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


               600 College Road East, Princeton, New Jersey 08540
              (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 July 31, 2001, there were 44,956,016 shares of Common Stock, par value$.001
per share, outstanding.


--------------------------------------------------------------------------------
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<PAGE>


                                   ITXC CORP.
                                     INDEX

                                                                            Page
                                                                            ----
Part I.  Financial Information

Item 1.  Financial Statements

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

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

         Condensed Consolidated Statements of Operations for the
                Six Months Ended June 30, 2001 and 2000(Unaudited) .....    5

         Condensed Consolidated Statements of Cash Flows for the
                Six Months Ended June 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 .....   17

Part II. Other Information

Item 1.  Legal Proceedings .............................................   17

Item 4.  Submission of Matters to a Vote of Security Holders ...........   18

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

Signatures .............................................................   19


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<PAGE>


PART I - Financial Information

Item 1.    Financial Statements

                           ITXC CORP. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets


                                                    June 30,       December 31,
                                                     2001              2000
                                                  (Unaudited)

Cash and cash equivalents                        $  49,219,446    $  36,768,527
Marketable securities                              121,237,494      162,667,823
Accounts receivable, net                            19,265,109       17,799,511
Prepaid expenses and other current assets            5,240,862        3,091,187
                                                 -------------    -------------
  Total current assets                             194,962,911      220,327,048

Property and equipment, net                         38,776,921       37,957,981
Intangible assets, net                               5,992,999      126,793,138
Other assets                                           747,318          598,339
                                                 -------------    -------------
   Total assets                                  $ 240,480,149    $ 385,676,506
                                                 =============    =============


Accounts payable and accrued liabilities         $  25,718,394    $  22,258,166
Other liabilities                                      908,993        1,052,196
Equipment note payable                               1,483,714        1,723,191
Current portion of capital lease obligations         3,474,677        3,933,671
                                                 -------------    -------------
  Total current liabilities                         31,585,778       28,967,224

Capital lease obligation, less current portion       3,229,530        4,425,322

Common stock                                            45,334           45,046
Additional paid in capital                         455,900,461      455,087,203
Deferred employee compensation                      (3,381,723)      (5,134,356)
Accumulated other comprehensive income               1,082,180          768,804
Accumulated deficit                               (247,981,411)     (98,482,737)
                                                --------------    -------------
  Total stockholders' equity                       205,664,841      352,283,960

Total liabilities and stockholders' equity       $ 240,480,149    $ 385,676,506
                                                ==============    =============


See accompanying notes.


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<PAGE>

                           ITXC CORP. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                                         Three Months ended June 30,
                                                                         2001                  2000
<S>                                                                  <C>                  <C>
Total revenue                                                        $ 38,800,709         $ 18,619,221
Costs and expenses:
Data communications and telecommunications                             34,035,816           16,542,925
Network operations                                                      2,242,574            1,035,868
Selling, general and administrative                                    11,204,372            6,533,983
Depreciation                                                            4,911,955            2,265,957
Amortization of intangibles                                             6,706,776              249,999
Write-off of intangibles                                              108,022,251                   --
Non-cash employee compensation                                            876,317            1,065,121
                                                                      -----------         ------------
     Total costs and expenses                                         168,000,061           27,693,853
                                                                      -----------         ------------
Loss from operations                                                 (129,199,352)          (9,074,632)
Interest income, net                                                    2,428,270            3,245,841
                                                                     ------------         ------------
Net loss                                                            $(126,771,082)        $ (5,828,791)
                                                                    =============         ============

Basic and diluted net loss per share                                $       (2.80)        $      (0.15)
                                                                    =============         =============

Weighted average shares used in computation of basic and
    diluted net loss per share and cash basis loss per share           45,265,214           38,503,812
</TABLE>


See accompanying notes.


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<PAGE>

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

<TABLE>
<CAPTION>

                                                                                  Six Months ended June 30,
                                                                                  2001                 2000
<S>                                                                            <C>                  <C>
Total revenue                                                                  $ 74,943,575         $ 33,685,300
Costs and expenses:
Data communications and telecommunications                                       66,059,389           30,196,332
Network operations                                                                4,410,126            2,422,938
Selling, general and administrative                                              26,217,174           12,466,098
Depreciation                                                                      9,495,715            3,852,913
Amortization of intangibles                                                      13,380,094              499,998
Write-off of intangibles                                                        108,022,251                   --
Non-cash employee compensation                                                    1,752,633            2,120,633
                                                                               ------------         ------------
  Total costs and expenses                                                      229,337,382           51,558,912
                                                                               ------------         ------------
Loss from operations                                                           (154,393,807)         (17,873,612)
                                                                               ------------         ------------
Interest income, net                                                              5,145,133            4,594,203
Loss associated with investments                                                   (250,000)          (8,195,000)
                                                                               ------------         ------------
Net loss                                                                      $(149,498,674)        $(21,474,409)
                                                                              =============         ============

Basic and diluted net loss per share                                          $       (3.31)        $      (0.57)
                                                                              =============         ============

Weighted average shares used in computation of basic and
    diluted net loss per share and cash basis loss per share                     45,203,373           37,545,618
</TABLE>



See accompanying notes.


