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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------
                                    FORM 10-K

[X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
             Act of 1934 for the fiscal year ended December 31,2000.

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from ____ to ______.

                        Commission File Number 333-80411

                                   ITXC CORP.

             (Exact name of registrant as specified in its charter)

                   Delaware                                22-3531960
       (State or other jurisdiction of                 (I.R.S. Employer
        incorporation or organization)               Identification Number)

               600 College Road East, Princeton, New Jersey 08540
      (609) 750-3333

                   (Address and telephone number, including area code, of
                    registrant's principal executive office)

Securities registered pursuant to Section 12(b) of the Act:  none.

Securities registered pursuant to Section 12(g) of the Act:

                               Title of each class
                               -------------------
                     Common Stock, par value $.001 per share

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____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

Aggregate market value of voting stock held by non-affiliates as of January 31,
2001 was approximately $360 million.

Number of shares of Common Stock outstanding as of January 31, 2001: 44,477,325.

Documents incorporated by reference: Definitive proxy statement for the
registrant's 2001 annual meeting of shareholders (Part III).
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                                   ITXC CORP.
                                TABLE OF CONTENTS

<TABLE>
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         PART I

                                                                                                                  Page
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         Item 1    Business of the Company..............................................................          1

         Item 2.   Properties...........................................................................          12

         Item 3    Legal Proceedings....................................................................          12

         Item 4    Submission of Matters to a Vote of Security Holders..................................          12

         Item 4A   Executive Officers of the Registrant.................................................          12

         PART II

         Item 5    Market for the Registrant's Common Equity and
                   Related Stockholder Matters..........................................................          15

         Item 6    Selected Financial Data..............................................................          15

         Item 7    Management's Discussion and Analysis of Results of
                   Operations and Financial Condition...................................................          17

         Item 7A   Quantitative and Qualitative Disclosures About Market Risk...........................          23

         Item 8    Financial Statements and Supplementary Data..........................................          23

         Item 9    Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure..................................................          24

         PART III

         Item 10   Directors of the Registrant..........................................................          24

         Item 11   Executive Compensation...............................................................          24

         Item 12   Security Ownership of Certain Beneficial Owners
                   and Management.......................................................................          24

         Item 13   Certain Relationships and Related Transactions.......................................          24

         PART IV

         Item 14   Exhibits, Financial Statements Schedules and Reports
                   on Form 8-K..........................................................................          25

         Signatures.....................................................................................          27
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Item 1. Business of the Company
-------------------------------

                                  Introduction

     ITXC Corp. was incorporated in Delaware in 1997. On October 1, 1999, we
consummated our initial public offering, on March 15, 2000 we completed a
follow-on offering of shares by ourselves and certain of our shareholders and on
October 12, 2000 we consummated the acquisition of eFusion, Inc. Our principal
executive offices are located at 600 College Road East, Princeton, New Jersey
08540, and our telephone number is (609) 750-3333. As used in this Annual
Report, the terms "we," "ITXC" and the "Company" refer to ITXC Corp. and its
subsidiaries.

     ITXC, WWeXchange(R), BestValue Routing(TM) and webtalkNOW!(SM), and many of
our product/service names referred to herein, are trademarks or trade names of
the Company or its subsidiaries. This Annual Report also includes references to
trademarks and trade names of other companies.

     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. 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 under the Securities Litigation Reform Act
of 1995. 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 in Exhibit
99.1 to this Annual Report. We assume no responsibility to update these
forward-looking statements after the filing of this Annual Report.

Overview

     We are a leading global provider of high quality Internet-based voice and
fax services. Our services allow communications users and service providers,
such as traditional telephone companies, Internet service providers, Internet
portals, web sites and data network providers, to capitalize on the convergence
of the public Internet and the traditional telephone network. We believe that
our scale, reputation for high quality and ability to rapidly implement new
services addresses the substantial opportunities that are resulting from this
convergence.

     We have developed and deployed ITXC.net(SM), an actively-managed network
overlaid on the public Internet, to deliver high quality voice and fax
communications while providing our customers with the cost savings and global
reach of the Internet. We believe that the rapid growth of commercial traffic on
ITXC.net demonstrates that we have successfully used our proprietary BestValue
Routing to address the quality problems which early attempts at Internet
telephony encountered.

     To date, we have concentrated our efforts on rapidly deploying ITXC.net
worldwide. We have established ITXC-owned facilities in the U.S. and London and
have arranged call termination and origination services with affiliates
throughout the world. We have used our affiliate structure to achieve what we
believe is the broadest global network in the Internet telephony marketplace. As
of January 31, 2001, we had affiliates in 238 international cities operating 424
ITXC.net points of presence. On a typical day, we carry traffic to and from over
90 countries. By using the Internet for transport and our affiliates' local
infrastructure for terminating voice traffic, we have developed a reliable
network, which we are expanding rapidly, at substantially lower capital expense
than traditional carrier networks.

     In April 1998, we introduced ITXC WWeXchange Service, the first application
enabled by ITXC.net. This service provides international call completion to our
customers and enables them to offer their own customers phone-to-phone global
voice and fax service. We have achieved a high network usage growth rate since
commencing ITXC WWeXchange Service. The following table sets forth the number of
minutes of traffic carried over ITXC.net during the past eight quarters:

                                                                    Minutes
                  Quarter ended                                  (in millions)
                                                                 -------------

                  March 31, 1999.............................        11
                  June 30, 1999..............................        24
                  September 30, 1999.........................        43
                  December 31, 1999..........................        72
                  March 31, 2000 ............................       131
                  June 30, 2000..............................       201
                  September 30, 2000.........................       270
                  December 31, 2000..........................       355

     In April 1999, we introduced a new ITXC-owned proprietary device called a
SNARC, which facilitates the use of our network by our customers by enabling
them to access our network directly from their own premises to originate calls.
In addition, since December 1999 we have been installing similar devices on
selected affiliates' premises to connect them directly to the Internet for the
purpose of
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terminating calls originated by ITXC.net affiliates. These devices avoid the
costs of dedicated connections to network hubs and improve the economics of our
services to our customers. We believe that SNARCs strengthen our customers' and
affiliates' relationships with us and position us to deploy additional enhanced
services over ITXC.net.

     In December 1999, we commenced our first service offering as a voice
application service provider. Our webtalkNOW! service allows Internet portals,
Internet service providers and web sites to offer web-to-phone calling to their
customers under their own brands. We offer an outsourced voice solution for
these customers which capitalizes on the global reach and quality of ITXC.net as
a platform for enhanced Internet-based voice services.

     In October 2000, we consummated our acquisition of eFusion, Inc.(TM), an
Oregon-based provider of Internet voice services that help online businesses and
Internet service providers deliver eSatisfaction(SM) to their customers.
e-commerce companies can implement ITXC Push to Talk(SM) Service (acquired with
eFusion) to facilitate live voice interaction for browsing consumers or
recipients of targeted emails. Direct voice contact with call centers helps
build online revenues, decrease shopping cart abandonment rates and
differentiate our customers' web sites and email.

     In addition to our current services, we intend to introduce more advanced
communications applications enabled by ITXC.net when the appropriate market
opportunities exist. We expect that these services, when implemented, will allow
our customers to offer additional Internet-based voice products and services to
their customers. Examples of services we may introduce include:

     .    enhanced phone-to-phone services;

     .    voice over Internet service directly from and to subscriber premises;

     .    phone-to-PC services;

     .    device-to-phone service and phone-to-device service, including devices
          such as personal digital assistants;

     .    unified messaging, combining voice, fax and e-mail communications; and

     .    single telephone number service, in which a single billing and reach
          me number follows the subscriber.

Industry Overview

Convergence of Global Telecommunications and Data Services

     The global telecommunications industry has grown at a rapid rate over the
last decade, driven by domestic and international deregulation, technological
development, network deployment and the globalization of business. The number of
communications service providers has also been increasing as a result of
competition fostered by domestic and international deregulation. These factors
have contributed to a substantial decrease in the cost of telephony services
delivered over the traditional telephone network. This decrease in price,
however, has been offset by an increase in total revenue driven by the growth in
demand that low prices have created. Based on country-by-country information and
other data provided by the International Telecommunications Union, total
telecommunications services revenue was approximately $700 billion in 1997.
According to Insight Research Corporation, an industry research firm, this
market is projected to grow to approximately $1.3 trillion by 2003. According to
TeleGeography, a market research firm, total international voice over Internet
protocol traffic grew to approximately 1.7 billion minutes in 1999. Also
according to TeleGeography, 2000 international telephone traffic grew by over
15% in 1999, to approximately 107.8 billion minutes (this number does not
include PC-to-phone traffic, traffic routed over end-to-end IP networks, traffic
routed on private networks, or domestic traffic in any country).

     In addition, over the last decade, the volume of traffic on data networks
has grown at an even faster rate. This growth has been driven by several
factors, including technological innovation, high penetration of personal
computers and, in particular, by the rapid expansion of the Internet as a global
medium for communications, information and commerce. International Data
Corporation, a market research firm, estimates that the number of Internet users
worldwide will grow from approximately 142 million in 1998 to approximately 399
million in 2002. This increase in data traffic has necessitated additional data
network capacity and quality. As a result, businesses have invested billions of
dollars in order to meet this need.

     We believe that the combination of increasing demand for voice services and
the proliferation of data networks, with their enhanced functionality and
efficiency, is driving the convergence of voice traffic and data networks,
including the Internet. We expect this transfer of traffic to accelerate as
corporations and network infrastructure providers attach increasing value to
data networks and as the functionality of computers and computing devices, such
as personal digital assistants, is enhanced by voice capability.

Network Infrastructure

     The basic technology of traditional telecommunications is designed for slow
mechanical switches. Communications over the traditional telephone network are
routed through circuits which must dedicate resources to each call until the
call ends, regardless of whether anyone is actually talking on the circuit. This
circuit-switching technology incurs a significant cost per call and does not
efficiently support the integration of voice with data services.
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     Data networks, however, were designed for electronic switching. They break
the data stream into small, individually addressed packages of data which are
routed independently of each other from the origin to the destination.
Therefore, they do not require a fixed amount of bandwidth to be reserved
between the origin and destination of each call. This allows multiple voice or
voice and data calls to be pooled, resulting in these networks being able to
carry more calls with an equal amount of bandwidth.

The Emergence of Voice on Data Networks

     Voice on the Internet consists of both traditional and enhanced voice and
fax services between ordinary phones and the addition of interactive voice
capability to computers, web sites and email. Voice on the Internet serves both
the extensive market of existing phone users and the expanding market of
computer users. We believe data networks provide lower cost than the traditional
telephone network and are better suited to deliver future enhanced services to
both phone users and computer users. Moreover, the Internet is the most
cost-effective data network for transmitting any type of data worldwide,
including voice.

     Telephony based on Internet protocols emerged in 1995, with the invention
of a personal computer program that allowed the transport of voice
communications over the Internet via a microphone connected to a personal
computer. Initial sound quality was poor and the service required that both
parties to the conversation use personal computers instead of telephones. In
1996, the advent of the gateway for the first time offered anyone with access to
a telephone the ability to complete calls on the Internet. A gateway is a
device that transfers calls from the traditional telephone network to a network
such as the Internet, and vice versa.

The Economics of Internet Telephony

     Long distance telephone calls transported over the Internet are less
expensive than similar calls carried over the traditional telephone network
primarily because the cost of using the Internet is not determined by the
distance those calls need to travel. Also, routing calls over the Internet is
more cost-effective than routing calls over the traditional telephone network
because the technology that enables Internet telephony is more efficient than
traditional telephone network technology. The greater efficiency of the Internet
creates cost savings that can be passed on to the consumer in the form of lower
long distance rates or retained by the carrier as higher margins.

     Beyond cost benefits, innovation in the provision of enhanced services is
expected to yield increased functionality as well. We believe such enhanced
functionality will expand the addressable market for Internet services to
include anyone with a telephone. We believe this market is potentially larger
than the market for any other existing Internet service which requires a
computer for access. Moreover, computer users will benefit from interactive
voice being an option in web browsing and other computer-based communications.

Limitations of Existing Internet Telephony Solutions

     The growth of voice on the Internet has been limited in the past due to
poor sound quality caused by technical issues such as delays in packet
transmission and bandwidth limitations related to Internet network capacity and
local access constraints. However, the continuing addition of data network
infrastructure, recent improvements in packet-switching and compression
technology, new software algorithms and improved hardware have substantially
reduced delays in packet transmissions and the effect of these delays. ITXC's
BestValue Routing enables the company to provide its carrier customers with the
consistent quality they require. In fact, ITXC's carrier customers typically do
not tell their customers that their phone-to-phone calls are being transmitted
over the Internet since these callers are receiving the quality that they
expect. International Data Corporation projects that Internet protocol telephony
revenue will grow rapidly to over $23.4 billion in 2003.

     Several large long distance carriers, including AT&T and Sprint, have
announced Internet telephony service offerings. Smaller Internet telephony
service providers have also begun to offer low-cost Internet telephony services
from personal computers to telephones and from telephones to telephones.
Traditional carriers have substantial investments in traditional telephone
network technology, and therefore have been slow to embrace Internet technology.
We believe that these service offerings by large long distance carriers and
smaller providers are generally available in limited geographic areas and can
only complete calls to a limited number of locations.

     We believe that the infrastructure required for a global network is too
expensive for most companies to deploy on their own. This mandates that the
network be a combination of gateways owned by different operators. For a network
to achieve optimal functionality, however, the gateways need to be
interoperable, or able to communicate with one another. As a result, uniform
standards for vendors and manufacturers of Internet telephony equipment and
software need to be developed.

     In recent years, commercial web sites have grown in popularity. Efforts to
enhance these web sites with voice enabled e-commerce features such as
click-and-call contact with a customer service agent have been hampered by the
early quality problems with voice on the Internet described above.

Increasing Trend Toward Outsourcing Telephony Solutions

     We believe that the global reach and functionality of the Internet makes it
especially suited for enhanced voice services. These services, which may include
web-to-phone, phone-to-PC and unified messaging, could be a significant source
of additional revenues to Internet portals, Internet service providers and web
sites that are seeking to expand their service offerings. Such voice services
require considerable expertise and capital to deploy and may involve execution
risk for any Internet portal, Internet service provider or web site lacking this
expertise. We expect that Internet portals, Internet service providers and web
sites will increasingly outsource their
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communications services to companies, like us, that provide the network and
expertise necessary to facilitate those services rather than incurring the risk
and delay of developing and deploying an array of communications services
themselves and undertaking the task of building a global network like ITXC.net.

The ITXC Solution

     We believe that the rapid growth of commercial traffic on ITXC.net
demonstrates that we deliver high quality, low cost voice and fax communications
over the Internet and are well positioned to deliver web-to-phone, ITXC Push to
Talk Service and other Internet-based enhanced voice services. The key
advantages of our solution include:

     .    Quality. We believe that we deliver to our customers high quality
          voice communications over the Internet at competitive pricing. We
          maintain high quality primarily through our proprietary BestValue
          Routing technology and techniques which include ITXC-developed
          monitoring and analysis software and rapid human response from our
          24-hours-a-day, 7-days-a-week network operations center. In addition,
          we blend the redundancy of the public Internet with our use of
          multiple termination affiliates in many cities to help assure the
          reliability and quality of our network. We use dedicated data networks
          and even the traditional telephone network in the rare cases when we
          cannot assure consistent quality on the Internet.

     .    Lower Costs. By using the public Internet, we are able to reach and
          rapidly deploy many affiliates throughout the world at a substantially
          lower capital expense than building the dedicated connections that a
          traditional telephony carrier would require. Also, as a result of our
          ability to use the public Internet, we believe that we have
          significantly lower marginal costs than the traditional telephone
          network or a private data network.

     .    Interoperability. We have led an effort called iNOW! resulting in an
          industry standard for interoperability. More than 45 Internet
          telephony vendors have agreed to comply with the iNOW! initiative. The
          VocalTec, Cisco and Lucent equipment installed on ITXC.net is already
          interoperable to some extent under a version of iNOW!. We believe that
          as a result, we and our affiliates have the only multi-vendor
          interoperable network in the Internet protocol telephony industry.
          Although we have transferred the iNOW! trademark and web site to an
          industry standards body, we intend to continue to provide leadership
          in interoperability of voice over the Internet services.

     .    Global Scale. Our network is overlaid on the public Internet to
          provide a global communications medium to voice service providers.
          ITXC.net is scalable--by using the public Internet and our global
          network of affiliates, we are able to rapidly and easily add capacity
          when needed. In addition, we believe that we are able to connect new
          affiliates to ITXC.net in significantly less time than it would take
          for a traditional telephony carrier or dedicated data network to
          establish a dedicated connection. For example, we connected 16 cities
          in China to ITXC.net within three weeks after we signed an agreement
          with China Telecom. Moreover, we have a business model of purchasing
          terminating minutes directly from affiliates and selling call
          completion to customers and affiliates. This model eliminates the need
          for complex settlement between carriers which had previously slowed
          the deployment of a global network.

