<PAGE>

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

                                    FORM 10-Q


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

                  For the quarterly period ended April 30, 2005

                                       OR

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

                          Commission File Number 0-2180

                                 [COVISTA LOGO]

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

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

                           721 Broad Street, Suite 200
                              Chattanooga, TN 37402
               (Address of principal executive offices)(Zip Code)

                                 (423) 648-9500
                Company's telephone number, including area code:

Indicate by check mark whether Covista Communications, Inc. ("Covista" or the
"Company") (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 Covista was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

                                 Yes  X   No ___
                                     ---

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

                                Yes ___  No  X
                                            ---

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 June 1, 2005
-----------------------------                    ---------------------------
Common Share, $0.05 par value                             17,822,025







<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
                       SECOND QUARTER REPORT ON FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                        PAGE No.
                                                                                                        --------
<S>                                                                                                    <C>
PART I - FINANCIAL INFORMATION

Condensed Consolidated Balance Sheets                                                                      3

         April 30, 2005 (unaudited), and January 31, 2005

Condensed Consolidated Statements of Operations for three months ended April 30, 2005 and 2004             4
(unaudited)

Condensed Consolidated Statements of Cash Flows                                                            5

         Three months ended April 30, 2005 and 2004 (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)                                         6 - 11

Management's Discussion and Analysis of                                                                 12 - 14

         Financial Condition and Results of Operations

Critical Accounting Policies                                                                            15 - 16

PART II - OTHER INFORMATION

Items 1-5  Not Applicable                                                                                  17

Items 6                                                                                                    17

CERTIFICATIONS AND SIGNATURES                                                                              18
</TABLE>


                                       2






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
<TABLE>
<CAPTION>

                                                         April 30, 2005           January 31, 2005
                                                         --------------           ----------------
                                                           (Unaudited)
     <S>                                                 <C>                     <C>
      CURRENT ASSETS:
       Cash and cash equivalents                              $ 6,508,990              $  8,606,407
       Trade accounts receivable, (net of allowance
        of $1,527,478 and $1,151,345 at April 30
        and January 31, respectively)                           8,467,950                 9,023,815
       Prepaid expenses and other current assets                  800,218                   624,188
                                                             ------------              ------------
      Total current assets                                     15,777,158                18,254,410
                                                             ------------              ------------
      Property and equipment, net                               5,768,410                 6,082,362
      Deferred line installation costs, net                       215,120                   244,240
      Intangible assets, net                                    2,066,667                 2,166,667
      Goodwill                                                    200,000                   200,000
      Other Assets                                                283,400                   283,400
                                                             ------------              ------------
                                                             $ 24,310,755              $ 27,231,079
                                                             ============              ============
LIABILITIES AND SHAREHOLDERS' EQUITY
      CURRENT LIABILITIES:
       Accounts payable and accrued line cost                   5,098,937                $6,833,955
       Accrued tax and regulatory fees                          1,855,909                 2,384,147
       Accrued sales commission                                   485,293                   582,002
       Deferred revenue                                         1,436,055                 1,251,235
       Other accrued liabilities                                1,478,459                 1,618,108
       Salaries and wages payable                                 216,638                   474,315
       Debt due to related party                                  258,433                   573,017
                                                             ------------              ------------
      Total current liabilities                                10,829,723                13,716,779
                                                             ------------              ------------
      SHAREHOLDERS' EQUITY:
      Common stock                                                967,922                   967,922
      Additional paid-in capital                               52,931,049                52,931,049
      Accumulated deficit                                     (38,722,500)              (38,939,231)
      Treasury stock                                           (1,695,440)               (1,445,440)
                                                             ------------              ------------
       Total shareholders' equity                            $ 13,481,032              $ 13,514,300
                                                             ------------              ------------
                                                             $ 24,310,755              $ 27,231,079
                                                             ============              ============
</TABLE>

            See notes to condensed consolidated financial statements


                                       3






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        Three Months Ended April 30,
                                                                                               2005              2004
                                                                                               ----              ----
<S>                                                                                     <C>               <C>
NET REVENUE                                                                             $11,252,673       $18,194,305
                                                                                        -----------       -----------
Costs and Expenses
  Cost of revenue, excluding depreciation and amortization                                6,031,095         9,957,663
  Selling, general and administrative, excluding depreciation and amortization            4,433,276         8,656,102
  Depreciation and amortization                                                             584,494         1,488,694
                                                                                        -----------       -----------
Total costs and expenses                                                                 11,048,865        20,102,459
                                                                                        -----------       -----------
OPERATING INCOME (LOSS)                                                                     203,808        (1,908,154)
                                                                                        -----------       -----------
Other Income (Expense)
  Interest income                                                                            22,220            13,135
  Interest expense                                                                          (9,297)          (104,756)
                                                                                        -----------       -----------
Total other income (expense)                                                                 12,923           (91,621)
                                                                                        -----------       -----------
Income (loss) before income taxes                                                           216,731        (1,999,775)
Income taxes                                                                                     --                --
                                                                                        -----------       -----------
NET INCOME (LOSS)                                                                          $216,731       $(1,999,775)
                                                                                        ===========       ===========
BASIC EARNINGS (LOSS) PER COMMON SHARE                                                        $0.01            $(0.11)
                                                                                        ===========       ===========
DILUTED EARNINGS (LOSS) PER COMMON SHARE                                                      $0.01            $(0.11)
                                                                                        ===========       ===========
</TABLE>


           See notes to condensed consolidated financial statements.


