8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported) December 14, 2009

ATSI Communications, Inc.

(Exact Name of Registrant as Specified in Charter)

Nevada

(State or Other Jurisdiction of Incorporation

001-15687 (Commission File Number) 74-2849995 (I.R.S. Employer Identification No.)

3201 Cherry Ridge,  Building C, Suite 300  San Antonio, Texas (Address of Principal Executive Offices) 78230 (Zip Code)

(210) 614-7240

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act.

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Item 2.02.  Results of Operations and Financial Condition.

On December 14, 2009, ATSI Communications, Inc. (the “Company”) issued a press release regarding its results of operations for the quarter ended October 31, 2009.  A copy of this press release is being furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

Pursuant to General Instruction B.2, the information furnished pursuant to this Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated into any filing under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, notwithstanding any general incorporation language in those filings.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On December 15, 2009, the Company’s $5 million Account Transfer Agreement (the “Agreement”) with Wells Fargo Business Credit was automatically extended according to its terms until December 15, 2010.  Under the Agreement, the Company may sell not less than $350,000 and no more than $5,000,000 of its accounts receivable to Wells Fargo Business Credit and for a discounted amount based on the number of days between the date of sale and the date of collection.

Item 9.01. Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press release dated December 14, 2009
99.2	Press release dated December 15, 2009

SIGNATURES

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

	ATSI Communications, Inc.
Date: December 16, 2009	By:	/s/ Antonio Estrada Jr.
		Antonio Estrada Jr.
		Sr. VP of Finance &
		Corporate Controller

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated December 14, 2009
99.2	Press release dated December 15, 2009

EX-99.1

	Exhibit 99.1
	NEWS RELEASE

Contact:	Jack Eversull
	The Eversull Group
	972-378-7917 or 972-571-1624
	972-378-7981 (fax)
E-mail:	jack@theeversullgroup.com
Web Site:	www.atsi.net

ATSI Reports 1st Quarter FY2010 Results

- 37% Sequential Quarter over Quarter Growth -

San Antonio, Texas – December 14, 2009 – ATSI Communications, Inc. (OTCBB:ATSX) today announced results for the first quarter ended October 31, 2009.  The Company reported revenue of $4.9 million and gross profit of $280,000 for the 1st quarter.  Compared to the immediately preceding quarter, revenue increased by 37% and gross profit improved by 135%.   Adjusted for non-cash items, non-GAAP net loss for the first fiscal quarter of 2010 was $172,000.  The Company incurred $101,000 in non-cash expenses during the quarter ended October 31, 2009 that included depreciation, amortization, interest, and stock based compensation.

Arthur L. Smith, CEO of ATSI, stated, “We are pleased to report quarter over quarter revenue growth and a positive trend that has continued into our 2nd quarter.  We also expect to derive the full benefit of 1st quarter expense reductions during the 2nd quarter that combined with an improvement in gross profit should result in positive cash flow from operations for the month of January 2010.   Mr. Smith added, “We also made key operational progress during the quarter positioning ATSI as a technology enabler marketing new and innovative VoIP services that includes IP/PBX services, IP trunking, and customized VoIP solutions.  The addition of several new corporate customers during the period validates our strategy of marketing these new services through established channel partners.”

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principals, or GAAP, ATSI uses non-GAAP measures of operating income (loss), net income (loss) and income (loss) per share, which are adjustments from results based on GAAP to exclude non-cash expenses, including non-cash stock-based compensation in accordance with SFAS 123R. ATSI’s management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of ATSI’s on-going core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such deemed it important to provide all this information to investors.

Net income before non-cash items is not a term defined by generally accepted accounting principles (GAAP) and may not be comparable to other similarly titled measurements used by other companies. Such non-GAAP measures should be considered in addition to, and not as a substitute for, performance measures calculated in accordance with GAAP. The accompanying table includes a detailed reconciliation of net loss reported in accordance with GAAP to net loss before non-cash items.

ATSI Communications, Inc. operates through its wholly owned subsidiary, Digerati Networks, Inc.  Digerati Networks is a premier global VoIP carrier serving rapidly expanding markets in Asia, Europe, the Middle East, and Latin America.  Through Digerati’s partnerships with established foreign carriers and network operators, interconnection and service agreements, and a NextPoint powered VoIP network, ATSI believes it has clear advantages over its competition.  ATSI also owns a minority interest of a subsidiary in Mexico, ATSI Comunicaciones, S.A. de C.V., which operates under a 30-year government issued telecommunications license.

The information in this news release includes certain forward-looking statements that are based upon management’s expectations and assumptions about certain risks and uncertainties that can affect future events.  Although management believes these assumptions and expectations to be reasonable on the date of this news release, these risks and uncertainties may cause actual events to differ material from managements those contained in this news release.  The risks and uncertainties include, but are not limited to, continuing as a going concern, availability and cost of our present vendors and suppliers, and absence of any change in government regulations or other costs associated with data transmission over the Internet or termination of transmissions in foreign countries.

