<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 September 30, 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.)

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

                                 (609) 750-3333
              (Registrant's telephone number, including area code)




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 October 31 2001, there were 45,504,609 shares of Common Stock, par value
$.001 per share, outstanding.

<PAGE>


                                   ITXC CORP.
                                     INDEX

                                                                           Page
                                                                           ----
Part I.  Financial Information

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets as of September 30, 2001
                (Unaudited) and December 31, 2000 .......................   3

         Condensed Consolidated Statements of Operations for the
                Three Months Ended September 30, 2001 and 2000(Unaudited)   4

         Condensed Consolidated Statements of Operations for the
                Nine Months Ended September 30, 2001 and 2000(Unaudited)    5

         Condensed Consolidated Statements of Cash Flows for the
                Nine Months Ended September 30, 2001 and 2000(Unaudited)    6

         Notes to Condensed Consolidated Financial Statements(Unaudited)    7

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations ............................   9

Item 3.  Quantitative and Qualitative Disclosure About Market Risk ......  18

Part II. Other Information

Item 1.  Legal Proceedings ..............................................  18


Item 6.  Exhibits and Reports on Form 8-K ...............................  18

Signatures ..............................................................  20

                                        2

<PAGE>

PART I - Financial Information

Item 1.    Financial Statements

                           ITXC CORP. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                               September 30,         December 31,
                                                                                   2001                 2000
                                                                                (Unaudited)

<S>                                                                            <C>                  <C>
Cash and cash equivalents                                                      $ 26,858,593         $ 36,768,527
Marketable securities                                                           129,045,530          162,667,823
Accounts receivable, net                                                         20,418,515           17,799,511
Prepaid expenses and other current assets                                         3,990,108            3,091,187
                                                                          -----------------     ----------------
  Total current assets                                                          180,312,746          220,327,048

Property and equipment, net                                                      41,545,483           37,957,981
Intangible assets, net                                                              108,000          126,793,138
Other assets                                                                      1,385,168              598,339
                                                                          -----------------     ----------------
   Total assets                                                               $ 223,351,397        $ 385,676,506
                                                                          =================     ================


Accounts payable and accrued liabilities                                       $ 27,882,683         $ 22,258,166
Other liabilities                                                                   778,590            1,052,196
Equipment note payable                                                            1,340,115            1,723,191
Current portion of capital lease obligations                                      3,532,632            3,933,671
                                                                          -----------------     ----------------
  Total current liabilities                                                      33,534,020           28,967,224

Capital lease obligation, less current portion                                    2,699,300            4,425,322

Common stock                                                                         45,605               45,046
Additional paid in capital                                                      456,021,007          455,087,203
Deferred employee compensation                                                   (2,092,083)          (5,134,356)
Accumulated other comprehensive income                                            1,382,413              768,804
Accumulated deficit                                                            (268,238,865)         (98,482,737)
                                                                          -----------------     ----------------
  Total stockholders' equity                                                    187,118,077          352,283,960

Total liabilities and stockholders' equity                                     $223,351,397        $ 385,676,506
                                                                          =================     ================
</TABLE>



See accompanying notes.

                                       3

<PAGE>

                           ITXC CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                 Three Months ended September 30,
                                                                                     2001                  2000
                                                                          ------------------------------------------
<S>                                                                           <C>                  <C>
Total revenue                                                                  $ 46,467,479        $  23,504,908
Costs and expenses:
Data communications and telecommunications                                       40,201,299           20,687,818
Network operations                                                                2,250,700            1,312,975
Selling, general and administrative                                              10,516,936            6,895,519
Depreciation                                                                      5,149,469            3,044,346
Amortization                                                                        347,823              250,019
Impairment of assets                                                              5,715,027                    -
Restructuring charges                                                             3,442,747                    -
Non-cash employee compensation                                                    1,005,208              903,564
                                                                           ----------------     ----------------
  Total costs and expenses                                                       68,629,209           33,094,241
                                                                                 ----------           ----------
Loss from operations                                                            (22,161,730)          (9,589,333)
                                                                               ------------           -----------
Interest income, net                                                              1,904,276            3,356,371

Net loss                                                                       $(20,257,454)       $  (6,232,962)
                                                                           =================    =================

Basic and diluted net loss per share                                           $      (0.45)       $       (0.16)
                                                                              =============        ==============

Weighted average shares used in computation of basic and
  diluted net loss per share and cash basis loss per share                       45,485,413           38,572,410
</TABLE>



See accompanying notes.