                                       4







<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          Three Months Ended April 30,
                                                                                              2005                2004
                                                                                              ----                ----
<S>                                                                                   <C>                <C>
OPERATING ACTIVITIES:
    Net income (loss)                                                                  $   216,731         $(1,999,775)
    Adjustment for non-cash charges                                                        858,298           1,821,117
    Changes in assets and liabilities                                                   (2,716,441)         (1,849,767)
                                                                                       -----------         -----------
Net cash used in operating activities                                                   (1,641,411)         (2,028,425)
                                                                                       -----------         -----------
INVESTING ACTIVITIES:
    Purchase of property and equipment                                                    (141,422)            (96,357)
    Additions to deferred line installation cost                                                --             (41,233)
                                                                                       -----------         -----------
Net cash used in investing activities                                                     (141,422)           (137,590)
                                                                                       -----------         -----------
FINANCING ACTIVITIES:
    Exercise of stock options                                                                   --              14,350
    Bank borrowing - net of repayment                                                           --           2,162,273
                                                                                          (314,584)           (314,583)
    Note payable to related party                                                      -----------         -----------
Net cash provided by (used in) financing activities                                       (314,584)          1,862,040
                                                                                       -----------         -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    (2,097,417)           (303,975)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                           8,606,407           3,797,247
                                                                                       -----------         -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                               $ 6,508,990         $ 3,493,272
                                                                                       ===========         ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
    Interest                                                                           $     9,296         $    91,621

</TABLE>

See notes to condensed consolidated financial statements



                                       5






<PAGE>



                  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 from the information disclosed in the notes to the consolidated financial
statements included in the Annual Report on Form 10-K of Covista Communications,
Inc. and Subsidiaries (Covista) for the fiscal year ended January 31, 2005. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments only) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended April 30, 2005 are
not necessarily indicative of the results that may be expected for the year
ending January 31, 2006.

Revenue Recognition

         The Company recognizes revenue on telecommunications services in the
period that the service is provided. Revenue is recognized when earned based
upon the following specific criteria: (1) persuasive evidence of arrangement
exists, (2) services have been rendered, (3) seller's price to the buyer is
fixed or determinable, and (4) collectibility is reasonably assured.

         Covista's revenue is generally comprised of fees paid by the end
customers for voice and data services, and carrier charges including access. End
customer revenue includes voice and data services and is comprised of monthly
recurring charges and usage charges. Monthly recurring charges include the fees
paid by customers for facilities in service and additional features on those
facilities. Usage charges consist of usage-sensitive fees paid for calls made.
Carrier access billing is comprised of charges paid primarily by inter-exchange
carriers (IXC's) to the Company for the origination and termination of
inter-exchange toll and toll-free calls. Amounts billed to IXC's are recorded
based on the Company's determination of usage, category of traffic and the
associated rate. These items are subject to some degree of estimation and
subsequent adjustments may occur. However, management does not believe such
adjustments will be material to the consolidated financial statements.

Deferred Line Installation Costs

         The Company defers charges from other common carriers related to the
cost of installing telephone transmission facilities (lines). Amortization of
these costs is provided using the straight-line method over the related contract
life of the lines ranging from three to five years.

Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.






                                       6






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Intangible Assets

         Prior to the transaction with PAETEC, intangible assets consist of
prepaid network capacity and purchased customer and agent relationships
amortized on a straight-line basis over periods varying between 10 and 120
months. The Company incurred amortization expense on intangible assets of
approximately $129,000 and $534,000 for the quarters ended April 30, 2005 and
2004 respectively. During the quarter ended October 31, 2004, the Company
recorded a charge of approximately $1.35 million against intangible assets
related to restructuring as a result of the PAETEC transaction. The Company's
non-current balance of intangible assets with a definite life was approximately
$2,067,000, net of accumulated amortization of approximately $1,533,000 at April
30, 2005 and approximately $2,167,000, net of accumulated amortization of
approximately $1,433,000 at January 31, 2005. Approximate amortization expense
on intangible assets for the next 5 years as of January 31, is as follows:

           2006                $400,000
           2007                $400,000
           2008                $400,000
           2009                $400,000
           Thereafter          $967,000

Risks and Uncertainties

         Future results of operations involve a number of risks and
uncertainties. Factors that could affect future operating results and cash flows
and cause actual results to vary materially from historical results include, but
are not limited to:

         o  Changes in government policy, regulation and enforcement or adverse
            judicial or administrative interpretations and rulings or
            legislative action relating to regulations, enforcement and pricing,
            including, but not limited to, changes that affect continued
            availability of the unbundled network element platforms of the local
            exchange carriers network and the costs associated therewith.

         o  Dependence on the availability and functionality of the networks of
            the incumbent local exchange carriers as they relate to the
            unbundled network element platforms.

         o  Increased price competition in local and long distance services,
            including bundled services and overall competition within the
            telecommunications industry.

         o  Outcomes unfavorable to the Company of the FCC's rule-making process
            and pending litigation with regards to the availability and pricing
            of various network elements and bundles thereof.

