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

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                                   FORM 10-QA

(MARK ONE)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the quarterly period ended October 31, 2003

                                       Or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from     to

                         Commission File Number 1-15687

                            ATSI COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)



                  DELAWARE                                  74-2849995
        (State or other jurisdiction                       (IRS Employer
      of incorporation or organization)                 Identification No.)

      8600 WURZBACH ROAD, SUITE 700W
            SAN ANTONIO, TEXAS                                 78240
  (Address of Principal Executive Offices)                   (Zip Code)

                                 (210) 614-7240
              (Registrant's telephone number, including area code)


     Indicate  by  check  mark  whether the registrant (1) has filed all reports
required  to  be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was  required to file such reports) and (2) has been subject to such
filing  requirements  for  the  past  90  days.    X  Yes  No
                                                  ---         ---

     Indicate  by  check mark whether the registrant is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act)      Yes  No  X
                                                   ---         ---

     There  were  103,638,690 shares of Common Stock outstanding at December 15,
2003.


                                        2
<PAGE>
                            ATSI COMMUNICATIONS, INC.
                                AND SUBSIDIARIES

                          QUARTERLY REPORT ON FORM 10-Q
                     FOR THE QUARTER ENDED OCTOBER 31, 2003

                                      INDEX

PART I. FINANCIAL INFORMATION                                             Page
                                                                          ----

Item 1. Financial Statements (Unaudited)

     Consolidated Balance Sheets as of July 31, 2003 and
     October 31, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
     Consolidated Statements of Operations for the Three
     Months Ended October 31, 2002 and 2003 . . . . . . . . . . . . . . . . .5
     Consolidated Statements of Comprehensive Loss for the
     Three Months Ended October 31, 2002 and 2003 . . . . . . . . . . . . . .6
     Consolidated Statements of Cash Flows for the Three
     Months Ended October 31, 2002 and 2003 . . . . . . . . . . . . . . . . .7
     Notes to Consolidated Financial Statements . . . . . . . . . . . . . . .8

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .9

Item 3. Quantitative and Qualitative Disclosures About Market Risk. . . . . 15

Item 4. Control and procedures. . . . . . . . . . . . . . . . . . . . . . . 17

PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . 17

Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 17

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 18



                                        3
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                               ATSI COMMUNICATIONS, INC.
                                                   AND SUBSIDIARIES
                                              CONSOLIDATED BALANCE SHEETS
                                        (in thousands except share information)


                                                                                            October 31,    July 31,
                                                                                               2003          2003
                                                                                           -------------  ----------
<S>                                                                                        <C>            <C>
ASSETS                                                                                       (unaudited)
------
CURRENT ASSETS:
Cash and cash equivalents                                                                  $        120   $     140
Accounts receivable                                                                                   3           7
Note Receivable-current portion                                                                     125         187
Prepaid & Other current assets                                                                       12           6
                                                                                           -------------  ----------
     Total current assets                                                                           260         340
                                                                                           -------------  ----------

OTHER ASSETS, net
Note Receivable                                                                                     100         100
Investment in joint venture                                                                         692         663
                                                                                           -------------  ----------
     Total assets                                                                          $      1,052   $   1,103
                                                                                           =============  ==========

LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Pre-petition liabilities of bankrupt subsidiaries, net of assets                           $     12,355   $  12,350
Accounts payable                                                                                    366         356
Accrued liabilities                                                                               2,654       2,559
Notes payable                                                                                       495         445
Convertible debentures                                                                              275         275
Series D Cumulative Preferred Stock, 3,000 shares authorized, 742 shares issued and
outstanding.                                                                                      1,104       1,093
Series E Cumulative Preferred Stock, 10,000 shares authorized and 1,170 shares issued and
Outstanding                                                                                       1,226       1,209
Liabilities from discontinued operations, net of assets                                           1,152       1,152
                                                                                           -------------  ----------
     Total current liabilities                                                                   19,627      19,439
                                                                                           -------------  ----------

LONG-TERM LIABILITIES:
Other                                                                                                57           9
                                                                                           -------------  ----------
     Total long-term liabilities                                                                     57           9
                                                                                           -------------  ----------
COMMITMENTS AND CONTINGENCIES                                                                         -           -
STOCKHOLDERS' DEFICIT:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized,
Series A Cumulative Convertible Preferred Stock, 50,000 shares authorized, 4,370 shares
issued and outstanding.                                                                               -           -
Series F Cumulative Convertible Preferred Stock, 10,000 shares authorized, 7,260 shares
issued and outstanding.                                                                               -           -
Series G Cumulative Convertible Preferred Stock, 42,000 shares authorized, 6,500 shares
issued and outstanding.                                                                               -           -
Common stock, $0.001, 200,000,000 shares authorized and 103,638,690
issued and outstanding                                                                              104         104
Additional paid in capital                                                                       61,044      61,124
Accumulated deficit                                                                             (80,282)    (80,075)
Other Comprehensive (Loss) Income                                                                   502         502
                                                                                           -------------  ----------
     Total stockholders' deficit                                                                (18,632)    (18,345)
                                                                                           -------------  ----------
     Total liabilities and stockholders' deficit                                           $      1,052   $   1,103
                                                                                           =============  ==========
</TABLE>


                                        4
<PAGE>
<TABLE>
<CAPTION>
                             ATSI COMMUNICATIONS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (unaudited)

