<PAGE>

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                                       OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                      FOR THE QUARTER ENDED MARCH 31, 2001
                        COMMISSION FILE NUMBER 000-31589

                                  VASTERA, INC.
             (Exact Name of Registrant as Specified in its Charter)

                  DELAWARE                                   54-1616513
      (State or Other Jurisdiction of                     (I.R.S. Employer
       Incorporation or Organization)                  Identification Number)


                                   -----------

                         45025 AVIATION DRIVE, SUITE 200
                                DULLES, VA 20166
                                 (703) 661-9006
            (Address and phone number of principal executive offices)



Indicate by check number 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
                                       ---   ---

At May 10, 2001 there were 37,832,070 shares of the registrant's Common Stock,
$.01 par value per share, outstanding.

================================================================================

<PAGE>

                                  VASTERA, INC.

                                TABLE OF CONTENTS


PART I -- FINANCIAL INFORMATION (UNAUDITED)


ITEM 1 - Financial Statements

<TABLE>
<CAPTION>
                                                                                                                       Page
                                                                                                                       ----
   <S>                                                                                                                 <C>
   Condensed Consolidated Balance Sheets as of December 31, 2000 and March 31, 2001                                      1

   Condensed Consolidated Statements of Operations for Three Months Ended March 31, 2001 and 2000                        2

   Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000                    3

   Notes to Unaudited Condensed Consolidated Financial Statements                                                        4


ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations                           12

ITEM 3 - Quantitative and Qualitative Disclosures of Market Risk                                                         29



PART II - OTHER INFORMATION


ITEM 1 - Legal Proceedings                                                                                               31
ITEM 2 - Changes in Securities and Use of Proceeds                                                                       31
ITEM 4 - Submission of Matters to a Vote of Securities Holders                                                           31
ITEM 6 - Exhibits and Reports on Form 8-K                                                                                31



SIGNATURES                                                                                                               32
</TABLE>


<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1:  FINANCIAL STATEMENTS

                                  VASTERA, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                DECEMBER 31,          MARCH 31,
                                                                                                   2000                 2001
                                                                                                   ----                 ----
                                                                                                                    (UNAUDITED)
<S>                                                                                             <C>                 <C>
ASSETS
Current assets:
   Cash and cash equivalents...........................................................             $ 19,693            $ 10,133
   Short-term investments..............................................................               70,978              73,468
   Accounts receivable, net of allowance of $665 and $721 for doubtful accounts,
      respectively.....................................................................               11,163              11,252
   Prepaid expenses and other current assets...........................................                1,653               2,137
                                                                                                  ----------           ---------
        Total current assets...........................................................              103,487              96,990
Property and equipment, net............................................................                6,183               6,300
Intangible assets, net.................................................................               75,302              83,077
Deposits and other assets..............................................................                  538                 648
                                                                                                  ----------           ---------
        Total assets...................................................................             $185,510            $187,015
                                                                                                  ----------           ---------
                                                                                                  ----------           ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
   Line of credit and capital lease obligations, current...............................             $  1,837            $  1,979
   Accounts payable....................................................................                2,896               3,814
   Accrued expenses....................................................................                3,422               4,521
   Accrued compensation and benefits...................................................                3,683               3,391
   Deferred revenue, current...........................................................               10,171              10,334
                                                                                                  ----------           ---------
        Total current liabilities......................................................               22,009              24,039
Long-term liabilities:
   Line of credit and capital lease obligations, net of current portion................                1,787               1,443
   Deferred revenue, net of current portion............................................                2,704               2,276
                                                                                                  ----------           ---------
        Total liabilities..............................................................               26,500              27,758
                                                                                                  ----------           ---------
Commitments and contingencies

Stockholders' equity:
   Common stock, $0.01 par value; 100,000 shares authorized; 36,336 and 37,506 shares
      issued and outstanding, respectively.............................................                  363                 375
   Additional paid-in capital..........................................................              292,887             308,557
   Accumulated other comprehensive income..............................................                   66                 700
   Deferred compensation...............................................................              (8,927)             (7,716)
   Accumulated deficit.................................................................            (125,379)           (142,659)
                                                                                                  ----------           ---------
        Total stockholders' equity ....................................................              159,010             159,257
                                                                                                  ----------           ---------
        Total liabilities and stockholders' equity ....................................             $185,510            $187,015
                                                                                                  ----------           ---------
                                                                                                  ----------           ---------


The accompanying notes are an integral part of these condensed consolidated
balance sheets.

                                       1

<PAGE>



                                  VASTERA, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                                                    THREE MONTHS ENDED
                                                                                                          MARCH 31,
                                                                                                  --------------------------
                                                                                                     2000             2001
                                                                                                     ----             ----
<S>                                                                                               <C>               <C>
REVENUES:
   Subscription/transaction revenues.............................................                $   2,617         $   8,474
   Services revenues.............................................................                    3,662             4,227
                                                                                                   -------           -------
   Total revenues................................................................                    6,279            12,701
                                                                                                   -------           -------
Cost of revenues
   Cost of subscription/transaction revenues.....................................                      364             3,682
   Cost of services revenues.....................................................                    3,271             3,025
                                                                                                   -------           -------
OPERATING EXPENSES:
   Sales and marketing...........................................................                    3,387             4,319
   Research and development......................................................                    3,398             3,534
   General and administrative....................................................                    1,294             2,043
   Depreciation..................................................................                      461               713
   Amortization..................................................................                      119             4,975
   In-process research and development...........................................                        -             6,901
   Stock-based compensation......................................................                    2,622             1,676
                                                                                                   -------           -------
      Total operating expenses...................................................                   11,281            24,161
                                                                                                   -------           -------
      Loss from operations.......................................................                  (8,637)          (18,167)
   Other income (expense):
   Interest income...............................................................                      101             1,044
   Interest expense..............................................................                     (74)             (157)
                                                                                                   -------           -------
      Total other income (expense)...............................................                       27               887
                                                                                                   -------           -------
Net loss.........................................................................                $ (8,610)         $(17,280)
Dividends and accretion on redeemable convertible preferred stock................                 (12,107)                 -
                                                                                                   -------           -------
Net loss applicable to common stockholders.......................................                $ (20,717)        $(17,280)
                                                                                                   -------           -------
                                                                                                   -------           -------
Basic and diluted net loss per common share......................................                $  (3.13)         $  (0.47)
                                                                                                   -------           -------
                                                                                                   -------           -------
Weighted-average common shares outstanding.......................................                    6,624            36,422
                                                                                                   -------           -------
                                                                                                   -------           -------
Pro forma basic and diluted loss per common share................................                $  (0.47)         $  (0.47)
                                                                                                   -------           -------
                                                                                                   -------           -------
Pro forma weighted-average common shares outstanding.............................                   18,362            36,422
                                                                                                   -------           -------
                                                                                                   -------           -------

</TABLE>


The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                       2

<PAGE>

                                  VASTERA, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                                  THREE MONTHS ENDED MARCH 31,
                                                                                                  ----------------------------
                                                                                                     2000           2001
                                                                                                   ---------      ---------
<S>                                                                                                 <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss............................................................................             $(8,610)      $(17,280)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Stock-based compensation.........................................................                2,622          1,676
      Depreciation and amortization....................................................                  580          5,688
      In process research and development..............................................                    -          6,901
      Provision for allowance for doubtful accounts....................................                    -            375
      Amortization of revenue discount related to Ford contract........................                    -             75
      Amortization of revenue discount related to warrants issued to a customer........                   41              -

   Changes in operating assets and liabilities:
      Accounts receivable..............................................................              (2,018)          (479)
      Prepaid expenses and other current assets........................................                (638)          (496)
      Deposits and other assets........................................................                  221          (119)
      Accounts payable and accrued expenses............................................                1,275        (1,166)
      Accrued compensation and benefits................................................                (543)        (1,676)
      Deferred revenue.................................................................                  474          (260)
                                                                                                    --------      ---------
      Net cash used in operating activities............................................              (6,596)        (6,761)
                                                                                                    --------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Net purchases of short-term investments.............................................              (9,925)        (1,809)
   Acquisition of property and equipment...............................................                (747)          (593)
                                                                                                    --------      ---------
      Net cash used in investing activities............................................             (10,672)        (2,402)
                                                                                                    --------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of redeemable convertible preferred stock....................               16,974              -
   Proceeds from the exercise of preferred stock warrants..............................                    -            294
   Proceeds from the exercise of stock options.........................................                  107            138
   Principal payments on long-term debt................................................                (105)          (639)
                                                                                                    --------      ---------
   Net cash provided by (used in) financing activities.................................               16,976          (207)
                                                                                                    --------      ---------
Effect of foreign currency exchange rate changes on cash and cash equivalents..........                    -          (190)
                                                                                                    --------      ---------
      Net decrease in cash and cash equivalents........................................                (292)        (9,560)
Cash and cash equivalents, beginning of period.........................................                  961         19,693
                                                                                                    --------      ---------
Cash and cash equivalents, end of period...............................................             $    669      $  10,133
                                                                                                    --------      ---------
                                                                                                    --------      ---------
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

                                       3

<PAGE>

                                  VASTERA, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.       BASIS OF PRESENTATION AND NATURE OF BUSINESS:

         The accompanying unaudited condensed consolidated financial statements
of Vastera, Inc. and its subsidiaries ("Vastera" or the "Company") have been
prepared on the same basis as the audited financial statements and include all
adjustments, including all normal recurring adjustments, which are necessary for
a fair presentation of the financial position, results of operations and cash
flows for the interim periods presented. The results of operations for the
interim periods presented are not necessarily indicative of the results to be
expected for any subsequent quarter or for the entire year ending December 31,
2001. All significant intercompany balances and transactions have been
eliminated in consolidation. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
Securities and Exchange Commission's (the "SEC") rules and regulations. The
Company's interim financial statements should be read in conjunction with the
Company's audited consolidated financial statements and notes thereto, as filed
with the SEC with the Company's Annual Report on Form 10-K and other reports
filed with the SEC.

