Document:

Exhibit
      4.1

    PROMISSORY
      NOTE

    

    November
      3, 2006

    

    
      	 	
              $250,000.00

            

    

    

    FOR
      VALUE RECEIVED,
      the
      undersigned, ATSI
      COMMUNICATIONS, INC.,
      a
      Nevada corporation (the “Company”),
      promises to pay CCA
      FINANCIAL SERVICES
      (the
“Lender”)
      at
      P.O. Box 16298, Sugar Land, TX 77496 or other address as the Lender shall
      specify in writing, the principal sum of Two
      Hundred Fifty Thousand Dollars ($250,000) and
      interest at the annual rate of sixteen percent (16%) on the unpaid balance
      pursuant to the following terms of this Promissory Note (the “Note”):
      

     

    1.  Principal
      and Interest.
      For
      value
      received, the Company hereby promises to pay to the order of the Lender on
      the
      12-month anniversary of the date hereof (“Maturity
      Date”)
      in
      lawful money of the United States of America and in immediately available funds
      the principal sum of Two Hundred Fifty Thousand Dollars ($250,000), together
      with interest on the unpaid principal of this note at the rate of sixteen
      percent (16%) per year (computed on the basis of a 365-day year and the
      actual days elapsed) from the date of this Note until paid. 

    

    2.  Monthly
      Principal and Interest Payments.
      The
      Company shall make monthly payments of principal and interest in accordance
      with
the
      payment schedule attached hereto as Exhibit A (the “Payment
      Schedule”).
      Each
      payment shall be due and payable as of the Payment Due Date set forth on the
      Payment Schedule and all payment amounts shall be first applied to interest
      and
      the balance to principal. There shall be no prepayment fee or penalty.

    

    3.  Right
      of Prepayment.
      Notwithstanding the payments pursuant to Section 2, the Company at its option
      shall have the right to prepay, with three (3) business days advance written
      notice, any additional amounts of outstanding principal of the Note without
      penalty. 

    

    4.  Waiver
      and Consent.
      To the
      fullest extent permitted by law and except as otherwise provided herein, the
      Company waives demand, presentment, protest, notice of dishonor, suit against
      or
      joinder of any other person, and all other requirements necessary to charge
      or
      hold the Company liable with respect to this Note.

    

    5.  Costs,
      Indemnities and Expenses.
      In the
      event of default as described herein, the Company agrees to pay all reasonable
      fees and costs incurred by the Lender in collecting or securing or attempting
      to
      collect or secure this Note, including reasonable attorneys’ fees and expenses,
      whether or not involving litigation, collecting upon any judgments and/or
      appellate or bankruptcy proceedings. The Company agrees to pay any documentary
      stamp taxes, intangible taxes or other taxes which may now or hereafter apply
      to
      this Note or any payment made in respect of this Note, and the Company agrees
      to
      indemnify and hold the Lender harmless from and against any liability, costs,
      attorneys’ fees, penalties, interest or expenses relating to any such taxes, as
      and when the same may be incurred.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.  Secured
      Nature of the Note.
      This
      Note is secured by the Security Agreement of even date herewith between the
      Company and the Lender (the “Security
      Agreement”)
      (collectively this Note, the Security Agreement, and any other related
      agreements entered into between the Company and the Lender are collectively
      referred to herein as the “Transaction
      Documents”).
      

    

    7.  Event
      of Default.
      An
“Event
      of Default”
shall
      be deemed to have occurred upon the occurrence of any of the following:

    

    (i)  The
      Company should fail for any reason or for no reason to make any payment of
      the
      principal of, interest on or other charges in respect of this Note, within
      ten
      (10) days of the date the same shall become due and payable (whether on an
      installment date or the Maturity Date or by acceleration or
      otherwise);

    

    (ii)  The
      Company shall fail to observe or perform any other covenant, agreement or
      warranty contained in, or otherwise commit any breach or default of any
      provision of this Note, or any of the other Transaction Documents, which is
      not
      cured within fifteen (15) days after the time of breach;

    

    (iii)  The
      Company or any subsidiary that is controlled by the Company shall commence,
      or
      there shall be commenced against the Company or any subsidiary controlled by
      the
      Company under any applicable bankruptcy or insolvency laws as now or hereafter
      in effect or any successor thereto, or the Company or any subsidiary controlled
      by the Company commences any other proceeding under any reorganization,
      arrangement, adjustment of debt, relief of debtors, dissolution, insolvency
      or
      liquidation or similar law of any jurisdiction whether now or hereafter in
      effect relating to the Company or any subsidiary controlled by the Company
      or
      there is commenced against the Company or any subsidiary controlled by the
      Company any such bankruptcy, insolvency or other proceeding which remains
      undismissed for a period of 61 days; or the Company or any subsidiary controlled
      by the Company is adjudicated insolvent or bankrupt; or any order of relief
      or
      other order approving any such case or proceeding is entered; or the Company
      or
      any subsidiary of the Company suffers any appointment of any custodian, private
      or court appointed receiver or the like for it or any substantial part of its
      property which continues undischarged or unstayed for a period of sixty one
      (61)
      days; or the Company or any subsidiary controlled by the Company makes a general
      assignment for the benefit of creditors; or the Company or any subsidiary
      controlled by the Company shall fail to pay, or shall state that it is unable
      to
      pay, or shall be unable to pay, its debts generally as they become due; or
      the
      Company or any subsidiary controlled by the Company shall by any act or failure
      to act expressly indicate its consent to, approval of or acquiescence in any
      of
      the foregoing; or any corporate or other action is taken by the Company or
      any
      subsidiary controlled by the Company for the purpose of effecting any of the
      foregoing; provided however, that the no such action relating to or affecting
      ATSI Communications, Inc., a Texas corporation, or Telespan, Inc., a Texas
      corporation) shall be considered an Event of Default hereunder; and

    

    (iv)  The
      Company or any subsidiary controlled by the Company shall default in any of
      its
      obligations under any other promissory note, or any mortgage, credit agreement
      or other facility, indenture agreement, factoring agreement or other instrument
      under which there may be issued, or by which there may be secured or evidenced
      any indebtedness for borrowed money or money due under any long term leasing
      or
      factoring arrangement of the Company or any subsidiary controlled by the Company
      in an amount exceeding $200,000, whether such indebtedness now exists or shall
      hereafter be created and such default shall result in such indebtedness becoming
      or being declared due and payable prior to the date on which it would otherwise
      become due and payable; and

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (v)  The
      Common Stock shall cease to be quoted for trading or listed for trading on
      the
      OTC Bulletin Board (“OTC”),
      Nasdaq SmallCap Market, New York Stock Exchange, American Stock Exchange or
      the
      Nasdaq National Market and shall not again be quoted or listed for trading
      thereon within five (5) Trading Days of such delisting.

    

    8.  Remedies.Upon
      an
      Event of Default (as defined above), the entire principal balance and accrued
      interest outstanding under this Note, and all other obligations of the Company
      under this Note, shall be immediately due and payable without any action on
      the
      part of the Lender; interest shall accrue on the unpaid principal balance at
      twenty four percent (24%) per year or the highest rate permitted by applicable
      law, if lower; and the Lender shall be entitled to seek and institute any and
      all remedies available to it. Furthermore, anytime after the occurrence of
      an
      Event of Default the Lender from time to time may convert the outstanding
      amounts owed under this Note into shares of Common Stock (the “Conversion
      Shares”)
      at a
      conversion price equal to the lesser of (a) the fixed price one hundred twenty
      percent (120%) of the Closing Bid Price as quoted by Bloomberg, LP on the date
      of this Note, or (b) eighty percent (80%) of the lowest Closing Bid Price of
      the
      Common Stock as quoted by Bloomberg, LP during the five (5) trading days
      immediately preceding the date of such conversion. However, in no event, shall
      the number of shares issued exceed seventy-five million (75,000,000) shares.
      In
      order to convert, the Lender shall send a notice of conversion in the form
      attached hereto as Exhibit B (“Conversion
      Notice”)
      to the
      Company and to the Company’s transfer agent, and the Company shall, or cause its
      transfer agent to, deliver to the Lender the Conversion Shares in an amount
      equal to the outstanding amount of this Note being converted divided by the
      applicable conversion price as set forth on the Conversion Notice within three
      (3) Trading Days receipt of such Conversion Notice. 

    

    9.  Maximum
      Interest Rate.
      In no
      event shall any agreed to or actual interest charged, reserved or taken by
      the
      Lender as consideration for this Note exceed the limits imposed by New Jersey
      law. In the event that the interest provisions of this Note shall result at
      any
      time or for any reason in an effective rate of interest that exceeds the maximum
      interest rate permitted by applicable law, then without further agreement or
      notice the obligation to be fulfilled shall be automatically reduced to such
      limit and all sums received by the Lender in excess of those lawfully
      collectible as interest shall be applied against the principal of this Note
      immediately upon the Lender’s receipt thereof, with the same force and effect as
      though the Company had specifically designated such extra sums to be so applied
      to principal and the Lender had agreed to accept such extra payment(s) as a
      premium-free prepayment or prepayments.