                                       4

<PAGE>

                           ITXC CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                               Nine Months ended September 30,
                                                                                  2001                 2000
                                                                          ------------------------------------------
<S>                                                                          <C>                  <C>
Total revenue                                                                $  121,411,054       $   57,190,208
Costs and expenses:
Data communications and telecommunications                                      106,260,689           50,884,150
Network operations                                                                6,660,826            3,735,913
Selling, general and administrative                                              36,734,110           19,361,617
Depreciation                                                                     14,645,184            6,897,259
Amortization                                                                     13,727,917              750,017
Impairment of assets                                                            113,737,278                    -
Loss associated with investments                                                    250,000            8,195,000
Restructuring charges                                                             3,442,747                    -
Non-cash employee compensation                                                    2,757,840            3,024,197
                                                                             --------------       --------------
  Total costs and expenses                                                      298,216,591           92,848,153
                                                                                -----------           ----------
Loss from operations                                                           (176,805,537)         (35,657,945)
                                                                             --------------       --------------
Interest income, net                                                              7,049,409            7,950,573
                                                                             --------------       --------------
Net loss                                                                     $ (169,756,128)      $  (27,707,372)
                                                                             ===============     ================

Basic and diluted net loss per share                                         $        (3.75)      $        (0.73)
                                                                             ===============      ===============

Weighted average shares used in computation of basic and
  diluted net loss per share and cash basis loss per share                       45,298,420           37,890,380
</TABLE>



See accompanying notes.

                                       5

<PAGE>

                           ITXC CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                               Nine months ended September 30,
                                                                                  2001                 2000
                                                                          ------------------------------------------
<S>                                                                            <C>                   <C>
Operating activities
Net loss                                                                       $(169,756,128)        $(27,707,372)
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation                                                                    14,645,184            6,897,259
  Amortization                                                                    13,727,917              750,017
  Impairment of assets                                                           113,737,278                   --
  Provision for doubtful accounts                                                  6,752,106            2,449,134
  Non-cash restructuring charges                                                     669,199                   --
  Loss relating to joint venture                                                          --            8,195,000
  Amortization of non-cash deferred employee compensation                          2,757,840            3,024,197
  Amortization of original issue discounts                                        (1,162,576)          (2,031,835)
  Changes in operating assets and liabilities:
    Increase in accounts receivable                                               (9,372,110)         (10,905,649)
    Increase in prepaid expenses and other assets                                 (1,094,418)          (1,243,752)
    Increase in accounts payable and accrued expenses                              5,624,517            3,282,303
    (Decrease) increase in other liabilities                                        (273,606)             494,238
                                                                                 ------------        -------------
Net cash used in operating activities                                            (23,744,797)         (16,796,460)
                                                                                 ------------        -------------
Investing activities
Purchase of property and equipment                                               (19,230,581)         (21,695,755)
Purchase of service contract rights                                                       --               (9,219)
Deferred acquisition costs                                                                --             (691,759)
Purchase of available for sale securities                                        (89,063,887)        (357,934,974)
Maturities of available for sale securities                                      124,430,811          224,770,364
                                                                                 ------------        -------------
Net cash provided by (used in) investing activities                                16,136,343        (155,561,343)
                                                                                   ----------        -------------
Financing activities
Repayment of equipment line of credit                                               (383,076)                  --
Repayment of capital lease obligations                                            (3,168,753)          (1,288,911)
Proceeds from issuance of second public offering                                          --          161,282,681
Proceeds from short swing sale                                                            --            1,208,777
Proceeds from exercise of stock options                                              344,974              363,975
Proceeds from issuance of common stock related to employee stock
purchase plan                                                                        873,821              654,898
                                                                                 ------------        ------------
Net cash (used in) provided by financing activities                               (2,333,034)         162,221,420
                                                                                  -----------        ------------
Effect of exchange rate fluctuations on cash                                          31,554                   --
                                                                                      ------         ------------
Decrease in cash                                                                  (9,909,934)         (10,136,383)
Cash and cash equivalents at beginning of period                                  36,768,527           49,017,768
                                                                                 -----------         ------------
Cash and cash equivalents at end of period                                       $26,858,593          $38,881,385
                                                                                 ===========          ===========
</TABLE>



See accompanying notes.

