U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                  -------------


|X|   Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the quarterly period ended April 30, 2002


|_|   Transition report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the transition period from ____ to ____



                          Commission File No. 000-24996

                          INTERNET COMMERCE CORPORATION
             (Exact name of registrant as specified in its charter)

          Delaware                                         13-3645702
  (State of incorporation)                              (I.R.S. Employer
                                                     Identification Number)

                           805 Third Avenue, 9th Floor
                            New York, New York 10022
          (Address of principal executive offices, including zip code)

                                 (212) 271-7640

              (Registrant's telephone number, including area code)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

      As of May 31, 2002 the registrant had outstanding 11,479,967 shares of
Class A Common Stock.

<PAGE>

                          INTERNET COMMERCE CORPORATION

                               INDEX TO FORM 10-Q

                                                                            PAGE

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated balance sheets as of April 30, 2002
      (unaudited) and July 31, 2001.....................................     3

Consolidated statements of operations and comprehensive
      loss for the three and nine months ended
      April 30, 2002 (unaudited) and April 30, 2001 (unaudited).........     4

Consolidated statements of cash flows for the nine months
      ended April 30, 2002 (unaudited) and April 30, 2001
      (unaudited).......................................................     5

Notes to consolidated financial statements..............................  6-14

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations............................. 15-29

Item 3..Quantitative and Qualitative Disclosures About Market Risk......    29


PART II.  OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds......................    29

Item 6.  Exhibits and Reports on Form 8-K ..............................    29

SIGNATURES..............................................................    30

<PAGE>

INTERNET COMMERCE CORPORATION

Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                                  April 30,             July 31,
                                                                                    2002                  2001
                                                                                  ---------             --------
                                                                                 (unaudited)
ASSETS
Current assets:
<S>                                                                              <C>                   <C>
   Cash and cash equivalents                                                     $  1,365,864          $  2,223,487
   Marketable securities                                                              240,629               665,552
   Accounts receivable, net of allowance for doubtful accounts
   of $273,228 and $224,022, respectively                                           1,504,856             1,588,242
   Prepaid expenses and other current assets                                          454,776               401,334
                                                                                 ------------          ------------
      Total current assets                                                          3,566,125             4,878,615

Restricted cash                                                                       213,706               276,635
Property and equipment, net                                                         1,282,992             1,920,662
Software development costs, net                                                       389,429               425,471
Goodwill                                                                            3,904,684             2,194,067
Other intangible assets, net                                                        3,346,000             5,917,854
Other assets                                                                          122,863                60,794
                                                                                 ------------          ------------
      Total assets                                                               $ 12,825,799          $ 15,674,098
                                                                                 ============          ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                              $    707,322          $    713,670
    Accrued expenses                                                                1,680,579             2,381,788
   Accrued dividends - preferred stock                                                137,126               273,289
   Deferred revenue                                                                   177,480               306,764
    Capital lease obligation                                                          206,433               328,480
    Other liabilities                                                                 191,961               228,189
                                                                                 ------------          ------------
          Total current liabilities                                                 3,100,901             4,232,180

Capital lease obligation - less current portion                                       178,867               255,009
                                                                                 ------------          ------------
          Total liabilities                                                         3,279,768             4,487,189
                                                                                 ------------          ------------

Commitments and contingencies

Stockholders' Equity:
Preferred stock:
     Preferred stock - 5,000,000 shares authorized, including 10,000
       shares of series A, 10,000 shares of series C and 175 shares
       of series S: Series A preferred stock - par value $.01 per share,
       225 shares issued and outstanding in 2001                                         --                       2

     Series C preferred stock - par value $.01 per share, 44.76 votes
       per share; 10,000 shares issued and outstanding (liquidation
       value of $10,131,148)                                                              100                   100

Common stock:

     Class A - par value $.01 per share, 40,000,000 shares authorized,
       one vote per share; 11,411,041 and 9,770,180 shares issued and
       outstanding, respectively                                                      114,111                97,702

     Class B - par value $.01 per share, 2,000,000 shares authorized,
       six votes per share; 1,930 shares issued and outstanding in 2001                  --                      19

Additional paid-in capital                                                         84,843,243            80,750,153
Accumulated deficit                                                               (75,126,530)          (69,261,320)
Accumulated other comprehensive loss                                                 (284,893)             (209,728)
Deferred compensation - restricted stock                                                 --                (190,019)
                                                                                 ------------          ------------
          Total stockholders' equity                                                9,546,031            11,186,909
                                                                                 ------------          ------------

          Total liabilities and stockholders' equity                             $ 12,825,799          $ 15,674,098
                                                                                 ============          ============
</TABLE>

                 See notes to consolidated financial statements.


                                       3
<PAGE>

INTERNET COMMERCE CORPORATION

Consolidated Statements of Operations and Comprehensive Loss (unaudited)

<TABLE>
<CAPTION>

                                                                     Three Months Ended                 Nine Months Ended
                                                                         April 30,                          April 30,
                                                                  ----------------------------    ----------------------------
                                                                     2002              2001          2002             2001
                                                                  ------------    ------------    ------------    ------------
<S>                                                               <C>             <C>             <C>             <C>
Revenue:
  Services                                                        $  2,724,582    $  3,041,468    $  8,460,108    $  6,940,238
                                                                  ------------    ------------    ------------    ------------

Expenses:
   Cost of services (excluding non-cash compensation of
       $133,429 for the nine months ended April 30, 2002)            1,863,741       2,478,409       6,492,832       6,258,618

       Product development and enhancement                             230,456         237,012         729,786         674,654

   Selling and marketing (excluding non-cash compensation of
       $23,109 for the nine months ended April 30, 2002)               922,900       1,362,391       2,823,173       4,096,837

   General and administrative (excluding non-cash
       compensation of $33,481 for the nine months ended
       April 30, 2002 and $450,110 for the nine months ended
       April 30, 2001)                                               1,510,986       2,920,720       4,165,266       7,712,621

   Non-cash charges for stock-based compensation and services             --              --           190,019         450,110

    Impairment of acquired intangibles                                    --         1,871,900            --         1,871,900
                                                                  ------------    ------------    ------------    ------------
                                                                     4,528,083       8,870,432      14,401,076      21,064,740
                                                                  ------------    ------------    ------------    ------------

Operating loss                                                      (1,803,501)     (5,828,964)     (5,940,968)    (14,124,502)
                                                                  ------------    ------------    ------------    ------------

Interest and investment income                                          53,582          57,311         130,512         434,340

Interest expense                                                        (6,906)        (21,315)        (61,885)        (59,962)

Other income                                                            18,651          30,994           7,131          30,994
                                                                  ------------    ------------    ------------    ------------
                                                                        65,327          66,990          75,758         405,372
                                                                  ------------    ------------    ------------    ------------

Loss before income taxes                                            (1,738,174)     (5,761,974)     (5,865,210)    (13,719,130)

Income tax benefit                                                        --         1,605,380            --         1,605,380
                                                                  ------------    ------------    ------------    ------------

Net loss                                                          $ (1,738,174)   $ (4,156,594)   $ (5,865,210)   $(12,113,750)

Dividends on preferred stock                                           (98,299)       (102,518)       (263,837)       (314,827)
Beneficial conversion feature from repricing and issuance of
     warrants in warrant exchange offer                               (461,084)           --          (461,084)           --
                                                                  ------------    ------------    ------------    ------------

Loss attributable to common stockholders                          $ (2,297,557)   $ (4,259,112)   $ (6,590,131)   $(12,428,577)
                                                                  ============    ============    ============    ============

Basic and diluted loss per common share                           $      (0.21)   $      (0.45)   $      (0.62)   $      (1.47)
                                                                  ============    ============    ============    ============

Weighted average number of common shares outstanding--
   basic and diluted loss per share                                 11,163,575       9,519,102       8,461,208      10,655,905
                                                                  ============    ============    ============    ============

COMPREHENSIVE LOSS:
Net loss                                                          $ (1,738,174)   $ (4,156,594)   $ (5,865,210)   $(12,113,750)
Other comprehensive loss:

   Unrealized losses - marketable securities                           (38,027)       (137,389)        (75,165)       (155,877)
                                                                  ------------    ------------    ------------    ------------

Comprehensive loss                                                $ (1,776,201)   $ (4,293,983)   $ (5,940,375)   $(12,269,627)
                                                                  ============    ============    ============    ============
</TABLE>

                See notes to consolidated financial statements.


                                       4
<PAGE>

INTERNET COMMERCE CORPORATION

Consolidated Statements of Cash Flows (unaudited)

<TABLE>
<CAPTION>

                                                                                        Nine Months Ended April 30,
                                                                                    ----------------------------------
                                                                                       2002                  2001
                                                                                    ------------         -------------
<S>                                                                                 <C>                  <C>
Cash flows from operating activities:
 Net loss                                                                           $ (5,865,210)        $(12,113,750)
 Adjustments to reconcile net loss to net cash used in operating activities:
      Impairment of intangible assets                                                       --              1,871,900
      Depreciation and amortization                                                    1,635,615            2,901,535
      Allowance for doubtful accounts                                                    161,600               53,696
      Gain on sale of marketable securities                                             (106,399)                --
      Gain on sale of long term assets                                                    (8,591)
      Deferred taxes                                                                        --             (1,613,925)
      Non-cash charges for equity instruments issued for compensation
        and services                                                                     190,019              450,110
      Changes in:
          Accounts receivable                                                            (78,214)          (1,177,037)
          Prepaid expenses and other assets                                             (120,066)              70,194
          Accounts payable                                                                (6,348)            (398,809)
          Accrued expenses                                                              (516,830)             323,200
          Deferred revenue                                                              (129,284)            (346,998)
          Other liabilities                                                              (36,228)              14,116
                                                                                    ------------         ------------

          Net cash used in operating activities                                       (4,879,936)          (9,965,768)
                                                                                    ------------         ------------

Cash flows from investing activities:
   Payment for purchase of acquisition, net of cash acquired                                --                (22,055)
   Capitalization of software development costs                                         (164,256)             (74,230)
   Purchases of property and equipment                                                   (46,948)            (574,991)
   Purchases of certificates of deposit                                                     --                (24,540)
   Proceeds from sales of property and equipment                                          31,251                 --
   Proceeds from maturities of certificates of deposit                                    62,929                 --
   Proceeds from sales of marketable securities                                          456,157                 --
                                                                                    ------------         ------------

          Net cash provided by (used in) investing activities                            339,133             (695,816)
                                                                                    ------------         ------------

Cash flows from financing activities:
   Proceeds from issuance of common stock and warrants, net                            3,107,269                 --
   Proceeds from exercise of employee stock options                                      223,882              291,310
   Proceeds from exercise of warrants                                                    602,022                 --
   Payments of capital lease obligations                                                (249,993)            (323,391)
                                                                                    ------------         ------------

          Net cash provided by (used in) financing activities                          3,683,180              (32,081)
                                                                                    ------------         ------------

Net decrease in cash and cash equivalents                                               (857,623)         (10,693,665)

Cash and cash equivalents, beginning of period                                         2,223,487           14,003,329
                                                                                    ------------         ------------

Cash and cash equivalents, end of period                                            $  1,365,864         $  3,309,664
                                                                                    ============         ============

Supplemental disclosure of cash flow information:
     Cash paid for interest during the period                                       $     61,885         $     59,962
</TABLE>


                See notes to consolidated financial statements.