    

    10.  Representations,
      Warranties, and Covenants of the Company.
      

    

    	(a)  	
            Organization
              and Qualification.
              The Company and its subsidiaries are corporations duly organized and
              validly existing in good standing under the laws of the jurisdiction
              in
              which they are incorporated, and have the requisite corporate power
              to own
              their properties and to carry on their business as now being conducted.
              Each of the Company and its subsidiaries is duly qualified as a foreign
              corporation to do business and is in good standing in every jurisdiction
              in which the nature of the business conducted by it makes such
              qualification necessary, except to the extent that the failure to be
              so
              qualified or be in good standing would not have a material adverse
              effect
              on the Company and its subsidiaries taken as a
              whole.

          

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    	(b)  	
            Authorization,
              Enforcement, Compliance with Other Instruments.
              (i) The Company has the requisite corporate power and authority to
              enter into and perform this Note and the other Transaction Documents
              and
              to issue the Conversion Shares upon an Event of Default in accordance
              with
              the terms hereof and thereof, (ii) the execution and delivery of the
              Transaction Documents by the Company and the consummation by it of
              the
              transactions contemplated hereby and thereby, including, without
              limitation, the issuance of the Note and the reservation for issuance
              and
              the issuance of the Conversion Shares issuable upon conversion, have
              been
              duly authorized by the Company’s Board of Directors and no further consent
              or authorization is required by the Company, its Board of Directors
              or its
              stockholders, (iii) the Transaction Documents have been duly executed
              and
              delivered by the Company, (iv) the Transaction Documents constitute
              the
              valid and binding obligations of the Company enforceable against the
              Company in accordance with their terms, except as such enforceability
              may
              be limited by general principles of equity or applicable bankruptcy,
              insolvency, reorganization, moratorium, liquidation or similar laws
              relating to, or affecting generally, the enforcement of creditors’ rights
              and remedies. 

          

    

    	(c)  	
            The
              authorized capital stock of the Company consists of 150,000,000 shares
              of
              Common Stock, $.001 par value per share (“Common
              Stock”),
              50,000 shares of Series A Preferred Stock, $.001 par value per share
              (the
              “Series
              A Preferred”),
              3,000 shares of Series D Preferred Stock, $.001 par value per share
              (the
              “Series
              D Preferred”),
              10,000 shares of Series E Preferred Stock, $.001 par value per share
              (the
              “Series
              E Preferred”),
              and 16,000,000 shares of Series H Preferred Stock, par value $0.001
              per
              share (the “Series
              H Preferred”)
              of which ______________ shares of Common Stock, 2,750 shares of Series
              A
              Preferred, 742 shares of Series D Preferred, 1,170 shares of Series
              E
              Preferred, and 11,802,353 shares of Series H Preferred are issued and
              outstanding. All of such outstanding shares have been validly issued
              and
              are fully paid and nonassessable.

          

    

    	(d)  	
            Reporting
              Status.
              Until the earlier of (i) the date as of which the Lender may sell all
              of
              the Conversion Shares without restriction pursuant to Rule 144(k)
              promulgated under the Securities Act of 1933, as amended (or successor
              thereto), or (ii) the date on which (A) the Lender shall have sold
              all the
              Conversion Shares and (B) none of the Note remains outstanding, the
              Company shall file in a timely manner all reports required to be filed
              with the SEC pursuant to the Securities Exchange Act of 1934, as amended
              (the “Exchange Act”), and the regulations of the Securities and Exchange
              Commission thereunder, and the Company shall not terminate its status
              as
              an issuer required to file reports under the Exchange Act even if the
              Exchange Act or the rules and regulations thereunder would otherwise
              permit such termination.

          

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    	(e)  	
            Listings
              or Quotation.
              The Company’s Common Stock shall be listed or quoted for trading on any of
              (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the
              Nasdaq National Market, (d) the Nasdaq Capital Market, or (e) the OTC
              Bulletin Board (“OTC”)
              (each, a “Primary
              Market”)
              and if issued, the Company shall promptly secure the listing or quotation
              of the Conversion Shares for trading on the same Primary Market upon
              which
              the shares of Common Stock are then listed or
              quoted.

          

    

    	(f)  	
            Each
              of the Company and the Lender shall pay all costs and expenses incurred
              by
              such party in connection with the negotiation, investigation, preparation,
              execution and delivery of the Transaction Documents, except that the
              Company shall pay to the Buyer or its designee a due diligence and
              structuring fee to of Seven Thousand Five Hundred Dollars ($7,500)
              which
              shall be paid directly from the proceeds of the this
              Note.

          

    

    	(g)  	
            Issuance
              of Capital Stock.
              So long as any portion of this Note is outstanding, the Company shall
              not,
              without the prior written consent of the Lender, (i) issue or sell
              shares
              of common stock or preferred stock without consideration or for a
              consideration per share less than 80% of the bid price of the common
              stock
              determined immediately prior to its issuance, (ii) issue any warrant,
              option, right, contract, call, or other security instrument granting
              the
              holder thereof, the right to acquire common stock without consideration
              or
              for a consideration less than 80% of such common stock’s bid price value
              determined immediately prior to its issuance, (iii) enter into any
              security instrument granting the holder a security interest in any
              and all
              assets of the Company, or (iv) file any registration statement on Form
              S-8
              except to register up to 15% of the number of shares outstanding to
              be
              issued to employees, officers, or directors pursuant to a employee
              stock
              option plan approved by the Company’s Board of Directors.

          

    

    11.  Cancellation
      of Note.
      Upon
      the repayment by the Company of all of its obligations hereunder to the Lender,
      including, without limitation, the principal amount of this Note, plus accrued
      but unpaid interest, the indebtedness evidenced hereby shall be deemed canceled
      and paid in full. Except as otherwise required by law or by the provisions
      of
      this Note, payments received by the Lender hereunder shall be applied first
      against expenses and indemnities, next against interest accrued on this Note,
      and next in reduction of the outstanding principal balance of this
      Note.

    

    12.  Severability.
      If any
      provision of this Note is, for any reason, invalid or unenforceable, the
      remaining provisions of this Note will nevertheless be valid and enforceable
      and
      will remain in full force and effect. Any provision of this Note that is held
      invalid or unenforceable by a court of competent jurisdiction will be deemed
      modified to the extent necessary to make it valid and enforceable and as so
      modified will remain in full force and effect.

    

    13.  Amendment
      and Waiver.
      This
      Note may be amended, or any provision of this Note may be waived, provided
      that
      any such amendment or waiver will be binding on a party hereto only if such
      amendment or waiver is set forth in a writing executed by the parties hereto.
      The waiver by any such party hereto of a breach of any provision of this Note
      shall not operate or be construed as a waiver of any other breach.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    14.  Successors.
      Except
      as otherwise provided herein, this Note shall bind and inure to the benefit
      of
      and be enforceable by the parties hereto and their permitted successors and
      assigns.

    

    15.  Assignment.
      This
      Note shall not be directly or indirectly assignable or delegable by the Company.
      The Lender may assign this Note as long as such assignment complies with the
      Securities Act of 1933, as amended.

    

    16.  No
      Strict Construction.
      The
      language used in this Note will be deemed to be the language chosen by the
      parties hereto to express their mutual intent, and no rule of strict
      construction will be applied against any party.

    

    17.  Further
      Assurances.
      Each
      party hereto will execute all documents and take such other actions as the
      other
      party may reasonably request in order to consummate the transactions provided
      for herein and to accomplish the purposes of this Note.

    

    18.  Notices,
      Consents, etc.  Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms hereof must be in writing and will be deemed to have
      been
      delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
      when
      sent by facsimile (provided confirmation of transmission is mechanically or
      electronically generated and kept on file by the sending party); or (iii) one
      (1) Trading Day after deposit with a nationally recognized overnight delivery
      service, in each case properly addressed to the party to receive the same.
      The
      addresses and facsimile numbers for such communications shall be:

    

    
      	
              If
                to Company:

            	
              ATSI
                Communications, Inc

            
	 	
              3201
                Cherry Ridge Drive, Suite C300 

            
	 	
              San
                Antonio, TX 78230

            
	 	
              Attention: Arthur
                L. Smith

            
	 	
              Chief
                Executive Officer

            
	 	
              Telephone: 
                210-614-7240

            
	 	
              Facsimile: 
                210-614-7264

            
	 	 
	
              With
                a Copy to:

            	
              Franklin,
                Cardwell & Jones

            
	 	
              1001
                McKinney, 18th
                Floor

            
	 	
              Houston,
                Texas 77002

            
	 	
              Attention: Lawrence
                E. Wilson

            
	 	
              Telephone: (713)
                425-3259

            
	 	
              Facsimile: (713)
                222-0938

            
	 	 
	
              If
                to the Lender:

            	
              CCA
                Financial Services, Inc.

