UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                            FORM 10-Q
(Mark one)
   [X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended:     July 31, 2001

                               OR

   [ ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

              For the transition period from                  to

              Commission File Number 0-2180

                         COVISTA COMMUNICATIONS, INC.
                         ----------------------------
           (Exact name of registrant as specified in its charter)

           New Jersey                            22-1656895
          ------------                          ------------
(State or other Jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)

                150 Clove Road, 8th Floor, Little Falls, NJ   07424
               -------------------------------------------   --------
               (Address of principal executive offices)     (Zip Code)

Registrant's telephone number, including area code:  (973) 812-1100

                         Not applicable
                         --------------
         (Former address of principal executive offices) (Zip Code)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                        Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                 Class                Outstanding at September 14, 2001
   --------------------------         ---------------------------------
  Common Share, $.05 par value                 10,819,405 shares

<PAGE>
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                    COVISTA COMMUNICATIONS, INC.

                          AND SUBSIDIARIES

                 SECOND QUARTER REPORT ON FORM 10-Q


                                INDEX
                                -----

                                                                  Page No.

PART I.    FINANCIAL INFORMATION

     Condensed Consolidated Statements of Operations and
          Comprehensive (Loss) Income
          Six months ended July 31, 2001 and 2000
          (unaudited) and three months ended July
          31, 2001 and 2000 (unaudited)                               2

     Condensed Consolidated Balance Sheets
          July 31, 2001 (unaudited), and
          January 31, 2001                                          3-4

     Condensed Consolidated Statements of Cash Flows
          Six months ended July 31, 2001 and 2000
          (unaudited)                                                 5

     Notes to Condensed Consolidated Financial
          Statements (unaudited)                                    6-9

     Management's Discussion and Analysis of
          Financial Condition and Results of Operations           10-12


PART II. OTHER INFORMATION

     Items 1-5                                                       13

     Item 6. Exhibits and Reports on Form 8-K                        13


SIGNATURES                                                           14




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                COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES


               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                      COMPREHENSIVE (LOSS) INCOME
                               (Unaudited)
<TABLE>
<CAPTION>
                                                Six Months Ended        Three Months Ended
                                                -----------------       ------------------
                                                    July 31,                  July 31,
                                                     -------                   -------
                                               2001        2000         2001         2000
                                            ----------- ----------   -----------  ----------
<S>                                        <C>          <C>          <C>         <C>
NET SALES                                  $ 58,336,354 $ 65,900,505 $28,892,331 $34,108,643

Costs and Expenses
    Cost of sales                            49,087,504   57,058,483  22,349,264  30,606,448
    Access charge settlement (Note G)                 -   (1,264,483)          -  (1,264,483)
    Selling, general and administrative      14,069,658   13,117,319   6,500,708   6,171,648
                                             ----------   ----------  ----------  -----------

    Total costs and expenses                 63,157,162   68,911,319  28,849,972  35,513,613
                                             ----------   ----------  ----------  -----------

OPERATING (LOSS ) INCOME                     (4,820,808)  (3,010,814)     42,359  (1,404,970)
                                             ----------   ----------  ----------  -----------
Other Income (Expense)
    Interest income                              75,641       88,586      40,392      40,586
    Other income                                271,588       32,592      18,331      25,280
    Interest expense                            (33,527)     (56,355)    (15,522)    (27,100)
                                              ----------   ----------   ---------   ---------
    Total other income                          313,702       64,823      43,201      38,766
                                              ----------   ----------   ---------   ---------
(Loss) income before benefit from
  income taxes                               (4,507,106)  (2,945,991)     85,560  (1,366,204)

Benefit from income taxes                             -      (65,676)          -           -
                                              ----------  ----------    ---------  ----------


NET (LOSS) INCOME                            (4,507,106)  (2,880,315)     85,560  (1,366,204)

Other Comprehensive Income, net of taxes:
   Unrealized holding gain                            -       22,028           -      23,309
                                              ---------    ---------     --------  ----------
COMPREHENSIVE (LOSS) INCOME                 $(4,507,106) $(2,858,287)    $85,560 $(1,342,895)
                                              =========    =========      =======  ==========

BASIC (LOSS) EARNINGS PER COMMON SHARE      $     (0.47) $     (0.40)    $  0.01  $    (0.19)
                                             ----------    ----------      -------  ---------
DILUTED (LOSS) EARNINGS PER COMMON SHARE    $     (0.47) $     (0.40)    $  0.01  $    (0.19)
                                             ----------    ----------      -------  ---------
DIVIDENDS PER SHARE                                NONE          NONE        NONE        NONE

</TABLE>

                See notes to condensed consolidated financial statements.