         Vastera is a leading provider of web-native solutions for global trade
management. The Company's offerings include a library of global trade content,
web-native software solutions and management consulting and managed services.
Managed services range from management of a specific global trade function to
providing complete management of a client's global trade operations. Our
customers utilize these offerings to manage their global trade processes. Global
trade involves the shipment of goods between countries and the management of
information and business processes to complete shipment.

         The Company's operations are subject to certain risks and
uncertainties, including among others, uncertainties relating to product
development, rapidly changing technology, current and potential competitors with
greater financial, technological, production, and marketing resources,
dependence on key management personnel, limited protection of intellectual
property and proprietary rights, uncertainty of future profitability and
possible fluctuations in financial results.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

USE OF ESTIMATES

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

REVENUE RECOGNITION

         The Company's revenues consist of subscription/transaction revenues and
services revenues.

                                       4

<PAGE>

SUBSCRIPTION/TRANSACTION REVENUES

         Subscription/transaction revenues consist of subscription-based
revenues, transaction-based revenues and perpetual software license revenues.
The Company recognizes revenue from the sale of software products in accordance
with Statement of Position ("SOP") 97-2, "Software Revenue Recognition."

         Subscription-based revenues are revenues derived from arrangements in
which our clients subscribe to our software products and services. Revenues are
recognized ratably over the contract term. Subscription arrangements typically
range from three to five years.

         Transaction-based revenues are revenues derived from agreements, which
provide for transaction fees based on usage of our software products or on the
performance of our services. Revenues are recognized as transactions occur.

         Perpetual software license revenues are derived from the sales of
perpetual software licenses and the related maintenance contract. Maintenance
contracts include the right to unspecified enhancements on a when-and-if
available basis, ongoing support and content update services. The content
updates provided under maintenance arrangements are significant and frequent and
thus the entire arrangement is in substance a subscription. Revenues from
perpetual software license sales are recognized ratably over the estimated
economic life of the product. We have estimated that the life of the product is
three years, which is consistent with the historical periods between major
upgrades to the functionality and architecture of our products such that we
would charge all customers a new fee to migrate to the new version. Revenues
from maintenance contracts are recognized ratably over the contract term,
typically one year.

SERVICES REVENUES

         Services revenues are derived from implementation, management
consulting and training services. Services are performed on a time and materials
basis or under fixed price arrangements and are recognized as the services are
performed or using percentage of completion.

CONCENTRATIONS OF CREDIT RISK

         Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents, short-term
investments, and accounts receivable. The Company limits the amount of
investment exposure in any one financial instrument and does not have any
foreign currency investments. The Company sells products and services to
customers across several industries throughout the world without requiring
collateral. The Company does, however, routinely assess the financial strength
of its customers and maintains allowances for anticipated losses.

         As of December 31, 2000 and March 31, 2001, no customer accounted for
more than 10 % of the Company's accounts receivable.

UNAUDITED NET LOSS PER COMMON SHARE

         Basic net loss per common share is computed by dividing net loss
applicable to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted net loss per common share includes
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock. As of March
31, 2000 and 2001, options to purchase approximately 6,453,000 and 8,411,000
shares of common stock, respectively, were outstanding; warrants to purchase
approximately 2,115,000 and 12,000 shares, respectively, of redeemable
convertible preferred stock were outstanding; and as of March 31, 2000,
approximately 7,654,000 shares of redeemable convertible preferred

                                       5

<PAGE>

stock that were convertible into approximately 12,681,000 shares of common stock
were outstanding. Due to the anti-dilutive nature of the options, warrants and
redeemable convertible preferred stock, there is no effect on the calculation of
weighted-average shares for diluted earnings per share. As a result, the basic
and diluted loss per share amounts are identical.

         Unaudited pro forma loss per common share is computed using the pro
forma weighted-average number of common shares outstanding for the period.
Pro forma weighted-average common shares include the assumed conversion of
all outstanding convertible preferred stock into common stock as of the
beginning of the period presented.

COMPREHENSIVE INCOME

         As of December 31, 2000 and March 31, 2001, accumulated other
comprehensive income includes unrealized gains and losses on investments and
foreign currency translation adjustments.

3. ACQUISITION

         On March 1, 2001, the Company entered into a definitive agreement (the
"Agreement") to acquire Speed Chain Network, Inc., ("Speedchain"), a development
stage company with no revenues since its inception in 1999. Speedchain is a
supply chain event management and global e-logistics solutions provider. The
acquisition was effected on March 29, 2001 through the merger of Speedchain into
a wholly owned subsidiary of the Company, Vastera Acquisition Corporation. The
acquisition was accounted for under the purchase method of accounting and the
operating results of Speedchain have been included in the accompanying condensed
consolidated financial statements from the date of acquisition.

         Under the terms of the Agreement, the Company issued 1,032,690 shares
of common stock in exchange for all of the outstanding preferred stock, common
stock, warrants and stock options of Speedchain. The shares were valued at
$14.00 per share, the average of the closing prices for the three days before
and after March 1, 2001. The Company issued options to acquire approximately
24,000 shares of common stock in exchange for the vested Speedchain stock
options it assumed in the business combination. The options were valued at
approximately $328,000 using the Black-Scholes model assuming 128% volatility, a
risk free interest rate of 6.19%, and an exercise period of three years. On
March 29, 2001, the Company also issued options to acquire approximately 64,000
shares of common stock in exchange for the unvested Speedchain stock options it
assumed in the business combination. Accordingly, the Company recorded $465,000
of deferred compensation that will be amortized on an accelerated basis over the
remaining vesting period of these options.

         The aggregate purchase price was determined as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                            VALUE
                                                                                                            -----
<S>                                                                                                       <C>
                      Fair value of common stock................................................          $ 14,457
                      Fair value of options.....................................................               328
                      Assumed liabilities.......................................................             3,401
                      Estimated transaction costs and other.....................................             1,610
                                                                                                          ---------
                           Aggregate purchase price.............................................          $ 19,796
                                                                                                          ---------
</TABLE>

         The acquisition resulted in an allocation of the purchase price to the
net tangible and intangible assets of Speedchain, as well as the write-off of
the portion of the purchase price allocated to in-process research and
development projects. The Company has allocated the purchase price based upon
the fair values of the assets and the liabilities acquired and allocated to the
purchase price accordingly.

                                       6

<PAGE>


         The purchase price has been allocated on a preliminary basis as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                            VALUE
                                                                                                            -----
<S>                                                                                                       <C>
                      Current assets............................................................             $  38
                      Property and equipment....................................................                57
                      Assembled workforce.......................................................               300
                      In-process R&D............................................................             6,901
                      Goodwill..................................................................            12,500
                                                                                                          --------
                                                                                                          $ 19,796
                                                                                                          --------
</TABLE>

         The amount allocated to assembled workforce and goodwill is being
amortized on a straight-line method over the estimated useful life of these
assets, two years and four years, respectively.

         The Company valued in process research and development ("IPR&D")
projects acquired in the acquisition at $6.9 million, based upon an independent
appraisal of the development project for which technological feasibility has not
been established and no alternative future uses exist. The acquired IPR&D
projects are targeted at the supply chain event management and e-logistics
market.

         The value of the IPR&D project identified was determined by estimating
the future cash flows from the project, once commercially feasible, discounting
the net cash flows back to their present value and then applying a percentage of
completion to the calculated present value. The percentage of completion for the
project was determined using milestones representing management's estimate of
effort, value added and degree of difficulty of the portion of the project
completed as of March 29, 2001, as compared to the remaining research and
development to be completed to bring the project to technical feasibility.
Speedchain's project started in February 2000 and, as of March 29, 2001, the
Company estimated that the project was 70% complete.

         Development of the technology remains a substantial risk to the Company
due to factors including the remaining effort to achieve technical feasibility,
rapidly changing customer needs and competitive threats from other companies.
Additionally the value of the other intangible assets acquired may become
impaired. Failure to bring these products to market in a timely manner could
adversely affect future sales and profitability of the combined company.

         In connection with the Speedchain acquisition, the Company recognized
approximately $300,000 in liabilities as the cost of closing redundant
facilities and terminating certain employees. The accrual consisted primarily of
severance and other employee termination costs. These activities resulted in the
termination of eight employees in connection with the elimination of duplicative
positions and the restructuring of certain operations. Substantially all of this
accrual is expected to be paid out in 2001.

         The following unaudited pro forma information has been prepared as if
the acquisition of Speedchain had occurred as of January 1, 2000, excluding the
one time $6.9 million IPR&D charge.

<TABLE>
<CAPTION>

                                                                           PRO FORMA FOR THE       PRO FORMA FOR THE
                                                                              YEAR ENDED           THREE MONTHS ENDED
                                                                           DECEMBER 31, 2000        MARCH 31, 2001
                                                                              -----------             -----------
                                                                              (UNAUDITED)             (UNAUDITED)
<S>                                                                        <C>                      <C>
  Total revenues...................................................             $  32,970              $  12,701
  Net loss.........................................................              (79,540)               (13,268)
  Pro forma basic and diluted loss per common share................                (3.12)                 (0.35)
</TABLE>

                                       7

<PAGE>


         The unaudited pro forma information is not necessarily indicative of
the results of operations that would have occurred had the acquisition been made
at the beginning of the periods presented or the future results of the combined
operations.