                                       5

<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002

1.    BASIS OF PRESENTATION

      The accompanying  unaudited  consolidated financial statements of Internet
      Commerce  Corporation  (the  "Company"  or "ICC")  have been  prepared  in
      accordance with  accounting  principles  generally  accepted in the United
      States of America  ("GAAP")  for  interim  financial  information.  In the
      opinion of management, such statements include all adjustments (consisting
      only of normal recurring  adjustments) necessary for the fair presentation
      of the Company's financial position,  results of operations and cash flows
      at the dates and for the periods  indicated.  Pursuant to the requirements
      of the Securities and Exchange Commission  applicable to Quarterly Reports
      on Form 10-Q, the accompanying financial statements do not include all the
      disclosures  required by GAAP for annual financial  statements.  While the
      Company  believes that the disclosures  presented are adequate to make the
      information  not   misleading,   these  interim   consolidated   financial
      statements  should  be read in  conjunction  with  the  audited  financial
      statements  and related notes  included in the Company's  Annual Report on
      Form 10-K for the year  ended July 31,  2001.  Operating  results  for the
      three and nine month  periods  ended  April 30,  2002 are not  necessarily
      indicative  of the results that may be expected for the fiscal year ending
      July 31, 2002.

      Certain  2001  items  have been  reclassified  to  conform  to their  2002
      presentation.


2.    ORGANIZATION AND NATURE OF BUSINESS

      The Company was  incorporated  under the name  Infosafe  Systems,  Inc. in
      November 1991 in the State of Delaware.

      ICC  provides   Internet-based   services  for  the  electronic   commerce
      business-to-business  communication  services market.  ICC.NET, our global
      Internet-based   value  added  network,  or  VAN,  provides  supply  chain
      connectivity  solutions  for  electronic  data  interchange,  or EDI,  and
      electronic  commerce  and  offers  users a vehicle  to  securely  send and
      receive files of any format and size.

      The ICC.NET system uses the Internet and proprietary technology to deliver
      customers'   documents   and  data  files  to  members  of  their  trading
      communities,  many of which have incompatible systems, by translating such
      documents  and data files into any format  required by the  receiver.  The
      ICC.Net  system can be accessed  using a standard web browser or virtually
      any other communications protocol.

      The acquisition of Research Triangle  Commerce,  Inc. ("RTCI") on November
      6, 2000,  gives the Company the capability to facilitate  the  development
      and operations of comprehensive  business-to-business  electronic commerce
      solutions. RTCI specializes in electronic commerce solutions involving EDI
      and EAI (Enterprise Application Integration) by providing mission critical
      electronic commerce consulting,  electronic commerce software,  outsourced
      electronic commerce services and technical resource management.

      Through the acquisition of Intercoastal Data Corporation ("IDC") on August
      3, 2000, ICC expanded its  capabilities  to include an EDI service bureau,
      which  provides  EDI  services  to small and  mid-sized  companies.  These
      services  include the conversion of electronic  forms into hard copies and
      the  conversion  of  hard  copies  to an EDI  format.  IDC  also  provides
      Universal  Product Code,  or UPC,  services and maintains UPC catalogs for
      our customers.

      In October 2001, we sold in a private placement  1,159,716 shares of class
      A common stock and warrants to purchase 347,915 additional shares of class
      A common stock for gross  proceeds of $3,189,219.  The warrants  expire in
      October 2006 and are immediately  exercisable at $3.58 per share. On April
      23, 2002, the Company  offered  certain holders of its warrants the option
      to exercise these warrants at a reduced  exercise price of $2.50 per share
      in exchange for a new five-year warrant,  on substantially  similar terms,
      exercisable  at $3.50 per share.  Warrantholders  exercised  warrants  for
      217,007  shares of class A common  stock of the  Company  and the  Company
      received gross proceeds of $542,247 and issued 217,002 five-year  warrants
      to these holders. See Note 4.


                                       6
<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002


2.    ORGANIZATION AND NATURE OF BUSINESS (CONTINUED)

      As of April 30,  2002,  we had cash and cash  equivalents  and  marketable
      securities of $1,606,000. These resources,  together with the amounts owed
      to the Company by Triaton GmbH under the Joint Services Agreement,  should
      provide the Company  with  sufficient  liquidity  to continue in operation
      through July 31, 2002. The Joint Services  Agreement  requires  payment by
      Triaton of $1,000,000 in July 2002 and $6,000,000 during fiscal year 2003.
      However, if we do not receive the scheduled payments from Triaton GmbH and
      we cannot  reduce  costs to achieve  sufficient  savings,  or our expenses
      increase  more  than  anticipated,   our  revenue  does  not  increase  as
      anticipated  because of competitive  or other reasons,  our cash resources
      may not be sufficient and we will require additional financing.  There can
      be no assurances  that any  financing  will be available or that the terms
      will be acceptable to us, or that any financing will be consummated.


3.    SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES

      Principles of consolidation:

      The consolidated  financial statements include the accounts of the Company
      and its wholly owned subsidiary. All significant intercompany transactions
      have been eliminated in consolidation.

      Revenue recognition:

      The Company derives its revenue from subscriptions to its ICC.NET service,
      which  include  transaction,   mailbox  and  fax  transmission  fees.  The
      subscription  fees are comprised of both fixed and usage-based fees. Fixed
      subscription fees are recognized on a pro-rata basis over the subscription
      period,  generally one year.  Usage fees are  recognized in the period the
      services  are  rendered.   The  Company  also  derives   revenue   through
      implementation  fees and  interconnection  fees.  Implementation  fees are
      recognized over the life of the subscription period.  Interconnection fees
      are fees charged to connect to another VAN service and are recognized when
      the data is transmitted to the connected service.

      The  Company  also  provides  a  broad  range  of  professional   services
      consisting  of  EDI  and  electronic  commerce  consulting,  data  mapping
      services  and EDI  education  and  training at seminars  hosted by leading
      universities  around the United  States.  Revenue from EDI and  electronic
      commerce  consulting  and education and training are  recognized  when the
      services are provided.  Revenue from data mapping  services are recognized
      when the map has been  completed and  delivered to the  customer.  Revenue
      from fixed fee  professional  service  contracts are recognized  using the
      percentage-of-completion  method of accounting,  as prescribed by SOP 81-1
      "Accounting   for   Performance   of    Construction-Type    and   Certain
      Production-Type Contracts."

      The percentage of completion for each contract is determined  based on the
      ratio of direct labor hours incurred to total estimated direct labor hours
      required to complete the contract.  The Company may periodically encounter
      changes in estimated  costs and other factors that may lead to a change in
      the  estimated   profitability   of  a  fixed-price   contract.   In  such
      circumstances, adjustments to cost and profitability estimates are made in
      the period in which the underlying factors requiring such revisions become
      known. If such revisions indicate a loss on a contract, the entire loss is
      recorded  at such  time.  Amounts  billed in  advance  of  services  being
      performed are recorded as deferred revenue.  Certain  fixed-fee  contracts
      may have substantive customer acceptance provisions.  The acceptance terms
      generally  include a single review and revision cycle for each deliverable
      to  incorporate  the  customer's  suggested  or  required   modifications.
      Deliverables  are  considered  accepted upon  completion of the review and
      revision and revenue is recognized upon acceptance.



                                       7
<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002


3.    SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES (continued)

      The Company also derives revenue from its service  bureau.  Service bureau
      revenues  are  comprised  of  EDI  services,  including  data  translation
      services,  purchase order and invoice  processing  from  EDI-to-print  and
      print-to-EDI,  UPC services,  including UPC number generation, UPC catalog
      maintenance  and UPC label  printing.  The  service  bureau  also  derives
      revenue from software  licensing  and provides  software  maintenance  and
      support. Revenue from the EDI services and UPC services is recognized when
      the  services  are  provided.  The Company  accounts  for its EDI software
      license  sales in  accordance  with the  American  Institute  of Certified
      Public  Accountants'   Statement  of  Position  97-2,   "Software  Revenue
      Recognition",  as amended.  Revenue from software  licenses are recognized
      when  all  of the  following  conditions  are  met:  (1) a  non-cancelable
      non-contingent license agreement has been signed; (2) the software product
      has been  delivered;  (3) there are no  material  uncertainties  regarding
      customer  acceptance;  and (4)  collection of the resulting  receivable is
      probable.  Revenue from  software  maintenance  and support  contracts are
      recognized  ratably over the life of the contract.  The Company's software
      license revenue was not significant in any of the periods presented.

      In  addition,   SOP  97-2,   generally   requires  revenue  from  software
      arrangements  involving  multiple elements to be allocated to each element
      of the arrangement based on the relative fair values of the elements, such
      as software  licenses,  post contract customer support,  installation,  or
      training and recognized as the element is delivered and the Company has no
      significant  remaining  performance  obligations.  The Company's  multiple
      element  arrangements  generally  consist of a software  license  and post
      contract  support.  The Company  allocates  the  aggregate  revenues  from
      multiple  element  arrangements  to each element based on vendor  specific
      objective evidence.  The Company has established vendor specific objective
      evidence  for each of the  elements as it sells both the software and post
      contract  customer  support  independent of multiple  element  agreements.
      Customers are charged  standard  prices for the software and post contract
      customer support and theses prices do not vary from customer to customer.

      If the  Company  enters into a multiple  element  agreement  where  vendor
      specific  objective  evidence  of  fair  value  for  each  element  of the
      arrangement  does not exist,  all revenue from the arrangement is deferred
      until all elements of the arrangement are delivered.

      Service revenue from maintenance  contracts is recognized ratably over the
      term of the maintenance  contract, on a straight-line basis. Other service
      revenue is recognized at the time the service is performed.

      Deferred revenue:

      Deferred  revenue  is  comprised  of  deferrals  for  subscription   fees,
      professional  services,  license  fees  and  maintenance  associated  with
      contracts  for which  amounts have been received in advance of services to
      be performed or prior to the shipment of software.

      Recent Accounting Pronouncements:

      In July 2001, the FASB issued SFAS No. 141,  "Business  Combinations"  and
      SFAS No.  142,  "Goodwill  and  Other  Intangible  Assets."  SFAS No.  141
      requires  that all business  combinations  subsequent to June 30, 2001, be
      accounted for under the purchase  method of  accounting.  SFAS No.141 also
      requires  that  the fair  value  of an  assembled  workforce  acquired  be
      included in the amount initially recorded as goodwill.  As required by the
      statement,  the Company  reclassified into goodwill  $1,710,617  initially
      recorded as other intangible  assets related to the value of the assembled
      workforce  of RTCI as required by this  statement.  SFAS No. 142  requires
      that upon adoption,  amortization of goodwill will cease; and instead, the
      carrying value of goodwill will be evaluated for impairment on at least an
      annual basis.  SFAS No. 142 is effective for fiscal years  beginning after
      December 15, 2001;  however,  the Company has adopted this  standard as of
      the beginning of its 2002 fiscal year,  August 1, 2001, as permitted under
      the  provisions of SFAS No. 142. See Note 8 for the effects of adoption of
      this standard.  The Company has evaluated  goodwill for impairment and has
      determined that no impairment exists at August 1, 2001.


                                       8
<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002


3.    SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES (continued)

      In  July  2001,  the  FASB  issued  SFAS  No.143,  "Accounting  for  Asset
      Retirement  Obligations."  SFAS No.  143 is  effective  for  fiscal  years
      beginning  after June 15, 2002,  and  establishes  an accounting  standard
      requiring the recording of the fair value of liabilities  associated  with
      the  retirement  of  long-lived  assets in the  period  in which  they are
      incurred. The Company is in the process of determining the impact that the
      adoption of SFAS No. 143 may have on its earnings and financial position.

      In  August  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
      Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supercedes SFAS
      No. 121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and for
      Long-Lived  Assets to be Disposed  Of." SFAS No. 144  addresses  financial
      accounting  and  reporting  for the  impairment  or disposal of long-lived
      assets.  The  provisions  of SFAS No. 144 are  effective  for fiscal years
      beginning  after  December 15, 2001. The Company is required to adopt SFAS
      No. 144 by the first  quarter of fiscal  2003.  The  Company is  currently
      evaluating  the  potential  impact  of  SFAS  No.  144 on its  results  of
      operations and financial position.

