EXHIBIT 10.1
                                                                    ------------
                        EXTENSION OF CONSULTING AGREEMENT
                                (AMENDMENT NO. 1)

1.  PARTIES.

1.1. This Extension of Consulting Agreement Amendment No. 1 (the "Amendment") is
made  and  entered  into  effective  as  of  March  1, 2005, by and between ATSI
Communications, Inc. (the "Company"), a Nevada corporation whose address is 8600
Wurzbach  Road,  Suite  700W,  San  Antonio, Texas 78240 and Donald W. Sapaugh &
Hunter  M.  Carr,  natural  persons (the "Consultant's"), whose address is 10750
Hammerly,  Suite  300,  Houston,  Texas  77043  and  amends certain Extension of
Consulting  Agreement as of November 1, 2004 (the "Consulting Agreement") by and
between  the  Company  and  the  Consultant.

2.  RECITALS.

2.1.  This  Agreement  is  made  with  reference  to  the  following  facts  and
circumstances:

     (a)  The  Consulting  Agreement  provides  for  the payment of a Consulting
          Fee  (as  defined in the Consulting Agreement) in the form of warrants
          to purchase the Company's common stock pursuant to a Warrant Agreement
          attached as an exhibit to the Consulting Agreement.

     (b)  As  a  result  of  the  Restructure  and additional work undertaken by
          the Consultants that, neither of which were anticipated at the time of
          the  Consulting  Agreement,  the  parties wish to amend the Consulting
          Agreement  to  establish  a new Consulting Fee and change the terms of
          the warrants to purchase the common stock.

2.2.  In  consideration  of  the  premises,  and  for  other  good  and valuable
consideration,  the receipt of which is hereby acknowledged, the Company and the
Consultant  agree  as  follows.

3.  CONSULTING  FEE.

Section  4.1  of  the  Extension  of  Consulting Agreement is amended to read as
follows  in  its  entirety:

     4.1.  The  Company  shall  pay  the  Consultant  as  a fee for his services
     under  this  Agreement  (the  "Consulting  Fee") warrants to purchase up to
     1,250,000  shares of the Company's common stock in the denominations and at
     the  price per share identified in Exhibit 4.1, which shall be deemed to be
     fully earned upon execution of this Agreement.

4.  TERM  OF  EXTENSION.

Section  3.1  of  the  Extension  of  Consulting Agreement is amended to read as
follows  in  its  entirety:


<PAGE>
     3.1.  The  Company  herby  engages  the  services  of the consultant, as an
     independent  contractor  for  twelve (12) months from March 1, 2005 through
     February 28, 2006.

5.  REPLACEMENT  OF  EXHIBIT  4.1

Section  4.1  to  the Extension of Consulting Agreement is hereby deleted in its
entirety  and  replaced  with  Exhibit  4.1  attached  to  this  Amendment.

6.  REVOCATION  OF  THE  WARRANT  AGREEMENT  AND  REPLACEMENT  OF  EXHIBIT  A.

The  Warrant  Agent  Agreement attached as Exhibit A to the Consulting Agreement
and  signed  by the Company and the Consultant is hereby revoked in its entirety
and  deemed  to  be  of  no  further force or effect.  Exhibit A attached to the
Extension  of  Consulting Agreement is deleted in its entirety and replaced with
Exhibit  A  attached  to  this  Amendment.

7.  RATIFICATION  OF  THE  CONSULTING  AGREEMENT.

The  Company  and  the  Consultant  hereby  ratify  and  confirm  the Consulting
Agreement  as  amended  by  this  Amendment.

IN  WITNESS  WHEREOF,  the parties have executed this Agreement, effective as of
the  date  first  above  written.

The  Consultants:                              The  Company:



/S/  Donald  W.  Sapaugh                       ATSI  Communications,  Inc.,
------------------------
Donald  W.  Sapaugh                            a  Nevada  corporation
                                               By  /S/  Arthur  L.  Smith
                                                   ----------------------
/S/  Hunter  M.  Carr                          Arthur  L.  Smith
---------------------
Hunter  M.  Carr                               President  &  CEO


<PAGE>
<TABLE>
<CAPTION>
                             EXHIBIT 4.1
                           CONSULTING FEE

<S>                              <C>
               -------------------------------------------
               NUMBER OF SHARES  EXERCISE PRICE PER SHARE
               -------------------------------------------
                   650,000               $ .35
               -------------------------------------------
                   300,000               $ .30
               -------------------------------------------
                   300,000               $ .40
               -------------------------------------------
</TABLE>