<PAGE>

                       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 March 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: 000-26739

                                   ITXC CORP.
             (Exact name of registrant as specified in its charter)

              Delaware                                22-35-31960
          (State or other jurisdiction of            (I.R.S. Employer
         incorporation or organization)             Identification No.)

                             600 College Road East
                          Princeton, New Jersey 08540
          (Address of principal executive office, including zip code)

                                 (609) 750-3300
              (Registrant's telephone number, including area code)

             (Former name, former address and former fiscal year,
                         if changed since last report)

 Indicate by checkmark 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.

 At April 30, 2001, there were 44,954,175 shares of Common Stock, par value
$.001 per share, outstanding.

                                                                          Page 1
<PAGE>

                                    ITXC CORP.

                                     INDEX


<TABLE>
<CAPTION>
                                                                              Page
                                                                              ----
<S>                                                                           <C>
Part I.  Financial Information

Item 1.  Financial Statements

          Condensed Consolidated Balance Sheets as of March 31, 2001
          and December 31, 2000 (Unaudited)................................     3

         Condensed Consolidated Statements of Operations for the
           Three Months Ended March 31, 2001 and 2000(Unaudited)...........     4

         Condensed Consolidated Statements of Cash Flows for the
           Three Months Ended March 31, 2001 and 2000(Unaudited)...........     5

         Notes to Condensed Consolidated Financial Statements(Unaudited)...     6

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations...............................     8

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.........    14

Part II. Other Information

Item 1.  Legal Proceedings.................................................    15


Item 6.  Exhibits and Reports on Form 8-K..................................    15

Signatures.................................................................    16
</TABLE>

                                                                          Page 2
<PAGE>

PART I - Financial Information

Item 1.    Financial Statements


                          ITXC CORP. AND SUBSIDIARIES
                     Condensed Consolidated Balance Sheets



<TABLE>
<CAPTION>
                                                                                March 31,           December 31,
                                                                                   2001                 2000
                                                                               (Unaudited)

<S>                                                                           <C>                  <C>
Cash and cash equivalents                                                     $  20,504,088        $  36,768,527
Marketable securities                                                           159,170,666          162,667,823
Accounts receivable, net                                                         18,517,999           17,799,511
Prepaid expenses and other current assets                                         4,843,219            3,091,187
                                                                              -------------        -------------
  Total current assets                                                          203,035,972          220,327,048

Property and equipment, net                                                      39,288,595           37,957,981
Intangible assets, net                                                          120,119,819          126,793,138
Other assets                                                                        691,361              598,339
                                                                              -------------        -------------
   Total assets                                                               $ 363,135,747        $ 385,676,506
                                                                              =============        =============


Accounts payable and accrued liabilities                                      $  21,369,545        $  22,258,166
Other liabilities                                                                   880,530            1,052,196
Equipment note payable                                                            1,627,458            1,723,191
Current portion of capital lease obligations                                      4,046,786            3,933,671
                                                                              -------------        -------------
  Total current liabilities                                                      27,924,319           28,967,224

Capital lease obligation, less current portion                                    3,327,517            4,425,322

Common stock                                                                         45,186               45,046
Additional paid in capital                                                      455,812,298          455,087,203
Deferred employee compensation                                                   (4,258,040)          (5,134,356)
Accumulated other comprehensive income                                            1,494,793              768,804
Accumulated deficit                                                            (121,210,326)         (98,482,737)
                                                                              -------------        -------------
  Total stockholders' equity                                                    331,883,911          352,283,960

Total liabilities and stockholders' equity                                    $ 363,135,747        $ 385,676,506
                                                                              =============        =============
</TABLE>




See accompanying notes.

                                                                          Page 3
<PAGE>

                          ITXC CORP. AND SUBSIDIARIES
                Condensed Consolidated Statements of Operations
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                                   Three Months ended March 31,
                                                                                     2001                 2000
                                                                          ------------------------------------------
<S>                                                                            <C>                  <C>
Total revenue                                                                  $ 36,142,867         $ 15,066,079
Costs and expenses:
Data communications and telecommunications                                       32,023,574           13,653,406
Network operations                                                                2,167,552            1,387,069
Selling, general and administrative                                              15,012,802            5,932,116
Depreciation                                                                      4,583,758            1,586,956
Amortization and write-off of intangibles                                         6,923,320              249,999
Non-cash employee compensation                                                      876,316            1,055,513
                                                                               ------------         ------------
  Total costs and expenses                                                       61,587,322           23,865,059
                                                                               ------------         ------------
Loss from operations                                                            (25,444,455)          (8,798,980)
Interest income, net                                                              2,716,866            1,348,361
Loss associated with investments                                                         --           (8,195,000)
                                                                               ------------         ------------
Net loss                                                                       $(22,727,589)        $(15,645,619)
                                                                               ============         ============

Basic and diluted net loss per share                                           $      (0.50)        $      (0.43)
                                                                               ============         ============

Weighted average shares used in computation of basic and
    diluted net loss per share                                                   45,140,846           36,587,424
</TABLE>



See accompanying notes.