                                       6

<PAGE>

   ITXC CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------
                                   (Unaudited)
                                   -----------

1.   Basis of Presentation

The September 30, 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 accounting
principles generally accepted in the United States 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 and nine months ended September 30, 2001 are not
necessarily indicative of the results to be expected for any other interim
period or the entire fiscal year.

The consolidated financial statements include the accounts of ITXC Corp. and its
wholly-owned subsidiaries, ITXC Data Transport Services, LLC, ITXC, Ltd., ITXC
Asia PTE, Ltd and ITXC Inc. All significant intercompany balances and
transactions have been eliminated in consolidation.

2.   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 three
and nine month periods ended September 30, 2001 and 2000 were as follows:
<TABLE>
<CAPTION>
                                               Three Months ended September 30,      Nine Months ended September 30,
                                                    2001               2000               2001               2000
                                             ---------------------------------------------------------------------------
<S>                                             <C>               <C>               <C>                <C>
Net loss                                        $(20,257,454)     $  (6,232,962)    $  (169,756,128)   $ (27,707,372)
Other comprehensive income:
   Unrealized holding gains
arising during period (net of tax of $0)             401,269            320,664           1,350,858          409,723

  Foreign currency translation adjustments          (101,036)                --              31,554               --
                                                 ------------      ------------       -------------      ------------
Comprehensive loss                              $(19,957,221)     $  (5,912,298)     $ (168,373,716)   $ (27,297,649)
                                                =============     =============     ===============    ==============
</TABLE>

                                       7

<PAGE>

3.   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
were (prior to the impairment charge described below) 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.

The following table presents unaudited pro forma results of operations of the
Company as if the above acquisition had occurred at January 1, 2000:
<TABLE>
<CAPTION>
                                   Three Months ended September 30,      Nine Months ended September 30,
                                        2001               2000               2001              2000
                                 --------------------------------------------------------------------------
<S>                                  <C>                 <C>               <C>               <C>
Revenues                             $ 46,267,479        $23,941,937       $121,411,054      $57,934,812
Net loss                              (20,257,454)       (17,235,710)      (169,756,128)     (60,979,979)
Net loss per share                   $      (0.45)       $     (0.39)      $      (3.75)     $     (1.41)
</TABLE>


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. See Notes 4 and 8 for
information regarding a disposition of a portion of this business.

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.

4.   Impairment of Long-Lived Assets and Business Reorganization Charges

Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
("SFAS No. 121") requires recognition of impairment losses for long-lived assets
whenever events or changes in circumstances result in impairment indicators
being present and the carrying amount of an asset to exceed the sum of the
expected future cash flows associated with the asset. In response to current
market conditions and the consequent slower than anticipated growth of the
Company's enhanced services, at its July 2001 board meeting the Company made a
strategic decision to reduce expenditures for the development and marketing of
enhanced services and reduced headcount in these areas by about 40 people. The
Company has also determined that certain long-lived assets related to its
October 2000 eFusion acquisition have become impaired. During the second quarter
of 2001, the Company recognized a $108.0 million impairment charge, which
represented an $86.7 million write-down of goodwill and a $21.3 million
write-down of other intangible assets to their fair values. The fair value of
the intangible assets of $6.0 million was determined based on a discounted cash
flow analysis using management's revised operating forecasts for the remaining
cash flow streams from the eFusion acquisition.

                                       8

<PAGE>

On October 11, 2001, the Company sold most of the tangible and intangible assets
of its e-commerce business (other than patents) to eStara, Inc., a privately
held provider of web-voiced services, in exchange for a 19.9% equity position in
eStara. The Company has valued this investment at $700,000. ITXC also granted
certain patent licenses to eStara, while retaining its ownership of such
patents. As a result, the Company determined that there was a further impairment
of long-lived assets and recorded a $5.7 million impairment charge during the
third quarter of 2001 to write-down such assets to their fair value.