      In November  2001,  the  Emerging  Issues Task Force  ("EITF") of the FASB
      reached a consensus on Issue No. 01-14, "Income Statement Characterization
      of  Reimbursements  Received  for  `Out-of-Pocket'  Expenses  Incurred." A
      consensus  was reached  that  reimbursements  received  for  out-of-pocket
      expenses  incurred  should  be  characterized  as  revenue  in the  income
      statement.   The  Company  adopted  01-14  effective   February  1,  2002.
      Reimbursements  of  out-of-pocket  expenses were not significant in any of
      the periods presented.

4.    STOCKHOLDERS' EQUITY

      Private Placement of Common Stock:

      On October 29, 2001, the Company sold  1,159,716  shares of class A common
      stock and warrants to purchase  347,915 shares of class A common stock for
      gross proceeds of $3,189,219. The warrants are immediately exercisable and
      have an exercise  price of $3.58 per share.  The warrants are  exercisable
      for a  five-year  period.  The  Company  may redeem the  warrants,  at its
      option,  at any time  beginning  180-calendar  days  after the sale if the
      closing bid price of the class A common stock exceeds 200% of the exercise
      price for a period of 30 consecutive trading days. The redemption price is
      ten cents per warrant.

      In  connection  with the private  placement  the Company  incurred fees of
      $152,511,  of which  $35,000 has been paid in cash and  $117,511  has been
      paid by  issuing  warrants  to  purchase  50,000  shares of class A common
      stock.  The warrants have  substantially  the same terms and conditions as
      the warrants issued in the private placement.

      Approximately  20%, or $635,000,  of the gross proceeds were received from
      directors and officers, or entities with which the Company's directors are
      affiliated.

      Warrant Exchange Offer:

      The Company  commenced a warrant  exchange  offer on April 23,  2002.  The
      offer was extended to investors who participated in the private  placement
      on  October  29,  2001  and to  holders  of  warrants  issued  as  fees in
      connection  with such private  placement.  The offer  lowered the exercise
      price of the warrants issued in the private placement to $2.50 per class A
      common share for those  investors that agreed to exercise those  warrants.
      In  addition,  for each class A common  share  purchased  pursuant  to the
      warrant  exercise,  a new  warrant  (the "New  Warrants")  to  purchase an
      equivalent  number of class A common  shares was issued.  The New Warrants
      have an  exercise  price of $3.50  per  share  and are  exercisable  for a
      five-year  period.  The New Warrants have the same redemption terms as the
      warrants issued in the private  placement.  The warrant exchange offer was
      originally  set to expire  on April  30,  2002,  but was  extended  by the
      Company's board of directors until May 31, 2002. As of April 30, 2002, the
      Company received $542,247 in proceeds and issued a total of 217,007 shares
      of class A common stock and warrants to purchase 217,007 shares of class A
      common stock.


                                       9
<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002


4.    STOCKHOLDERS' EQUITY (CONTINUED)

      The  Company  valued  the  warrant  exchange  offer and the  newly  issued
      warrants at $461,084 using the  Black-Scholes  pricing model.  This amount
      has been  deducted  from the  Company's net loss to arrive at the net loss
      attributable to common stockholders.

      All of our  directors  and  officers  and  the  entities  with  which  our
      directors are  affiliated  that  participated  in the October 2001 private
      placement discussed above participated in this warrant exchange, providing
      approximately  32%, or $173,180,  of the gross proceeds received from this
      offer as of April 30, 2002.

      Class A and Class B Warrants:

      On  February  18,  2002,  234,140  class A warrants  and  263,835  class B
      warrants  expired.  The  warrants  were  exercisable  for an  aggregate of
      1,002,200 shares of the Company's class A common stock.

      Private Placement Commission Warrants (April 1999):

      On April 29, 2002, 43,350 Private Placement  Commission  Warrants expired.
      The warrants  were  exercisable  for an aggregate of 43,350  shares of the
      Company's class A common stock.

5.    CONTINGENCY

      In October 2000,  Thomas Lipscomb,  a former President and Chief Executive
      Officer of the Company,  commenced an action against Alan Alpern, a former
      officer of the Company,  and against Arthur Medici, a former officer and a
      current director of the Company,  in the Supreme Court of the State of New
      York, County of New York. In the action,  Mr. Lipscomb claims that Messrs.
      Alpern and Medici tortuously interfered with his employment agreement with
      the  Company.  Mr.  Lipscomb  seeks  compensatory  damages of $672,000 and
      punitive  damages of $1  million.  Both  Messrs.  Alpern  and Medici  have
      requested  that the Company  indemnify  them pursuant to its by-laws.  The
      Company is defending the action and currently  considering  such requests.
      It is the  Company's  understanding  that both  Messrs.  Alpern and Medici
      intend to defend the action  vigorously.  The Company is unable to predict
      the ultimate outcome of this claim since this action is in its preliminary
      stage.

      Subsequently,  by Demand for  Arbitration  dated  November 30,  2001,  Mr.
      Lipscomb  commenced an arbitration  against the Company arising out of the
      same alleged breach of his employment agreement that formed the underlying
      basis for his suit against Messrs.  Alpern and Medici. In the arbitration,
      Mr.  Lipscomb  seeks  recovery  of  $614,000  before  interest,  costs and
      attorneys' fees. The Company intends to defend the arbitration  vigorously
      and to predict the  ultimate  outcome of this  claim.  The Company has not
      accrued  any  amount  for this  contingency  as the  possible  loss is not
      probable nor can it be reasonably estimated at this time.

6.    CONCENTRATION OF CREDIT RISK

      No single  customer  accounted for more than 10% of the Company's  revenue
      for the three and  nine-month  periods  ended April 30, 2002 and April 30,
      2001.  No single  customer  accounted  for more than 10% of the  Company's
      accounts receivable as of April 30, 2002 and July 31, 2001.


                                       10
<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002


7.    BUSINESS SEGMENT INFORMATION

      The Company has three operating  segments.  These three operating segments
      are:

      ICC.NET service - Our ICC.NET service, the Company's global Internet-based
      value  added  network,  or VAN,  uses  the  Internet  and our  proprietary
      technology to deliver our  customers'  documents and data files to members
      of their trading communities, many of which may have incompatible systems,
      by  translating  the documents and data files into any format  required by
      the receiver.

      Service  Bureau - Our service  bureau  manages and  translates the data of
      small and mid-sized  companies that exchange EDI data with large companies
      and provides  various EDI and UPC (universal  product code) services.  Our
      service bureau also licenses EDI software.

      Professional   Services  -  Our  professional  services  segment  provides
      comprehensive business-to-business electronic commerce solutions including
      electronic  commerce  infrastructure  solutions and data mapping services.
      Our   professional   services   segment   also   conducts   a  series   of
      product-independent one-day EDI seminars for electronic commerce users.

      The tables below  summarize  information  about  operations and long-lived
      assets of our operating  segments as of and for the three and  nine-months
      ended April 30, 2002 and 2001.

<TABLE>
<CAPTION>

                                                                             Service           Professional
                                                          ICC.NET            Bureau              Services             Total
                                                          -------            ------              --------             -----

<S>                                                    <C>                <C>                    <C>               <C>
Three Months - April 30, 2002
Revenue from external customers                         $ 1,660,461         $   419,567         $   644,554         $ 2,724,582
                                                        ===========         ===========         ===========         ===========

Operating (loss) income                                 $(1,170,251)        $    29,455         $  (662,705)        $(1,803,501)

Other income, net                                            53,166                --                12,161              65,327
                                                        -----------         -----------         -----------         -----------
Net (loss) income                                       $(1,117,085)        $    29,455         $  (650,544)        $(1,738,174)
                                                        ===========         ===========         ===========         ===========

Supplemental segment information:
     Amortization and depreciation                      $   168,827         $    32,611         $   320,753         $   522,191
     Non-cash charges for stock-based
       Compensation                                            --                  --                  --                  --

Nine Months - April 30, 2002
Revenue from external customers                         $ 4,681,202         $ 1,217,959         $ 2,560,947         $ 8,460,108
                                                        ===========         ===========         ===========         ===========

Operating loss                                          $(3,807,528)        $   (32,119)        $(2,101,321)        $(5,940,968)

Other income (expense), net                                 106,095                --               (30,337)             75,758
                                                        -----------         -----------         -----------         -----------
Net loss                                                $(3,701,433)        $   (32,119)        $(2,131,658)        $(5,865,210)
                                                        ===========         ===========         ===========         ===========

Supplemental segment information:
     Amortization and depreciation                      $   574,602         $    72,953         $   988,060         $ 1,635,615
     Non-cash charges for stock-based compensation             --                  --               190,019             190,019

As of April 30, 2002
Property and equipment, net                             $   668,841         $    65,211         $   548,940         $ 1,282,992
Software development costs, net                              59,324             330,105                --               389,429
Goodwill                                                     26,132           2,167,935           1,710,617           3,904,684
Other intangible assets, net                                   --                  --             3,346,000           3,346,000
                                                        -----------         -----------         -----------         -----------
Long lived assets, net                                  $   754,297         $ 2,563,251         $ 5,605,557         $ 8,923,105
                                                        ===========         ===========         ===========         ===========
</TABLE>


                                       11
<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002

<TABLE>
<CAPTION>

7.       BUSINESS SEGMENT INFORMATION (CONTINUED)

                                                                               Service         Professional
                                                            ICC.NET            Bureau          Services (A)          Total
                                                            -------            ------          ------------          -----
<S>                                                       <C>                <C>                <C>                <C>
         Three Months - April 30, 2001
         Revenue from external customers                  $  1,602,157       $    329,319       $  1,109,992       $  3,041,468
                                                          ============       ============       ============       ============

         Operating loss                                   $ (2,024,387)      $   (104,650)      $ (3,699,927)      $ (5,828,964)
         Other income, net                                      70,396               --               (3,406)            66,990
         Income tax benefit                                    344,300               --            1,261,080          1,605,380
                                                          ------------       ------------       ------------       ------------
         Net loss                                         $ (1,609,691)      $   (104,650)      $ (2,442,253)      $ (4,156,594)
                                                          ============       ============       ============       ============

         Supplemental segment information:
              Amortization and depreciation               $    239,132       $     70,606       $  1,010,726       $  1,320,464
              Impairment of acquired intangibles          $       --         $       --         $  1,871,900          1,871,900

         Nine Months - April 30, 2001

         Revenue from external customers                  $  3,542,234       $  1,086,504       $  2,311,500       $  6,940,238
                                                          ============       ============       ============       ============

         Operating loss                                   $ (8,154,411)      $   (114,581)      $ (5,855,510)      $(14,124,502)
         Other income, net                                     369,234               --               36,138            405,372
         Income tax benefit                                    344,300               --            1,261,080          1,605,380
                                                          ------------       ------------       ------------       ------------
         Net loss                                         $ (7,440,877)      $   (114,581)      $ (4,558,292)      $(12,113,750)
                                                          ============       ============       ============       ============

         Supplemental segment information:
              Amortization and depreciation               $    687,368       $    191,765       $  2,022,402       $  2,901,535
              Impairment of acquired intangibles          $       --         $       --         $  1,871,900       $  1,871,900

         As of April 30, 2001
         Property and equipment, net                      $  1,097,312       $     79,931       $  1,038,629       $  2,215,872
         Software development costs, net                       296,620             74,231               --              370,851
         Goodwill, net                                          65,331          2,244,944         16,252,389         18,562,664
         Other intangible assets, net                             --                 --            7,185,300          7,185,300
                                                          ------------       ------------       ------------       ------------
         Long lived assets, net                           $  1,459,263       $  2,399,106       $ 24,476,318       $ 28,334,687
                                                          ============       ============       ============       ============
</TABLE>

(A) - The Company's  professional  services  segment was acquired on November 6,
2000.