                                                                          Page 4
<PAGE>

                          ITXC CORP. AND SUBSIDIARIES
                Condensed Consolidated Statements of Cash Flows
                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                                Three Months ended March 31,
                                                                                  2001                 2000
                                                                          ------------------------------------------
<S>                                                                             <C>                  <C>
Operating activities
Net loss                                                                        $(22,727,589)        $(15,645,619)
Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation                                                                   4,583,758            1,586,956
    Amortization of intangibles                                                    6,673,320              249,999
    Provision for doubtful accounts                                                4,133,823              496,715
    Loss relating to joint venture                                                        --            8,195,000
    Amortization for non-cash deferred employee compensation                         876,316            1,055,513
    Amortization of original issue discounts                                        (464,811)            (622,475)
    Changes in operating assets and liabilities:
         Increase in accounts receivable                                          (4,852,312)          (1,764,213)
         (Increase) decrease  in prepaid expenses and other assets                (1,845,055)              61,897
         Decrease in accounts payable and accrued expenses                          (888,622)          (1,124,879)
         (Decrease) increase  in other liabilities                                  (171,666)             143,221
                                                                                ------------         ------------
Net cash used in operating activities                                            (14,682,838)          (7,367,885)
                                                                                ------------         ------------
Investing activities
Purchase of property and equipment                                                (5,905,125)          (6,360,594)
Purchase of service contract rights                                                       --               (8,110)
Purchase of available for sale securities                                        (45,685,728)         (59,345,743)
Maturities of available for sale securities                                       50,275,017           58,073,019
                                                                                ------------         ------------
Net cash used in investing activities                                             (1,315,836)          (7,641,428)
                                                                                ------------         ------------
Financing activities
Repayment of equipment line of credit                                                (95,733)                  --
Repayment of capital lease obligations                                              (993,936)            (457,552)
Proceeds from issuance of second public offering                                          --          161,296,000
Proceeds from exercise of stock options                                              725,235              189,480
                                                                                ------------         ------------
Net cash (used in) provided by  financing activities                                (364,434)         161,027,928
                                                                                ------------         ------------
Effect of exchange rate fluctuations on cash                                          98,669                   --
                                                                                ------------         ------------
(Decrease) increase  in cash                                                     (16,264,439)         146,018,615
Cash and cash equivalents at beginning of period                                  36,768,527           49,017,768
                                                                                ------------         ------------
Cash and cash equivalents at end of period                                       $20,504,088         $195,036,383
                                                                                ============         ============
</TABLE>



See accompanying notes.

                                                                          Page 5
<PAGE>

                           ITXC CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------

                                   (Unaudited)
                                   -----------


1.       Basis of Presentation

The March 31, 2001 and 2000 financial statements have been prepared by ITXC
Corp. (the "Company" or "ITXC") and are unaudited. In the opinion of the
Company's management, all adjustments (consisting solely of normal recurring
adjustments) necessary to present fairly the Company's consolidated financial
position, results of operations and cash flows for the interim periods have been
made. Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the
consolidated financial statements and notes thereto presented herein pursuant to
the rules and regulations of the Securities and Exchange Commission. The
condensed consolidated financial statements and notes thereto presented herein
should be read in conjunction with the Company's audited consolidated financial
statements for the year ended December 31, 2000 and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000
filed with the Securities and Exchange Commission. The results of operations for
the three months ended March 31, 2001 are not necessarily indicative of the
results to be expected for any other interim period or the entire fiscal year.

2.       Subsidiaries and Joint Venture

In March 1998, ITXC Data Transport Services LLC ("Data Transport"), a wholly
owned subsidiary, was formed for the purpose of holding licenses and agreements
with certain carriers and re-sellers and to acquire and operate switching
equipment for the Company.

In July 1998, ITXC Asia PTE Ltd, a wholly-owned subsidiary (Singapore company),
was formed for the purpose of selling and marketing the Company's services in
Asia.

