----

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**UNITED      STATES **

**SECURITIES      AND EXCHANGE COMMISSION**

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**FORM      10-QSB**

**[**
**Mark      One**
**]      **

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

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

**ATSI      COMMUNICATIONS, INC.**

| **Nevada**(State                or Other Jurisdiction ofIncorporation                or Organization)                                                                          |   | **74-2849995**(IRS                Employer Identification                No.) |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|
|                                                                                                                                                                           |   |                                                                          |
| **3201                Cherry Ridge****Building                C, Suite 300****San                Antonio, Texas 78230**(Address                of Principal Executive Offices) |
|                                                                                                                                                                           |
| **(210)                614-7240**(Issuer’s                Telephone Number, Including Area                Code)                                                          |

| **Class**                              | **Outstanding                as of June 13, 2007** |
|----------------------------------------|----------------------------------------------------|
|                                   |                                               |
| Common                Stock, $.001 par | 37,109,225                                         |

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**ATSI      COMMUNICATIONS, INC.**

**AND      SUBSIDIARIES**

**QUARTERLY      REPORT ON FORM 10-QSB**

**FOR      THE QUARTER ENDED APRIL 30, 2007**

**INDEX**

|                                                                                                                                                                  |   | Page   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| **PART                  I. FINANCIAL INFORMATION**                                                                                                                    |   |   |
|                                                                                                                                                                  |   |   |
| Item                  1. Financial Statements (unaudited)                                                                                                             |   |   |
|                                                                                                                                                                  |   |   |
| Consolidated                  Balance Sheets as of April 30, 2007 and July 31, 2006                                                                                   |   | 3      |
| Consolidated                  Statements of Operations for the Three and Nine Months Ended April                  30,                  2007 and 2006                  |   | 4      |
| Consolidated                  Statements of Comprehensive Income (Loss) for the Three and Nine                  Months                  Ended April 30, 2007 and 2006 |   | 5      |
| Consolidated                  Statement of Changes in Stockholders’ Deficit for the Nine Months Ended                  April 30, 2007                           |   | 6      |
| Consolidated                  Statements of Cash Flows for the Nine Months Ended April 30, 2007                  and                  2006                            |   | 7      |
| Notes                  to Consolidated Financial Statements                                                                                                           |   | 8      |
|                                                                                                                                                                  |   |   |
| Item                  2. Management’s Discussions and Analysis or Plan Of                  Operations                                                           |   | 11     |
|                                                                                                                                                                  |   |   |
| Item                  3. Controls and Procedures                                                                                                                      |   | 19     |
|                                                                                                                                                                  |   |   |
| **PART                  II. OTHER INFORMATION**                                                                                                                       |   |   |
|                                                                                                                                                                  |   |   |
| Item                  1. Legal Proceedings                                                                                                                            |   | 19     |
|                                                                                                                                                                  |   |   |
| Item                  2. Unregistered Sales of Equity Securities and Use of                  Proceeds                                                                 |   | 20     |
|                                                                                                                                                                  |   |   |
| Item                  3. Default Upon Senior Securities                                                                                                               |   | 20     |
|                                                                                                                                                                  |   |   |
| Item                  4. Submission of Matters to a Vote of Security Holders                                                                                          |   | 20     |
|                                                                                                                                                                  |   |   |
| Item                  5. Other Information                                                                                                                            |   | 20     |
|                                                                                                                                                                  |   |   |
| Item                  6. Exhibits                                                                                                                                     |   | 20     |

----

| **PART                1. FINANCIAL INFORMATION**                  |
|-------------------------------------------------------------------|
|                                                              |   |   |   |   |
| **ITEM                1. FINANCIAL STATEMENTS**                   |
|                                                              |
| ATSI                COMMUNICATIONS, INC. AND SUBSIDIARIES         |
| CONSOLIDATED                BALANCE SHEETS                        |
| (In                thousands, except share and per share amounts) |
| (Unaudited)                                                       |