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<PAGE>

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

<TABLE>
<CAPTION>
                                                                                  Six months ended June 30,
                                                                                  2001                 2000
                                                                               -----------------------------------
<S>                                                                            <C>                   <C>
Operating activities
Net loss                                                                       $(149,498,674)        $(21,474,409)
Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation                                                                   9,495,715            3,852,913
    Amortization of intangibles                                                   13,380,094              499,998
    Write-off of intangibles                                                     108,022,251                   --
    Provision for doubtful accounts                                                5,476,844            1,437,854
    Loss relating to joint venture                                                        --            8,195,000
    Amortization for non-cash deferred employee compensation                       1,752,633            2,120,633
    Amortization of original issue discounts                                        (867,650)          (1,359,686)

    Changes in operating assets and liabilities:

         Increase in accounts receivable                                          (6,943,441)          (6,274,794)
         Increase in prepaid expenses and other assets                            (2,298,657)          (1,119,814)
         Increase (decrease) in accounts payable and accrued expenses              3,243,372           (1,748,486)
         (Decrease) increase in other liabilities                                   (142,203)             423,688
                                                                                 ------------        ------------
Net cash used in operating activities                                            (18,379,716)         (15,447,103)
                                                                                 ------------        ------------
Investing activities
Purchase of property and equipment                                                (9,650,010)         (11,404,667)
Acquisition costs                                                                   (385,353)                  --
Purchase of service contract rights                                                        --              (8,110)
Purchase of available for sale securities                                        (50,597,268)        (272,412,372)
Maturities of available for sale securities                                        93,076,033         175,938,019
                                                                                 ------------        ------------


Net cash provided by (used in) investing activities                                32,443,402        (107,887,130)
                                                                                 ------------        ------------
Financing activities
Repayment of equipment line of credit                                               (239,477)                  --
Repayment of capital lease obligations                                            (2,319,427)            (949,695)
Proceeds from issuance of second public offering                                          --          161,296,000
Proceeds from short swing sale                                                            --            1,208,777
Proceeds from exercise of stock options                                              813,546              260,717
Proceeds from issuance of common stock related to employee stock
purchase plan                                                                              --             394,516
                                                                                 ------------        ------------
Net cash (used in) provided by financing activities                               (1,745,358)         162,210,315
                                                                                 ------------        ------------
Effect of exchange rate fluctuations on cash                                         132,591                   --
                                                                                 ------------        ------------
Increase in cash                                                                  12,450,919           38,876,082
Cash and cash equivalents at beginning of period                                  36,768,527           49,017,768
                                                                                 ------------        ------------
Cash and cash equivalents at end of period                                       $49,219,446          $87,893,850
                                                                                 ===========         ============
</TABLE>



See accompanying notes.


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<PAGE>

   ITXC CORP. AND SUBSIDIARIES

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

1.   Basis of Presentation

The June 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 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 and
six months ended June 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, Data Transport, 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 six month periods ended June 30, 2001 and 2000 were as follows:

<TABLE>
<CAPTION>

                                                  Three Months ended June 30,           Six Months ended June 30,
                                                    2001               2000               2001              2000
                                             --------------------------------------------------------------------------
<S>                                            <C>                  <C>               <C>              <C>
Net loss                                       $(126,771,082)        $(5,828,791)     $(149,498,674)   $ (21,474,409)
Other comprehensive income:
   Unrealized holding gains (losses) arising
    during period (net of tax of $0)                (446,535)             89,059            949,589           89,059
  Foreign currency translation adjustments            33,922                 --             132,591               --
                                               -------------         -----------      --------------   -------------
Comprehensive loss                             $(127,183,695)        $(5,739,732)     $(148,416,494)   $ (21,385,350)
                                               =============         ===========      =============    =============
</TABLE>


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<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) to be 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 June 30,           Six Months ended June 30,
                                  2001               2000               2001              2000
                           --------------------------------------------------------------------------
<S>                            <C>                 <C>                <C>              <C>
Revenues                       $ 38,800,709        $18,753,491        $74,943,575      $33,992,875
Net loss                       (126,771,082)       (17,045,793)      (149,498,674)     (43,744,269)
Net loss per share               $    (2.80)            $(0.39)        $    (3.31)          $(1.02)
</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.