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                COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED BALANCE SHEETS



                                             July 31,           January 31,
                                               2001                 2001
                                            ------------        ------------
                                            (Unaudited)            (Note)

ASSETS

CURRENT ASSETS:

          Cash and cash equivalents          3,461,132           2,691,889

          Investments available for sale        25,000             537,007

          Accounts receivable, net          17,174,623          20,526,178

          Prepaid network capacity             400,000                   -

          Prepaid expenses and other
             current assets                  1,135,581           1,225,463
                                            ----------          ----------

          TOTAL CURRENT ASSETS              22,196,336          24,980,537
                                            ----------          ----------

PROPERTY AND EQUIPMENT, NET                 14,817,444          13,020,579
                                            ----------          ----------
OTHER ASSETS:

         Prepaid network capacity-
            long-term                        3,600,000                   -

         Deferred line installation costs,
            net                                195,714             216,672

         Customer list, net                    722,979                   -

         Other assets                          862,064             879,614
                                            ----------          ----------
                                             5,380,757           1,096,286
                                            ----------          ----------
                                           $42,394,537         $39,097,402
                                            ==========          ==========



NOTE:  The balance sheet at January 31, 2001 has been taken from the audited
       consolidated financial statements at that date.

       See notes to condensed consolidated financial statements.

                               (Continued)

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                COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED BALANCE SHEETS

                                        July 31,         January 31,
                                          2001              2001
                                       ------------     ------------
                                       (Unaudited)         (Note)

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

   Current portion of long-term debt    $   584,332      $   615,053

   Accounts payable                      25,020,356       27,960,046

   Other current and acccrued
    liabilities                           2,643,054        2,834,557

   Salaries and wages payable               885,443        1,304,818
                                         ----------       ----------

TOTAL CURRENT LIABILITIES                29,133,185       32,714,474
                                         ----------       ----------

OTHER LONG-TERM LIABILITIES                 221,705          223,788
                                         ----------       ----------

LOAN FROM SHAREHOLDER                     4,000,000                -
                                         ----------       ----------
LONG-TERM DEBT                              110,754          382,047
                                         ----------       ----------

SHAREHOLDERS' EQUITY

    Common Stock                            647,791          475,291
    Additional paid-in-capital           37,744,167       30,016,454
    Accumulated deficit                 (15,792,625)     (11,285,519)
                                        -----------       ----------
                                         22,599,333       19,206,226

    Unearned ESOP shares                (12,225,000)     (12,225,000)
    Treasury stock                       (1,445,449)      (1,445,440)
    Accumulated and other comprehensive
      income                                      -          241,307
                                        -----------       ----------

         Total Shareholders' Equity       8,928,893        5,777,093
                                        -----------       ----------
                                        $42,394,537      $39,097,402
                                        ===========       ==========


NOTE:  The balance sheet at January 31, 2001 has been taken from the
       audited consolidated financial statements at that date.

       See notes to condensed consolidated financial statements.
<PAGE>
<PAGE>
                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                      Six Months Ended
                                                           July 31,
                                                  2001               2000
                                               -----------       -----------
OPERATING ACTIVITIES:

    Net loss                                   $(4,507,106)      $(2,880,315)
    Adjustment for non-cash charges              3,866,088         2,652,167
    Gain on disposal of property and equipment           -            (1,975)
    Gain on sale of marketable securities         (262,234)                -
    Changes in assets and liabilities, net of
      effect of acquisition of Blink Data Corp. (1,382,933)        2,778,243
                                                -----------       -----------
    Net cash (used in) provided by
      operating activities                      (2,286,185)        2,548,120
                                               -----------        -----------

INVESTING ACTIVITIES:

    Cash acquired in purchase of
      Blink Data Corp.                             90,402                  -
    Proceeds on sale of marketable securities   1,141,302                  -
    Purchases of marketable securities           (608,369)                 -
    Purchase of prepaid network capacity       (4,000,000)                 -
    Purchase of property and equipment         (3,539,473)        (2,352,150)
    Proceeds on sale of fixed assets                    -              1,975
    Additions to deferred line
     installation costs                           (26,420)           (18,499)
                                              -----------        -----------
    Net cash used in investing activities      (6,942,558)        (2,368,674)
                                              -----------        -----------

FINANCING ACTIVITIES:

    Sale of Common Stock                        6,300,000                  -
    Proceeds of loan from shareholder           4,000,000                  -
    Repayments of bank borrowings                (302,014)          (279,100)
                                              -----------        -----------
    Net cash provided by (used in)
     financing activities                       9,997,986           (279,100)
                                              -----------        -----------

NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                               769,243            (99,654)

CASH AND CASH EQUIVALENTS,
   BEGINNING OF PERIOD                          2,691,889          4,374,479
                                              -----------        -----------
CASH AND CASH EQUIVALENTS,
   END OF PERIOD                               $3,461,132         $4,274,825
                                              ===========        ===========

SUPPLEMENTAL DISCLOSURE OF CASH
   FLOW INFORMATION:

   Cash paid (received) during the
     period for:
        Interest                              $    33,527        $    56,355
        Income taxes                          $         -        $(1,643,227)









      
<PAGE>
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            COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             (Unaudited)


NOTE A--BASIS OF PRESENTATION

      The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  They do
not include all information and notes required by generally accepted
accounting principles for complete financial statements.   However,
except as disclosed herein, there has been no material change in the
information disclosed in the notes to the consolidated financial
statements included in the Annual Report on Form 10-K of Covista
Communications, Inc. (formerly Total-Tel USA Communications, Inc.)
and Subsidiaries (the "Registrant") for the fiscal year ended
January 31, 2001.  In the opinion of Management, all adjustments
(consisting of normal recurring accruals only) considered necessary
for a fair presentation have been included.  Operating results for
the six-month period ended July 31, 2001 are not necessarily
indicative of the results that may be expected for the year ending
January 31, 2002.

NOTE B -NEW ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards (SFAS)  No.  133,
Accounting for Derivative Instruments and Hedging Activities, is
effective for all fiscal years beginning after June 15, 2000. SFAS
133, as amended, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. Under SFAS
133, certain contracts that were not formerly considered derivatives
may now meet the definition of a derivative. The Registrant adopted
SFAS 133 effective February 1, 2001. The adoption of SFAS 133 did
not have a significant impact on the financial position, results of
operations, or cash flows of the Registrant.

In June 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 141 ("SFAS
141"), "Business Combinations." SFAS 141 requires the purchase
method of accounting for business combinations initiated after June
30,  2001 and eliminates the pooling-of-interests method. The
Registrant does not believe that the adoption of SFAS 141 will have
a significant impact on its financial statements, beyond the
cessation of goodwill amortization on future business combinations.

In June 2001, the FASB issued Statement of Financial Accounting
Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible
Assets", which is effective January 1, 2002. SFAS 142 requires,
among other things, the discontinuance of goodwill amortization. In
addition, the standard includes provisions for the reclassification
of certain existing recognized intangibles as goodwill, reassessment
of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported
goodwill and the identification of reporting units for purposes of
<PAGE>
<PAGE>
assessing potential future impairments of goodwill. SFAS 142 also
requires  the Registrant to complete a transitional goodwill
impairment test six months from the date of adoption. The Registrant
is currently assessing but has not yet determined the impact of SFAS
142 on its financial position and results of operations.

In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement
Obligations", which is effective for all fiscal years beginning
February 1, 2003. SFAS 143 requires recording the fair value of a
liability for an asset retirement obligation in the period in which
it is incurred, and a corresponding increase in the carrying value
of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost
is depreciated over the useful life of the related asset.  Upon
settlement of the liability, it is either settled for its recorded
amount or a gain or loss upon settlement is recorded. The Registrant
is currently assessing but has not yet determined the impact of SFAS
143 on its financial position and results of operations.

NOTE C -- EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
(loss) earnings per common share:
<TABLE>
<CAPTION>
                                               Six Months                     Three Months
                                                  Ended                           Ended
                                         July 31,2001  July 31,2000  July 31, 2001  July 31, 2000
                                         ------------ -------------  -------------- -------------
<S>                                      <C>           <C>           <C>            <C>
Numerator:
      (Loss) Earnings available to    $(4,507,106)    $(2,880,315)  $    85,560      $(1,366,204)
      Common Shareholders used in
      basic and diluted (loss)
      earnings per Common Share
Denominator:
     Weighted-average number of         9,568,783       7,299,825    10,819,405        7,305,195
     Common Shares used in basic
     (loss) earnings per Common
     Share (1)

     Effect of diluted securities:
            Common share options(2)             -               -       286,103                -
                                      -----------     -----------    ----------       -----------