In July 1998, the Company obtained a 49% interest in ITXC Comunicacoes Ltda
("ITXC Ltda"), a newly formed Brazilian joint venture, in consideration of
rights to certain technology, which will provide exchange carrier long-distance
services in Brazil. The Company's ownership interest in ITXC Ltda is accounted
for under the equity method of accounting. The ITXC Ltda joint venture
agreement, as amended, provided for an exit clause triggered by an acquisition
of the Company, certain business combinations, failure of the Company or ITXC
Ltda to meet certain performance thresholds or the occurrence of certain other
events. If any of these events occurred, the clause provided the Company a call
option and provided TeleNova Communicacoes Ltda and its assignee (collectively,
"TeleNova") a put option which required the Company to acquire TeleNova's
interest in ITXC Ltda. In February 2000, the Company agreed to issue 150,000
shares of its Common Stock to affiliates of TeleNova in exchange for: (i)
600,000 shares of TeleNova stock, (ii) termination of the call and put options
and (iii) certain contractual commitments by each party. As part of this
agreement, the parties also terminated the joint venture agreement and related
license agreement. This resulted in a charge to operations amounting to $8.2
million which reflected the difference between the value of ITXC stock that was
issued at the time of such modifications and the value of the TeleNova capital
stock that the Company received in exchange. In December 2000, the Company
reduced its investment in TeleNova by $7.4 million to approximately $500,000,
which is accounted for on a cost basis, and is included in other assets,
reflecting an other-than temporary decline in such investment.

In June 1999, the Company formed ITXC, Ltd., (United Kingdom company), a wholly
owned subsidiary, to conduct certain United Kingdom operations.

On October 12, 2000, the Company acquired a 100% interest in eFusion, Inc., a
provider of voice-enabled applications to service providers. On November 6,
2000, eFusion Inc.'s name was changed to ITXC, Inc.

The consolidated financial statements include the accounts of ITXC Corp and its

                                                                          Page 6
<PAGE>

wholly-owned subsidiaries, Data Transport, ITXC, Ltd., ITXC Asia PTE, Ltd and
ITXC Inc. All significant intercompany balances and transactions have been
eliminated in consolidation.


3.       Public Offering

On March 15, 2000, the Company completed a public offering of its common stock,
  selling 2 million shares at a price of $85.00 per share, generating net
  proceeds to the Company of approximately $161.3 million. In addition, certain
  stockholders sold 2 million previously unregistered shares. Certain of these
  shares were sold by an executive officer of the Company within six months
  after his minor children had acquired shares of the Company's common stock. In
  accordance with SEC rules, the officer remitted $1.2 million to the Company in
  April 2000. Such amount is included in additional paid in capital.

4.       Comprehensive Income

The components of accumulated other comprehensive income include unrealized
gains (losses) on available-for-sale securities and foreign currency translation
adjustments.

The components of comprehensive income (loss), net of related tax, for the
periods ended March 31, 2001 and 2000 were as follows:


<TABLE>
<CAPTION>
                                                           Three Months ended March 31,
                                                              2001             2000
                                                       -----------------------------------
<S>                                                      <C>               <C>
Net loss                                                  $(22,727,589)     $(15,645,619)
Other comprehensive income:
   Unrealized holding gains arising during period
   (net of tax of $0)                                        1,396,124                 -
  Foreign currency translation adjustments                      98,669                 -
                                                          ------------      ------------

Comprehensive loss                                        $(21,232,796)     $(15,645,619)
                                                          ============      ============
</TABLE>


5.       Capital Stock

On May 3, 2000, the Company's stockholders approved an increase in the
authorized Common Stock to 400,000,000 shares. On October 12, 2000 the Company
issued approximately 5,340,000 shares of Common Stock in connection with the
purchase of eFusion, Inc.


6.     Acquisition

On October 12, 2000, the Company acquired a 100% interest in eFusion, Inc.
("eFusion"), a provider of voice-enabled applications to service providers, e-
commerce companies and call centers, for an aggregate purchase price of
approximately $158.8 million. The purchase price consisted primarily of 5.3
million shares of ITXC Common Stock and options to purchase 575,045 shares of
ITXC Common Stock. In connection with the transaction, the Company recorded
goodwill of $101.5 million and other intangibles of $32.0 million, all of which
are being amortized over five years. The Company also purchased $10.5 million of
tangible net assets. The acquisition was accounted for as a purchase, and
accordingly, the net assets and results of operations of the acquired business
have been included in the consolidated financial statements from the date of
acquisition.

In connection with the acquisition of eFusion, the Company immediately expensed
the amount allocated to in-process research and development of $14.8 million in
accordance with an independent third party valuation, as technological
feasibility had not been established and the technology had no alternative
future use as of the date of the acquisition.

