   | (0.03      | ) |   | $ | (0.01 | ) |
|                                                                                   |   |                                |       |   |   |   |   |   |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED                         |   |                                | 57,934,037 |   |   |   | 45,504,120 |   |

----

|                                |   |   |       |   | Additional |   |   |        |   |   | Other         |   |   |   |    |
|-------------------------------------|--------|--------|------------|--------|------------|--------|--------|-------------|--------|--------|---------------|--------|--------|--------|---------|
|                                |   | Common |       |   | Paid-in    |   |   | Accumulated |   |   | Comprehensive |   |   |   |    |
|                                |   | Shares |       |   | Par        |   |   | Capital     |   |   | Deficit       |   |   | Income |    |   | Totals |   |
| BALANCE, July 31, 2009              |   |   | 45,504,120 |   |       | $      | 46     |        |   | $      | 73,253        |   |   | $      | (73,901 | ) |   | $ | 1 |   |   | $ | (601 | ) |
| Stock option expense                |   |   | -          |   |       |   | -      |        |   |   | 23            |   |   |   | -       |   |   |   | - |   |   |   | 23 |   |
| Net loss                            |   |   | -          |   |       |   | -      |        |   |   | -             |   |   |   | (419    | ) |   |   | - |   |   |   | (419 | ) |
| BALANCE, July 31, 2010              |   |   | 45,504,120 |   |       | $      | 46     |        |   | $      | 73,276        |   |   | $      | (74,320 | ) |   | $ | 1 |   |   | $ | (997 | ) |
| Stock option expense                |   |   | -          |   |       |   | -      |        |   |   | 197           |   |   |   | -       |   |   |   | - |   |   |   | 197 |   |
| Stock issued for settlement of debt |   |   | 5,000,000  |   |       |   | 5      |        |   |   | 195           |   |   |   | -       |   |   |   | - |   |   |   | 200 |   |
| Stock issued for services           |   |   | 15,378,290 |   |       |   | 15     |        |   |   | 555           |   |   |   | -       |   |   |   | - |   |   |   | 570 |   |
| Net loss                            |   |   | -          |   |       |   | -      |        |   |   | -             |   |   |   | (1,637  | ) |   |   | - |   |   |   | (1,637 | ) |
| BALANCE, July 31, 2011         |   |   | 65,882,410 |   |       | $      | 66     |        |   | $      | 74,223        |   |   | $      | (75,957 | ) |   | $ | 1 |   |   | $ | (1,667 | ) |

----

|                                                                    |   | Years ended July 31, |   |
|-------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                    |   | 2011                                |   |   | 2010 |   |
|                                                                    |   |                                |   |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                   |   |                                |   |   |   |   |
| Net loss                                                                |   | $                                   | (1,637 | ) |   | $ | (419 | ) |
| Adjustments to reconcile net loss to cash used in operating activities: |   |                                |   |   |   |   |   |   |
| Loss on debt extinguishment                                             |   |                                | 100    |   |   |   | - |   |
| Gain on forgiveness of accrued interest                                 |   |                                | (92    | ) |   |   | - |   |
| Depreciation and amortization                                           |   |                                | 100    |   |   |   | 165 |   |
| Write-off accounts receivables                                          |   |                                | 40     |   |   |   | - |   |
| Amortization of deferred financing fees                                 |   |                                | 36     |   |   |   | - |   |
| Issuance of stock grants and options for services                       |   |                                | 767    |   |   |   | 23 |   |
| Amortization of debt discount                                           |   |                                | 1      |   |   |   | 32 |   |
| Changes in operating assets and liabilities:                            |   |                                |   |   |   |   |   |   |
| Accounts receivable                                                     |   |                                | (77    | ) |   |   | (189 | ) |
| Prepaid expenses and other current assets                               |   |                                | (17    | ) |   |   | 29 |   |
| Accounts payable                                                        |   |                                | 204    |   |   |   | 52 |   |
| Accrued liabilities                                                     |   |                                | 64     |   |   |   | 6 |   |
| Customer deposits                                                       |   |                                | 109    |   |   |   | - |   |
| Net cash used in operating activities                                   |   |                                | (402   | ) |   |   | (301 | ) |
|                                                                    |   |                                |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                   |   |                                |   |   |   |   |   |   |
| Investment in certificates of deposit                                   |   |                                | -      |   |   |   | 325 |   |
| Purchases of property & equipment                                   |   |                                | (21    | ) |   |   | (62 | ) |
| Net cash (used in) provided by investing activities                     |   |                                | (21    | ) |   |   | 263 |   |
|                                                                    |   |                                |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                   |   |                                |   |   |   |   |   |   |
| Payment of deferred financing fees                                      |   |                                | (73    | ) |   |   | - |   |
| Payments on debt                                                        |   |                                | (539   | ) |   |   | (775 | ) |
| Proceeds from debt                                                      |   |                                | 1,097  |   |   |   | 250 |   |
| Acquisition of put option on warrants                                   |   |                                | (75    | ) |   |   | - |   |
| Principal payments on capital lease obligation                          |   |                                | -      |   |   |   | (1 | ) |
| Net cash provided by (used in) financing activities                     |   |                                | 410    |   |   |   | (526 | ) |
|                                                                    |   |                                |   |   |   |   |   |   |
| DECREASE IN CASH AND CASH EQUIVALENTS                                   |   |                                | (13    | ) |   |   | (564 | ) |
| CASH AND CASH EQUIVALENTS, beginning of period                          |   |                                | 73     |   |   |   | 637 |   |
|                                                                    |   |                                |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, end of period                                |   | $                                   | 60     |   |   | $ | 73 |   |
|                                                                    |   |                                |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES:                                               |   |                                |   |   |   |   |   |   |
| Cash paid for interest                                                  |   | $                                   | 152    |   |   | $ | 86 |   |
|                                                                    |   |                                |   |   |   |   |   |   |
| NON-CASH INVESTING AND FINANCING TRANSACTIONS                           |   |                                |   |   |   |   |   |   |
| Stock issued for settlement of debt                                     |   | $                                   | 200    |   |   | $ | - |   |