                                                 Three months ended October 31,
                                                 ------------------------------
                                                       2003           2002
                                                  --------------  ------------
<S>                                               <C>             <C>
OPERATING REVENUES:
Services
      Carrier services                            $          33   $     5,423
      Network services                                       42           197
                                                  --------------  ------------

     Total operating revenues                                75         5,620

OPERATING EXPENSES:
Cost of services (exclusive of depreciation and
amortization, shown below)                                   50         5,004
      Selling, general and administration                   196         1,269
      Bad debt expense                                        4            13
      Depreciation and Amortization                           -           406
                                                  --------------  ------------

     Total operating expenses                               250         6,692
                                                  --------------  ------------

OPERATING LOSS                                             (175)       (1,072)

OTHER INCOME (EXPENSE):
  Other income (expense), net                                 1           (13)
  Loss on an unconsolidated affiliate                        (7)            -
  Interest expense                                          (26)         (193)
                                                  --------------  ------------

     Total other income (expense)                           (32)         (206)

LOSS FROM CONTINUING
OPERATIONS                                                 (207)       (1,278)

NET LOSS FROM DISCONTINUED
OPERATIONS                                                    -        (1,651)

NET LOSS                                                   (207)       (2,929)
                                                  ==============  ============

LESS: PREFERRED DIVIDENDS                                   (94)          (96)
                                                  --------------  ------------

NET LOSS APPLICABLE TO COMMON
STOCKHOLDERS                                              ($301)      ($3,025)
                                                  ==============  ============

BASIC AND DILUTED LOSS PER SHARE                         ($0.00)       ($0.03)
                                                  ==============  ============
WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                               103,639,000    96,679,000
                                                  ==============  ============
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>
                            ATSI COMMUNICATIONS, INC.
                                AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                                 (In thousands)
                                   (unaudited)

                                          Three months ended October 31,
                                          ------------------------------
                                               2003            2002
                                           -------------  --------------
<S>                                        <C>            <C>
Net loss to common stockholders

  Other comprehensive loss, net of tax:           ($301)        ($3,025)

  Foreign currency translation adjustment             -             224
                                           -------------  --------------

Comprehensive loss to common stockholders         ($301)        ($2,801)
                                           =============  ==============
</TABLE>



                                        6
<PAGE>
<TABLE>
<CAPTION>
                                  ATSI COMMUNICATIONS, INC.
                                      AND SUBSIDIARIES
                           CONSOLIDATED STATEMENT OF CASH FLOWS
                                      (In thousands)
                                        (unaudited)

                                                                  Three months ended October 31,
                                                                  ------------------------------
                                                                       2003         2002
                                                                   -------------  -------------
<S>                                                                <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS                                                                  ($207)       ($2,929)
  Adjustments to reconcile net income to net cash used in
   operating activities-
     Impairment loss                                                          -             89
     Depreciation and amortization                                            -            795
     Foreign currency loss                                                    -            326
     Loss on an unconsolidated affiliate                                      7              -
     Issuance of Warrants for services                                       14              -
     Provision for losses on accounts receivable                              4             13
     Changes in operating assets and liabilities:
        Decrease in accounts receivable                                       5            453
       (Increase) in prepaid expenses and other                              (6)            (2)
       Increase in accounts payable                                          58          1,075
       Increase in accrued liabilities                                       29            741
       (Decrease) in deferred revenue                                         -            (72)
                                                                   -------------  -------------
Net cash used in / provided by operating activities                         (96)           489
                                                                   -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property & equipment                                          -            (25)
    Cash proceeds sale of ATSICOM                                            62              -
    Investment in ATSICOM                                                   (36)             -
                                                                   -------------  -------------
Net cash provided by / used in investing activities                          26            (25)
                                                                   -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of debt                                            50              -
   Capital lease Payments                                                     -            (87)
   Payment of expenses related to the issuance of preferred stock             -             (6)
   Proceeds from issuance of common stock, net
   of issuance costs                                                          -              5
                                                                   -------------  -------------
Net cash provided by / used in financing activities                          50            (88)
                                                                   -------------  -------------
NET INCREASE (DECREASE) IN CASH                                             (20)           376
CASH AND CASH EQUIVALENTS, beginning of period                              140             27
CASH AND CASH EQUIVALENTS- Allocated to discontinued operations               -            (94)
                                                                   -------------  -------------
CASH AND CASH EQUIVALENTS, end of period                           $        120   $        309
                                                                   =============  =============
</TABLE>


                                        7
<PAGE>
                           ATSI COMMUNICATIONS, INC.
                                AND SUBSIDIARIES

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                    (In thousands, except per share amounts)

     1.  BASIS  OF  PRESENTATION

     The  accompanying  unaudited  interim  financial  statements  of  ATSI
Communications, Inc. have been prepared in accordance with accounting principles
generally  accepted  in  the  United  States  of  America  and  the rules of the
Securities  and  Exchange  Commission ("SEC"), and should be read in conjunction
with  the  audited  financial  statements  and  notes  thereto contained in ATSI
Communications  Inc.  filed  with  the  SEC  on  Form  10-K.  In  the opinion of
management,  these  interim  financial  statements  contain  all  adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial  position  and  the  results  of  operations  for  the interim periods
presented  have  been  reflected  herein.  The results of operations for interim
periods  are  not  necessarily  indicative of the results to be expected for the
full  year.  Notes  to  the  financial  statements,  which  would  substantially
duplicate  the  disclosure contained in the audited financial statements for the
most  recent fiscal year ended July 31, 2003, as reported in the Form 10-K, have
been  omitted.

