Document:

EXHIBIT 4.2
                                                                     -----------
                                 PROMISSORY NOTE

$103,454.08                    SAN  ANTONIO,  TEXAS           NOVEMBER 1, 2004

     FOR  VALUE RECEIVED, ATSI COMMUNICATIONS, INC., a Nevada corporation, whose
address  is  8600 Wurzbach Road, Suite 700W, San Antonio, Texas 78240 ("Maker"),
promises  to  pay  to  the  order  of  FRANKLIN,  CARDWELL  & JONES, PC, a Texas
professional corporation ("Payee"), at 1001 McKinney, 18th Floor, Houston, Texas
77002,  or  at  such other place and to such other party or parties as the owner
and  holder  hereof  may  from time to time designate in writing, the sum of ONE
HUNDRED  THREE THOUSAND FOUR HUNDRED FIFTY-FOUR AND 08/100 DOLLARS ($103,454.08)
in  lawful money of the United States of America which shall be legal tender for
the  payment  of  debts from time to time, together with interest thereon at the
rate  of six percent (6%) per annum.  The interest on this Note shall be accrued
monthly  in arrears on the first day of each month based on the actual number of
days  elapsed  in  the preceding month and a 365 day year.  The entire principal
balance  hereof  shall,  if  not  sooner  paid, be payable in full thirteen (13)
months  from  the  date  hereof.

     Payment  of  this  Note  is  secured  and  guaranteed by certain collateral
agreements,  security agreements, collateral assignments, mortgages, guaranties,
and  lien  instruments  executed  by  Maker  in  favor of Payee, including those
executed  simultaneously  herewith, those executed heretofore, or those executed
hereafter,  including  specifically  without  limitation, the Security Agreement
(the  "Security  Documents").

     From  and after November 1, 2005, the Payee may elect to convert all or any
part  of the outstanding principal hereunder and any accrued but unpaid interest
thereon  to  shares  of  common stock of the Maker.  The Payee shall provide the
Maker  with  written notice of its election to exercise such right of conversion
and  the  amount  of  outstanding  principal  and accrued interest balance to be
converted (the "Conversion Notice").  Upon receipt of the Conversion Notice, the
Maker shall immediately issue the number of fully-paid and non-assessable shares
of  common  stock  of  the  Maker (the "Conversion Stock") which is equal to the
amount  of  the  outstanding  principal  and  accrued  interest set forth in the
Conversion  Notice  divided  by the product of (a) .90, times (b) the average of
the  last  sale  price reported by a recognized reporting inter-dealer quotation
system  or  stock  exchange  for the five trading days preceding delivery of the
Conversion  Stock  to  the  Payee; provided, however, that the Maker shall never
deliver to Payee an amount of stock that is greater than 9.9% of the outstanding
shares  of  Maker  without the written consent of Payee.  Any trading day within
the  period described in clause (b) above in which there were no trades shall be
deemed  to  have  a  last  trade at the par value of the Conversion Stock.  Upon
delivery  of  the  Conversion Stock and a legal opinion permitting the immediate
sale  of  the Conversion Stock according to Rule 144 under the Securities Act of
1933,  the  corresponding  amount  of outstanding principal and accrued interest
balance  of  the  Note  shall  be  deemed  to  be  discharged.

     The  Maker  may  elect  to  pay in cash the total outstanding balance on or
before  April 30, 2005; the Payee will waive all accrued interest as of the date
of  the  payment  and  grant  a  10%  discount on the total outstanding balance.
     Maker  expressly  agrees  that  in the event of (a) default in the punctual
payment of this Note or any part of the principal of or interest thereon, or (b)
default in the punctual payment or performance of any other Obligations, as such
term is defined in the Security Documents, the holder may, at its or his option,
without  demand  or  presentment  for  payment, notice of default or nonpayment,
notice or presentment of default, notice of acceleration, notice of intention to
accelerate  or  otherwise,  declare  the principal and any and all interest then
accrued  thereon,  at  once  due  and  payable.  The  principal  and

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any  and  all  interest  then accrued thereon shall bear interest at the maximum
non-usurious rate of interest that may lawfully be charged under the laws of the
State of Texas or United States Federal Government, as applicable, from the date
of such default until paid.  Upon the occurrence of any default any other holder
of  this  Note  shall also have the right to exercise any and all of the rights,
remedies  and recourses now or hereafter existing in equity or at law, by virtue
of  statute  or otherwise, including, but not limited to, the right to foreclose
any  and  all  liens  and security interests securing the indebtedness evidenced
hereby.