     .    Easy Access. We offer our customers two ways to connect from their
          switches to ITXC.net: through normal dedicated connections and through
          SNARCs. SNARCs are specially built devices, which we own and install
          on our carrier customers' premises in order to eliminate the cost of
          dedicated connections from their switches to our network hubs. SNARCs
          allow our customers to benefit from the global termination
          capabilities of ITXC.net by bringing the advantages of voice over the
          Internet to the customer's premises. In addition, our affiliates can
          terminate calls directly from ITXC.net using similar SNARC equipment
          that we install on their premises.

     .    Enhancement of e-commerce Services. Because ITXC.net can deliver high
          quality voice on the Internet globally, we believe it can become a
          preferred network for a variety of voice-enhanced web sites and enable
          us to offer services to e-commerce providers who want to provide their
          customers with the ability to talk over the Internet while browsing a
          web site or after receiving email. Through our eFusion acquisition, we
          have begun offering a suite of such services over ITXC.net.

     .    Attractive Platform for New Services. Because of our leadership
          position in establishing interoperability standards and the breadth of
          our deployed network, developers of new services are bringing products
          to us for evaluation and possible deployment on ITXC.net. We believe
          that our operation as a voice application service provider opens our
          network to new categories of customers, including Internet portals and
          web sites.

Our Strategy

     Our goal is to remain the leading wholesale provider of Internet-based
voice and fax services as measured by revenue and network size. In order to
achieve this goal we intend to:

     .    Exploit Our Early Entrant Status and Worldwide Network

     As of January 31, 2001, we had aggressively deployed ITXC.net in 238
international cities. We believe that with the increasing use of this network,
ITXC has developed a reputation in the communications industry for providing
high quality voice and fax services over the Internet. In addition, we believe
our experience as one of the first providers of Internet-based voice services
has placed us at the
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forefront of developing the proprietary tools and techniques which enable us to
offer our services. We intend to continue to enhance and capitalize upon our
reputation and experience in the communications industry as we provide existing
and new voice and fax services.

     .    Rapidly Expand ITXC.net by Adding Additional Affiliates Worldwide

     We have used our affiliate structure to quickly achieve a global reach for
ITXC.net. We believe that this approach allows us to quickly expand and develop
a broader network than our competitors. We intend to continue to rapidly add new
affiliates worldwide in order to provide our customers with additional
termination points.

     .    Capitalize on the Cost Advantages of the Internet

     By overlaying ITXC.net on the public Internet, we believe that we are able
to capture significant cost and capital savings. Instead of incurring the
capital expense to deploy a global physical network, we are able to carry a
substantial portion of our customer's traffic using the existing Internet
infrastructure together with our affiliate network. We believe that it would
require significantly more capital for a carrier using traditional methods of
network deployment to implement a network with the same capacity and global
reach as ITXC.net. Additionally, the cost of transporting our traffic over the
Internet is largely not distance sensitive, since we pay only for Internet
access. We believe these factors enable us to benefit from significant cost
savings that are not available to operators of the traditional telephone network
or private data networks.

     .    Use Voice to Enhance Internet Applications

     ITXC Push to Talk Service increases sales for traditional and new merchants
by making the agents in their call centers directly accessible from their web
sites and targeted email. We believe that the reach and quality of ITXC.net,
along with the strong patent portfolio acquired with eFusion, have positioned
ITXC as a leader in this new industry.

     .    Expand Our Role as a Voice Application Service Provider

     With our webtalkNOW! service we have positioned ourselves as a voice
application service provider, capable of providing an outsourced solution for
web-to-phone services for Internet portals, Internet service providers and web
sites. We believe that our webtalkNOW! service extends the benefits of the
consistent quality, global reach and cost-effectiveness of ITXC.net to new
categories of customers beyond our original customer base.

     .    Establish ITXC.net as the Standard for Quality in Our Industry

     By combining our BestValue Routing approach with our knowledge of gateway
and Internet technology, we believe that we have demonstrated that the Internet
can be an effective medium for two-way voice and fax communication. By
continuing to provide reliable high quality voice and fax service with a global
reach, our goal is to be the network of choice for new enhanced services that
incorporate voice.

     .    Provide our Customers and Affiliates with Direct Access to ITXC.net

     We are committed to providing our customers with high quality, low cost
voice service. SNARCs provide our customers with a voice communications solution
that minimizes reliance on the traditional telephone network. By installing
SNARCs on customer premises, we can provide our customers with direct access to
all of the ITXC.net termination points worldwide without the need for a direct,
dedicated connection to one of our network hubs. We believe that, in the future,
an extension of our SNARC program will connect our customers' customers directly
to the Internet. We now provide selected affiliates with direct access to voice
traffic sent over ITXC.net for termination without the need for a direct,
dedicated connection to one of our network hubs and thus are able to improve the
economics of our services to them. We believe that SNARCs will strengthen our
customers' and affiliates' relationships with us and position us to deploy
additional Internet-based enhanced voice services over ITXC.net.

     .    Deliver Additional Internet Voice Services Over ITXC.net

     We believe that Internet telephony represents only the beginning of the
evolution of the Internet as a medium for voice and fax services and that our
web-to-phone service represents only the early stage of this evolution. Through
enhancements to ITXC.net, we can position ourselves to provide the network for
wide commercial deployment of new voice and fax services from traditional
telephony technology suppliers like Lucent, new entrants like Cisco, Internet
telephony companies like VocalTec and a number of start-ups. We believe that, in
the future, the Internet will serve as a platform for existing and enhanced
voice and fax services that may be accessed from traditional phones, personal
computers and a variety of devices that span the range between telephones and
personal computers.

ITXC.net

     ITXC.net, a global communications network, allows us to deliver reliable,
high quality voice and fax service through an actively-managed network overlaid
on the public Internet.

     We have implemented ITXC.net by using the public Internet to connect
ITXC-owned network hubs in the U.S. and London with our affiliates around the
world. We use ITXC-developed software and skilled network management personnel
to help assure the
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reliability and quality of voice transmission over the Internet. To further
enhance the reliability of ITXC.net, we are also able to route and terminate
voice traffic through alternate channels.

The key components of ITXC.net include:

     .    The Public Internet

     ITXC.net routes voice traffic over the public Internet; this allows
traditional telephone users to benefit from Internet cost savings while calling
phone-to-phone. By using the Internet, we are able to reach and rapidly deploy
many affiliates throughout the world at what we believe to be significantly
lower capital costs than that of building the dedicated connections that a
traditional telephony carrier or dedicated data network would require.

     .    Global Network of Affiliates

     We have a global network of independent affiliates which own their own
gateways and originate and/or terminate voice traffic over ITXC.net. We have
used our affiliate structure to rapidly achieve what we believe to be the
broadest global network in the Internet telephony marketplace. As of January 31,
2001, we had affiliates in 238 international cities operating 424 ITXC.net
points of presence. Our affiliates range from small Internet service providers
to traditional telephone companies.

     .    Multiple Access Points

     As of January 31, 2001, we had four network hubs, one in New York, one in
New Jersey, one in California and one in London, each consisting of a switch and
multiple gateways. Our customers access ITXC.net through dedicated connections
from their switches to these network hubs or by using SNARCs located on their
premises. SNARCs connect our carrier customers' switches to the Internet and
ITXC.net and thereby avoid costly, distance-based dedicated line charges
associated with connecting customer switches to our network hubs. Selected
affiliates connect directly to the Internet to terminate calls using similar
equipment. As of January 31, 2001, we had installed over 70 SNARCs at 33 carrier
customer sites and 45 SNARCS at 30 affiliate locations.

     .    BestValue Routing

     Our BestValue Routing approach employs ITXC-developed software and
techniques to efficiently and cost-effectively route voice traffic over
ITXC.net. We believe that our ability to develop and deploy intelligent routing
methods represents a significant competitive advantage. We have patents pending
in this area and we acquired related granted patents with our eFusion
acquisition. We believe that this approach enables us to provide consistent,
reliable quality since we are able to avoid the majority of Internet congestion
points and minimize packet loss and delay.

     We implement our BestValue Routing approach from our 24-hours-a-day,
7-days-a-week network operations center where we poll our affiliates' gateways
periodically to assure their stability, test the quality of Internet connections
to the gateways and collect call detail records in near real-time to monitor the
quality of calls placed over our network. We use network analysis software to
compare monitoring data to predetermined parameters from our database of call
detail records. This software generates reports on a per route basis when the
measured parameters fail to meet predetermined standards. Frequent analysis of
this information allows us to rapidly correct network problems such as
congestion or inoperative gateways.

     Our monitoring and analysis software helps our staff to manage a routing
scheme across multiple switches and gateways around the world. Our routing
technicians establish predetermined percentages of traffic to be sent to each
provider, based both on price and quality. If a particular Internet route or
termination provider is not meeting our standards, our staff switches to a
better quality route and then resolves the problem. For example, if transport
through the public Internet proves to be unreliable on a particular route, we
can reroute the traffic through dedicated data networks or the traditional
telephone network to terminate the call in a traditional manner. The use of
multiple termination affiliates in many cities in which we operate provides us
with numerous termination possibilities to help ensure completed calls with
consistent quality.

Our Strategic Carrier and Technology Partners

     We believe that our strategic relationships with carrier affiliates are
important because they allow us to extend the geographic reach of ITXC.net. We
believe that these relationships will lead to a broader origination/termination
presence in key areas and allow us to provide service over our own network for
more of our customers. We also expect that these relationships will assist us in
focusing our development of new Internet-based voice services

     Because gateways are critical to the infrastructure of ITXC.net, we have
strategic relationships with Cisco, Lucent, Clarent and VocalTec, each of which
is a leading gateway and/or switch manufacturer. Lucent and Cisco have provided
us with vendor financing in connection with the purchase of gateways and other
equipment. VocalTec is an equity investor in ITXC.

     We expect our strategic relationships to continue and that our
relationships with these and other technology partners will help drive the
development of new voice, fax and voice-enabled services over ITXC.net.

Our Services
                                       6
<PAGE>

ITXC WWeXchange Service

     In April 1998, we introduced ITXC WWeXchange service, the first application
enabled by ITXC.net. This service provides international call completion to our
customers and enables them to offer their own customers phone-to-phone global
voice and fax service. ITXC WWeXchange service relies upon Internet telephony
technology. Such technology permits calls originated by a telephone to be
transmitted over the Internet. We believe that Internet telephony is the first
technology that allows non-computer users to access the Internet.

     ITXC WWeXchange service provides our customers with high quality, low cost
global long distance service without their having to understand or deploy
Internet telephony technology themselves. We believe that the high quality of
calls completed using ITXC WWeXchange service allows our customers to use
ITXC.net as an alternative to traditional voice traffic networks.

     We believe that our affiliates benefit from ITXC WWeXchange service because
they:

     .    rapidly obtain a flow of international traffic without incurring
          significant sales or marketing costs;

     .    obtain high quality international long distance for their originated
          calls at lower rates than through traditional telephony;

     .    connect directly to other affiliates while having a single billing
          relationship with us; and

     .    have a global reach without incurring the incremental costs of
          building and operating multiple facilities.

SNARCs

     SNARCs are specially built gateways that we place on selected customer
premises in order to eliminate the cost of backhaul from customer switches to
our switches. Until we launched our SNARC program in April 1999, customers had
to bear the expense of running dedicated circuits from their facilities to their
suppliers. This is known as backhaul. Our customers also typically ran circuits
from their facilities to our network hubs in New York or Los Angeles. However,
the introduction of our SNARC program reduces the expense of backhaul by
transporting traffic directly to the Internet and ITXC.net in whatever city the
customer is located. We believe that this use of Internet capability to
eliminate the expense of backhaul makes us more attractive to customers located
away from major telephony hubs. In addition, since December 1999 we have been
installing similar equipment on selected affiliates' premises to connect them
directly to the Internet for the purpose of their terminating calls originated
over ITXC.net. As of January 31, 2001, we had installed over 70 SNARCs at 33
customer sites and 45 SNARCS at 30 affiliate locations.

ITXC Push to Talk Service

     ITXC Push to Talk Service adds interactive voice to e-commerce web sites
and targeted email. e-commerce enterprises that use ITXC Push to Talk Service on
their web sites and in email allow consumers to talk in real time with a call
center agent while still logged onto the Internet. Consumers receive immediate
assistance and information on products and services and can complete purchases
with the call center agent. We believe that our customers use ITXC Push to Talk
Service because it helps them increase sales from their web sites and targeted
email. ITXC Push to Talk Service features three methods of consumer to call
center interaction:

     .    Phone-to-Phone. The consumer can speak with the merchant or call
          center agent by telephone. A consumer that has a telephone line that
          is not being used to access the Internet provides his or her telephone
          number to us and receives an immediate telephone call from a call
          center agent or other representative. We place a call to the consumer,
          and a call to the agent or representative, and then we connect both
          calls together.

     .    PC-to-Phone. The consumer can connect directly to the enterprise's
          call center or other representative through a PC-to-telephone call
          over the Internet.

     .    Text Chat. If the call center is connected to the Internet, a consumer
          can choose to enter a live text chat session with a call center agent.

     ITXC Push to Talk Service is used in a variety of applications besides
e-commerce web sites, including directed electronic mail, Internet service
directories and in advertising banners. As of January 31, 2001, ITXC Push to
Talk Service had been deployed on 30 web sites and three additional customers
had signed contracts for the service but had not yet deployed ITXC Push to Talk
buttons on their web sites.

webtalkNOW! Service

     We believe that ITXC.net has the same advantages of consistent quality,
global coverage and competitive prices for web-to-phone calls as it does for
phone-to-phone calls. Our webtalkNOW! service provides an outsourced solution to
Internet portals, Internet service providers and web sites allowing them to
offer self-branded web-to-phone service to their users. We can provide our
customers with high quality, global call completion over ITXC.net for their
end-users' web-to-phone calling and the dialing software necessary for

                                       7
<PAGE>

their users to actually place calls over ITXC.net from their PCs. We believe
that our webtalkNOW! service will assist our customers in building their own
brands and in retaining their end-users.

Future Enhanced Voice Services

     We intend to make significant investments to develop and market additional
services for use over ITXC.net when we perceive that there is a viable market
opportunity for us. We believe that as a result of the convergence of the data
and communications networks and the capabilities and size of ITXC.net, we will
be able to offer next-generation, enhanced voice services to both new and
existing customers when the need arises. In addition, we believe that ITXC.net's
open architecture, combined with the strength and size of our customers,
affiliates and strategic relationships, will attract developers of voice
services to our network.

     We may introduce the following enhanced voice services in the future and we
may introduce other services not listed. However, we cannot provide assurances
that we will be able to successfully develop or implement these or other
services in the future.

     .    Enhanced Phone-to-Phone Service: Planned enhancements to our existing
          ITXC WWeXchange Service include:

          .    enhanced 800 and 900 service;

          .    number portability;

          .    subscriber authentication;

          .    conferencing services; and

          .    subscriber identification through voice prints and voice
               commands.

     .    Phone-to-PC Service: We believe that subscribers will be able to
          specify that they want to receive ordinary telephone calls on a PC
          rather than a standard telephone and that ITXC.net will be able to
          complete these calls.

     .    Device-to-Phone Service and Phone-to-Device Service: There are
          Internet phone devices available on the market today that allow owners
          to make calls over the Internet. While there is no incremental cost
          for these calls over the cost of Internet access, calls can only be
          made to others who have Internet phones. We may use ITXC.net to enable
          the completion of inexpensive calls from these devices to any
          telephone. In addition, we believe that other devices, such as
          personal digital assistants, will become voice-enabled.

     .    Unified Messaging Service: We may be able to offer a service over
          ITXC.net that our customers can use to provide their customers with
          telephone access to voice messages, e-mail and faxes. In addition, our
          customers may be able to provide to their customers access to voice
          mail from personal computers.

     .    Single Number Service: We believe that ITXC.net will be able to
          support a service enabling subscribers to maintain a single, permanent
          telephone number for all calls regardless of their location. This
          single number would serve as a billing number when the subscriber is
          placing calls and as a reach-me number for receiving calls. The number
          could be reassigned to any phone or personal computer. This type of
          call-forwarding would take advantage of Internet-addressing and
          ITXC.net to eliminate most of the costs and technical obstacles which
          have prevented the widespread deployment of such services on the
          traditional telephone network.

Sales, Marketing and Distribution

     Our sales and marketing goals are to:

     .    expand the use of ITXC WWeXchange Service by our existing call
          origination customers and affiliates and further expand our call
          origination customer base;

     .    expand the use of ITXC Push to Talk Service by our existing customers
          and find both new applications and new customers for that service;

     .    expand the use of ITXC webtalkNOW! Service by Internet portals,
          Internet service providers and web sites, especially for paid calling;

     .    expand our terminating affiliate base;

     .    increase the number of carriers that are ITXC affiliates; and

     .    maintain and expand our market leadership position among providers of
          voice and fax services over the Internet.

     We use the reputations and industry relationships cultivated by our senior
management and our status as an early entrant to attract affiliates to ITXC.net.
We typically meet potential affiliates at Internet and telephony trade shows and
seminars we conduct on

                                       8
<PAGE>

Internet telephony. We often meet potential customers through directed sales
calls by our sales personnel and at telephony trade shows. We also target
strategic affiliates internationally and have made joint sales calls with Cisco,
Clarent, Lucent and VocalTec.