     2.  PRE-PETITION LIABILITIES (NET OF ASSETS) OF THE BANKRUPT SUBSIDIARIES

     ATSI (Texas), Inc. and TeleSpan, Inc. filed for protection under Chapter 11
of  the  U.S.  Bankruptcy  Code  on  February  4,  2003  and  February  18, 2003
respectively.  The  court ordered joint administration of both cases on April 9,
2003  and  on  May 14, 2003 the court converted the cases to Chapter 7.  The two
bankrupt  subsidiaries were our primary operating companies and they have ceased
operations.  These  bankruptcies  did not include ATSI Communications, Inc., the
reporting  entity  (the  SEC  registrant).  On July 2, 2003, the U.S. Bankruptcy
Court  handling  the  Chapter 7 cases for ATSI Texas and TeleSpan, Inc. approved
the  sale  of  two  of their subsidiaries, ATSI-Mexico and SINFRA, to Latingroup
Ventures,  L.L.C.  (LGV), a non-related party.  Under the purchase agreement LGV
acquired  all  the  communication  centers  and assumed all related liabilities.
Additionally,  under  the  agreement,  LGV acquired the Comercializadora License
owned  by  ATSI-Mexico  and  the  Teleport and Satellite Network License and the
20-year  Packet  Switching  Network  license  owned  by  SINFRA.  The  Chapter 7
Bankruptcy  Trustee received all the proceeds from the sale of these entities of
approximately  $17,500.  The  Chapter  7  Bankruptcy  Trustee  will  manage  the
designation  of  these  funds.  Upon liquidation of all the assets owned by ATSI
Texas  and  TeleSpan, Inc., the Chapter 7 Trustee will negotiate all claims with
creditors.

The  following  represents  the  pre-petition liabilities (net of assets) in the
Chapter  7  case:

<TABLE>
<CAPTION>
                            ATSI Texas and TeleSpan
                    Pre petition Liabilities, net of assets
                                 (in thousands)

                                            October 31, 2003     July 31, 2003
                                          ---------------------  --------------
<S>                                       <C>                    <C>
CURRENT LIABILITIES:
   Accounts payable                       $               7,497  $        7,492
   Accrued liabilities                                    2,015           2,015
   Notes payable                                            636             636
   Capital leases                                         2,207           2,207
                                          ---------------------  --------------
       Total current liabilities          $              12,355  $       12,350
                                          ---------------------  --------------
</TABLE>


                                        8
<PAGE>
     3.   NOTES PAYABLE

     On  October 14, 2003, we signed a consulting agreement with Recap Marketing
& Consulting, LLP and we also borrowed and entered into an unsecured convertible
promissory  note payable in the amount of $50,000. Additionally, on November 25,
2003  we  also  borrowed  $25,000  from  Recap  Marketing  & Consulting, LLP and
entered  into  an unsecured convertible promissory note payable. These notes are
secured  by the conversion of the Company's warrants to common stock and have an
annual  interest  rate  of  12% and maturity dates of April 20, 2004 and May 25,
2004,  respectively.  Under the consulting agreement we shall pay the Consultant
as  a  fee for their services warrants to purchase up to 1,500,000 shares of the
Company's  common  stock  at  a  predetermined  price  per  share,  as  follows:

                                  Common     Exercise
                                  Shares       Price
                                  ---------  ---------
                                  1,000,000  $    0.01
                                  250,000    $    0.25
                                  125,000    $    0.50
                                  125,000    $    0.75


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

     SPECIAL NOTE: This Quarterly Report on Form 10-Q contains  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended  and Section 21E of the Securities and Exchange Act of 1934, as amended.
"Forward  looking  statements"  are  those statements that describe management's
beliefs  and  expectations about the future.  We have identified forward-looking
statements  by using words such as "anticipate," "believe," "could," "estimate,"
"may,"  "expect,"  and  "intend."  Although  we  believe  these expectations are
reasonable,  our  operations  involve  a  number  of  risks  and  uncertainties,
including  those  described in the Additional Risk Factors section of the Annual
Report  Form  10-K  and  other  documents filed with the Securities and Exchange
Commission.  Therefore,  these  types  of  statements may prove to be incorrect.

     The  following  is a discussion of the consolidated financial condition and
results  of  operations  of ATSI for the three months ended October 31, 2003 and
2002.  It  should  be  read  in  conjunction  with  our  Consolidated  Financial
Statements,  the  Notes  thereto  and  the  other financial information included
elsewhere  in  the annual report on Form 10-K filed with the SEC on November 13,
2003.

GENERAL

Carrier  Services:  We  provide  termination  services to U.S and Latin American
telecommunications  companies  who  lack  transmission  facilities,  require
additional  capacity or do not have the regulatory licenses to terminate traffic
in  Mexico. Typically these telecommunications companies offer their services to
the  public  for domestic and international long distance services.  The Company
incurs  termination  charges,  charges which are related to the fees that we are
charged  by our carriers / vendors for the termination of phone calls into their
infrastructure  and  network,  primarily  in  Mexico.


                                        9
<PAGE>
Network  Services:  We  offer private communication links for multi-national and
Latin  American  corporations  or  enterprise customers who use a high volume of
telecommunications services to communicate with their U.S. offices or businesses
and  need greater dependability than is available through public networks. These
services  include  data, voice and fax transmission as well as Internet services
between  the customers multiple international offices and branches.  The Company
incurs  satellite and fiber optic charges. The satellite and fiber optic charges
are  incurred  as  part of the connection links between the customer's different
remote locations and sites to transmit data, voice and Internet services.