     No  failure to exercise and no delay on the part of Payee in exercising any
power  or  right  in  connection herewith or under the Security Documents or any
other  instrument  evidencing, securing, or guaranteeing this Note shall operate
as  a waiver thereof, nor shall any single or partial exercise of any such right
or  power, or any abandonment or discontinuance of steps to enforce such a right
or  power, preclude any other or further exercise thereof or the exercise of any
other  right  or  power.  No  course  of  dealing  between Maker and Payee shall
operate  as  a  waiver  of any right of Payee.  No modification or waiver of any
provision  of  this  Note  or  any  other  instrument  evidencing,  securing, or
guaranteeing  this  Note nor any consent to any departure therefrom shall in any
event  be effective unless the same shall be in writing and signed by the person
against  whom  enforcement  thereof  is  to  be  sought, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which  given.

     In the event default is made in the prompt payment of this Note when due or
declared due, and the same is placed in the hands of an attorney for collection,
or  suit  is  brought  on  same,  or  the same is collected through any judicial
proceeding whatsoever, or if any action or foreclosure be had hereon, then Maker
agrees  and  promises  to pay an additional amount as reasonable, calculated and
foreseeable  attorneys' and collection fees incurred by Payee in connection with
enforcing its rights herein contemplated, all of which amounts shall become part
of  the  principal  hereof.

     To  the extent permitted by applicable law, all makers, endorsers, sureties
and  guarantors  hereof,  if any, as well as any person to become liable on this
Note,  hereby  waive  demand  or presentment for payment of this Note, notice of
default  or nonpayment, protest, notice of protest, suit, notice of intention to
accelerate,  notice  of  acceleration,  diligence or any notice of or defense on
account  of  the  extension  of  time  of  payments  or  change in the method of
payments,  and  consent  to  any  and all renewals and extensions in the time of
payment  hereof,  and  to  any substitution, exchange or release of any security
herefor  or  the  release  of  any party primarily or secondarily liable hereon.

     It  is expressly provided and stipulated that notwithstanding any provision
of  this  Note  or  the Security Documents or any other instrument evidencing or
securing  the  indebtedness herein set forth, in no event shall the aggregate of
all  interest  paid  by  Maker  to  Payee  hereunder  ever  exceed  the  maximum
non-usurious rate of interest which may lawfully be charged Maker under the laws
of the State of Texas or United States Federal Government, as applicable, on the
principal balance of this Note remaining unpaid.  It is expressly stipulated and
agreed  by  Maker  that it is the intent of Payee and Maker in the execution and
delivery  of this Note to contract in furtherance of such laws, and that none of
the  terms  of  this Note, or said other instruments, shall ever be construed to
create  a contract to pay for the use, forbearance or detention of money, at any
interest  rate  in excess of the maximum non-usurious rate of interest permitted
to  be  charged  Maker  under  the  laws  of the State of Texas or United States
Federal  Government, as applicable.  Neither Maker nor any guarantors, endorsers
or  other parties now or hereafter becoming liable for payment of the Note shall
ever  be  liable  for  interest  in  excess  of the maximum non-usurious rate of
interest  that  may  lawfully be charged under the laws of the State of Texas or
United  States  Federal  Government,  as  applicable, and the provisions of this
paragraph  and  the immediately succeeding paragraph shall govern over all other
provisions  of  this

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Note,  and  all  other  instruments  evidencing  or  securing  the  indebtedness
evidenced  hereby,  should any such provisions be in apparent conflict herewith.

     Specifically  and  without  limiting  the  generality  of  the  foregoing
paragraph,  it  is  expressly  provided  that:

     (i)     In  the event of prepayment of the principal of this Note, in whole
     or  in  part,  or  the  payment  of the principal of this Note prior to the
     stated  maturity  date  hereof,  whether resulting from acceleration of the
     maturity  of  this  Note or otherwise, if the aggregate amounts of interest
     accruing  hereon  prior  to  such  payment  plus the amount of any interest
     accruing  after  maturity  and  plus  any  other  amount paid or accrued in
     connection  with  the indebtedness evidenced hereby which by law are deemed
     interest  on  the  indebtedness  evidenced  by the Note and which aggregate
     amounts paid or accrued (if calculated in accordance with the provisions of
     this  Note other than this paragraph) would exceed the maximum non-usurious
     rate  of interest which could lawfully be charged as above mentioned on the
     unpaid  principal  balance  of the indebtedness evidenced by this Note from
     time  to  time  advanced  (less any discount) and remaining unpaid from the
     date  advanced to the date of final payment thereof, then in such event the
     amount  of  such  excess shall be credited, as of the date paid, toward the
     payment  of  the  principal  of this Note so as to reduce the amount of the
     final  payment  of  principal  due on this Note, or if the principal amount
     hereof has been paid in full, refunded to Maker.

