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                                                                    EXHIBIT 99.1

     Certain statements under the captions "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and " Business of the Company"
and elsewhere in this Annual Report are forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, statements about our plans,
objectives, expectations and intentions and other statements contained in this
Annual Report that are not historical facts. When used in this Annual Report,
the words "expects," "anticipates," "intends," "plans," "believes," "seeks" and
"estimates" and similar expressions are generally intended to identify forward-
looking statements. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual results to
differ materially from those expressed or implied by these forward-looking
statements. These factors consist primarily of the risks identified below.

As a company with a limited operating history in a new and rapidly changing
industry, it is difficult to predict our future growth and operating results.

     Our limited operating history makes predicting our future growth and
operating results difficult. We were incorporated in Delaware in 1997 and began
our first commercial service in April 1998. Our management team and other
employees have worked at ITXC for only a short period of time. Stockholders and
potential stockholders should consider the risks and uncertainties that an early
stage company like ours will face in the new and rapidly evolving market for
Internet-based voice services. Stockholders and potential stockholders should
consider that we have not proven that we can:

       . maintain our current, and develop new, relationships with the unrelated
third parties that complete voice and fax calls over our network, our
affiliates, as well as with our customers;

       . respond effectively to competitive pressures; and

       . continue to develop and upgrade our network and technology.

If we cannot accomplish these goals, our business may not succeed.

We have not been profitable and expect future losses.

     To date, we have not been profitable. We may never be profitable or, if we
become profitable, we may be unable to sustain profitability. We have incurred
significant losses since inception. We reported net losses of $0.6 million for
the inception period from July 21, 1997 through December 31, 1997, $7.2 million
for the year ended December 31, 1998 and $19.7 million for the year ended
December 31, 1999. We expect to continue to incur significant losses for the
foreseeable future. As of December 31, 1999, our accumulated deficit was $27.5
million. Our revenue may not grow or may not even continue at the current level.
After 1999, we expect to recognize non-cash charges of approximately $10.2
million relating to non-cash compensation in connection with stock options that
we granted prior to our initial public offering. Those charges will be expensed,
generally over the next three to seven years, in connection with the underlying
vesting periods of the options that were granted.

     In addition, we have issued 150,000 shares of our common stock in
connection with the termination of our South American joint venture. The value
of such shares, offset by the value of certain securities received in exchange,
will be expensed. We expect that such charge will be reflected in our statement
of operations for the quarter ending March 31, 2000. See "Management's
Discussion and Analysis of Financial Condition and Results of Operation--
Overview."

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The growth of ITXC.net depends upon the growth of the Internet, which may not
continue.

     The growth of ITXC.net depends on continued growth in the use of the
Internet generally and on the growth in the use of the Internet through
telephones and other devices, in addition to personal computers. Growth of the
Internet may be inhibited by a number of factors, such as:

       . quality of infrastructure;

       . security concerns;

       . technological failures, such as viruses;

       . inconsistent quality of service; and

       . lack of availability of cost-effective, high-speed service.

Even if Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth or its performance or
reliability may decline.

We are growing rapidly and effectively managing our growth may be difficult.

     Our business has grown rapidly in terms of customers, employees and the
size of ITXC.net since our inception. This growth has placed a significant
strain on our resources and systems which has resulted in fluctuations in our
network expenses. Our business model depends on continued rapid growth which
will put a further strain on our resources, systems and management. If we are
not able to effectively manage our growth by implementing systems, expanding
ITXC.net and hiring, training and managing employees, our ability to offer our
services will be materially harmed.

Our business may be harmed because we rely on a third-party communications
infrastructure over which we have no control.

     Our service could be disrupted, our reputation could be hurt and we could
lose customers, if the quality and maintenance of the third-party communications
infrastructure on which we rely suffers. This infrastructure, including the
Internet, is used to carry our voice traffic between our customers and
affiliates. We have no control over whether the infrastructure on which we rely
will be adequately maintained by these third parties or whether these third
parties are able to upgrade or improve their equipment and prevent it from
becoming obsolete. If these third parties fail to maintain, upgrade or improve
this equipment, our business may be materially harmed.