     We sell ITXC Push to Talk Service both directly to corporate customers and
through ad agencies and other providers of e-commerce services. That service has
been particularly attractive to the hospitality and travel industry and is
gaining traction in the financial services industry among others.

     We have a dedicated sales force selling phone-to-phone and PC-to-phone
calling services which is supplemented by members of our executive management
team. This sales force also recruits the affiliates that terminate calls for us
around the world. Our salespeople are based regionally within the U.S. and in
Singapore, London, Miami, Bahrain and Moscow, as well as in our corporate
office. We also have sales agents located in China and Venezuela. Our senior
management focuses on maintaining and cultivating relationships with our
customers. We assign our sales representatives specific accounts based on their
level of experience, location and the quality of the relationship between the
representative and the customer. We compensate our sales staff based in large
part on incentive-based goals and measurements. In addition to our marketing and
sales staff, we rely on our executive and operations personnel, including the
staff of our 24-hours-a-day, 7-days-a-week network operations center, to
identify sales opportunities within existing customer accounts and to provide
quality customer service. ITXC has a separate dedicated sales force in its
e-commerce division to sell ITXC Push to Talk Service.

     We also maintain an Internet web site which, among other things, provides
information to prospective customers and affiliates concerning the technical and
other requirements for becoming a part of ITXC.net.

     Our primary marketing and sales support is centralized and directed from
our headquarters office in Princeton, New Jersey. We have a full-time staff
dedicated to our marketing efforts. The marketing and sales support staff are
charged with implementing our marketing strategies, prospecting and producing
sales presentation materials and proposals.

     Initially, we targeted medium and large e-commerce enterprises as potential
users of ITXC Push to Talk Service. We anticipate that once the initial market
deployment phase for ITXC Push to Talk Service is complete, our sales force will
increasingly focus on developing and maintaining resale and distribution
channels, rather than marketing directly to enterprise customers and
telecommunications carriers. We have also entered into distribution agreements
with a number of companies to resell and market ITXC Push to Talk Service
internationally.

New Services Development and Implementation

     Our development team is dedicated to the improvement and enhancement of the
monitoring and analysis software tools and Internet management systems we use to
achieve BestValue Routing, the enhancement of our management systems, including
our billing and customer care software, and the development and implementation
of new Internet-based voice services. Our future success will depend, in part,
on our ability to improve existing technology and develop and/or implement new
voice services that incorporate leading technology.

Competition

ITXC WWeXchange Service and webtalkNOW!

     The long distance telephony market and the Internet telephony market are
highly competitive. There are several large and numerous small competitors, and
we expect to face continuing competition for ITXC.net based on price and service
offerings from existing competitors and new market entrants in the future. The
principal competitive factors in our market include price, quality of service,
breadth of geographic presence, customer service, reliability, network size and
capacity and the availability of enhanced communications services. Our
competitors include major and emerging telecommunications carriers in the U.S.
and foreign telecommunications carriers.

     .    Internet Protocol and Internet Telephony Service Providers

     During the past several years, a number of companies have introduced
services that make Internet telephony or voice services over the Internet
available to businesses and consumers. Concert Global Clearinghouse, iBasis 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. These companies may offer the kinds of voice services we intend to
offer in the future. In addition, companies currently in related markets have
begun to provide voice over the Internet services or adapt their products to
enable voice over the Internet services. These related companies may potentially
migrate into the Internet telephony market as direct competitors.

     .    Telecommunications Companies and Long Distance Providers

     A number of telecommunications companies, including AT&T, Deutsche Telekom,
Level Three, MCI WorldCom, Genuity and Qwest Communications, currently maintain,
or plan to maintain, data networks to route the voice traffic of other
telecommunications companies. These companies, which tend to be large entities
with substantial resources, generally have large budgets available for research
and development, and therefore may further enhance the quality and acceptance of
the transmission of voice over the Internet.

                                       9
<PAGE>

ITXC Push to Talk Service

     During the past year, a number of vendors in the web-enabled call center
market have formed alliances with other vendors to help round out their service
offerings. In addition, competitor alliances with established systems
integrators or with integrated customer relationship management vendors may make
the stand-alone ITXC Push to Talk Service a less competitive solution. Our most
direct competitors generally offer several call connection options, including
text chat and voice over the Internet with some form of collaboration. The
primary competitors for ITXC Push to Talk Service include VocalTec; WebEx;
WebCenter; WebLine, recently purchased by Cisco; Net2Phone; PakNetX, recently
purchased by Aspect; CosmoCom; Genesys; LivePerson and Quintus.

General

     Many of our competitors have substantially greater financial, technical and
marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we
have. As a result, certain of these competitors may be able to adopt more
aggressive pricing policies which could hinder our ability to market our
Internet-based voice services. We believe that our key competitive advantages
are our ability to deliver reliable, high quality voice service over the
Internet in a cost-effective manner, our technology and the patents that protect
it, and the size and rapid growth of our network. We cannot provide assurances,
however, that this advantage will enable us to succeed against comparable
service offerings from our competitors.

Government Regulation

Regulation of Internet Telephony

     The use of the Internet to provide telephone service is a fairly recent
market development. At present, ITXC is not aware of any domestic, and is only
aware of a few foreign, laws or regulations that prohibit voice communications
over the Internet.

     United States. ITXC believes that, under U.S. law, the Internet-related
services that ITXC provides constitute information services as opposed to
regulated telecommunications services, and, as such, are not currently actively
regulated by the FCC or any state agencies charged with regulating
telecommunications carriers. Nevertheless, aspects of ITXC's operations may be
subject to state or federal regulation, including regulation governing universal
service funding, disclosure of confidential communications and excise tax
issues. ITXC cannot provide assurances that Internet-related services will not
be actively regulated in the future. Several efforts have been made in the U.S.
to enact federal legislation that would either regulate or exempt from
regulation services provided over the Internet. Increased regulation of the
Internet may slow its growth, particularly if other countries also impose
regulations. Such regulation may negatively impact the cost of doing business
over the Internet and materially adversely affect ITXC's business, operating
results, financial condition and future prospects.

     The FCC has considered whether to impose surcharges or other common carrier
regulations upon certain providers of Internet telephony, primarily those which,
unlike ITXC, provide Internet telephony services directly to end users. While
the FCC has presently refrained from such regulation, the regulatory
classification of Internet telephony remains unresolved.

     Specifically, the FCC has expressed an intention to further examine the
question of whether certain forms of phone-to-phone Internet telephony are
information services or telecommunications services. The two are treated
differently in several respects, with certain information services being
regulated to a lesser degree. The FCC has noted that certain forms of
phone-to-phone Internet telephony bear many of the same characteristics as more
traditional voice telecommunications services and lack the characteristics that
would render them information services.

     If the FCC were to determine that certain Internet-related services
including Internet telephony services are subject to FCC regulations as
telecommunications services, the FCC could subject providers of such services to
traditional common carrier regulation, including requirements to make universal
service contributions, and pay access charges to local telephone companies. It
is also possible that the FCC may adopt a regulatory framework other than
traditional common carrier regulation that would apply to Internet telephony
providers. Any such determinations could materially adversely affect ITXC's
business, financial condition, operating results and future prospects to the
extent that any such determinations negatively affect the cost of doing business
over the Internet or otherwise slow the growth of the Internet. Congressional
dissatisfaction with FCC conclusions could result in requirements that the FCC
impose greater or lesser regulation, which in turn could materially adversely
affect ITXC's business, financial condition, operating results and future
prospects.

     State regulatory authorities may also retain jurisdiction to regulate
certain aspects of the provision of intrastate Internet telephony services.
Several state regulatory authorities have initiated proceedings to examine the
regulation of such services. Others could initiate proceedings to do so.

     One of ITXC's subsidiaries is subject to regulation by the FCC and the New
York Public Service Commission as a result of having been granted authorizations
to provide telecommunications services by these entities.

     International. The regulatory treatment of Internet telephony outside of
the U.S. varies widely from country to country. A number of countries that
currently prohibit competition in the provision of voice telephony also prohibit
Internet telephony. Other

                                      10
<PAGE>

countries permit but regulate Internet telephony. Some countries will evaluate
proposed Internet telephony service on a case-by-case basis and determine
whether it should be regulated as a voice service or as another
telecommunications service. Finally, in many countries, Internet telephony has
not yet been addressed by legislation or regulation. Increased regulation of the
Internet and/or Internet telephony providers or the prohibition of Internet
telephony in one or more countries could materially adversely affect our
business, financial condition, operating results and future prospects. The
European Commission regulatory regime, for example, distinguishes between voice
telephony services and other telecommunications services.

     In January 1998, the European Commission issued a communication addressing
whether Internet telephony was voice telephony and thus subject to regulation by
the member states of the European Union. Consistent with its earlier directives,
the Commission concluded that no form of Internet telephony currently meets the
definition of voice telephony subject to regulation by the member states of the
European Union. The European Commission stated that only phone-to-phone
communications reasonably could be considered voice telephony and that, at
present, even phone-to-phone Internet telephony does not meet all elements of
its voice telephony definition. Therefore, the European Commission concluded
that, at the present time, voice over Internet services cannot be classified as
voice telephony. More recently, in September 2000, after requesting comments
from interested parties the European Commission issued a subsequent
communication in which it reaffirmed that Internet telephony is not currently
voice telephony.

     As a result of the European Commission's conclusion, providers of Internet
telephony should be subjected to no more than a general authorization or
declaration requirement by European Union member countries. However, ITXC cannot
provide assurances that more stringent regulatory requirements will not be
imposed by individual member countries of the European Union, since Commission
communications, unlike directives, are not binding on the member states. The
member countries therefore are not obligated to reach the same conclusions as
the Commission on this subject so long as they adhere to the definition of voice
telephony in the Services Directive. Moreover, in its January 1998 IP Telephony
Communication, the European Commission stated that providers of Internet
telephony whose services satisfy all elements of the voice telephony definition
and whose users can dial out to any telephone number can be considered providers
of voice telephony and may be regulated as such by the member states of the
European Union. ITXC cannot provide assurances that the services provided over
ITXC.net will not be deemed voice telephony subject to heightened regulation by
one or more member states. Moreover, ITXC cannot provide assurances that the
failure of ITXC or any of its customers or affiliates to obtain any necessary
authorizations will not have a material adverse effect on ITXC's business,
financial condition, operating results and future prospects.

     One of ITXC's subsidiaries, ITXC, Ltd., is subject to regulation in the
United Kingdom as a result of having been granted authorization to provide
telecommunications services by the Department of Trade and Industry. Given that
ITXC, Ltd. has commenced providing services, it must comply with all applicable
regulations imposed on telecommunications carriers in the U.K.

     ITXC is also providing service in countries where regulation of Internet
telephony is far more restrictive than in the European Union. Specifically, ITXC
has a strategic affiliate relationship with China Telecom to provide Internet
telephony services in the People's Republic of China. See "ITXC's Strategic
Carrier and Technology Partners." China currently prohibits foreign ownership of
telecommunications companies and strictly limits competition in the
telecommunications sector. However, a recent yet to be implemented trade
agreement between the U.S. and China enables China's entry into the World Trade
Organization and may open up the Chinese Internet market to foreign investment.
In the event that this agreement is implemented, U.S. firms would be permitted
to invest in Chinese-based Internet ventures. Internet telephony is now being
provided in China by China Telecom, Unicom, and Jitong Communications.

Certain Other Regulation Affecting the Internet

     United States. Congress has recently adopted legislation that regulates
certain aspects of the Internet, including online content, user privacy and
taxation. In addition, Congress and other federal entities are considering other
legislative and regulatory proposals that would further regulate the Internet.
Congress has, for example, considered legislation on a wide range of issues
including Internet spamming, database privacy, gambling, pornography and child
protection, Internet fraud, privacy and digital signatures. Various states have
adopted and are considering Internet-related legislation. Increased U.S.
regulation of the Internet may slow its growth, particularly if other
governments follow suit, which may negatively impact the cost of doing business
over the Internet and materially adversely affect our business, financial
condition, results of operations and future prospects.

     International. The European Union has also enacted several directives
relating to the Internet. The European Union has, for example, adopted a
directive that imposes restrictions on the collection and use of personal data.
Under the directive, citizens of the European Union are guaranteed rights to
access their data, rights to know where the data originated, rights to have
inaccurate data rectified, rights to recourse in the event of unlawful
processing and rights to withhold permission to use their data for direct
marketing. The directive could, among other things, affect U.S. companies that
collect or transmit information over the Internet from individuals in European
Union member states, and will impose restrictions that are more stringent than
current Internet privacy standards in the U.S. In particular, companies with
offices located in European Union countries will not be allowed to send personal
information to countries that do not maintain adequate standards of privacy.
Although ITXC does not engage in the collection of data for purposes other than
routing its services and billing for its services, the directive is quite broad
and the European Union privacy standards are stringent. Accordingly, the
potential effect on the development of ITXC in this area is uncertain.

Proprietary Rights

     Proprietary rights are important to our success and our competitive
position. As of January 31, 2001, we had four issued patents, two patents
allowed pending issuance, and had applied for 15 additional patents. As of
January 31, 2001, we had 11 registered

                                      11
<PAGE>

trademarks and 19 pending applications for trademarks in the U.S., and had 21
registered trademarks and 16 pending applications for trademarks in other parts
of the world. The laws of some foreign countries do not protect our proprietary
rights to the same extent as do the laws of the U.S., and effective copyright,
trademark and trade secret protection may not be available in such
jurisdictions. In general, our efforts to protect our intellectual property
rights through copyright, trademark and trade secret laws may not be effective
to prevent misappropriation of our content, and our failure to protect our
proprietary rights could materially adversely affect our business, financial
condition, operating results and future prospects. Despite such protection, a
third party could, without authorization, copy or otherwise appropriate our
proprietary network information and other proprietary information about our
services and technology. Our agreements with employees, consultants and others
who participate in development activities could 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.

     Enforcing our patent rights could result in costly litigation. Our patents
could be invalidated in litigation. Should this happen, we will lose a
significant competitive advantage. Additionally, our competitors could be
awarded patents on technologies and business processes that could require us to
significantly alter our technology, change our business processes or pay
substantial license and royalty fees. In addition, we have, from time to time,
received notices alleging patent infringement claims and are currently involved
in defending a legal proceeding involving patent infringement claims (see "Legal
Proceedings"). Claims of infringement, whether successful or not, could
seriously harm our business, financial condition, results of operations and
prospects.

Employees

     As of January 31, 2001, we employed 303 people. None of our employees is
subject to any collective-bargaining arrangements, and we consider our relations
with our employees to be good.

Item 2. Properties
------------------

     Our principal executive office is located in Princeton, New Jersey, where
we lease approximately 34,000 square feet. We have network hubs in New York
City, Jersey City, New Jersey, Los Angeles and London, under co-location
arrangements. We have sales offices in Singapore and London. In June 2000, we
signed a lease for approximately 60,000 additional square feet of space near our
present location in Princeton, New Jersey. We expect to be able to begin using
that new space before the end of 2001. We believe that we will be able to obtain
additional space on commercially reasonable terms to meet future requirements.

Item 3.  Legal Proceedings
-------  -----------------

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

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

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

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

     Not applicable.

Item 4A.  Executive Officers of the Registrant
--------  ------------------------------------

     The Company's executive officers, their respective ages and their positions
with the Company are set forth below:

<TABLE>
<CAPTION>
         Name                       Age                      Position
<S>                                 <C>
         Tom I. Evslin              57                       Chairman  of  the  Board,   Chief   Executive Officer and
                                                             President

         Edward B. Jordan           40                       Executive  Vice  President,  Chief  Financial Officer,
                                                             Treasurer, Secretary and Director

         Luis Machuca               43                       Executive Vice President and General  Manager - e-commerce

         Steven J. Ott              40                       Executive Vice President, Global Sales
</TABLE>

                                      12
<PAGE>

<TABLE>
<S>                                 <C>
         Thomas J. Shoemaker        44                       Executive Vice President, Business Development; General Manager of e-
                                                             calling Subscriber Services

         Eric G. Weiss              34                       Executive Vice President, ITXC.net

         Mary A. Evslin             52                       Vice President, Marketing and Customer Success

         Bradley E. Miller          34                       Vice President of Network Development and Engineering
</TABLE>


     Tom I. Evslin, our founder, has been Chairman of the Board, Chief Executive
Officer and President since our inception in July 1997. From December 1994 until
July 1997, Mr. Evslin was employed by AT&T, where he designed its Internet
strategy and launched and ran its Internet service provider, AT&T WorldNet
Service. From December 1991 until December 1994, he worked for Microsoft, where
he last served as General Manager, Server Applications Division from May 1993.
From 1969 to 1991, he was Chairman and Chief Executive Officer of Solutions,
Inc., a communications software development company. He is the Chairman of the
Policy Committee and a member of the Board of the Voice On The Net Coalition.
Mr. Evslin served on the board of directors of VocalTec from 1997 until his
resignation on June 10, 1999. He is Mary A. Evslin's husband.