                                                                          Page 7
<PAGE>

The following table presents unaudited pro forma results of operations of the
Company as if the above acquisition had occurred at January 1, 2000:

                                    Three Months Ended March 31,
                                 ---------------------------------
                                       2001            2000
                                             Unaudited)
------------------------------------------------------------------
Revenues                         $ 36,142,867        $ 15,239,384
Net loss                          (22,727,589)        (26,698,476)
Net loss per share               $      (0.50)       $       (.64)


The pro forma results of operations are not necessarily indicative of what the
actual results of operations of the Company would have been had the acquisition
occurred at the beginning of fiscal 2000, nor do they purport to be indicative
of the future results of operations of the Company.


The pro forma amounts reflect the estimated amortization of the excess of the
purchase price over the fair value of net assets acquired, the exclusion of the
in-process research and development write-off and the approximate number of
shares issued to complete the acquisition.


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements, the related Notes to Consolidated Financial
Statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000 (the "10-K") and the Unaudited Condensed
Consolidated Financial Statements and related Notes to Consolidated Financial
Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

ITXC has included in this Quarterly Report certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
concerning ITXC's usiness, operations and financial condition. "Forward-looking
statements" consist of all non-historical information, including the references
in this Quarterly Report to future revenue growth, future expense growth, future
credit exposure, EBITDA, revenue targets, anticipated cash resources,
anticipated capital expenditures, capital requirements and the Company's plans
for future periods. In addition, the words "could", "expects", "anticipates",
"objective", "plan", "may affect", "may depend", "believes", "estimates",
"projects" and similar words and phrases are also intended to identify such
forward-looking statements.

Actual results could differ materially from those projected in the Company's
forward-looking statements due to numerous known and unknown risks and
uncertainties, including, among other things, unanticipated technological
difficulties, the volatile and competitive environment for Internet telephony,
changes in domestic and foreign economic, market and regulatory conditions, the
inherent uncertainty of financial estimates and projections, the difficulties of
integrating businesses which were previously operated as stand-alone units, the
creditworthiness of our customers and other considerations described as "Risk
Factors" in Exhibit 99.1 to the 10-K ("Exhibit 99.1") and in other filings by
the Company with the SEC. Such factors may also cause substantial volatility in
the market price of the Company's common stock. All such forward-looking
statements are current only as of the date on which such statements were made.
ITXC does not undertake any obligation to publicly update any forward-looking
statement to reflect events or circumstances after the date on which any such
statement is made or to reflect the occurrence of unanticipated events.

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

                                                                          Page 8
<PAGE>

Overview

We are a leading global provider of Internet-based voice and fax services.

In April 1998, we launched our first service delivered over ITXC.net--our
WWeXchange(R) service. Our operations since that time have included:

     o    increasing our voice traffic, from 2,746 minutes during April 1998 to
          approximately 345 million minutes carried through our WWeXchange
          service during the quarter ended March 31, 2001;

     o    refining our monitoring and analysis software in order to achieve
          BestValue Routing(TM);

     o    expanding our affiliate network to 242 affiliates at March 31, 2001
          and increasing the global reach of ITXC.net; and

     o    increasing our employee headcount, from 29 employees on April 1, 1998
          to 308 employees on March 31, 2001 (including employees added by
          virtue of our eFusion acquisition).


To date, our primary sources of revenue have been the fees that we receive
from customers for terminating calls, that they have originated, on the
Internet. Our revenue for terminating calls over ITXC.net has depended primarily
upon the following factors:

     o    the volume of voice traffic carried over ITXC.net, which is measured
          in terms of minutes of voice traffic;

     o    the mix of voice traffic carried over ITXC.net, which reflects the
          fact that calls made over certain routes will generate greater
          revenues than calls of a similar duration made over other routes; and

     o    pricing pressures resulting from competitive conditions in our
          markets.


Increased competition from other providers of Internet telephony services and
traditional telephony services could materially adversely affect revenue in
future periods.

We have also received revenues from the subscriber services that we have
provided in our webtalkNOW!(SM) service since December 1999 and from the
subscriber and e-commerce services that we have provided since October 2000
pursuant to our eFusion acquisition. Revenues from these services, $0.8 million
for the quarter ended March 31, 2001, consist of minute based revenue,
subscriber based revenue and revenue per "push".

To date, we have derived a significant portion of our revenue from a small
number of customers. The loss of a major customer could have a material adverse
effect on our business, financial condition, operating results and future
prospects.