|                                                                                                                                                                                        |   | April                30, |    | July                31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|-------------------------|--------|
|                                                                                                                                                                                        |   | 2007                     |    | 2006                    |   |
| ASSETS                                                                                                                                                                                      |   |                     |    |                    |   |
| CURRENT                ASSETS:                                                                                                                                                              |   |                     |    |                    |   |
| Cash                and cash equivalents                                                                                                                                                    |   | $                        | 597     |                    | $      | 36 |   |
| Certificates                of deposit                                                                                                                                                      |   |                     | 202     |                    |   | - |   |
| Accounts                receivable, net of allowance for bad debt of $76 and $0,                respectively                                                                                |   |                     | 852     |                    |   | 621 |   |
| Prepaid                & other current assets                                                                                                                                           |   |                     | 51      |                    |   | 33 |   |
| Total                current assets                                                                                                                                                         |   |                     | 1,702   |                    |   | 690 |   |
|                                                                                                                                                                                        |   |                     |    |                    |   |   |   |
| LONG-TERM                ASSETS:                                                                                                                                                            |   |                     |    |                    |   |   |   |
| Certificates                of deposit                                                                                                                                                      |   |                     | 100     |                    |   | - |   |
|                                                                                                                                                                                        |   |                     |    |                    |   |   |   |
| PROPERTY                AND EQUIPMENT                                                                                                                                                       |   |                     | 385     |                    |   | 284 |   |
| Less                - accumulated depreciation                                                                                                                                              |   |                     | (243    | )                       |   | (182 | ) |
| Net                property and equipment                                                                                                                                                   |   |                     | 142     |                    |   | 102 |   |
|                                                                                                                                                                                        |   |                     |    |                    |   |   |   |
| Total                assets                                                                                                                                                                 |   | $                        | 1,944   |                    | $      | 792 |   |
|                                                                                                                                                                                        |   |                     |    |                    |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' DEFICIT                                                                                                                                        |   |                     |    |                    |   |   |   |
| CURRENT                LIABILITIES:                                                                                                                                                         |   |                     |    |                    |   |   |   |
| Accounts                payable                                                                                                                                                             |   | $                        | 814     |                    | $      | 677 |   |
| Accounts                payable, related parties                                                                                                                                            |   |                     | -       |                    |   | 42 |   |
| Line                of credit, CSI Business Finance                                                                                                                                         |   |                     | -       |                    |   | 150 |   |
| Accrued                liabilities                                                                                                                                                          |   |                     | 508     |                    |   | 2,389 |   |
| Current                portion of obligation under capital leases                                                                                                                           |   |                     | 3       |                    |   | 3 |   |
| Notes                payable                                                                                                                                                                |   |                     | 770     |                    |   | 50 |   |
| Notes                payable, related party                                                                                                                                                 |   |                     | -       |                    |   | 106 |   |
| Convertible                debentures                                                                                                                                                       |   |                     | 138     |                    |   | 74 |   |
| Total                current liabilities                                                                                                                                                    |   |                     | 2,233   |                    |   | 3,491 |   |
|                                                                                                                                                                                        |   |                     |    |                    |   |   |   |
| LONG-TERM                LIABILITIES:                                                                                                                                                       |   |                     |    |                    |   |   |   |
| Notes                payable                                                                                                                                                                |   |                     | 51      |                    |   | 500 |   |
| Convertible                debentures                                                                                                                                                       |   |                     | 177     |                    |   | 234 |   |
| Obligation                under capital leases, less current portion                                                                                                                        |   |                     | 4       |                    |   | 6 |   |
| Other                                                                                                                                                                                       |   |                     | 4       |                    |   | 4 |   |
| Total                long-term liabilities                                                                                                                                                  |   |                     | 236     |                    |   | 744 |   |
|                                                                                                                                                                                        |   |                     |    |                    |   |   |   |
| Total                liabilities                                                                                                                                                            |   |                     | 2,469   |                    |   | 4,235 |   |
|                                                                                                                                                                                        |   |                     |    |                    |   |   |   |
| STOCKHOLDERS'                DEFICIT:                                                                                                                                                       |   |                     |    |                    |   |   |   |
| Series                  A Cumulative Convertible Preferred Stock, $0.001, 50,000 shares                  authorized, 0 and 2,750 shares issued and outstanding, respectively                |   |                     | -       |                    |   | - |   |
| Series                D Cumulative Preferred Stock, $0.001, 3,000 shares authorized, 742                shares                issued and outstanding                                        |   |                     | 1       |                    |   | 1 |   |
| Series                E Cumulative Preferred Stock, $0.001, 10,000 shares authorized, 1,170                shares issued and outstanding                                                    |   |                     | 1       |                    |   | 1 |   |
| Series                  H Convertible Preferred Stock, $0.001, 16,000,000 shares authorized,                  0 and                  11,802,353 shares issued and outstanding, respectively |   |                     | -       |                    |   | 12 |   |
| Common                  stock, $0.001 par value, 150,000,000 shares authorized, 37,093,225                  and                  16,444,768 shares issued and outstanding, respectively     |   |                     | 37      |                    |   | 16 |   |
| Additional                paid in capital                                                                                                                                                   |   |                     | 72,044  |                    |   | 68,775 |   |
| Accumulated                deficit                                                                                                                                                          |   |                     | (72,609 | )                       |   | (72,249 | ) |
| Other                comprehensive income                                                                                                                                                   |   |                     | 1       |                    |   | 1 |   |
| Total                stockholders' deficit                                                                                                                                                  |   |                     | (525    | )                       |   | (3,443 | ) |
| Total                liabilities and stockholders' deficit                                                                                                                                  |   | $                        | 1,944   |                    | $      | 792 |   |

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| ATSI                COMMUNICATIONS, INC. AND SUBSIDIARIES         |
|-------------------------------------------------------------------|
| CONSOLIDATED                STATEMENTS OF OPERATIONS              |
| (In                thousands, except share and per share amounts) |
| (Unaudited)                                                       |