     We  have incurred operating losses and deficiencies in operating cash flows
in  each  year  since  our  inception  in 1994 and expect our losses to continue
through  July  31,  2003.  Our  operating  losses were $5,780,000 $8,259,000 and
$4,850,000  for  the years ending July 31, 2003, 2002 and 2001, respectively. We
had an operating loss of  $175,000, for the quarter ended October 31, 2003 and a
working  capital  deficit  of  $19,367,000,  at  October  31, 2003.  Due to such
losses  as  well  as  our  recurring  losses, as well as the negative cash flows
generated  from  our operations and our substantial working capital deficit, the
auditor's  opinion  on  our  financial  statements  as  of  July  31, 2003 calls
attention  to  substantial  doubts  about  our  ability  to  continue as a going
concern.  This  means  that  there  is substantial doubt that we will be able to
continue in business through the end of our next fiscal year, July 31, 2004.

     We have experienced difficulty in paying our vendors and lenders on time in
the  past, and as a result on December 31, 2002 our carrier network capacity was
idled  and all of the US employees were terminated.  This means that we were not
able  to  generate  revenues from carrier services during the second half of the
fiscal  year ending July 31, 2003.  During the quarter ended October 31, 2003 we
signed  up  four  new  carrier  customers and generated approximately $33,000 in
revenue.  However,  there can be no assurance that such revenue will continue to
be  generated  at  these  levels  from  these  customers.

     Additionally,  during  the  quarter  ended  October  31,  2003  management
continued  to  pursue  different  avenues  for funding and during the quarter we
entered into a short-term promissory note for $50,000.  These funds have allowed
the  Company to pay those operating and corporate expenses that were not covered
by  our  current  cash  inflows  from  operations.  We  will continue to require
additional  funding  until  the  cash  inflows from operations are sufficient to
cover  the  monthly operating expenses.  However, there can be no assurance that
we  will  be  successful  in  securing additionally funding over the next twelve
months.

     ATSI  was  founded  in  1993.  We are an international carrier, serving the
rapidly  expanding  communications  markets in and between Latin America and the
United  States.  Our  mission  is  to  connect  the  Americas  with  exceptional
communication  services.  Our  strategy  is  to  become  a  leading  provider of
communication  services  to  carriers  and businesses in the U.S./Latin American
corridor  through  a  high  quality,  'next generation' VoIP network established
through  our  partnership  with  Dialmex.

RESULTS  OF  OPERATIONS

     The  following  table  sets  forth  certain items included in the Company's
results  of  operations  in dollar amounts and as a percentage of total revenues
for the three-month periods ended October 31, 2002 and 2003.


                                       10
<PAGE>
<TABLE>
<CAPTION>
                                                  Three months ended October 31,
                                                  -------------------------------
                                                       2003            2002
                                                  --------------  ---------------
                                                     $       %        $       %
                                                  -------  -----  ---------  ----
<S>                                               <C>      <C>    <C>        <C>
Operating revenues
------------------
Services
    Carrier services                              $   33     44%  $  5,423    96%
    Network services                                  42     56%       197     4%

                                                  -------  -----  ---------  ----

Total operating revenues                              75    100%     5,620   100%

Cost of services (exclusive of depreciation and
amortization, shown below)                            50     67%     5,004    89%
                                                  -------  -----  ---------  ----

Gross Margin                                          25     33%       616    11%

Selling, general and
administrative expense                               196    261%     1,269    23%

Bad debt expense                                       4      5%        13     0%

Depreciation and amortization                          -      0%       406     7%
                                                  -------  -----  ---------  ----

Operating loss                                      (175)    (2)    (1,072)   (0)

Other income (expense), net                          (32)   -43%      (206)   -4%
                                                  -------  -----  ---------  ----

Net loss from continuing operations                 (207)  -276%    (1,278)  -23%

Net loss from discontinued operations                  -      0%    (1,651)  -29%

Net loss                                            (207)  -276%    (2,929)  -52%

Less: preferred stock dividends                      (94)  -125%       (96)   -2%
                                                  -------  -----  ---------  ----

Net loss applicable to common shareholders         ($301)  -401%   ($3,025)  -54%
                                                  =======  =====  =========  ====
</TABLE>

THREE  MONTHS  ENDED OCTOBER 31, 2003 COMPARED TO THREE MONTHS ENDED OCTOBER 31,
2002

     Operating  Revenues.  Consolidated operating revenues decreased 99% between
periods  from  $5.6  million  for  the  quarter  ended  October  31,  2002  to
approximately $75,000 for the quarter ended October 31, 2003.

     Carrier services revenues decreased approximately $5.4 million, or 99% from
the  quarter  ended  October 31, 2002 to the quarter ended October 31, 2003. Our
carrier  traffic  declined  from approximately 68.9 million minutes in the prior
fiscal first quarter to approximately 680,480 minutes in the first quarter ended
October  31,  2003.  The  decrease  in revenue and carrier traffic can mainly be
attributed  to  the idling of our network during December 2002. During the first
quarter  of  fiscal  year  2004,  we  signed  four  new  customers and generated
approximately  $33,000  in  carrier  services  revenue. However, there can be no
assurance  that  such revenue will continue to be generated at these levels from
these  customers.