     Edward B. Jordan has been an Executive Vice President since February 1999,
has served as our Chief Financial Officer, Secretary and Treasurer since he
joined us in September 1997 and has served as a Director since April 1998. From
September 1997 until February 1999, he was our Vice President, Administration.
For ten years prior to joining us, Mr. Jordan was employed by Dialogic
Corporation, a manufacturer of computer telephony products, serving first as
Controller and then as Chief Financial Officer, Treasurer and Vice President.
Prior to joining Dialogic, Mr. Jordan served in the Audit Department of Deloitte
& Touche from 1982 to 1986. Mr. Jordan is a certified public accountant.

     Luis Machuca joined ITXC in October 2000 as Executive Vice President and
General Manager - e-commerce. From September 1999 until October 2000, Mr.
Machuca served as President and Chief Operating Officer of eFusion, Inc. (which
was acquired by ITXC in October 2000). From December 1998 until September 1999,
Mr. Machuca was on sabbatical and served on advisory boards and was active in a
number of nonprofit organizations. From September 1996 until December 1998, Mr.
Machuca was Executive Vice President of the Commercial Division of Packard Bell
NEC. From August 1981 until September 1996, Mr. Machuca worked at Intel
Corporation in a variety of roles, including General Manager, Contract
Manufacturing Operations; Director of Operations, PC Enhancement Division;
Co-General Manager, OEM Products and Services Division; and Director of
Marketing, Desktop Products Group.

     Steven J. Ott was our Vice President, Global Sales from January 1998 until
December 1999, when he was promoted to Executive Vice President and assigned
responsibility for global sales of both ITXC WWeXchange Service and e-calling
services sold through portals, carriers and ISPs to subscribers. From August
1994 to January 1998, Mr. Ott served as Vice President of Global Sales and
Support at Voxware, Inc., a software company providing core audio compression
algorithms and applications to technology companies. Prior to August 1994, Mr.
Ott served first as a Director and then as Vice President of Corporate
Development at Legent Corporation, a software development company.

     Thomas J. Shoemaker joined us in January 2000 as our Executive Vice
President of Business Development, responsible for both new service development
and mergers and acquisitions. In December 2000, Mr. Shoemaker assumed additional
responsibility as our General Manager of e-calling Subscriber Services. Prior to
joining us, from August 1998 to December 1999, he was President and Chief
Executive Officer of Electric Schoolhouse, an Internet education company
providing application and information services to parents, teachers, students
and schools for use at home and in the classroom. From August 1997 to August
1998, Mr. Shoemaker was the Vice President responsible for AT&T's WorldNet
Service. Prior to that role, he held a number of business, technical, and
marketing positions in AT&T Business Services, Bell Laboratories and Bell
Communications Research from September 1979 to August 1997.

     Eric G. Weiss joined us in October 1997 as our Business Unit Manager,
WWeXchange Service and served in that capacity until May 1998. From May 1998 to
December 2000, Mr. Weiss served as Vice President and Business Unit Manager,
WWeXchange Service. In December 2000, Mr. Weiss was promoted to Executive Vice
President and assumed responsibility for the operation of ITXC.net. From May
1995 to October 1997, he was employed by Dialogic Corporation as a Product Line
Manager. From September 1994 until May 1995, Mr. Weiss was a Manager with BCE
Ventures, Bell Canada Enterprises (BCE) Inc., a telecommunications firm. From
1991 until September 1994, he held various management positions with Hewlett
Packard Company, a manufacturer of electronic equipment.

     Mary A. Evslin has been our Vice President, Marketing and Customer Success
since July 1997. From 1993 through July 1997, Ms. Evslin served as a volunteer
for The American Red Cross and for various charitable organizations. From 1992
to 1993, Ms. Evslin was employed by Attachmate Corporation, a provider of
mainframe connectivity software to businesses, as Manager of Service Marketing.
From 1986 to 1992, she served as President of Solutions International, a
software marketing company. From 1978 to 1986, Ms. Evslin served as Vice
President of Marketing and Sales at Solutions, Inc., a communications software
development company. She is Tom I. Evslin's wife.

     Bradley E. Miller has been our Vice President of Network Development and
Engineering since May 2000. Prior to that time, he served as our Vice President,
Operations since he joined us in November 1997. From June 1996 to November 1997,
Mr. Miller was Director of Operations at CGX Telecom/CAIS Internet, a tier 1
Internet service provider. From May 1995 until June 1996, Mr. Miller

                                      13
<PAGE>

was a Management Information Systems Manager at US Assist, an international
travel assistance company. From June 1987 until May 1995, he was the Director of
Operations at Donohoe Constructions Company, a construction firm.

     Officers who do not have an employment agreement with us serve at the
discretion of our board of directors and hold office until their successors are
elected and qualified or until their earlier resignation or removal.

                                      14
<PAGE>

                                     PART II

Item 5.  Market for the Registrant's Common Equity and related Stockholder
--------------------------------------------------------------------------
         Matters
         -------


     Our common stock has traded on the NASDAQ National Market under the symbol
ITXC since September 28, 1999. The following table sets forth the per share
range of high and low sales prices of our common stock for the periods
indicated:

                                               High        Low
Year ended December 31, 1999:
Third quarter (September 28-30 only)      $    32.25   $   28.25
Fourth quarter .....................           49.00       27.00

Year ended December 31, 2000:
First quarter ......................          124.75       33.25
Second quarter .....................           70.43       25.62
Third quarter ......................           39.75       13.43
Fourth quarter .....................           15.81        5.75

     The market price for our stock is highly volatile and fluctuates in
response to a wide variety of factors.

     We have never declared or paid any dividends on our common stock. We do not
anticipate paying any cash dividends in the forseeable future. We currently
intend to retain future earnings, if any, to finance operations and the
expansion of our business. Any future determination to pay cash dividends will
be at the discretion of our board of directors and will depend upon our
financial condition, operating results, capital requirements and other factors
the board of directors deem relevant. In addition, our credit agreement
restricts our ability to declare and pay dividends without the consent of our
lender.

     As of January 31, 2001, there were 243 holders of record of our common
stock and, as of that date, we estimate that there were approximately 15,000
beneficial owners of the Common Stock.

     In July 1998, we obtained a 49% interest in ITXC Comunicacoes Ltda ("ITXC
Ltda"), a newly formed joint venture, in consideration of rights to certain
technology, which provided exchange carrier long-distance services in certain
countries in South America. The ITXC Ltda joint venture agreement, as amended,
provided the Company a call option and provided TeleNova Communicacoes Ltda and
its assignee (collectively, "TeleNova") a put option which required the Company
to acquire TeleNova's interest in ITXC Ltda which option would be triggered upon
the occurrence of certain events, at a price based either on a formula, as
defined in the agreement, or an appraisal of ITXC Ltda's fair value. In February
2000, the Company recast this relationship. The Company issued 150,000 shares of
its common stock to TeleNova and its affiliates in exchange for: (1) equity in a
private affiliate of TeleNova; (2) termination of the puts and calls which
previously could have required substantial cash or equity outlays by the
Company; and (3) certain contractual commitments by the parties. As part of this
transaction, the parties terminated the joint venture agreement and a license
agreement that the Company previously furnished to the joint venture. We relied
on Section 4(2) of the Securities Act of 1933 to issue these 150,000 shares,
inasmuch as there were a limited number of new investors, each of whom was
purchasing for investment purposes.

Item 6.   Selected Financial Data
---------------------------------

     The following selected financial data for the period from January 1, 1998
through December 31, 2000 are derived from our audited consolidated financial
statements. You should read the information that we have presented below in
conjunction with our consolidated financial statements, related notes and other
financial information included elsewhere in this Annual Report. The acquisition
of eFusion, completed on October 12, 2000, has been accounted for as a purchase
transaction. Accordingly, eFusion's assets, liabilities and results of
operations are reflected solely for periods on or after October 12, 2000.

<TABLE>
<CAPTION>
                                                                     Period from
                                                                    July 21, 1997
                                                                  (date of inception)               Year ended
                                                                     to Dec. 31                     December 31,
                                                                                                    ------------
(in thousands, except per share data)                                   1997           1998            1999            2000
                                                                        ----           ----            ----            ----
Operating Data
Revenue:
<S>                                                                     <C>          <C>             <C>             <C>
     Telecommunications revenue                                         $ -          $1,238          $24,423         $84,783
     Consulting revenue                                                  59             653              988               -
                                                                         --             ---              ---               -
Total revenue                                                            59           1,891           25,411          84,783
Cost expenses:
     Data communications and telecommunication                            -           2,017           23,095          74,859
     Cost of consulting revenue                                           -             192                -               -
     Network operations                                                   -           1,321            3,219           5,836
</TABLE>

                                      15
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                     <C>           <C>             <C>             <C>
     Selling, general and administrative                                701           5,120           14,778          30,103
     Depreciation and amortization                                        5             345            2,556          20,723
     Purchased in-process research and development                        -               -                -          14,805
     Non-cash employee compensation                                       -             194            2,716           4,873
Total cost and expenses                                                 706           9,189           46,364         151,199
                                                                        ---           -----           ------         -------
Loss from operations                                                   (647)         (7,298)         (20,953)        (66,416)
Loss associated with investments                                          -               -                -         (15,619)
Interest income, net                                                      1              91            1,289          11,071
                                                                          -              --            -----          ------
Net loss                                                               (646)         (7,207)         (19,665)        (70,964)
Accretion of redemption value of mandatorily redeemable
     converted preferred stock                                            -             (14)            (773)              -
Net loss applicable to common stockholders                            $(646)        $(7,222)        $(20,438)       $(70,964)
                                                                       =====         =======         ========        ========
Basic and diluted net loss per share applicable
     to common stockholders                                          $ (.09)        $ (0.88)        $ (1.29)         $ (1.81)
                                                                       =====          ======          ======           ======
Weighted average shares used in computation of basic
     and diluted net loss per share applicable to
     common stockholders                                              7,005           8,185           15,886          39,292
Pro forma basic and diluted net loss per share                                      $ (0.45)        $  (0.69)       $  (1.81)
                                                                                      ======           ======          ======
Weighted average shares used in computation
     of basic and diluted net loss per share                                         16,155           28,526          39,292


                                                                                        As of December 31,

                                                                       1997            1998             1999            2000
                                                                       ----            ----             ----            ----
Balance Sheet Data:

Cash, cash equivalents and marketable securities                     $  498        $  4,171         $ 74,396        $199,437
Total assets                                                            795           7,834           99,862         385,677
Long-term obligations, including current portion                          -           1,437            5,493          10,082
Working capital                                                        (227)          2,069           65,810         191,360
Redeemable preferred stock                                                -           9,867                -               -
Total stockholders equity (deficit)                                      52          (6,118)          80,366         352,284
</TABLE>

                                      16
<PAGE>

Item 7.   Management's Discussion and Analysis of Financial Condition and
-------------------------------------------------------------------------
          Results of Operations
          ---------------------

Overview

     We are a leading global provider of Internet-based voice and fax services.
From our inception in July 1997 through April 1998, our operating activities
were focused primarily on:

     o    developing monitoring and analysis software to enable us to
          efficiently and cost effectively route voice over the Internet which
          we refer to as BestValue Routing;

     o    developing relationships with affiliates throughout the world to
          establish the global reach of ITXC.net;

     o    developing additional business strategies to supplement our affiliate
          network; and

     o    hiring our initial employee group.


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

     o    increasing our voice traffic, from 2,746 minutes during April 1998 to
          approximately 355 million minutes carried through our WWeXchange
          service during the quarter ended December 31, 2000;

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

     o    expanding our affiliate network to 211 affiliates at January 31, 2001
          and increasing the global reach of ITXC.net; and

     o    increasing our employee headcount, from 29 employees on April 1, 1998
          to 303 employees on January 31, 2001.

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

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

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

     o    pricing pressures resulting from competitive conditions in our
          markets.


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

     We have also received revenues from the subscriber services that we have
provided in our webtalkNOW! service since December 1999 and from the subscriber
and e-commerce services that we have provided since October 2000 pursuant to our
eFusion acquisition. Revenues from these services, $2.1 million for the quarter
ended December 31, 2000, consist of minute based revenue, subscriber based
revenue and revenue per "push".

     We received consulting revenue derived from a market trial agreement that
we entered into with a third-party shortly after our inception in order to
generate funds to sustain operations. Under that agreement, we earned a portion
of the revenue ratably over the term of the agreement and the remainder of the
revenue as we met specific milestones. We do not consider it likely that we will
have future significant consulting revenue.

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

     Our operating expenses have been primarily:

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

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

                                      17
<PAGE>

          o    costs associated with buying Internet access at ITXC-operated
               locations; these costs are largely proportional to the bandwidth
               of access acquired and do not typically vary based upon volume of
               voice traffic until additional bandwidth needs to be acquired.

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

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

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

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

            o    the importance to us of BestValue Routing;

            o    the pace of technological change in our industry; and

            o    our goal of expanding the applications of our technology.

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

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

     The eFusion acquisition was consummated on October 12, 2000; in that
transaction, we issued approximately 5.3 million shares of our common stock and
accounted for the transaction as a purchase. We recognized $101.5 million of
goodwill and other intangibles of $32.0 million, which will all be amortized
over a period of five years. In addition to the amortization charge that we
recognized in the fourth quarter, we also wrote off $14.8 million of in-process
research and development. The amount allocated to in-process research and
development was determined by an independent third party valuation, as
technological feasibility had not been established and the technology had no
alternative future use as of the date of acquisition.

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

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

     Since our inception in July 1997, we have experienced operating losses in
each quarterly and annual period and negative cash flows from operations in each
quarter since we commenced offering services over ITXC.net in April 1998. As of
December 31, 2000, we had an accumulated deficit of $98.5 million. The profit
potential of our business is unproven, and our limited operating history makes
an
                                      18
<PAGE>

evaluation of us and our prospects difficult. We may not achieve profitability
or, if we achieve profitability, we might not sustain profitability.

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

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

Results of Operations for the Years Ended December 31, 1998, 1999 and 2000

     Revenue

     Our revenue (other than consulting revenue) for the years ended December
31, 1998, 1999 and 2000 was $1.2 million, $24.4 million and $84.8 million,
respectively. We were able to achieve this increase despite our decision to
terminate services to certain customers. See "- Operating Expenses - Selling,
General and Administrative Expenses." The principal aspect of this increase was
the increased revenue generated from our WWeXchange service, which provides
international call completion to ITXC's customers and enables them to offer
their own customers phone-to-phone global voice service. Our WWeXchange service
was responsible for $80.4 million of revenues during the year ended December 31,
2000, as compared with $24.4 million during 1999. During 2000, revenues from our
webtalkNOW! service (a PC-to-telephone service which allows Internet portals,
Internet service providers and web sites to offer web-to-phone calling to their
customers under their own brands), our call completion service and our Push to
Talk services amounted to $4.4 million.

     We carried 957 million minutes of traffic over ITXC.net in 2000, as
compared with 150 million minutes during 1999. Of the total minutes, 767 million
minutes were carried through ITXC's WWeXchange service and 190 million minutes
were provided through our webtalkNOW! service.

     Revenues from the webtalkNOW! service were less than expected during 2000.
Our webtalkNOW! customers had, in most cases, business models that were
dependent on significant advertising revenues from "dot.com" companies. Those
companies (our customers' customers) were dramatically impacted by setbacks in
the capital markets during the last nine months of 2000.

     Our consulting revenue increased from $653,000 during 1998 to $988,000
during 1999. Our periodic receipt of consulting revenues reflected the
accomplishment of various performance requirements under our market trial
agreement. We did not earn any consulting revenue during 2000 and do not expect
to earn substantial consulting revenue in subsequent periods.

     Operating Expenses

     Data Communications and Telecommunications Expenses. We did not incur data
communications and telecommunications expenses until we began providing service
over ITXC.net in April 1998. During the year ended December 31, 1998, such
expenses amounted to $2.0 million, as compared to telecommunications revenue of
$1.2 million during that period. During the year ended December 31, 1999, such
expenses amounted to $23.1 million, compared to telecommunications revenue of
$24.4 million. During the year ended December 31, 2000, such expenses amounted
to $74.9 million, compared to telecommunications revenue of $84.8 million. The
increase in the dollar amount of such costs during 2000 primarily reflected the
increased traffic during 2000 as well as costs associated with establishing a
new network hub in Jersey City, New Jersey during the first quarter of 2000 and
expanding that hub later during the year, establishing a new network hub in
London, England during the second quarter of 2000, and establishing and
increasing capacity at ITXC's other hubs in anticipation of future growth in
traffic.

     Cost of Consulting Revenue. We did not incur any expenses under our market
trial agreement during any of the periods described in this Annual Report other
than the year ended December 31, 1998. During that period, the cost of
consulting revenue amounted to $192,000, representing 29% of consulting revenue.
Since 1998, we were only required to present an update report, which we provided
in 1999.