|                                                                                                                 |   | Three                months ended April 30, |       | Nine                months ended April 30, |   |
|----------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|------------|--------------------------------------------|--------|
|                                                                                                                 |   | 2007                                        |       | 2006                                       |   | 2007 |   | 2006 |   |
| OPERATING                REVENUES:                                                                                   |   |                                        |       |                                       |   |   |   |   |   |
| Carrier                services                                                                                      |   | $                                           | 8,109      |                                       | $      | 4,047 |   | $ | 21,645 |   | $ | 9,253 |   |
| Communication                services                                                                                |   |                                        | 27         |                                       |   | 39 |   |   | 87 |   |   | 91 |   |
| Network                services                                                                                      |   |                                        | 4          |                                       |   | 5 |   |   | 13 |   |   | 17 |   |
| Total                operating revenues                                                                              |   |                                        | 8,140      |                                       |   | 4,091 |   |   | 21,745 |   |   | 9,361 |   |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| OPERATING                EXPENSES:                                                                                   |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| Cost                of services (exclusive of depreciation and amortization, shown                below)             |   |                                        | 7,647      |                                       |   | 3,899 |   |   | 20,175 |   |   | 8,908 |   |
| Selling,                general and administrative expense (exclusive of legal and professional                fees) |   |                                        | 317        |                                       |   | 209 |   |   | 1,271 |   |   | 828 |   |
| Legal                and professional fees                                                                           |   |                                        | 84         |                                       |   | 72 |   |   | 199 |   |   | 153 |   |
| Bad                debt expense                                                                                      |   |                                        | 29         |                                       |   | - |   |   | 76 |   |   | - |   |
| Depreciation                and amortization expense                                                                 |   |                                        | 24         |                                       |   | 23 |   |   | 62 |   |   | 72 |   |
| Total                operating expenses                                                                              |   |                                        | 8,101      |                                       |   | 4,203 |   |   | 21,783 |   |   | 9,961 |   |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| OPERATING                INCOME (LOSS)                                                                               |   |                                        | 39         |                                       |   | (112 | ) |   | (38 | ) |   | (600 | ) |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| OTHER                INCOME (EXPENSE):                                                                               |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| Loss                on derivative instrument liabilities                                                             |   |                                        | -          |                                       |   | 88 |   |   | - |   |   | (8 | ) |
| Debt                forgiveness income                                                                               |   |                                        | -          |                                       |   | 11 |   |   | - |   |   | 50 |   |
| Other                income                                                                                          |   |                                        | 4          |                                       |   | - |   |   | 4 |   |   | - |   |
| Interest                expense                                                                                      |   |                                        | (257       | )                                          |   | (26 | ) |   | (326 | ) |   | (81 | ) |
| Total                other income (expense), net                                                                     |   |                                        | (253       | )                                          |   | 73 |   |   | (322 | ) |   | (39 | ) |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| INCOME                (LOSS) FROM CONTINUING OPERATIONS                                                              |   |                                        | (214       | )                                          |   | (39 | ) |   | (360 | ) |   | (639 | ) |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| DISCONTINUED                OPERATIONS                                                                               |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| Gain                on disposal of discontinued operations                                                           |   |                                        | -          |                                       |   | - |   |   | - |   |   | 1,652 |   |
| INCOME                FROM DISCONTINUED OPERATIONS                                                                   |   |                                        | -          |                                       |   | - |   |   | - |   |   | 1,652 |   |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| NET                INCOME (LOSS)                                                                                     |   | $                                           | (214       | )                                          | $      | (39 | ) | $ | (360 | ) | $ | 1,013 |   |
| LESS:                PREFERRED DIVIDEND                                                                              |   |                                        | (7         | )                                          |   | (23 | ) |   | (45 | ) |   | (82 | ) |
| ADD:                REVERSAL OF PREVIOUSLY RECORDED PREFERRED DIVIDEND                                               |   |                                        | 600        |                                       |   | - |   |   | 828 |   |   | - |   |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| NET                INCOME (LOSS) TO COMMON STOCKHOLDERS                                                              |   | $                                           | 379        |                                       | $      | (62 | ) | $ | 423 |   | $ | 931 |   |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| BASIC                INCOME (LOSS) PER SHARE:                                                                        |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| From                continuing operations                                                                            |   | $                                           | 0.01       |                                       | $      | 0.00 |   | $ | 0.02 |  | $ | (0.06 | ) |
| From                discontinued operations                                                                          |   | $                                           | -          |                                       | $      | - |   | $ | - |   | $ | 0.13 |   |
| Total                                                                                                                |   | $                                           | 0.01       |                                       | $      | 0.00 |   | $ | 0.02 |   | $ | 0.07 |   |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| DILUTED                INCOME (LOSS) PER SHARE                                                                       |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| From                continuing operations                                                                            |   | $                                           | 0.01       |                                       | $      | 0.00 |   | $ | 0.02 |   | $ | (0.02 | ) |
| From                discontinued operations                                                                          |   | $                                           | -          |                                       | $      | - |   | $ | - |   | $ | 0.05 |   |
| Total                                                                                                                |   | $                                           | 0.01       |                                       | $      | 0.00 |   | $ | 0.02 |   | $ | 0.03 |   |
|                                                                                                                 |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| WEIGHTED                AVERAGE COMMON SHARES OUTSTANDING                                                            |   |                                        |       |                                       |   |   |   |   |   |   |   |   |   |
| BASIC                                                                                                                |   |                                        | 37,005,780 |                                       |   | 14,819,277 |   |   | 24,712,414 |   |   | 12,876,351 |   |
| DILUTED                                                                                                              |   |                                        | 39,842,780 |                                       |   | 14,819,277 |   |   | 27,549,414 |   |   | 30,647,375 |   |