----

|   | · | Digerati is the primary obligor in its arrangements, |
|--------|--------|------------------------------------------------------|

|   | · | Digerati has latitude in establishing pricing, |
|--------|--------|------------------------------------------------|

|   | · | Digerati changes the product or performs part of the service and is involved in the determination of the product or service specifications, |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Digerati has discretion in supplier selection and |
|--------|--------|---------------------------------------------------|

|   | · | Digerati assumes credit risk for the amount billed to the customer. |
|--------|--------|---------------------------------------------------------------------|

----

----

----

| Balance at July 31, 2010           |   | $      | 85,000  |   |
|------------------------------------|--------|--------|---------|--------|
| Settlement of derivative liability |   |   | (75,000 | )      |
| Balance at July 31, 2011           |   | $      | 10,000  |   |

----

|                             | Useful lives |   | 2011   |   |   | 2010   |   |
|----------------------------------|--------------|--------|--------|--------|--------|--------|--------|
| Telecom equipment & software | 1-5 years    |   | $      | 877    |   |   | $      | 856 |   |
| Less: accumulated depreciation   |         |   |   | (812   | )      |   |   | (727 | ) |
| Net–property and equipment |         |   | $      | 65     |   |   | $      | 129 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | July 31, |   |   | July 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2011     |   |   | 2010     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |
| Note payable to Alfonso Torres, payable upon maturity, bearing interest of 6.00% per annum, maturing July 31, 2012, unsecured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $        | 370    |   |     | $      | 537 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to ATVF, Scott Crist, Roderick Ciaccio & Vencore Solutions, payable in monthly installments, bearing interest at 10.00% per annum, matured on September 10, 2010, collateralized by Digerat's accounts receivables (other than accounts factored with Wells Fargo), $100,000 certificate of deposit with Wells Fargo and Digerati's ownership in ATSICOM. Additionally, issued 425,000 warrants to the note holders, at an exercise price per warrant of $0.19. The warrants have the following “Put” and “Call” rights: Put right. From and after the second anniversary of the notes payable, the holder shall have the right to request from Digerati, upon five (5) business days prior notice, to acquire from the holders the warrants at a price $0.39 per warrant. Call right. At any time any warrants are outstanding, if the last sale price of Digerati's common stock is greater than $.80 per share for ten (10) consecutive trading days, Digerati shall be entitled to require the purchaser to exercise the warrants and pay the exercise price upon five (5) business days written notice. Net of unamortized discount of $0 and $1, respectively |   |     | -      |   |     |   | 133 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to San Antonio National Bank payable in monthly installments, bearing interest at 8.00% per annum, maturing October 25, 2011, collateralized by Digerati's assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |     | 39     |   |     |   | 189 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to ATV Texas Ventures payable in monthly installments, bearing interest at 12.00% per annum, maturing November 10, 2011, collateralized by Digerati's assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |     | 18     |   |     |   | 69 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to ATV Texas Ventures payable in monthly installments, bearing interest at 12.00% per annum, maturing January 10, 2012, collateralized by Digerati's assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     | 27     |   |     |   | 77 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to ATV Texas Ventures payable in monthly installments, bearing interest at 12.00% per annum, maturing March 10, 2012, collateralized by Digerati's assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |     | 18     |   |     |   | 43 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to ATV Texas Ventures IV payable in monthly installments, bearing interest at 12.00% per annum, maturing October 10, 2012, collateralized by Digerati's assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |     | 131    |   |     |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to Recap Marketing & Consulting LLP, bearing interest at 3% per annum, maturing October 1, 2010. If the note is not extinguished by the maturity date, the note may be converted to Digerati's common stock at a rate per share mutually agreeable by the parties, however, if converted; the company will issue no more than 1,666,666 common shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |     | 20     |   |     |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to ATVF II payable in monthly installments, bearing interest at 12% for the first year and 18% during the second year, maturing January 10, 2013, collateralized by Digerati's assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |     | 154    |   |     |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |     |   |   |     |   |   |   |
| Note payable to ATVF II payable in monthly installments, bearing interest at 16% for the first year and 18% during the second year, maturing May 10, 2013, collateralized by Digerati's assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |     | 187    |   |     |   | - |   |