Our operating expenses have been primarily:

     o    Data Communications and Telecommunications Expenses. Internet-related
          expenses, consisting primarily of:

          o    costs associated with sending voice traffic over the Internet,
               primarily fees that we pay to our affiliates to terminate or
               assist us in terminating calls, fees that we pay when we find it
               necessary to utilize the traditional telephone network or private
               data networks to terminate calls and expenses incurred in
               connecting our customers to our network; these expenses are
               largely proportional to the volume of voice traffic carried over
               our network; and

          o    costs associated with buying Internet access at ITXC-operated
               locations; these costs are largely proportional to the bandwidth

                                                                          Page 9
<PAGE>

               of access acquired and do not typically vary based upon volume of
               voice traffic until additional bandwidth needs to be acquired.

     o    Network Operations Expenses. Expenses associated with operating the
          network, consisting primarily of the salaries, payroll taxes and
          benefits that we pay for those employees directly involved in the
          operation of ITXC.net and related expenses. From the date of our
          eFusion acquisition, network operations expenses also include related
          expenses incurred to operate eFusion's services. We expect to
          eliminate certain duplicative network operations expenses resulting
          from that acquisition by the second quarter of 2001.

     o    Selling, General and Administrative Expenses. There are three
          components of selling, general and administrative expenses, consisting
          of the following:

           o    Sales and Marketing Expenses. Salaries, payroll taxes, benefits
                and commissions that we pay for sales personnel and expenses
                associated with the development and implementation of our
                promotion and marketing campaigns. We anticipate that sales and
                marketing expenses will increase in the future as we expand our
                internal sales force, hire additional marketing personnel and
                increase expenditures for promotion and marketing. We expect
                that such expenses will also increase as telecommunications
                revenue increases.

           o    Development Expenses. Salary, payroll tax and benefit expenses
                that we pay for employees and consultants who work on the
                development of our network management approaches, e-commerce
                services and future applications of our technology. We believe
                that investing in the enhancement of our technology is critical
                to our future success. We expect that our development expenses
                will increase in future periods, based upon various factors,
                including:

                o    the importance to us of BestValue Routing;

                o    the pace of technological change in our industry; and

                o    our goal of expanding the applications of our technology.

           o    General and Administrative Expenses. Salary, payroll tax and
                benefit expenses and related costs for general corporate
                functions, including executive management, administration,
                facilities, information technology and human resources, together
                with accounts receivable reserves. We expect that general and
                administrative expenses will increase in the future as we hire
                additional personnel and incur additional costs related to the
                growth of our business and operations. In addition, we expect to
                expand our facilities and incur associated expenses to support
                our anticipated growth.

     o    Non-Cash Employee Compensation Expenses. Non-cash employee
          compensation represents compensation expense incurred in connection
          with the grant of certain stock options to our employees with exercise
          prices less than the fair value of our Common Stock at the respective
          dates of grant. During 1999, but prior to our initial public offering,
          we granted options to purchase 3,413,500 shares of our Common Stock at
          exercise prices equal to or less than fair value, resulting in
          non-cash charges of approximately $12.4 million. Similarly, in
          connection with our eFusion acquisition during 2000, we were required
          to take non-cash charges of approximately $0.7 million in connection
          with options granted in exchange for options previously granted by
          eFusion. Our non-cash employee compensation charges will be expensed,
          generally over the next three to four years, in connection with the
          underlying vesting periods of the options granted.

The eFusion acquisition was consummated on October 12, 2000; in that
transaction, we issued approximately 5.3 million shares of our common stock and
accounted for the transaction as a purchase. We recognized $101.5 million of
goodwill and other intangibles of $32.0 million, which will all be amortized
over a period of five years. In addition to the amortization charge that we
recognized, we also wrote off $14.8 million of in-process research and
development in the fourth quarter of 2000.

                                                                         Page 10
<PAGE>

The amount allocated to in-process research and development was determined by an
independent third party valuation, as technological feasibility had not been
established and the technology had no alternative future use as of the date of
acquisition.

We believe that the services we provide over the Internet are not currently
actively regulated in the U.S. Several efforts have been made, however, to enact
federal legislation that would regulate certain aspects of the Internet. If
adopted, such legislation could increase our costs significantly and could
materially adversely affect our business, operating results, financial condition
and future prospects.

We anticipate that from time to time our operating expenses may increase on a
per minute basis as a result of decisions to route additional traffic over the
traditional telephone network or private data networks in order to maintain
quality transmissions during relatively short periods of time as we transition
our network to increased levels of capacity. During these periods, we
occasionally experience reductions in volume from certain customers.
Historically, we have satisfactorily resolved these transition issues. However,
in the future other anticipated or unanticipated operating problems associated
with the growth of ITXC.net may develop.