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| ATSI                  COMMUNICATIONS, INC. AND SUBSIDIARIES             |
|-------------------------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
| (In                  thousands)                                         |
| (Unaudited)                                                             |

|                                                     |   | Three                  months ended April 30, |   | Nine                  months ended April 30, |   |
|----------------------------------------------------------|--------|-----------------------------------------------|--------|----------------------------------------------|--------|
|                                                     |   | 2007                                          |   | 2006                                         |   | 2007 |   | 2006 |   |
|                                                     |   |                                          |   |                                         |   |   |   |   |   |
| Net                  income (loss)                       |   | $                                             | (214   | )                                            | $      | (39 | ) | $ | (360 | ) | $ | 1,013 |   |
|                                                     |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Foreign                  currency translation adjustment |   |                                          | -      |                                         |   | - |   |   | - |   |   | - |   |
|                                                     |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income (loss)             |   | $                                             | (214   | )                                            | $      | (39 | ) | $ | (360 | ) | $ | 1,013 |   |
|                                                     |   |                                          |   |                                         |   |   |   |   |   |   |   |   |   |

----

**ATSI        COMMUNICATIONS, INC. AND SUBSIDIARIES**

**CONSOLIDATED        STATEMENT OF STOCKHOLDERS DEFICIT**

**(inthousands,        except share amounts)**

**(unaudited)**

|                                                                |   | **Preferred(A)** |                           | **Preferred(D)** |   | **Preferred(E)**               |   | **Preferred(H)** |                           | **Common** |   | **Additional****Paid-in**      |   | **Retained** |                           | **OtherComp.** |   |                           |   |
|---------------------------------------------------------------------|--------|------------------|--------------------------------|------------------|--------|--------------------------------|--------|------------------|--------------------------------|------------|--------|--------------------------------|--------|--------------|--------------------------------|----------------|--------|--------------------------------|--------|
|                                                                |   | **Shares**       |                           | **Par**          |   | **Shares**                     |   | **Par**          |                           | **Shares** |   | **Par**                        |   | **Shares**   |                           | **Par**        |   | **Shares**                     |   | **Par** |   | **Capital** |   | **(Deficit)** |   | **Income/Loss** |   | **Totals** |   |
| **Balances;                    July 31, 2006**                      |   |             | **2,750**                      |             | $      | -                              |   |             | **742**                        |       | $      | 1                              |   |         | **1,170**                      |           | $      | 1                              |   |   | **11,802,420** |   | **$** | **12** |   |   | **16,444,403** |   | **$** | **16** |   | **$** | **68,775** |   |   | **(72,249** | **)** |   | **1** |   |   | **(3,443** | **)** |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                    issuedfor Services                        |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   | 1,366,85                    5 |   |   | 1 |   |   | 309 |   |   |   |   |   |   |   |   | 310 |   |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commonshares                    issuedfor PreferredStockConversion  |   |             | (2,750                         | )                |   | -                              |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   | (11,802,420 | ) |   | (12 | ) |   | 16,261,847 |   |   | 16 |   |   | 1,137 |   |   |   |   |   |   |   |   | 1,141 |   |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise                    of warrants                             |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   | 150,000 |   |   | 1 |   |   | 34 |   |   |   |   |   |   |   |   | 35 |   |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                    declared                               |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (45 | ) |   |   |   |   |   |   |   | (45 | ) |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reversal                    of previouslyrecordedpreferreddividen d |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 828 |   |   |   |   |   |   |   |   | 828 |   |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockoptionexpense                                                  |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 216 |   |   |   |   |   |   |   |   | 216 |   |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                    fromexerciseof options                  |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   | 100,000 |   |   | 1 |   |   | 16 |   |   |   |   |   |   |   |   | 17 |   |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beneficial                    ConversionFeature, private placement  |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 144 |   |   |   |   |   |   |   |   | 144 |   |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                    issuedfor conversionof notes payable      |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   | 2,770,12                    0 |   |   | 2 |   |   | 630 |   |   |   |   |   |   |   |   | 632 |   |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    (Loss)                                       |   |             |                      |             |   |                      |   |             |                      |       |   |                      |   |         |                      |           |   |                      |   |   |                      |   |   |                      |   |   |                      |   |   |                      |   |   |                      |   |   | (360 | ) |   |                      |   |   | (360 | ) |
|                                                                |   |             |                           |             |   |                           |   |             |                           |       |   |                           |   |         |                           |           |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balances;                    April 30, 200 7**                    |   |             | **-**                          |             | $      | -                              |   |             | **742**                        |       | $      | 1                              |   |         | **1,170**                      |           | $      | 1                              |   |   | **-** |   | **$** | **-** |   |   | **37,093,225** |   | **$** | **37** |   | **$** | **72,044** |   |   | **(72,609** | **)** |   | **1** |   |   | **(525** | **)** |