     Weighted-average number of         9,568,783       7,299,825    11,105,508        7,305,195
     Shares and diluted potential
     Common Shares used in diluted
     (loss) earnings per Common Share

Basic (loss) earnings per Common Share $    (0.47)     $    (0.40)  $      0.01       $    (0.19)
                                        ---------       ---------     ---------        ---------

Diluted (loss) earnings
  per Common Share                     $    (0.47)     $    (0.40)  $      0.01       $    (0.19)
                                        ---------       ---------     ---------        ---------

(1)  600,000 ESOP shares have not been included in the weighted average number of Common Shares -
     See Note E
(2)  Common Shares subject to options are not included in the calculation of diluted loss per
     Common Share for the six month periods ended July 31, 2001 and 2000, and the three-month
     period ended July 31, 2000, as doing so would be antidilutive due to the net loss per common
     share.
</TABLE>


<PAGE>
<PAGE>
NOTE D -- SEGMENT REPORTING

      The Registrant sells telecommunications services to two
distinct segments: a retail segment consisting primarily of small to
medium sized businesses principally within the United States, and a
wholesale segment with sales to other telecommunications carriers
throughout the world.

     In addition to direct costs, each segment is allocated a
portion of the Registrant's switch and operating expenses.  The
allocation of expense is based upon the minutes of use flowing
through the Registrant's switch network. There are no intersegment
sales.  Assets are held at the consolidated level and are not
allocable to the operating segments.  The Registrant evaluates
performance on operating earnings of the two business segments.

     Summarized financial information concerning the Registrant's
reportable segments is shown in the following table:

                                     Retail        Wholesale      Total
                                    --------       ---------      -----
Six Months Ended July 31, 2001

Net Sales                        $ 24,721,154   $ 33,615,200     $58,336,354
Gross margin                        7,809,725      1,439,125       9,248,850
Operating (loss) income            (3,722,735)    (1,098,073)     (4,820,808)

Six Months Ended July 31, 2000

Net Sales                         $29,274,332   $ 36,626,173     $65,900,505
Gross margin                        7,432,511      2,673,994      10,106,505
Operating (loss) income            (3,971,611)       960,797      (3,010,814)


NOTE E - EMPLOYEE STOCK OWNERSHIP PLAN

On September 1, 1998, the Registrant established the TotalTel USA
Communications, Inc. Employee Stock Ownership Plan (the "ESOP
Plan").  Concurrently with the establishment of the non-leveraged
ESOP Plan, the Registrant contributed 600,000 shares of its Common
Stock to the ESOP Plan. The Common Shares were recorded at fair
value at the date contributed to the ESOP, totaling approximately
$12.2 million, with an offset to Unearned ESOP Shares in the
Statement of Shareholders' Equity.  The ESOP Plan was to be
administered through a Trust by a Trustee as designated by the Board
of Directors. No shares had been allocated from the ESOP Plan as of
July 31, 2001. In February 1999, the Registrant's Board of Directors
authorized the termination of the ESOP Plan and subsequently the IRS
had given its approval to terminate the ESOP.

On August 14, 2001, the ESOP was terminated and the 600,000 shares
of the Registrant's Common Stock was returned to its authorized but
unissued Common Shares.

NOTE F -STOCK OPTIONS

On February 23, 2000, the Board of Directors adopted a resolution
allowing the Registrant to re-price all outstanding options granted
under its 1996 and 1999 Stock Option Plans. All outstanding options
<PAGE>
<PAGE>
providing for the purchase of approximately 243,000 Common Shares,
net of cancellations, which were originally granted at prices
ranging from $14.63 to $21.50 per share were re-priced to $14.25 per
share. All other terms and conditions, including vesting periods
remained unchanged. The Registrant has applied FASB Interpretation
No.  44 "Accounting for Certain Transactions Involving  Stock
Compensation" related to stock option repricing. During the six-
months ended July 31, 2001, there has been no financial statement
impact based upon the market value of the Registrant's Common
Shares. On February 1, 2001 36 employees were given the opportunity
to cancel 536,200 options to purchase Common Shares. All 36
employees agreed to cancel the options. On August 2, 2001 536,200
options to purchase Common Shares were issued to 36 people at the
then closing market price of $5.65.