                                       12
<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002


8.    GOODWILL AND OTHER INTANGIBLE ASSETS

      In July 2001, the FASB issued SFAS No. 141,  "Business  Combinations"  and
      SFAS No.  142,  "Goodwill  and  Other  Intangible  Assets."  SFAS No.  141
      requires  that all business  combinations  subsequent to June 30, 2001, be
      accounted for under the purchase  method of  accounting.  SFAS No.141 also
      requires  that  the fair  value  of an  assembled  workforce  acquired  be
      included  in the  amount  initially  recorded  as  goodwill.  The  Company
      reclassified  into  goodwill   $1,710,617   initially  recorded  as  other
      intangible assets related to the value of the assembled  workforce of RTCI
      as required by this  statement.  SFAS No. 142 requires that upon adoption,
      amortization  of goodwill will cease;  and instead,  the carrying value of
      goodwill  will be evaluated  for  impairment  on at least an annual basis.
      SFAS No. 142 is effective for fiscal years  beginning  after  December 15,
      2001;  however,  the Company has adopted this standard as of the beginning
      of its 2002 fiscal year, August 1, 2001, as permitted under the provisions
      of SFAS No. 142. The Company has evaluated goodwill for impairment and has
      determined  that no  impairment  exists at August 1, 2001.  The  Company's
      reporting units utilized for evaluating the recoverability of goodwill are
      the same as its operating segments.

      The  following  table reports the amounts that net loss and loss per basic
      and diluted  share would have been in all periods  presented  exclusive of
      goodwill amortization expense recognized in those periods.

<TABLE>
<CAPTION>

                                                  Three Months Ended                        Nine Months Ended
                                                       April 30,                                April 30,
                                          ---------------------------------         -----------------------------------
                                              2002                 2001                 2002                 2001
                                          ------------         -------------        -------------        --------------

<S>                                       <C>                  <C>                  <C>                  <C>
Reported net loss                         $  (1,738,174)       $  (4,156,594)       $  (5,865,210)       $  (12,113,750)
Add:  Goodwill amortization                       --                 543,817                 --               1,155,007
                                          -------------        -------------        -------------        --------------
Adjusted net loss                         $  (1,738,174)       $  (3,612,777)       $  (5,865,210)       $  (10,958,743)
                                          =============        =============        =============        ==============


Reported basic and diluted loss per
  common share                            $       (0.21)       $       (0.45)       $       (0.62)       $        (1.47)
Add:  Goodwill amortization                        --                   0.06              --                       0.14
                                          -------------        -------------        -------------        --------------
Adjusted basic and diluted                $       (0.21)       $       (0.39)       $       (0.62)       $        (1.33)
loss per share                            =============        =============        =============        ==============
</TABLE>

      At April 30, 2002,  other  intangible  assets consisted of the proprietary
      technology acquired in the acquisition of RTCI. The proprietary technology
      is being  amortized  over five  years and  amortization  expense  has been
      recorded in cost of  services.  Additional  information  on the  Company's
      other intangible assets is as follows:

                                  As of April 30, 2002     As of July 31, 2001
                               -------------------------  ----------------------
                                 Gross                     Gross
                                Carrying    Accumulated   Carrying   Accumulated
                                 Value      Amortization   Value    Amortization
                               -----------  ------------  --------- ------------

Amortized intangible assets
     Proprietary technology     4,780,000    1,434,000    4,780,000      717,000
     Assembled workforce             --           --      2,154,595      299,741
                               ----------   ----------   ----------   ----------
Total                          $4,780,000   $1,434,000   $6,934,595   $1,016,741
                               ==========   ==========   ==========   ==========

      The Company did not have any indefinite lived intangible  assets that were
      not subject to  amortization  as of April 30, 2002 or as of July 31, 2001.
      The  aggregate  amortization  expense  for  other  intangible  assets  was
      approximately $717,000 and $938,800 during the nine months ended April 30,
      2002 and April 30, 2001, respectively.

      At July 31,  2001,  estimated  amortization  expense  for the  five  years
      commencing  August  1,  2002  related  to other  intangible  assets  is as
      follows:

                  2002      $956,000
                  2003      $956,000
                  2004      $956,000
                  2005      $956,000
                  2006      $239,000

                                       13

<PAGE>

INTERNET COMMERCE CORPORATION

Notes to Consolidated Financial Statements
April 30, 2002


9.    SUPPLEMENTAL NON-CASH DISCLOSURES TO STATEMENT OF CASH FLOWS

      The Company had the following non-cash investing and financing activities:

                                                     Nine Months Ended April 30,
                                                     ---------------------------
                                                         2002           2001
                                                      ----------     ----------
 Issuance of common stock for dividends
   on preferred stock                                 $   400,000    $      --
 Issuance of common stock for services                     77,400           --
 Property acquired under capital leases                    51,804         44,945
 Amounts related to business acquisition:
      Fair value of assets acquired, net
      of cash acquired, less:                                --       28,492,257
                                                      -----------    -----------
              Liabilities assumed                            --        1,921,092
              Fair value of equity instruments
                issued                                       --       20,529,624
              Note receivable                                --        5,000,000
              Transactions costs paid in
                prior period                                 --          369,486
              Transaction costs accrued                      --          650,000
                                                      -----------    -----------

                                                             --       28,470,202
                                                      -----------    -----------
       Payment for purchase of
         acquisitions, net of cash acquired                  --           22,055


10.   SUBSEQUENT EVENT

      As of May 31, 2002, and subsequent to April 30, 2002, the Company received
      an additional  $116,770 in proceeds and issued a total of 46,708 shares of
      class A common  stock and  warrants to purchase  46,708  shares of class A
      common stock.



                                       14

<PAGE>

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

      This Quarterly  Report on Form 10-Q contains a number of  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities  Act"), and Section 21E of the Securities  Exchange Act
of 1934, as amended (the "Exchange  Act").  Specifically,  all statements  other
than statements of historical  facts included in this Quarterly Report regarding
our financial position, business strategy and plans and objectives of management
for future  operations are  forward-looking  statements.  These  forward-looking
statements are based on the beliefs of management,  as well as assumptions  made
by and information currently available to management.  When used in this report,
the  words  "anticipate,"   "believe,"   "estimate,"  "expect,"  "may,"  "will,"
"continue" and "intend," and words or phrases of similar import,  as they relate
to our  financial  position,  business  strategy  and plans,  or  objectives  of
management,   are  intended  to  identify  forward-looking   statements.   These
"cautionary  statements"  reflect our current view with respect to future events
and are  subject  to risks,  uncertainties  and  assumptions  related to various
factors including, without limitation, those listed below the heading "Overview"
and  in  our  registration  statements  and  periodic  reports  filed  with  the
Securities  and Exchange  Commission  under the  Securities Act and the Exchange
Act.

      Although we believe that our expectations are reasonable, we cannot assure
you  that our  expectations  will  prove  to be  correct.  Based  upon  changing
conditions,  should any one or more of these risks or uncertainties materialize,
or should any underlying  assumptions  prove incorrect,  actual results may vary
materially  from  those  described  in this  Quarterly  Report  as  anticipated,
believed, estimated, expected or intended.

      In this Item 2,  references to the "Company",  "we",  "our", or "us", mean
Internet Commerce Corporation.

Overview

      We  are  a  leader  in  the   electronic   commerce   business-to-business
communication   services  market  that  provides  complete  electronic  commerce
infrastructure  solutions.  Our business operates in three segments: our ICC.Net
service, our professional services and our service bureau.

      Our ICC.NET  service,  the  Company's  global  Internet-based  value added
network, or VAN, uses the Internet and our proprietary technology to deliver our
customers'  documents  and data files to members of their  trading  communities,
many of which may have  incompatible  systems,  by translating the documents and
data files into any format required by the receiver. We believe that our ICC.NET
service has significant  advantages over  traditional  VANs, and email-based and
other  Internet-based  systems,  because our  service has a lower cost,  greater
transmission  speed  and  more  features,  including  authentication  and  audit
services.  Our  professional  services  segment  facilitates the development and
operations of comprehensive  business-to-business electronic commerce solutions.
Our  service  bureau  manages  and  translates  the data of small and  mid-sized
companies that exchange EDI data with large companies.

      Through  July 2000,  our  business  was  entirely  focused on our  ICC.NET
service.  During fiscal 2001, we made two acquisitions that enable us to offer a
more  complete  range of  services  and allow  our  customers  to  expand  their
electronic  commerce trading  communities and bridge their legacy systems to the
Internet.

      In August  2000,  we acquired  IDC through  which we acquired  our service
bureau.  IDC  is  engaged  in  the  development,   marketing,   sale  and  other
exploitation  of  business-to-business  EDI  standards-based   applications  for
standard-based  EDI exchange over VANs, private networks,  exchanges,  extranets
and the Internet.

      In November 2000, we completed the  acquisition of RTCI,  through which we
acquired our  professional  services  segment.  RTCI is an  electronic  commerce
infrastructure  solutions  company serving the  business-to-business  electronic
commerce market. RTCI helps its clients conduct business  electronically through
a continuum of services including eConsulting, data transformation mapping (EDI,
EAI, XML) and  internetworking.  RTCI has developed a business model that offers
remote service delivery,  fixed and value-based  pricing and reusable solutions.
Subsequent  to the  acquisition,  due to a reduction of the workforce of RTCI, a
steep decline in value of companies similar to RTCI,  continued operating losses
and a significant  reduction in the forecasted  future operating  profits of our
professional services segment,  management determined that triggering events had
occurred  related to certain  intangible  assets.  Projected  cash flow analysis
related to those  assets  determined  that the assets had been

                                       15
<PAGE>

impaired.  These  intangible  assets were written  down to estimated  fair value
based on the related discounted expected future cash flows in fiscal year 2001.

      We rely on many of our competitors to  interconnect,  at reasonable  cost,
with  our  service.  We have  interconnection  arrangements  with  more  than 50
business-to-business  networks  for the  benefit  of our  customers.  Two of the
largest  networks,  GE Global Exchange  Services ("GXS") and Sterling  Commerce,
which we believe account for  approximately 60% of the estimated EDI users, have
chosen to discontinue  their  interconnect  arrangements  with the Company.  GXS
discontinued its interconnection with our service in September 2001 and Sterling
Commerce  discontinued its interconnection with our service on April 8, 2002. We
have entered into arrangements with Peregrine Systems,  Inc. and IBM Corporation
so our  customers  can  continue to  communicate  through us with their  trading
communities.  As a result of these  new  interconnection  arrangements,  we will
incur  additional  costs and may lose existing  customers if the arrangements we
have provided are inadequate for their business purposes.  We believe,  however,
that the arrangements we have made will satisfy our existing  customers and that
our  business  and  financial  condition  will not be  materially  or  adversely
affected as a result of these new arrangements.

Critical  Accounting  Policies  and  Significant  Use of  Estimates in Financial
Statements

      The Securities and Exchange  Commission ("SEC") recently issued disclosure
guidance  for  "critical   accounting   policies."  The  SEC  defines  "critical
accounting  policies" as those that require  application  of  management's  most
difficult,  subjective  or complex  judgments,  often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods.

      The following list of critical accounting policies is not intended to be a
comprehensive list of all of our accounting policies. Our significant accounting
policies  are  more  fully  described  in Note 2 to the  consolidated  financial
statements  included  in our Annual  Report on Form  10-K.  In many  cases,  the
accounting  treatment of a particular  transaction is  specifically  dictated by
generally accepted accounting  principles with no need for management's judgment
in their  application.  There are also areas in which  management's  judgment in
selecting any  available  alternative  would not produce a materially  different
result. We have identified the following to be critical  accounting  policies of
the Company:

      Revenue Recognition: The Company derives its revenue from subscriptions to
its ICC.NET  service,  which include  transaction,  mailbox and fax transmission
fees. The  subscription  fees are comprised of both fixed and usage-based  fees.
Fixed subscription fees are recognized on a pro-rata basis over the subscription
period, generally one year. Usage fees are recognized in the period the services
are rendered.  The Company also derives revenue through  implementation fees and
interconnection  fees.  Implementation  fees are recognized over the life of the
subscription period. Interconnection fees are fees charged to connect to another
VAN service and are  recognized  when the data is  transmitted  to the connected
service.