In addition, as part of the July and September 2001 business-reorganization
plans, the Company recorded a charge to earnings of approximately $3.4 million
in the third quarter of 2001 of which $659,000 had been paid through September
30, 2001. The charge is primarily comprised of headcount reductions of 70
employees world-wide (approximately $1.5 million) and facility consolidations
(approximately $1.2 million) as the Company has closed its Beaverton, Oregon
facility.

5. Stock Repurchase Program

In September 2001, the Board of Directors authorized a new share buyback program
through which the Company may repurchase up to $10 million worth of shares of
common stock in the open market. As of September 30, 2001, the Company had not
repurchased any shares under this program.

6. Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement No. 141,
Business Combinations, and Statement No. 142, Goodwill and Other Intangible
Assets, effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill and intangible assets deemed to have indefinite lives will
no longer be amortized but will be subject to annual impairment tests. Other
intangible assets will continue to be amortized over their useful lives. The
Company believes that the adoption of this standard will not have a significant
impact on its results of operations and financial position.

7. Legal Proceedings

The Company and certain of its officers/directors have been named as defendants
in several purported shareholder class action lawsuits. The lawsuits allege,
among other things, that, in connection with the Company's public offerings of
securities, its Prospectus did not disclose certain alleged practices involving
its underwriters and their customers. These actions seek compensatory and other
damages, and costs and expenses associated with the litigation. These actions
are in the early stages and the Company has not yet determined if there is any
potential material impact on its Consolidated Financial Statements. Management
believes that ITXC and its officers/directors did not engage in any improper or
illegal conduct and intends to defend these actions vigorously.

The Company has been served with a complaint filed in Virginia state court on
behalf of Hercules Communications Company, LLC in which the plaintiff demands
damages, including punitive damages, based on the Company's alleged refusal to
carry out a purported agreement to purchase certain assets from Hercules. The
claims are primarily based on alleged breach of contract, breach of implied
contract, breach of an oral contract, promissory estoppel and fraud. The Company
does not believe the case to be meritorious and intends to vigorously defend its
conduct.

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

                                       9

<PAGE>

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 business, operations and financial condition. "Forward-looking
statements" consist of all non-historical information, and the analysis of
historical information, including the references in this Quarterly Report to
future revenue growth, future expense growth, future credit exposure, EBITDA,
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, the uncertainties involved in certain legal
proceedings, instabilities arising from terrorist actions and responses thereto,
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 accounting principles
generally accepted in the United States 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.

Overview

We are a leading global wholesale telecommunications carrier. ITXC.netsm, our
Internet-based network, delivers our customers' voice and fax calls to and from
over 130 countries.

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 566 million minutes carried through our WWeXchange
          service during the quarter ended September 30, 2001;

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

     o    expanding our points of presence (PoPs) to 645 at September 30, 2001
          and increasing the global reach of ITXC.net; and

     o    increasing our employee headcount, from 29 employees on April 1, 1998
          to 261 employees on September 30, 2001.

To date, our primary sources of revenue have been the fees that we receive from
customers for terminating calls that the customers have originated. Calls are
terminated by us primarily by transmitting the calls over the Internet and
delivering the calls to terminating carriers. Our revenue for terminating calls
over ITXC.net has depended primarily upon the following factors:

                                       10

<PAGE>

     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 provided from October 2000 through
October 2001 pursuant to our eFusion acquisition. Revenues from these services,
which have not been material ($0.5 million for the quarter ended September 30,
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 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 included related
          expenses incurred to operate eFusion's services.

     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 decrease in the near term, reflecting staff
            reductions and cost containment, and may increase in the longer term
            if telecommunications revenue increases require us to expand our
            internal sales force, hire additional marketing personnel and
            increase expenditures for promotion and marketing.