NOTE G -ACCESS CHARGE SETTLEMENT

In the second quarter of the fiscal year ended July 31, 2000, the
Registrant received a cash payment of $1,264,483 from certain Bell
Companies in settlement of a class action suit, to which the
Registrant was a party, filed in 1992, relating to overcharges by
those companies. The settlement concluded the class action with the
Bell Companies. The Registrant's portion of the settlement was
determined during the second quarter ended July 31, 2000. The cash
payment was recorded as a separate line item as a reduction of costs
and expenses in the quarter.


NOTE H -INCOME TAXES

For  the fiscal year ended January 31, 2000, the Registrant
established a valuation allowance against its net deferred tax asset
due to the uncertainty of realizing certain tax credits and loss
carryforwards. In the six month period ended July 31, 2001, the
Registrant continued this accounting treatment and recorded a full
valuation allowance against the net tax benefit arising from the
period's net operating loss. Accordingly, the net deferred tax asset
of $9,413,484 is fully offset by the valuation allowance, and does
not appear as an asset on the balance sheet. It will be reflected at
value when the net deferred tax asset may be utilized in future
periods.

NOTE I -ACQUISITION OF BLINK DATA

On February 1, 2001, the Board of Directors of the Registrant
authorized the acquisition of Blink Data Corporation, a
telecommunications services provider, for 300,000 shares of the
Registrant's Common Stock valued at the fair market value at March
29, 2001. Kevin Alward, who subsequently became a Director and Chief
Operating Officer of the Registrant, was a principal shareholder,
officer and director of Blink Data Corporation. The transaction was
completed on March 29, 2001, and was accounted for by the purchase
method of accounting. During the quarter ended July 31, 2001, the
Registrant finalized its calculation of the purchase price and has
allocated approximately $815,000 of the purchase price over net
assets to customer lists. The customer list is being amortized on an
accelerated basis over the expected customer life.


<PAGE>
<PAGE>

NOTE J - SHAREHOLDER LOAN AND PREPAID NETWORK CAPACITY

On July 2, 2001, the Registrant received a loan from a major
shareholder in the amount of $4,000,000. The loan is due and payable
on February 1, 2003 and carries an interest rate of 8%. The proceeds
of the loan were used to purchase a 10-year commitment for
approximately 2.8 billion DS-0 channel miles of telecommunications
network capacity. The $4,000,000 was paid during the three-month
period ended July 31, 2001, and is classified on the balance sheet
as prepaid network capacity, current and long term. This cost will
be amortized to operations, based upon the greater of capacity use
or straight line over the term of the agreement. For the three-month
period ended July 31, 2001 the network capacity is not yet in
service.


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<PAGE>
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               COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULT OF OPERATIONS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS:

     Certain matters discussed in this Quarterly Report on Form 10-Q
are "forward-looking statements" intended to qualify for the safe
harbor from liability provided by the Private Securities Litigation
Reform Act of 1995. These forward-looking statements generally can
be identified as such because the context of the statement will
include words such as the Registrant "believes", "anticipates",
"expects", or words of similar import. Similarly, statements which
describe the Registrant's future plans, objectives or goals are also
forward-looking statements.  Such forward-looking statements are
subject to certain risks and uncertainties which are described in
close proximity to such statements and which could cause actual
results to differ materially from those anticipated as of the date
of this Report. Shareholders, potential investors and other readers
are urged to consider these factors in evaluating the forward-
looking statements and are cautioned not to place undue reliance
upon  such  forward-looking  statements.  The forward-looking
statements included herein are made only as of the date of this
Report and the Registrant undertakes no obligation to publicly
update such forward-looking statements to reflect subsequent events
or circumstances, except as required under applicable laws.

Results of Operations
---------------------

      Net sales were approximately $58,336,000 for the first six
months of the current fiscal year, a decrease of approximately
$7,565,000 or 11.5% as compared to the approximately $65,901,000
recorded in the first six months of the prior fiscal year.  Net
sales for the second quarter of the current fiscal year were
approximately $28,892,000, a decrease of approximately $5,217,000 or
15.3% as compared to the approximately $34,109,000 recorded in the
second quarter of the prior fiscal year.