                                       11
<PAGE>
     Network  services revenues decreased approximately 79% or $155,000 from the
quarter  ended  October  31, 2002 to the quarter ended October 31, 2003.  During
the quarter ended October 31, 2003 we signed up one network service customer and
generated  approximately  $3,705  in  revenues  from  this  customer  during the
quarter.  Additionally  we  also  provided  network management services to Latin
Group  Ventures L.L.C. (LGV), a non-related party.  Under the agreement with LGV
we  provide  customer  service,  technical  support  and  manage the collections
process of their private network customers.  This management agreement initiated
on  July  1,  2003  and  we  will  generate  approximately  $12,700 per month in
management  fees  through  June  30, 2004.  During the quarter ended October 31,
2003  we  generated approximately $42,000 in network services revenue.  However,
there  can  be  no  assurance that such revenue will continue to be generated at
these  levels  from  these  customers.

     Cost  of  Services.  (Exclusive  of  depreciation  and  amortization)  The
consolidated  cost  of  services  deceased by approximately $5.0 million, or 99%
from  the  quarter ended October 31, 2002 to the quarter ended October 31, 2003.
The  decrease  in cost of services is a direct result of the decrease in carrier
revenue  and network services revenue.  As mentioned above, we idled our network
in  December  2002  and  our  carrier  traffic  declined from approximately 68.9
million  minutes  in the first quarter of the prior fiscal year to approximately
680,480 minutes in the quarter ended October 31, 2003, thus reducing our cost of
services  between  quarters.

     Selling,  General  and  Administrative  (SG&A)  Expenses.  SG&A  expenses
decreased  approximately $1.1 million, or 85% from the quarter ended October 31,
2002  to  the  quarter  ended  October  31,  2003.  The  decrease  can mainly be
attributed  to  the  termination  of  all  of  the employees associated with the
carrier  services  business  unit  and  network  services  in January 2003.  The
termination  of  these employees resulted in a decrease in salaries and wages of
approximately  $195,000  per  month or $585,000 per quarter.  Additionally, as a
result  of  the termination of these employees, during the quarter ended October
31,  2003,  the  company  did not incur health and business insurance expense of
approximately $96,000 per month or $288,000 associated with these employees.

     Depreciation  and Amortization.  Depreciation and amortization decreased by
approximately  100%  or  $406,000 from the quarter ended October 31, 2002 to the
quarter  ended  October 31, 2003.  The decrease is attributed to the disposition
of  all  capital  equipment before the commencement of the quarter ended October
31,  2003.

     Operating  Loss.  The  Company's  operating loss decreased by approximately
$897,000  or  84%  from  the quarter ended October 31, 2002 to the quarter ended
October  31, 2003.  The decrease in operating loss is attributed to the decrease
between  periods  of  SG&A of  $1.1 million and the decrease in depreciation and
amortization  of  approximately $406,000.  The decrease in SG&A and depreciation
and  amortization  were  offset  slightly  by  the  reduction in gross margin of
approximately  $591,000.

     Other  Income  (expense).  Other  expense  decreased approximately $174,000
from  the  quarter ended October 31, 2002 to the quarter ended October 31, 2003.
The  decrease  in  other  income  and  expense  is attributed to the decrease in
interest  expense  of approximately $169,000 recognized during the quarter ended
October  31,  2003  associated  with various capital leases.  During the quarter
ended  October 31, 2003 the Company did not have any capital leases, thus we did
not  incur  any  interest  expense  associated  with  capital  leases.

     Loss  from  discontinued  operations.  Loss  from  discontinued  operations
decreased  by  $1.7  million  between periods, from $1.7 million for the quarter
ended  October  31,  2002  to  $0  during  the  quarter  ended


                                       12
<PAGE>
October  31, 2003. During the quarter ended October 31, 2002, we recognized loss
from  discontinued operations of approximately $1.7 associated with Mexico Telco
operations.  The  Mexico  Telco  loss  from  discontinued  operations during the
quarter  ended  October  31, 2002 can mainly be attributed to the recognition of
approximately  $320,000 in severance expense related to the termination of three
executives  from  the  Mexico operations, the recognition of $326,000 of foreign
currency  loss  on exchange rate and the recognition of approximately $88,000 of
impairment  loss  of  ATSIMEX's  goodwill.

     Preferred  Stock  Dividends.  During the quarter ended October 31, 2003, we
recorded  approximately  $94,000 of non-cash dividends related to our cumulative
convertible preferred stock compared to the non-cash dividends recognized during
the quarter ended 31, October 2002 of approximately $96,000.

     Net  loss  to  Common  Stockholders.  The  net  loss  for the quarter ended
October  31,  2003  decreased  to $301,000 from $3,025,000 for the quarter ended
October  31,  2002.  The  decrease  in  net  loss to common stockholders was due
primarily  to  the  idling  of  our  network  and  not incurring any fixed costs
associated  with the leasing of satellite sites, connectivity fees and operating
a  network  site  during the quarter ended October 31, 2003.  During the quarter
ended  October  31,  2002,  we  incurred  approximately $450,000 of fixed costs.
Additionally,  as  mentioned  above  SG&A  expenses  and  loss from discontinued
operations  decreased  from  the  quarter  ended October 31, 2002 to the quarter
ended  October  31,  2003  by  approximately  $1.1  million  and  $1.7  million,
respectively.