ATSI COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Three months ended October 31,
	2009			2008
OPERATING REVENUES:
VoIP services	$	4,985		$	7,136
Total operating revenues		4,985			7,136
OPERATING EXPENSES:
Cost of services (exclusive of depreciation and amortization)		4,705			6,566
Selling, general and administrative expense (exclusive of legal and professional fees)		368			533
Legal and professional fees		98			67
Bad debt expense		-			(20	)
Depreciation and amortization expense		44			43
Total operating expenses		5,215			7,189
OPERATING LOSS		(230	)		(53	)
OTHER INCOME (EXPENSE):
Gain on early extinguishment of debt		-			108
Investment loss		-			(14	)
Interest expense		(43	)		(34	)
Total other expense		(43	)		60
NET INCOME (LOSS)		(273	)		7
Net loss applicable to noncontrolling interest		24			-
NET INCOME (LOSS) TO COMMON  STOCKHOLDERS	$	(249	)	$	7
BASIC INCOME (LOSS) PER SHARE TO COMMON STOCKHOLDERS	$	(0.01	)	$	0.00
DILUTED INCOME (LOSS) PER SHARE TO COMMON STOCKHOLDERS	$	(0.01	)	$	0.00
WEIGHTED AVERAGE BASIC COMMON SHARES OUTSTANDING		45,504,120			39,677,598
WEIGHTED AVERAGE DILUTED COMMON SHARES OUTSTANDING		45,504,120			40,265,098
NET INCOME (LOSS) TO COMMON STOCKHOLDERS, as reported:	$	(249	)	$	7
EXCLUDING NON-CASH ITEMS:
ADD:
Non-cash stock-based compensation, employees		14			62
Bad debt expense (recovery)		-			(20	)
Depreciation and amortization		44			43
Investment loss		-			14
Interest expense		43			34
MINUS:
Gain on early extinguishment of debt		-			108
Net loss applicable to noncontrolling interest		24			-
NET INCOME (LOSS) TO COMMON STOCKHOLDERS
EXCLUDING NON-CASH ITEMS:	$	(172	)	$	32

EX-99.2

	Exhibit 99.2
	NEWS RELEASE

Contact:	Jack Eversull
	The Eversull Group
	972-378-7917 or 972-571-1624
	972-378-7981 (fax)
E-mail:	jack@theeversullgroup.com
Web Site:	www.atsi.net

WELLS FARGO EXTENDS $5 MILLION FINANCING FOR ATSI

San Antonio, Texas – December 15, 2009 – ATSI Communications, Inc. (OTCBB: ATSX) today announced that Wells Fargo Business Credit, a division of Wells Fargo Bank, N.A.  (NYSE:WFC) has extended ATSI’s $5 million accounts receivable financing for an additional term.  The renewal of this facility that was originally approved for $3 million in December 2007 demonstrates ATSI’s positive track record with Wells Fargo.

Brad LeFevre, VP of Wells Fargo Business Credit, stated, "We are pleased to continue our financing relationship with ATSI.  We anticipate our accounts receivable funding will serve as an important financing tool that will facilitate the Company’s business expansion.”

Antonio Estrada, ATSI’s Sr. VP of Finance and Corporate Controller, added, “We appreciate Wells Fargo’s continued support of our business plan.  The $5 million facility is a testament to Wells Fargo’s confidence in ATSI and its management team. This financing will allow us the flexibility to provide improved terms to credit worthy customers and facilitate our cash management as we seek to grow our business during FY2010.”

ATSI Communications, Inc. operates through its wholly owned subsidiary, Digerati Networks, Inc.  Digerati Networks is a premier global VoIP carrier serving rapidly expanding markets in Asia, Europe, the Middle East, and Latin America.  Through Digerati’s partnerships with established foreign carriers and network operators, interconnection and service agreements, and a NextPoint powered VoIP network, ATSI believes it has clear advantages over its competition.  ATSI also owns a minority interest of a subsidiary in Mexico, ATSI Comunicaciones, S.A. de C.V., which operates under a 30-year government issued telecommunications license.

The information in this news release includes certain forward-looking statements that are based upon management’s expectations and assumptions about certain risks and uncertainties that can affect future events.  Although management believes these assumptions and expectations to be reasonable on the date of this news release, these risks and uncertainties may cause actual events to differ material from managements those contained in this news release.  The risks and uncertainties include, but are not limited to, continuing as a going concern, availability and cost of our present vendors and suppliers, and absence of any change in government regulations or other costs associated with data transmission over the Internet or termination of transmissions in foreign countries.