            
	 	
              P.O.
                Box 16298

            
	 	
              Sugar
                Land, TX 77496

            
	 	
              Attention: Frank
                L. Angelo

            
	 	
              Telephone: (713)
                202-4609

            
	 	
              Facsimile:
                 (281)
                265-5392

            

    

    

    or
      at
      such other address and/or facsimile number and/or to the attention of such
      other
      person as the recipient party has specified by written notice given to each
      other party three (3) trading days prior to the effectiveness of such change.
      Written confirmation of receipt (A) given by the recipient of such notice,
      consent, waiver or other communication, (B) mechanically or electronically
      generated by the sender's facsimile machine containing the time, date, recipient
      facsimile number and an image of the first page of such transmission or (C)
      provided by a nationally recognized overnight delivery service, shall be
      rebuttable evidence of personal service, receipt by facsimile or receipt from
      a
      nationally recognized overnight delivery service in accordance with clause
      (i),
      (ii) or (iii) above, respectively.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    19.  Remedies,
      Other Obligations, Breaches and Injunctive Relief.
      The
      Lender’s remedies provided in this Note shall be cumulative and in addition to
      all other remedies available to the Lender under this Note, at law or in equity
      (including a decree of specific performance and/or other injunctive relief),
      no
      remedy of the Lender contained herein shall be deemed a waiver of compliance
      with the provisions giving rise to such remedy and nothing herein shall limit
      the Lender’s right to pursue actual damages for any failure by the Company to
      comply with the terms of this Note. No remedy conferred under this Note upon
      the
      Lender is intended to be exclusive of any other remedy available to the Lender,
      pursuant to the terms of this Note or otherwise. No single or partial exercise
      by the Lender of any right, power or remedy hereunder shall preclude any other
      or further exercise thereof. The failure of the Lender to exercise any right
      or
      remedy under this Note or otherwise, or delay in exercising such right or
      remedy, shall not operate as a waiver thereof. Every right and remedy of the
      Lender under any document executed in connection with this transaction may
      be
      exercised from time to time and as often as may be deemed expedient by the
      Lender. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Lender and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the Lender shall be entitled,
      in
      addition to all other available remedies, to an injunction restraining any
      breach, and specific performance without the necessity of showing economic
      loss
      and without any bond or other security being required. 

    

    20.  Governing
      Law; Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      Jersey without giving effect to any choice of law or conflict of law provision
      or rule (whether of the State of New Jersey or any other jurisdictions) that
      would cause the application of the laws of any jurisdictions other than the
      State of New Jersey. Each party hereby irrevocably submits to the exclusive
      jurisdiction of the Superior Court of the State of New Jersey sitting in Hudson
      County, New Jersey and the United States Federal District Court for the District
      of New Jersey sitting in Newark, New Jersey, for the adjudication of any dispute
      hereunder or in connection herewith or therewith, or with any transaction
      contemplated hereby or discussed herein, and hereby irrevocably waives, and
      agrees not to assert in any suit, action or proceeding, any claim that it is
      not
      personally subject to the jurisdiction of any such court, that such suit, action
      or proceeding is brought in an inconvenient forum or that the venue of such
      suit, action or proceeding is improper. Each party hereby irrevocably waives
      personal service of process and consents to process being served in any such
      suit, action or proceeding by mailing a copy thereof to such party at the
      address for such notices to it under this Agreement and agrees that such service
      shall constitute good and sufficient service of process and notice thereof.
      Nothing contained herein shall be deemed to limit in any way any right to serve
      process in any manner permitted by law.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    21.  No
      Inconsistent Agreements.
      None of
      the parties hereto will hereafter enter into any agreement, which is
      inconsistent with the rights granted to the parties in this Note.

    

    22.  Third
      Parties.
      Nothing
      herein expressed or implied is intended or shall be construed to confer upon
      or
      give to any person or entity, other than the parties to this Note and their
      respective permitted successor and assigns, any rights or remedies under or
      by
      reason of this Note.

    

    23.  Waiver
      of Jury Trial.
      AS A
      MATERIAL INDUCEMENT FOR THE LENDER TO LOAN TO THE COMPANY THE MONIES HEREUNDER,
      THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
      RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
      ASSOCIATED WITH THIS TRANSACTION.

    

    24.  Entire
      Agreement.  This
      Note (including any recitals hereto) set forth the entire understanding of
      the
      parties with respect to the subject matter hereof, and shall not be modified
      or
      affected by any offer, proposal, statement or representation, oral or written,
      made by or for any party in connection with the negotiation of the terms hereof,
      and may be modified only by instruments signed by all of the parties
      hereto.

    

    IN
      WITNESS WHEREOF,
      this
      Promissory Note is executed by the undersigned as of the date
      hereof.

     

    
      	 	
              CCA
                Financial services, inc.

            
	 	 
	 	 
	 	
              By:
                /s/
                Frank L. Angelo

            
	 	
              Name: Frank
                L. Angelo

            
	 	 
	 	 
	 	 
	 	
              ATSI
                Communications, Inc.

            
	 	 
	 	
              By:
                /s/
                Arthur L. Smith 

            
	 	
              Name: Arthur
                L. Smith 

            
	 	
              Title: President
                & CEO

            

    

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    EXHIBIT
      A

    

    PAYMENT
      SCHEDULE

    

    
      	
              AMORTIZATION
                SCHEDULE - Normal Amortization

            	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	
               

            	 	
              Date

            	 	
              Payment

            	 	
              Interest

            	 	
              Principal

            	 	
              Balance

            	 
	
              Loan

            	 	
              10/31/2006

            	 	 	 	
               

            	 	
               

            	 	
              250,000.00

            	 
	
              1

            	 	
               11/30/2006

            	 	 	
              7,807.49

            	 	 	
              3,333.33

            	 	 	
              4,474.16

            	 	 	
              245,525.84

            	 
	
              2

            	 	
               12/31/2006

            	 	 	
              7,807.49

            	 	 	
              3,273.68

            	 	 	
              4,533.81

            	 	 	
              240,992.03

            	 
	
              2006
                Totals

            	 	
              15,614.98

            	 	 	
              6,607.01

            	 	 	
              9,007.97

            	 	 	 	 
	 	 	
               

            	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              3

            	 	
              1/31/2007

            	 	 	
              7,807.49

            	 	 	
              3,213.23

            	 	 	
              4,594.26

            	 	 	
              236,397.77

            	 
	
              4

            	 	
              2/28/2007

            	 	 	
              7,807.49

            	 	 	
              3,151.97

            	 	 	
              4,655.52

            	 	 	
              231,742.25

            	 
	
              5

            	 	
              3/31/2007

            	 	 	
              7,807.49

            	 	 	
              3,089.90

            	 	 	
              4,717.59

            	 	 	
              227,024.66

            	 
	
              6

            	 	
              4/30/2007

            	 	 	
              7,807.49

            	 	 	
              3,027.00

            	 	 	
              4,780.49

            	 	 	
              222,244.17

            	 
	
              7

            	 	
              5/31/2007

            	 	 	
              7,807.49

            	 	 	
              2,963.26

            	 	 	
              4,844.23

            	 	 	
              217,399.94

            	 
	
              8

            	 	
              6/30/2007

            	 	 	
              7,807.49

            	 	 	
              2,898.67

            	 	 	
              4,908.82

            	 	 	
              212,491.12

            	 
	
              9

            	 	
              7/31/2007

            	 	 	
              7,807.49

            	 	 	
              2,833.21

            	 	 	
              4,974.28

            	 	 	
              207,516.84

            	 
	
              10

            	 	
              8/31/2007

            	 	 	
              7,807.49

            	 	 	
              2,766.89

            	 	 	
              5,040.60

            	 	 	
              202,476.24

            	 
	
              11

            	 	
              9/30/2007

            	 	 	
              7,807.49

            	 	 	
              2,699.68

            	 	 	
              5,107.81

            	 	 	
              197,368.43

            	 
	
              12

            	 	
              10/31/2007

            	 	 	
              200,000.00

            	 	 	
              2,631.57

            	 	 	
              197,368.43

            	 	 	
              0.00

            	 
	
              2007
                Totals

            	 	
              270,267.41

            	 	 	
              29,275.38

            	 	 	
              240,992.03

            	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Grand
                Totals

            	 	
              285,882.39

            	 	 	
              35,882.39

            	 	 	
              250,000.00

            	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Last
                interest amount decreased by 0.01 due to rounding.