                                       11

<PAGE>

          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 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 decrease in the short term, based on our
            deemphasis of enhanced services, including the sale of e-commerce
            business, but may 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 decrease in the short term, reflecting, among other
             things, reductions in staff and closing of the Beaverton facility,
             as well as improved accounts receivable reserves resulting from
             past activities to shed higher credit risk customers and an
             increasing proportion of Tier I customers. In the longer term,
             general and administrative expenses may again increase as we hire
             additional personnel and incur additional costs associated with
             growth of the business and operations.

       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. We expect our non-cash employee compensation
          expense to be approximately $700,000 per quarter over the next 3
          quarters.

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 were to 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.

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.

In response to market conditions and the consequent slower-than-anticipated
growth of our enhanced services, at our July 2001 board meeting, we made a
strategic decision to reduce expenditures for the development and marketing of
enhanced services and to reduce headcount in these areas. In connection with
that decision, we determined that certain long-lived assets related to our
October 2000 eFusion acquisition had become impaired. During the second quarter
of 2001, we recognized a $108.0 million impairment charge, which represented an
$86.7 million write-down of goodwill and a $21.3 million write-down of other
intangible assets to their fair values. During the third quarter of 2001, we
wrote off $5.7 million of the remaining intangibles relating to the eFusion
acquisition. In October 2001, we sold most of the tangible and intangible assets
of our eCommerce business to eStara, Inc., a privately held corporation, in
exchange for a 19.9% equity position. We have valued this investment at
$700,000. See Note 4 of our Notes to Consolidated Financial Statements.

                                       12

<PAGE>

As a result of the reorganization plan adopted at our July Board meeting, we
recorded an additional charge to earnings of $3.4 million in the third quarter
of 2001. The charge relates to headcount reductions of approximately 70
employees, the shutdown of our Beaverton, Oregon office and related expenses.

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, or if state or federal regulatory agencies assert or attempt to assert
regulatory jurisdiction, our costs could increase significantly and our
business, operating results, financial condition and future prospects could be
materially adversely affected.

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
September 30, 2001, we had an accumulated deficit of $268.2 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 and Nine Months Ended September
30, 2001 and 2000

    Revenues

Telecommunications revenues amounted to $46.5 million during the quarter ended
September 30, 2001 and $121.4 during the nine months ended September 30, 2001.
Approximately 99% of total revenue during the three and nine months ended
September 30, 2001 was derived from our WWeXchange service, which provides
international 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 the Push to
Talk(SM) service that we operated until the sale/license of our eCommerce assets
and liabilities to eStara, Inc. in October 2001.

                                       13

<PAGE>

Revenues during the quarter and nine months ended September 30, 2001 increased
98% and 112%, respectively, from the comparable periods in 2000. These increases
were a result of more calls being carried on our network, ITXC.net.

We carried approximately 560 million minutes of WWeXchange service traffic in
the third quarter of 2001 and 1.3 billion minutes of traffic over ITXC.net in
the first nine months of 2001 as compared with 218 million minutes and 602
million minutes, respectively, during the comparable 2000 periods. During the
quarter ended September 30, 2001, our average revenues per minute for WWeXchange
service were 8.2 cents per minute, as compared with 10.2 cents per minute during
the quarter ended September 30, 2000 and 9.6 cents per minute during the quarter
ended June 30, 2001. The decline in average revenues per minute is primarily
attributable to a change in route mix during the third quarter of 2001.

Our webtalkNOW! traffic declined significantly during the third quarter of 2001
as a result of the significant decline in the number and financial strength of
the Internet-based (so-called "dot.com") consumer businesses that formed a
portion of the potential customer base of our webtalkNOW! service and the
greatly weakened financial condition of the surviving competitive local exchange
carriers (CLECs).

We reduced and/or eliminated WWeXchange service to some customers at the end of
the first quarter and during the second quarter of 2001 because their credit
situations deteriorated or they could not, or would not, meet our more stringent
credit terms.