      The  Company  also  provides  a  broad  range  of  professional   services
consisting of EDI and electronic commerce consulting,  data mapping services and
EDI education and training at seminars hosted by leading universities around the
United States. Revenue from EDI and electronic commerce consulting and education
and training are  recognized  when the services are provided.  Revenue from data
mapping services are recognized when the map has been completed and delivered to
the  customer.  Revenue  from  fixed  fee  professional  service  contracts  are
recognized  using  the   percentage-of-completion   method  of  accounting,   as
prescribed by SOP 81-1  "Accounting  for  Performance of  Construction-Type  and
Certain Production-Type Contracts."

      The percentage of completion for each contract is determined  based on the
ratio of direct  labor hours  incurred  to total  estimated  direct  labor hours
required to complete  the  contract.  The  Company  may  periodically  encounter
changes in  estimated  costs and other  factors that may lead to a change in the
estimated  profitability  of a  fixed-price  contract.  In  such  circumstances,
adjustments to cost and profitability  estimates are made in the period in which
the underlying  factors requiring such revisions become known. If such revisions
indicate a loss on a contract, the entire loss is recorded at such time. Amounts
billed in advance of services being performed are recorded as deferred  revenue.
Certain fixed-fee contracts may have substantive customer acceptance provisions.
The acceptance  terms  generally  include a single review and revision cycle for
each   deliverable   to  incorporate   the  customer's   suggested  or  required
modifications.  Deliverables  are  considered  accepted  upon  completion of the
review and revision and revenue is recognized upon acceptance.


                                       16
<PAGE>

      The Company also derives revenue from its service  bureau.  Service bureau
revenues are comprised of EDI services,  including  data  translation  services,
purchase order and invoice  processing from EDI-to-print and  print-to-EDI,  UPC
services, including UPC number generation, UPC catalog maintenance and UPC label
printing.  The service bureau also derives  revenue from software  licensing and
provides software maintenance and support. Revenue from the EDI services and UPC
services is recognized when the services are provided.  The Company accounts for
its EDI software  license  sales in  accordance  with the American  Institute of
Certified  Public  Accountants'  Statement of Position 97-2,  "Software  Revenue
Recognition", as amended. Revenue from software licenses are recognized when all
of the following conditions are met: (1) a non-cancelable non-contingent license
agreement  has been signed;  (2) the software  product has been  delivered;  (3)
there are no  material  uncertainties  regarding  customer  acceptance;  and (4)
collection  of the  resulting  receivable  is probable.  Revenue  from  software
maintenance  and support  contracts are recognized  ratably over the life of the
contract.  The Company's  software license revenue was not significant in any of
the periods presented.

      In  addition,   SOP  97-2,   generally   requires  revenue  from  software
arrangements  involving multiple elements to be allocated to each element of the
arrangement based on the relative fair values of the elements,  such as software
licenses,  post  contract  customer  support,   installation,  or  training  and
recognized  as the  element is  delivered  and the  Company  has no  significant
remaining performance  obligations.  The Company's multiple element arrangements
generally consist of a software license and post contract  support.  The Company
allocates the aggregate  revenues from  multiple  element  arrangements  to each
element based on vendor specific objective evidence. The Company has established
vendor specific objective evidence for each of the elements as it sells both the
software and post contract  customer  support  independent  of multiple  element
agreements.  Customers  are charged  standard  prices for the  software and post
contract  customer  support  and  theses  prices  do not vary from  customer  to
customer.

      If the  Company  enters into a multiple  element  agreement  where  vendor
specific  objective  evidence of fair value for each element of the  arrangement
does not exist,  all revenue from the arrangement is deferred until all elements
of the arrangement are delivered.

      Service revenue from maintenance  contracts is recognized ratably over the
term of the  maintenance  contract,  on a  straight-line  basis.  Other  service
revenue is recognized at the time the service is performed.

      Goodwill:  Goodwill  consists of the excess  purchase  price over the fair
value of identifiable net assets of acquired  businesses.  The carrying value of
goodwill is evaluated for impairment on an annual basis. Management also reviews
goodwill for impairment  whenever  events or changes in  circumstances  indicate
that the carrying  amount of goodwill may be impaired.  If it is determined that
an  impairment  in value has  occurred,  goodwill  will be  written  down to the
present value of the expected future operating cash flows to be generated by the
respective reporting unit. The Company has evaluated goodwill for impairment and
has  determined  that no  impairment  exists at August 1,  2001.  The  Company's
reporting units utilized for evaluating the  recoverability  of goodwill are the
same as its operating segments.

      Other Intangible Assets:  Other Intangible assets are carried at cost less
accumulated   amortization.   Other   intangible   assets  are  amortized  on  a
straight-line  basis over their expected  lives,  which are estimated to be five
years. The Company did not have any indefinite lived intangible assets that were
not subject to amortization

      Impairment  of  long-lived  assets.  Long-lived  assets of the Company are
reviewed for impairment  whenever  events or changes in  circumstances  indicate
that the carrying  amount of the asset may not be  recoverable.  Management also
reevaluates  the  periods of  amortization  of  long-lived  assets to  determine
whether events and circumstances  warrant revised estimates of useful lives. The
Company evaluates the carrying value of its long-lived assets in relation to the
operating  performance  and  future  undiscounted  cash  flows of the asset when
indications of impairment are present. If it is determined that an impairment in
value has occurred, the excess of the value of the asset will be written down to
the present value of the expected future operating cash flows to be generated by
the asset.

      Stock-based  compensation:   The  Company  accounts  for  its  stock-based
compensation  arrangements  with its employees in accordance with the provisions
of Accounting  Principles Board Opinion No. 25,  "Accounting for Stock Issued to
Employees" and complies with the disclosure  provisions of SFAS 123, "Accounting
for Stock-based Compensation." SFAS 123 established a fair-value-based method of
accounting  for   stock-based   compensation   plans.   Stock-based   awards  to
nonemployees  are accounted for at fair value in accordance  with the provisions
of SFAS 123.

                                       17
<PAGE>

      Income  Taxes:  We have a  history  of  unprofitable  operations  from the
operating losses incurred, which generated significant state and federal tax net
operating losses, or NOL carryforward.  GAAP requires that we record a valuation
allowance against the deferred tax asset associated with this NOL if it is "more
likely than not" that we will not be able to utilize it to offset  future taxes.
Due to our  history of  unprofitable  operations,  we have  recorded a valuation
allowance equal to 100% of these deferred tax assets.

      It is  possible,  however,  that we could be  profitable  in the future at
levels which cause  management  to conclude that it is more likely than not that
we will realize all or a portion of the NOL  carryforward.  Upon reaching such a
conclusion,  we would  immediately  record the estimated net realizable value of
the deferred tax asset at that time and would then provide for income taxes at a
rate  equal to our  combined  federal  and  state  effective  rates.  Subsequent
revisions to the estimated net realizable  value of the deferred tax asset could
cause our  provision  for  income  taxes to vary  significantly  from  period to
period, although our cash tax payments would remain unaffected until the benefit
of the NOL is utilized.

      Use of Estimates.  The  preparation of financial  statements in conformity
with accounting  principles  generally  accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial statements and reported amounts of revenue and expense
during the reporting  period.  Actual results could differ from those estimates.
The following  discussion reviews items incorporated in our financial statements
that required the use of significant management estimates.

      In connection with our purchase of Intercoastal  Data Corporation  ("IDC")
and  Research  Triangle  Commerce,   Inc.  ("RTCI"),   we  allocated  the  total
acquisition  costs  to all  tangible  and  intangible  assets  acquired  and all
liabilities  assumed,  with the excess purchase price over the fair value of net
assets acquired  recorded to goodwill.  To arrive at the allocation of the total
purchase price,  management used the best information  available to make certain
assumptions  in  estimating  the fair market value of IDC's and RTCI's  tangible
assets,  intangible  assets (such as trademarks,  brand,  intellectual  property
rights to developed technology, and customer lists) and liabilities.

      Impairment of acquired  intangibles  in the amount of $1,872,000  resulted
from a  reduction  of  the  workforce  of  RTCI  during  and  subsequent  to the
three-month  period ended April 30, 2001. The workforce of RTCI was recorded at
its estimated  fair value at the time of the merger.  The value of the workforce
was impaired approximately 50% by the reduction of RTCI personnel.

      In March 2000, ICC granted an option to purchase 100,000 shares of class A
common stock pursuant to a consulting  agreement with a former executive officer
and board member. The Black-Scholes  option-pricing  model was used to determine
the market value of these  options,  which  required  management to make certain
estimates for values of variables  used by the model.  Management  estimated the
values  for  stock  price  volatility,  the  expected  life of the  options  and
risk-free rate based on information that was available to management at the time
the  Black-Scholes   option-pricing   calculations   were  performed.   Non-cash
consulting  charges for this stock option  amounted to $450,000 in the 2001 Nine
Months.

      In connection  with a warrant  exchange  offer in April 2002,  the Company
valued  the  repriced  and  newly   issued   warrants  at  $461,084   using  the
Black-Scholes  pricing  model.  This amount has been deducted from the Company's
net loss to increase the net loss attributable to common stockholders.



                                       18
<PAGE>

Three  Months  Ended April 30, 2002  Compared  with Three Months Ended April 30,
2002.

Results of Operations - Consolidated

The following table reflects  consolidated  operating data by reported segments.
All significant intersegment activity has been eliminated.  Accordingly, segment
results reported  exclude the effect of transactions  between our subsidiary and
us.


                                                       Three Months Ended
                                                            April 30,
                                                --------------------------------
 Consolidated loss before income taxes:              2002              2001
                                                 ------------       -----------

ICC.Net                                          $ (1,117,085)      $(1,945,365)
Service Bureau                                         29,455          (104,650)
Professional Services                                (650,544)       (3,711,959)
                                                 ------------       -----------
Consolidated loss before income taxes              (1,738,174)      $(5,761,974)
                                                 ============       ===========

Results of Operations - ICC.Net

      Our ICC.NET  service,  the  Company's  global  Internet-based  value added
network, or VAN, uses the Internet and our proprietary technology to deliver our
customers'  documents  and data files to members of their  trading  communities,
many of which may have  incompatible  systems,  by translating the documents and
data  files  into any format  required  by the  receiver.  The  following  table
summarizes operating results for our ICC.Net service:

                                                          Three Months Ended
                                                              April 30,
                                                   -----------------------------
                                                        2002            2001
                                                   ------------     ------------
      Revenue:
          Services not including Triaton Joint
            Services Agreement                     $  1,660,461     $ 1,102,157
          Services performed under Triaton Joint
            Services Agreement                               --         500,000
                                                     --------------  -----------
                                                      1,660,461       1,602,157
      Expenses:
          Cost of services                              924,318         903,094
          Product development and enhancement           198,292         158,216
          Selling and marketing                         713,278         924,865
          General and administrative                    994,824       1,640,369
                                                    -----------     -----------
                                                      2,830,712       3,626,544
                                                    -----------     -----------
      Operating loss                                 (1,170,251)     (2,024,387)
                                                    -----------     -----------
      Other income, net                                  53,166          79,022
                                                    -----------     -----------
                                                    $(1,117,085)    $(1,945,365)
      Loss before income taxes                      ===========     ===========

      Revenue - ICC.Net - Revenue  related  to our  ICC.NET  service  was 61% of
consolidated revenue for the quarter ended April 30, 2002 ("2002 Quarter").  Our
ICC.NET service revenue  increased  $58,000 in the 2002 Quarter from the quarter
ended April 30, 2001 ("2001  Quarter").  The 2001 Quarter  included  $500,000 of
fees from Triaton GmbH, a subsidiary of ThyssenKrupp  Information Services GmbH,
under a Joint  Services  Agreement  dated  July  28,  2000.  No such  fees  were
recognized  in the 2002  Quarter.  Transaction  fees  from our  ICC.NET  service
increased  $692,000 as a result of a larger billable customer base and increased
volume usage by new and existing customers.