----

| ATSI                  COMMUNICATIONS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF CASH FLOWS      |
| (In                  thousands)                             |
| (Unaudited)                                                 |

|                                                                                                                             |   | Nine                  months ended April 30, |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                                                                             |   | 2007                                         |   | 2006 |   |
|                                                                                                                             |   |                                         |   |   |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                                                                           |   |                                         |   |   |   |
| NET                  INCOME (LOSS)                                                                                               |   | $                                            | (360   | ) | $ | 1,013 |   |
| Adjustments                  to reconcile net income (loss) to cash provided by (used in) operating                  activities: |   |                                         |   |   |   |   |   |
| Gain                  in disposal of investment                                                                                  |   |                                         | -      |   |   | (1,652 | ) |
| Debt                  forgiveness income                                                                                         |   |                                         | -      |   |   | (50 | ) |
| Depreciation                  and amortization                                                                                   |   |                                         | 62     |   |   | 72 |   |
| Issuance                  of stock grants and options, employees for services                                                    |   |                                         | 422    |   |   | 180 |   |
| Issuance                  of common stock and warrants for services                                                              |   |                                         | 38     |   |   | 151 |   |
| Provisions                  for losses on accounts receivables                                                                   |   |                                         | 76     |   |   | - |   |
| Loss                  on derivative instrument liabilities                                                                       |   |                                         | -      |   |   | 8 |   |
| Amortization                  of debt discount                                                                                   |   |                                         | 151    |   |   | - |   |
| Changes                  in operating assets and liabilities:                                                                    |   |                                         |   |   |   |   |   |
| Accounts                  receivable                                                                                             |   |                                         | (308   | ) |   | (234 | ) |
| Prepaid                  expenses and other                                                                                      |   |                                         | (17    | ) |   | 22 |   |
| Accounts                  payable                                                                                                |   |                                         | (1     | ) |   | 296 |   |
| Accrued                  liabilities                                                                                             |   |                                         | 54     |   |   | 48 |   |
| Net                  cash provided by (used) in operating activities                                                             |   |                                         | 117    |   |   | (146 | ) |
|                                                                                                                             |   |                                         |   |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                                                                           |   |                                         |   |   |   |   |   |
| Investment                  in certificates of deposit                                                                           |   |                                         | (302   | ) |   |   |   |
| Purchases                  of property & equipment                                                                           |   |                                         | (101   | ) |   | (4 | ) |
| Net                  cash used in investing activities                                                                           |   |                                         | (403   | ) |   | (4 | ) |
|                                                                                                                             |   |                                         |   |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:                                                                           |   |                                         |   |   |   |   |   |
| Proceeds                  from notes payable                                                                                     |   |                                         | 350    |   |   | 50 |   |
| Payments                  on notes payable, related party                                                                        |   |                                         | (106   | ) |   | - |   |
| Payments                  on notes payable                                                                                       |   |                                         | (78    | ) |   | - |   |
| Payments                  on advances from shareholders                                                                          |   |                                         | (148   | ) |   | - |   |
| Proceeds                  from advances from shareholders                                                                        |   |                                         | 713    |   |   | - |   |
| Issuance                  of common stock, cost of financing services                                                            |   |                                         | 67     |   |   | - |   |
| Proceeds                  from factoring line of credit                                                                          |   |                                         | -      |   |   | 150 |   |
| Processing                  fees, factoring line of credit                                                                       |   |                                         | -      |   |   | (26 | ) |
| Proceeds                  from the exercise of stock options                                                                     |   |                                         | 16     |   |   | - |   |
| Proceeds                  from the exercise of warrants                                                                          |   |                                         | 35     |   |   | 54 |   |
| Principal                  payments on capital lease obligation                                                                  |   |                                         | (2     | ) |   | (2 | ) |
| Net                  cash provided by financing activities                                                                       |   |                                         | 847    |   |   | 226 |   |
|                                                                                                                             |   |                                         |   |   |   |   |   |
| INCREASE                  IN CASH                                                                                                |   |                                         | 561    |   |   | 76 |   |
| CASH                  AND CASH EQUIVALENTS, beginning of period                                                                  |   |                                         | 36     |   |   | 29 |   |
|                                                                                                                             |   |                                         |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS, end of period                                                                        |   | $                                            | 597    |   | $ | 105 |   |
|                                                                                                                             |   |                                         |   |   |   |   |   |
| SUPPLEMENTAL                  DISCLOSURES:                                                                                       |   |                                         |   |   |   |   |   |
| Cash                  paid for interest                                                                                          |   | $                                            | 43     |   | $ | 9 |   |
| Cash                  paid for income taxes                                                                                      |   |                                         | -      |   |   | - |   |
|                                                                                                                             |   |                                         |   |   |   |   |   |
| NON-CASH                  INVESTING AND FINANCING TRANSACTIONS                                                                   |   |                                         |   |   |   |   |   |
| Issuance                  of common stock for conversion of debt                                                                 |   | $                                            | 572    |   | $ | 149 |   |
| Issuance                  of common stock for accounts payable                                                                   |   |                                         | 58     |   |   | - |   |
| Issuance                  of common stock for purchase of fixed assets                                                           |   |                                         | -      |   |   | 58 |   |
| Conversion                  of preferred stock to common stock                                                                   |   |                                         | 1,141  |   |   | 102 |   |
| Fair                  value of derivatives transferred to equity                                                                 |   |                                         | -      |   |   | 22 |   |
| Preferred                  stock dividends                                                                                       |   |                                         | 45     |   |   | 136 |   |
| Reversal                  of previously recorded preferred stock dividend                                                        |   |                                         | (828   | ) |   | - |   |
| Discount                  for beneficial conversion feature on convertible debt                                                  |   |                                         | 144    |   |   | - |   |