----

| Note payable to Thermo Credit, LLC., interest payment for the first twenty-three months with a balloon payment on the twenty-fourth month, maturing August 2, 2012, collateralized by Digerati's accounts receivable. Bearing an annual interest rate equivalent to the lesser of the maximum rate and the greater of the prime rate plus 8.25% and 11.5%, a commitment fee of 2% and weekly monitoring fee of .05%. Digerati is required to maintain the following financial covenants: 1) A consolidated debt service coverage ratio, for the 12-month period, of not less than 1.0 as of the last day of each quarter and 2) A consolidated operating income, for the 12-month period, of not less than zero as of the last day of each fiscal year |   |   | 477    |   |   |           | -      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|----------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |           |   |   |
| Total outstanding long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 1,441  |   |   |           | 1,048  |   |
| Current portion of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | (794   | )      |   |           | (409   | )      |
| Long-term debt, net of current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $      | 647    |   |   | $              | 639    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |           |   |   |
| Payments on long-term debt of Digerati are due as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |           |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   | (in thousands) |   |
| Fiscal 2012                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |           | 794    |   |
| Fiscal 2013                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |           | 647    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |           |   |   |
| Total payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   | $              | 1,441  |   |

----

|                          |   | 2011   |       |   | 2010   |   |
|-------------------------------|--------|--------|------------|--------|--------|--------|
| Net operating loss carryover  |   | $      | 6,777,000  |   |   | $      | 6,479,000 |   |
| Valuation allowance           |   |   | (6,777,000 | )      |   |   | (6,479,000 | ) |
| Total deferred tax asset, net |   | $      | -          |   |   | $      | - |   |

|   | - | 1,333,333 common shares to its directors for services rendered. The Company recognized stock-based compensation expense of $40,000 equivalent to the value of the shares calculated based on the share’s closing price at the grant date. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | 888,888 common shares to its directors for services rendered. The Company recognized stock-based compensation expense of $40,000 equivalent to the value of the shares calculated based on the share’s closing price at the grant date. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | 2,350,000 common shares to consultants for services. The Company recognized stock-based compensation expense of $94,000 equivalent to the value of the shares calculated based on the share’s closing price at the date of issuance. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | 300,000 common shares to a consultant for services. The Company recognized stock-based compensation expense of $15,000 equivalent to the value of the shares calculated based on the share’s closing price at the date of issuance. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | - | 10,506,069 common shares to various employees as part of the Company’s profit sharing plan contribution.  The Company recognized stock-based compensation expense of $380,162 equivalent to the value of the shares calculated based on the share’s closing price at the grant dates. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | extended the term of 7,359,000 existing options to July 31, 2015 and recognized incremental compensation expense of $34,501. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------|

|   | - | 1,785,000 options to purchase common shares to various employees with exercise prices ranging from $0.03 to $0.05 per share and a term of 7 years. The options vest equally over a period of three years.  The options have a fair market value of $96,867. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | 3,150,000 options to purchase common shares to various employees with an exercise price of $0.045 per share and a term of 7 years. The options vested upon issuance.  The Company recognized stock-based compensation expense of $136,742 equivalent to the fair market value of the options granted. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Expected dividend yield         |   | 0.00%             |
|---------------------------------|--------|-------------------|
| Expected stock price volatility |   | 218.67% - 223.86% |
| Risk-free interest rate         |   | 2.04% - 3.12%     |
| Expected term                   |   | 3.5 - 4.75 years  |

|                         |   |    |       |   | Weighted-average    |   |   | Weighted-average                 |   |
|------------------------------|--------|---------|------------|--------|---------------------|--------|--------|----------------------------------|--------|
|                         |   | Options |       |   | exercise price |   |   | remaining term (years) |   |
|                         |   |    |       |   |                |   |   |                             |   |
| Outstanding at July 31, 2009 |   |    | 8,274,000  |   |                | $      | 0.04   |                             |   |   | 7.0 |   |
| Granted                      |   |    | -          |   |                |   | -      |                             |   |   | - |   |
| Forfeited                    |   |    | (780,000   | )      |                |   | 0.04   |                             |   |   | 4.0 |   |
| Outstanding at July 31, 2010 |   |    | 7,494,000  |   |                |   | 0.04   |                             |   |   | 5.0 |   |
| Granted                      |   |    | 4,935,000  |   |                |   | 0.05   |                             |   |   | 7.0 |   |
| Forfeited                    |   |    | (930,000   | )      |                |   | 0.06   |                             |   |   | 6.9 |   |
| Outstanding at July 31, 2011 |   |    | 11,499,000 |   |                |   | 0.04   |                             |   |   | 4.9 |   |
| Exercisable at July 31, 2011 |   |    | 10,464,000 |   |                |   | 0.04   |                             |   |   | 4.8 |   |

----

|                         |   |     |     |   |                |   |   | Weighted-average           |   |
|------------------------------|--------|----------|----------|--------|---------------------|--------|--------|----------------------------|--------|
|                         |   |     |     |   | Weighted-average    |   |   | remaining contractual |   |
|                         |   | Warrants |     |   | exercise price |   |   | term (years)          |   |
|                         |   |     |     |   |                |   |   |                       |   |
| Outstanding at July 31, 2009 |   |     | 800,000  |   |                | $      | 0.19   |                       |   |   | 5.5 |   |
| Granted                      |   |     | -        |   |                |   | -      |                       |   |   | - |   |
| Exercised                    |   |     | -        |   |                |   | -      |                       |   |   | - |   |
| Forfeited and cancelled      |   |     | -        |   |                |   | -      |                       |   |   | - |   |
| Outstanding at July 31, 2010 |   |     | 800,000  |   |                |   | 0.19   |                       |   |   | 4.5 |   |
| Granted                      |   |     | -        |   |                |   | -      |                       |   |   | - |   |
| Exercised                    |   |     | -        |   |                |   | -      |                       |   |   | - |   |
| Forfeited and cancelled      |   |     | (375,000 | )      |                |   | 0.19   |                       |   |   | 4.5 |   |
| Outstanding at July 31, 2011 |   |     | 425,000  |   |                |   | 0.18   |                       |   |   | 3.5 |   |
| Exercisable at July 31, 2011 |   |     | 425,000  |   |                |   | 0.18   |                       |   |   | 3.5 |   |