                                       19
<PAGE>

      Cost of  services - ICC.Net - Cost of  services  relating  to our  ICC.NET
service  was 56% of  revenue  derived  from the  service  in the  2002  Quarter,
compared to 56% of revenue in the 2001 Quarter.  Cost of services related to our
ICC.Net  service  consists  primarily  of salaries  and  employee  benefits  and
connectivity  fees.  Connectivity fees are those costs that we incur to transmit
data electronically. These fees include charges from other VANS and charges from
Internet service  providers.  We reduced our cost of services personnel to 23 at
the end of the  2002  Quarter  from 46 at the end of the 2001  Quarter  and as a
result we were able to reduce  salaries and benefits  $196,000.  However,  these
savings were partially offset by our increase in cost for  connectivity  fees of
$118,000 in the 2002 Quarter from the 2001 Quarter. The increase in connectivity
fees was primarily  due to  additional  fees incurred to offer our customers and
their trading partners alternative  connectivity as a result of GXS and Sterling
disconnecting  our service from their  networks.  We anticipate that our ICC.NET
cost of services will decline as a percentage  of revenue in future  periods due
to increased  utilization of our existing  communications  infrastructure  as we
expect the use of our service to increase.

      Product  development and  enhancement - ICC.Net - Product  development and
enhancement costs relating to our ICC.Net service consists primarily of salaries
and employee benefits. The increase of $21,000 in the 2002 Quarter from the 2001
Quarter  was  primarily  the  result of  additional  costs  due to  implementing
alternative  connectivity of our ICC.NET service as a result of GXS and Sterling
disconnecting  our service  from their  networks and other  enhancements  in the
amount of  $232,000.  This was  partially  offset by a decrease  of  $163,000 in
salaries  and  employee  benefits  which were  realized  as a result of reducing
staffing to thirteen  employees in the 2002 Quarter from  nineteen  employees in
the 2001  Quarter.  The  reduction  in  employees  was  necessary  to reduce our
operating  expenses  in order to reach  our  goal of cash  flow  breakeven.  The
reduction in employees did not affect the quality or reliability of our service;
however,  a number of  enhancement  projects  were  postponed  as a result.  The
postponement of some of these enhancement projects has delayed the initiation of
service to certain customers.

      Selling and marketing - ICC.Net - Selling and marketing  expenses relating
to our ICC.Net  service  consist  primarily of salaries  and employee  benefits,
advertising and tradeshow costs and travel-related  costs. Selling and marketing
expenses  related to our  ICC.NET  service  were  reduced  $212,000  in the 2002
Quarter  from the 2001  Quarter.  We reduced  advertising  and  tradeshow  costs
$48,000  and  travel-related  costs  $32,000 in the 2002  Quarter  from the 2001
Quarter  as a result  of our cost  reduction  efforts  to  achieve  to cash flow
breakeven.  In  addition,  consulting  fees  decreased  $48,000 as a result of a
branding project that was completed in the 2001 Quarter.

      General and administrative - ICC.Net - General and administrative expenses
supporting  our ICC.NET  service  consist  primarily  of salaries  and  employee
benefits,   facility  costs  and  legal  and  professional   fees.  General  and
administrative  costs supporting our ICC.Net service  decreased  $645,000 in the
2002 Quarter. Legal and professional fees increased $238,000 in the 2002 Quarter
primarily as a result of exploring legal remedies available to us as a result of
GXS and Sterling disconnecting our service from their networks.  Consulting fees
decreased $74,000 as a result of the termination of a consulting contract with a
former  officer of the Company  that  resulted in a charge in the 2001  Quarter.
Also,  depreciation and amortization decreased $133,000 primarily as a result of
the Company's  implementation  of SFAS No. 142,  effective August 1, 2001, which
requires  goodwill to be tested for impairment on a periodic basis and no longer
permits the  amortization of goodwill.  The 2001 Quarter  included  severance of
$438,000, due to the termination of an officer. In addition, expenses associated
with the integration of the information  systems of acquired  companies amounted
to $256,000. No such expenses were incurred in the 2002 Quarter.

      Other  income -  ICC.Net  - Other  income  decreased  as a result of lower
average  cash  balances in the 2002  Quarter  compared to the 2001  Quarter.  In
addition,  we had realized  gains from the sale of marketable  securities in the
amount of $42,000 in the 2002 Quarter.  No realized gains were recognized in the
2001 Quarter.


                                       20
<PAGE>

Results of Operations - Service Bureau

      Our service  bureau manages and translates the data of small and mid-sized
companies that exchange EDI data with large  companies and provides  various EDI
and UPC (universal product code) services.  Our service bureau also licenses EDI
software.  The  following  table  summarizes  operating  results for our service
bureau:

                                                            Three Months Ended
                                                                April 30,
                                                       -------------------------
                                                          2002           2001
                                                        --------      ---------
Revenue:
  Services                                             $ 419,567      $ 329,319
                                                       ---------      ---------

Expenses:
    Cost of services                                     208,685        169,532
    Product development and enhancement                   32,164         78,796
    Selling and marketing                                 34,501         34,947
    General and administrative                           114,762        150,694
                                                       ---------      ---------
                                                         390,112        433,969
                                                       ---------      ---------

Operating income (loss)                                   29,455       (104,650)
                                                       ---------      ---------

Other income, net                                           --             --
                                                       ---------      ---------

Income (loss) before income taxes                      $  29,455      $(104,650)
                                                       =========      =========

      Revenue - Service  Bureau - Revenue  related to our service bureau was 15%
of the 2002  Quarter  consolidated  revenue.  The service  bureau's  revenue was
primarily  generated  from services  performed,  customer  support and licensing
fees.  The  increase  in  revenue  of  $90,000  was  primarily  the result of an
increased demand for barcode label printing from existing customers.

      Cost of  services  - Service  Bureau - Cost of  services  relating  to our
service  bureau was 50% of revenue  derived from the service  bureau in the 2002
Quarter,  compared to 51% of revenue derived from the service bureau in the 2001
Quarter.  Cost of services  related to our service bureau consists  primarily of
salaries and employee  benefits.  The increase in cost of services was primarily
the result of an  increase  in  salaries  and  employee  benefits as a result of
hiring  employees that were previously  outsourced  from a temporary  employment
agency.

      Product development and enhancement - Service Bureau - Product development
and  enhancement  costs  consist  primarily of salaries  and employee  benefits.
Product  development  and  enhancement  costs  incurred  by our  service  bureau
decreased  $47,000 in the 2002 Quarter from the 2001  Quarter.  The decrease was
primarily  attributable  to a decrease in salaries  and  employee  benefits as a
result of  reduced  staffing  in the 2002  Quarter  from the 2001  Quarter.  The
reduced staffing did not have any impact on future or existing projects.

      Selling and marketing - Service  Bureau - Selling and  marketing  expenses
relating to our service  bureau  consist  primarily  of  salaries  and  employee
benefits.

      General and  administrative - Service Bureau - General and  administrative
expenses  relating to our  service  bureau  consist  primarily  of salaries  and
employee benefits.



                                       21
<PAGE>

Results of Operations - Professional Services

      Our    professional     services     segment    provides     comprehensive
business-to-business electronic commerce solutions including electronic commerce
infrastructure  solutions and data mapping services.  Our professional  services
segment also conducts a series of  product-independent  one-day EDI seminars for
electronic commerce users. The following table summarizes  operating results for
our professional services:

                                                          Three Months Ended
                                                              April 30,
                                                   -----------------------------
                                                       2002            2001
                                                   -----------      -----------
Revenue:
  Services                                         $   644,554      $ 1,109,992
                                                   -----------      -----------

Expenses:
    Cost of services                                   730,738        1,405,783
    Selling and marketing                              175,121          402,579
    General and administrative                         401,400        1,129,657
    Impairment of acquired intangible                     --          1,871,900
                                                   -----------      -----------
                                                     1,307,259        4,809,919
                                                   -----------      -----------

Operating loss                                        (662,705)      (3,699,927)

Other income (expense), net                             12,161          (12,032)
                                                   -----------      -----------

Loss before income taxes                           $  (650,544)     $(3,711,959)
                                                   ===========      ===========

      Revenue - Professional services - Revenue related to professional services
was  24% of the  2002  Quarter  consolidated  revenue.  Revenue  generated  from
professional services consists of consulting,  educational and mapping services.
As a result of the  continuing  economic  slowdown,  revenue  from  professional
services has decreased $465,000. In addition, the impact of headcount reductions
also contributed to a decrease in revenue.

      Cost of services -  Professional  Services - Cost of services  relating to
professional  services was 113% of revenue derived from professional services in
the 2002  Quarter,  compared  to 127% of  revenue in the 2001  Quarter.  Cost of
services related to our professional services consists primarily of salaries and
employee  benefits,  contract labor and depreciation and amortization.  Salaries
and employee benefits relating to our professional  services  decreased $156,000
in the 2002  Quarter,  compared to the 2001  Quarter  due to a reduction  in the
workforce.  Non-reimbursable  travel-related  expenses  decreased  $130,000 as a
direct  result of the  reduction  in the  workforce.  Contract  labor  decreased
$135,000 as a  consequence  of decreased  revenues.  In  addition,  amortization
decreased  $200,000  as a result of the  impairment  of the  acquired  workforce
recognized at the end of 2001 Quarter.

      Selling and  marketing  -  Professional  Services - Selling and  marketing
expenses relating to our professional services consist primarily of salaries and
employee  benefits.  Selling and marketing  expenses related to our professional
services were reduced  $227,000 in the 2002 Quarter from the 2001  Quarter.  The
decrease in selling and  marketing  expenses  was  primarily  attributable  to a
decrease in salaries  and benefits of $82,000,  primarily  due to a reduction in
the workforce,  and a decrease of $45,000 in travel-related expenses as a result
of the  reduction in workforce.  We also reduced our trade show and  advertising
expenses  in the  amount of  $73,000  as a result  of  focusing  on our  ICC.Net
service. In addition,  we had a $30,000 decrease in amortization of our acquired
customer list, which was impaired in the 2001 Quarter.



                                       22
<PAGE>

      General  and   administrative  -  Professional   Services  -  General  and
administrative  expenses supporting our professional  services consist primarily
of  salaries  and  employee  benefits,   facility  costs  and  depreciation  and
amortization.  General and  administrative  costs  supporting  our  professional
services  decreased  $728,000 in the 2002  Quarter  from the 2001  Quarter.  The
decrease  was  partially   attributable  to  a  decrease  in  depreciation   and
amortization of $478,000,  a result of the Company's  implementation of SFAS No.
142,  effective  August 1,  2001,  which  requires  goodwill  to be  tested  for
impairment  on a  periodic  basis  and no longer  permits  the  amortization  of
goodwill.  The  decrease  was also  attributable  to a decrease in salaries  and
benefits of $166,000 primarily due to a reduction in the workforce. In addition,
we  also  reduced  facility  charges  by  $47,000   primarily  as  a  result  of
renegotiating  the terms of the lease to reduce  office  space from our existing
facility.

Nine Months Ended April 30, 2002 Compared with Nine Months Ended April 30, 2001.