If we cannot maintain relationships with the few vendors of gateway equipment
and software upon which ITXC.net depends, our network expenses could rise
significantly.

     ITXC.net is currently configured to use gateway equipment and software
which is primarily manufactured by four vendors, Cisco Systems, Clarent, Lucent
Technologies and VocalTec Communications. A gateway is a computer server that
translates voice and voice-related signaling back and forth between a
traditional telephone network and a data network. Gateways provided by some of
these vendors are not currently interoperable with each other. If we or our
affiliates are unable to maintain current purchasing terms with Cisco, Clarent,
Lucent and VocalTec, we will have to make significant technological
modifications to ITXC.net which could raise our network expenses significantly
and have a material adverse affect on our business, financial condition,
operating results and future prospects.

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Our network may not be able to handle increased traffic and a large number of
simultaneous calls, which could hurt our reputation and result in a loss of
customers.

     Our network relies on hardware and software that we or our affiliates have
developed or acquired. We expect that our network traffic and volume of
simultaneous calls will increase significantly. If the hardware and software
used in our network cannot accommodate this additional volume, our reputation
could be damaged and we could lose customers.

Failure to attract and retain affiliates and customers will harm our business.

  If we are unable to attract and retain affiliates and customers, the traffic
on ITXC.net may not increase and we may not be able to increase our global
reach. Our ability to attract and retain affiliates and customers will depend on
a number of factors, including:

       . our ability to reach agreement with telecommunications companies,
telephony resellers and Internet service providers regarding the terms and
conditions applicable to our business relationship;

       . our success in marketing our services to potential new and existing
affiliates and customers;

       . pricing by traditional carriers;

       . the rate at which we are able to deploy our network and services;

       . our ability to locate qualified foreign affiliates and call termination
providers;

       . consolidation in the telecommunications industry; and

       . the quality of the customer and technical support we provide.

Our quarterly operating results may fluctuate and could fall below expectations
of investors and industry analysts, resulting in a decline in our stock price.

     Our quarterly operating results have varied widely in the past and could
fluctuate significantly in the future. Therefore, you should not rely on
quarter-to-quarter comparisons for indications of future performance. Certain
factors may influence our quarterly operating results, including:

       . the amount and timing of capital expenditures and other costs relating
to the expansion of ITXC.net;

       . the introduction of new or enhanced services or changes in pricing
policies by us or our competitors; and

       . economic conditions specific to the Internet or all or a portion of the
technology sector.

If we cannot successfully address these factors, our operating results may fall
below analyst and investor expectations and the price of our common stock could
decline.

Our financial results and our operations could be materially adversely affected
if it becomes necessary for us to discontinue relationships with customers who
become unable to meet their payment obligations.

     During 1999, we discontinued service to four companies that had originated
calls over ITXC.net because of their failure to meet their payment obligations.
One of those companies was a substantial customer of ours. While we have not had
difficulty in replacing that business with other traffic, and while we have
fully reserved against or written-off the outstanding receivables from these
firms as of December

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31, 1999, our financial results and our operations could be materially adversely
affected if other comparably situated customers experience similar difficulties
in the future. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

Our marketing efforts could be adversely affected if we do not lead the
development of new interoperability standards.

     If we do not play a leadership role in the development of new
interoperability standards, the perception that we are an industry leader could
be jeopardized. We achieved that perception, in part, by leading the effort to
develop the iNOW! initiative. A standard for the interoperability of Internet
voice services and products other than iNOW! could emerge without our
participation. If that happens, our marketing efforts could be adversely
affected and it could take longer for us to deploy our network technology.

The lack of interoperability among hardware produced by different vendors may
limit our ability to grow a worldwide, fully interoperable network.

     Unless an interoperability standard is widely adopted and used by
manufacturers of gateways and other hardware, ITXC.net's growth will be limited.
Our business model depends on the growth of ITXC.net. Without a widely adopted
interoperability standard, terminators of voice traffic over the Internet will
continue to be required to only accept voice traffic which was originated on
gateways made by the same manufacturer as their terminating gateway.