4. SECURED REVOLVING LINE OF CREDIT AND EQUIPMENT LINE OF CREDIT:

         As of December 31, 2000 and March 31, 2001, the outstanding balance
under the equipment line of credit was approximately $2,925,000 and $2,561,000,
respectively, and there were no amounts outstanding under the secured revolving
line of credit. The revolving line of credit was scheduled to expire on December
31, 2000 and was extended to April 30, 2001. In May 2001, the Company
renegotiated and amended its secured revolving line of credit and equipment line
of credit. As amended, the Company may now borrow up to $10,000,000 under the
revolving line of credit, with a $2,500,000 sub-limit for the issuance of
letters of credit. Advances under the revolving line of credit are limited to
the lesser of $10,000,000 or the sum of 80% of eligible accounts receivable, as
defined in the loan agreement. The revolving line of credit bears interest at
the greater of the bank's prime rate or the overnight federal funds rate plus
 .50 basis points, (8.0% as of March 31, 2001). The revolving line of credit
matures in May 2002.

         The Company may borrow up to $6,439,649 under the equipment line of
credit. The equipment line of credit bears interest at the bank's prime rate
plus .50 basis points, (8.0% as of March 31, 2001). The equipment line of credit
has two interest-only payment periods. Amounts borrowed until November 15, 2001
are subject to interest-only payments. After this date, the Company is required
to make principal and interest payments to repay these borrowings over 30
months. The second interest-only payment period is applicable to borrowings from
November 16, 2001 to May 15, 2002. After May 15, 2002, the Company is required
to make principal and interest payments to repay the borrowings from the second
interest-only period over 30 months, and no additional borrowings may occur
thereafter.

         The terms of the revolving line of credit and equipment line of credit
require the Company to comply with certain financial covenants, including, but
not limited to, restrictions and limitations on future indebtedness, sale of
assets, and material changes in the Company's business. The financial covenants
include a minimum quick ratio, as defined in the loan agreement, of 2.0 to 1.0
and a maximum ratio of total liabilities to tangible net worth of 1.0 to 1.0 for
2001 and 1.5 to 1.0 for 2002 and thereafter. The most restrictive of the
financial covenants is that the Company's negative operating income shall not be
in excess of the amounts specified below (in thousands):

<TABLE>
<CAPTION>
                                                                                                              NEGATIVE OPERATING
                      AS OF THE QUARTER ENDED,                                                                      INCOME
                      ------------------------                                                                      ------
<S>                                                                                                           <C>
                      March 31, 2001.......................................................................        $ 6,500
                      June 30, 2001........................................................................          6,500
                      September 30, 2001...................................................................          5,000
                      December 31, 2001....................................................................          3,500
                      March 31, 2002.......................................................................          2,500
                      June 30, 2002........................................................................          1,000
                      September 30, 2002...................................................................              0
                      Thereafter...........................................................................              0
</TABLE>


                                       8

<PAGE>


Negative operating income is defined as loss from operations plus, to the extent
they have been deducted in determining the loss from operations, the sum of
non-cash expenses including amortization of goodwill, amortization of
intangibles, in-process research and development charges and stock-based
compensation expenses, less the sum of non-cash items of income, plus net
interest income/expense, as calculated in accordance with generally accepted
accounting principles.

5. COMMITMENTS AND CONTINGENCIES:

LITIGATION

         The Company is periodically a party to disputes arising from normal
business activities. In the opinion of management, resolution of these matters
will not have a material adverse effect upon the financial position or future
operating results of the Company.

6. SEGMENT INFORMATION:

         The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company has two reportable operating
segments: subscription/transactions and services. The subscription/transaction
segment generates revenues from subscription, transaction and software license
agreements of its Global Trade Management Solutions. The services segment
provides implementation, management consulting and training services to the
Company's customers. The Company evaluates its segments' performance based on
revenues and gross profit. The Company's unallocated costs include corporate and
other costs not allocated to the segments for management's reporting purposes.

         The following table summarizes the Company's two segments (in
thousands):

<TABLE>
<CAPTION>
                                                                                             THREE MONTHS ENDED
                                                                                                   MARCH 31,
                                                                                            ---------------------
                                                                                            2000             2001
                                                                                            ----             ----
<S>                                                                                         <C>              <C>
Revenues:
   Subscription/transaction.......................................................          $  2,617       $  8,474
   Services.......................................................................             3,662          4,227
                                                                                            --------       --------
      Total revenues..............................................................             6,279         12,701
                                                                                            --------       --------
Net loss:
   Subscription/transaction.......................................................             2,253          4,792
   Services.......................................................................               301          1,202
                                                                                            --------       --------
      Gross profit................................................................             2,644          5,994
                                                                                            --------       --------
   Unallocated expense............................................................          (11,281)       (24,161)
   Interest income................................................................               101          1,044
   Interest expense..............................................................               (74)          (157)
                                                                                            --------       --------
Net loss..........................................................................          $(8,610)      $(17,280)
                                                                                            --------       --------
                                                                                            --------       --------
</TABLE>

         Under SFAS No. 131, the Company is required to provide enterprise-wide
disclosures about revenues by product and services, long-lived assets by
geographic area, and revenues from significant customers.

REVENUES

         All of the Company's product revenues are from the subscription and
transaction sales of its global trade solutions products.

                                       9

<PAGE>

GEOGRAPHIC INFORMATION

         The Company sells its product and services through its offices in the
United States and through a subsidiary in the United Kingdom. Information
regarding revenues and long-lived assets attributable to the United States and
to all foreign countries is stated below. The geographic classification of
product and services revenues was based upon the location of the customer.
Vastera's product and services revenues were generated in the following
geographic regions (in thousands):

<TABLE>
<CAPTION>
                                                                                            THREE MONTHS ENDED
                                                                                                MARCH 31,
                                                                                            -----------------
                                                                                             2000      2001
                                                                                            ------    -------
<S>                                                                                      <C>          <C>
United States.........................................................................      $5,768    $11,489
Europe and Asia.......................................................................         442        200
Other international operations........................................................          69      1,012
                                                                                            ------    -------
      Total revenues..................................................................      $6,279    $12,701
                                                                                            ------    -------
                                                                                            ------    -------
</TABLE>

         Vastera's tangible long-lived assets were located as follows:

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,   MARCH 31,
                                                                                             2000         2001
                                                                                             ----         ----
<S>                                                                                      <C>            <C>
  United States....................................................................         $5,694       $5,848
  Europe and Asia..................................................................            489          439
  Other international operations...................................................              -           13
                                                                                            ------       ------
        Total long-lived assets....................................................         $6,183       $6,300
                                                                                            ------       ------
                                                                                            ------       ------
</TABLE>

SIGNIFICANT CUSTOMERS

         For the three months ended March 31, 2001 two customers accounted for
34% and 10% of total revenues, respectively. For the three months ended March
31, 2000, the Company did not have any customers that accounted for greater than
10% of total revenues.

7. SUPPLEMENTAL INFORMATION:

CASH FLOW INFORMATION

         Cash paid for interest was $74,000, and $95,000 for the three months
ended March 31, 2000 and 2001, respectively.


                                       10

<PAGE>


                 Noncash activities were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                             THREE MONTHS ENDED
                                                                                                                   MARCH 31,
                                                                                                             ------------------
                                                                                                             2000          2001
                                                                                                             ----          ----
                    <S>                                                                                      <C>          <C>
                    Capitalized lease obligations incurred...........................................      $   293       $   192
                    Issuance of common stock and stock options in acquisition........................            -        14,785
                    Deferred compensation in connection with stock options issued to employees in
                    acquisition......................................................................            -           465
                    Assumed liabilities, transaction costs and other, net of assets acquired in
                    acquisition......................................................................            -         4,916
                    Dividends and accretion on redeemable convertible preferred stock................       12,107             -
</TABLE>


                                       11

<PAGE>

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS.
FOR THIS PURPOSE, ANY STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "ANTICIPATES," "BELIEVES," "EXPECTS," "PLANS",' AND
SIMILAR PHRASES (AS WELL AS OTHER WORDS OR EXPRESSIONS REFERENCING FUTURE
EVENTS, CONDITIONS OR CIRCUMSTANCES) ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN
THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS, INCLUDING, BUT
NOT LIMITED TO, THE FACTORS SET FORTH IN THE CAPTION "RISKS RELATING TO OUR
BUSINESS." THIS DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES FOR THE PERIODS SPECIFIED.
FURTHER REFERENCE SHOULD BE MADE TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K AND
OTHER REPORTS FILED WITH THE SEC.

OVERVIEW

         We are a leading provider of web-native software products and services
that facilitate international buying and selling of goods by streamlining and
optimizing global trade processes. We call these products and services our
solutions. Global trade involves the shipment of goods between countries and the
management of information and business processes required to complete shipments.
In 1992, we introduced EMS-2000, a U.S.-centric, DOS-based export management
solution. In 1994, we introduced EMS-2000 Version 4, a multi-country, two-tier,
Windows-based export management solution. In 1997, we introduced Global
Passport, a multi-country, three-tier, client-server based, import/export
management solution. In 2000, we introduced TradeSphere, a multi-country,
multi-module suite of web-native global trade management solutions and we
introduced TradePrism.com, a trade portal that provides an Internet-based
delivery mechanism for our global trade management capabilities. Since our
inception, we have continued to develop comprehensive solutions with features,
functionality and services that allow companies to manage the complexities of
global trade.

         We provide our products and services from our offices in the United
States, the United Kingdom, Mexico, and Canada to over 200 clients. Our clients
typically acquire a limited number of server and user subscriptions or licenses
to implement in a division or department. As they expand implementation of our
products globally and to their clients, suppliers and business partners,
additional subscriptions or licenses are acquired. We currently market our
products and services on a global basis through our direct sales force and other
channels, such as strategic alliances and partners. We expect revenues from our
international operations to increase as we continue to expand our international
sales and services organizations.

         In January 2001 and March 2001, we expanded our global trade management
services provided to Ford by assuming responsibility for administering and
managing Ford's global trade operations in Mexico and Canada, respectively. The
contractual terms relating to other foreign operations have not been finalized
and are subject to negotiation based upon the actual costs. These costs include
personnel costs, administrative overhead and information technology processing
costs.