Results of Operations

      The  following  table  reflects  consolidated  operating  data by reported
segment. All significant intersegment activity has been eliminated. Accordingly,
segment  results  reported  exclude  the  effect  of  transactions  between  our
subsidiary and us:

                                                           Nine Months Ended
                                                              April 30,
                                                 -------------------------------
Consolidated loss before income taxes:               2002              2001
                                                 ------------      -------------

ICC.Net                                          $ (3,701,433)     $ (7,785,177)
Service Bureau                                        (32,119)         (114,581)
Professional Services                              (2,131,658)       (5,819,372)
                                                 ------------      ------------
Consolidated loss before income taxes            $ (5,865,210)     $(13,719,130)
                                                 ============      ============

Results of Operations - ICC.Net

      The following table summarizes operating results for our ICC.Net service:

                                                         Nine Months Ended
                                                             April 30,
                                                  ------------------------------
                                                       2002            2001
                                                  ------------     ------------
Revenue:
  Services not including Triaton Joint
    Services Agreement                            $  4,681,202     $  2,542,234
  Services performed under Triaton Joint
    Services Agreement                                    --          1,000,000
                                                  ------------     ------------

                                                     4,681,202        3,542,234
Expenses:

    Cost of services                                 2,897,584        2,656,022
    Product development and enhancement                610,458          409,057
    Selling and marketing                            2,197,020        3,254,969
    General and administrative                       2,783,668        4,926,487
    Non-cash charges for stock-based
      compensation and services                           --            450,110
                                                  ------------     ------------
                                                     8,488,730       11,696,645
                                                  ------------     ------------

Operating loss                                    $ (3,807,528)    $ (8,154,411)
                                                  ------------     ------------

Other income, net                                      106,095          369,234
                                                  ------------     ------------


Loss before income taxes                          $ (3,701,433)    $ (7,785,177)
                                                  ============     ============



                                       23
<PAGE>

      Revenue - ICC.Net - Revenue  related to our ICC.NET service was 55% of the
consolidated  revenue  for the nine  months  ended  April 30,  2002  ("2002 Nine
Months").  Our ICC.NET  service  revenue  increased  $1,139,000 in the 2002 Nine
Months from the nine months ended April 30, 2001 ("2001 Nine  Months).  The 2001
Nine Months  includes  $1,000,000  of fees from Triaton  GmbH,  a subsidiary  of
ThyssenKrupp  Information  Services GmbH, under a Joint Services Agreement dated
July 28, 2000. No such fees were recognized in the 2002 Nine Months. Transaction
fees  from our  ICC.NET  service  increased  $2,237,000  as a result of a larger
billable customer base and increased volume usage by new and existing customers.

      Cost of  services - ICC.Net - Cost of  services  relating  to our  ICC.NET
service was 62% of revenue  derived  from the  service in the 2002 Nine  Months,
compared to 75% of revenue in the 2001 Nine Months.  Cost of services related to
our ICC.Net  service  consists  primarily of salaries and employee  benefits and
connectivity  fees.  Connectivity fees are those costs that we incur to transmit
data electronically. These fees include charges from other VANS and charges from
Internet service providers.  Salaries and benefits increased $48,000 in the 2002
Nine Months from the 2001 Nine Months and connectivity  fees increased  $258,000
in the 2002 Nine Months from the 2001 Nine Months.  The increase in connectivity
fees was primarily  due to  additional  fees incurred to offer our customers and
their trading partners alternative  connectivity as a result of GXS and Sterling
disconnecting  our service from their  networks.  In addition,  consulting  fees
decreased  $107,000  in the 2002  Nine  Months  from the 2001 Nine  Months.  The
consulting fees in the 2001 Quarter were for mapping services  performed by RTCI
prior to its  acquisition in November 2000. We anticipate  that our ICC.NET cost
of  services  will  continue  to  decline as a  percentage  of revenue in future
periods  due  to   increased   utilization   of  our   existing   communications
infrastructure as we expect the use of our service to increase.

      Product  development and  enhancement - ICC.Net - Product  development and
enhancement  costs relating to our ICC.Net service consist primarily of salaries
and employee  benefits and  software  and  hardware  purchases.  The increase of
$201,000 in the 2002 Nine Months  from the 2001 Nine  Months was  primarily  the
result of additional costs due to implementing  alternative  connectivity of our
ICC.NET service as a result of GXS and Sterling  disconnecting  our service from
their  networks  and other  enhancements  in the  amount of  $602,000.  This was
partially  offset by a decrease of $295,000 in salaries  and  employee  benefits
which were  realized as a result of reducing  staffing to thirteen  employees at
the end of the 2002 Nine Months from  nineteen  employees at the end of the 2001
Nine Months.  The  reduction in employees  was necessary to reduce our operating
expenses  in order to reach our goal of positive  cash flow.  The  reduction  in
employees  did not affect the quality or  reliability  of our service,  however,
there were a number of enhancement  projects that were postponed as a result. It
is not expected that the postponement of these enhancement  projects will affect
future revenue. In addition,  as part of overall cost reduction,  travel-related
expenses were reduced by $22,000 and consulting expenses were reduced $16,000.

      Selling and marketing - ICC.Net - Selling and marketing  expenses relating
to our ICC.Net  service  consist  primarily of salaries  and employee  benefits,
advertising and tradeshow costs and travel-related  costs. Selling and marketing
expenses related to our ICC.NET service were reduced $1,058,000 in the 2002 Nine
Months from the 2001 Nine Months.  Salaries and employee benefits related to our
ICC.NET  service  decreased  $491,000,  primarily due to the  elimination of our
telesales  force.  We  reduced  advertising  and  tradeshow  costs  $98,000  and
travel-related  costs $138,000 in the 2002 Nine Months from the 2001 Nine Months
as a result of our cost reduction efforts to achieve to cash flow breakeven.  In
addition, consulting fees decreased $195,000 primarily as a result of a branding
project and a mass marketing project that was completed in the 2001 Nine Months.
No similar projects were undertaken in the 2002 Nine Months.



                                       24
<PAGE>

      General and administrative - ICC.Net - General and administrative expenses
supporting  our ICC.NET  service  consist  primarily  of salaries  and  employee
benefits,   facility  costs  and  legal  and  professional   fees.  General  and
administrative  costs supporting our ICC.Net service decreased $2,143,000 in the
2002 Nine  Months  from the 2001 Nine  Months.  Salaries  and  related  employee
benefits  decreased  $306,000 in the 2002 Nine Months, due to a reduction in the
workforce.  Recruitment  fees decreased  $137,000 as a result of a hiring freeze
during the 2002 Nine Months.  Consulting fees decreased  $281,000 as a result of
the  termination  of a consulting  contract with a former officer of the Company
that  resulted  in a charge  in the 2001 Nine  Months.  Also,  depreciation  and
amortization   decreased  $240,000  primarily  as  a  result  of  the  Company's
implementation  of SFAS No.  142,  effective  August  1,  2001,  which  requires
goodwill to be tested for  impairment on a periodic  basis and no longer permits
the  amortization  of  goodwill.  The 2001 Nine  Months  included  severance  of
$455,000,  primarily  due  to  the  termination  of  an  officer,  and  expenses
associated  with the  integration  of the  information  systems of the  acquired
companies that amounted to $827,000.

      Non-cash  charges -  ICC.Net - In March  2000,  ICC  granted  an option to
purchase  100,000  shares  of  class A common  stock  pursuant  to a  consulting
agreement with a former executive officer and board member.  Non-cash consulting
charges for this stock option amounted to $450,000 in the 2001 Nine Months.

      Other income,  net - Interest and investment  income decreased to $129,000
in the 2002 Nine Months from $380,000 in the 2001 Nine Months.  The decrease was
due to lower average cash balances in the 2002 Nine Months  compared to the 2001
Nine  Months.  This was  offset  by  realized  gains  from  sales of  marketable
securities  in the amount of $106,000 in the 2002 Nine Months.  No such realized
gains were recognized in the 2001 Nine Months.

Results of Operations - Service Bureau

      The following table summarizes operating results for our service bureau:

                                                          Nine Months Ended
                                                              April 30,
                                                     --------------------------
                                                         2002           2001
                                                     -----------    -----------
Revenue:
  Services                                           $ 1,217,959    $ 1,086,504
                                                     -----------    -----------
Expenses:
    Cost of services                                     663,730        464,130
    Product development and enhancement                  119,328        265,597
    Selling and marketing                                 95,767         77,146
    General and administrative                           371,253        394,212
                                                     -----------    -----------
                                                       1,250,078      1,201,085
                                                     -----------    -----------

Operating loss                                           (32,119)      (114,581)
                                                     -----------    -----------

Other income, net                                           --             --
                                                     -----------    -----------

Loss before income taxes                             $   (32,119)   $  (114,581)
                                                     ===========    ===========


      Revenue - Service  Bureau - Revenue  related to our service bureau was 14%
of the 2002 Nine Month  consolidated  revenue.  The service bureau's revenue was
primarily  generated  from services  performed,  customer  support and licensing
fees.  The  increase  in revenues of  $131,000  was  primarily  the result of an
increased demand for barcode label printing from existing customers.

      Cost of services - Service Bureau - Cost of services relating to our
service bureau was 54% of revenue derived from the service bureau in the 2002
Nine Months, compared to 43% of revenue derived from the service bureau in the
2001 Nine Months. Cost of services related to our service bureau consists
primarily of salaries and employee benefits. The increase in cost of services
was primarily the result of an increase in salaries and employee benefits as a
result of hiring employees that were previously outsourced from a temporary
employment agency.

                                       25
<PAGE>

      Product development and enhancement - Service Bureau - Product development
and  enhancement  costs  consist  primarily of salaries  and employee  benefits.
Product  development  and  enhancement  costs  incurred  by our  service  bureau
decreased  $146,000  in the 2002  Nine  Months  from the 2001 Nine  Months.  The
decrease  was  primarily  attributable  to costs  being  capitalized  for  newly
developed  software in the amount of $82,000.  Also, we reduced  consulting fees
$52,000  by  hiring  an  additional  employee  to  perform  the work  previously
performed by consultants.

      Selling and marketing - Service  Bureau - Selling and  marketing  expenses
relating to our service  bureau  consist  primarily  of  salaries  and  employee
benefits.

      General and  administrative - Service Bureau - General and  administrative
expenses  relating to our  service  bureau  consist  primarily  of salaries  and
employee benefits.

Results of Operations - Professional Services

      Note: The following  analysis of  professional  services for the 2001 Nine
Months  reflects the results of operations of our  professional  services  group
from November 6, 2000, the acquisition date of RTCI.

      The following table summarizes operating results for our professional
services:

                                                          Nine Months Ended
                                                              April 30,
                                                   -----------------------------
                                                      2002             2001
                                                   -----------      ------------

Revenue:
  Services                                         $ 2,560,947      $ 2,311,500
                                                   -----------      -----------

Expenses:
    Cost of services                                 2,931,518        3,138,466
    Selling and marketing                              530,386          764,722
    General and administrative                       1,010,345        2,391,922
    Non-cash charges for stock-based
      compensation and services                        190,019             --
    Impairment of acquired intangibles                    --          1,871,900
                                                   -----------      -----------
                                                     4,662,268        8,167,010
                                                   -----------      -----------

Operating loss                                     $(2,101,321)     $(5,855,510)
                                                   -----------      -----------

Other (expense) income, net                            (30,337)          36,138
                                                   -----------      -----------

Loss before income taxes                           $(2,131,658)     $(5,819,372)
                                                   ===========      ===========

      Revenue - Professional services - Revenue related to professional services
was 30% of the 2002 Nine Months  consolidated  revenue.  Revenue  generated from
professional services consists of consulting,  educational and mapping services.
The average monthly revenue decreased in the 2002 Nine Months as a result of the
continuing economic slowdown.  In addition,  the impact of headcount  reductions
also contributed to a decrease in average monthly revenue.

      Cost of services -  Professional  Services - Cost of services  relating to
professional  services was 114% of revenue derived from professional services in
the 2002 Nine Months,  compared to 136% of revenue in the 2001 Nine Months.  The
decrease  of cost of services as a percent of revenue in the 2002 Nine Months is
primarily the result of the amortization of the workforce intangible of $400,000
in the 2001 Nine  Months.  As required by FAS 142, we  reclassed  the  workforce
intangible  from other  intangible  assets to  goodwill  and as a result no such
amortization  charge was  incurred  in the 2002 Nine  Months.  Cost of  services
related to our professional services consists primarily of salaries and employee
benefits, contract labor and depreciation and amortization.


                                       26
<PAGE>

      Selling and  marketing  -  Professional  Services - Selling and  marketing
expenses relating to our professional services consist primarily of salaries and
employee benefits.

      General  and   administrative  -  Professional   Services  -  General  and
administrative  expenses supporting our professional  services consist primarily
of  salaries  and  employee  benefits,   facility  costs  and  depreciation  and
amortization.