     Network Operations Expenses. Network operations expenses increased from
$1.3 million during the year ended December 31, 1998 to $3.2 million during the
year ended December 31, 1999 and to $5.8 million during the year ended December
31, 2000. Expenses during 1998, representing 107% of our telecommunications
revenue, were incurred in preparing for the implementation of our WWeXchange
service in April 1998 and in the initial delivery of that service. During 1999
and 2000, such expenses primarily reflected the cost of operating our
24-hours-a-day, 7-days-a-week network operations center in Princeton, New
Jersey, as well as start-up costs

                                      19
<PAGE>

associated with the Jersey City, New Jersey and London hubs, and represented
13.2% of telecommunications revenue in 1999 and 6.9% of telecommunications
revenue in 2000. In general, network operations expenses are not proportional to
the volume of our traffic; regardless of our volume, we are required to pay the
salaries and related costs associated with operating our network operations
center in Princeton and operating our e-commerce service function in Beaverton,
Oregon.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $5.1 million during the year ended
December 31, 1998 to $14.8 million during the year ended December 31, 1999 and
$30.1 million during the year ended December 31, 2000. The increases reflected
(1) enhanced sales and marketing efforts that we undertook as our network
expanded, (2) growth in our sales and marketing staffs, (3) commissions paid on
increasing telecommunications revenue, (4) our hiring of employees and engaging
of consultants for development tasks, (5) a substantial increase in the number
of general and administrative personnel hired to support our growth and (6)
expenses associated with our eFusion business incurred after the acquisition of
that company in October 2000.

     The increase in selling, general and administrative expenses during 1999
and 2000 also included charges of $2.6 million and $3.5 million, respectively,
representing additional accounts receivable reserves and write-offs. These
charges reflect general industry trends and the discontinuance of service to
certain significant customers because of their failure to meet their payment
obligations. Furthermore, during March, 2001, it became necessary for us to
discontinue service to another substantial customer (representing $2.7 million
of revenues during January and February of 2001), as a result of its failure to
meet payment obligations. At that time, our account receivable for such customer
amounted to $2.1 million. We expect to take an additional charge with respect to
this customer in our March 31, 2001 consolidated financial statements. We do not
expect any material revenue impact from these matters. Such expectation
represents a forward-looking statement under the Private Securities Litigation
Reform Act of 1995. Actual results could differ from such expectation as a
result of a number of factors, including the extent to which we are able to
attract new customers to ITXC.net, the extent to which we are able to expand the
utilization of ITXC.net by other existing customers, our capacity constraints
and the mix of traffic that we carry in future periods.

     As a percentage of revenues, selling, general and administrative expenses
decreased from 58.2% in 1999 to 35.5% in 2000, reflecting the leveraging of such
expenses over our significantly increased revenue base. As our revenues continue
to grow, we expect selling, general and administrative expenses to decrease as a
percentage of revenues. Such expectation represents a forward-looking statement
under the Private Securities Litigation Reform Act of 1995. Actual results could
differ from such expectation as a result of a number of factors, including the
extent to which we incur unanticipated expenses associated with revenue growth
and other factors referred to in our filings with the SEC.

     Depreciation

     Depreciation expense increased from $345,000 in 1998 to $2.5 million in
1999 and $11.1 million in 2000, reflecting the expansion of our network and hubs
and the addition of new technologies deployed throughout our network. As a
percentage of revenue, depreciation expense was 18.2% in 1998, 9.7% in 1999 and
13.1% in 2000, reflecting our efforts to build our infrastructure to support
future growth.

     Amortization and Write-Off of Intangibles

     We recorded $101.5 million of goodwill in connection with our acquisition
of eFusion, which was accounted for as a purchase transaction. For 2000, we
amortized $5.1 million of this goodwill. In addition, we recorded other
intangibles of $32 million, of which $1.6 million was amortized in 2000 and the
balance of which will be amortized over five years. We also wrote off $14.8
million of in-process research and development associated with our eFusion
acquisition. Because the eFusion acquisition was accounted for as a purchase
transaction, eFusion's results of operations are included in our consolidated
financial statements solely for the period from October 12, 2000 through
December 31, 2000.

     Non-Cash Employee Compensation Expenses

     Non-cash employee compensation expense increased from $194,000 during the
year ended December 31, 1998 to $2.7 million during the year ended December 31,
1999 and $4.9 million during the year ended December 31, 2000, representing
amortization of deferred compensation incurred in connection with the grant of
options at exercise prices less than fair value.

     Interest Income, Net

     Our interest income, net principally represents income from cash and
investments which, in turn, were derived from capital contributions made by our
investors. In addition to the capital invested near the inception of our
business, we raised net proceeds of $9.9 million and $14.9 million from a group
of investors in private transactions completed during April 1998 and February
1999, respectively, we raised net proceeds of $78.4 million from our initial
public offering completed in October 1999 and we raised net proceeds of $161.4
million from our follow-on public offering completed in March 2000. During the
year ended December 31, 1998, interest generated from capital contributions
exceeded by $91,000 the interest that we paid on our line of credit and non-cash
interest related to the issuance of common stock warrants in connection with
bridge financing provided by two officers. During the years ended December 31,
1999 and

                                      20
<PAGE>

2000, the interest on our marketable securities, including the interest earned
on the proceeds from our initial and follow-on public offerings, exceeded the
interest that we paid on our line of credit and capital leases by $1.3 million
and $11.1 million, respectively.

     Loss Associated with Investments and Joint Venture

     During the year ended December 31, 2000, we incurred non-cash charges of
$15.6 million relating to the modifications made in our South American joint
venture. Approximately $8.2 million of these charges reflected the difference
between the value of our stock that we issued at the time of such modifications
and the value of the capital stock that we received in exchange for that stock
(valued as of the time of the transaction). The balance of these charges relates
to a reduction in the value of the shares that we received, reflecting an
other-than temporary decline in such investment. See Note 1 of the Notes to
ITXC's Consolidated Financial Statements presented elsewhere in this Annual
Report.

     Quarterly Financial Information

     The following table sets forth certain operating data and consolidated
statements of operations data for our most recent eight quarters. The financial
information has been derived from our unaudited consolidated financial
statements. In our management's opinion, this unaudited financial information
has been prepared on the same basis as the annual consolidated financial
statements and includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the information for the
quarters presented. This information should be read in conjunction with our
consolidated financial statements and the related notes included elsewhere in
this Annual Report. The operating results for any quarter are not necessarily
indicative of results for any future period.

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                             ------------------
                                           March 31,     June 30,      Sept. 30,       Dec. 31,
                                            1999          1999           1999            1999
                                                               (in thousands)
<S>                                        <C>            <C>            <C>            <C>
Minutes of traffic over ITXC.net ..        11,000         24,000         43,000         72,000
Revenue:
Telecommunications revenue ........      $  2,429       $  4,335       $  6,549       $ 11,109
Consulting revenue ................           688            300           --             --
                                         --------       --------       --------       --------

Total revenue .....................         3,118          4,635          6,549         11,109
Costs and expenses:
Data communications and
telecommunications ................         2,528          4,362          6,242          9,963
Network operations ................           546            736            882          1,054
Selling, general and administrative         2,558          3,117          4,031          5,072
Depreciation and amortization .....           278            421            655          1,203
Non-cash employee compensation ....           217            471          1,066            962
                                         --------       --------       --------       --------

Total costs and expenses ..........         6,128          9,107         12,876         18,254
                                         --------       --------       --------       --------

Loss from operations ..............        (3,010)        (4,472)        (6,327)        (7,145)
Interest income, net ..............            41            114             37          1,096
                                         --------       --------       --------       --------

Net loss ..........................      $ (2,969)      $ (4,358)      $ (6,289)      $ (6,049)

Loss per share ....................      $  (0.12)      $  (0.16)      $  (0.22)      $  (0.17)
</TABLE>


<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                      ------------------
                                                     March 31,       June 30,      Sept. 30,       Dec. 31,
                                                      2000            2000           2000            2000
                                                              (in thousands except per share data)
<S>                                                  <C>             <C>             <C>             <C>
Minutes of traffic over ITXC.net ............        131,000         201,000         270,000         355,000
Revenue:
Telecommunications revenue ..................      $  15,066       $  18,619       $  23,505       $  27,593
                                                   ---------       ---------       ---------       ---------

Costs and expenses:
Data communications and
telecommunications ..........................         13,653          16,543          20,688          23,975
Network operations ..........................          1,387           1,036           1,313           2,100
Selling, general and administrative .........          5,932           6,534           6,896          10,741
Depreciation and amortization ...............          1,837           2,516           3,294          13,076
Purchased in process research and development           --              --              --            14,805
Non-cash employee compensation ..............          1,055           1,065             904           1,848
                                                   ---------       ---------       ---------       ---------

Total costs and expenses ....................         23,865          27,694          33,095          66,545

Loss from operations ........................         (8,799)         (9,075)         (9,590)        (38,952)
Loss associated with investments ............         (8,195)           --              --            (7,424)
Interest income, net ........................          1,348           3,246           3,356           3,121

Net loss ....................................      $ (15,646)      $  (5,829)      $  (6,234)      $ (43,255)

Loss per share ..............................      $   (0.43)      $   (0.15)      $   (0.16)      $   (1.00)
</TABLE>

                                      21
<PAGE>

Liquidity and Capital Resources

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

     Net cash provided by financing activities was $11.0 million for the year
ended December 31, 1998, $93.6 million for the year ended December 31, 1999 and
$161.8 million for the year ended December 31, 2000 and was primarily
attributable to net proceeds from the issuance of our capital stock.

     Net cash used in operating activities amounted to $5.3 million, $16.2
million and $23.7 million for the years ended December 31, 1998, 1999 and 2000,
respectively. Cash used in operating activities in these periods was primarily
the result of net operating losses and increased accounts receivable, partially
offset by increases in accounts payable and accrued liabilities.

     Net cash used in investing activities was $2.3 million for the year ended
December 31, 1998, $32.4 million for the year ended December 31, 1999 and $150.4
million for the year ended December 31, 2000. Cash used in investing activities
was primarily related to the purchases of property and equipment and purchases
of investments with the proceeds of our initial public offering and follow-on
offering.

     As of December 31, 2000, our principal commitments consisted of obligations
outstanding under operating and capital leases. At that date, future minimum
payments for non-cancelable leases includes required payments of $6.1 million
during 2001 and $25 million for years 2002-2005 and thereafter under all leases.
We anticipate a substantial increase in capital expenditures and lease
commitments consistent with the anticipated growth in operations, infrastructure
and personnel.

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

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

     The credit agreement contains customary financial and other covenants and
may be terminated by our lender 45 days after the occurrence of certain mergers,
acquisitions and investments. As of December 31, 2000, we were in compliance
with all but one of the covenants under our credit agreement. Subsequently, our
non-compliance was waived.

     We have arranged for financing in the ordinary course for gateway
equipment, switching equipment and general office equipment, from third parties
and vendors. See Notes 10 and 11 of the Notes to our Condensed Consolidated
Financial Statements contained elsewhere in this Annual Report.

     Our capital requirements depend on numerous factors, including market
acceptance of our services, the responses of our competitors, the resources
allocated to ITXC.net and the development of future applications of our
technology, our success in marketing and selling our services, and other
factors. We have experienced substantial increases in our capital expenditures
since our inception, consistent with growth in our operations and staffing, and
we anticipate that our capital expenditures will continue to increase in the
future. We will evaluate possible acquisitions of, or investments in,
complementary businesses, technologies or services and plan to expand our sales
and marketing programs. Any such possible acquisition may be material and may
require us to incur a significant amount of debt or issue a significant number
of equity securities. Further, any businesses that we acquire will likely have
their own capital needs, which may be significant, which we would be called upon
to satisfy independent of the acquisition price. We currently believe that our
available cash and cash equivalents will be sufficient to meet our anticipated
needs for working capital and capital

                                      22
<PAGE>

expenditures for at least the next 12 months. This statement represents a
forward-looking statement under the Private Securities Litigation Reform Act of
1995. Actual results could differ materially from our expectations. We may need
to raise additional funds in order to fund more rapid expansion, to develop new
or enhance existing services, to respond to competitive pressures or to acquire
or invest in complementary business, technologies or services. Additional
funding may not be available on favorable terms or at all.

Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including derivative instruments embedded
in other contracts, and for hedging activities. SFAS No. 133, as amended by SFAS
137, is effective for all fiscal quarters of fiscal years beginning after June
15, 2000. As we do not currently engage in derivatives or hedging transactions,
we believe that there will be no current impact to our results of operations,
financial position or cash flows upon the adoption of SFAS No. 133.


     In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB
101"), "Revenue Recognition in Financial Statements," and further amended it to
defer the effective date. The SAB provides the SEC's views in applying generally
accepted accounting principles to selected revenue recognition issues. We were
required to adopt the provisions of this staff accounting bulletin in the fourth
quarter of 2000. The adoption of SAB 101 did not have a material impact on our
financial statements.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk
------------------------------------------------------------------

     We had investments of approximately $189.9 million as of December 31, 2000,
in certain marketable securities, which primarily consisted of short-term fixed
income investments. Due to the short-term nature of our investments we believe
that the effects of changes in interest rates are limited and would not have a
material impact on our financial condition or operating results.

Item 8. Financial Statements and Supplementary Data
---------------------------------------------------

     We have set forth our annual financial statements on the "F" pages that
follow this page. The index of our financial statements is set forth in Item 14
of this Annual Report.

                                      23
<PAGE>

Report of Independent Auditors

Board of Directors and Stockholders
ITXC CORP AND SUBSIDIARIES


We have audited the accompanying consolidated balance sheets of ITXC Corp and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ITXC Corp and
subsidiaries at December 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000 in conformity with accounting principles generally accepted in the
United States.



                                                     /s/ Ernst & Young LLP

MetroPark, New Jersey
February 9, 2001, except
for Note 18, as to which
the date is March 12, 2001

                                      F-1
<PAGE>

Consolidated Balance Sheets
ITXC CORP AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                                                 December 31,
                                                                                    ----------------------------------
                                                                                            1999             2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>               <C>
Assets
Current assets:
 Cash and cash equivalents                                                           $    49,017,768   $   36,768,527
 Marketable securities                                                                    25,378,297      162,667,823
 Accounts receivable, net of allowance of $1,284,000 in 1999
  and $2,124,000 in 2000                                                                   5,738,804       17,799,511
 Prepaid expenses and other current assets                                                 1,298,102        3,091,187
----------------------------------------------------------------------------------------------------------------------
 Total current assets                                                                     81,432,971      220,327,048
 Property and equipment, net                                                              15,411,656       37,957,981
 Goodwill, net of amortization of $5,075,599 in 2000                                              --       96,437,788
 Other intangibles, net of amortization of $1,597,650 in 2000                                     --       30,355,350
 Other assets                                                                              3,016,982          598,339
----------------------------------------------------------------------------------------------------------------------
Total assets                                                                         $    99,861,609   $  385,676,506
                                                                                    ----------------------------------
Liabilities and stockholders' equity
Current liabilities:
 Accounts payable                                                                    $    10,403,227   $   15,818,732
 Accrued expenses and other current liabilities                                            3,157,229        6,597,431
 Customer deposits                                                                           442,240          894,199
 Equipment line of credit                                                                         --        1,723,191
 Current portion of capital lease obligations                                              1,620,317        3,933,671
----------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                 15,623,013       28,967,224
Equipment line of credit                                                                   1,723,191               --
Capital lease obligations, less current portion                                            2,149,177        4,425,322
Commitments and contingencies
Stockholders' equity:
 Preferred Stock, $.001 par value, authorized 15,000,000 shares;
  issued and outstanding none in 1999 and 2000                                                    --               --
 Common Stock, $.001 par value, authorized 400,000,000 shares; issued and
  outstanding, 35,816,401 shares in 1999; and 45,047,143 shares in 2000                       35,816           45,046
 Additional paid-in capital                                                              118,089,750      455,087,203
 Deferred employee compensation                                                          (10,240,858)      (5,134,356)
 Accumulated other comprehensive income                                                           --          768,804
 Accumulated (deficit)                                                                   (27,518,480)     (98,482,737)
----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                                80,366,228      352,283,960
----------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                           $    99,861,609   $  385,676,506
                                                                                    ----------------------------------
</TABLE>

See accompanying notes.