         As previously disclosed in our registration statement on Form S-1, our
agreement with Ford U.S has a minimum term of four years and may continue for a
total of ten years. The guaranteed minimum revenues from the Ford U.S. Imports
operations are $11.6 million for 2001, 2002 and 2003 and $6.8 million for 2004.
The agreements with Ford Mexico and Ford Canada also have a minimum term of four
years and may continue for a total of ten years. On the third anniversary of the
agreement with each entity, either party may terminate for any reason after
providing the non-terminating party one-year advance notice. Commencing upon the
fourth anniversary of the agreement with each entity, either party may terminate
the agreement for any reason upon providing six months advance written notice.
These agreements provide us with a guaranteed, predictable and recurring revenue
stream over the next three to four years. We expect to derive at least $16.5
million in


                                       12

<PAGE>

revenues in 2001, 2002, and 2003 from our agreements with Ford U.S., Ford Mexico
and Ford Canada. Our client relationship with Ford will have a significant
impact on our total revenues and is expected to account for greater than 10% of
revenues for the foreseeable future. For the three months ended March 31, 2001,
Ford and Visteon accounted for approximately 34% and 10% of our total revenues,
respectively.

RECENT ACQUISITION

         On March 1, 2001, the Company entered into a definitive agreement (the
"Agreement") to acquire Speed Chain Network, Inc. ("Speedchain"), a development
stage company with no revenues since its inception in 1999. Speedchain is a
supply chain event management and global e-logistics solutions provider. The
acquisition was effected on March 29, 2001 through the merger of Speedchain into
a wholly owned subsidiary of the Company, Vastera Acquisition Corporation. The
acquisition was accounted for under the purchase method of accounting and the
operating results of Speedchain have been included in the accompanying condensed
consolidated financial statements from the date of acquisition.

         Under the terms of the Agreement, the Company issued 1,032,690 shares
of common stock in exchange for all of the outstanding preferred stock, common
stock, warrants and stock options of Speedchain. The shares were valued at
$14.00, the average of the closing prices for the three days before and after
March 1, 2001. The Company issued options to acquire approximately 24,000 shares
of common stock in exchange for the vested Speedchain stock options it assumed
in the business combination. The options were valued at approximately $328,000
using the Black-Scholes model assuming 128% volatility, a risk free interest
rate of 6.19%, and an exercise period of three years. On March 29, 2001, the
Company also issued options to acquire approximately 64,000 shares of common
stock in exchange for the unvested Speedchain stock options it assumed in the
business combination. Accordingly, the Company recorded $465,000 of deferred
compensation that will be amortized on an accelerated basis over the remaining
vesting period of these options.

         The Company valued in process research and development ("IPR&D")
projects acquired in the acquisition at $6.9 million, based upon an independent
appraisal of the development project for which technological feasibility has not
been established and no alternative future uses exist. The acquired IPR&D
projects are targeted at the supply chain event management and e-logistics
market.

         Goodwill and identifiable intangibles related to the Speedchain
acquisition and other previous acquisitions are being amortized on a
straight-line basis over two to four years and resulted in charges to
operations of approximately $119,000 and $5.0 million for the three months
ended March 31, 2000 and 2001. In the aggregate, amortization for future
periods is expected to be approximately $22.9 million for the year ending
December 31, 2001, approximately $24.3 for the year ending December 31, 2002,
approximately $24.0 million for the year ended December 31, 2003,
approximately $16.1 million for the year ended December 31, 2004 and $781,000
for the year ended December 31, 2005

SOURCE OF REVENUES AND REVENUE RECOGNITION POLICY

         Our revenues are classified as either subscription/transaction revenues
or services revenues. In 2000, we renamed our software products and services as
follows:

         o        our Global Passport software product is now called
                  TradeSphere;

         o        our strategic and operational consulting services are now
                  called Trade Management Consulting;

         o        our managed-services consisting of Global e-Content,
                  TradeSphere and our proprietary methodology and services is
                  now called Managed Services.

                                       13

<PAGE>

         A description of our current revenue classifications follows:

SUBSCRIPTION/TRANSACTION REVENUES

         Subscription/transaction revenues consist of subscription-based
revenues, transaction-based revenues and perpetual software license revenues.

         SUBSCRIPTION-BASED REVENUES. Subscription-based revenues are revenues
derived from subscription arrangements in which our clients subscribe to use
TradeSphere, TradePrism.com and Managed Services for a contract term. Revenues
are recognized ratably over the contract term. Subscription arrangements
typically range from three to five years. Payments on subscription arrangements
are collected annually, quarterly or monthly.

         TRANSACTION-BASED REVENUES. Transaction-based revenues are revenues
derived from agreements, which provide for transaction fees based on usage of
TradeSphere, TradePrism.com and Managed Services. Revenues are recognized as
transactions occur. Payments on transaction revenues are typically collected
monthly. Our transaction-based agreements, including our Ford agreements, are
often subject to minimum transaction thresholds.

         PERPETUAL SOFTWARE LICENSE REVENUES. Perpetual software license
revenues are derived from the sales of perpetual software licenses and the
related maintenance contract. Maintenance contracts include the right to
unspecified enhancements on an if-and-when available basis, ongoing support and
content update services. In general, our active clients renew these maintenance
contracts to obtain access to these significant and frequent content updates.
Revenues from perpetual software license sales are recognized ratably over the
estimated economic life of the product, three years. Revenues from maintenance
contracts are recognized ratably over the contract term, typically one year.
Payments on perpetual software license sales are typically collected upon
contract signing or shortly thereafter. Payments on maintenance revenues are
typically collected annually in advance, but may also be collected quarterly in
advance.

SERVICES REVENUES

         Our services revenues consist of TradeSphere services revenues and
Trade Management Consulting revenues.

         TRADESPHERE SERVICES REVENUES. TradeSphere services revenues are
derived from implementation and training services. These revenues are provided
on either a time-and-materials or on a fixed-price basis and are recognized as
the services are performed or on a percentage-of-completion basis.

         TRADE MANAGEMENT CONSULTING REVENUES. Trade Management Consulting
revenues are derived from management consulting services. These revenues are
provided on either a time-and-materials or on a fixed-price basis and are
recognized as the services are performed or on a percentage-of-completion basis.

         Our services revenues have increased due to the growth in our client
base, expansion of our implementation organization and expansion of our
management consulting organization. Services revenues are typically billed and
collected monthly. In the future we expect services revenues to decrease as a
percentage of total revenues.

         Our sales cycle averages six to nine months on software sales and nine
to twelve months on managed services agreements. Furthermore, we have
experienced, and expect to continue to experience, significant variation in the
size of individual sales. As a result of this and other factors, our results
have varied significantly in the past and are likely to be subject to
significant fluctuations in the future. Since subscription/transaction


                                       14

<PAGE>

revenues are recognized ratably, and the timing of services revenues is
dependent on the scope of the engagement, we believe that period-to-period
comparisons of the results of operations are not necessarily indicative of the
results we expect for any future period.

DEFERRED REVENUES

         Deferred revenues include amounts billed to clients for whom revenues
have not been recognized and generally result from billed, but deferred
subscription/transaction revenues and deferred services not yet rendered.
Deferred revenues will be recognized on a monthly basis over the remaining
economic life of the product or when the services are performed. As we continue
to increase our subscription and transaction-based revenues relative to our
perpetual licenses, we expect our deferred revenues to fluctuate since
subscription and transaction-based customers are billed and pay ratably (monthly
or quarterly). Thus, we do not consider deferred revenue to be a good indicator
of future revenues.

COST OF REVENUES

         Cost of revenues includes the cost of our subscription/transaction
revenues and the cost of our services revenues.

         Cost of subscription/transaction revenues includes royalties due to
third parties for technology products integrated into our software products as
well as the cost of salaries and related expenses for our technical support and
managed services organizations. We expect the cost of subscription/transaction
revenues to continue to increase as we further expand our offerings and
integrate other technology products into our product offerings.

         Cost of services revenues includes the cost of salaries and related
expenses for implementation, management consulting and training services
provided to clients, as well as, the cost of third parties contracted to provide
either application consulting or implementation services to our clients. The
total cost of revenues may fluctuate based on the mix of products and services
sold.

         We expect our cost of subscription/transaction revenues to increase as
a result of our recent transaction-based managed services contract signed with
Ford. In the short term, we expect our gross margins on subscription/transaction
revenues to fluctuate as we phase in the global trade management of Ford, as we
fully integrate Ford's technology with our technology and as we increase the
number of additional customers subscribing to our managed services.

IN-PROCESS RESEARCH AND DEVELOPMENT

         For the three months ended March 31, 2001, the Company incurred a
one-time IPR&D charge of approximately $6.9 million associated with the
acquisition of Speedchain. The Company valued IPR&D acquired in the Speedchain
acquisition consummated on March 29, 2001 at approximately $6.9 million based
upon an independent appraisal of the development project for which technological
feasibility has not been established and no alternative future uses exist. The
acquired IPR&D project is targeted at the supply chain event management and
e-logistics market.

STOCK-BASED COMPENSATION

         Stock-based compensation represents the difference between the exercise
price and the fair value for accounting purposes of the underlying common stock
at the date of grant. On March 29, 2001, $465,000 of deferred compensation was
recorded in connection with the unvested stock options that were assumed in

                                       15

<PAGE>

connection with the Speedchain acquisition. These amounts are included as a
component of stockholders' equity (deficit) and are being amortized on an
accelerated basis over the applicable vesting period.

         For the three months ended March 31, 2000 and 2001, we amortized
approximately $2.6 million and $1.7 million of deferred compensation,
respectively. We expect to amortize deferred compensation of approximately $5.6
million, $2.8 million, $987,000 and $45,000 for the years ended December 31,
2001, 2002, 2003 and 2004, respectively. The amount of stock option compensation
expense to be recorded in future periods could decrease if options are forfeited
for which accrued but unvested compensation has been recorded.