Since our inception in July 1997, we have experienced operating losses in each
quarterly and annual period and negative cash flows from operations in each
quarter since we commenced offering services over ITXC.net in April 1998. As of
March 31, 2001, we had an accumulated deficit of $121.2 million. The profit
potential of our business is unproven, and our limited operating history makes
an evaluation of us and our prospects difficult. We may not achieve
profitability or, if we achieve profitability, we might not sustain
profitability.

In February 2000, we recast our relationship with our partner in our South
American joint venture. We issued 150,000 shares of our Common Stock for: (1)
equity in a private affiliate of our joint venture partner; (2) a termination of
the puts and calls which previously could have required substantial cash or
equity outlays by us; and (3) certain contractual commitments by the parties. As
part of that transaction, we terminated our joint venture agreement and the
license agreement that we previously furnished to the joint venture. However, we
have not experienced a material change in our service to the carriers in the
territory previously serviced by the joint venture, since the new arrangement
contemplates the continuation of service to those carriers.

From an accounting perspective, during the year ended December 31, 2000, we
recorded a charge of $8.2 million, representing the difference between the value
of the 150,000 shares issued by ITXC, valued as of the time of the transaction,
and the value of the equity received by ITXC. An additional charge of $7.4
million was recognized in the fourth quarter of 2000, to reduce our investment
in TeleNova to $500,000, reflecting an other-than temporary decline in such
investment.


Results of Operations - Comparison of the Three Months Ended March 31, 2001 and
2000


         Revenues

Telecommunications revenues amounted to $36.1 million during the quarter ended
March 31, 2001. Approximately 98% of total revenue during the three months ended
March 31, 2001 was derived from our WWeXchange service, which provides
nternational call completion to our customers and enables them to offer their
own customers phone-to-phone global voice service. The remaining revenue was
derived principally from our webtalkNOW! service, a PC-to-telephone service
which allows Internet portals, Internet service providers and web sites to offer
web-to-phone calling to their customers under their own brands, and our Push to
Talk(SM) service.

Revenues during the quarter ended March 31, 2001 increased 140% from the
comparable period in 2000. This increase was a result both of more calls
originating outside the United States and a higher-priced mix of destinations
first coming online during the quarter ended March 31, 2001.

We carried approximately 345 million minutes of WWeXchange service traffic over
ITXC.net in the first quarter of 2001 as compared with 122 million minutes
during the

                                                                         Page 11
<PAGE>

comparable 2000 period. During the quarter ended March 31, 2001, our average
revenues per minute for WWeXchange service were 10.2 cents per minute, as
compared with 12.2 cents per minute during the quarter ended March 31, 2000.

Our webtalkNOW! traffic declined significantly during the first quarter of 2001
as customers experimented with a variety of suppliers. Furthermore, we reduced
and/or eliminated WWeXchange service to some customers at the end of the quarter
because their credit situations deteriorated or they could not, or would not,
meet our more stringent credit terms. In light of the financial turmoil in our
industry, we anticipate that it will be necessary for us to forego certain
potential revenue growth opportunities in order to reduce our credit exposure.
We do not anticipate that total revenues for the quarter ending June 30, 2001
will exceed $40 million and we recognize that revenues for that quarter may be
less than $40 million.


         Operating Expenses

Data Communications and Telecommunications Expenses. During the three months
ended March 31, 2001 and 2000, data communication expenses amounted to $32.0
million and $13.7 million, respectively, or 88.6% and 90.6% of
telecommunications revenues, respectively. The increase in the dollar amount of
such costs primarily reflected the increased traffic during 2001, as well as
costs associated with establishing and increasing capacity at our hubs in
anticipation of future growth in traffic.

Network Operations Expenses. Network operations expenses increased to $2.2
million during the three months ended March 31, 2001 from $1.4 million during
the three months ended March 31, 2000. Such expenses primarily reflected the
cost of operating our 24-hours-a-day, 7 days-a-week network operations center,
as well as start-up costs associated with the Jersey City, New Jersey, Los
Angeles, California and London hubs. Such costs represented 6.0% and 9.2% of
telecommunications revenues during the three months ended March 31, 2001 and
2000, respectively.

Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased to $15.0 million during the three
months ended March 31, 2001 from $5.9 million during the three months ended
March 31, 2000. These increases were due primarily to the credit issues
described below, hiring of additional sales and marketing, development and
administrative personnel, commissions paid on our increased telecommunications
revenue, expanded sales and marketing campaigns and increased facilities
expenses associated with our growth. As a percentage of revenues, SG&A expenses
increased to 41.5% from 39.4% over the comparable three-month period. During the
first quarter of 2001, a reserve of $3.2 million over and above our normal
reserves for receivables was taken because of the previously announced
bankruptcy filing of a major customer, certain other bankruptcies and the poor
financial condition of some of the Tier 2 carriers who are or who have been our
customers.