LIQUIDITY  AND  CAPITAL  RESOURCES

     Cash  provided by / used in operating activities:  During the quarter ended
October  31, 2003, operations consumed approximately $96,000 in cash.  This cash
consumed  by  operations  is  primarily due to operating losses of approximately
$207,000.  The net loss was somewhat offset by the increase in accounts payable,
accrued  liabilities  and the issuance of warrants for services of approximately
$58,000,  $29,000 and $14,000, respectively. The increase in accrued liabilities
and  accounts  payable is primarily due to the company recognizing approximately
$48,000  in  customer  deposits  from LVG for future services and the accrual of
professional  fees,  board  fees  and interest expense of approximately $39,000.
Additionally,  we  recognized  approximately $14,000 in the issuance of warrants
for  services  related  to  the  consulting  agreement  entered  into with Recap
Marketing  and  Consulting,  LLP.  Currently  we  are  not generating sufficient
revenues from operations to cover our monthly operating salaries and general and
administrative  expense.  We  depend  on  the  monthly payments of approximately
$20,750 from the sale of 51% of ATSI Comunicaciones S.A de C.V. to Telemarketing
S.A  de  C.V.  to  pay  for  our  monthly  SG&A expenses.  Currently we generate
approximately  $65,000  in  SG&A expenses.  We expect this financial instability
and lack of liquidity to continue during the fiscal year 2004.  As a result over
the next twelve months we estimate requiring additional funding of approximately
$445,000 to compensate for the deficiencies in cash inflows.

Cash  provided  by  /  used  in  investing  activities: During the quarter ended
October  31,  2003,  the Company received approximately $62,000 in payments from
the  sale of 51% of ATSI Comunicaciones S.A de C.V. to Telemarketing S.A de C.V.
Additionally, during the quarter ended we invested approximately $36,000 in ATSI
Comunicaciones  S.A  de  C.V.  ATSI  Comunicaciones  S.A  de C.V. utilized these
proceeds  to  pay off payroll taxes and professional fees previously agreed upon
the  sale  of  ATSICOM  to  Telemarketing.

Cash flows used in / provided by financing activities:  During the quarter ended
October  31, 2003 we received approximately $50,000 for the issuance of debt and
warrant  options.

     Overall,  the  Company's  net operating, investing and financing activities
during  the  fiscal  quarter


                                       13
<PAGE>
ended  October  31,  2003  provided  a decrease of approximately $20,000 in cash
balances.  We  intend to cover our monthly operating expenses with our remaining
available  cash.  However,  as discussed previously we are also dependent on the
monthly  cash  payments  from  the  sale  of  ATSICOM to cover monthly operating
expenses.

The  Company's  working  capital  deficit  at October 31, 2003 was approximately
$19,367,000.  This  represents  an  increase  of approximately $268,000 from our
working  capital deficit at July 31, 2003.  The increase is primarily attributed
to  our  deficiency of cash and the accrual of various professional services and
interest  expense.  The  Company's  working  capital deficit at October 31, 2003
included  approximately $12,355,000 related to the pre-petition liabilities (net
of  assets),  associated  with  the  Chapter  7 Bankruptcy cases, ATSI Texas and
TeleSpan Inc.  The adjusted Company's working capital deficit after exclusion of
the  pre-petition  liabilities  is  approximately  $7,012,000.

     The  Company's  current  liabilities  include  approximately  $12,355,000
associated  with  the  pre-petition  liabilities related to the two subsidiaries
under  the Chapter 7 Bankruptcy, ATSI Texas and TeleSpan, Inc.  The pre-petition
liability balance is composed of the following major liabilities:

-    approximately  $3  million  in  debt  owed  to IBM Corporation related to a
     capital  lease;
-    approximately $1.3 million debt to Northern Telecom, a subsidiary of Nortel
     Networks  associated with some telecommunications equipment acquired during
     fiscal  year  2001;
-    approximately  $5.1  million  in debt to various international and domestic
     telecommunications  carriers  for services provided during fiscal year 2002
     and  2003;
-    approximately  $250,000  in  property  taxes  to  various  taxing entities,
     approximately  $550,000  to  Universal  Service  Fund for telecommunication
     taxes;
-    approximately  $250,000  in  a  note  payable;  and
-    approximately $2.4 million associated with rent expense, salaries and wages
     and  professional  services  to  various  entities.

     The  Company's  current  obligations  also include approximately $1,367,000
owed  to the former owners of Grupo Intelcom, S.A. de C.V., the entity purchased
by  the  Company in July 2000 and through which the Company obtained its Mexican
long distance concession.  Of this amount, $357,000 is included in notes payable
and  the  additional  $1,030,000  is  included  in  accrued  liabilities.

     Furthermore,  the  Company's current liabilities also include approximately
$1.1  million  associated  with the Series D Cumulative preferred stock.  During
the  year ended July 31, 2003, we received a redemption letter from the Series D
holder  requesting  the  redemption  of  all  the outstanding Series D preferred
stock.  As  a  result  the  full redemption amount of approximately $942,000 and
dividends of approximately $158,000 were reclassed to current liabilities.

     Additionally,  the  Company's current liability includes approximately $1.3
million  associated  with  the  Series E Cumulative preferred stock.  During the
fiscal  year  ended  July  31,  2003,  the  Company  was de-listed from AMEX and
according to the terms of the Series E Cumulative preferred stock Certificate of
Designation,  if the Company fails to maintain a listing on NASDAQ, NYSE or AMEX
the  Series  E preferred stockholder could request a mandatory redemption of the
total  outstanding  preferred  stock.  As of the date of this filing we have not
received  such  redemption  notice.