         Negative developments in these areas could have a material adverse
effect on the Company's business, financial condition and results of operations.

Concentrations of Credit Risk

         The Company sells its telecommunications services and products
primarily to residential users, small to medium size businesses, and wholesale
customers. The Company performs ongoing credit evaluations of both its retail
and wholesale customers. The Company generally does not require collateral;
however, when circumstances warrant, deposits are required. Recent conditions in
the telecommunications industry have given rise to an increase in potential
doubtful accounts. Allowances are maintained for such potential credit losses.
The Company has entered into offset arrangements with certain of its customers,
which are also vendors, allowing for the ability to offset receivables against
the Company's payables balance.




                                       7






<PAGE>



NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS

         In December 2004, the FASB issued a revision to SFAS 123, "Share-Based
Payment" (SFAS No. 123R), that amends existing pronouncements for share-based
payment transactions in which an enterprise receives employee and non-employee
services in exchange for (a) equity instruments of the enterprise or (b)
liabilities that are based on the fair value of the enterprise's equity
instruments or that may be settled by the issuance of such equity instruments.
SFAS No. 123R eliminates the ability to account for share-based compensation
transactions using APB 25 and generally requires such transactions be accounted
for using a fair-value-based method. SFAS No. 123R's effective date would be
applicable for awards that are granted, modified, become vested, or settled in
cash in interim or annual periods beginning after December 15, 2005. SFAS No.
123R includes three transition methods; one that provides for prospective
application and two that provide for retrospective application. The Company
intends to adopt SFAS No. 123R prospectively commencing in the first quarter of
the fiscal year ending January 31, 2007; it is expected that the adoption of
SFAS No. 123R will cause us to record, as expense each quarter, a non-cash
accounting charge approximating the fair value of such share based compensation
meeting the criteria outlined in the provisions of SFAS No. 123R; as of January
31, 2005, the Company had approximately 483,000 granted stock options
outstanding which had not yet become vested. There are two acceptable methods of
valuing options under the revision, the Black-Sholes method and the binomial
method. The Company is currently assessing the impact on its 2005 earnings using
the two acceptable methods of valuing these options, and the ability to discount
the fair value of unvested shares.

         In March 2005, the FASB issued FIN 47 as an interpretation of FASB
Statement No. 143, Accounting for Asset Retirement Obligations (FASB No. 143).
This interpretation clarifies that the term conditional asset retirement
obligation as used in FASB No. 143, refers to a legal obligation to perform an
asset retirement activity in which the timing and/or method of settlement are
conditional on a future event that may or may not be within the control of the
entity. The obligation to perform the asset retirement activity is unconditional
even through uncertainly exists about the timing and/or method of settlement.
Accordingly, an entity is required to recognize a liability for the fair value
of a conditional asset retirement obligation if the fair value of the liability
can be reasonably estimated. This interpretation also clarifies when an entity
would have sufficient information to reasonably estimate the fair value of an
asset retirement obligation. FIN 47 is effective no later than the end of fiscal
years ending after December 15, 2005. The Company is currently assessing the
impact of the adoption of FIN 47.





                                       8






<PAGE>



                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE C - STOCK BASED COMPENSATION

         The following disclosure complies with the adoption of SFAS No. 123,
amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
and Disclosure - an amendment of FASB Statement No. 123", and includes pro forma
net income (loss) as if the fair value based method of accounting had been
applied:

<TABLE>
<CAPTION>
                                                                                          Three Months Ended April 30,
                                                                                              2005                2004
                                                                                              ----                ----
<S>                                                                                          <C>              <C>
Net income (loss) as reported (000's)                                                         $217             $(2,000)
Total stock-based compensation expense determined under fair
value based method for all options (000's)                                                    (106)               (192)
                                                                                              ----             -------
Pro forma net income (loss) (000's)                                                           $111             $(2,192)
                                                                                              ====             =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                           Three Months Ended April 30,
                                                                                             2005                2004
                                                                                             ----                ----
<S>                                                                                        <C>              <C>
Basic Earnings Per Share:
  As reported                                                                               $0.01              $(.11)
  Pro forma                                                                                 $0.01              $(.12)
Diluted Earnings Per Share:
  As reported                                                                               $0.01              $(.11)
  Pro forma                                                                                 $0.01              $(.12)
</TABLE>

         For purposes of pro forma disclosures under SFAS 123, the estimated
fair value of the options is assumed to be amortized to expense over the
options' vesting periods. The fair value of the options granted has been
estimated at the various dates of the grants using the Black-Scholes
option-pricing model with the following assumptions:

         o  Fair market value based on the Company's closing Common Stock price
            on the date the option is granted;

         o  Risk-free interest rate based on the weighted averaged U.S. Treasury
            note rates;

         o  Volatility based on the historical stock price over the expected
            term;

         o  No expected dividend yield based on future dividend payment plans.