----

**ATSI      COMMUNICATIONS, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      1 - BASIS OF PRESENTATION**

**NOTE      2 - GOING CONCERN**

**NOTE      3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|                                                                             |   | Three                  months ended April 30, |         | Nine                  months ended April 30, |   |
|----------------------------------------------------------------------------------|--------|-----------------------------------------------|--------------|----------------------------------------------|--------|
|                                                                             |   | 2007                                          |         | 2006                                         |   | 2007 |   | 2006 |   |
|                                                                             |   |                                          |         |                                         |   |   |   |   |   |
| Net                  income (loss) to common                                     |   |                                          |         |                                         |   |   |   |   |   |
| shareholders,                  as reported                                       |   | $                                             | 379,000      |                                         |   | ($62,000 | ) | $ | 423,000 |   | $ | 931,000 |   |
| Add:                   stock                  based compensation determined |   |                                          |         |                                         |   |   |   |   |   |   |   |   |   |
| under                  intrinsic value based method                              |   |                                          | -            |                                         |   | - |   |   | - |   |   | - |   |
| Less:                   stock based compensation determined                 |   |                                          |         |                                         |   |   |   |   |   |   |   |   |   |
| under                  fair value based method                                   |   |                                          | -            |                                         |   | - |   |   | - |   |   | (281,499 | ) |
|                                                                             |   |                                          |    |                                         |   |    |   |   |    |   |   |    |   |
| Pro                  forma net income (loss) to common stockholders              |   | $                                             | 379,000      |                                         |   | ($62,000 | ) | $ | 423,000 |   | $ | 649,501 |   |
|                                                                             |   |                                          |         |                                         |   |   |   |   |   |   |   |   |   |
| Basic                  net income (loss) per common share:                       |   |                                          |         |                                         |   |   |   |   |   |   |   |   |   |
| As                  reported                                                     |   | $                                             | 0.01         |                                         | $      | 0.00 |   | $ | 0.02 |   | $ | 0.07 |   |
| Pro                  forma                                                       |   | $                                             | 0.01         |                                         | $      | 0.00 |   | $ | 0.02 |   | $ | 0.05 |   |
|                                                                             |   |                                          |         |                                         |   |   |   |   |   |   |   |   |   |
| Diluted                  net income (loss) per common share:                     |   |                                          |         |                                         |   |   |   |   |   |   |   |   |   |
| As                  reported                                                     |   | $                                             | 0.01         |                                         | $      | 0.00 |   | $ | 0.02 |   | $ | 0.03 |   |
| Pro                  forma                                                       |   | $                                             | 0.01         |                                         | $      | 0.00 |   | $ | 0.02 |   | $ | 0.02 |   |

----

**NOTE      4 - STOCK-BASED COMPENSATION**

| Expected                dividend yield         |   |   | 0.00                   | %      |
|------------------------------------------------|--------|--------|------------------------|--------|
| Expected                stock price volatility |   |   | 80                     | %      |
| Risk-free                interest rate         |   |   | 4.51                   | %      |
| Expected                life of options        |   |   | 7                years |   |

|                                            |   |    |      |                          |   | Weighted-average                     |   |
|-------------------------------------------------|--------|---------|-----------|-------------------------------|--------|--------------------------------------|--------|
|                                            |   |    |      | Weighted-average              |   | remaining                contractual |   |
| **2005                Stock Compensation Plan** |   | Options |      | exercise                price |   | term                (years)          |   |
|                                            |   |    |      |                          |   |                                 |   |
| Outstanding                at July 31, 2006     |   |    | 4,354,000 |                          | $      | 0.16                                 |   |   | 9.0 |   |
|                                            |   |    |      |                          |   |                                 |   |   |   |   |
| Granted                                         |   |    | 1,345,000 |                          |   | 0.21                                 |   |   | 9.0 |   |
| Exercised                                       |   |    | (100,000  | )                             |   | 0.16                                 |   |   | - |   |
|                                            |   |    |      |                          |   |                                 |   |   |   |   |
| Outstanding                at April 30, 2007    |   |    | 5,599,000 |                          |   | 0.17                                 |   |   | 9.0 |   |
|                                            |   |    |      |                          |   |                                 |   |   |   |   |
| Exercisable                at April 30, 2007    |   |    | 2,837,000 |                          | $      | 0.17                                 |   |   | 9.0 |   |

----

**NOTE      5 - DEBTS**

**NOTE      6 - COMMON STOCK**

----

| ·    | 386,855                shares of common stock valued at $104,520 for its placement agent                fees and                legal and consulting services rendered by various                individuals. |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | 16,149,938                shares of common stock in connection with the conversion and redemption                of                11,802,420 shares of Series H Convertible Preferred Stock and accrued                premium common shares. |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | 111,909                shares of common stock in connection with the conversion of 2,750                shares                of Series A Convertible Preferred Stock and accrued                dividend. |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | 150,000                shares of common stock upon exercise of outstanding warrants for                aggregate                proceeds of $34,500. |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | 66,226                shares of common stock to Richard Benkendorf as a payment of $15,226                under                a settlement agreement. |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | 137,412                shares of common stock to John Fleming as a payment of $42,600 under                a                settlement agreement. |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | 980,000                shares of common stock to its employees and directors for services                rendered. ATSI recorded compensation expense of $205,800 in its statement                of operations for the aggregate market value of the stock at the                date of                issuance. |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | 100,000                shares of common stock upon exercise of outstanding stock options                by one                of its employees for aggregate proceeds of                $16,000. |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | 2,566,482                shares of common stock in connection with the conversion of various                notes                payable in the principal amount of $564,600 and accrued interest                of                $10,292. |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**NOTE      7 - PREFERRED STOCK DIVIDEND**