            	 	 	 

    

    

    

    
      
         

         

      

      
        9

        
          

        

      

      
         

      

    

     

    EXHIBIT
      B

     

     

    CONVERSION
      NOTICE

     

     

    (To
      be executed by the Lender in order to Convert the Note)

     

    

    
      	
               

              TO:
                

               

            

    

    

    The
      undersigned hereby irrevocably elects to convert $     
      of the
      principal amount of this Note into shares of Common Stock of ATSI
      Communications, Inc.,
      according to the conditions stated therein, as of the Date written
      below.

     

    
      	
               

              Conversion
                Date:

               

            	 
	
               

              Amount
                to be converted:

               

            	
               

              $        

               

            
	
               

              Conversion
                Price:

               

            	
               

              $        

               

            
	
               

              Number
                of shares of Common Stock to be issued:

               

            	 
	
               

              Amount
                of Note

               

               

              Unconverted:

               

            	
               

              $          

               

            
	 	
               

                

               

            
	 	 
	
               

              Please
                issue the shares of Common Stock in the following name and to the
                following address:

               

            
	
               

              Issue
                to:

               

            	 
	 	 
	
               

              Authorized
                Signature:

               

            	 
	
               

              Name:

               

            	 
	
               

              Title:

               

            	 
	
               

              Broker
                DTC Participant Code:

               

            	 
	
               

              Account
                Number:

               

            	 

    

    

    
10Exhibit
      10.1 

    

    PURCHASE
      AND SALE AGREEMENT

    

               
      THIS AGREEMENT is made by and between CCA
      Financial Services, Inc.,
      a
      Nevada company (“Factor”),
      whose address is P.O. Box 16298, Sugar Land, TX 77496, and ATSI COMMUNICATIONS,
      INC , a
      Nevada
      corporation,
      whose
      address is 3201 Cherry Ridge Drive, Suite C300, San Antonio, TX 78230 (the
      “Seller”).

    

               
      WHEREAS, Factor is engaged in, among other things, the business of purchasing
      accounts receivable and other rights to payment from persons or firms selling
      goods or rendering services to others, and Seller desires from time to time
      to
      sell accounts receivable and other rights to Factor pursuant to the terms of
      this Agreement;

    

                                                                     
      DEFINITIONS

    

               
      “Account Debtor” shall mean the party or parties obligated to pay a
      Receivable.

    

               
      “Agreement” shall mean this Purchase and Sale Agreement, together with the
      Schedules attached hereto.

    

    “Avoidance
      Claim” shall mean any claim that any payment received by Factor from or for the
      account of an Account Debtor is avoidable under the Bankruptcy Code or any
      other
      debtor relief statute.

    

               
      “Collateral” shall have the meaning ascribed thereto in the Security
      Agreement.

    

               
      “Dispute” shall mean any dispute, deduction, claim, offset, defense or
      counterclaim of any kind asserted by an Account Debtor and pertaining to a
      Receivable or the goods or services giving rise thereto.

    

               
      “Factor” shall have the meaning given in the first paragraph of this
      Agreement.

    

               
      “Legal Holiday” shall mean any day on which national banks doing business in the
      State of Texas are closed for regular business.

    

    “Misdirected
      Payment Fee” shall mean five percent (5 %) of the amount of any payment on
      account of a Receivable, which has been received by Seller and not delivered
      in
      kind to Factor on the next business day following the date of receipt by
      Seller.

     

               
      “Payments” shall have the meaning given in Section 31 of this
      Agreement

    

               
      “Purchase Price” shall have the meaning given in Section 6 of this
      Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

           

    “Receivables”
      shall mean the accounts receivable and other forms of rights to payment
      described on Schedule
      A
      attached
      hereto and/or as set forth on a supplemental Schedule
      A
      to be
      attached in the future and signed by Factor and Seller.

    

               
      “Reserve Account” shall have the meaning given in Section 7 of this
      Agreement.

    

               
      “Reserve Payment Worksheet” shall have the meaning given in Section 14 of this
      Agreement.

    

               
      “Secured Liabilities” shall have the meaning ascribed thereto in the Security
      Agreement.

    

               
      “Security Agreement” shall mean that certain Security Agreement between Factor
      and Seller executed of even date herewith.

    

               
      “Seller” shall have the meaning given in the first paragraph of this Agreement.

    

               
      “UCC” shall mean the Texas Uniform Commercial Code.

    

                                                                     
      AGREEMENT

    

               
      For and in consideration of the mutual promises herein contained, and other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, Factor and Seller hereby agree as follows:

    

               
      1.         Purchase
      and Sale of Accounts Receivable and other Rights. 
      Seller hereby sells, assigns, transfers, conveys and delivers to Factor, as
      an
      outright conveyance and not as a security interest all right, title and interest
      of Seller in the Receivables and other forms of rights to payment described
      on
Schedule
      A
      attached
      hereto and made a part hereof.  Seller represents and warrants that in the
      event invoices are attached to Schedule
      A,
      such
      invoices represent true and correct copies of invoices for the
      Receivables.  In the event Schedule
      A
      is not
      attached to this Agreement at the time of its original execution, the parties
      agree that actual purchases of receivables will be evidenced by the completion
      and execution by both parties of Schedule
      A
      in the
      future. Whether or not an initial Schedule
      A
      is
      attached to this Agreement, it is anticipated that additional Receivables will
      be sold by Seller to Factor (although Factor is not agreeing to purchase any
      particular Receivable or any additional Receivables hereby), and such future
      purchases will be evidenced by the completion and execution of additional
      schedules in form similar to Schedule
      A. 
      Upon execution by both Factor and Seller of such a supplemental schedule, the
      accounts receivable described therein shall become Receivables subject in all
      respects to the terms of this Agreement.  Seller acknowledges that the
      transactions contemplated by Agreement are each an “Account Purchase
      Transaction” as that term is used in Finance Code Section 306.001 of the Texas
      Codes.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      2.         Returned
      Receivables. 
      Seller has herein represented and warranted to Factor that all Receivables
      are
      free and clear of any Disputes.  Seller hereby acknowledges that Factor
      would not purchase any Receivable if Factor had knowledge that the same was
      subject to a Dispute.  Seller agrees that (i) should Seller or Factor
      discover that any Receivables are subject to a Dispute, (ii) any Receivable
      is
      owing from an Account Debtor which in Factor’s reasonable credit judgment has
      become insolvent, or (iii) any representation or warranty with respect to a
      Receivable provided in Section 11 below shall be false in any respect, Factor
      shall have the right to return such Receivable(s) to Seller in accordance with
      this Section 2 and other applicable Sections of this Agreement. Seller must
      immediately notify Factor of any Disputes upon receipt of its knowledge thereof.
      Any receivable that is not collected within 45 days of its purchase by Factor
      pursuant to the terms hereof shall be deemed subject to a Dispute.  Upon
      Factor’s election to return and charge-back a Receivable subject to a Dispute,
      Seller shall pay to Factor the face amount of the invoice less the sum of any
      payments theretofore received on such invoice by Factor and any unearned
      discount.  In order to fund such return and charge-back, Factor may, at its
      option, take any one or more of the following actions: (a) charge the
      Reserve Account for such amount, (b) subtract such amount from the Purchase
      Price for the next Receivable sold by Seller to Factor, or (c) otherwise invoice
      Seller for such amount, with such invoice being payable upon receipt.  Upon
      payment to Factor of such amount, Factor shall assign, transfer, convey and
      deliver such Receivable to Seller without recourse.

    

            
        3.         Transfer
      of Related Interests. 
      In addition to the Receivables, Seller hereby sells, assigns, transfers, conveys
      and delivers to Factor all other rights, title and interests (but not
      obligations) now or hereafter existing in connection with the Receivables,
      including, but not limited to, liens, security interests and guarantees securing
      payment of the Receivables, Seller's interest in returned goods arising with
      respect to the Receivables, and all other rights and remedies of Seller related
      to the Receivables such as rights of stoppage in transit, replevin, reclamation
      and lawsuits to collect the Receivables.  If any Receivable is ever
      represented by a promissory note or other written evidence of obligation, Seller
      shall endorse and deliver the same to Factor and take any other action requested
      by Factor to effectuate such transfer.

    

               
      4.         Further
      Assurances. 
      Seller agrees to execute and deliver to Factor such notices of assignment and
      other documents as Factor may request from time to time to further document
      the
      sale and assignment of Receivables hereunder.

    

               
      5.         Terms
      - Seller's Customers. 
      Except as may otherwise be agreed to in writing from time to time, all
      Receivables shall be due upon receipt by the Account Debtor of the invoice
      from
      Seller, and invoices to be factored pursuant hereto will be forwarded to the
      Account Debtor upon delivery of the goods or the services that are the subject
      of the Receivable.  Seller shall not vary the terms of sale, terms of
      payment, or location of payment set forth in the invoice relating to any
      Receivable without Factor's prior written consent, it being understood that
      any
      Receivable is the property of Factor.