                                       9






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE D - EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted earnings
(loss) per Common Share:

<TABLE>
<CAPTION>
                                                                                         Three Months Ended April 30,
                                                                                             2005                2004
                                                                                             ----                ----
<S>                                                                                  <C>                  <C>
Numerator:
    Income (loss) available to Common Shareholders
    used in basic and diluted loss per Common Share                                    $   216,731         $(1,999,775)
Denominator:
    Weighted-average number of Common Shares used in
     basic loss per Common Share                                                        17,822,025          17,822,025
Effect of diluted securities:
     Common share options (1)                                                                   --                 --
                                                                                       -----------        ------------
Weighted-average number of Common Shares and diluted potential Common
Shares used in diluted earnings (loss) per Common Share                                 17,822,025          17,822,025
                                                                                       -----------        ------------
Basic earnings (loss) per Common Share                                                       $0.01               $(.11)
                                                                                       -----------        ------------
Diluted earnings (loss) per Common Share                                                     $0.01               $(.11)
                                                                                       -----------        ------------
</TABLE>

1)  Common Shares subject to options are not included in the calculation of
    diluted loss per Common Share for the three-month period ended April 30,
    2004 as doing so would be antidilutive due to the net loss per common share.
    Options to purchase 1,391,958 shares of Common Stock at a weighted average
    exercise price of $2.90 per share were outstanding at April 30, 2005, but
    are excluded in the computation of diluted earnings per share because the
    options' exercise price was greater than the market price of the Common
    Shares.

NOTE E - SEGMENT REPORTING

         The Company sells telecommunication services to three distinct
segments: a residential segment, a retail segment, consisting primarily of
small to medium size businesses and a wholesale segment, with sales to other
telecommunications carriers.

         In addition to direct costs, each segment is allocated a proportion of
the Company's operating expenses, including utilization of its switch and
facilities. The allocation of expenses is based upon the minutes of use flowing
through the Company's switching network. There are no intersegment sales. When
specifically identified, assets are allocated to each segment. All intangible
assets and goodwill have been allocated to the retail segment. Capital
expenditures and other assets are allocated based on total revenue. Management
evaluates performance on operating results of the three business segments.



                                       10






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


         Summarized financial information (000's) concerning Covista's
reportable segments is shown in the following table:


<TABLE>
<CAPTION>
                                              Residential              Retail          Wholesale               Total
                                              -----------              ------          ---------               -----
<S>                                              <C>                  <C>                <C>                <C>
  Three Months Ended April 30, 2005
    Net Sales                                     $ 6,761             $ 3,425             $1,067             $11,253
    Operating profit (loss)                       $   425             $     6             $ (227)            $   204
    Assets                                        $12,690             $ 7,592             $4,029             $24,311
    Capital expenditures                          $    85             $    44             $   12             $   141

  Three Months Ended April 30, 2004
    Net Sales                                     $ 4,669             $12,943               $582             $18,194
    Operating profit (loss)                       $  (320)            $(1,106)            $ (482)            $(1,908)
    Assets                                        $ 6,348             $31,125             $1,583             $39,056
    Capital expenditures                          $    25             $    68             $    3             $    96
</TABLE>


NOTE F - INCOME TAXES

         For the fiscal year ended January 31, 2005, Covista established a
valuation allowance against its net deferred tax asset due to the uncertainty of
realizing certain tax credits and loss carryforwards. In the quarter ended April
30, 2005, Covista continued this accounting treatment and recorded a full
valuation allowance against the net tax benefit arising from the quarter's
operating activity. The result is that the net deferred tax asset of
approximately $5.6 million is fully offset by the valuation allowance and as
such, does not appear as an asset on the balance sheet. It will be reflected in
the Company's balance sheet when the net deferred tax asset can be utilized in
future periods or when management's assessment is substantially changed.

NOTE G - DEBT

         On June 17, 2002, Covista entered into a term loan agreement with a
major bank. The initial principal amount of this loan was $3,775,000, payable in
36 monthly installments at a fixed interest rate of 4.495% for the first year
and converting to 2% over LIBOR on June 17, 2003 and thereafter or 3.1%.
Effective June 17, 2003, Covista's Chairman of the Board paid the bank in full
and assumed the remaining balance of this loan under the identical terms and
conditions. This loan is secured by certain of the Company's switching
equipment. The balance on this facility was approximately $258,000 at April 30,
2005 which is classified as current.

NOTE H - COMMITMENTS AND CONTINGENCIES

         The Company is involved in various legal and administrative actions
arising in the normal course of business. While the resolution of any such
actions may have an impact on the financial results for the period in which it
is resolved, management believes that the ultimate disposition of these matters
will not have a material adverse effect upon its consolidated results of
operations, cash flows or financial position.