**ITEM      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF      OPERATIONS**

*SPECIAL      NOTE: This Quarterly Report on Form 10-QSB contains “forward-looking statements”within the meaning of Section 27A of the Securities Act of 1933, as amended,      and      Section 21E of the Securities 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. Some of these risks      include the availability and capacity of competitive data transmission networks,      the continued effectiveness of our concession from the government of Mexico,      and      or ability to raise sufficient capital to continue operations. Additional risks      are included in our Annual Report on Form 10-KSB filed with the Securities      and      Exchange Commission on October 10, 2006. *

----

**General**

* *

* *

**Results      of Operations **

|                                                                                                                     |   | Three                  months ended April 30, |   |   |   | Nine                  months ended April 30, |   |                      |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|--------|--------|----------------------------------------------|--------|---------------------------|--------|
|                                                                                                                     |   | 2007                                          |   | 2006   |   | Variances                                    |   |                    % |   | 2007 |   | 2006 |   | Variances |   |  % |   |
| OPERATING                  REVENUES:                                                                                     |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |
| Carrier                  services                                                                                        |   | $                                             | 8,109  |   | $      | 4,047                                        |   | $                         | 4,062  |   |   | 100 | % | $ | 21,645 |   | $ | 9,253 |   | $ | 12,392 |   |   | 134 | % |
| Communication                  services                                                                                  |   |                                          | 27     |   |   | 39                                           |   |                      | (12    | ) |   | -31 | % |   | 87 |   |   | 91 |   |   | (4 | ) |   | -4 | % |
| Network                  services                                                                                        |   |                                          | 4      |   |   | 5                                            |   |                      | (1     | ) |   | -20 | % |   | 13 |   |   | 17 |   |   | (4 | ) |   | -24 | % |
| Total                  operating revenues                                                                                |   |                                          | 8,140  |   |   | 4,091                                        |   |                      | 4,049  |   |   | 99 | % |   | 21,745 |   |   | 9,361 |   |   | 12,384 |   |   | 132 | % |
|                                                                                                                     |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of services (exclusive of depreciation and amortization, shown                  below)             |   |                                          | 7,647  |   |   | 3,899                                        |   |                      | (3,748 | ) |   | -96 | % |   | 20,175 |   |   | 8,908 |   |   | (11,267 | ) |   | -126 | % |
| Selling,                  general and administrative expense (exclusive of legal and professional                  fees) |   |                                          | 317    |   |   | 209                                          |   |                      | (108   | ) |   | -52 | % |   | 1,271 |   |   | 828 |   |   | (443 | ) |   | -54 | % |
| Legal                  and professional fees                                                                             |   |                                          | 84     |   |   | 72                                           |   |                      | (12    | ) |   | -17 | % |   | 199 |   |   | 153 |   |   | (46 | ) |   | -30 | % |
| Bad                  debt expense                                                                                        |   |                                          | 29     |   |   | -                                            |   |                      | (29    | ) |   | -100 | % |   | 76 |   |   | - |   |   | (76 | ) |   | -100 | % |
| Depreciation                  and amortization expense                                                                   |   |                                          | 24     |   |   | 23                                           |   |                      | (1     | ) |   | -4 | % |   | 62 |   |   | 72 |   |   | 10 |   |   | 14 | % |
| OPERATING                  INCOME (LOSS)                                                                                 |   |                                          | 39     |   |   | (112                                         | )      |                      | 151    |   |   | 135 | % |   | (38 | ) |   | (600 | ) |   | 562 |   |   | 94 | % |
|                                                                                                                     |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER                  INCOME (EXPENSE):                                                                                 |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                  on derivative instrument liabilities                                                               |   |                                          | -      |   |   | 88                                           |   |                      | (88    | ) |   | 100 | % |   | - |   |   | (8 | ) |   | 8 |   |   | 100 | % |
| Debt                  forgiveness income                                                                                 |   |                                          | -      |   |   | 11                                           |   |                      | (11    | ) |   | -100 | % |   | - |   |   | 50 |   |   | (50 | ) |   | -100 | % |
| Other                  income                                                                                            |   |                                          | 4      |   |   | -                                            |   |                      | 4      |   |   | 100 | % |   | 4 |   |   | - |   |   | 4 |   |   | 100 | % |
| Interest                  expense                                                                                        |   |                                          | (257   | )      |   | (26                                          | )      |                      | (231   | ) |   | -888 | % |   | (326 | ) |   | (81 | ) |   | (245 | ) |   | -302 | % |
| Total                  other income (expense), net                                                                       |   |                                          | (253   | )      |   | 73                                           |   |                      | (326   | ) |   | 447 | % |   | (322 | ) |   | (39 | ) |   | (283 | ) |   | -726 | % |
|                                                                                                                     |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                  (LOSS) FROM CONTINUING OPERATIONS                                                                |   |                                          | (214   | )      |   | (39                                          | )      |                      | (175   | ) |   | -449 | % |   | (360 | ) |   | (639 | ) |   | 279 |   |   | 44 | % |
|                                                                                                                     |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DISCONTINUED                  OPERATIONS                                                                                 |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain                  on disposal of discontinued operations                                                             |   |                                          | -      |   |   | -                                            |   |                      | -      |   |   | - |   |   | - |   |   | 1,652 |   |   | (1,652 | ) |   | -100 | % |
| INCOME                  FROM DISCONTINUED OPERATIONS                                                                     |   |                                          | -      |   |   | -                                            |   |                      | -      |   |   | - |   |   | - |   |   | 1,652 |   |   | (1,652 | ) |   | -100 | % |
|                                                                                                                     |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  INCOME (LOSS)                                                                                       |   | $                                             | (214   | )      | $      | (39                                          | )      | $                         | (175   | ) |   | -449 | % | $ | (360 | ) | $ | 1,013 |   | $ | (1,373 | ) |   | -136 | % |
| LESS:                  PREFERRED DIVIDEND                                                                                |   |                                          | (7     | )      |   | (23                                          | )      |                      | 16     |   |   | 70 | % |   | (45 | ) |   | (82 | ) |   | 37 |   |   | 45 | % |
| ADD:                  REVERSAL OF PREVIOUSLY RECORDED PREFERRED DIVIDEND                                                 |   |                                          | 600    |   |   | -                                            |   |                      | 600    |   |   | 100 | % |   | 828 |   |   | - |   |   | 828 |   |   | 100 | % |
|                                                                                                                     |   |                                          |   |   |   |                                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                  INCOME (LOSS) TO COMMON STOCKHOLDERS                                                                |   | $                                             | 379    |   | $      | (62                                          | )      | $                         | 441    |   |   | 711 | % | $ | 423 |   | $ | 931 |   | $ | (508 | ) |   | -55 | % |