If the iNOW! interoperability initiative or another similar initiative is not
widely adopted and implemented, our network may not grow and our business could
be adversely affected.

Intense price competition and the nature of the calls that we place over
ITXC.net may limit our revenues.

     Our revenues are not solely tied to the number of minutes of calls that are
placed over ITXC.net. Intense competition could reduce the prices that we charge
for our services. In addition, our revenues are affected by the types of calls
placed over ITXC.net. Calls placed over certain routes or to certain termination
points may generate less revenue than calls of a similar duration made over
different routes or to different termination points.

Intense price competition could reduce the demand for our service.

     We may not be able to compete successfully in the developing Internet
telephony market. Many of our competitors are larger than us and have
substantially greater financial resources than we do. The market for our
services has been extremely competitive and is expected to be so for the
foreseeable future. Internet protocol and Internet telephony service providers
such as AT&T Global Clearinghouse, iBasis and GRIC and the wholesale divisions
of Net2Phone and deltathree.com route traffic to destinations worldwide and
compete directly with us. Other Internet telephony service providers focus on a
retail customer base and may in the future compete with us. In addition, major
telecommunications companies, such as AT&T, Deutsche Telekom, MCI WorldCom and
Qwest Communications, have entered or plan to enter the Internet telephony
market. See "Business of the Company--Competition."

If we are unable to keep up with rapid technological change in our industry in a
cost-effective manner, our revenues will decrease.

     The market we serve, the market for voice services over the Internet, is
characterized by rapid technological developments, evolving industry standards
and customer demands and frequent new services announcements, such as new
hardware and software entrants and releases. In order for us to remain
competitive and continue positive growth of our business and increase the use of
our network, we must respond to these developments quickly and in a cost-
effective manner. If we fail to respond in this

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manner, our technology could become obsolete, our customers will choose other
alternatives to transmit their traffic and our revenues will decrease.

We may need additional capital in the future to expand ITXC.net and it may not
be available on acceptable terms or at all, which could force us to curtail or
cease our operations.

     The development of our business depends on our ability to expand the global
reach of ITXC.net. The net proceeds from our stock offerings and our cash flow
from operations could be insufficient to expand ITXC.net to meet future customer
demands. To date, our cash flow from operations has been insufficient to cover
our expenses and capital needs. We may require significant additional capital in
the future which may not be available on terms acceptable to us or at all. If we
cannot raise adequate capital on acceptable terms, we may be forced to restrict
the growth of ITXC.net, we may not be able to attract new affiliates and we may
have to curtail or cease our operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

Foreign political and economic instability could harm our ability to maintain a
global presence.

     A key component of our business plan is our global network of affiliates.
Our ability to maintain and expand our global reach may be harmed by foreign
political and economic instability. Before investing, consider that the
following factors may inhibit our ability to maintain and expand our global
presence:

       . potentially longer payment cycles outside of the U.S.;

       . difficulty in collecting accounts receivable from foreign affiliates;

       . weaknesses in particular foreign economies;

       . changes in diplomatic and trade relationships;

       . foreign taxes; and

       . the economic and administrative burdens of complying with a variety of
foreign laws, trade standards, tariffs and trade barriers.

Damage to our systems and network could interrupt our service and result in
reduced revenue and harm to our reputation.

     Our operations are dependent on our ability to maintain the components of
ITXC.net and our other computer and telecommunications systems in effective
working order. In addition, our systems may be damaged by natural disasters,
equipment failure or intentional acts of vandalism. If we fail to safeguard our
systems and network and experience frequent or long system delays or
interruptions, we may not be able to provide our service in a consistent and
cost-effective manner--which will result in reduced revenue and harm to our
reputation.

Our proprietary rights may be difficult to protect or maintain.

     Our efforts to protect our intellectual property rights through patent,
copyright, trademark and trade secret laws in the U.S. and in other countries
may not prevent misappropriation, and our failure to protect our proprietary
rights could materially adversely affect our business, financial condition,
operating results and future prospects.