        Operating Expenses

Data Communications and Telecommunications Expenses. During the three months
ended September 30, 2001 and 2000, data communication expenses amounted to $40.2
million and $20.7 million, respectively, or 86.5% and 88.0% of
telecommunications revenues, respectively. During the nine months ended
September 30, 2001 and 2000, data communication expenses amounted to $106.3
million and $50.9 million, respectively, or 87.5% and 89.0% of
telecommunications revenue, 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 $2.3
million during the three months ended September 30, 2001 from $1.3 million
during the three months ended September 30, 2000 and to $6.7 million during the
nine months ended September 30, 2001 from $3.7 million during the nine months
ended September 30, 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 4.8% and 5.6% of
telecommunications revenues during the three months ended September 30, 2001 and
2000, respectively, and 5.5% and 6.5% of telecommunications revenue during the
nine months ended September 30, 2001 and 2000, respectively. There was a slight
increase in network operation expenses for the three months ended September 30,
2001 as compared to the $2.2 million of expenses for the three months ended June
30, 2001. We anticipate that we will be able to continue to leverage these costs
over a larger revenue base in future quarters.

Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased to $10.5 million during the three
months ended September 30, 2001 from $6.9 million during the three months ended
September 30, 2000 and to $36.7 million during the nine months ended September
30, 2001 from $19.4 million during the nine months ended September 30, 2000.
These increases were due primarily to the hiring of additional personnel,
commissions paid on our increased telecommunications revenue, expanded sales and
marketing campaigns, increased facilities expenses associated with our growth
and the customer credit issues described below. As a percentage of revenues,
SG&A expenses decreased to 22.6% from 29.3% over the comparable three-month
periods and decreased to 30.3% from 33.9% over the comparable nine month
periods. 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 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 had been our customers.
SG&A expenses for the third quarter were $700,000 less than SG&A expenses

                                       14

<PAGE>

for the quarter ended June 30, 2001, reflecting a reduction in headcount. We
were down to 261 employees at September 30, 2001, as compared with 308 employees
at the beginning of the second quarter.

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 $5.1 million during the three months ended
September 30, 2001 from $3.0 million during the three months ended September 30,
2000, and to $14.6 million during the nine months ended September 30, 2001 from
$6.9 million during the nine months ended September 30, 2000. These increases
reflect the expansion of our network and hubs and the addition of new
technologies deployed throughout our network. We added $8.9 million of capital
expenditures during the third quarter. As a percentage of revenue, depreciation
expense for the three month periods was 11.1% in 2001 and 13.0% in 2000, and for
the nine month periods was 12.1% in 2001 and 12.1% in 2000, reflecting our
efforts to build our infrastructure to support future growth.

        Amortization and Write-Off of Intangibles; Impairment Charges

We recorded $101.5 million of goodwill and $32.0 million of other intangibles in
connection with our October 2000 acquisition of eFusion, which was accounted for
as a purchase transaction, all of which were, prior to the impairment charge
described below, being amortized over five years. Accordingly, independent of
the impairment charge described below, we amortized $0.3 million and $13.7
million of intangibles during the three and nine months ended September 30,
2001, respectively.

Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
("SFAS No. 121") requires recognition of impairment losses for long-lived
assets whenever events or changes in circumstances result in impairment
indicators being present and the carrying amount of an asset exceeding the sum
of the expected future cash flows associated with the asset. In response to
market conditions and the consequent slower-than-anticipated growth of the
Company's enhanced services, we have determined that certain long-lived assets
related to our October 2000 eFusion acquisition have become impaired. During the
second quarter of 2001, we recognized a $108.0 million impairment charge. During
the third quarter of 2001, we recognized an additional $5.7 million impairment
charge which represented an additional write-down of intangible assets to their
fair value.

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 three and nine months ended September 30, 2001 but not for
the three and nine months ended September 30, 2000.

        Non-Cash Employee Compensation Expenses

Non-cash employee compensation expense increased to $1.0 million during the
quarter ended September 30, 2001 from $0.9 million during the quarter ended
September 30, 2000, and decreased from $3.0 million for the nine months ended
September 30, 2000 to $2.8 million for the nine months ended September 30, 2001,
representing amortization of deferred compensation incurred in connection with
the grant of options at exercise prices less than fair value. We expect these
costs to be approximately $700,000 per quarter in the future.

        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.