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.

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<PAGE>

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 it's 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. As a
result, the Company has 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.

As part of the business-reorganization plan, the Company expects to record a
charge to earnings of approximately $2.0 million in the third quarter of 2001.
The charge relates to headcount reductions and facility consolidations.

5.   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 is currently reviewing the impact of these standards and will be
performing a fair-value analysis at a later date in connection with the adoption
of FAS No. 142 on January 1, 2002.

6.   Subsequent Events

The Company and certain of its officers/directors have been identified as
defendants in press releases describing several purported shareholder class
action lawsuits for alleged violations of federal securities laws. The Company
was served in one lawsuit on August 14, 2001. This suit alleges, among other
things, that, in connection with the Company's securities offerings, its
Prospectus did not disclose certain alleged practices involving its underwriters
and their customers. The Company has no way of knowing whether other lawsuits
which have been described in press releases will be served or will have
substantially the same allegations. The one action served seeks 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.

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 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,
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


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<PAGE>

integrating businesses which were previously operated as stand-alone units, the
creditworthiness of our customers, the uncertainties involved in certain legal
proceedings 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.

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 398 million minutes carried through our WWeXchange
          service during the quarter ended June 30, 2001;

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

     o    expanding our points of presence (PoPs) to 559 at June 30, 2001 and
          increasing the global reach of ITXC.net; and

     o    increasing our employee headcount, from 29 employees on April 1, 1998
          to 293 employees on June 30, 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 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:

     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, which have
not been material ($0.7 million for the quarter ended June 30, 2001), consist of
minute based revenue,


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<PAGE>

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 include related
          expenses incurred to operate eFusion's services. By June 30, 2001, we
          had eliminated substantially all duplicative network operations
          expenses resulting from that acquisition.

     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,


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<PAGE>

               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.

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 current market conditions and the consequent slower-than-
anticipated growth of the Company's enhanced services, at it's 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. As a result, the Company has 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. See Note 4 of our Notes to Consolidated Financial Statements.

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
June 30, 2001, we had an accumulated deficit of $248.0 million. The profit
potential of our

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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.

On July 25, 2001, we announced a business reorganization plan relating to
reductions in the development and marketing of enhanced services.

As part of the business-reorganization plan, we expect to record an additional
charge to earnings of approximately $2.0 million in the third quarter of 2001.
The charge relates to headcount reductions and facility consolidations. This
restructuring plan will allow the Company to concentrate its resources and
management attention on its phone-to-phone service.

Results of Operations - Comparison of the Three and Six Months Ended June 30,
2001 and 2000

    Revenues

Telecommunications revenues amounted to $38.8 million during the quarter ended
June 30, 2001 and $74.9 during the six months ended June 30, 2001. Approximately
98% of total revenue during the three and six months ended June 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 our Push to Talk(SM)
service.

Revenues during the quarter and six months ended June 30, 2001 increased
108% and 123%, respectively, from the comparable periods in 2000. This increase
was a result of more calls originating on our network, ITXC.net.

We carried approximately 398 million minutes of WWeXchange service traffic in
the second quarter of 2001 and 743 million minutes of traffic over ITXC.net in
the first six months of 2001 as compared with 157 million minutes and 279
million minutes, respectively, during the comparable 2000 periods. During the
quarter ended June 30, 2001, our average revenues per minute for WWeXchange
service were 9.6 cents per minute, as compared with 11.2 cents per minute during
the quarter ended June 30, 2000 and 10.2 cents per minute during the quarter
ended March 31, 2001.

Our webtalkNOW! traffic declined significantly during the second 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 condition of the surviving competitive local exchange carriers
(CLECs).

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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 June 30, 2001 and 2000, data communication expenses amounted to $34.0
million and $16.5 million, respectively, or 87.7% and 88.8% of
telecommunications revenues, respectively. During the six months ended June 30,
2001 and 2000, data communication expenses amounted to $66.1 million and $30.2
million, respectively, or 88.1% and 89.6% 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 $2.2
million during the three months ended June 30, 2001 from $1.0 million during the
three months ended June 30, 2000 and to $4.4 million during the six months ended
June 30, 2001 from $2.4 million during the six months ended June 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 5.8% and 5.6% of telecommunications revenues during the three months
ended June 30, 2001 and2000, respectively, and 5.9% and 7.2% of
telecommunications revenue during the six months ended June 30, 2001 and 2000,
respectively. There was a slight increase in network operation expenses for the
three months ended June 30, 2001 as compared to the $2.2 million of expenses for
the three months ended March 31, 2001.

Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased to $11.2 million during the three
months ended June 30, 2001 from $6.5 million during the three months ended June
30, 2000 and to $26.2 million during the six months ended June 30, 2001 from
$12.5 million during the six months ended June 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
28.9% from 35.1% over the comparable three-month periods and decreased to 35.0%
from 37.0% over the comparable six 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.

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
coulddiffer 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 $4.9 million during the three months ended
June 30, 2001 from $2.3 million during the three months ended June 30, 2000, and
to $9.5 million during the six months ended June 30, 2001 from $3.9 million
during the six months ended June 30, 2000. These increases reflect the expansion
of our network and hubs and the addition of new technologies deployed throughout
our network. As a percentage of revenue, depreciation expense for the three
month periods was 12.7% in 2001 and 12.2% in 2000, and for the six month periods
was 12.7% in 2001 and 11.4% in 2000, reflecting our efforts to build our
infrastructure to support future growth.

        Amortization and Write-Off of Intangibles; Impairment Charge

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


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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 wrote off $ 6.7 million and $ 13.4
million of intangibles during the three and six months ended June 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 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 it's 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. As a
result, 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 which represented a
write-down of goodwill and 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 six months ended June 30, 2001 but not for the
three and six months ended June 30, 2000.

        Non-Cash Employee Compensation Expenses

Non-cash employee compensation expense decreased to $0.9 million during the
quarter ended June 30, 2001 from $1.1 million during the quarter ended June 30,
2000, and from $2.1 million for the six months ended June 30, 2000 to $1.8
million for the six months ended June 30, 2001, 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 June 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 $2.4 million and $3.2 million, respectively, and during the
six months ended June 30, 2001 and 2000 by $5.1 million and $4.6 million.

        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 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 differ


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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 $1.7 million for the six months
ended June 30, 2001.

Net cash used in operating activities amounted to $18.4 million for the six
months ended June 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
$32.4 million for the six months ended June 30, 2001, reflecting the maturities
of investments which were used to finance operating activities, offsetting $9.7
million of capital expenditures during the first six months of 2001.

As of June 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 $6.6 million during 2001 and
$25.9 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
permittedto 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
beterminated by our lender 45 days after the occurrence of certain mergers,
acquisitions and investments. As of June 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.

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

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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 PrivateSecurities 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 amortized but will be subject to annual impairment tests. Other
intangible assets will continue to be amortized over their useful lives. The
Company is currently reviewing the impact of these standards and will be
performing a fair-value analysis at a later date in connection with the adoption
of FAS No. 142 on January 1, 2002.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We had investments of $167.4 million as of June 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.

In addition, ITXC and certain of our officers/directors have been identified as
defendants in press releases describing several purported shareholder class
action lawsuits for alleged violations of federal securities laws. ITXC was
served in one lawsuit on August 14, 2001. This suit alleges, among other things,
that, in connection with our securities offerings, our Prospectus did not
disclose certain alleged practices involving our underwriters and their
customers. We have no way of knowing whether other lawsuits which have been
described in press releases will be served or will have substantially the same
allegations. The one action served seeks compensatory and other damages, and
costs and expenses associated with the litigation. These actions are in the
early stages and we have not yet determined if there is any potential material
impact on our Consolidated Financial Statements. We believe that ITXC and its
officers/directors did not engage in any improper or illegal conduct and intend
to defend these actions vigorously.

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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 4. Submission of Matters to a Vote of Security Holders.

The Company's Annual Meeting of Stockholders was held on May 2, 2001. At that
meeting, Frank Gill was elected to serve on the Board of Directors for a term of
three years. A total of 31,907,632 shares of Common Stock voted in favor of Mr.
Gill's election, a total of 45,906 shares of Common Stock voted against Mr.
Gill's election. There were no abstentions or broker non-votes.

The following directors have terms that extended beyond the Annual Meeting: Tom
Evslin, Edward Jordan, William Collatos and Frederick Wilson.


Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits:

          10.1 Amended and Restated Loan Agreement, dated July 1, 2001, between
               ITXC and PNC Bank.

          10.2 Amended and Restated Employment Agreement between the Company and
               Tom Evslin.

          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 duringthe
quarter ended June 30, 2001.


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<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
theundersigned thereunto duly authorized.


                                        ITXC CORP.

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

Dated:  August 14, 2001


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                                  EXHIBIT INDEX

10.1 Amended and Restated Loan Agreement, dated July 1, 2001, between ITXC and
     PNC Bank.

10.2 Amended and Restated Employment Agreement between the Company and Tom
     Evslin.

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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