     A third party could, without authorization, copy or otherwise appropriate
our proprietary network information. Our agreements with employees and others
who participate in development activities could

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be breached, we may not have adequate remedies for any breach, and our trade
secrets may otherwise become known or independently developed by competitors.

     We rely upon license agreements with respect to our use of the software and
hardware provided to us by our vendors.  Those license agreements may not
continue to be available to us on acceptable terms or at all. See "Business of
the Company--Proprietary Rights."

Acquisitions may disrupt our business, divert the attention of our management
and require significant capital infusions.

     Our industry is characterized by growth through acquisitions. To compete
effectively, we expect to make investments in complementary companies,
technologies or assets and may consider a number of acquisitions, significant
and otherwise, at any one time. Acquisitions could disrupt our ongoing business,
distract the attention of our small number of senior managers, make it difficult
to maintain our network and operational standards, controls and procedures and
subject us to risks that are different, in nature and magnitude, than the risks
we currently face.

     We also may not be able to successfully integrate the services, products
and personnel of any acquisition into our operations. We may be required to
incur a significant amount of debt or issue a significant number of equity
securities, which may dilute our stockholders' equity interest substantially, to
pay for acquisitions and may be required to invest a substantial amount of cash
to support the further development of any companies that we may acquire. Our
acquisitions may not result in any return, or a sufficient return, on our
investment and we may lose all or a substantial portion of our investment.

Our success is dependent on the continued service of our key management and
technical personnel.

     Our future success depends, in part, on the continued service of our key
management and technical personnel, including Tom I. Evslin, Edward B. Jordan,
John G. Musci and Thomas J. Shoemaker, four of our senior executive officers. If
any of those individuals were unable or unwilling to continue in their present
positions, our business, financial condition, operating results and future
prospects could be materially adversely affected. We do not carry key person
life insurance on our personnel and only Messrs. Evslin, Musci and Shoemaker
have employment agreements.

We may have difficulty attracting and retaining the skilled employees we need to
execute our growth plan.

     From time to time we have experienced, and we expect to continue to
experience in the future, difficulty in hiring and retaining highly skilled
employees. Our future success depends on our ability to attract, retain and
motivate highly skilled employees, particularly engineering and technical
personnel. Competition for employees in our industry is intense. We may not be
able to retain our key employees or attract, assimilate or retain other highly
qualified employees in the future.

Future government regulation and legal uncertainties could affect our ability to
provide our services.

     Our business, financial condition, operating results and future prospects
could be materially adversely affected if Congress, the Federal Communications
Commission, state regulatory authorities, foreign governments or other bodies
begin to regulate or, in the case of certain foreign governments, prohibit
Internet telephony.

     United States. Although our services are not currently actively regulated
by the FCC, aspects of our operations may be subject to state or federal
regulation in the future. Increased regulation of the Internet may slow its
growth, and impact our cost of providing our service over the Internet. In
addition, the FCC may in the future impose surcharges or other regulations upon
us which could materially adversely affect our business, financial condition,
operating results and future prospects.

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     International. Increased regulation of the Internet and/or Internet
telephony providers or the prohibition of Internet telephony in one or more
foreign countries could materially adversely affect our business, financial
condition, operating results and future prospects.

     Our failure to qualify to do business in a foreign jurisdiction in which we
are required to do so or to comply with foreign laws and regulations could harm
our ability to conduct international operations.

     Our customers and affiliates may also currently be, or in the future may
become, subject to requirements to qualify to do business in a particular
foreign country, to otherwise comply with regulations, including requirements to
obtain authorization, or to cease from conducting their business as conducted in
that foreign country. We cannot be certain that our customers and affiliates
either are currently in compliance with any such requirements, will be able to
comply with any such requirements, and/or will continue in compliance with any
such requirements. The failure of our customers and affiliates to comply with
such requirements could materially adversely affect our business, financial
condition, operating results and future prospects.