   Wholesale revenue for the six-month period decreased to
approximately $33,615,000 a decrease of approximately $3,011,000 or
8.2%. For the quarter ended July 31, 2001, wholesale revenue was
approximately $15,982,000, a decrease of approximately  $4,212,000
or 20.9% over the comparative quarter in the last fiscal year.
Wholesale minutes sold in the six-month period ended July 31, 2001
were approximately 300,871,000 minutes, an increase of approximately
6,581,000 minutes or 2.2%. Wholesale minutes sold in the quarter
ended July 31, 2001 were approximately 147,755,000 minutes, a
decrease of approximately 12,530,000 minutes or 7.8%. For the six-
month period the decline in revenue does not parallel the increased
usage due to an approximate 10.4% reduction of price, because of the
competitive wholesale market place, a trend that the Registrant
believes is likely to continue. For the three-month period ended
July 31, 2001, the decline in volume was due to business failures of
several wholesale customers. The Registrant has also attempted to
limit its exposure by tightening up credit limits on all wholesale
accounts. A rate decrease of approximately 14.3% was experienced in
the three-month period ended July 31, 2001.
<PAGE>
<PAGE>
   Retail revenues for the six-month period were approximately
$24,721,000, a decrease of approximately $4,553,000 or 15.6%. For
the quarter ended July 31, 2001, retail revenues were approximately
$12,911,000, an approximately $1,004,000 or 7.2% decrease over the
comparative quarter in the last fiscal year. Retail minutes sold in
the  six-month period ended July 31, 2001 were approximately
313,643,000 minutes, a decrease of approximately 1,291,000 minutes
or 0.4%. Retail minutes sold in the quarter ended July 31, 2001 were
approximately 168,324,000 minutes, an increase of approximately
17,316,000 minutes, or 11.5%.

    For the six-month period ended July 31, 2001, the decrease in
volume was attributed to the intense competition within  the
industry, offset by the addition of approximately 14,000,000 minutes
gained from the Blink acquisition. The Registrant has experienced a
reduction of approximately 1.4 cents per minute or 15.5% to an
average billing rate per minute of 7.9 cents during the current
fiscal year. This rate decrease equates to an approximate $4,433,000
reduction in retail revenue. The volume decrease equates to an
approximately $120,000 reduction in retail revenue. These two
factors combined account for the approximately $4,553,000 retail
revenue shortfall over the prior year's six month revenue. Given the
competitive climate in the long distance telephone industry, there
can be no assurance that the trend will abate during the remainder
of the fiscal year.

   For the three-month period ended July 31, 2001 the volume
increase of approximately 17,316,000 minutes was attributed to the
acquisition of Blink Data (approximately 11,500,000 minutes) and a
concerted sales effort to acquire new customers. The Registrant
experienced a reduction of approximately 1.5 cents per minute or
16.3% to an average billing rate of 7.7 cents per minute in the
three-month period ended July 31, 2001. This rate decrease amounts
to approximately $2,600,000 for the quarter which was offset by the
approximately  $1,596,000 volume increase,  resulting in the
approximately $1,004,000 decrease in retail revenue for the three-
month period ended July 31, 2001.

    Cost of sales for the current six-month period was approximately
$49,088,000, a decrease of approximately $7,971,000 or 14.0%. These changes
were favorable in relation to the 11.5% decrease in sales for the six-month
period. The decrease in cost of sales was primarily due an improvement in
rates over the prior year, (partially due to new contracted rates with the
Registrant's suppliers), of approximately $7,935,000 and recovery of disputes
relating to prior years of approximately $770,000. This saving was offset by
the increase in carrier volume of approximately $641,000.

   Cost of sales (excluding the access charge settlement of approximately
$1,264,000) for the three-month period ended July 31, 2001 was approximately
$22,349,000, a decrease of approximately $8,257,000 or 27.0%. These changes
were favorable in relation to the 15.3% decrease in revenues in the second
quarter. The decrease in cost of sales was primarily due to an improvement in
rates over the three-month period ended July 31, 2000, (partially due to new
contracted rates with the Registrant's suppliers), of approximately
$7,044,000; the recovery of approximately $961,000 of disputes filed in
previous periods; the reduced volume of carrier traffic of approximately
$1,434,000 and savings in the switch and network operations of approximately

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<PAGE>
$63,000. These savings were offset by the cost of additional retail volume of
approximately $1,221,000.

   In the normal course of business the Registrant will file disputes with its
service suppliers. The Registrant's accounting policy is to record the
invoiced amount to cost of sales, which may include disputed amounts. When the
dispute is resolved and the credit is received, the amount is credited to cost
of sales. Open disputes included in cost of sales for the six-month period and
the three-month period ended July 31, 2001 are approximately $2,000,000
and $500,000, respectively.

   In the quarter ended July 31, 2000 the Registrant received a cash payment
of $1,264,483 from certain Bell Companies in settlement of a class action suit
filed in 1992 relating to overcharges by those companies. The settlement
concluded the class action with the Bell Companies.