----

|  ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
|---------------|---------------------------------------------------------------------------------------|

| ITEM 9A.  | CONTROLS AND PROCEDURES. |
|---------------------|--------------------------|

| ITEM 9B.  | OTHER INFORMATION. |
|---------------------|--------------------|

----

| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
|----------|---------------------------------------------------------|

| Name                |         | Age |         | Position Held                                     |         | Held Office Since |
|---------------------|--------------|-----|--------------|--------------------------------------------------------|--------------|-----------------------------|
| Arthur L. Smith     |         | 46  |         | President, Chief Executive Officer and Director        |         | 2003                        |
| Ruben R. Caraveo    |         | 43  |         | Sr. Vice President, Operations and Technology          |         | 2006                        |
| Antonio Estrada Jr. |         | 36  |         | Sr. Vice President, Finance & Corporate Controller |         | 2007                        |
| John R. Fleming     |         | 57  |         | Director, Interim Executive Chairman of the Board      |         | 2002                        |
| Murray R. Nye       |    | 57  |    | Director                                               |    | 1996                        |

----

|   | · | The name of the stockholder and evidence of ownership of our shares, including the number of shares owned and the length of time of ownership; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The name of the candidate, the candidate’s resume or a listing of her or his qualifications to be one of our Directors and the person’s consent to be named as a Director if nominated by the Directors. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 11.  | EXECUTIVE COMPENSATION. |
|---------------------|-------------------------|

|   | · | Offer compensation opportunities that attract highly qualified executives, reward outstanding initiative and achievement, and retain the leadership and skills necessary to build long-term stockholder value; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Emphasize pay-for-performance by maintaining a portion of executives’ total compensation at risk, tied to both our annual and long-term financial performance and the creation of stockholder value; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Further our short and long-term strategic goals and values by aligning executive officer compensation with business objectives and individual performance. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Base salary; |
|--------|--------|--------------|

|   | · | Annual performance-based cash bonus; |
|--------|--------|--------------------------------------|

|   | · | Long-term incentives in the form of stock options; and |
|--------|--------|--------------------------------------------------------|

|   | · | Benefits that are offered to executives on the same basis as our non-executive employees. |
|--------|--------|-------------------------------------------------------------------------------------------|

----

|   | · | Existing salary levels; |
|--------|--------|-------------------------|

|   | · | Competitive pay practices; |
|--------|--------|----------------------------|

|   | · | Individual and corporate performance; and |
|--------|--------|-------------------------------------------|

|   | · | Internal equity among our executives, taking into consideration their relative contributions to our success. |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

| Name           |   | Title                                      |   | Bonus |   |
|---------------------|--------|-------------------------------------------------|--------|-------|--------|
| Arthur L. Smith     |   | President, Chief Executive Officer and Director |   | $     | 82,500 |   |
| Ruben R. Caraveo    |   | Sr. Vice President, Operations and Technology   |   | $     | 74,250 |   |
| Antonio Estrada Jr. |   | Sr. Vice President & Corporate Controller   |   | $     | 60,500 |   |

----

| Name and PrincipalPosition               |   | Year   |   | Salary($) |    |   | Bonus (1)($) |   |   | StockAwards ($) |   |   | OptionAwards ($)(2) |   |   | All OtherCompensation (3)($) |   |   | Total($) |   |
|----------------------------------------------------|--------|--------|--------|-----------|---------|--------|-------------------|--------|--------|----------------------|--------|--------|--------------------------|--------|--------|----------------------------------------|--------|--------|----------|--------|
|                                               |   |   |   |      |    |   |              |   |   |                 |   |   |                     |   |   |                                   |   |   |     |   |
| Arthur L. Smith                                    |   | 2011   |   | $         | 165,000 |   |              | $      | 20,059 |                 |   | $      | -0-                      |   |   | $                                      | 28,217 |   |     | $      | 92,000 |   |   | $ | 305,276 |   |
| CEO & President                                |   | 2010   |   | $         | 165,000 |   |              | $      | 31,908 |                 |   | $      | -0-                      |   |   | $                                      | -0-    |   |     | $      | -0- |   |   | $ | 196,908 |   |
|                                               |   |   |   |      |    |   |              |   |   |                 |   |   |                     |   |   |                                   |   |   |     |   |   |   |   |   |   |   |
| Ruben R. Caraveo                                   |   | 2011   |   | $         | 148,500 |   |              | $      | 8,173  |                 |   | $      | -0-                      |   |   | $                                      | 28,217 |   |     | $      | 89,705 |   |   | $ | 274,595 |   |
| Senior Vice President of Operations and Technology |   | 2010   |   | $         | 148,500 |   |              | $      | 29,511 |                 |   | $      | -0-                      |   |   | $                                      | -0-    |   |     | $      | -0- |   |   | $ | 178,011 |   |
|                                               |   |   |   |      |    |   |              |   |   |                 |   |   |                     |   |   |                                   |   |   |     |   |   |   |   |   |   |   |
| Antonio Estrada Jr.                                |   | 2011   |   | $         | 121,000 |   |              | $      | 24,479 |                 |   | $      | -0-                      |   |   | $                                      | 28,217 |   |     | $      | 81,846 |   |   | $ | 255,542 |   |
| Senior Vice President of                           |   | 2010   |   | $         | 121,000 |   |              | $      | 27,858 |                 |   | $      | -0-                      |   |   | $                                      | -0-    |   |     | $      | -0- |   |   | $ | 148,858 |   |
| Finance & Corporate Controller                 |   |   |   |      |    |   |              |   |   |                 |   |   |                     |   |   |                                   |   |   |     |   |   |   |   |   |   |   |