     On  October  31,  2002  we filed a filed a lawsuit in the Southern District
Court  of  New  York  against  two financial institutions, Rose Glen Capital and
Shaar  Fund,  the  holders  of  Series  D  and  E  Redeemable


                                       14
<PAGE>
Preferred Stock, for what we believe to be "Stock fraud and manipulation". These
liabilities combined for a total of approximately $2.4 million. Accounting rules
dictate  that  these  liabilities  remain in our books under Current Liabilities
until  the lawsuit is resolved in the judicial system or otherwise. At this time
we cannot predict the outcome or the time frame for this to occur.

     In addition, we also have approximately $1.2 million of current liabilities
(net  of  assets)  associated  to  the  discontinued  operations  of the retails
services  unit.  This  balance is mainly composed of approximately $453,000 owed
to  the  Mexican  taxing  authorities  related  to  a  note  assumed through the
acquisition  of Computel and approximately $944,000 related to income taxes owed
as of the quarter ending October 31, 2003.

     We believe that, based on our limited availability to capital resources and
our  current cash balances, that these resources may not be available to support
our  ongoing  operations  for  the  next  twelve  months or until we are able to
generate  income  from  operations.  These matters raise substantial doubt about
our  ability to continue as a going concern.  Our ability to continue as a going
concern is dependent upon the ongoing support of our stockholders and customers,
our ability to obtain capital resources to support operations and our ability to
successfully  market  our  services.

     As  previous  discussed,  in  May  2003,  the  company entered into a Share
Purchase  Agreement  with  Telemarketing de Mexico, S.A. de C.V. (Telemarketing)
whereby  we  agreed  to  sell  Telemarketing 51% of our Mexican subsidiary, ATSI
Comunicaciones,  S.A. de C.V. (ATISCOM).  The agreement provides that there will
be  an  initial  payment  of  $194,000 plus payment of approximately $200,000 of
ATSICOM'S  liabilities and the remaining purchase price of $747,000 will be paid
as  follows:

-    Beginning  in May 2003 Telemarketing will pay ATSI $20,750 per month for 12
     months;  and
-    Beginning  in  May  2004, Telemarketing will pay ATSI $20,750 per month for
     the  next  24  months,  contingent on ATSI generating 20,750,000 minutes of
     monthly  traffic  through  ATSICOM's network. In the event the Company does
     not  reach  the  above-mentioned  volume  of  monthly  minutes, the monthly
     payment  will  be adjusted based on the same percentage of the shortfall in
     minutes,  until  Telemarketing  pays the total purchase price. On the other
     hand, if ATSI exceeds the volume of monthly traffic, Telemarketing can make
     additional  payments,  without  penalty.

     Management  intends  to  utilize the funds from the sale of ATSICOM to fund
operations.  There  can  be  no  assurance  that  we will be able to continue to
operate  with these funds over the next twelve months or that we will be able to
generate  sufficient  cash  from  operations  to  cover  our  monthly  operating
expenses.  Additionally, there is no assurance that we will be able to raise the
additional  capital  from  equity  of  debt  sources  required  to  continue  in
operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We  are  subject  to several market risks.  Specifically, we face commodity
price  risks  and  equity  price  risks.

     Commodity  Price  Risk: Certain of our businesses, namely carrier services,
     ----------------------
operate in an extremely price sensitive and volatile environment.  While we have
been  able  to  withstand these pricing volatilities, certain of our competitors
are  much  larger  and better positioned.  Our ability to continue to operate in
this  environment may be dependent on our ability to further reduce our costs of
transporting  these  minutes.

     Equity Price Risks:  Until such time as we are able to consistently produce
     ------------------
positive  cash  flows  from


                                       15
<PAGE>
operations,  we  will be dependent on our ability to continue to access debt and
equity  sources of capital. While recent history has shown us capable of raising
equity  sources  of  capital;  future  equity  financings and the terms of those
financings  will be largely dependent on our stock price, our operations and the
future  dilution  to  our  shareholders.

MEXICAN  FACILITIES-BASED  LICENSE  POSES  RISKS

     Currently  we  own  49% of ATSICOM that holds the Concession License.  This
license  is  for  30  years, and it can be renewed at the end of the term.  This
concession  is  the  major  asset of the Company and is regulated by the Mexican
government.  The  Mexican  government  could  grant  similar  concessions to our
competitors,  which  will  affect the value of our concession.  In addition, the
Mexican  government  also  has  (1)  authority  to  temporarily seize all assets
related  to  the  Mexican  concession  in  the  event  of natural disaster, war,
significant  public  disturbance  and  threats  to  internal peace and for other
reasons  of  economic or public order and (2) the statutory right to expropriate
any  concession  and  claim  all  related  assets  for  public interest reasons.
Although  Mexican  law  provides  for compensation in connection with losses and
damages related to temporary seizure or expropriation, we cannot assure you that
the  compensation  will  be  adequate  or  timely.

     Under  this  license, ATSI Comunicaciones de Mexico S.A de C.V. is required
to  meet  the  following:

General  requirements:
---------------------

     -    Maintain  approximately  10  millions  dollars  in  registered  and
          subscribed  capital;
     -    Install  and  operate  a network in Mexico, the Mexican government has
          the  right to approve the operating plan before is implemented and any
          future  changes  to  the  operating plan before it can be implemented;
     -    Continuously  develop and conduct training programs for its staff; and
     -    Have an assigned individual responsible for the technical functions to
          operate  the  concession.