                                      F-2
<PAGE>

Consolidated Statements of Operations
ITXC CORP AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                                                            Year ended December 31,
                                                                        -------------------------------------------------------
                                                                              1998                    1999             2000
-------------------------------------------------------------------------------------------------------------------------------
Revenue:
<S>                                                                     <C>                <C>                  <C>
 Telecommunications revenue                                             $   1,238,008      $       24,423,162   $   84,783,282
 Consulting revenue                                                           652,944                 988,232               --
-------------------------------------------------------------------------------------------------------------------------------
Total revenue                                                               1,890,952              25,411,394       84,783,282
Costs and expenses:
 Data communications and telecommunications                                 2,016,757              23,095,225       74,858,629
 Cost of consulting revenue                                                   192,203                      --               --
 Network operations                                                         1,320,587               3,219,039        5,836,347
 Selling, general and administrative                                        5,120,944              14,778,207       30,103,257
 Depreciation                                                                 344,587               2,472,128       11,090,548
 Amortization of intangibles                                                       --                  84,308        9,632,129
 Purchased in-process research and development                                     --                      --       14,805,000
 Non-cash employee compensation                                               194,288               2,715,862        4,873,135
-------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses                                                    9,189,366              46,364,769      151,199,045
-------------------------------------------------------------------------------------------------------------------------------
Loss from operations                                                       (7,298,414)            (20,953,375)     (66,415,763)
Loss associated with investments                                                   --                      --      (15,619,000)
Interest income                                                               230,538               1,495,800       11,783,418
Interest expense                                                             (139,575)               (207,160)        (712,912)
-------------------------------------------------------------------------------------------------------------------------------
Net loss                                                                   (7,207,451)            (19,664,735)     (70,964,257)
Accretion of redemption value of mandatorily redeemable
 convertible preferred stock                                                  (14,217)               (772,795)              --
-------------------------------------------------------------------------------------------------------------------------------
Net loss applicable to common stockholders                              $  (7,221,668)     $      (20,437,530)  $  (70,964,257)
                                                                        -------------------------------------------------------
Basic and diluted net loss per share applicable
 to common stockholders                                                 $       (0.88)     $            (1.29)  $        (1.81)
                                                                        -------------------------------------------------------
Weighted average shares used in computation of basic and diluted
 net loss per share applicable to common stockholders                       8,184,556              15,885,883       39,292,353
Pro forma basic and diluted net loss per share (unaudited)              $       (0.45)     $            (0.69)  $        (1.81)
                                                                        -------------------------------------------------------
Weighted average shares used in computation of pro forma basic
 and diluted net loss per share (unaudited)                                16,154,670              28,525,619       39,292,353

See accompanying notes.
</TABLE>

                                      F-3
<PAGE>

Consolidated Statements of Stockholders' Equity
ITXC CORP AND SUBSIDIARIES


<TABLE>
<CAPTION>
                                                              Series A Convertible                                     Additional
                                                                Preferred stock              Common Stock                Paid-in
For the years ended 1998, 1999 and 2000                        Shares     Amount        Shares           Amount          Capital
-----------------------------------------------------------------------------------------------------------------------------------
<S>               <C> <C>                                       <C>          <C>      <C>           <C>             <C>
Balance, December 31, 1997                                      278,000      278      7,800,000     $        7,800  $    1,447,822
Conversion of Series A Stock and Preferred Warrant
 to Common Stock                                               (278,000)    (278)       556,000                556            (278)
Repayment of subscription receivable                                                         --                 --            (900)
Issuance of Common Stock for services                                --       --         25,000                 25          10,600
Utilization of software credit                                       --       --             --                 --              --
Accretion of redemption value of mandatorily
 redeemable convertible preferred stock                              --       --             --                 --         (14,217)
Deferred non-cash employee compensation                              --       --             --                 --         760,489
Amortization of non-cash deferred
 employee compensation                                               --       --             --                 --              --
Non cash interest expense                                            --       --             --                 --          90,000
Net loss                                                             --       --             --                 --              --
-----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                                           --       --      8,381,000     $        8,381  $    2,293,516
Accretion of redemption value of mandatorily
 redeemable convertible preferred stock                              --       --             --                 --        (772,795)
Deferred non-cash employee compensation                                                      --                 --      12,390,519
Amortization of non-cash deferred employee compensation              --       --             --                 --              --
Issuance of common stock for exercise of warrants                                     1,444,000              1,444            (722)
Issuance of common stock for exercise of options                     --       --        613,743                614         219,285
Issuance of common stock for initial public offering                 --       --      7,187,500              7,187      78,407,034
Conversion of mandatorily redeemable convertible
 preferred stock to common stock                                     --       --     18,190,158             18,190      25,552,913
Net loss                                                             --       --             --                 --              --
-----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                                           --       --     35,816,401  $          35,816  $  118,089,750
Cancellation of options                                              --       --             --                 --        (966,609)
Amortization of non-cash employee compensation                       --       --             --                 --              --
Issuance of common stock for exercise of options                     --       --      1,676,722              1,677       1,080,248
Issuance of common stock and options for acquisition of              --       --      5,340,105              5,340     157,521,901
 eFusion
Issuance of common stock for joint venture exit agreement            --       --        150,000                150      16,118,850
Issuance of common stock for employee stock purchase plan            --       --         63,915                 63         654,835
Issuance of common stock for secondary public offering               --       --      2,000,000              2,000     161,379,450
Adjustment to reflect short swing sale                               --       --             --                 --       1,208,778
Unrealized gain on available for sale securities                     --       --             --                 --              --
Net loss                                                             --       --             --                 --              --
Total comprehensive loss
Balance, December 31, 2000                                           --       --     45,047,143  $          45,046  $  455,087,203
-----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>

                                      F-4
<PAGE>

<TABLE>
<CAPTION>
                         Deferred
Software Credit          Employee       Subscription   Accumulated          Accumulated Other
Subscription           Compensation     Receivable        Deficit        Comprehensive Income         Total
-------------------------------------------------------------------------------------------------------------------
<S>                                        <C>    <C>                                           <C>
  (757,000)                   --           (900)  $      (646,294)             --               $      51,706


     --                       --             --                --              --                          --
     --                       --            900                --              --                          --
     --                       --             --                --              --                      10,625
   757,000                    --             --                --              --                     757,000


     --                       --             --                --              --                          --
     --                 (760,489)            --                --              --                     (14,217)


     --                  194,288             --                --              --                     194,288
     --                       --             --                --              --                      90,000
     --                       --             --        (7,207,451)             --                  (7,207,451)
-------------------------------------------------------------------------------------------------------------------
     --            $    (566,201)            --   $    (7,853,745)             --               $  (6,118,049)


     --                       --             --                --              --                    (772,795)
     --              (12,390,519)            --                --              --                          --
     --                2,715,862             --                --              --                   2,715,862
     --                       --             --                --              --                         722
     --                       --             --                --              --                     219,899
     --                       --             --                --              --                  78,414,221


     --                       --             --                --              --                  25,571,103
     --                       --                      (19,664,735)             --                 (19,664,735)
-------------------------------------------------------------------------------------------------------------------
     --            $ (10,240,858)            --   $   (27,518,480)             --               $  80,366,228
     --                  966,609             --                --              --                          --
     --                4,873,134             --                --              --                   4,873,134
     --                       --             --                --              --                   1,081,925
     --                 (733,241)            --                --              --                 156,794,000
     --                       --             --                --              --                  16,119,000
     --                       --             --                --              --                     654,898
     --                       --             --                --              --                 161,381,450
     --                       --             --                --              --                   1,208,778
     --                       --             --                --         768,804                     768,804
     --                       --             --       (70,964,257)             --                 (70,964,257)
                                                                                              ----------------
                                                                                                  (70,195,453)
     --            $  (5,134,356)            --   $   (98,482,737)    $   768,804             $   352,283,960
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-5
<PAGE>

<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
ITXC CORP AND SUBSIDIARIES




                                                                                           Year ended December 31,
                                                                      ----------------------------------------------------------
                                                                               1998                 1999               2000
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                <C>                  <C>
Operating activities
Net loss                                                               $  (7,207,451)     $      (19,664,735)  $   (70,964,257)
Adjustments to reconcile net loss to net cash used in
 operating activities:
  Depreciation and amortization                                              344,587               2,556,436        20,722,677
  Purchased in-process research and development                                   --                      --        14,805,000
  Provision for doubtful accounts                                            172,475               2,600,554         3,514,259
  Loss associated with investment                                                 --                      --        15,619,000
  Amortization of non-cash deferred employee compensation                    194,288               2,715,862         4,873,135
  Issuance of common stock for services                                       10,625                      --                --
  Non-cash interest expense                                                   90,000                      --                --
  Amortization of original issue discounts                                        --                (510,582)       (2,690,095)
  Changes in operating assets and liabilities:
    Increase in accounts receivable                                         (673,214)             (7,838,619)      (15,335,902)
    Increase in prepaid expenses and other assets                           (127,446)             (1,218,042)       (1,384,197)
    Increase in accounts payable and accrued expenses                      1,315,057               5,801,871         6,711,816
    Increase (decrease) in customer deposits                                 589,556                (588,492)          451,959
--------------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities                                     (5,291,523)            (16,145,747)      (23,676,605)
--------------------------------------------------------------------------------------------------------------------------------

Investing activities
Purchase of property and equipment                                        (2,073,696)             (4,714,757)      (24,732,996)
Purchase of service contract rights                                               --              (3,035,057)          (14,983)
Cash of business acquired for stock, net of acquisition costs                     --                      --         8,175,745
Purchase of available for sale securities                                   (200,000)            (64,367,815)     (411,378,601)
Maturities of available for sale securities                                       --              39,700,000       277,547,974
--------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                     (2,273,696)            (32,417,629)     (150,402,861)
Financing activities
Proceeds from equipment line of credit                                     1,200,000                 523,191                --
Proceeds from stockholder note                                               750,000                      --                --
Repayment of capital lease obligations                                       (13,927)               (479,710)       (2,287,089)
Repayment of line of credit                                                       --                      --          (209,737)
Proceeds from short swing sale                                                    --                      --         1,208,778
Proceeds from exercise of stock options                                          900                 220,621         1,081,925
Proceeds from issuance of common stock related to
 employee stock purchase plan                                                     --                      --           654,898
Issuance of convertible preferred stock                                    9,101,606              14,931,584
Proceeds from public offerings                                                    --              78,414,221       161,381,450
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                 11,038,579              93,609,907       161,830,225
--------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash                                                3,473,360              45,046,531       (12,249,241)
Cash and cash equivalents at beginning of year                               497,877               3,971,237        49,017,768
--------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                               $   3,971,237      $       49,017,768   $    36,768,527
                                                                      ----------------------------------------------------------
Supplemental disclosures of cash flow information
Cash paid for interest                                                 $      36,446      $          223,834   $       712,912
                                                                      ----------------------------------------------------------
Fixed assets financed by capital leases                                $     251,000      $        4,014,000   $     6,876,588
                                                                      ----------------------------------------------------------
See accompanying notes.
</TABLE>

                                      F-6
<PAGE>

Notes to Consolidated Financial Statements
ITXC CORP AND SUBSIDIARIES


1. Organization and Nature of Business

ITXC Corp (the "Company") is a Delaware corporation, incorporated on July 21,
1997. The Company was founded for the purpose of providing Internet voice, fax
and voice-enabled services primarily to traditional telephone companies,
Internet service providers and telecommunications resellers, under the brand
name WWeXchange for which revenues commenced in 1998. The Company operates in
one business segment.

Public Offerings

On October 1, 1999, the Company completed an initial public offering (IPO) of
7.2 million shares of Common Stock at a price of $12.00 per share, generating
net proceeds of approximately $78.4 million. Under the Company's Certificate of
Incorporation, all outstanding shares of Series B Redeemable Convertible
Preferred Stock and Series C Redeemable Convertible Preferred Stock were
converted into shares of Common Stock on a two-for-one basis (reflecting the
stock split described in Note 12), effective upon the closing of the Company's
IPO, resulting in the issuance of an additional 18.2 million shares of Common
Stock.

On March 15, 2000, the Company completed a public offering of Common Stock at a
price of $85 per share. The Company sold 2 million shares, generating net
proceeds to the Company of approximately $161.4 million, while certain
stockholders sold 2 million previously unregistered shares. Certain of these
shares were sold by an executive officer of the Company within six months after
his minor children had acquired shares of the Company's Common Stock. In
accordance with SEC rules, the officer remitted $1.2 million to the Company in
April, 2000. Such amount is included in additional paid in capital.

Subsidiaries and Joint Venture

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

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

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

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

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

                                      F-7
<PAGE>

Notes to Consolidated Financial Statements
ITXC CORP AND SUBSIDIARIES

Basis of Consolidation

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

2. Significant Accounting Policies

Cash Equivalents

The Company considers all highly-liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Marketable Securities

Marketable securities consist of fixed income investments which can be readily
purchased or sold using established markets. In accordance with SFAS 115,
"Accounting for Certain Investments in Debt and Equity Securities", management
determines the appropriate classification of debt securities at the time of
purchase and reevaluates such designations as of each balance sheet date. Such
investments are classified as available-for-sale and, accordingly, are carried
at fair value which approximates amortized cost at December 31, 1999. Fair value
is based on quoted market prices. The amortized cost of debt securities is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization and accretion, as well as interest, are included in interest
income. Realized gains and losses and declines in value judged to be other than
temporary are included in investment income. The cost of securities sold is
based on the specific identification method.

Concentration of Credit Risk

The Company transacts a significant volume of business with several customers.
Three customers represented 12%, 12%, and 11%, respectively, of 1999 total
revenue. Accounts receivable from these customers were approximately $3,090,900
at December 31, 1999. No single customer represented more than 10% of 2000 total
revenue. The Company performs a credit evaluation of all new customers and
requires certain customers to provide collateral in the form of a cash deposit.

Depreciation and Amortization

Property and equipment are recorded at cost and are depreciated over the
estimated useful lives and leasehold improvements are depreciated over the term
of the lease or over the estimated useful lives, whichever is shorter, utilizing
the straight-line method as follows:


                                                        Estimated Useful Life
--------------------------------------------------------------------------------
Network equipment and software                                  2-3
Furniture, fixtures and office equipment                        3-7
Leasehold improvements                                      life of lease


Revenue Recognition

The Company recognizes telecommunications revenue and the related costs at the
time the services are rendered. Telecommunications revenue is derived from fees
charged to terminate Internet based voice and fax services over the Company's
network.

In 1997, the Company entered into a market trial agreement with a third party.
Under that agreement, the Company conducted a market trial to determine the
market opportunity, operational requirements and business arrangements with
respect to offering wholesale switching, transport, billing and settlement
services relating to Internet protocol telephony services. While the agreement
was in effect, the Company conducted a market trial of its wholesale switching,
transport, billing and settlement services and provided periodic reports
according to an agreed upon schedule. These reports provided marketing analyses,
service descriptions, operations analyses and business structure and competitive
analyses. The Company recognized consulting revenue under the market trial
agreement as certain milestones were attained and cash collections were assured,
as specified in the contract, and in accordance with Statement of Financial
Accounting Standards, No. 68, "Research and Development Arrangements". This
agreement required certain research reports to be delivered by the Company and
accepted by the customer, for payments under the contract to become due and
payable. At December 31, 1998, $888,232, of revenue was deferred in connection
with this market trial agreement for payments received in advance of delivery
and acceptance of certain reports, which was fully earned during 1999.

                                      F-8
<PAGE>

Advertising

Advertising costs are expensed as incurred. During 1998, 1999 and 2000, the
Company expensed approximately $119,000, $198,000, and
$231,000, respectively, of such costs.

Research and Development

Development costs are expensed as incurred. Development costs of approximately
$594,000, $1,509,000 and $6,121,000 were expensed in
1998, 1999 and 2000, respectively, and are included in selling, general and
administrative costs.

Income Tax

Deferred income taxes are determined using the liability method in accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities (i.e. temporary differences) and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.

Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance with
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees," using an intrinsic value approach to measure compensation
expense, if any. Appropriate disclosures using a fair value based method, as
provided by Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), are also reflected in the accompanying
notes to the financial statements. The Company has not issued any options other
than to employees and directors.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivatives and
Hedging Activities" ("SFAS 133"), which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives) and for
hedging activities. SFAS 133, as amended by SFAS 137, is effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. As the Company
does not currently engage in derivatives or hedging transactions, there will be
no current impact to the Company's results of operations, financial position or
cash flows upon the adoption of SFAS 133.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB101"),
"Revenue Recognition in Financial Statements," and further amended it to defer
the effective date. The SAB provides the SEC's views in applying generally
accepted accounting principles to selected revenue recognition issues. We were
required to adopt the provisions of this staff accounting bulletin in the fourth
quarter of 2000. The adoption of SAB 101 did not have a material impact on our
financial statements.

Long-Lived Assets

In accordance with SFAS 121, "Accounting for Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of", the Company reviews its long-lived
assets and certain identifiable intangibles for impairment whenever changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable. The analysis of the recoverability utilizes undiscounted cash
flows. The measurement of the loss, if any, will be calculated as the amount by
which the carrying amount of the assets exceeds the fair value.

Comprehensive Income

SFAS No. 130, "Reporting Comprehensive Income" ("SFAS 130"), sets forth rules
for the reporting and display of comprehensive income (net income plus all other
changes in net assets from non owner sources) and its components in the
financial statements. At December 31, 2000, components of other comprehensive
income consisted of the net unrealized gain on marketable securities of
approximately $769,000, which is stated as a component of shareholders' equity
as accumulated comprehensive income. Prior to 2000, there were no items of other
comprehensive income.

                                      F-9
<PAGE>

Notes to Consolidated Financial Statements
ITXC CORP AND SUBSIDIARIES

Fair Value of Financial Instruments

The Company's financial instruments, including cash and cash equivalents,
accounts receivable, short-term borrowings and accounts payable, are carried at
cost, which approximates their fair value because of the short-term maturity of
these instruments. The fair value of long-term borrowings approximates its
carrying value as it bears interest at a floating rate.