     

    6.        
      Purchase
      Price; Discounts; Additional Fees. 
      The Purchase Price (herein so called) for Receivables shall be the gross amount
      of the invoice, including any miscellaneous charges such as sales taxes, less
      any early payment or special discounts offered to Seller's customers as
      previously disclosed to Factor, and less a discount equal to 10% of such gross
      amount of the invoice.  As an inducement for Seller to sell only invoices
      from which prompt payment can be expected, Factor will remit a rebate as
      follows.   If Factor receives payment of an invoice within 15 days of
      the purchase thereof, a rebate of 8.75% of the gross amount of the invoice
      will
      be remitted to Seller; if Factor receives payment of an invoice after 15 days,
      but on or before 30 days of the purchase, a rebate of 7.5% of the gross amount
      of the invoice will be remitted to Seller.  If the total gross amount of
      invoices factored in a one month period exceeds $500,000, the rebate amount
      will
      be increased to 9% if invoices are paid within 15 days and to 8% if paid within
      30 days. Until an invoice is collected or is repurchased by Seller, an
      additional factoring fee shall accrue and be owing after 30 days in the amount
      of 5% of the gross amount of the invoice for each 15 day period (or portion
      thereof) the invoice remains uncollected or not repurchased after 30 days. 
A Seller shall be permitted to stop the accrual of any such additional fee
      at
      any time by repurchasing the uncollected invoice.  In addition to the other
      fees described herein, Seller shall pay to Factor the Misdirected Payment Fee
      immediately upon its accrual.  The Purchase Price, less the deduction for
      the Reserve Account described below, shall be paid only after execution by
      Seller and Factor of a Schedule covering such Receivable.  Any applicable
      rebates shall be credited to the Reserve Account (as defined in Section 7)
      upon
      collection of each Receivable.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

             

    7.        
      Payments
      on Accounts Purchased; Reserve Account. 
      In addition to the discount set forth in Section 6 hereof, Factor shall deduct
      from the Purchase Price of each Receivable an amount initially equal to 10%
      of
      the gross amount of the Receivable, such deduction to be placed in an account
      under the exclusive control of Factor (as further described in this Section
      7,
      herein referred to as the "Reserve Account").  The balance in the Reserve
      Account shall at all times be maintained in a minimum amount equal to no less
      than 10% of the aggregate gross amount of all Receivables outstanding at a
      particular time; provided, however, (i) the applicable percentage deduction
      from
      the Purchase Price described in the immediately preceding section may be
      increased as necessary to maintain such minimum balance, and (ii) the amount
      required to be maintained in the Reserve Account as a percentage of the gross
      amount of all Receivables outstanding may be increased or decreased upon notice
      by Factor to Seller.  Upon preparation of the Reserve Payment Worksheet (as
      such term is defined in Section 14 hereof), Factor shall release to Seller
      amounts, if any, in the Reserve Account in excess of the balance required
      pursuant to this Section 7.  The Reserve Account shall accrue no interest.

    

               
      8.         Offset;
      Security Interest. 
      Factor is authorized to offset and charge against the Reserve Account any amount
      for which Seller may become obligated to Factor at any time under this Agreement
      or otherwise.  In addition to such right of offset and for the purpose of
      securing Factor in the payment of any and all sums of money that may become
      due
      and owing to Factor from Seller, Seller agrees to grants to Factor a lien and
      security interest in certain of its assets, all pursuant to and as described
      in
      the Security Agreement.  To the extent that the sale to Factor of any
      Collateral is deemed inconsistent with the granting of a security interest
      pursuant to the Security Agreement, the security interest granted in the
      Security Agreement as to such Collateral only shall automatically terminate
      and
      be of no further force and effect.  The terms of the prior sentence to the
      contrary notwithstanding, in the event a Receivable is charged-back as provided
      in Section 2 hereof, such account shall then constitute Collateral and be then
      subject to a new security interest in favor of Factor.  Seller agrees that
      Factor may file financing statements from time to time to perfect Factor's
      security interest in the Collateral.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    9.  Verification
      and Collection of Accounts.           
      Seller hereby authorizes Factor to contact each Account Debtor at any time
      for
      purposes of verification or collection of Receivables.  Seller shall
      cooperate with Factor to the maximum extent possible to provide information
      necessary for Factor to accomplish verification or collection of any Receivable.
      Unless otherwise agreed by Factor in writing, Seller shall provide the original
      invoice and any necessary copies required by the Account Debtor and one copy
      to
      Factor ready for mailing with the required postage to the Account Debtor. 
All invoices shall direct that payment be made by wire transfer to a bank
      account owned and controlled by Factor, to be provided by Factor.  If
      requested by Factor, Seller agrees to furnish evidence of shipment of the
      related merchandise and/or performance of services rendered, and a written
      assignment and bill of sale of such Receivable, all in a form satisfactory
      to
      Factor, including the original purchase order from the Account Debtor.  If
      requested by Factor, all invoices for Receivables shall plainly state on their
      faces in language acceptable to Factor that the amounts payable thereunder
      have
      been sold to and are payable directly to Factor.  If payment is made to
      Seller under any circumstances, such payment shall be held in trust by Seller
      for Factor and shall not be negotiated or commingled in any way with any of
      Seller's funds.  Notwithstanding that Seller has agreed to pay the
      Misdirected Payment Fee, Seller shall, within one business day after receipt,
      deliver any such payments to Factor in the original form as received by
      Seller.  In the event the form of such payment is made payable to Seller,
      Seller shall endorse such instrument to the order of Factor.  In the event
      that on at least two occasions within a twelve month period, Seller does not
      deliver to Factor within one business day payments that were made by an Account
      Debtor directly to Seller, Factor shall be permitted upon three days notice
      to
      Seller, to redirect Seller’s mail to Factor.  Seller agrees to furnish
      Factor, upon request, any and all papers, documents or records of whatever
      nature related directly or indirectly, to any Receivables.

          