   Selling, general and administrative expense for the six-month period
increased to approximately $14,070,000, an increase of approximately $953,000,
or 7.3%. For the quarter ended July 31, 2001, selling, general and
administrative expense was approximately $6,501,000, an approximate $329,000,
or a 5.3% increase over the comparative quarter in the last fiscal year. The
increase of approximately $953,000 for the six-month period was primarily due
to the increased provision for doubtful accounts of approximately
$918,000, relating to the business failure of several of the Registrant's
wholesale customers; an increase in legal, regulatory and collections expense
of approximately $196,000; an increase in amortization of customer lists
(acquired from Blink Data Corp.) of approximately  $180,000 and an increase in
rent expense of approximately $98,000. These increases were offset by
reductions in commission expense, related to reduced sales volumes, of
approximately $414,000 and other net savings of approximately $25,000. For the
three-month period ended July 31, 2001, the increase of approximately $329,000
was comprised primarily of increased provision for doubtful accounts of
approximately $315,000, relating to the business failure of several of the
Registrant's wholesale customers;  an increase in legal, regulatory and
collections expense of approximately $188,000; an increase in rent expense of
approximately $57,000; an increase in amortization of customer lists (acquired
from Blink Data Corp.) of approximately $180,000 and an increase in other net
expense of approximately $15,000. These increases were offset by savings in
salaries and wages, relating to the first quarter's reduction in force, of
approximately $262,000; reductions in commission expense, due to reduced
sales volumes, of approximately $45,000; and reduced consulting expenses of
approximately $119,000.

   For the reasons described above, the operating loss for the six-month
period ended July 31, 2001 was approximately $4,821,000, an increase of
approximately $1,810,000 from the six-month period ended July 31, 2000. The
operating income for the three-month period ended July  31, 2001 was
approximately $42,000, an improvement of approximately $1,447,00 over the
prior year's three-month period ended July 31, 2000.

   Total other income, net, for the current six-month period was approximately
$314,000 as compared to approximately $65,000 of total other income, net,
recorded in the prior year six-month period. The approximately $249,000 change
for the six-month period is primarily due to the sale of marketable securities
at a gain of approximately $263,000. Total other income for the current fiscal
quarter was approximately $43,000 as compared to approximately $39,000 of
total other income recorded in the comparable period during the prior
fiscal year.

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<PAGE>
   Basic and diluted loss per Common Share was $0.47 per share for the current
six-month period ended July 31, 2001 as compared to $0.40 loss per share for
the six-months ended July 31, 2000. Basic and diluted earnings per Common
Share was $0.01 per share for the current three-month period ended July 31,
2001 as compared to $0.19 loss per Common Share for the three-months ended
July 31, 2000.

Liquidity and Capital Resources
-------------------------------

   At July 31, 2001, the Registrant had a working capital deficit of
approximately $6,937,000, an improvement of  approximately $797,000 as
compared to January 31, 2001. The ratio of current assets to current
liabilities at July 31, 2001 was 0.8:1, as compared to the ratio of 0.8:1 at
January 31, 2001. The increase in working capital at July 31, 2001 was
primarily attributable to a decrease in accounts payable of approximately
$2,940,000; an increase in cash and cash equivalents of approximately
$769,000; a decrease in accrued liabilities of approximately $610,000; an
increase in prepaid expenses and other current assets of approximately
$310,000 and a reduction in the current portion of long term debt of
approximately $31,000. This was offset by an increase in the reserve for
doubtful accounts of approximately $1,373,000; a decrease in accounts
receivable of approximately $1,978,000 and a decrease in investments available
for sale of approximately $512,000.

   The increase in cash of approximately $769,000 was the result primarily of
proceeds from the sale of common stock of $6,300,000; proceeds from a long
term loan received from a major shareholder of $4,000,000; the proceeds from
the sale of marketable securities of approximately $1,141,000; and cash
acquired in the purchase of Blink Data Corp. of approximately $90,000. These
increases were offset by cash used in operations of approximately $2,286,000;
the purchase of a 10-year commitment for approximately 2.8 billion DS-0
channel miles of telecommunications capacity for approximately $4,000,000;
purchases of property and equipment of approximately $3,540,000; purchases of
marketable securities of approximately $608,000; repayment of bank borrowings
of approximately $302,000; and the addition of deferred line installation
costs of approximately $26,000.