                                       11







<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE I - PAETEC TRANSACTION

         On May 25, 2004, the Company signed a definitive agreement to sell
certain of its retail customers, and the related switches and facilities to
PAETEC Communications, Inc., a Fairport, New York based competitive local
exchange carrier, ("PAETEC") for an aggregate selling price of $14.6 million
(the "Transaction"). This Transaction was consummated in two phases. Phase one
of the transaction was consummated on August 17, 2004, whereby the Company sold
to PAETEC the net assets and relationships serving these retail long distance
customers, which represented approximately 92.5% of the aggregate purchase
price. Phase two of this transaction was consummated on January 31, 2005,
whereby the Company sold to PAETEC the net assets and relationships of these
retail local customers, which represented approximately 7.5% of the aggregate
purchase price.

         Contemporaneously with this transaction, Covista executed an agreement
to purchase $12 million of services from PAETEC over 24 months (the "wholesale
service agreement"). This Wholesale Service Agreement allows the Company to
procure services at market competitive rates and the Company anticipates that it
should fully utilize the commitment during the term. If the Company does not
utilize the full amount within the first 24 months of the agreement, the Company
would then have a commitment to PAETEC equal to 150% of the unused portion at
the end of the 24-month term.

         The Company received aggregate cash proceeds for this transaction of
approximately $12.7 million through April 30, 2005. The balance due with respect
to the total selling price is subject to adjustment-based performance of the
customer base through May 2005. Subsequent to April 30, 2005, PAETEC submitted a
final calculation to the Company indicating that the purchased customer base has
not performed, as expected and no additional payment would be made. Management
is currently auditing this final calculation. Accordingly, the Company has not
recognized the remaining balance payable by PAETEC because collectibility of the
remaining amount was not considered probable as of April 30, 2005.

         The long-lived, tangible assets sold in the transaction had a carrying
value of approximately $3.9 million and were primarily comprised of switches and
network equipment. In addition, the Company wrote-off intangible assets of
purchased customer and agent relationships with a carrying value of
approximately $1.5 million and goodwill with a carrying value of approximately
$8 million as a part of this transaction.

         A portion of any final amount collected from PAETEC was to be used by
the Company to repurchase shares of the Company's outstanding Common Stock from
the former Chief Operating Officer of the Company. Regardless of the amount of
final payment collected from PAETEC, the Company was obligated to purchase a
minimum of $250,000 worth of Common Stock from this former employee at $2.00 per
share. Subsequent to April 30, 2005, the Company repurchased 125,000 shares.
This amount was accrued as of April 30, 2005.

NOTE J - SUBSEQUENT EVENT

         On May 27, 2005, the Company issued a press release announcing that the
Company's Board of Directors had unanimously approved the voluntary delisting of
the Company's Common Stock from the NASDAQ National Market. Simultaneously with
the delisting, the Company will file a Form 15 with the Securities and Exchange
Commission ("SEC") to deregister its Common Stock and suspend its reporting
obligations under the Securities Exchange Act of 1934 (the "Exchange Act").

         The Company intends to delist its Common Stock and file the Form 15
with the SEC on or about June 30, 2005. Upon delisting from NASDAQ, the
Company's Common Stock will no longer trade on the NASDAQ National Market. The
Company expects that the deregistration from the Exchange Act will become
effective 90 days after filing of the Form 15. The Company's future reporting
obligations to file periodic and current reports such as 10-K's, 10-Q's and
8-K's with the SEC will be suspended immediately upon filing of the Form 15.





                                       12






<PAGE>


                                     ITEM 2
                  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 Covista "believes",
"anticipates", "expects", or words of similar import. Similarly, statements,
which describe Covista'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 Covista 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 $11,253,000 for the first three months of
the current fiscal year, a decrease of approximately $6,941,000 or 38% as
compared to the approximately $18,194,000 recorded in the first three months of
the prior fiscal year. The overall decrease is primarily related to the sale of
certain retail customers to PAETEC, as further discussed, and intense
competitive pressure in the retail segment.

         For the quarter ended April 30, 2005, residential revenues were
approximately $6,761,000, an increase of approximately $2,092,000 or 45% versus
the first quarter from the prior fiscal year. Approximately $3,738,000 of the
current quarter total was for local service versus $932,000 in the comparative
quarter of last fiscal year. Residential minutes sold for the three-month period
ended April 30, 2005 were approximately 72,676,000, an increase of approximately
2,261,000 or 3%. The overall blended rate per minute for long distance revenue
was $0.042 versus $0.053 during the first quarter of the previous year.
The current year revenue increase in the residential segment is primarily
attributed to the launch of local service to these residential users in selected
markets in addition to direct marketing via mail and web based affinity
marketing campaigns. While the Company has launched local services to the
residential segment in certain markets, the Company plans to expand the number
of markets in which it has the ability to offer its local and long distance
bundled product offering. Additionally, the Company plans to expand its
marketing resources to target new geographic market areas where the Company has
the ability to offer competitive bundled services to residential users.