----

**Three      Months ended April 30, 2007 Compared to Three Months ended April 30,      2006**

*Operating      Revenues*

*ost      of Services (Exclusive of depreciation and amortization).*

*Selling,      General and Administrative (SG&A) Expenses (exclusive of legal and      professional fees). *

----

*Legal      and professional fees*

*Bad      debt expense. *

*Depreciation      and amortization*

*Operating      income (loss)*

*Gain      (loss) on derivative instruments liabilities, net. *

*Debt      forgiveness income. *

*Interest      expense*

*Income      (loss) from continuing operations*

*Preferred      stock dividends*

*Reversal      of previously recorded preferred stock dividends. *

----

*Net      income (loss) applicable to common stockholders*

**Nine      Months ended April 30, 2007 Compared to Nine Months ended April 30,      2006**

*Operating      Revenues*

*ost      of Services. (Exclusive of depreciation and amortization)*

*Selling,      General and Administrative (SG&A) Expenses*
*(exclusive      of legal and professional fees, non-cash stock compensation to employees and      common stock and warrants for services). *

----

*Legal      and Professional Fees*

*Bad      debt expense. *

*Depreciation      and amortization*

*Operating      Loss*

*Gain      (loss) on derivative instruments liabilities, net. *

*Debt      forgiveness income. *

*Interest      expense*

----

*Income      (loss) from continuing operations*

*Net      income from discontinued operations. *

*Preferred      stock dividends*

*Reversal      of previously recorded preferred stock dividends. *

*Net      income (loss) applicable to common stockholders*

**Liquidity      and Capital Resources**

*Cash      Position:*

----

**Ongoing      operations**

----

**ITEM      3. CONTROLS AND PROCEDURES**

**PART      II. OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS**

----

**ITEM      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS**

**ITEM      3. DEFAULTS UPON SENIOR SECURITIES**

| Series                  D Cumulative Preferred Stock  |   |   | 318,000 |   |
|------------------------------------------------------------|--------|--------|---------|--------|
| TOTAL                                  |   | $      | 318,000 |   |

**ITEM      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

**ITEM      5. OTHER INFORMATION**

**ITEM      6. EXHIBITS **

| **Exhibit** |   |                                                                                                                                                                                                |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Number**  |   | **Description**                                                                                                                                                                                     |
|        |   |                                                                                                                                                                                                |
| 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. |

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**SIGNATURE**

|                             |                                                           |                                               |
|----------------------------------|----------------------------------------------------------------|----------------------------------------------------|
|                             | **ATSI                COMMUNICATIONS, INC**.(Registrant)       |
|                        |                                                      |                                          |
| Date:              June 14, 2007 | By:                                                  | /s/ Arthur              L.              Smith |
|                             | Name: Arthur              L. Smith                        |
|                             | Title: President              and Chief Executive Officer |
|                             |                                                                                                                           |                                  |
|----------------------------------|--------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                             |                                                                                                                           |
|                        |                                                                                                                      |                             |
| Date:              June 14, 2007 | By:                                                                                                                  | /s/ Antonio              Estrada |
|                             | Name: Antonio              Estrada                                                                                        |
|                             | Title:                Corporate                Controller(Principal                Accounting and Principal Financial Officer) |

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