BENEFICIAL CONVERSION

         On February 4, 2000 and February 29, 2000, pursuant to a stock purchase
agreement with new and existing investors, we issued approximately 1,569,000
shares of Series E convertible preferred stock for approximately $17.0 million.
We recorded a beneficial conversion feature as a dividend of approximately $8.1
million in the first quarter of 2000 to reflect the difference between the
underlying convertible price per share of common stock and the estimated fair
market value for accounting purposes of the common stock on the date of
issuance.

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2000 TO MARCH 31, 2001

REVENUES

         TOTAL REVENUES. Total revenues increased 102% from approximately $6.3
million for the three months ended March 31, 2000 to approximately $12.7 million
for the three months ended March 31, 2001.

         SUBSCRIPTION/TRANSACTION REVENUES. Subscription/transaction revenues
increased 224% from approximately $2.6 million for the three months ended March
31, 2000 to approximately $8.5 million for the three months ended March 31,
2001. We attribute this increase to continued growth in our managed services
client base, further market acceptance of our product offerings and our
increased sales and marketing efforts. Subscription/transaction revenues
accounted for 42% of our total revenues for the three months ended March 31,
2000 and 67% for the three months ended March 31, 2001. We expect
subscription/transaction revenues to continue to account for at least two-thirds
of our total revenues.

         SERVICES REVENUES. Services revenues increased 15% from approximately
$3.7 million for the three months ended March 31, 2000 to approximately $4.2
million for the three months ended March 31, 2001. This increase resulted from
increases in our client base as well as in our average billing rates. Services
revenues accounted for 58% of our total revenues for the three months ended
March 31, 2000 and 33% for the three months ended March 31, 2001. We expect
services revenues to continue to account for up to one-third of our total
revenues.

COST OF REVENUES

         COST OF SUBSCRIPTION/TRANSACTION REVENUES. The cost of
subscription/transaction revenues increased from approximately $364,000 for the
three months ended March 31, 2000 to approximately $3.7 million for the three
months ended March 31, 2001. This increase resulted from our investment in our
client support infrastructure and the growth of our managed services client
base. The cost of subscription/transaction revenues as a percentage of
subscription/transaction revenues was 14% for the three months ended March 31,
2000 and 43% for the three months ended March 31, 2001. This increase as a
percentage of subscription/transaction revenues reflected our expansion of our
technical support and managed services organization. We believe the cost of
subscription/transaction revenues will decrease as a percentage of
subscription/transaction revenues on a

                                       16

<PAGE>

quarter over quarter basis as we expect to realize productivity improvements
from our investment in our support infrastructure and our managed services
agreements.

         COST OF SERVICES REVENUES. The cost of services revenues decreased 8%
from approximately $3.3 million for the three months ended March 31, 2000 to
approximately $3.0 million for the three months ended March 31, 2001. This
decrease resulted from utilizing internal personnel for client implementations
instead of third party consultants. The cost of services revenues as a
percentage of services revenues was 89% for three months ended March 31, 2000
and 72% for three months ended March 31, 2001. This decrease reflects the
productivity improvements that we have made in our implementation and training
organizations. We expect the cost of services revenues to decrease as a
percentage of services revenues.

OPERATING EXPENSES

         SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses earned by sales and marketing personnel, sales
training events, public relations, advertising, trade shows and travel expenses
related to both promotional events and direct sales efforts. Sales and marketing
increased 28% from approximately $3.4 million for three months ended March 31,
2000 to approximately $4.3 million for the three months ended March 31, 2001.
This increase resulted from our continued investment in our sales and marketing
infrastructure, both domestically and internationally. These investments
included significant personnel and related expenses, recruiting fees, travel
expenses and related facility and equipment costs. In addition, we increased
marketing activities, including trade shows, public relations, direct mail
campaigns and other promotional activities during this period. Sales and
marketing expenses represented 54% of our total revenues for the three months
ended March 31, 2000 and 34% for the three months ended March 31, 2001. We
believe that we will need to continue to increase our sales and marketing
expenses to expand our market position. As a result, we anticipate that sales
and marketing expenses will continue to increase in absolute dollar amounts but
decrease as a percentage of total revenues in future years.

         RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries, benefits and equipment for software developers, quality
assurance personnel, program managers and technical writers. Research and
development expenses increased 4% from approximately $3.4 million for the three
months ended March 31, 2000 to approximately $3.5 million for the three months
ended March 31, 2001. This increase resulted from an increase in the number of
internal and contract software developers and quality assurance personnel needed
to support our product development and testing activities. Research and
development expenses represented 54% of our total revenues for the three months
ended March 31, 2000 and 28% for the three months ended March 31, 2001. We
believe that we must continue to invest in research and development in order to
develop new products and services. As a result, we anticipate that research and
development expenses will continue to increase in absolute dollar amounts but
decrease as a percentage of total revenues.

         GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries, benefits and related costs for executive, finance,
administrative and information services personnel. These expenses also include
fees for legal, audit and accounting, and other professional services. General
and administrative expenses increased 58% from approximately $1.3 million for
the three months ended March 31, 2000 to approximately $2.0 million for the
three months ended March 31, 2001. This increase resulted from the addition of
executive, finance and administrative personnel to support the growth of our
business. General and administrative expenses represented 21% of our total
revenues for the three months ended March 31, 2000 and 16% for the three months
ended March 31, 2001. We believe our general and administrative expenses will
continue to increase in absolute dollar amounts, but decrease as a percentage of
total revenues as we expand our administrative staff, domestically and
internationally, and incur expenses associated with being a public company. We
expect these expenses to include annual and other public reporting costs,
directors' and officers' liability insurance, investor relations programs and
additional legal, accounting and consulting fees.

                                       17

<PAGE>

         DEPRECIATION. Depreciation expense increased 55% from approximately
$461,000 for the three months ended March 31, 2000 to approximately $713,000 for
the three months ended March 31, 2001. This increase resulted from the
depreciation of fixed assets purchased to build the infrastructure needed to
support the growth of our business. Depreciation expense represented 7% of our
total revenues for the three months ended March 31, 2000 and 6% for the three
months ended March 31, 2001.

         AMORTIZATION. Amortization expense increased approximately $4.9 million
from approximately $119,000 for the three months ended March 31, 2000 to
approximately $5.0 million for the three months ended March 31, 2001. This
increase resulted from the amortization of goodwill and intangible assets from
the acquisition of Ford's global customs operations in July 2000. Amortization
expense represented 2% of our total revenues for the three months ended March
31, 2000 and 39% for the three months ended March 31, 20001. As part of the Ford
transaction, we acquired an assembled workforce that was valued at approximately
$6.5 million. This value was allocated to each country in which we provide
services to Ford based upon the number of employees in each country. The related
amortization is being recorded on a straight-line basis over three years from
the date we assume Ford's customs operations in each country. As part of the
Ford transaction, we also acquired the perpetual right to use their technology
royalty-free. This asset was valued at approximately $2.3 million and is being
amortized on a straight-line basis over four years. In addition to recording the
value associated with the assembled workforce and the licensed technology, we
recorded approximately $70.1 million in goodwill. The goodwill is being
amortized on a straight-line basis over four years.

         STOCK-BASED COMPENSATION. Stock-based compensation expense decreased
from approximately $2.6 million for the three months ended March 31, 2000 to
approximately $1.7 million for the three months ended March 31, 2001. Deferred
compensation of approximately $7.7 million at March 31, 2001 will be amortized
on an accelerated basis over the applicable vesting period.

         OTHER INCOME (EXPENSES), NET. Other income (expenses), net fluctuates
based on the amount of cash balances available for investment, borrowings under
our line of credit, interest expense related to our term loans and realized
gains and losses on investments. Other income (expenses), net increased from
approximately $27,000 for the three months ended March 31, 2000 to approximately
$887,000 for the three months ended March 31, 2001. This increase reflects the
additional interest expense on the equipment line of credit for three months
ended March 31, 2001, offset by the interest income earned on our proceeds from
our initial public offering completed in October 2000 currently maintained in
short-term investments.

         INCOME TAXES. No provision for income taxes has been recorded for
either the three months ended March 31, 2000 or 2001 due to accumulated net
operating losses. We have recorded a valuation allowance for the full amount of
our net deferred tax assets as a result of the uncertainty surrounding the
timing of the realization of these future tax benefits.

LIQUIDITY AND CAPITAL RESOURCES

         We had cash and cash equivalents and short-term investments of $83.4
million as of March 31, 2001, a decrease of $7.1 million from December 31, 2000.

         We have primarily financed our operations through sales of our stock,
borrowings under our line of credit and capital lease obligations and net
revenues generated from our business. Through December 31, 2000, we have raised
cumulative net proceeds of approximately $45.5 million through convertible
preferred stock offerings and $86.1 million through our initial public offering
completed in October 2000.

         The Company has a secured revolving line of credit and an equipment
line of credit with PNC Bank. As of December 31, 2000 and March 31, 2001, the
outstanding balance under the equipment line of credit was approximately
$2,925,000 and $2,561,000, respectively, and there were no amounts outstanding
under the

                                       18

<PAGE>

secured revolving line of credit. The revolving line of credit was scheduled to
expire on December 31, 2000 and was extended to April 30, 2001. In May 2001, the
Company renegotiated and amended its secured revolving line of credit and
equipment line of credit. As amended, the Company may now borrow up to
$10,000,000 under the revolving line of credit, with a $2,500,000 sub-limit for
the issuance of letters of credit. Advances under the revolving line of credit
are limited to the lesser of $10,000,000 or the sum of 80% of eligible accounts
receivable, as defined in the loan agreement. The revolving line of credit bears
interest at the greater of the bank's prime rate or the overnight federal funds
rate plus .50 basis points, (8.0% as of March 31, 2001). The revolving line of
credit matures in May 2002.