As our revenues continue to grow, we expect SG&A expenses to decrease as a
percentage of revenues. Such expectation represents a forward-looking statement
under the Private Securities Litigation Reform Act of 1995. Actual results could
differ from such expectation as a result of a number of factors, including the
extent to which we incur unanticipated expenses associated with revenue growth
and the extent to which our customers present unanticipated credit problems.

         Depreciation

Depreciation expense increased to $4.6 million during the three months ended
March 31, 2001 from $1.6 million during the three months ended March 31, 2000,
reflecting the expansion of our network and hubs and the addition of new
technologies deployed throughout our network. As a percentage of revenue,
depreciation expense was 12.7% in 2001 and 10.5% in 2000, reflecting our efforts
to build our infrastructure to support future growth.

         Amortization and Write-Off of Intangibles

We recorded $101.5 million of goodwill and $32 million of other intangibles in
connection with our October 2000 acquisition of eFusion, which was accounted for
as a purchase transaction, all of which are being amortized over five years.
Because the eFusion acquisition was accounted for as a purchase transaction,
eFusion's results of operations are included in our consolidated financial
statements for the quarter ended March 31, 2001 but not for the quarter ended
March 31, 2000.

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       Non-Cash Employee Compensation Expenses

Non-cash employee compensation expense decreased to $0.9 million during the
quarter ended March 31, 2001 from $1.1 million during the quarter ended March
31, 2000, representing amortization of deferred compensation incurred in
connection with the grant of options at exercise prices less than fair value.

     Interest Income, Net

Our interest income, net principally represents income from cash and investments
which, in turn, were derived from capital contributions made by our investors.
In addition to the capital invested near the inception of our business, we
raised net proceeds of $9.9 million and $14.9 million from a group of investors
in private transactions completed during April 1998 and February 1999,
respectively, we raised net proceeds of $78.4 million from our initial public
offering completed in October 1999 and we raised net proceeds of $161.4 million
from our follow-on public offering completed in March 2000. During the quarters
ended March 31, 2001 and 2000, the interest on our marketable securities,
including the interest earned on the proceeds from our initial and follow-on
public offerings, exceeded the interest that we paid on our line of credit and
capital leases by $2.7 million and $1.3 million, respectively.

     Loss Associated with Investments and Joint Venture

During the quarter ended March 31, 2000, we incurred a one-time non-cash charge
of $8.2 million relating to the modifications made in our South American joint
venture. These charges reflected the difference between the value of our stock
that we issued at the time of such modifications and the value of the capital
stock that we received in exchange for that stock (valued as of the time of the
transaction).

Losses

We have reported net operating losses and net losses since our inception. We
believe that we will first report positive earnings before interest, taxes,
depreciation and amortization (so-called "EBITDA") during the first quarter of
2002. This estimate represents a forward-looking statement under the Private
Securities Litigation Reform Act of 1995. We cannot assure you that we will be
EBITDA positive within one year; due to the risk factors described in the first
paragraph of this "Management's Discussion and Analysis", our actual results
could differ materially from our estimate.

Liquidity and Capital Resources

Prior to our initial public offering, we financed our operations primarily
through the private placement of our capital stock and, to a lesser extent,
through equipment financing. Net proceeds from our initial public offering,
including proceeds resulting from the exercise by the underwriters of their
over-allotment option, were $78.4 million. This capital was supplemented by net
proceeds of $161.4 million raised upon consummation of our March 2000 follow-on
offering of Common Stock.

Net cash used by financing activities was $0.4 million for the quarter ended
March 31, 2001.

Net cash used in operating activities amounted to $14.7 million for the three
months ended March 31, 2001, reflecting net operating losses and increased
accounts receivable, partially offset by increases in accounts payable and
accrued liabilities.

Net cash used in investing activities was $1.3 million for the quarter ended
March 31, 2001, reflecting the purchases of property and equipment and purchases
of investments with the net proceeds of our initial public offering and
follow-on offering offset by maturities of investments which were used to
finance operating activities.

As of March 31, 2001, our principal commitments consisted of obligations
outstanding under operating and capital leases. At that date, future minimum
payments for non-cancelable leases includes required payments of $6.5 million
during 2001 and $25.7 million for years 2002-2005 and thereafter under all
leases.

                                                                         Page 13
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We anticipate a substantial increase in capital expenditures, lease commitments,
and/or debt financing consistent with the anticipated growth in operations,
infrastructure and personnel.