     Additionally, it is possible that laws--new or already in existence--may be
applied by the U.S. and/or other countries to transport services provided over
the Internet, including laws governing:

       . sales and other taxes;

       . user privacy;

       . pricing controls;

       . characteristics and quality of products and services;

       . consumer protection;

       . cross-border commerce, including laws that would impose tariffs, duties
and other import restrictions; and

       . other claims based on the nature and content of Internet materials,
including claims of defamation, negligence and the failure to meet necessary
obligations.

If such laws are applied to our services, our ability to conduct our business
could be materially adversely affected.

The beneficial ownership of a significant amount of our common stock by our
directors and officers could delay or prevent a change in control of ITXC.

     The concentrated beneficial ownership of our common stock could delay or
prevent a change in control of ITXC that might otherwise be beneficial to our
stockholders. Our executive officers and directors and their respective
affiliates beneficially own approximately 47% of our outstanding common stock.
Accordingly, these stockholders will be able to exert significant influence over
matters requiring approval by our stockholders, including the election of
directors and the approval of mergers or other business combinations.

We have broad discretion in the use of the proceeds that we have received from
the public offering of our common stock.

     Our management will have broad discretion in the application of proceeds
and the timing of the expenditure of all of the net proceeds that we have
received from the public offering of our common stock.

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If our management fails to apply those proceeds effectively, we may not be
successful in expanding ITXC.net and growing our business and revenues.

Our certificate of incorporation and bylaws and Delaware law contain provisions
that could discourage a takeover.

     Provisions of our certificate of incorporation and by-laws and Delaware law
may discourage, delay or prevent a merger or acquisition that you may consider
favorable. These provisions of our certificate of incorporation and by-laws:

       . establish a classified board of directors in which only a portion of
the total number of directors will be elected at each annual meeting;

       . authorize the board to issue preferred stock;

       . prohibit cumulative voting in the election of directors;

       . limit the persons who may call special meetings of stockholders;

       . prohibit stockholder action by written consent; and

       . establish advance notice requirements for nominations for the election
of the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.

The sale of a substantial number of shares of our common stock in the public
market may adversely affect our stock price.

     A substantial amount of our common stock is held by stockholders who have
agreed not to sell their shares until at least June 7, 2000.  After these
restrictions expire or if these restrictions are waived by the underwriters,
those holders could decide to sell some or all of their shares.

     The market price of our common stock could decline as a result of sales of
substantial amounts of common stock in the public market or the perception that
substantial sales could occur. These sales also might make it difficult for us
to sell equity securities in the future at a time when, and at a price which, we
deem appropriate.

Our stockholders will experience dilution when we issue the additional shares of
common stock that we are permitted or required to issue under options, warrants
and our employee stock purchase plan.

     Stockholders should be aware that we are permitted, and in some cases
obligated, to issue shares of common stock. If and when we issue these shares,
the percentage of the common stock  that existing stockholders own will be
diluted. The following is a summary of additional shares of common stock that we
have currently reserved for issuance as of January 31, 2000:

       . 8,000,954 shares are issuable upon the exercise of options or other
benefits under our stock incentive plan, consisting of:

              . outstanding options to purchase 5,561,130 shares at a weighted
       average exercise price of $4.83 per share, of which options covering
       750,485 shares were exercisable as of January 31, 2000; and

              . 2,439,824 shares available for future awards after January 31,
       2000;

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       . 879,766 shares are issuable upon the exercise of outstanding warrants
at a weighted average exercise price of $.85 per share; and

       . 858,164 shares are issuable under our employee stock purchase plan.

The stock prices of Internet-related companies such as ours are highly volatile
and could drop unexpectedly resulting in costly litigation and harm to our
business.

     The market price of our common stock is subject to significant
fluctuations. Many companies in our industry have been the subject of class
action litigation by investors following periods of volatility in the price of
their publicly traded securities. If the market value of our common stock
experiences adverse fluctuations, and we become the subject of this type of
litigation, regardless of the outcome, we will incur substantial legal costs. In
addition, this type of litigation may strain our resources and divert management
attention, causing our business to suffer.

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