    10.      
      Collection
      by Factor. 
      Seller specifically authorizes Factor, to the extent permitted by applicable
      law, to notify each Account Debtor to pay directly to Factor all accounts that
      are Receivables or Collateral, regardless of whether Seller has defaulted
      hereunder. Factor is authorized, but not obligated, to collect, sue for and
      give
      releases for all monies or other items of value due on all Receivables. 
Factor is hereby specifically authorized to endorse all checks, drafts or other
      forms of trade acceptances that are made payable to Seller, whether tendered
      in
      payment of Receivables or otherwise, and to apply such payments against the
      applicable Receivables or, if such payment does not relate to a particular
      Receivable, against any other obligation of Seller to Factor.  Seller
      authorizes Factor to accept, indorse and deposit on behalf of Seller any checks
      tendered by an account debtor “in full payment” of its obligation to
      Seller.  Seller shall not assert against Factor any claim arising
      therefrom, irrespective of whether such action by Factor effects an accord
      and
      satisfaction of Seller's claims, under §3-311 of the Uniform Commercial Code, or
      otherwise.  Seller
      hereby waives notice of nonpayment of any Receivables as well as all other
      notices, demands or presentations for payment hereunder, and Seller expressly
      agrees that Factor may extend or renew from time to time the payment of any
      Receivable without notice to or consent by Seller.  In the event it becomes
      necessary for Factor to employ an attorney and incur other expenses to collect
      any Receivable or to enforce any of the terms of this Agreement by reason of
      a
      breach or default by Seller, Seller agrees to pay to Factor an amount equal
      to
      all reasonable attorneys' fees, expenses and costs incurred by Factor.  In
      the event any merchandise represented by any Receivable shall be returned to
      or
      repossessed by the Seller, such merchandise shall be held by the Seller
in
      trust
      for
      Factor, separate and apart from the Seller's own property, and subject to
      Factor’s directions and control.  With respect to any returned or
      repossessed merchandise, Seller shall, at its sole cost and expense, (a) provide
      proper storage therefor, (b) maintain adequate insurance coverage thereon,
      (c)
      prepare the same for sale, (d) defend title thereto, (e) take any other action
      necessary for the protection thereof, (f) pay all freight and related shipping
      costs, and (g) be responsible for any other costs or expenses incurred in
      connection with the foregoing, including, without limitation, attorneys'
      fees. 
In
      order to satisfy any of the Secured Liabilities, Factor is hereby authorized
      by
      Seller to initiate electronic debit or credit entries through the ACH system
      to
      any deposit account maintained by Seller wherever located.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      11.       Representations
      and Warranties of Seller. 
      Seller hereby represents, warrants and guarantees to Factor that the information
      contained in any application previously submitted by Seller, Seller's financial
      statements and any other materials previously submitted in connection herewith
      is true, correct and complete in all respects as of the date specified therein
      and fully and accurately represent the financial condition of Seller as of
      the
      dates specified, with no material adverse change having occurred in the
      financial condition of the Seller since the dates of the financial statements;
      that all federal, state and local tax returns and payments of any kind due
      or
      owing have been filed or paid, and no part of the purchase price for any
      Receivable shall be used to pay any wage or salary unless appropriate
      withholdings have been deposited; that assignment of each Receivable will
      thereby vest in Factor absolute ownership of each Receivable free from any
      liens, claims or equities of third parties; that Seller is the sole owner of
      and
      has good, free and unencumbered title to each Receivable; that execution and
      performance of this Agreement has been fully authorized by all necessary
      actions; that no assignment, pledge, security interest or encumbrance exists
      with respect to any Receivable; that each Receivable is based upon a bona fide
      sale of goods or services and represents a completed delivery or completed
      furnishing of property or services in fulfillment of all the terms and
      provisions of a fully executed and unexpired contract with the Account Debtor
      and is a valid and enforceable obligation of the Account Debtor; that each
      Account Debtor has accepted goods or services covered by the applicable
      Receivable; that all Receivables are current, are not past due, have not been
      paid in whole or in part, are outstanding in the amounts reflected in
Schedule
      A
      and are
      not and will not be subject to any dispute or claim as to price, quality,
      quantity, physical condition, workmanship, delay in shipment, set off,
      counterclaim or other defense, that no product or service was provided on a
      guaranteed-sale basis or buy-back agreement, and the Account Debtor has not
      and
      will not claim any defense of any kind or character or object for any reason
      whatsoever against payment of such Receivable; that Seller's chief executive
      office and the location where all books and records pertaining to each
      Receivable are kept are at the address shown below for notice to Seller; and
      no
      Receivable is subject to a Dispute. Seller further represents and warrants
      that
      Seller is a corporation duly organized, validly existing under the laws of
      the
      state of its incorporation and in good standing under the laws of the State
      of
      Texas; that Seller is solvent, properly licensed and authorized to operate
      the
      business under the trade name represented within the meaning of any and all
      applicable federal, state or local laws; that no petition in bankruptcy has
      been
      filed by or against Seller nor has Seller filed any petition seeking an
      arrangement of its debts or for any other relief under the Bankruptcy Code
      of
      the United States; that no application for appointment of a receiver or trustee
      for all or a substantial part of Seller's property is pending; and that Seller
      has made no assignment for the benefit of creditors. Seller further warrants
      that Seller does not own, control or exercise dominion over, in any way
      whatsoever, the business of any Account Debtor and that the Account Debtor
      is
      solvent to the best knowledge and information of Seller.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      12.  Certain
      Covenants of Seller. 
      Seller covenants and agrees to (i) notify Factor in writing immediately upon
      any
      Dispute and upon imposition or assessment of any lien, levy, tax lien,
      assessment or similar action against Seller or any of Seller's assets; and
      (ii)
      furnish Factor, upon request, any and all papers, documents or records of
      whatever nature related directly or indirectly to any Receivables.  Seller
      agrees that it will not, without prior, written notice to Factor, (a) sell
      or
      factor accounts other than to Factor for the period of this Agreement; (b)
      move
      either its chief executive office or the location where books and records
      pertaining to the Receivable are kept to a location outside of Houston,
      Texas;  (c) change its legal name; (d) change its state of incorporation;
      (e) use any trade name; (f) merge or consolidate with any other corporation
      or
      entity; (g) dissolve or cease its operations as they are now conducted; or
      (g)
      without Factor’s written consent, take or omit taking any actions that would
      render any of Seller's representations and warranties incorrect or incomplete,
      or take any action that would cause or induce any Account Debtor on any
      Receivable to fail to pay the Receivable in a timely manner.

    

               
      13.       Survival
      of Agreement, Representations, Warranties and Covenants.
      All
      warranties, representations and covenants made by Seller herein or in any other
      instrument delivered by Seller or on Seller’s behalf in connection with this
      Agreement shall be considered to have been relied upon by Factor and shall
      survive the purchase of the Receivables regardless of any investigation made
      by
      Factor or on Factor’s behalf and shall continue in full force and effect so long
      as any amount due or to become due hereunder is outstanding and unpaid and
      so
      long as this Agreement has not terminated.  Specifically, all warranties,
      representations and covenants made by Seller in this Agreement shall be deemed
      reaffirmed by Seller upon execution of each supplemental Schedule
      A
      hereto.

    

               
      14.       Reserve
      Payment Worksheet and Financial Statements. 
      Factor shall prepare and provide to Seller on a bi-monthly basis Reserve Payment
      Worksheets (herein so called) showing aggregate outstanding Receivables as
      of
      the end of the applicable period, total collections during the period, debits
      and credits to the Reserve Account, present balance of the Reserve Account
      and
      discounts charged.  Seller shall provide to Factor as soon as practicable
      monthly balance sheets and statements of income. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      15.       Interest
      on Unpaid Charges; Attorneys' Fees and Costs of Enforcement. 
      All payment obligations of Seller to Factor provided herein not discharged
      when
      due shall bear interest, if demanded by Factor, at the rate of 18% per annum,
      payable on the first day of each month if demand is not sooner made.  If
      Seller defaults hereunder or if a Dispute arises, Seller shall pay all costs
      of
      enforcement incurred by Factor against Seller or the Account Debtor as
      appropriate, including but not limited to attorney's fees incurred.

    

               
      16.       Disputes; 
      No Assumption of Liability by Factor;  Indemnification. 
      Seller shall immediately notify Factor of the assertion by any Account Debtor
      of
      any Dispute. Seller has heretofore represented to Factor that no Receivable
      is
      subject to a Dispute. Therefore, Seller shall settle, at its own expense, all
      Disputes, subject to Factor's approval, but Factor shall have the right, in
      its
      discretion, to settle any Dispute directly with the Account Debtor involved
      upon
      such terms as Factor may deem advisable and at Seller's expense.  Seller
      specifically acknowledges and agrees that Factor is not assuming any liability
      or obligation of any kind to any Account Debtor or in any way relating to the
      Receivables.  Seller hereby represents and warrants to Factor that no
      Receivable, or any invoice, credit application, bill, billing memorandum,
      correspondence, or any other documents relating to a Receivable contracts for
      or
      charges anything of value that constitutes interest in excess of the maximum
      non-usurious rate allowed to be charged such Account Debtor pursuant to
      applicable law.  Seller acknowledges that Factor, as the owner of a
      Receivable, may be subject to a claim of usury by an Account Debtor in the
      event
      an invoice, credit application, bill, billing memorandum, correspondence or
      other document provides for the payment of interest or any other charge or
      fee
      which may deemed to be interest, which is in excess of the maximum non-usurious
      rate allowed by applicable law.  In the event an Account Debtor raises a
      claim of usury in connection with a Receivable, such Receivable shall be deemed
      to be subject to a Dispute and subject to the charge-back provisions of this
      Agreement.  Seller shall promptly indemnify and hold harmless Factor from
      and against any and all claims, causes of action, counterclaims and other
      liabilities and costs of any kind (including attorneys' fees incurred by Factor
      in connection therewith) that may be asserted against Factor by any Account
      Debtor or otherwise arising in connection with the Receivables, except as may
      be
      based on the acts or omissions of Factor. 
      Seller shall notify Factor within two business days of it becoming aware of
      the
      assertion of an Avoidance Claim, and shall indemnify Factor from any loss
      arising out of the assertion of any Avoidance Claim.

    

               
      17.       Books
      and Records. 
      Seller agrees to permit Factor access to all books and records of the Seller
      during normal business hours that relate to the Collateral.