Capital Expenditures
--------------------

Capital expenditures for the six-month period ended July 31, 2001 were
approximately $3,540,000. These expenditures were financed principally from
the sale of Common Stock and the proceeds of a long-term loan received from
the Chairman of the Board. The major expenditures were approximately
$2,884,000 for new switches to be installed as part of the Registrant's
network expansion; approximately $311,000 for equipment and fixtures  for  the
Registrant's Tennessee call center; approximately $135,000 for software and
hardware upgrades to the LAN; approximately $137,000 for customer premises
equipment; approximately $50,000 for equipment to upgrade the New York Switch
and approximately $23,000 for furniture and fixtures and leasehold
improvements. Planned spending for the balance of the fiscal year ending
January 31, 2002, includes approximately $2,000,000 for additional switches
and equipment to be installed as part of the Registrant's network expansion.
These expenditures are planned to be financed primarily through vendor
financing and additional lines of credit which the Registrant intends to
negotiate with its current lender or other sources. In addition, the
Registrant may seek to sell privately, additional equity or debt securities.

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<PAGE>
However, there can be no assurance that the Registrant shall be able to obtain
such financing or, if available, the terms thereof shall be economical.

Pending Transaction
-------------------

On July 18, 2001 the Registrant executed a definitive merger agreement with
Capsule Communications, Inc. Under the terms of the agreement approved by the
Boards of Directors of both companies, Capsule would become a wholly owned
subsidiary of the Registrant. The shareholders of Capsule, other than its
controlling shareholder would receive 0.1116 shares of Covista Common Stock
for each share of Capsule Common Stock, subject to an adjustment as provided
for in the agreement; and Henry G. Luken III, Chairman of the Board of
Covista Communications and the controlling shareholder of Capsule,
would receive 0.0838 shares of Covista Common Stock for each share
in Capsule Common Stock.

Market Risk
-----------

   Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in interest
rates, foreign exchange rates and equity prices.  As the Registrant holds no
marketable securities at July 31, 2001, the exposure to interest rate risk
relating to marketable securities no longer exists. The Registrant does not
hold any derivatives related to its interest rate exposure. The Registrant
also maintains long-term debt at fixed rates. Due to the nature and amounts of
the Registrant's note payable, an immediate 10% change in interest rates would
not have a material effect in the Registrant's results of operations over the
next fiscal year. The Registrant's exposure to adverse changes in foreign
exchange rates is also immaterial to the consolidated statements as a whole.

Subsequent Event
----------------

   The Registrant's New York City switching facility and certain of the
Registrant's network capabilities have been disabled as a result of the
catastrophe at the World Trade Center. While the Registrant cannot presently
assess the economic impact of this disaster, we believe that there will be an
adverse effect on the results for the quarter ending October 31, 2001.


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            COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES

                     PART II - OTHER INFORMATION
                     ---------------------------





ITEMS 1 - 5           Not applicable



ITEM 6                Form 8-K was filed on July 19, 2001

                      On  July 17, 2001, Covista Communications, Inc.
                      ("Covista") entered into an Agreement and Plan of
                      Reorganization (the "Merger Agreement") with Capsule
                      Communications,  Inc.,  a  Delaware  corporation
                      ("Capsule"), and CCI Acquisitions Corp., a Delaware
                      corporation ("CCI") and wholly owned subsidiary of
                      Covista.  Pursuant to the Merger Agreement  and
                      subject to the conditions set forth in the Merger
                      Agreement (including approval of the Merger Agreement
                      by the stockholders of each of Covista and Capsule,
                      receipt  of  required  regulatory  approvals,
                      effectiveness of a registration statement registering
                      the shares of Covista's common stock to be issued in
                      the merger and other customary closing conditions),
                      CCI would merge with and into Capsule, and Capsule,
                      as the surviving corporation, would become a wholly-
                      owned subsidiary of Covista. It is anticipated that
                      approximately 2,100,000 shares of the Registrant's
                      Common Stock would be issued upon consummation of the
                      merger, which is expected to close in the fourth
                      quarter of the Registrant's fiscal year ending
                      January 31, 2002.



















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                              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 thereunto duly authorized.

                                    COVISTA COMMUNICATIONS, INC.
                                           (Registrant)


Date: September 14, 2001            By:   /s/ A. John Leach, Jr.
                                       -----------------------------
                                              A. John Leach, Jr.
                                              President and Chief
                                              Executive Officer



Date: September 14, 2001            By:  /s/  Thomas P. Gunning
                                       ------------------------------
                                              Thomas P. Gunning,
                                              Vice President, Chief Financial
                                              Officer and Principal Accounting
                                              Officer