         For the quarter ended April 30, 2005, retail revenues were
approximately $3,425,000, a decrease of approximately $9,519,000 or 74% versus
the comparative quarter in the last fiscal year. Retail minutes sold in the
three-month period ended April 30, 2005 were approximately 50,008,000 minutes, a
decrease of approximately 143,634,000 minutes or 74%. The overall blended retail
rate per minute decreased to $0.062 versus $0.066 from the first quarter of the
previous year. The current year revenue decrease in the retail segment is
primarily attributed to the Company's sale of a major portion of its retail
customer base to PAETEC, in addition to intense competitive pressure from other
providers, especially those which have the ability to bundle local dial tone
with traditional long distance offerings.





                                       13







<PAGE>


                                     ITEM 2
                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF
                                   OPERATIONS

         For the quarter ended April 30, 2005, wholesale revenue was
approximately $1,068,000, an increase of approximately $486,000 or 83% versus
the comparative quarter in the last fiscal year. Wholesale revenue for the
quarter ended April 30, 2005 includes approximately $157,000 of access charges
billed to other long distance carriers, which terminate calls to the Company's
local customers, versus approximately $118,000 for the quarter end April 30,
2004. The Company plans to maintain nominal wholesale volume in the future,
based on network capacity and gross margin opportunities, while balancing any
possible financial exposure related to un-collectable balances.

         Cost of revenue for the current three-month period was approximately
$6,031,000, a decrease of approximately $3,927,000 or 39%. These changes were
favorable in relation to the 38% decrease in revenue for the three-month period.
The decrease in cost of revenue was primarily due to an overall decrease in
revenue volume.

         In the normal course of business, billings for line costs are often not
received until after the period of service, Covista, therefore, uses certain
estimates to determine its monthly cost of revenue ("line cost") and
corresponding accounts payable to these service providers. These line costs
include fees for network transport, access, egress and facility charges. The
Company completes a detailed bill audit function, which includes a comparison of
invoices received to amounts accrued, contractual rates and applicable tariffs
and engineering data regarding usage. Accrued amounts are adjusted based on the
bill audit function and actual invoices received. These adjustments to actual
expense are typically identified within 90 days following the period of
estimate.

         We structure and price our products in order to maintain network and
line costs as a percentage of revenue at certain targeted levels. There are
several factors that could cause our network and line costs as a percentage of
revenue to increase in the future, including without limitation:

         Determinations by the FCC, courts or state commission(s) that make
unbundled local switching and/or combinations of unbundled network elements
effectively unavailable to us in some or all of our geographic service areas,
requiring us to provide services in these areas through other means, including
local service resale agreements with incumbent local telephone companies,
network elements purchased from the Regional Bell Operating Companies at "just
and reasonable" rates under Section 271 of the Act and the switching facilities
of other non-incumbent carriers, in any case, at significantly increased costs
or to provide services over our own switching facilities, if we were able to
deploy them.

         For the quarter ended April 30, 2005, selling, general and
administrative expense, excluding depreciation and amortization was
approximately $4,433,000, a decrease of approximately $4,223,000 or 49% versus
the comparative quarter in the last fiscal year. The overall decrease was
primarily due to decreases in commissions of approximately $1,015,000, decreased
payroll of approximately $1,409,000, decreases in advertising expense of
approximately $668,000; decreased rent expense of approximately $87,000,
decreased billing expense of approximately $117,000 and other general decreases
of approximately $927,000.

         For the reasons described above, the operating income for the
three-month period ended April 30, 2005 was approximately $204,000, an
improvement of approximately $2,112,000 from the three-month period ended
April 30, 2004.

         Basic and diluted earnings per Common Share was $0.01 per share for the
current three-month period ended April 30, 2005 as compared to $(0.11) loss per
share for the three-months ended April 30, 2004.

Liquidity and Capital Resources

         At April 30, 2005, Covista had working capital of approximately
$4,947,000, an increase of approximately $409,000 as compared to January 31,
2005. The ratio of current assets to current liabilities at April 30, 2005 was
1.46 as compared to the ratio of 1.33 at January 31, 2005. For the three months
ended April 30, 2005 the Company used cash of approximately $1,641,000 in
operating activities, approximately $141,000 in investing activities and
approximately $315,000 in financing activities.





                                       14






<PAGE>


                                     ITEM 2
                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF
                                   OPERATIONS


Capital Expenditures

         Capital expenditures for the three-month period ended April 30, 2005
were approximately $141,000. Capital expenditures for the remainder of Fiscal
2005 are estimated at approximately $750,000 and are expected to be funded from
operations.

Prepaid Network Capacity

         In July 2001, Covista purchased 2.8 billion DS-0 channel miles of
telecommunications network capacity from an unaffiliated party that expires on
June 30, 2011. The unaffiliated party has been reorganized under Chapter 11
and, as of the date of this report, has continued to perform under the
agreement. As of the date hereof, Covista has used approximately 946
million DS-0 channel miles of telecommunications network capacity against the
2.8 billion DS-0 total prepaid network capacity, of which $400,000 has been
classified as a current asset and based on anticipated usage in the next 12
months the remainder of the prepaid capacity amount of approximately $2,067,000
is included in intangible assets.