    

               
      18.       Taxes. 
      All taxes and governmental charges imposed with respect to the sale of
      Receivables shall be charged to Seller, and Seller shall be liable for all
      sales
      taxes and other taxes due in connection with any sale or rendering of services
      resulting in a Receivable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      19.       Termination. 
      Seller and Factor recognize that future purchases of Receivables are to be
      made
      only with mutual consent of Seller and Factor, through joint execution by Seller
      and Factor of a supplemental Schedule
      A. 
      Accordingly, this Agreement shall continue in full force and effect unless
      and
      until each of the following occur: (i) written notice of the termination of
      this
      Agreement as it relates to future Receivables by any party hereto and subject
      to
      the terms specified by the letter of intent executed by Factor and Seller,
      (ii)
      the payment in full of all obligations of Seller to Factor pursuant hereto
      and
      (iii) the collection of all outstanding Receivables sold by Seller to Factor
      that, in the sole discretion of Factor, can be collected.  Either party may
      immediately terminate this Agreement as to future transactions, without cause
      within its sole discretion, and nothing contained in this Agreement shall
      constitute an agreement or commitment to purchase any accounts until such
      accounts have been approved by Factor and a supplemental Schedule describing
      such Receivables has been executed by Factor and Seller.  In the event
      Seller shall have breached any provision of this Agreement or any other
      agreement with Factor, or if either party shall have given notice to the other
      of the termination of this Agreement as to future Receivables, the Reserve
      Account and any other monies, balances or credits otherwise due by Factor to
      the
      Seller may be retained and applied by Factor from time to time to reduce such
      obligations.  The balance in the Reserve Account shall not be released to
      Seller unless all of Seller's obligations hereunder have been paid in
      full.  Seller acknowledges that it has the obligation hereunder to sell to
      Factor only Receivables that are free and clear of any Dispute.  As
      provided in Section 2(a) hereof, Factor has the right to charge the Reserve
      Account for any Receivables that are returned and charged-back to Seller as
      a
      result of a Dispute.  Accordingly, in the event any Receivable remains
      uncollected by Factor at the date of notice of termination of this Agreement
      as
      to future Receivables, the Reserve Account shall not be released to Seller
      until
      such time as Factor has determined, in its sole discretion, that there are
      no
      uncollected Receivables subject to a Dispute.  At the discretion of Factor,
      upon written notice of the termination of this Agreement as it relates to future
      Receivables by any party hereto, Factor may return and charge back to Seller
      any
      and all outstanding Receivables in the manner described in Section 2
      above.  In addition and notwithstanding any provision of this Agreement to
      the contrary, Factor shall not be obligated to release the Reserve Account
      unless and until Seller has executed and delivered to Factor a general release
      in the form attached hereto as Exhibit
      “A”.  
      Furthermore, upon termination of this Agreement as to future Receivables, the
      security interest granted to Factor by Seller pursuant to the Security Agreement
      shall be released by Factor only upon determination by Factor, in its sole
      discretion, that no additional obligations of Seller are owed to Factor
      hereunder and no uncollected Receivable is subject to a Dispute. In recognition
      of Factor's
      right to have its attorneys' fees and other expenses incurred in connection
      with
      this Agreement secured by the Collateral, notwithstanding payment in full of
      all
      Secured Liabilities by Seller, Factor shall not be required to record any
      terminations or satisfactions of any of Factor's liens on the Collateral unless
      and until Seller has executed and delivered to Factor a general release in
      the
      form of Exhibit
      “A”
      hereto.  Seller
      understands that this provision constitutes a waiver of its rights under §9-513
      of the UCC. 
      Termination
      of this Agreement shall not affect the rights and obligations of the parties
      accruing with respect to prior transactions.  

    

               
      20.       Waiver. 
      Any failure by Factor to exercise any of its rights hereunder, shall not be
      deemed to be a waiver by Factor of such or any other rights, nor in any manner
      impair the subsequent exercise of the same or any other right, and any waiver
      by
      Factor of any default shall not constitute a waiver of any subsequent
      default.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      21.       Choice
      of Law. 
      The parties hereto agree that the transaction described herein is expected
      to be
      a Qualified transaction, as defined in Section 35.51 of the Texas Business
      and
      Commerce Code (although no assurance is given that Factor will purchase any
      specific amount of Receivables pursuant hereto), and that to the maximum extent
      permitted by applicable law, all issues relating to the transaction described
      herein shall be construed according to the laws of the State of
      Texas.

    

               
      22.       Entire
      Agreement. 
      This Agreement represents the entire Agreement between the parties, and may
      not
      be amended or modified except by written instrument executed by Factor and
      Seller.  This Agreement supersedes and replaces any prior agreement among
      the parties, oral or written.  No representations, whether oral or written,
      are being relied upon which are not expressly set forth in this Agreement. 
The parties recognize that any oral representations and prior written
      representations are “merged” into this Agreement and no reliance can be placed
      thereon.

    

               
      23.       Successors
      and Assigns. 
      This Agreement shall be binding upon and inure to the benefit of the parties
      hereto and their respective administrators, legal representatives, successors
      and assigns.  Factor may, at its discretion, sell or assign its rights and
      interests hereunder in any manner, by sale of participation interest or
      otherwise.

    

               
      24.       Severability. 
      If any provision of this Agreement shall, for any reason, be held to violate
      any
      applicable law, then the remaining portion of this Agreement shall remain in
      full force and effect.

    

               
      25.       Headings,
      Construction. 
      The headings contained in this Agreement are for reference purposes only and
      shall not modify or affect the terms of this Agreement in any
      manner.

    

               
      26.       Saturday,
      Sunday or Legal Holiday. 
      If any day provided in this Agreement for the performance of any obligation
      should fall on a Saturday, Sunday or Legal Holiday, the compliance with such
      obligation or delivery shall be deemed acceptable on the next business day
      following such day.

    

               
      27.       Receipt
      of Payment. 
      Any payment received by Factor on a Saturday, Sunday or Legal Holiday, or any
      payment that is received by Factor after 3:00 p.m., shall be deemed received
      on
      the next day that is not a Saturday, Sunday or Legal Holiday.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      28.       Notices. 
      Any notice, demand or request permitted, required or desired to be given under
      this Agreement shall be in writing and shall be deemed effectively given when
      actually hand delivered or when sent by United States certified or registered
      mail, return receipt requested, postage prepaid, or sent by private, receipted
      carrier guaranteeing same-day or next-day delivery, addressed as
      follows:

    

               
      If to Factor:     CCA Financial Services,
      Inc.

                                       
      P.O. Box 16298

                                       Sugar
      Land, Texas 77496

                                       Attention:
       Frank Angelo

                           
      

               
      If to Seller:      ATSI Communications,
      Inc

                                       
      3201 Cherry Ridge Drive, Suite C300

                                       
      San Antonio, TX 78230

                                       
      Attention: Art Smith

    

               
      29.       Determination
      of Purchase Price. 
      The Purchase Price of the Receivables has been determined pursuant to
      negotiations between Factor and Seller and represents the fair market value
      thereof, after due consideration has been given to the nature of the Receivable,
      the probability of prompt collection thereof, the credit worthiness of the
      Account Debtor, the payment history of the Account Debtor and other economical
      factors relative to the Receivables. Further, in arriving at the Purchase Price,
      consideration has been given to services rendered and services that will be
      rendered in the future by Factor in connection with credit investigations of
      Account Debtor, supervising the ledgering of accounts purchased, supervising
      the
      collection of accounts purchased, and the assumption of certain credit
      risks.  The parties hereto acknowledge that the purchase of the Receivables
      by Factor constitutes an outright conveyance by the Seller to
      Factor.

    

               
      30.       Provision
      Regarding Usury. 
      Nothing contained herein, nor any course of dealing in the future, shall be
      construed to be anything other than an outright purchase and sale of such
      Receivables.  All right, title and interest of the Seller has been conveyed
      to Factor and such transaction is not subject to a security interest in the
      Receivables and the Purchase Price paid to Seller by Factor constitutes
      consideration for the acquisition of the Receivables and under no circumstances
      shall be construed as a loan and no consideration herein set forth is for the
      use, forbearance or detention of money.  Nothing contained herein shall be
      construed as to require the payment of interest; however, should a court of
      competent jurisdiction rule that any consideration paid hereunder are in fact
      or
      in law to be treated as interest, in no event shall Seller be obligated to
      pay
      that interest at a rate in excess of the maximum amount permitted by law, and
      all agreements, conditions, or stipulations contained herein, if any, which
      may
      in any event or contingency whatsoever operate to bind, obligate, or compel
      Seller to pay a rate of interest exceeding the maximum rate of interest
      permitted by law shall be without binding force or effect at law or in equity
      to
      the extent only of the excess of interest over such maximum rate of interest
      permitted by law.  Also in such event, Factor may “spread” all charges
      characterized as interest over the entire term of all transactions with Seller
      and will refund to Seller the excess of any payments made over the highest
      lawful rate.  It is the intention of the parties hereto that in the
      construction and interpretation of this Agreement, the foregoing sentence shall
      be given precedence over any other agreement, condition, or stipulation herein
      contained which is in conflict with same.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      31.       Power
      of Attorney. 
      For so long as this Agreement has not been terminated, Factor is hereby
      irrevocably authorized as Seller’s Attorney-in-Fact, with full authority in the
      place of Seller and in the name of Seller or otherwise, in Factor’s discretion,
      to take any action and to execute any instrument which Factor may deem necessary
      or advisable to accomplish the purposes of this Agreement, including, without
      limitation:

    

                           
      (a)        To endorse in the name of Seller,
      and to take all actions necessary to collect for deposit to Factor’s account,
      all checks, drafts and other forms of trade acceptances, negotiable instruments
      and other forms of payment (hereinafter collectively referred to as the
“Payments”) which are tendered in payment of Receivables or in payment of
      insurance claims relating to the Receivables, or which are received by
      Factor.  The authorization includes, without limitation, the power to open,
      cash, endorse, deposit and otherwise collect all such Payments in the event
      they
      are not made payable to Factor;

    

                           
      (b)        To contact Account Debtors at any
      time in order to verify and/or collect Receivables;

    

                           
      (c)        To contact the Internal Revenue
      Service and other State and local taxing authorities in order to ascertain
      Seller’s tax liability;

    

                           
      (d)        To obtain and adjust insurance
      required to be paid to Factor;

    

                           
      (e)        To ask, demand, collect, sue for,
      recover, compound, receive and give acquittance and receipts for moneys due
      and
      to become due under or in respect of any of the Receivables;

    

                           
      (f)         To file, at Seller’s
      expense, any claims or take any action or institute any proceedings which Factor
      may deem necessary or desirable for the collection of any of the Receivables
      or
      any of the collateral securing payment of the Receivables or otherwise to
      enforce the rights of Factor with respect to the Receivables.