|   | (1) | Bonus amounts paid during fiscal 2011 were paid for achieving monthly margin requirements as stipulated in the annual compensation plan and closing of financings for FY2011. Bonus amounts during fiscal 2010 were paid for achieving monthly margin requirements as stipulated in the annual compensation plan. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | A description of the assumptions made in valuation of options granted can be found in Note 9 to the Financial Statements, which is deemed to be a part of this Item. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | All other compensation consists of contributions to the Non-Standardized Profit Sharing Plan. |
|--------|-----|-----------------------------------------------------------------------------------------------|

----

| Name                 |   | Grant Date |   | Number of Sharesof Stock or Units(#) |      |   | Number ofSecuritiesUnderlyingOptions(#) |   |      | Exerciseor BasePrice ofOptionAwards($/Sh) |   |   | Grant DateFair Value ofStock andOptionAwards |   |
|----------------------|--------|-----------------|--------|---------------------------------------------------------------|-----------|--------|----------------------------------------------|--------|-----------|-----------------------------------------------------|--------|--------|------------------------------------------------------------------|--------|
|                 |   |            |   |                                                          |      |   |                                         |   |      |                                                |   |   |                                                             |   |
| Arthur L. Smith      |   | 7/16/2009       |   |                                                          | 885,737   | (1)    |                                         |   | 1,695,000 | (2)                                                 |   | $      | 0.040                                                            |   |   | $ | 103,230 |   |
|                 |   | 9/20/2010       |   |                                                          | 1,533,333 | (1)    |                                         |   | -0-       |                                                |   | $      | 0.030                                                            |   |   | $ | 46,000 |   |
|                 |   | 2/1/2011        |   |                                                          | 1,022,222 | (1)    |                                         |   | 650,000   | (3)                                                 |   | $      | 0.045                                                            |   |   | $ | 75,250 |   |
|                 |   |            |   |                                                          |      |   |                                         |   |      |                                                |   |   |                                                             |   |   |   |   |   |
| Ruben R. Caraveo     |   | 7/16/2009       |   |                                                          | 979,130   | (1)    |                                         |   | 1,475,000 | (2)                                                 |   | $      | 0.040                                                            |   |   | $ | 98,165 |   |
|                 |   | 9/20/2010       |   |                                                          | 1,533,333 | (1)    |                                         |   | -0-       |                                                |   | $      | 0.030                                                            |   |   | $ | 46,000 |   |
|                 |   | 2/1/2011        |   |                                                          | 971,231   | (1)    |                                         |   | 650,000   | (3)                                                 |   | $      | 0.045                                                            |   |   | $ | 72,955 |   |
|                 |   |            |   |                                                          |      |   |                                         |   |      |                                                |   |   |                                                             |   |   |   |   |   |
| Antonio Estrada, Jr. |   | 7/16/2009       |   |                                                          | 1,150,000 | (1)    |                                         |   | 1,447,000 | (2)                                                 |   | $      | 0.040                                                            |   |   | $ | 103,880 |   |
|                 |   | 9/20/2010       |   |                                                          | 1,533,333 | (1)    |                                         |   | -0-       |                                                |   | $      | 0.030                                                            |   |   | $ | 46,000 |   |
|                 |   | 2/1/2011        |   |                                                          | 796,568   | (1)    |                                         |   | 650,000   | (3)                                                 |   | $      | 0.045                                                            |   |   | $ | 65,096 |   |

|   | (1) | Contributions to the Non-Standardized Profit Sharing Plan during for FY2008, FY2009 and FY2010 |
|--------|-----|------------------------------------------------------------------------------------------------|