Concession  services  requirements:
----------------------------------

     -    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.

Tariff  Requirements:
--------------------

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

Verification  and  Information  requirements:
--------------------------------------------

     -    Provide audited financial statements on a yearly basis that includes a
          detailed  description  of the fixed assets utilized in the network and
          accounting  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;  and
     -    Provide  statistical  reports of traffic, switching capacity and other
          parameters  in  the  network.


                                       16
<PAGE>
Other  requirements: The Concessionaire  is  required  to have a bond/ insurance
-------------------
policy  for  approximately $500,000 dollars, naming the Mexican Federal Treasury
Department  as  beneficiary  in  the  event  the  Mexican government revokes the
concession  license.

     We  cannot  assure you that we and our partner, Telemarketing, will be able
to  obtain financing to finish the Mexican network; if we or our partners obtain
financing  it  will be in a timely manner or on favorable terms; or if we or our
partners  will  be  able to comply with the Mexican concession's conditions.  If
our  partners or we fail to comply with the terms of the concession, the Mexican
government  may  terminate  it  without  compensation  to our partners or us.  A
termination would prevent us from engaging in our proposed business.

ITEM  4.  CONTROLS  AND  PROCEDURES

     The  Company has adopted and implemented disclosure controls and procedures
designed to provide reasonable assurance that all reportable information will be
recorded, processed, summarized and reported within the time period specified in
the  SEC's  rules and forms. The Company's President and Chief Executive Officer
and  the  Company's Controller and Principal Financial have concluded that these
disclosures  and  procedures  are  effective  at the reasonable assurance level.
Under  the  supervision  and with the participation of the Company's management,
including  the Company's President and Chief Executive Officer and the Company's
Controller  and  Principal  Financial  Officer,  the  Company  has evaluated the
effectiveness  of  the  design  and  operation  of  its  disclosure controls and
procedures  pursuant to Exchange Act Rule 13a-15(e) as of the end of the quarter
covered  by  this  report.  Based  on  that  evaluation, the President and Chief
Executive  Officer  and  the  Controller  and  Principal  Financial Officer have
concluded  that these disclosure controls and procedures are effective as of the
end of the period covered by this report. There were no changes in the Company's
internal  control  over  financial  reporting during the quarter covered by this
report  that  have  had  a  material  affect  or are reasonably likely to have a
material  affect  on  internal  control  over  financial  reporting.

                           PART II.  OTHER INFORMATION

ITEM  5.  OTHER  INFORMATION

     On  December  10, 2004, we announced ATSI's reincorporation plan to Nevada.
Additionally  we  announced that the Annual Stockholders Meeting is scheduled to
be  held  on  January  15,  2004.

     On December 09, 2003, the Board of Directors approved the recommendation of
its  Audit  Committee  that  the  firm  of  Tanner  +  Co.  be  dismissed as its
independent  public accountants and that the firm of  Malone and Bailey, PLLC be
engaged as the independent auditors of the Company.  The Company is not aware of
any  disagreements  regarding  accounting  or  financial disclosure, or auditing
scope  or  procedure  with  Tanner + Co.  The opinion of Tanner + Co. for fiscal
2002  and  fiscal  2003  contained  a qualification as to the uncertainty of the
Company's ability to continue as a going concern but was not otherwise qualified
or  limited.

     On December 13, 2001, the Board of Directors approved the recommendation of
its  Audit  Committee  that  the firm of Arthur Andersen LLP be dismissed as its
independent  public  accountants  and  that  the  firm  of Ernst & Young, LLP be
engaged  as  the independent auditors of the Company.  On November 14, 2002, the
Company's  Board of Directors approved the recommendation of its Audit Committee
that  the  firm  of  Ernst  &  Young, LLP be dismissed as its independent public
accountants  and  that  the  firm  of  Tanner  +  Co.  be  hired


                                       17
<PAGE>
as  its independent public accountants for the fiscal year ending July 31, 2002.
The Company was not aware of any disagreements regarding accounting or financial
disclosure,  or  auditing  scope or procedure with either Arthur Andersen LLP or
Ernst  &  Young.  The opinion of Arthur Andersen LLP for fiscal 2001 contained a
qualification  as  to the uncertainty of the Company's ability to continue, as a
going  concern  but  was  not  otherwise  qualified  or  limited.

     The  Company  did  not  consult Malone and Bailey, PLLC with respect to the
application  of  accounting  principles  to a specified transaction, proposed or
completed,  or the type of audit opinion that might be rendered on the Company's
financial statements, or any other matters or reportable events pursuant to Item
304(a).

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)     Exhibits:

     The exhibits listed below are filed as part of this report.

EXHIBIT
NUMBER
------

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. *

*  Filed  herewith




                                       18
<PAGE>
                                    SIGNATURE

Pursuant  to  the  requirements  of the Securities and Exchange Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  hereunto  duly  authorized.


                                ATSI COMMUNICATIONS, INC.
                                      (Registrant)


Date:  March 1, 2004            By:     /s/Arthur L. Smith
       -------------                    ------------------
                                Name:   Arthur L. Smith
                                Title:  President and
                                        Chief Executive Officer




Date:  March 1, 2004            By:     /s/Antonio  Estrada
       -------------                    -------------------
                                Name:   Antonio Estrada
                                Title:  Corporate Controller
                                        (Principal Accounting and Financial
                                        Officer)




                                       19
<PAGE>