     (ii)     If  under  any  circumstances  the  aggregate  amounts paid on the
     indebtedness  evidenced  by  this  Note  prior to and incident to the final
     payment  hereof  include amounts which by law are deemed interest and which
     would exceed the maximum non-usurious rate of interest which could lawfully
     have  been  charged  or  collected  on this Note, as above mentioned, Maker
     stipulates  that (a) any non-principal payment shall be characterized as an
     expense,  fee,  or  premium rather than as interest and any excess shall be
     credited hereon by the holder hereof (or, if this Note shall have been paid
     in  full, refunded to Maker); and (b) determination of the rate of interest
     for determining whether the indebtedness evidenced hereby is usurious shall
     be made by amortizing, prorating, allocating, and spreading, in equal parts
     during  the  full  stated  term hereof, all interest at any time contracted
     for,  charged, or received from Maker in connection with such indebtedness,
     and any excess shall be canceled, credited, or refunded as set forth in (a)
     herein. Time shall be of the essence in performing all such actions.

     Any  check, draft, money order, or other instrument given in payment of all
or  any  portion of this Note may be accepted by Payee and handled in collection
in  the customary manner, but the same shall not constitute payment hereunder or
diminish  any  rights of Payee except to the extent that actual cash proceeds of
such  instruments  are  unconditionally  received  by  Payee.

     Maker  agrees  that this Note shall be freely assignable to any assignee of
Payee,  subject  to  compliance  with  applicable  securities  laws.

     Maker  represents  and warrants that the extension of credit represented by
this Note is for business, commercial, investment, or other similar purposes and
not  primarily  for  personal,  family,  household  or  agricultural  use.

     This  Note  has  been  executed  and  delivered  and  shall be construed in
accordance with and governed by the laws of the State of Texas and of the United
States  of  America  applicable  in  Texas.

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Venue for any litigation between Maker and Payee with respect to this Note shall
be  Harris County, Texas.  Maker and Payee hereby irrevocably submit to personal
jurisdiction  in  Texas,  and  waive  all objections to personal jurisdiction in
Texas  and  venue  in  Harris  County,  Texas  for  purposes of such litigation.

     THIS NOTE, THE DEED OF TRUST, AND ALL DOCUMENTS AND INSTRUMENTS EXECUTED IN
CONNECTION  HEREWITH  OR  THEREWITH, REPRESENT THE FINAL AGREEMENT BETWEEN MAKER
AND  PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT  ORAL  AGREEMENTS  BETWEEN  MAKER  AND PAYEE.  IN THE EVENT OF ACTUAL
CONFLICT  IN  THE  TERMS  AND PROVISIONS OF THIS NOTE AND THE DEED OF TRUST, THE
TERMS  AND  PROVISIONS  OF  THE  DEED  OF  TRUST  WILL  CONTROL.

     THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN MAKER AND PAYEE.

                                ATSI  COMMUNICATIONS,  INC.,
                                a  Nevada  corporation

                                By:   /S/Arthur L. Smith
                                      ------------------
                                Arthur L. Smith, President & CEO

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<PAGE>EXHIBIT 10.1
                                                                    ------------
                                  EXTENSION OF
                              CONSULTING AGREEMENT

Whereas, Donald W. Sapaugh & Hunter M. A Carr ("Consultants") entered into a
Consulting Agreement ("Agreement") with ATSI Communications, Inc. (the
"Company") on the 14th day of October, 2003, and such Extension shall become
effective as of the 1st day of November, 2004; and

Whereas, due to circumstances beyond the control of the Consultants or the
Company, the parties desire to extend, and amend the Agreement as is more fully
described below:

Extension:
3.1 The Company hereby engages the services of the Consultants, as independent
contractors for an additional period of six (6) months from the effective date
of the Agreement.

Amendment:
4.1 The Company shall pay the Consultants as a fee for their services under this
Agreement (the "Consulting Fee") warrants to purchase up to 1,000,000 shares of
the Company's common stock at the predetermined price per share of $.50/share.

IN WITNESS WHEREOF, the parties hereto have caused this Extension of the
Agreement to be duly executed, as of the day and year first above written.

The Company                             The Warrant Agents:

ATSI Communications, Inc.               Donald W. Sapaugh and Hunter M. A Carr

By: /s/Arthur L. Smith        By: /s/ Donald W. Sapaugh and /s/ Hunter M.A. Carr
    ------------------            ----------------------------------------------
Arthur L. Smith                 Donald W. Sapaugh
Title: President and CEO        Hunter M. A Carr

<PAGE>

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