|   | (2) | This represents the re-pricing of previously issued stock options.  A description of the assumptions made in valuation of options granted can be found in Note 8 to the Financial Statements, which is deemed to be a part of this Item. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Issuance of stock options, a description of the assumptions made in valuation of options granted can be found in Note 9 to the Financial Statements, which is deemed to be a part of this Item. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                |   | Option Awards                                                 |    | Stock Awards |                                                                 |
|---------------------|--------|--------------------------------------------------------------------|---------|-------------------|----------------------------------------------------------------------|
| Name                |   | Number ofSecuritiesUnderlyingUnexercisedOptions(#)Exercisable |    |              | Number ofSecuritiesUnderlyingUnexercisedOptions(#)Unexercisable |   |   | OptionExercisePrice($) |   | OptionExpirationDate |   | Number ofShares orUnits ofStock ThatHave NotVested(#) |   |   | MarketValue ofShares orUnits ofStock ThatHave NotVested($) |   |
|                |   |                                                               |    |              |                                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Arthur L. Smith     |   |                                                               | 420,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 9/29/2015 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 525,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 10/3/2015 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 300,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 9/25/2016 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 450,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 8/15/2017 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 650,000 |              |                                                                 |   | - |   |   | $ | 0.045 |   | 2/1/2018 |   |   | - |   |   |   | - |   |
| Ruben R. Caraveo    |   |                                                               | 375,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 9/29/2015 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 475,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 10/3/2015 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 250,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 9/25/2016 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 375,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 8/15/2017 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 650,000 |              |                                                                 |   | - |   |   | $ | 0.045 |   | 2/1/2018 |   |   | - |   |   |   | - |   |
| Antonio Estrada Jr. |   |                                                               | 347,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 9/29/2015 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 475,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 10/3/2015 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 250,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 9/25/2016 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 375,000 |              |                                                                 |   | - |   |   | $ | 0.040 |   | 8/15/2017 |   |   | - |   |   |   | - |   |
|                |   |                                                               | 650,000 |              |                                                                 |   | - |   |   | $ | 0.045 |   | 2/1/2018 |   |   | - |   |   |   | - |   |

----

| Name                 |   | ExecutiveContribution inLast FY($) |   |   | RegistrantContributionfor FY2009 &FY2010($)(1) |   |   | AggregateEarnings in LastFY($) |   |   | AggregateWithdrawals/Distributions($) |   |   | AggregateBalance at LastFYE($)(2) |   |
|----------------------|--------|----------------------------------------------|--------|--------|--------------------------------------------------------------|--------|--------|------------------------------------------|--------|--------|---------------------------------------|--------|--------|---------------------------------------------|--------|
|                 |   |                                         |   |   |                                                         |   |   |                                     |   |   |                                  |   |   |                                        |   |
| Arthur L. Smith      |   | $                                            | -0-    |   |                                                         | $      | 92,000 |                                     |   | $      | -0-                                   |   |   | $                                           | -0-    |   |   | $ | 92,000 |   |
| Ruben R. Caraveo     |   | $                                            | -0-    |   |                                                         | $      | 89,705 |                                     |   | $      | -0-                                   |   |   | $                                           | -0-    |   |   | $ | 89,705 |   |
| Antonio Estrada, Jr. |   | $                                            | -0-    |   |                                                         | $      | 81,846 |                                     |   | $      | -0-                                   |   |   | $                                           | -0-    |   |   | $ | 81,846 |   |

|   | (1) | All amounts reported in this column are included as Other Compensation for fiscal 2011 in the Summary Compensation Table. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------|

|   | (2) | All amounts reported in this column are included as Other Compensation for fiscal 2011 in the Summary Compensation Table. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------|

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
|----------|-------------------------------------------------------------------------------------------------|

----

| NAME OF                     |   | COMMON |       |   | % OF      |   |   | TOTAL VOTING |   |
|-----------------------------------------------------------|--------|--------|------------|--------|----------------|--------|--------|-------------------|--------|
| INDIVIDUAL OR GROUP                   |   | STOCK  |       |   | CLASS (1) |   |   | INTEREST          |   |
|                                            |   |   |       |   |           |   |   |              |   |
| INDIVIDUAL OFFICERS,                                      |   |   |       |   |           |   |   |              |   |
| DIRECTORS AND NOMINEES                                    |   |   |       |   |           |   |   |              |   |
|                                            |   |   |       |   |           |   |   |              |   |
| Arthur L. Smith                                 |   |   | 6,927,444  | (2)    |           |   | 9.2    | %                 |   |   | 6,927,444 | (2) |
| President, Chief Executive Officer                        |   |   |       |   |           |   |   |              |   |   |   |   |
| Director                                        |   |   |       |   |           |   |   |              |   |   |   |   |
|                                            |   |   |       |   |           |   |   |              |   |   |   |   |
| Ruben R. Caraveo                      |   |   | 6,138,843  | (3)    |           |   | 8.1    | %                 |   |   | 6,138,843 | (3) |
| Sr. Vice President, Sales and Operations                  |   |   |       |   |           |   |   |              |   |   |   |   |
|                                            |   |   |       |   |           |   |   |              |   |   |   |   |
| Antonio Estrada Jr.                                  |   |   | 6,149,729  | (4)    |           |   | 8.2    | %                 |   |   | 6,149,729 | (4) |
| Sr. VP of Finance & Corporate Controller              |   |   |       |   |           |   |   |              |   |   |   |   |
|                                            |   |   |       |   |           |   |   |              |   |   |   |   |
| John R. Fleming        |   |   | 3,836,201  | (5)    |           |   | 5.1    | %                 |   |   | 3,836,201 | (5) |
| Director                                        |   |   |       |   |           |   |   |              |   |   |   |   |
|                                            |   |   |       |   |           |   |   |              |   |   |   |   |
| Murray R. Nye               |   |   | 3,836,201  | (6)    |           |   | 5.1    | %                 |   |   | 3,836,201 | (6) |
| Director                                        |   |   |       |   |           |   |   |              |   |   |   |   |
|                                            |   |   |       |   |           |   |   |              |   |   |   |   |
| ALL OFFICERS AND                                |   |   |       |   |           |   |   |              |   |   |   |   |
| DIRECTORS AS A GROUP                                      |   |   | 26,888,418 | (7)    |           |   | 35.7   | %                 |   |   | 26,888,418 | (7) |