                                       15

<PAGE>

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 September 30, 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 $1.9 million and $3.4 million, respectively, and during the
nine months ended September 30, 2001 and 2000 by $7.0 million and $8.0 million,
respectively. The reductions reflect our usage of cash and yield reductions
resulting from a reduction in short-term interest rates.

        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).

         Restructuring Charges

During the third quarter of 2001, we took a $3.4 million restructuring charge,
of which $659,000 has been paid through September 30, 2001, relating principally
to our determination to cease providing eCommerce services associated with our
eFusion acquisition. This charge is primarily comprised of headcount reductions
of approximately 70 employees world-wide (approximately $1.5 million) and the
shutdown of our Beaverton, Oregon office (approximately $1.2 million).

        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. However, we cannot assure you that we
will be EBITDA positive during the first quarter of 2002; due to the risk
factors described in the first paragraph of this "Management's Discussion and
Analysis", our actual results could vary 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 in financing activities was $2.3 million for the nine months ended
September 30, 2001, principally reflecting the repayment of certain capital
lease obligations.

Net cash used in operating activities amounted to $23.7 million for the nine
months ended September 30, 2001, reflecting net operating losses and increased
accounts receivable, partially offset by increases in accounts payable and
accrued liabilities.

Net cash provided by investing activities was $16.1 million for the nine months
ended September 30, 2001, reflecting the maturities of investments which were
used to finance operating activities, offsetting $18.2 million of capital
expenditures during the first nine months of 2001.

As of September 30, 2001, our principal commitments consisted of obligations
outstanding under operating and capital leases. At that date, future minimum

                                       16

<PAGE>

payments for non-cancelable leases includes required payments of $6.6 million
during 2001 and $25.8 million for years 2002-2005 and thereafter under all
leases.

Over the long term, 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 2002. 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 September 30, 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.

In September 2001, our Board of Directors authorized a share buyback program
through which we may repurchase up to $10 million worth of shares of common
stock in the open market. As of September 30, 2001, we had not repurchased any
shares under this program.

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 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, after taking into account the stock buyback program
described above, 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.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statement No. 141,
Business Combinations, and Statement No. 142, Goodwill and Other Intangible
Assets, effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill and intangible assets deemed to have indefinite lives will
no longer be

                                       17

<PAGE>

amortized but will be subject to annual impairment tests. Other intangible
assets will continue to be amortized over their useful lives. The Company
believes that the adoption of this standard will not have a significant impact
on its results of operations and financial position.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We had investments of $152.7 million as of September 30, 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.

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.

The Company and certain of its officers/directors have been named as defendants
in several purported shareholder class action lawsuits. The lawsuits allege,
among other things, that, in connection with the Company's public offerings of
securities, its Prospectus did not disclose certain alleged practices involving
its underwriters and their customers. These actions seek compensatory and other
damages, and costs and expenses associated with the litigation. These actions
are in the early stages and the Company has not yet determined if there is any
potential material impact on its Consolidated Financial Statements. Management
believes that ITXC and its officers/directors did not engage in any improper or
illegal conduct and intends to defend these actions vigorously.

The Company has been served with a complaint filed in Virginia state court on
behalf of Hercules Communications Company, LLC in which the plaintiff demands
damages, including punitive damages, based on the Company's alleged refusal to
carry out a purported agreement to purchase certain assets from Hercules. The
claims are primarily based on alleged breach of contract, breach of implied
contract, breach of an oral contract, promissory estoppel and fraud. The Company
does not believe the case to be meritorious and intends to vigorously defend its
conduct.

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) The registrant filed three Current Reports on Form 8-K during the
quarter ended September 30, 2001. Information regarding the items reported on is
as follows:

                                       18

<PAGE>
<TABLE>

<S>                    <C>
Date                   Matter Reported On (all disclosures under Item 5)
----                   -------------------------------------------------

September 6, 2001      The commencement of the Hercules litigation referred to above.

September 17, 2001     EBITDA and Revenue Guidance.

September 17, 2001     Announcement of Stock Repurchase Authorization.
</TABLE>

                                       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.

                                        ITXC CORP.

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

Dated:  November 14, 2001

                                       20

<PAGE>

                                  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)

                                       21