Use of Estimates

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

3. Available for Sale Investments

The Company's available for sale investments which are included in cash
equivalents ($47,715,977 and $27,222,914 at December 31, 1999 and 2000,
respectively) and marketable securities are as follows:

                                              December 31,
                                  ----------------------------------
                                         1999              2000
--------------------------------------------------------------------
Money market funds                $    9,409,553     $   13,721,472
Commercial paper                      48,676,937         42,134,313
Certificates of deposit                7,000,296         21,626,308
Corporate bonds                               --         45,762,499
Asset-backed securities                8,007,508         66,646,145
--------------------------------------------------------------------
Total                             $   73,094,294     $  189,890,737
                                  ----------------------------------


Gross realized gains and losses for the years ended December 31, 1998,  1999 and
2000 were immaterial.

The Company's  available for sale  securities  have the following  maturities at
December 31, 2000:


Due in one year or less                             $    72,367,467
Due after one year through five years                   117,523,270


4. Accounts Receivable

The Company estimates the amount of the allowance for doubtful accounts required
to reduce accounts receivable to expected net realizable value by reviewing the
status of significant past-due receivables and analyzing historical bad debt
trends.

The Company did not write-off any accounts receivable during 1998. The Company
wrote-off approximately $1,490,000 of accounts receivable
during 1999 and approximately $2,674,000 during 2000.

                                     F-10
<PAGE>

5. Property and Equipment

Property and equipment is comprised of the following:


                                                            December 31,
                                                -------------------------------
                                                         1999              2000
--------------------------------------------------------------------------------
Network equipment and software                  $  13,494,034    $   42,442,904
Furniture, fixtures and office equipment            4,126,859         8,742,331
Leasehold improvements                                612,479           685,010
--------------------------------------------------------------------------------
                                                   18,233,372        51,870,245
Less accumulated depreciation and amortization      2,821,716        13,912,264
--------------------------------------------------------------------------------
                                                $  15,411,656    $   37,957,981
                                                -------------------------------

Equipment under capital leases totaled approximately $4,265,000 and $11,140,000
at December 31, 1999 and 2000, respectively. Included in accumulated
depreciation is approximately $609,000 and $3,321,000 related to such assets at
December 31, 1999 and 2000, respectively.

At December 31, 1999 and 2000, network equipment and software includes $1
million of software which is used in Internet gateways and switches. This
software was purchased from a stockholder, who was paid by issuance of common
stock warrants (see Note 12). By December 31, 1999 all such software was
deployed into operations and is being depreciated over a three-year life.

During 2000, the Company purchased $7.2 million of network equipment and
software from the same stockholder, a principal stockholder of the Company.

6. Acquisition

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

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

The following table presents unaudited pro forma results of operations of the
Company as if the above acquisition had occurred at January 1, 1999:

                                        Year Ended December 31,
                                 ---------------------------------
                                      1999                2000
                                              (Unaudited)
------------------------------------------------------------------
Revenues                         $ 28,928,000        $ 85,602,000
Net loss                          (56,273,000)        (90,266,000)
Net loss per share               $      (2.65)       $      (2.08)


The unaudited pro forma results of operations are not necessarily indicative of
what the actual results of operations of the Company would have been had the
acquisition occurred at the beginning of fiscal 1999, nor do they purport to be
indicative of the future results of operations of the Company.

                                     F-11
<PAGE>

Notes to Consolidated Financial Statements
ITXC CORP AND SUBSIDIARIES

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

7. Purchase of Contractual Rights

On November 30, 1999, the Company purchased the contractual rights to certain
terminator and reseller agreements and intellectual property, for a cash
purchase price of $3.0 million, of which $84,000 was amortized in 1999. The
remainder of these costs were fully amortized in 2000 due to the fact that
certain termination relationships had been discontinued.

8. Accrued Expenses

Accrued expenses and other current liabilities are comprised of the following:

                                                 December 31,
                                        ----------------------------
                                             1999            2000
--------------------------------------------------------------------
Compensation                             $ 1,367,120    $ 4,545,611
Payroll tax withholding liability            644,954         80,883
Other                                      1,145,155      1,970,937
--------------------------------------------------------------------
                                         $ 3,157,229    $ 6,597,431
                                        ----------------------------

9. Income Taxes

Due to operating losses, the Company has no income tax liability for 1998, 1999
or 2000.

Significant components of the Company's deferred tax assets and liabilities at
December 31, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                  December 31,
                                                    -------------------------------------
                                                          1999                 2000
-----------------------------------------------------------------------------------------
Deferred tax assets:
<S>                                                 <C>                   <C>
Net operating loss carryforward                     $   9,400,502         $  45,704,961
Allowance for doubtful accounts                           513,600               849,600
Amortization of non-cash employee compensation          1,085,658             2,081,855
Loss on disposition of joint venture                           --             8,970,160
Other                                                     207,599               946,842
-----------------------------------------------------------------------------------------
                                                       11,207,359            58,553,418
Less valuation allowance                              (10,870,050)          (43,364,564)
-----------------------------------------------------------------------------------------
Deferred tax asset                                        337,309            15,188,854
Deferred tax liabilities:
Fixed and intangible assets                              (337,309)          (15,188,854)
-----------------------------------------------------------------------------------------
Net deferred tax asset                              $          --         $          --
                                                    -------------------------------------
</TABLE>

At December 31, 2000, approximately $15.9 million of the deferred tax asset
related to net operating loss ("NOL") carryforwards and an equivalent amount of
deferred tax asset valuation allowance represented tax benefits associated with
the exercise of non-qualified stock options. Such benefits, when realized, are
credited to additional paid-in capital.

                                     F-12
<PAGE>

A reconciliation setting forth the differences between the effective tax rate of
the Company and the U.S. statutory rate is as follows:

<TABLE>
<CAPTION>
                                                                 December 31,
                                  --------------------------------------------------------------------------
                                           1998                      1999                     2000
------------------------------------------------------------------------------------------------------------
<S>                              <C>               <C>     <C>              <C>     <C>              <C>
Statutory federal income
 tax (benefit) at 34%             $  (2,450,533)    34.0%   $  (6,389,893)   34.0%   $ (24,127,847)   34.0%
State income tax (benefit),
 net of federal benefit                (404,338)    5.6        (1,116,352)    5.9       (3,556,828)    5.0
Nondeductible expenses                    7,750    (0.1)           21,269    (0.1)       1,783,366    (2.5)
Other                                    (4,909)    0.1            74,077    (0.4)         153,075    (0.2)
Increase in valuation allowance       2,852,030   (39.6)        7,410,899   (39.4)     (25,748,234)  (36.3)
------------------------------------------------------------------------------------------------------------
Total                             $          --      --     $          --      --    $          --      --
                                  --------------------------------------------------------------------------
</TABLE>

At December 31, 2000, the Company has a federal and state NOL carryforward of
approximately $114.5 million. The federal NOL carryforwards expire from 2012 to
2020. The state NOL carryforwards expire from 2004 to 2007. The Company has not
performed a detailed analysis to determine whether an ownership change under
Section 382 of the Internal Revenue Code occurred, but believes that it is
likely that such a change occurred. The effect of an ownership change would be
the imposition of an annual limitation on the use of NOL carryforwards
attributable to periods before the change. The Company has not determined the
amount of the potential limitation.

The Company's existing deferred tax assets at December 31, 1998, 1999 and 2000
have been reduced by a valuation allowance of $3,108,838,
$10,870,050 and $27,436,770, respectively, due to the uncertainty regarding the
realization of such deferred tax assets.

10. Debt

The Company has a revolving credit agreement with a bank, which provides for
maximum borrowings of $10.0 million, which may be used either under a revolving
line of credit or an equipment line. At December 31, 2000, $1.7 million was
outstanding and $2.0 million was applied towards letters of credit. The
agreement expires on June 30, 2001.

The revolving line bears interest at the greater of (i) the bank's prime rate or
(ii) the federal funds rate plus 0.5%. The equipment line bears interest at the
greater of (i) the bank's prime rate or (ii) the federal funds rate plus 0.5%.
The rate in effect at December 31, 2000 under the equipment line was 8.75%,
representing the bank's prime rate. Interest payments are due and payable on a
monthly basis. Principal payments are due and payable on the expiration date at
which time the Company is permitted to convert the outstanding amount under the
equipment line to a term loan due three years from the final draw down. In
addition, the Company is required to maintain compliance with certain financial
covenants. At December 31, 2000, the Company was in violation of one of those
covenants and has since obtained a waiver of such violation.

11. Commitments and Contingencies

The Company leases an office facility under a non-cancelable operating lease
which commenced June 15, 1998, has a term of five years and provides for minimal
annual base rental payments of $656,000. The Company may, at its option,
terminate the lease after 18 months or 36 months. The lease contains one five-
year renewal option at the then applicable fair market rental rate. In addition,
the lease requires the Company to pay increases in real estate taxes and other
operating costs of the properties above base year amounts. During 2000, the
Company entered into a new office lease which will become effective in August
2001. Under the terms of the new lease, the landlord will assume all commitments
of the Company's current lease. The Company has also entered into capital lease
agreements for furniture and equipment.

                                      F-13
<PAGE>

Notes to Consolidated Financial Statements
ITXC CORP AND SUBSIDIARIES


Future minimum lease payments for noncancelable operating and capital leases
having initial or remaining terms in excess of one year are as
follows:

                                                    Operating       Capital
-----------------------------------------------------------------------------
2001                                             $   1,657,811  $  4,467,483
2002                                                 2,328,244     3,552,193
2003                                                 2,097,536     1,288,387
2004                                                 2,097,536        92,025
2005 and thereafter                                 13,535,753            --
-----------------------------------------------------------------------------
                                                                   9,400,088
Less amounts representing interest                                 1,041,095
-----------------------------------------------------------------------------
Present value of net minimum lease payments                     $  8,358,993
                                                                -------------

Rental expense for all operating leases was approximately $217,000, $530,000,
and $1,340,000 in 1998, 1999 and 2000, respectively.

Legal Matters

The Company is involved in certain claims and legal actions arising in the
normal course of business. Management does not expect that the
outcome of these cases will have a material effect on the Company's financial
position or results of operations.

12. Capital Stock

On October 1, 1997, the Company issued 1,800,000 shares of Common Stock to an
investor for $900, which was paid subsequent to December 31, 1997. On October 1,
1997, the Company issued ten warrants to purchase an aggregate of 1,200,000
shares of Common Stock at par value to an investor in exchange for a software
credit in the amount of $1.0 million to be used within three years against the
purchase of products from the investor. Each warrant became exercisable for each
$100,000 of the software credit utilized by the Company. At December 31, 1998,
$1.0 million of the software credit had been utilized by the Company for the
purchase of software, and, accordingly, all warrants were exercisable. Also, on
October 1, 1997, the Company sold to the same investor 278,000 shares of Series
A Convertible Preferred Stock (the "Series A Stock"), and a warrant to purchase
an additional 122,000 shares of Series A Stock (the "Preferred Warrant") with an
exercise price of par value, for aggregate proceeds of $500,000.

On November 18, 1997, the Company issued a warrant to purchase up to 3,800,000
shares of Common Stock, with an exercise price of $1.32 per share, to a customer
to whom the Company provided consulting services (see Note 1). The fair value of
the warrant was determined to be de minimis on the date of grant. The warrant
was not exercised, and, on April 6, 1998, was canceled.

On April 27, 1998, all of the outstanding shares of Series A Stock were
converted into 556,000 shares of Common Stock and the Preferred Warrant was
converted into a warrant to purchase 244,000 shares of Common Stock. Such
warrants and the warrant to purchase 1,200,000 shares of Common Stock were
exercisable at any time prior to the earlier of October 1, 2004 or the
consummation of an initial public offering of the Company's Common Stock. All
1,444,000 warrants were exercised during 1999 for an aggregate exercise price of
$722.

On August 25, 1999, the Company's Board of Directors approved a 2-for-1 stock
split of its Common Stock which became effective on September 20, 1999. All
Common Stock share amounts and Preferred Stock conversion ratios included in the
financial statements reflect the stock split for all periods presented.

On September 20, 1999, the Company's stockholders approved an increase in the
authorized Common Stock to 67,500,000 shares which became effective on September
20, 1999. On May 3, 2000, the Company's stockholders approved an increase in the
authorized Common Stock to 400,000,000 shares.

On October 12, 2000 the Company issued 5,340,000 shares of Common Stock in
connection with the purchase of eFusion, Inc. (see Note 6).

                                     F-14
<PAGE>

Series B Mandatorily Redeemable Convertible Preferred Stock

On April 27, 1998, the Company issued 5,865,104 shares of Series B Mandatorily
Redeemable Convertible Preferred Stock ("Series B Stock") to various investors
at a purchase price of $1.705 per share, resulting in net proceeds of
$9,852,000. In this private placement, 439,883 shares were sold to two officers
of the Company and 668,622 shares were sold to the holders of the Series A Stock
and the Preferred Warrant.

Each share of Series B Stock was convertible into two shares of Common Stock,
subject to anti-dilution provisions, as defined. The Series B Stock
automatically converted into Common Stock upon the completion of the initial
public offering of the Company's Common Stock discussed in Note 1, resulting in
the issuance of an additional 11,730,208 shares of Common Stock.

In connection with the Series B Stock private placement, the two officers of the
Company who participated in the offering provided the Company with bridge
financing of $750,000 which was converted into Series B Stock. In addition, the
Company issued the two officers warrants to purchase an aggregate of 879,766
shares of Common Stock with an exercise price of $.8525 per share. The warrants
are exercisable at any time prior to April 30, 2008. The fair value of these
warrants was determined to be $90,000 at the date of the grant, which is
included in 1998 interest expense.

Series C Mandatorily Redeemable Convertible Preferred Stock

On February 24, 1999, the Company issued 3,229,975 shares of Series C
Mandatorily Redeemable Convertible Preferred Stock (the "Series C Stock") to
various investors at a purchase price of $4.644 per share, resulting in net
proceeds of $14,932,000. The Series C Stock had conversion and redemption
features identical to the Series B Stock, and accordingly, also automatically
converted into Common Stock upon the completion of the initial public offering
of the Company's Common Stock discussed in Note 1, resulting in the issuance of
an additional 6,459,950 shares of Common Stock.

Also, on February 24, 1999 the Board of Directors increased the total authorized
Preferred Stock from 10,000,000 shares to 15,000,000 shares.

Registration Rights

Certain of the common and preferred stockholders have registration rights under
an agreement which, as amended on February 24, 1999, provides for the
registration of Common Stock held by such stockholders, on or after one year
from the completion of the initial public offering of the Company's Common
Stock.

Common Shares Reserved

As of December 31, 2000, the Company had reserved shares of Common Stock for
issuance as follows:


                                                      Number of Shares
-----------------------------------------------------------------------
Exercise of common stock options                             8,100,001
Exercise of common stock warrants                              879,766
Employee stock purchase plan                                   794,699

                                     F-15
<PAGE>

Notes to Consolidated Financial Statements
ITXC CORP AND SUBSIDIARIES

Stock Option Plan

On February 17, 1998, the Company adopted the 1998 Stock Incentive Plan (the
"Plan"). The Plan, as amended, provides for the granting of awards to purchase
up to 7,700,000 shares of Common Stock, subject to annual increases in the
number of shares covered by the Plan. During 2000 the annual increase in the
number of shares covered by the Plan was 1,074,492. The Plan provides for award
grants in the form of incentive stock options, non-qualified stock options,
stock appreciation rights, restricted stock, performance units and performance
shares.

Under the terms of the Plan, a committee of the Company's Board of Directors may
grant options to purchase shares of the Company's Common Stock to employees,
directors and consultants of the Company at such prices as may be determined by
the committee, principally equal to or greater than fair value at the date of
grant. Options granted under the Plan generally vest over three years and expire
after ten years.

On October 12, 2000, pursuant to the eFusion merger agreement the Company
exchanged 575,045 options to purchase the Company's common stock for existing
eFusion options outstanding at that time. These options were exchanged at the
same exchange ratio as that used for eFusion common stock and issued under the
same terms as the original eFusion options.

The Company's stock option activity is as follows:

<TABLE>
<CAPTION>

                                                  1998                           1999                           2000
----------------------------------------------------------------------------------------------------------------------------------
                                                         Weighted-                     Weighted-                      Weighted-
                                                           Average                       Average                        Average
                                           Number of      Exercise       Number of      Exercise        Number of      Exercise
                                             Shares          Price        Shares           Price          Shares          Price
----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>             <C>           <C>          <C>              <C>              <C>
Options outstanding,
beginning of year                           1,598,340       $   0.05     2,641,250     $     0.21        5,338,924      $    1.83
Options granted in connection
with acquisition                                   --             --            --             --          575,045           6.50
Options granted                             1,517,910           0.35     3,487,500           2.82        2,642,133          23.58
Options exercised                                  --             --      (613,743)        (0.44)       (1,676,722)         (0.70)
Options cancelled                            (475,000)         (0.15)     (176,083)        (1.95)         (554,285)         (7.84)
----------------------------------------------------------------------------------------------------------------------------------
Options outstanding, end of year            2,641,250       $   0.21     5,338,924     $     1.83        6,325,095     $    11.12
                                           ---------------------------------------------------------------------------------------
</TABLE>

The weighted-average fair value of options granted in 1998, 1999 and 2000 was
$1.16, $11.75, and $21.19, respectively.