      Non-cash   charges  -  Professional   Services  -  Non-cash   charges  for
compensation and services relating to our professional services in the 2002 Nine
Months  consisted of $190,000 of stock-based  compensation  expenses  related to
172,907 unvested  restricted  shares issued to RTCI employees in connection with
our  acquisition of RTCI. The value of the restricted  shares was amortized from
the date of acquisition through January 1, 2002.

      Impairment  of Acquired  Intangibles  -  Professional  Services  -Due to a
reduction of the  workforce  of RTCI,  management  determined  that a triggering
event had  occurred  related  to the  acquired  workforce.  Projected  cash flow
analysis  related to this asset  determined  that this asset had been  impaired.
This  intangible  asset was written  down to  estimated  fair value based on the
related discounted expected future cash flows and other relevant factors. During
the 2001 Nine Months,  we recorded an impairment  charge related to the impaired
intangible acquired from RTCI.

Liquidity and Capital Resources

      Our  principal  sources  of  liquidity,  which  consist  of cash  and cash
equivalents and marketable  securities,  decreased to $1,606,000 as of April 30,
2002 from $2,889,000 as of July 31, 2001. We believe,  these resources  together
with the amounts owed to us by Triaton GmbH under the Joint Services  Agreement,
should  provide us with  sufficient  liquidity to continue in operation  through
July 31,  2003.  The Joint  Services  Agreement  requires  payment by Triaton of
$1,000,000 in July 2002 and $6,000,000 during fiscal year 2003.  However,  if we
do not receive the  scheduled  payments  from Triaton GmbH and we cannot  reduce
costs  to  achieve  sufficient  savings,  or our  expenses  increase  more  than
anticipated, our revenue does not increase as anticipated because of competitive
or other  reasons,  our cash resources may not be sufficient and we will require
additional  financing.  There can be no assurances  that any  financing  will be
available or that the terms will be acceptable to us, or that any financing will
be consummated.

      We  anticipate  losses  through July 31, 2002 as we continue to expand the
commercial markets for our ICC.NET service and service bureau.

      We have financed our operations  through private  placements during fiscal
1994,  our initial  public  offering  during fiscal 1995 (the "IPO"),  a private
placement in March 1997, a private  placement of bridge note units during fiscal
1998 and 1999, a private  placement  of series A preferred  stock in April 1999,
private  placements  of our class A common stock,  series C preferred  stock and
warrants in November  1999 and a private  placement  of our class A common stock
and warrants in October 2001.

      We sold in the October 2001 private placement  1,159,716 shares of class A
common  stock and  warrants to  purchase  347,915  additional  shares of class A
common stock for gross  proceeds of $3,189,219.  The warrants  expire in October
2006 and are exercisable at $3.58 per share,  subject to adjustment  pursuant to
customary antidilution adjustments for stock splits, dividends and combinations.
In connection with the private placement, the Company incurred fees of $152,511,
of which  $35,000  has been paid in cash and  $117,511  has been paid by issuing
warrants to purchase  50,000 shares of class A common  stock.  The warrants have
substantially  the same  terms  and  conditions  as the  warrants  issued in the
private placement.

      We commenced a warrant  exchange  offer on April 23,  2002.  The offer was
extended to investors who  participated in the private  placement on October 29,
2001 and to holders of warrants  issued as fees in connection  with such private
placement.  The offer lowered the exercise  price of the warrants  issued in the
private  placement  to $2.50 per class A common share for those  investors  that
agreed to exercise those  warrants.  In addition,  for each class A common share
purchased  pursuant to the warrant exercise,  a new warrant (the "New Warrants")
to purchase an equivalent  number of class A common  shares was issued.  The New
Warrants  have an exercise  price of $3.50 per share and are  exercisable  for a
five-year  period.  The New  Warrants  have  the  same  redemption  terms as the
warrants  issued  in the  private  placement.  The  warrant  exchange  offer was
originally  set to expire on April 30, 2002,  but was extended by the  Company's
board of  directors  until May 31,  2002.  As of April  30,  2002,  the  Company
received  $542,247 in proceeds  and issued a total of 217,007  shares of class A
common stock and warrants to purchase 217,007 shares of class A common stock.

                                       27
<PAGE>

      We have a net operating loss  carryforward of approximately $76 million to
offset future taxable income for federal income tax purposes. The utilization of
the loss  carryforward to reduce any such future income taxes will depend on our
ability to generate sufficient taxable income prior to the expiration of the net
operating loss  carryforwards.  The carryforward  expires from 2007 to 2021. The
Internal  Revenue  Code of 1986,  as amended,  and the  regulations  promulgated
thereunder  contain  provisions  which limit the use of available  net operating
loss  carryforwards in any given year should  significant  changes (greater than
50%) in  ownership  interests  occur.  Due to the IPO,  the net  operating  loss
carryover of approximately  $1.9 million incurred prior to the IPO is subject to
an annual  limitation of  approximately  $400,000  until that portion of the net
operating loss is utilized or expires.  Due to the private placement of series A
preferred stock in April 1999, the net operating loss carryover of approximately
$18  million  incurred  prior to the private  placement  is subject to an annual
limitation of  approximately  $1 million until that portion of the net operating
loss is utilized  or expires.  Also,  due to the 100%  ownership  change when we
acquired RTCI, RTCI's net operating loss of approximately  $6.5 million incurred
prior  to  the  ownership   change  is  subject  to  an  annual   limitation  of
approximately  $1.4  million  until that  portion of the net  operating  loss is
utilized or expires.

     Consolidated Working Capital

      Consolidated  working capital decreased to $465,000 at April 30, 2002 from
$646,000 at July 31, 2001. This decrease is due to a $1,283,000 decrease in cash
and  cash  equivalents  and  marketable  securities  primarily  as a  result  of
continued  operating  losses  partially offset by proceeds raised in our October
2001 private  placement and April 2002 warrant  exchange offer.  The decrease is
also the result of a $701,000 decrease in accrued expenses.

     Analysis of Cash Flows

      Cash used in operating activities decreased to $4,880,000 in the 2002 Nine
Months from  $9,966,000  in the 2001 Nine Months.  The decrease is primarily the
result of a decrease in cash operating  expenses of  $3,266,000,  which excludes
impairment of intangible  assets,  depreciation  and  amortization  and non-cash
charges  for equity  instruments  issued for  compensation  and  services.  This
decrease is also the result of an increase in revenue of $1,520,000.

      Cash  provided by investing  activities  increased to $339,000 in the 2002
Nine Months  compared to cash used by  investing  activities  of $696,000 in the
2001 Nine Months.  This increase is primarily the result of $456,000 in proceeds
from the sales of  marketable  securities in the 2002 Nine Months and a decrease
of cash purchases of property and equipment of $528,000.

      Cash provided by financing  activities increased to $3,683,000 in the 2002
Nine Months compared to cash used in financing activities of $32,000 in the 2001
Nine Months.  The increase is primarily the result of net proceeds of $3,107,000
from the  October  2001  private  placement  described  above and an increase of
$602,000 of proceeds  from the  exercise of warrants to purchase  class A common
stock.

     Recent Accounting Pronouncements

      In July 2001, the FASB issued SFAS No. 141,  "Business  Combinations"  and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that
all business combinations subsequent to June 30, 2001 be accounted for under the
purchase method of accounting.  SFAS No.141 also requires that the fair value of
an assembled  workforce acquired be included in the amount initially recorded as
goodwill. As required by this statement,  the Company reclassified into goodwill
$1,710,617 initially recorded as other intangible assets related to the value of
the  assembled  workforce  of RTCI.  SFAS No. 142 requires  that upon  adoption,
amortization of goodwill will cease, and instead, the carrying value of goodwill
will be evaluated for  impairment  on at least an annual basis.  SFAS No. 142 is
effective  for fiscal years  beginning  after  December 15, 2001;  however,  the
Company has adopted this  standard as of the  beginning of its 2002 fiscal year,
August 1, 2001, as permitted  under the provisions of SFAS No. 142. The adoption
of this standard resulted in no charges for amortization of goodwill in the 2002
Quarter and the 2002 Nine Months. Amortization expense in the amount of $544,000
and  $1,155,000  were  charged  in  the  2001  Quarter  and  2001  Nine  Months,
respectively,  prior to the adoption of SFAS No. 142. The Company has  evaluated
goodwill for impairment and has determined  that no impairment  exists at August
1, 2001.

                                       28
<PAGE>

      In  July  2001,  the  FASB  issued  SFAS  No.143,  "Accounting  for  Asset
Retirement  Obligations."  SFAS No. 143 is effective for fiscal years  beginning
after June 15, 2002,  and  establishes  an  accounting  standard  requiring  the
recording of the fair value of  liabilities  associated  with the  retirement of
long-lived  assets in the period in which they are  incurred.  The Company is in
the process of determining the impact that the adoption of SFAS No. 143 may have
on its earnings and financial position.

      In  August  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets." SFAS No. 144 supersedes  SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be  Disposed  Of." SFAS No. 144  addresses  financial  accounting  and
reporting for the impairment or disposal of long-lived assets. The provisions of
SFAS No. 144 are effective for fiscal years  beginning  after December 15, 2001.
The  Company is  required  to adopt SFAS No. 144 by the first  quarter of fiscal
2003. The Company is currently  evaluating the potential  impact of SFAS No. 144
on its results of operations and financial position.

      In November  2001,  the  Emerging  Issues Task Force  ("EITF") of the FASB
reached a consensus on Issue No. 01-14,  "Income Statement  Characterization  of
Reimbursements Received for `Out-of-Pocket'  Expenses Incurred." A consensus was
reached that reimbursements  received for out-of-pocket expenses incurred should
be characterized as revenue in the income  statement.  The Company adopted 01-14
effective  February 1, 2002.  Reimbursements of out-of-pocket  expenses were not
significant in any of the periods presented.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

      During the third quarter ended April 30, 2002,  there were no  significant
changes related to the Company's market risk exposure.


PART II.  OTHER INFORMATION

Item 2: Changes in Securities and Use of Proceeds

      The Company  commenced a warrant  exchange  offer on April 23,  2002.  The
offer was extended to investors  who  participated  in our private  placement on
October 29, 2001. The offer lowered the exercise price of the warrants issued in
the private  placement to $2.50 per warrant for those  investors  that agreed to
exercise  those  warrants.  In  addition,  for  each  warrant  exercised,  a new
five-year warrant was issued having an exercise price of $3.50 per warrant.  The
offer was  originally  set to expire on April 30, 2002,  but was extended by the
Company's  board of  directors  until May 31, 2002.  As of April 30,  2002,  the
Company  received  $542,247 in proceeds and issued a total of 217,007  shares of
class A common stock and warrants to purchase  217,007  shares of class A common
stock. The Company may redeem the warrants, at its option, at any time beginning
180 calendar  days after the sale if the closing bid price of the class A common
stock  exceeds  200% of the  exercise  price for a period of thirty  consecutive
trading days.  The redemption  price is ten cents per warrant.  We intend to use
the proceeds from the private  placement  for general  corporate  purposes.  The
securities  described in this section  were issued by ICC in a  transaction  not
involving a public offering,  to investors that made  representations  that they
were  "accredited"  investors who were purchasing the securities with investment
intent and not with the intent to distribute the securities. The issuance of the
securities was exempt from registration under Section 4(2) of the Securities Act
of 1933, as amended.

Item 6: Exhibits and Reports on Form 8-K

(a)   Exhibits.
      --------

      None.

(b)   Reports on Form 8-K
      --------------------

      None.



                                       29
<PAGE>


                                   SIGNATURES

      In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                         INTERNET COMMERCE CORPORATION
                                         -----------------------------
                                         (Registrant)


Date:  June 7, 2002                      By: /s/ Walter M. Psztur
                                            -------------------------------
                                             Walter M. Psztur
                                             Chief Financial Officer
                                             (Principal Financial and
                                             Accounting Officer)



                                       30