|   | (1) | Based upon 75,349,410 shares of common stock outstanding as of July 31, 2011.  Any shares represented by options exercisable within 60 days after July 31, 2011 are treated as being outstanding for the purpose of computing the percentage of the class for such person but not otherwise. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Includes 2,345,000 shares subject to options exercisable at July 31, 2011. |
|--------|-----|----------------------------------------------------------------------------|

|   | (3) | Includes 2,125,000 shares subject to options exercisable at July 31, 2011. |
|--------|-----|----------------------------------------------------------------------------|

|   | (4) | Includes 2,097,000 shares subject to options exercisable at July 31, 2011. |
|--------|-----|----------------------------------------------------------------------------|

|   | (5) | Includes 1,450,000 shares subject to options exercisable at July 31, 2011. |
|--------|-----|----------------------------------------------------------------------------|

|   | (6) | Includes 1,450,000 shares subject to options exercisable at July 31, 2011. |
|--------|-----|----------------------------------------------------------------------------|

|   | (7) | Includes 9,467,000 shares subject to options exercisable at July 31, 2011. |
|--------|-----|----------------------------------------------------------------------------|

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
|----------|----------------------------------------------------------------------------|

----

| ITEM 14.  | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
|---------------------|-----------------------------------------|

|                          |   | Year Ended July 31, |   |
|-------------------------------|--------|------------------------------------|--------|
| Description of Fees |   | 2011                               |   |   | 2010 |   |
|                          |   |                               |   |   |   |   |
| Audit Fees                    |   | $                                  | 46,650 |   |   | $ | 57,000 |   |
| Audit Related Fees            |   |                               | -0-    |   |   |   | -0- |   |
| Tax fees                      |   |                               | -0-    |   |   |   | -0- |   |
| All Other Fees                |   |                               | -0-    |   |   |   | -0- |   |

| ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
|----------|------------------------------------------|

|   | 2.1    | Plan and Agreement of Merger of ATSI Communications, Inc. with and into ATSI Merger Corporation, dated as of March 24, 2004. (Exhibit 2.1 to Form 8-K of ATSI filed on May 24, 2004)                                                   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                   |
|   | 3.1    | Articles of Incorporation of ATSI Merger Corporation. (Exhibit 3.1 to Form 8-K of ATSI filed on May 24, 2004)                                                                                                                          |
|   |   |                                                                                                                                                                                                                                   |
|   | 3.2    | Bylaws of ATSI Merger Corporation. (Exhibit 3.2 to Form 8-K of ATSI filed on May 24, 2004)                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                   |
|   | 3.3    | Articles of Merger of ATSI Communications, Inc. with and into ATSI Merger Corporation. (Exhibit 3.3 to Form 8-K of ATSI filed on May 24, 2004)                                                                                         |
|   |   |                                                                                                                                                                                                                                   |
|   | 4.1    | Promissory note payable to Alfonso Torres dated October 1, 2007 in the principal amount of $459,170. (Exhibit 10.4 to Form 10-QSB for the period ended October 31, 2006 filed December 1 4, 2007)                                      |
|   |   |                                                                                                                                                                                                                                   |
|   | 4.2    | Promissory Notes payable to several holders dated September 26, 2008 in the principal amount of $850,000. (Exhibit 4.6 to Form 10-KSB for the period ended July 31, 2008 filed October 29, 2008)                                       |
|   |   |                                                                                                                                                                                                                                   |
|   | 4.3    | Promissory note payable to San Antonio National Bank dated October 23, 2008 in the principal amount of $425,000. (Exhibit 10.1 to Form 10-KSB for the period ended October 31, 2008 filed December 15, 2008)                           |
|   |   |                                                                                                                                                                                                                                   |
|   | 4.4    | Promissory note payable and security agreement with ATV Texas Ventures III, LP. dated November 11, 2009 in the principal amount of $100,000. (Exhibit 10.1 to Form 10-K for the period ended October 31, 2009 filed December 12, 2009) |