         The Company may borrow up to $6,439,649 under the equipment line of
credit. The equipment line of credit bears interest at the bank's prime rate
plus .50 basis points, (8.0% as of March 31, 2001). The equipment line of
credit has two interest-only payment periods. Amounts borrowed until November
15, 2001 are subject to interest-only payments. After this date, the Company is
required to make principal and interest payments to repay these borrowings over
30 months. The second interest-only payment period is applicable to borrowings
from November 16, 2001 to May 15, 2002. After May 15, 2002, the Company is
required to make principal and interest payments to repay the borrowings from
the second interest-only period over 30 months, and no additional borrowings may
occur thereafter.

         The terms of the revolving line of credit and equipment line of credit
require the Company to comply with certain financial covenants including, but
not limited to, restrictions and limitations on future indebtedness, sale of
assets and material changes in the Company's business. The financial covenants
include a minimum quick ratio, as defined in the loan agreement, of 2.0 to 1.0
and a maximum ratio of total liabilities to tangible net worth of 1.0 to 1.0 for
2001 and 1.5 to 1.0 for 2002 and thereafter. The most restrictive of the
financial covenants is that the Company's negative operating income shall not be
in excess of the amounts specified below (in thousands):

<TABLE>
<CAPTION>
                                                                                                              NEGATIVE OPERATING
                      AS OF THE QUARTER ENDED,                                                                      INCOME
                      ------------------------                                                                      ------
<S>                                                                                                           <C>
                      March 31, 2001.......................................................................          $ 6,500
                      June 30, 2001........................................................................            6,500
                      September 30, 2001...................................................................            5,000
                      December 31, 2001....................................................................            3,500
                      March 31, 2002.......................................................................            2,500
                      June 30, 2002........................................................................            1,000
                      September 30, 2002...................................................................                0
                      Thereafter...........................................................................                0
</TABLE>

Negative operating income is defined as loss from operations plus, to the extent
they have been deducted in determining the loss from operations, the sum of
non-cash expenses including amortization of goodwill, amortization of
intangibles and stock-based compensation expenses, less the sum of non-cash
items of income, plus net interest income/expense, as calculated in accordance
with generally accepted accounting principles.

         Net cash used in operating activities totaled approximately $6.6
million for the three months ended March 31, 2000 and $6.8 million for the three
months ended March 31, 2001. Net cash flows from operating activities reflect
net losses of approximately $8.6 million for the three months ended March 31,
2000 and $17.3 million for the three months ended March 31, 2001, and to a
lesser extent, are offset by the non-cash expenses relating to depreciation and
amortization, stock-based compensation and provision for allowance for doubtful
accounts. In addition, the net cash used in operations increased due to the
increase in accounts receivable and a decrease in accrued compensation and
deferred revenues.


                                       19

<PAGE>

         Net cash used in investing activities was approximately $10.7 million
for the three months ended March 31, 2000 and $2.4 million for the three months
ended March 31, 2001. Our investing activities reflect the additions of property
and equipment and purchases of investments. We also anticipate that our capital
expenditures will increase over the next several years as we expand our
facilities and acquire equipment to support expansion of our sales, marketing
and research and development activities.

         Net cash provided by (used in) financing activities was approximately
$17.0 million for the three months ended March 31, 2000 and ($207,000) for the
three months ended March 31, 2001. The cash provided by financing activities for
the three months ended March 31, 2000 reflect the net proceeds from the sale of
our redeemable convertible preferred stock. The cash used in financing
activities for the three months ended March 31, 2001 reflect the principal
payments on the equipment line of credit offset by the proceeds from the
exercise of preferred stock warrants and stock options.

         Amounts borrowed from one lending institution for capital leases are
due over 36 to 48-month repayment periods and are collateralized by our software
products. As of December 31, 2000 and March 31, 2001, the outstanding balance
under this capital lease agreement was approximately $541,000 and $502,000
respectively.

         We expect to pay approximately $1.8 million, $1.4 million, $336,000 and
$17,000 on our equipment line of credit and lease agreements in 2001, 2002, 2003
and 2004, respectively. We will fund these commitments through our current cash
resources and our future cash flow from operations.

         We intend to continue the investment in the business, particularly in
the areas of research and development, sales and marketing. Our future liquidity
and capital requirements will depend on numerous factors, including:

         o        The costs and timing of expansion of sales and marketing
                  activities;

         o        The costs and timing of product development efforts and the
                  success of these development efforts;

         o        The extent to which our existing and new products and services
                  gain market acceptance;

         o        The level and timing of revenues;

         o        The costs involved in maintaining and enforcing intellectual
                  property rights;

         o        The timing of market developments; and

         o        Available borrowings under line of credit and capital lease
                  arrangements.

         In addition, we may use cash resources to fund acquisitions of
complementary businesses and technologies. We believe that our current cash
resources will be sufficient to meet our working capital and capital
expenditures for at least the next 12 months. Thereafter, we may find it
necessary to obtain additional equity or debt financing. In the event that
additional financing is required, we may not be able to raise it on terms
acceptable to us, if at all.

         The Company reimburses Ford for certain expenses in connection with the
acquisition of Ford's global customs operations. The Company expects to pay
approximately $534,000 in fees to Ford each month for the reimbursement of
expenses incurred by Ford for the use of facilities, the costs of leased
employees and the maintenance and expenses related to the acquired technology.

                                       20

<PAGE>

RISKS RELATING TO OUR BUSINESS

         IN ADDITION TO OTHER INFORMATION IN THE FORM 10-Q, THE FOLLOWING RISK
FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING VASTERA AND ITS BUSINESS,
BECAUSE SUCH FACTORS MAY HAVE A SIGNIFICANT IMPACT ON VASTERA'S BUSINESS,
OPERATING RESULTS AND FINANCIAL CONDITION. IF ANY OF THE RISK FACTORS SET FORTH
IN THIS FORM 10-Q OR IN VASTERA'S OTHER SECURITIES AND EXCHANGE COMMISSION
FILINGS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS COULD BE MATERIALLY AND ADVERSELY IMPACTED. ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE PROJECTED IN ANY FORWARD-LOOKING STATEMENTS.


WE HAVE A HISTORY OF LOSSES AND EXPECT TO INCUR LOSSES IN THE FUTURE.

         Vastera incurred net losses of approximately $8.3 million in 1998,
$10.5 million in 1999, $35.8 million in 2000 and $17.3 million for the three
months ended March 31, 2001. Our accumulated deficit as of March 31, 2001 was
approximately $142.7 million. We expect to continue to incur losses in the
foreseeable future. We believe that the success of our business depends on our
ability to significantly increase revenue and to limit our operating expenses.
If our revenues fail to grow at anticipated rates or our operating expenses
increase without a corresponding increase in our revenues, or we fail to adjust
operating expense levels appropriately, we may not be able to achieve and
maintain profitability, which would increase the possibility that the value of
your investment will decline.

OUR INABILITY TO PROVIDE OUR MANAGED SERVICES SUCCESSFULLY TO EXISTING AND
FUTURE CLIENTS, INCLUDING FORD WITH WHOM WE HAVE ENTERED INTO A SIGNIFICANT
CONTRACT, WOULD SIGNIFICANTLY REDUCE OUR REVENUES, INCREASE OUR COSTS, HURT OUR
REPUTATION IN OUR INDUSTRY AND ADVERSELY AFFECT OUR BUSINESS.

         As a critical element of our strategy, we intend to provide managed
services to our current and future clients. We plan to deliver services ranging
from providing operational management for a single global trade process to
managing a client's worldwide trade operation. We expect that the revenues we
receive from providing these services will increase as a percentage of our
revenues over time and represent a material portion of our revenues. If we are
not able to successfully provide these services to existing or future clients,
this strategy will have failed, and we will not realize significant expected
future revenues.

         Furthermore, we have established a contractual relationship with Ford
under which we acquired Ford's global customs operations and will provide Ford
with our managed services. Through this relationship, Ford has become our single
largest client, generating a significant portion of our revenues. For the three
months ended March 31, 2001, we derived approximately 34% and 10% of our total
revenues from Ford and Visteon, respectively. Because the Ford contract is our
largest to date, we cannot assure you that we have adequate resources to meet
our obligations to Ford.

         Any inability to perform under our agreement with Ford or other
agreements with existing and future clients would significantly reduce our
revenues, increase our costs, hurt our reputation in our industry and adversely
affect our business.

THE MARKET FOR OUR RECENTLY DEVELOPED WEB-NATIVE SOLUTIONS IS NEWLY EMERGING AND
DEPENDENT ON THE GROWTH OF THE INTERNET, AND IF THE INTERNET DOES NOT GROW AS
FAST OR IS NOT AS EFFECTIVE AS WE ANTICIPATE, CLIENTS MAY NOT USE OUR PRODUCTS
AND OUR REVENUES MAY DECLINE.

         The market for our recently developed web-native solutions is newly
emerging and we cannot be certain that this market will continue to develop and
grow or that companies will choose to use our solutions rather than attempt to
develop alternative platforms and applications internally or through other
means. The anticipated

                                       21

<PAGE>

growth of the global trade market may depend on the growth of the Internet.
Increased use of the Internet largely depends upon available Internet security,
bandwidth and reliability. If use of the Internet by businesses does not
increase as fast and is not as effective as we currently anticipate, the market
for our web-native solutions may not grow as we expect and our revenues would be
adversely affected.

ANY RESTRICTION ON OUR ABILITY TO COST EFFECTIVELY AND LEGALLY ACCESS A FOREIGN
COUNTRY'S RULES AND REGULATIONS THAT ARE INCORPORATED INTO OUR GLOBAL TRADE
CONTENT, GLOBAL eCONTENT, OR ANY FAILURE TO TIMELY UPDATE GLOBAL eCONTENT TO
INCLUDE CHANGES IN SUCH RULES AND REGULATIONS, MAY COMPROMISE THE EFFECTIVENESS
OF OUR SOLUTIONS AND ADVERSELY IMPACT OUR REVENUES.