We maintain a credit agreement that provides a committed line of credit from a
financial institution in the aggregate amount of $10.0 million. We are permitted
to use any portion of that commitment under a revolving line of credit for
working capital or under an equipment sub-line for the purchase of certain
capital equipment and related software. This credit agreement is collateralized
by substantially all of our assets. We are permitted to borrow under the credit
agreement until June 2001. At that time, we must repay the outstanding working
capital loans unless that revolving line is extended. Loans outstanding under
the equipment sub-line are due and payable 36 months after the final draw under
the equipment sub-line.

Interest accrues at a floating rate per annum equal to the higher of our
lender's published prime rate and the weighted average federal funds rate
available to our lender plus 0.5%.

The credit agreement contains customary financial and other covenants and may be
terminated by our lender 45 days after the occurrence of certain mergers,
acquisitions and investments. As of March 31, 2001, we were in compliance with
all of the covenants under our credit agreement.

We have arranged for financing in the ordinary course for gateway equipment,
switching equipment and general office equipment, from third parties and
vendors.

Our capital requirements depend on numerous factors, including market acceptance
of our services, the responses of our competitors, the resources allocated to
ITXC.net and the development of future applications of our technology, our
success in marketing and selling our services, and other factors. We have
experienced substantial increases in our capital expenditures since our
inception, consistent with growth in our operations and staffing, and we
anticipate that our capital expenditures will continue to increase in the
future. However, our capital expenditure expectations for the next twelve months
have been pared somewhat, reflecting higher yields per minute, the availability
to us of used equipment and the reduction of certain capital intensive
initiatives. We will evaluate possible acquisitions of, or investments in,
complementary businesses, technologies or services and plan to expand our sales
and marketing programs. Any such possible acquisition may be material and may
require us to incur a significant amount of debt or issue a significant number
of equity securities. Further, any businesses that we acquire will likely have
their own capital needs, which may be significant, which we would be called upon
to satisfy independent of the acquisition price. We currently believe that our
available cash and cash equivalents will be sufficient to meet our anticipated
needs for working capital and capital expenditures for at least the next 12
months. This statement represents a forward-looking statement under the Private
Securities Litigation Reform Act of 1995. Actual results could differ materially
from our expectations. We may need to raise additional funds in order to fund
more rapid expansion, to develop new or enhance existing services, to respond to
competitive pressures or to acquire or invest in complementary business,
technologies or services. Additional funding may not be available on favorable
terms or at all.


Item 3.    Quantitative and Qualitative Disclosure About Market Risk

We had investments of $176.3 million as of March 31, 2001 in certain marketable
securities, which primarily consist of short-term fixed income investments. Due
to the short-term nature of our investments, we believe that the effects of
changes in interest rates are limited and would not have a material impact on
our financial condition or operating results.

                                                                         Page 14
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PART II - Other Information

Item 1.    Legal Proceedings

From time to time, we are involved in various legal proceedings relating to
claims arising in the ordinary course of business.

On May 23, 2000, Connectel, LLC, filed suit against us in the United States
Federal District Court for the Eastern District of Pennsylvania. Connectel
alleges in its complaint that we are infringing on the claims of a patent owned
by Connectel by, acting alone or with others, assembling, offering to sell or
selling "communications networks or switching systems" within the United States
and for export worldwide without license from Connectel. We believe that the
Connectel claims are without merit and we intend to defend the lawsuit
vigorously. However, should a judge issue an injunction against us, such action
could have a material adverse effect on our operations.

We are not a party to any other legal proceeding, the adverse outcome of which
is expected to have a material adverse effect on our business, financial
condition, operating results or future prospects.


Item 6.    Exhibits and Reports on Form 8-K

         (a)  Exhibits:


         99.1  Risk Factors (incorporated by reference to Exhibit 99.1 to the
               Company's Annual Report on Form 10-K for the year ended December
               31, 2000)

         (b) No Current Reports on Form 8-K were filed by the Registrant during
the quarter ended March 31, 2001.

                                                                         Page 15
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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.

                                      ITXC CORP.

                                      By:  /s/ Edward B. Jordan
                                               ---------------------
                                                  Edward B. Jordan
                                            Executive Vice President,
                                            Chief Financial Officer and
                                            Chief Accounting Officer

Dated:  May 15, 2001

                                                                         Page 16
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                                  EXHIBIT INDEX



99.1   Risk Factors (incorporated by reference to Exhibit 99.1 to the Company's
       Annual Report on Form 10-K for the year ended December 31, 2000)

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