Accounts Receivable and Credit Risk

         Accounts receivable subject Covista to the potential for credit risk
with customers principally in the retail and wholesale segments. To reduce
credit risk, Covista performs ongoing evaluations of its customers' financial
condition and, except in situations where the risk warrants it, Covista does not
require a deposit or other collateral. Accounts receivable of approximately
$8,468,000, net of the reserve for uncollectible accounts totaling approximately
$1,527,000, represents approximately 35% of the total assets of Covista.

         No one customer accounts for greater than eight percent of the total
revenues. In the wholesale segment, which contains Covista's largest customers,
Covista has been able to reduce credit risk by using reciprocal arrangements
with certain customers, which are also Covista's suppliers, to offset
outstanding receivables. Covista has historically maintained a ratio of bad
debts to revenues of less than 3%. For the three-month period ended April 30,
2005, this ratio was approximately 2.4%. Covista also measures accounts
receivable turnover (as measured in days sales outstanding). For the periods
ended April 30, 2005 and 2004, days sales outstanding were 56 days and 50 days,
respectively.

Related Party Transactions

         Jay J. Miller, a Director of Covista, has provided various legal
services for Covista. During the quarter ended April 30, 2005, Covista accrued
approximately $8,000 to Mr. Miller for services rendered.

         On June 17, 2002, Covista entered into a term loan agreement with a
major bank. The initial principal amount of this loan was $3,775,000, payable in
36 monthly installments at a fixed interest rate of 4.495% for the first year
and converting to 2% over LIBOR on June 17, 2003 and thereafter or 3.1%.
Effective June 17, 2003, Covista's Chairman of the Board paid the bank in full
and assumed the remaining balance of this loan under the identical terms and
conditions. This loan is secured by certain of the Company's switching
equipment. The balance on this facility was approximately $258,000 at April 30,
2005 which is classified as current.





                                       15






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CRITICAL ACCOUNTING POLICIES

Nature of Operations

         Covista Communications, Inc. ("Covista"), and its wholly-owned
subsidiaries (collectively, the "Company") operates as a switch based resale
common carrier providing domestic and international long distance and local
telecommunications service to customers throughout the United States. On
September 15, 2000, the Company changed its name from Total-Tel USA
Communications, Inc. to Covista Communications, Inc. Prior to the acquisition on
February 8, 2002 of Capsule Communications, Inc. ("Capsule"), the Company's
principal customers were primarily businesses and other common carriers. As a
result, Capsule became a wholly owned subsidiary of Covista. Capsule was a
switch-based interexchange carrier providing long distance telephone
communications services primarily to small and medium-size business customers as
well as residential accounts. The results of Capsule's operations have been
included in the Company's statement of operations since the acquisition date.

Principles of Consolidation

         The consolidated financial statements include the accounts of Covista
Communications, Inc. and its subsidiaries, all of which are wholly owned. All
significant inter-company transactions and balances have been eliminated in the
consolidated financial statements.

Revenue Recognition

         The Company recognizes revenue on telecommunications services in the
period that the service is provided. Revenue is recognized when earned based
upon the following specific criteria: (1) persuasive evidence of arrangement
exists, (2) services have been rendered, (3) seller's price to the buyer is
fixed or determinable, and (4) collectibility is reasonably assured.

         Covista's revenue is generally comprised of fees paid by the end
customers for voice and data services, and carrier charges including access. End
customer revenue includes voice and data services and is comprised of monthly
recurring charges and usage charges. Monthly recurring charges include the fees
paid by customers for facilities in service and additional features on those
facilities. Usage charges consist of usage-sensitive fees paid for calls made.
Carrier access billing is comprised of charges paid primarily by inter-exchange
carriers (IXC's) to the Company for the origination and termination of
inter-exchange toll and toll-free calls. Amounts billed to IXC's are recorded
based on the Company's determination of usage, category of traffic and the
associated rate. These items are subject to some degree of estimation and
subsequent adjustments may occur. However, management does not believe such
adjustments will be material to the consolidated financial statements.

Property and Equipment

         Property and equipment are stated at cost. Depreciation and
amortization is being provided by use of the straight-line method over the
estimated useful lives of the related assets. Leasehold improvements are
amortized over the shorter of the term of the lease or the useful lives of the
asset.

         The estimated useful lives of the principal classes of assets and book
value as of April 30, 2005 are as follows:

<TABLE>
<CAPTION>
          Classification                             Years            Book Value (000s)
          --------------                             -----            -----------------
          <S>                                       <C>                 <C>
          Machinery and equipment                    5-10                   $12,933
          Office furniture, fixtures and equipment   5-10                     1,972
          Leasehold improvements                     2-10                       482
          Computer equipment and software            5-7                      4,255
            Less Accumulated Depreciation                                   (13,874)
                                                                            -------
                                                                            $ 5,768
                                                                            =======
</TABLE>

Deferred Line Installation Costs

         The Company defers charges from other common carriers related to the
cost of installing telephone transmission facilities (lines). Amortization of
these costs is provided using the straight-line method over the related contract
life of the lines ranging from three to five years.