         The success of our global trade management solutions for our clients
depends on our ability to obtain or access the complex rules and regulations
published by foreign governments governing a particular country's import and
export of goods. The foundation of our solutions, Global eContent, is subject to
rapid change at the initiative of foreign governments, based on factors beyond
our control. Any changes in a country's rules and regulations relating to global
trade that we are unable to include in our Global eContent library may result in
dissatisfied clients and possible litigation. In addition, to the extent a
foreign government restricts our access to its rules and regulations, charges a
fee for such access or grants proprietary rights to such information to one or
more of our competitors, our solutions may not be useful to, or cost efficient
for, our current and future clients and our revenues could decrease.

OUR SERVICES AGREEMENT WITH FORD IS SUBJECT TO TERMINATION FOR ANY REASON BY
EITHER FORD OR US AFTER FOUR YEARS AND, IF IT IS TERMINATED, WE WILL NOT REALIZE
THE REVENUES EXPECTED TO BE GENERATED THEREUNDER.

         The services agreement between Ford and us has a 10-year term that may
be terminated by either party for any reason after four years. If the services
agreement is terminated prior to July 2010, we will not realize a material
amount of revenues expected to be generated thereunder. Any events adversely
affecting our relationship with Ford may result in us not being able to achieve
the full marketing benefit associated with having Ford as a principal client,
which would reduce our revenues, increase our costs and hurt our reputation in
our industry.

FLUCTUATIONS IN OUR OPERATING RESULTS AND THE COMPOSITION OF OUR REVENUES,
PARTICULARLY COMPARED TO THE EXPECTATIONS OF MARKET ANALYSTS AND INVESTORS, MAY
LEAD TO A REDUCED PRICE OF OUR COMMON STOCK.

         Our operating results have varied in the past and could fluctuate
significantly in the future. For example, our services revenues were
approximately $4.2 million in the quarter ended September 30, 2000, $4.3 million
in the quarter ended December 31, 2000 and $4.2 million in the quarter ended
March 31, 2001. We expect that our operating results will continue to vary in
the future, based on a number of factors, including:

         o        Demand for our products and services;

         o        Increases in our operating expenses;

         o        Competition in our industry;

         o        Variability in the mix of our subscription and transaction
                  revenues and our consulting revenues;

         o        Timing of new solution introductions and enhancements to our
                  TradeSphere and TradePrism.com solutions; and

         o        Continued business from our existing clients;

                                       22

<PAGE>

         Due to the foregoing factors, our annual or quarterly results of
operations may not meet the expectations of securities analysts and investors,
which could cause the price of our common stock to decline.

OUR ABILITY TO ACHIEVE OR MAINTAIN PROFITABILITY WILL BE CONSTRAINED IF WE DO
NOT EFFECTIVELY MANAGE OUR RAPID GROWTH.

         We have significantly increased our employee base to meet increasing
demand for our client solutions. The number of our employees has increased by 91
employees from 312 as of December 31, 2000 to 403 as of March 31, 2001. As we
expand our operations, we expect to continue to increase the size of our
employee base. Our management and operations have been strained by this growth
and will continue to be strained by our anticipated growth. To compete
effectively and to manage future growth, we must continue to improve our
financial and management controls, reporting systems and procedures on a timely
basis. We must also expand, train and manage our employee base. If we are not
successful in managing our growth, our ability to achieve or maintain
profitability may be harmed.

WE MAY BE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL, WHICH WOULD ADVERSELY
AFFECT OUR ABILITY TO DEVELOP AND EFFECTIVELY MANAGE OUR BUSINESS.

         Our future performance will depend largely on the efforts and abilities
of our senior executives, key technical, professional services, sales and
marketing and managerial personnel. This dependence is particular to our
business because personal relationships are a critical element of obtaining and
maintaining clients. Our success will depend on our ability to attract and
retain these key employees in the future. The employment of our key personnel,
including our executives, is at will. The market for such persons is extremely
competitive and we may not find qualified replacements for personnel who leave
us. In the past, we have experienced difficulty in hiring qualified technical,
professional services, sales, marketing and managerial personnel. In addition,
we do not maintain key person life insurance on any of our key personnel, and
have no plans to do so. The loss of, or the inability to attract, any one or
more of our key personnel may harm our ability to develop and effectively manage
our business.

IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL AS NEEDED OR OBTAIN ADDITIONAL
CAPITAL ON UNFAVORABLE TERMS IN THE FUTURE, OUR OPERATIONS AND GROWTH STRATEGY
MAY BE ADVERSELY AFFECTED AND THE MARKET PRICE FOR OUR COMMON STOCK COULD
DECLINE.

         We have historically financed our operations primarily through the sale
of our securities. As of March 31, 2001, we had cash and cash equivalents of
approximately $10.1 million plus short-term investments of approximately $73.5
million and an accumulated deficit of approximately $142.7 million. While we
believe that the net proceeds from our initial public offering, combined with
current cash resources, will be sufficient to meet our working capital and
capital expenditures for at least twelve months, we may need to raise additional
debt or equity capital to fund the expansion of our operations, to enhance our
products and services, or to acquire or invest in complementary products,
services, businesses or technologies. If we raise additional funds through
further issuances of equity or convertible debt or equity securities, our
existing stockholders could suffer significant dilution, and any new equity
securities we issue could have rights, preferences and privileges superior to
those of holders of our common stock, including shares of common stock sold in
the offering. Any debt financing secured by us in the future could involve
restrictive covenants relating to our capital raising activities and other
financial and operational matters, which may make it more difficult for us to
obtain additional capital and to pursue business opportunities, including
potential acquisitions. In addition, we may not be able to obtain additional
financing on terms favorable to us, if at all. If adequate funds are not
available on

                                       23

<PAGE>

terms favorable to us, our operations and growth strategy may be adversely
affected and the market price for our common stock could decline.

OUR INTERNATIONAL OPERATIONS AND PLANNED EXPANSION EXPOSE US TO BUSINESS RISKS
THAT COULD LIMIT THE EFFECTIVENESS OF OUR GROWTH STRATEGY AND CAUSE OUR
OPERATING RESULTS TO SUFFER.

         We intend to expand our international operations substantially and
enter new international markets, including providing our services to divisions
and subsidiaries of Ford operating in foreign countries. This expansion will
require significant management attention and financial resources to translate
successfully our software products into various languages, to develop compliance
expertise relating to international regulatory agencies and to develop direct
and indirect international sales and support channels. We face a number of risks
associated with conducting our business internationally that could negatively
impact our operating results, including:

         o        language barriers, conflicting international business
                  practices and other difficulties relating to the management
                  and administration of a global business;

         o        longer sales cycles associated with educating foreign clients
                  about the benefits of our products and services;

         o        currency fluctuations and exchange rates;

         o        multiple and possibly overlapping tax structures and the
                  burdens of complying with a wide variety of foreign laws;

         o        the need to consider characteristics unique to technology
                  systems used internationally; and

         o        economic or political instability in some international
                  markets.

         We may not succeed in our efforts to enter new international markets,
establish, maintain or increase international demand for our solutions or expand
our international operations, which may harm our growth strategy and could cause
our operating results to suffer.

OUR LENGTHY AND VARIABLE SALES CYCLE MAKES IT DIFFICULT FOR US TO PREDICT WHEN
OR IF SALES WILL OCCUR AND, THEREFORE, WE MAY EXPERIENCE AN UNPLANNED SHORTFALL
IN REVENUES.

         Our products have a lengthy and unpredictable sales cycle that
contributes to the uncertainty of our operating results. Clients typically view
the purchase of our solutions as a significant and strategic decision. As a
result, clients generally evaluate our solutions and determine their impact on
existing infrastructure over a lengthy period of time. Our sales cycle has
averaged approximately six to nine months for software sales and nine to twelve
months for managed services agreements, depending on a particular client's
implementation requirements and whether the client is new or is extending an
existing implementation. The license of our software products may be subject to
delays if the client has lengthy internal budgeting, approval and evaluation
processes. We may incur significant selling and marketing expenses during a
client's evaluation period, including the costs of developing a full proposal
and completing a rapid proof of concept or custom demonstration, before the
client engages us. Larger clients may purchase our solutions as a part of
multiple simultaneous purchasing decisions, which may result in additional
unplanned administrative processing and other delays. If revenues forecasted
from a specific client for a particular quarter are not realized or are delayed
to another quarter, we may experience an unplanned shortfall in revenues, which
could adversely affect our operating results.


                                       24

<PAGE>

ANY LOSS OF OUR STRATEGIC ALLIANCES OR FAILURE TO DEVELOP NEW RELATIONSHIPS
WOULD REDUCE OUR REVENUES.

         We have established strategic alliances with a number of third parties
including Accenture, Commerce One, EXE Technologies, i2 Technologies, IBM, JD
Edwards, Manugistics Group, Inc., Microsoft, Oracle, SAP, Sun Microsystems and
Yantra. We depend on these relationships for our worldwide implementation,
integration, development and promotion of our solutions. We also expect these
relationships to provide us with marketing and sales opportunities. If we are
unable to maintain successfully our existing relationships or develop new
relationships, our revenues may be reduced.

ANY LOSS OF OUR LICENSED THIRD-PARTY TECHNOLOGY MAY RESULT IN INCREASED COSTS OF
OR DELAYS IN PROVIDING OUR SOLUTIONS, WHICH WOULD HARM OUR OPERATING RESULTS.

         We license technology from several companies on a non-exclusive basis
that is integrated into our TradeSphere product suite, including development
tools and facilities from IBM (WebSphere and MQ Series) and Forte, which was
acquired by Sun Microsystems. We anticipate that we will continue to license
technology from these and other third parties in the future. This software may
not continue to be available on commercially reasonable terms, or at all. While
the term of our license with Sun Microsystems expires on December 23, 2002, and
our license with IBM expires on June 30, 2006, these licenses would be difficult
and time-consuming to replace. The loss of any of these technology licenses
could result in delays in the licensing of our TradeSphere products until
equivalent technology, if available, is identified, licensed and integrated, and
would adversely affect our operating results.