    

    This
      Power of Attorney is irrevocable and coupled with an interest.  Seller
      hereby acknowledges that Seller is not entitled to any notice, demand or
      presentation with respect to payment of any Receivable and agrees that Factor
      may extend or renew from time to time the payment of any Receivable without
      notice to or consent by Seller.

    

               
      32.       Joint
      and Several Obligations. 
      If more than one party is executing this Agreement as Seller, each party agrees
      that its obligations hereunder are joint and several, and that its obligations
      shall be not released, diminished, impaired or affected by the occurrence of
      any
      one or more of the following events, all of which may occur without notice
      to or
      consent of any other Seller:

    

                           
      (a)        Any release, partial release,
      subordination or loss of any security, guaranty or collateral and any time
      existing in connection with the obligations contained herein;

    

                           
      (b)        The death, insolvency, bankruptcy,
      disability or incapacity of any Seller, guarantor, or any other party now or
      hereafter obligated hereon;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

                           
      (c)        Any renewal, extension, and/or
      rearrangement of all or any portion of the obligations contained
      herein;

    

                           
      (d)        Any neglect, delay, omission,
      failure or refusal of Factor to take or prosecute any action for the collection
      of the obligations provided herein;

    

                           
      (e)        The unenforceability for any
      reason of all or any part of the obligations contained herein against any
      Seller, guarantor or other party;

    

                           
      (f)         The finding of any payment
      by any Seller to constitute a preference under bankruptcy or similar debtor
      relief law; 

    

                           
      (g)        Any release or partial release of
      liability of any Seller, guarantor or other party; and

    

                           
      (h)        Any other action that might impair
      rights in the nature of contribution or subrogation that any Seller might
      otherwise have.

    

               
      33.       Waiver
      of Consumer Rights.
      IN CONNECTION WITH THIS AGREEMENT, SELLER WAIVES SELLER'S RIGHTS, IF ANY, UNDER
      THE DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, TEXAS BUSINESS AND
      COMMERCE CODE SECTION 17.41 ET SEQ., A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS
      AND PROTECTIONS.  AFTER CONSULTATION WITH AN ATTORNEY OF SELLER'S OWN
      SELECTION, SELLER VOLUNTARILY CONSENTS TO THIS WAIVER.

    

               
      34.       Submission
      to Jurisdiction. 
      (a)        
      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER
      DOCUMENTS TO WHICH SELLER AND FACTOR ARE A PARTY MAY BE BROUGHT IN THE COURTS
      OF
      THE STATE OF TEXAS OR OF THE UNITED STATES LOCATED IN HARRIS COUNTY, TEXAS
      AND,
      BY EXECUTION AND DELIVERY OF THIS AGREEMENT, SELLER HEREBY IRREVOCABLY ACCEPTS
      FOR ITSELF AND IN RESPECT OF SELLER’S PROPERTY, UNCONDITIONALLY, THE
      JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR
      PROCEEDING.  SELLER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
      OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
      THE
      MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
      TO
      SELLER PURSUANT TO SECTION 28, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30)
      DAYS
      AFTER SUCH MAILING.  NOTHING IN THIS AGREEMENT SHALL AFFECT THE RIGHT OF
      FACTOR TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
      LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST SELLER IN ANY OTHER
      JURISDICTION.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

                           
      (b)        SELLER HEREBY IRREVOCABLY WAIVES
      ANY OBJECTION WHICH SELLER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
      OF
      ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
      WITH
      THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) OF THIS SECTION
      34 AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
      ANY
      SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
      BEEN
      BROUGHT IN AN INCONVENIENT FORUM.

    

               
      35.      
      Waiver
      of Jury Trial. 
      SELLER
      HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
      RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
      RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
      AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH
      THIS AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
      ANY
      SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
      JURY.

    

               
      36.       No
      Obligation to Purchase Further Receivables. 
      Seller specifically acknowledges and agrees that, anything herein to the
      contrary notwithstanding, Factor has the right to approve or reject any or
      all
      future accounts receivable proposed for sale under this Agreement IN ITS SOLE
      DISCRETION, and no course of conduct or prior course of dealing shall establish
      any commitment, obligation or agreement to purchase future accounts
      receivable.

    

               
      37.       Use
      of
      Facsimiles. 
      The parties acknowledge and agree that it is anticipated that execution of
      this
      Agreement, as well as schedules or other documents executed in connection
      herewith, may be evidenced by facsimile signatures, and such documents
      containing facsimile signatures shall be of the same force and effect as if
      original signatures had been obtained. 

    

     

    (Remainder
      of Page Intentionally Left Blank)

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

               
      EXECUTED as of this         day
      of __________, 2006.

    

                                                                           
      FACTOR:

                                                                           
      

                           
                                                     
CCA
      FINANCIAL SERVICES, INC.

                                                                           
      

    

    

                                                                           
      By:                                                                  
      

                                                                           
           Frank L. Angelo     

               
                 
           
           
           
           
    

    

                                                                           
      SELLER:

                                                                           
      

                                                                           
      ATSI
      COMMUNICATIONS, INC.

    

                                                                           
      By:                                                                  
      

                                                                           
      Name:  Arthur L. Smith

                                                                           
      Title:     Chief Executive Officer

               
      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SCHEDULE
      A

    TO
      PURCHASE AND SALE AGREEMENT

    DATED
      ________________, 2006 BETWEEN

    CCA
      FINANCIAL SERVICES, INC AND

    ATSI
      COMMUNICATIONS, INC.

    

    

    

    

    Receivables

    

     

    

    

    

    

    

                                                                                                                                       
             Initials

    

                                                                                                                                            
   ______

                                                                                                                                       
             Seller

    

                                                                                                                                            
   ______

                                                                                                                                       
             Factor

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    EXHIBIT
      “A”

     

     

    GENERAL
      RELEASE 

     

               
      FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are
      hereby acknowledged, the undersigned and each of them (collectively "Releasor")
      hereby forever releases, discharges and acquits CCA
      FINANCIAL SERVICES, INC.
      ("Releasee"), its parent, officers, directors, shareholders, agents and
      employees, of and from any and all claims of every type, kind, nature,
      description or character, and irrespective of how, why, or by reason of what
      facts, whether heretofore existing, now existing or hereafter arising, or which
      could, might, or may be claimed to exist, of whatever kind or name, whether
      known or unknown, suspected or unsuspected, liquidated or unliquidated, each
      as
      though fully set forth herein at length, to the extent that they arise out
      of or
      are in way connected to or are related to that certain  Purchase and Sale
      Agreement between Releasee and Releasor dated __________ __, 200_ (collectively,
      the “Claims”).

    

               
      Releasor agrees that the matters released herein are not limited to matters
      which are known or disclosed.

     

    Releasor
      acknowledges that factual matters now unknown to it may have given or may
      hereafter give rise to Claims which are presently unknown, unanticipated and
      unsuspected, and it acknowledges that this Release has been negotiated and
      agreed upon in light of that realization and that it nevertheless hereby intends
      to release, discharge and acquit the Releasee from any such unknown
      Claims.

    

               
      Acceptance of this Release shall not be deemed or construed as an admission
      of
      liability by any party released.

    

    Releasor
      acknowledges that either (a) it has had advice of counsel of its own choosing
      in
      negotiations for and the preparation of this release, or (b) it has knowingly
      determined that such advise is not needed.

    

    DATED:
                                                   
       

    Individual
      Releasor:                                                                        
      

                                          (Arthur
      L. Smith individually)

    

    Entity
      Releasor:   ATSI
      Communications, Inc.                                                                                           
      

                       By:
                                                                       
      

                              
          Name:                                                 
      

                              
          Title:

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