The following table summarizes information about fixed price stock options
outstanding at December 31, 2000:
<TABLE>
<CAPTION>
                                                         Outstanding                  Exercisable
                                               ----------------------------- ----------------------------
                                                  Weighted-       Weighted-       Number        Weighted-
                                                   Average         Average   Exercisable at      Average
       Range of                                   Remaining        Exercise    December 31,     Exercise
    Exercise Prices       Number of Shares     Contractual Life     Price           2000          Price
---------------------------------------------------------------------------------------------------------
<S>         <C>               <C>                  <C>             <C>          <C>            <C>
 $  0.01 -  $   12.00         4,491,984            7.8 years       $  3.40      1,998,800      $    1.46
   12.01 -      35.00         1,170,386            9.6 years         18.38          5,363          29.18
   35.01 -      55.00           497,725            9.0 years         40.24         18,091          41.72
   55.01 -      75.00            67,500            9.3 years         57.74         50,000          55.12
   75.01 -      95.00            58,250            9.1 years         86.59              0              0
   95.01 -     119.75            39,250            9.1 years        117.17              0              0
---------------------------------------------------------------------------------------------------------
 $  0.01 -  $  119.75         6,325,095            8.3 years       $ 11.12      2,072,254      $    3.18
                              ---------------------------------------------------------------------------
</TABLE>

                                     F-16
<PAGE>

Had the Company been accounting for its employee stock options under the fair
value method of SFAS No. 123, there would not have been a material impact on the
Company's net loss or basic and diluted net loss per share available to common
stockholders during 1999 or 1998. The Company's net loss and basic and diluted
net loss per share for 2000 would have increased on a pro forma basis to $81.6
million and $2.08, respectively.

During 1998 and 1999, prior to the IPO, the Company granted options to employees
to purchase an aggregate of 1,517,910 and 3,319,750 shares, respectively, of
Common Stock at exercise prices ranging from $.30 to $4.00. The exercise price
of each of these option grants was below the fair value of the Company's Common
Stock at the respective dates of grant, resulting in aggregate non-cash
compensation of approximately $760,000 and $12.4 million in 1998 and 1999,
respectively. Additionally, the 575,045 options that the Company issued in
exchange for the eFusion options outstanding at the time of the eFusion merger
generated aggregate non-cash compensation of approximately $733,000. All non-
cash compensation is being amortized to expense over the option vesting periods,
generally three to seven years.

13. Stock Purchase Plan

During 1999, the Company's Board of Directors adopted the ITXC Corp Employee
Stock Purchase Plan (the "Purchase Plan"), intended to qualify under Section 423
of the Internal Revenue Code. The Purchase Plan enables eligible employees to
purchase shares of the Company's Common Stock through payroll deductions,
ranging from 1% to 10% of gross pay. The purchase price for Common Stock
purchased under the Purchase Plan is 85% of the lesser of the fair market value
of the shares on the first or last day of the offering period. The first
offering period commenced on October 1, 1999. The Company initially reserved
500,000 shares of Common Stock for issuance under the plan, subject to annual
increases in the number of shares covered by the Purchase Plan. An additional
358,164 shares were reserved in 2000 under the provisions of the plan. During
2000, 63,915 shares were purchased under the plan.

14. Earnings (Loss) Per Share

The Company computes net loss per share under the provisions of SFAS No. 128,
"Earnings per Share" ("SFAS 128"), and SEC Staff Accounting Bulletin No. 98
("SAB 98").

Under the provisions of SFAS 128 and SAB 98, basic and diluted net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted average number of shares of Common Stock outstanding
during the period. The calculation of diluted net loss per share excludes
potential common shares if the effect is antidilutive. Basic earnings per share
is computed by dividing income or loss applicable to common stockholders by the
weighted average number of shares of Common Stock outstanding during this
period. The increase in the weighted average shares outstanding from 1998 to
1999 is largely attributable to the completion of the Company's IPO and
conversion of Preferred Stock to Common Stock, which both occurred on October 1,
1999.

Diluted earnings per share is determined in the same manner as basic earnings
per share except that the number of shares is increased assuming exercise of
dilutive stock options and warrants using the treasury stock method. The diluted
earnings per share amount equals basic earnings per share because the Company
had a net loss and the impact of the assumed exercise of the stock options and
warrants is not dilutive.

15. Geographic Data

During 1999 and 2000, the Company generated approximately 7% and 13%,
respectively, of its revenue from customers domiciled in countries other than
the United States, primarily in Asia. For the year ended December 31, 1998,
substantially all of the Company's revenue was derived from domestic operations.

16. Unaudited Pro Forma Information

The Company's historical capital structure prior to the completion of the IPO is
not indicative of its ongoing structure due to the automatic conversion of all
Series B and Series C Stock upon closing of the IPO on October 1, 1999.

Accordingly, the unaudited pro forma net loss per share assumes the conversion
of the Series B and Series C Stock to Common Stock as if it had been converted
at the date of issuance, even though the result is antidilutive.

                                     F-17
<PAGE>

Notes to Consolidated Financial Statements
ITXC CORP AND SUBSIDIARIES



The following table presents the calculation of basic and diluted net loss per
share and pro forma net loss per share:

<TABLE>
<CAPTION>
                              December 31, 1998                      December 31, 1999                  December 31, 2000
                            --------------------------------------------------------------------------------------------------------

                                             Denominator                     Denominator                        Denominator
                                             (Weighted                       (Weighted                          (Weighted
                              Numerator      Average     Per    Numerator     Average       Per     Numerator    Average     Per
                              (Net Loss)     Shares)     Share  (Net Loss)    Shares)       Share   (Net Loss)   Shares)     Share
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>          <C>            <C>     <C>           <C>         <C>      <C>           <C>        <C>
Basic and diluted net loss
 per common share           $(7,221,668)   8,184,556    $(.88)  $(20,437,530) 15,885,883  $(1.29)  $(70,964,257)  39,292,353 $(1.81)
Accretion of redemption
 value of mandatorily
   redeemable convertible
    preferred stock              14,217           --       --        772,795          --      --             --           --     --
Assumed conversion of shares
 of mandatorily redeemable
  convertible preferred stock
    into shares of common
     stock at issuance               --    7,970,114       --             --  12,639,736      --             --           --     --
------------------------------------------------------------------------------------------------------------------------------------
Pro forma basic and
 diluted net loss per
  common share              $(7,207,451)  16,154,670   $ (.45)  $(19,664,735) 28,525,619  $ (.69)  $(70,964,257)  39,292,353 $(1.81)
                            --------------------------------------------------------------------------------------------------------
</TABLE>

17. Employee Benefit Plan

The Company maintains a defined contribution plan that is qualified under
Section 401(k) of the Internal Revenue Code, which covers all eligible
employees. Eligible employees can contribute up to 15% of their compensation not
to exceed Internal Revenue Code limits. The Plan provides for matching
contributions to eligible participants in an amount equal to 40% of their
contribution, up to 6% of compensation. No Company contributions were made for
the year ended December 31, 1999. Company contributions for the year ended
December 31, 2000 were $174,770.

18. Subsequent Event

During March, 2001, the Company discontinued service to a substantial customer
(representing $2.7 million of revenues during January and February of 2001) as a
result of the customer's failure to meet its payment obligations. At that time,
the Company's account receivable balance for such customer amounted to $2.1
million. The Company will record an additional charge with respect to this
customer during the first quarter of 2001.

                                     F-18
<PAGE>

Item 9. Changes in and Disagreements with Accountants on Accounting and
-----------------------------------------------------------------------
        Financial Disclosure
        --------------------

        Not applicable.

                                    PART III

Item 10.  Directors of the Registrant
-------------------------------------

     The registrant incorporates by reference herein information to be set forth
in its definitive proxy statement for its 2001 annual meeting of shareholders
that is responsive to the information required with respect to this Item.

Item 11.  Executive Compensation
--------------------------------

     The registrant incorporates by reference herein information to be set forth
in its definitive proxy statement for its 2001 annual meeting of shareholders
that is responsive to the information required with respect to this Item.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

     The registrant incorporates by reference herein information to be set forth
in its definitive proxy statement for its 2001 annual meeting of shareholders
that is responsive to the information required with respect to this Item.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

     The registrant incorporates by reference herein information to be set forth
in its definitive proxy statement for its 2001 annual meeting of shareholders
that is responsive to the information required with respect to this Item.

                                      24
<PAGE>

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
-------------------------------------------------------------------------

(a) The following financial statements and related report are set forth in Item
8 of this Annual Report on Form 10-K (pages follow page 17 of this Annual
Report):

<TABLE>
<CAPTION>
                                                                                  Page
<S>                                                                                  <C>
Report of Independent Auditors.................................................... F-1

Consolidated Balance Sheets as of December 31, 1999 and 2000...................... F-2

Consolidated Statements of Operations for the years ended December
31, 1998, 1999 and 2000........................................................... F-3

Consolidated Statements of Stockholders' Equity for the years ended December
31, 1998, 1999 and 2000........................................................... F-4

Consolidated Statements of Cash Flows for the years ended December
31, 1998, 1999 and 2000........................................................... F-6

Notes to Consolidated Financial Statements........................................ F-7
</TABLE>


(b) Financial statement schedules have been omitted because they are not
applicable or the required information is included in the financial statements
or notes thereto.

(c) The following exhibits are incorporated by reference herein or annexed to
this Annual Report:

     2.1 Amended and Restated Agreement and Plan of Merger, dated as of July 25,
     2000, among the registrant, a wholly-owned subsidiary of the Registrant and
     eFusion, Inc. (1)

     3.1 Third Restated Certificate of Incorporation, as amended (2)

     3.2 By-laws, as amended (3)

     4.1 Form of certificate representing shares of common stock (4)

     10.1 Second Amended and Restated Employment Agreement between the
     Registrant and Tom Evslin (5)

     10.3 1998 Stock Incentive Plan, as amended (6)

     10.5 Employee Stock Purchase Plan (7)

     10.6 Joint Venture and Quotaholders Agreement, dated as of July 19, 1998,
     by and between TeleNova Comunicacoes Ltda. and ITXC Corp. (6)

     10.7 First Amendment to Joint Venture and Quotaholders' Agreement, dated
     August 18, 1998, by and between TeleNova Comunicacoes Ltda. and ITXC Corp.
     (6)

     10.8 Memorandum and Amendment to Joint Venture and Quotaholders' Agreement,
     dated as of May 31, 1999, by and among ITXC Corp., TeleNova Comunicacoes
     Ltda. and Telesisa Sistemas emTelecomunicacoes S.A. (6)

     10.9 Lease Agreement, dated February 2, 1998 by and between the Registrant
     and Peregrine Investment Partners--I (6)

     10.10 First Amendment to Lease dated April 16, 1999, by and between the
     Registrant and Peregrine Investment Partners--I (6)

     10.11 Employment Agreement between the Registrant and Thomas Shoemaker (5)

     10.12 Second Amendment to Lease, dated December 6, 1999, by and between the
     Registrant and Peregrine Investment Partners--I (5)

                                      25
<PAGE>

     10.13 Amended and Restated Loan Agreement, dated February 7, 2000, between
     the Registrant and PNC Bank (5)

     10.14 Joint Venture Exit Agreement by and among the Registrant, TeleNova
     Comunicacoes Ltda., TeleNova Overseas, Ltd., Telesisa Sistemas em
     Telecomunicacoes S.A., and ITXC Comunicacoes Ltda., dated February 7, 2000
     (5)

     10.15 Lease Agreement, dated as of June 30, 2000, between the registrant
     and PNC Associates LP (8)

     21.1 Subsidiaries of the Registrant (5)

     23.1 Consent of Ernst & Young LLP

     24.1 Powers of Attorney

     99.1 Risk Factors

     ------------------------------------------------------------------
     (1) Incorporated by reference to Exhibit 2.1 of the registrant's
     Registration Statement on Form S-4 (No. 333-44248).
     (2) Incorporated by reference to Exhibit 4.1 of the registrant's
     Registration Statement on Form S-8 (No. 333-47902).
     (3) Incorporated by reference to Exhibit 3.2 of the registrant's Annual
     Report on Form 10-K for they year ended December 31, 1999.
     (4) Incorporated by reference to Exhibit 4.2 of the registrant's
     Registration Statement on Form S-1 (No. 333-80411).
     (5) Incorporated by reference to the similarly numbered Exhibit of the
     registrant's Registration Statement on Form S-1 (No. 333-96343).
     (6) Incorporated by reference to the similarly numbered Exhibit of the
     registrant's Registration Statement on Form S-1 (No. 333-80411).
     (7) Incorporated by reference to the similarly numbered Exhibit of the
     registrant's Form 10-Q for the quarter ended September 30, 1999.
     (8) Incorporated by reference to Exhibit 10.14 of the registrant's
     Registration Statement on Form S-4 (No. 333-44248).


(b) Financial Statement Schedules: Not applicable.

(c) During the quarter ended December 31, 2000, the Company filed one Current
Report on Form 8-K. That Report, filed on October 13, 2000, described the
registrant's acquisition of eFusion, Inc. in response to Items 2 and 7 of that
Form.

                                      26
<PAGE>

                                   SIGNATURES
                                   ----------

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, this 30th day of
March, 2001.

                                          ITXC CORP.

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

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 30th day of March, 2001.

<TABLE>
<CAPTION>
Signature                                         Title
<S>                                               <C>
/s/ Tom I. Evslin*
------------------------------------------        Chairman, President and Chief Executive
Tom I. Evslin                                     Officer

/s/ Edward B. Jordan
------------------------------------------        Chief Financial and
Edward B. Jordan                                  Accounting Officer and Director

/s/ William P. Collatos*
------------------------------------------        Director
William P. Collatos


------------------------------------------        Director
Elon Ganor

/s/ Frank Gill*
------------------------------------------        Director
Frank Gill

------------------------------------------        Director
Frederick R. Wilson

*By: /s/ Edward B. Jordan
------------------------------------------
Attorney-in-Fact
</TABLE>
                                      27
<PAGE>

                                  EXHIBIT INDEX

2.1 Amended and Restated Agreement and Plan of Merger, dated as of July 25,
2000, among the registrant, a wholly-owned subsidiary of the Registrant and
eFusion, Inc. (1)

3.1 Third Restated Certificate of Incorporation, as amended (2)

3.2 By-laws, as amended (3)

4.1 Form of certificate representing shares of common stock (4)

10.1 Second Amended and Restated Employment Agreement between the Registrant and
Tom Evslin (5)

10.3 1998 Stock Incentive Plan, as amended (6)

10.5 Employee Stock Purchase Plan (7)

10.6 Joint Venture and Quotaholders Agreement, dated as of July 19, 1998, by and
between TeleNova Comunicacoes Ltda. and ITXC Corp. (6)

10.7 First Amendment to Joint Venture and Quotaholders' Agreement, dated August
18, 1998, by and between TeleNova Comunicacoes Ltda. and ITXC Corp. (6)

10.8 Memorandum and Amendment to Joint Venture and Quotaholders' Agreement,
dated as of May 31, 1999, by and among ITXC Corp., TeleNova Comunicacoes Ltda.
and Telesisa Sistemas emTelecomunicacoes S.A. (6)

10.9 Lease Agreement, dated February 2, 1998 by and between the Registrant and
Peregrine Investment Partners--I (6)

10.10 First Amendment to Lease dated April 16, 1999, by and between the
Registrant and Peregrine Investment Partners--I (6)

10.11 Employment Agreement between the Registrant and Thomas Shoemaker (5)

10.12 Second Amendment to Lease, dated December 6, 1999, by and between the
Registrant and Peregrine Investment Partners--I (5)

10.13 Amended and Restated Loan Agreement, dated February 7, 2000, between the
Registrant and PNC Bank (5)

10.14 Joint Venture Exit Agreement by and among the Registrant, TeleNova
Comunicacoes Ltda., TeleNova Overseas, Ltd., Telesisa Sistemas em
Telecomunicacoes S.A., and ITXC Comunicacoes Ltda., dated February 7, 2000 (5)

10.15 Lease Agreement, dated as of June 30, 2000, between the registrant and PNC
Associates LP (8)

21.1 Subsidiaries of the Registrant (5)

23.1 Consent of Ernst & Young LLP

24.1 Powers of Attorney

99.1 Risk Factors

------------------------------------------------------------------
(1) Incorporated by reference to Exhibit 2.1 of the registrant's Registration
Statement on Form S-4 (No. 333-44248).
(2) Incorporated by reference to Exhibit 4.1 of the registrant's Registration
Statement on Form S-8 (No. 333-47902).
(3) Incorporated by reference to Exhibit 3.2 of the registrant's Annual Report
on Form 10-K for they year ended December 31, 1999.
(4) Incorporated by reference to Exhibit 4.2 of the registrant's Registration
Statement on Form S-1 (No. 333-80411).
(5) Incorporated by reference to the similarly numbered Exhibit of the
registrant's Registration Statement on Form S-1 (No. 333-96343).
(6) Incorporated by reference to the similarly numbered Exhibit of the
registrant's Registration Statement on Form S-1 (No. 333-80411).
(7) Incorporated by reference to the similarly numbered Exhibit of the
registrant's Form 10-Q for the quarter ended September 30, 1999.
(8) Incorporated by reference to Exhibit 10.14 of the registrant's Registration
Statement on Form S-4 (No. 333-44248).