----

|   | 4.5    | Promissory note payable and security agreement with ATV Texas Ventures III, LP. dated January 10, 2010 in the principal amount of $100,000. (Exhibit 10.1 to Form 10-K for the period ended January 31, 2010 filed March 12, 2010)       |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                     |
|   | 4.6    | Promissory note payable and security agreement with ATV Texas Ventures III, LP. dated March 16, 2010 in the principal amount of $50,000. (Exhibit 10.1 to Form 10-K for the period ended April 30, 2010 filed June 9, 2010)              |
|   |   |                                                                                                                                                                                                                                     |
|   | 4.7    | Loan and Security Agreement and Promissory Note dated August 2, 2010 between ATSI Communications, Inc. and Thermo Credit, LLC.  (Exhibits 4.1 and 4.2 to Form 8-K for ATSI filed August 19, 2010)                              |
|   |   |                                                                                                                                                                                                                                     |
|   | 4.8    | Securities Purchase Agreement dated October 11, 2011 between Digerati  Technologies, Inc. and Asher Enterprises, Inc. (Exhibits 4.8 Form 10-K for Digerati  filed October 31, 2011)                                  |
|   |   |                                                                                                                                                                                                                                     |
|   | 4.9    | Promissory Note dated October 11, 2011 between Digerati  Technologies, Inc. and Asher Enterprises, Inc. (Exhibits 4.9 Form 10-K for Digerati  filed October 31, 2011)                                                |
|   |   |                                                                                                                                                                                                                                     |
|   | 10.1   | Interconnection Agreement TELMEX and ATSICOM (English summary) (Exhibit 10.26 to Annual Report on Form 10-K for year ended July 31, 2003 filed November 12, 2003)                                                                        |
|   |   |                                                                                                                                                                                                                                     |
|   | 10.2   | Interconnection Agreement TELMEX and ATSICOM (English Translation) (Exhibit 10.27 to Amended Annual Report on Form 10-K/A for the year ended July 31, 2003 filed March 2, 2004)                                                          |
|   |   |                                                                                                                                                                                                                                     |
|   | 10.3   | Settlement Agreement dated December 10, 2007 between ATSI Communications, Inc. and The Shaar Fund, Inc. (Exhibit 10.3 to Form 10-QSB for the period ended October 31, 2006 filed December 1 4, 2007)                                     |
|   |   |                                                                                                                                                                                                                                     |
|   | 10.4   | Confidential Settlement Agreement dated August 27, 2007 between ATSI Communications, Inc. and RGC International Investors, LDC. (Exhibit 10.7 to Annual Report on Form 10-KSB for the period ended July 31, 2007 filed October 17, 2007) |
|   |   |                                                                                                                                                                                                                                     |
|   | 10.5   | Settlement Agreement dated October 20, 2008 between ATSI Communications, Inc. and the 9% Convertible Debenture holders. (Exhibit 10.4 to Form 10-KSB for the period ended October 31, 2008 filed December 15, 2008)                      |
|   |   |                                                                                                                                                                                                                                     |
|   | 21.1   | Subsidiary List *                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                     |
|   | 31.1   | Certification of our President and Chief Executive Officer, under Section 302 of the Sarbanes-Oxley Act of 2002. *                                                                                                                       |
|   |   |                                                                                                                                                                                                                                     |
|   | 31.2   | Certification of our Corporate Controller and Principal Financial Officer, under Section 302 of the Sarbanes-Oxley Act of 2002. *                                                                                                        |
|   |   |                                                                                                                                                                                                                                     |
|   | 32.1   | Certification of our President and Chief Executive Officer, under Section 906 of the Sarbanes-Oxley Act of 2002. *                                                                                                                       |
|   |   |                                                                                                                                                                                                                                     |
|   | 32.2   | Certification of our Corporate Controller and Principal Financial Officer, under Section 906 of the Sarbanes-Oxley Act of 2002. *                                                                                                        |

----

|                        | DIGERATI TECHNOLOGIES, INC. |
|-----------------------------|-----------------------------|
|                        |                        |   |
| Date: October 31, 2011 | By:                         | /s/ Arthur L. Smith |
|                        |                        | Arthur L. Smith |
|                        |                        | President and |
|                        |                        | Chief Executive Officer |

| Signature               |   | Title                                    |   | Date             |
|-------------------------|--------|------------------------------------------|--------|------------------|
|                    |   |                                     |   |             |
| /s/ Arthur L. Smith     |   | Principal Executive Officer and Director |   | October 31, 2011 |
| Arthur L. Smith         |   |                                     |   |             |
|                    |   |                                     |   |             |
| /s/ Antonio Estrada Jr. |   | Principal Accounting Officer             |   | October 31, 2011 |
| Antonio Estrada Jr.     |   | Principal Finance Officer                |   |             |
|                    |   |                                     |   |             |
| /s/ John R. Fleming     |   | Director                                 |   | October 31, 2011 |
| John R. Fleming         |   |                                     |   |             |
|                    |   |                                     |   |             |
| /s/ Murray R. Nye       |   | Director                                 |   | October 31, 2011 |
| Murray R. Nye           |   |                                     |   |             |

----

| Number |         | Description                                                                                                                     |
|--------|--------------|---------------------------------------------------------------------------------------------------------------------------------|
|   |         |                                                                                                                            |
| 4.8    |         | Securities Purchase Agreement dated October 11, 2011 between Digerati Technologies, Inc. and Asher Enterprises, Inc.            |
| 4.9    |         | Promissory Note dated October 11, 2011 between Digerati Technologies, Inc. and Asher Enterprises, Inc.                          |
| 21.1   |         | Subsidiary List                                                                                                                 |
|   |         |                                                                                                                            |
| 31.1   |         | Certification of our President and Chief Executive Officer, under Section 302 of the Sarbanes-Oxley Act of 2002.                |
| 31.2   |         | Certification of our Corporate Controller and Principal Financial Officer, under Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1   |         | Certification of our President and Chief Executive Officer, under Section 906 of the Sarbanes-Oxley Act of 2002.                |
| 32.2   |    | Certification of our Corporate Controller and Principal Financial Officer, under Section 906 of the Sarbanes-Oxley Act of 2002. |

----