                                       16






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CRITICAL ACCOUNTING POLICIES


Goodwill

         Goodwill represents the excess of the purchase price over the net
tangible and identifiable intangible assets of acquired businesses and, in
accordance with SFAS No. 142 is not amortized. The Company makes an annual
impairment assessment on January 31st of each year. The annual impairment
assessment made at January 31, 2005 and 2004 did not result in any impairment
charges.

Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.

Vendor Disputes

         The Company records disputed line cost expenses in accordance with FASB
Statement No. 5, "Accounting for Contingencies". Billings from line cost vendors
are compared to the Company's engineering and operations data, with differences
filed with the vendors as a disputed billing. Disputed line cost billings are
recorded by the Company at the estimated liability due based upon the Company's
historical experience in settling similar disputes. Actual settlement of
disputes may differ from original estimates. Management adjusts the dispute
reserve each month. The net reserve for dispute losses at April 30, 2005 and
2004 was approximately $848 thousand and $2.2 million respectively and is
included in accounts payable and accrued line cost.

Risks and Uncertainties

         Future results of operations involve a number of risks and
uncertainties. Factors that could affect future operating results and cash flows
and cause actual results to vary materially from historical results include, but
are not limited to:

         o  Changes in government policy, regulation and enforcement or adverse
            judicial or administrative interpretations and rulings or
            legislative action relating to regulations, enforcement and pricing,
            including, but not limited to, changes that affect continued
            availability of the unbundled network element platforms of the local
            exchange carriers network and the costs associated therewith.

         o  Dependence on the availability and functionality of the networks of
            the incumbent local exchange carriers as they relate to the
            unbundled network element platforms.

         o  Increased price competition in local and long distance services,
            including bundled services and overall competition within the
            telecommunications industry.

         o  Outcomes unfavorable to the Company of the FCC's rule-making process
            and pending litigation with regards to the availability and pricing
            of various network elements and bundles thereof.

         Negative developments in these areas could have a material adverse
effect on the Company's business, financial condition and results of operations.




                                       17






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CRITICAL ACCOUNTING POLICIES


Concentrations of Credit Risk

         The Company sells its telecommunications services and products
primarily to residential, small to medium size businesses, and wholesale
customers. The Company performs ongoing credit evaluations of both its retail
and wholesale customers. The Company generally does not require collateral;
however, when circumstances warrant, deposits are required. Recent conditions in
the telecommunications industry have given rise to an increase in potential
doubtful accounts. Allowances are maintained for such potential credit losses.
The Company has entered into offset arrangements with certain of its customers
which are also vendors, allowing for the ability to offset receivables against
the Company's payables balance.

Cash and Cash Equivalents

         The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Cash and cash
equivalents consist of cash on hand, demand deposits and money market accounts.

Income Taxes

         Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. In the event the future tax
consequences of differences between the financial reporting bases and the tax
bases of Covista's assets and liabilities result in deferred tax assets, an
evaluation of the probability of being able to realize the future benefits
indicated by such asset is required. A valuation allowance is provided for a
portion of the deferred tax assets when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. In assessing
whether deferred tax assets can be realized, management considers the scheduled
reversals of deferred tax liabilities, projected future taxable income, and
tax-planning strategies.

Fair Value of Financial Instruments

         For cash and cash equivalents, the carrying value is a reasonable
estimate of its fair value. The estimated fair value of publicly traded
financial instruments is determined by the Company using quoted market prices,
dealer quotes and prices obtained from independent third parties. For financial
instruments not publicly traded, fair values are estimated based on values
obtained from independent third parties or quoted market prices of comparable
instruments. The fair value of the debt was determined based on interest rates
that are currently available to the Company for issuance of debt with similar
terms and remaining maturities for debt issues that are not traded on quoted
market prices. However, judgment is required to interpret market data to develop
the estimates of fair value. Accordingly, the estimates are not necessarily
indicative of the amounts that could be realized in a current market exchange.

         The carrying values were approximately equal to the fair values of
financial instruments as of January 31, 2005 and April 30, 2005.

Long-Lived Assets

         Effective February 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment of Disposal of
Long-Lived Assets". SFAS 144 establishes a single accounting model for the
impairment or disposal of long-lived assets, including discontinued operations.
The Company reviews the recoverability of the carrying value of long-lived
assets, including intangibles with a definite life, for impairment using the
methodology prescribed in SFAS 144 whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable. The
Company uses an undiscounted cash flow methodology and if not recoverable,
adjusts assets to fair value.



                                       18






<PAGE>


                  COVISTA COMMUNICATIONS, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION


ITEMS 1-5 Not applicable

ITEM 6    Exhibits and Reports on Form 8K

          8K - Dated April 29, 2005, Press Release Regarding Fiscal 2005 Results

          8K - Dated June 1, 2005, Press Release Regarding Voluntary Delisting


                                       19






<PAGE>


                                   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: June 14, 2005                 By:    /s/ A. John Leach, Jr.
      -------------                       -----------------------
                                          A. John Leach, Jr.
                                          President and Chief Executive Officer


Date: June 14, 2005                 By:    /s/  Frank J. Pazera
      -------------                       ---------------------
                                          Executive Vice President,
                                          Chief Financial Officer
                                          and Principal Accounting Officer




                                       20