THE DYNAMIC AND COMPLEX NATURE OF GLOBAL ECONTENT INCREASES THE LIKELIHOOD THAT
WE MAY FACE COSTLY PRODUCT LIABILITY CLAIMS.

         The foundation of our software solutions and managed services, Global
eContent, is a rules-based application that provides comprehensive management of
government trade regulations and programs acquired, interpreted, and updated by
Vastera's in-country trade experts. Because of the dynamic and complex nature of
Global eContent, we may face product liability claims in connection with our
current products and future products. Any provisions in our agreements with our
clients designed to limit our exposure to potential product liability claims and
any product liability insurance may not be adequate to protect us from such
claims under our agreements. A successful product liability claim brought
against us could harm our financial condition. Even if unsuccessful, any product
liability claim could result in costly litigation and divert management's
attention and resources. In addition, the effective implementation of our
products may depend upon the successful operation of third-party licensed
products in conjunction with our products, and therefore any undetected errors
in these licensed products may prevent the implementation or impair the
functionality of our products, delay new product introductions and injure our
reputation.

THE UNCERTAINTY OF FUTURE GOVERNMENT REGULATION OF THE INTERNET AND GLOBAL TRADE
MAY ADD TO OUR OPERATING COSTS.

         We may face unanticipated operating costs because of the current
uncertainty surrounding potential government regulation of the Internet and
e-commerce. We believe that we are not currently subject to direct regulation of
online commerce, other than regulations applicable to businesses generally.
However, the Internet has rapidly emerged as a commerce medium, and governmental
agencies have not yet been able to adapt all existing regulations to the
Internet environment. Laws and regulations may be introduced and court decisions
reached that affect the Internet or other online services, covering issues such
as user pricing, user privacy, freedom of expression, access charges, content
and quality of products and services, advertising, intellectual property rights
and information security. As an Internet company, it is unclear in which
jurisdictions we are actually conducting business. Our failure to qualify to do
business in a jurisdiction that requires us to do so

                                       25

<PAGE>

could subject us to fines or penalties and could result in our inability to
enforce contracts in that jurisdiction. Even if we were able to ascertain
correctly in which jurisdictions we conduct business, many of these
jurisdictions have yet to determine the application of their existing laws to
web-based global trade or develop laws that apply to such trade. Complying with
new regulation would increase our operating costs.

WE MAY BE UNABLE TO EXPAND THE IMPORT AND EXPORT TRADE MANAGEMENT SERVICES
PROVIDED TO FORD INTO OTHER GEOGRAPHIC REGIONS AND OTHER PRODUCT LINES IN THE
MANNER ANTICIPATED.

         Under our agreement, we are providing Ford with import and export trade
management services in a phased in geographical approach, which started with the
United States, and presently includes Mexico and Canada. If we are unable to
perform the services provided in the United States, Mexico and Canada in
accordance with our mutually agreed upon performance criteria, Ford may not
incorporate our services into many of Ford's operations in other geographic
regions and product lines, which would reduce our future revenue growth.
Additionally, in the past Ford may not have complied fully with all of the
regulatory requirements established by foreign governments, which may impede our
ability to establish and leverage our operations under the Ford agreements in
other geographic regions and which in turn would reduce our future revenue
growth. Any failure to receive the requisite government approvals in connection
with providing Ford managed services would adversely impact our operating
results.

WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS ADEQUATELY, WHICH COULD
RESULT IN THEIR UNAUTHORIZED USE BY OUR COMPETITORS AND HAVE AN ADVERSE IMPACT
ON OUR REVENUES.

         Our success depends on our ability to protect our proprietary rights.
We rely primarily on:

         o        Copyright, trade secret and trademark laws;

         o        Confidentiality agreements with employees and third parties;
                  and

         o        Protective contractual provisions such as those contained in
                  license agreements with consultants, vendors and clients,
                  although we have not signed such agreements in every case.

         Despite our efforts to protect our proprietary rights, unauthorized
parties may copy aspects of our products and obtain and use information we
regard as proprietary. Other parties may breach confidentiality agreements and
other protective contracts. We may not become aware of these breaches or have
adequate remedies available. We may need to litigate claims against third
parties who infringe our intellectual property rights, which could be costly.

         We have not secured registration of all our marks in the United States
and have pursued limited registration of our intellectual property in foreign
countries. The laws of some foreign countries do not protect our proprietary
rights to the same extent, as do the laws of the United States. Effective
copyright, trademark and trade secret protection may not be available in other
jurisdictions. If we cannot adequately protect our proprietary rights, our
competitors could benefit from the unauthorized use of such rights, resulting in
an adverse impact on our revenues. Even if we are able to protect our
proprietary rights, we could incur significant costs to defend our rights.

OUR PATENT PROTECTION STRATEGY IS IN DEVELOPMENT CURRENTLY AND ANY INADEQUACY IN
THE PROTECTION OF OUR TECHNOLOGY COULD INCREASE OUR OPERATING COSTS.

         We may also rely on patents to protect our proprietary rights in the
future. Any patent strategy we attempt to implement may not be successful and
could harm our business by disclosing unpatentable trade secrets. The laws that
apply to the types of patents we may seek are evolving and are subject to
change. We

                                       26

<PAGE>

presently have filed provisional patent applications in the United States. These
applications may not result in patents or may take longer than we expect to
result in patents. We may also decide to not file patent applications in all the
countries in which we operate or intend to operate. Our decision to do so may
inhibit our ability to protect our proprietary rights in those countries. Even
if we are issued patents, we cannot assure you that they will provide us any
meaningful protection or competitive advantage. If we try to enforce our
patents, third parties may challenge our patents in court or before the United
States Patent and Trademark Office. An unfavorable outcome in any such
proceeding could require us to cease using the technology or to license rights
from prevailing third parties. There is no guarantee that any prevailing party
would offer us a license or that we could acquire any license made available to
us on commercially acceptable terms. Developing and enforcing our patent
protection strategy may increase our operating costs.

WE MAY HAVE TO DEFEND AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH
COULD BE EXPENSIVE AND, IF WE ARE NOT SUCCESSFUL, COULD DISRUPT OUR BUSINESS.

         We cannot be certain that our solutions do not or will not infringe
valid patents, copyrights, trademarks or other intellectual property rights held
by third parties. As a result, we may be subject to legal proceedings and claims
from time to time relating to the intellectual property of others in the
ordinary course of our business.

         For example, at least one firm has asserted that it is about to obtain
a broad patent that might read on the entire area of international trade
calculations or a large portion of commerce related to the use of computers in
international trade. An assessment of our risk related to this patent cannot be
made until the U.S. Patent and Trademark Office issue such patent. If and when
such patent is issued, we believe we will then be able to determine the
technology and business processes covered by it and its possible applicability
to our business. We cannot assure you that we will not be subject to lawsuits or
other demands arising out of this or any other patents that may exist now or in
the future.

         We may incur substantial expenses in defending against any third-party
infringement claims, regardless of their merit. Successful infringement claims
against us may result in substantial monetary liability or may disrupt our
business.

COMPETITION IN OUR MARKET COULD MAKE IT DIFFICULT TO ATTRACT CLIENTS, CAUSE US
TO REDUCE PRICES, RESULTING IN REDUCED GROSS MARGINS, OR CAUSE US TO FAIL TO
GAIN MARKET SHARE OR EXPERIENCE A LOSS OF MARKET SHARE, ANY OF WHICH COULD
REDUCE OUR OPERATING RESULTS.

         The market for our products and services is competitive, dynamic and
subject to frequent technological changes. The intensity of competition and the
pace of change are expected to increase in the future. Our solutions face
competition from a number of competitors offering products and services that
vary in functionality including:

         o        Content aggregators such as Dun & Bradstreet and TradeCompass;

         o        International trade logistics providers such as ClearCross,
                  Capstan, Nextlinx and QRS Corporation;

         o        Trade consultants such as management consulting firms, law
                  firms and boutique consulting firms; and

         o        Outsourcing service providers, such as third-party logistics
                  providers, fourth-party logistics providers and carriers.

         We expect additional competition from other established and emerging
companies as the market for global trade solutions evolves. Current or future
competitors may develop or offer services that are comparable

                                       27

<PAGE>

or superior to ours at a lower price, which could harm our revenues and
profitability. Increased competition could result in price reductions, reduced
gross margins and loss of market share or failure to gain market share, any of
which would seriously harm our business. We may not be able to compete
successfully against current and future competitors, which may reduce our
operating results and lower the value of your investment in our common stock.

ANY FUTURE ACQUISITIONS MAY BE DIFFICULT AND DISRUPTIVE, WE MAY NOT REALIZE THE
EXPECTED BENEFITS FROM ANY SUCH ACQUISITIONS AND OUR OPERATING RESULTS MAY BE
HARMED IF WE CANNOT ADDRESS THE CHALLENGES PRESENTED BY ACQUISITIONS.

         In the past we have acquired businesses to expand our operations or
market presence and intend to continue our expansion by acquiring or investing
in companies, assets or technologies that complement our business and offer
opportunities for growth. These transactions involve many risks and challenges
that we might not successfully overcome, including:

         o        Difficulties in assimilating technologies, products, personnel
                  and operations;

         o        Disruption of our ongoing business and diversion of
                  management's attention from other business concerns;

         o        Risks of entering markets in which we have no or limited prior
                  experience;

         o        Issuances of equity securities that may dilute your ownership
                  interest in our common stock;

         o        Cash payments to or the assumption of debt or other
                  liabilities of the companies we acquire; and

         o        Large write-offs and amortization expenses related to goodwill
                  and other intangible assets.

         Our inability to address these risks could negatively impact our
operating results. In addition, in connection with our acquisition of Ford's
global customs operations, we acquired, or are receiving full-time services
from, a number of Ford employees. Any failure to successfully integrate these
employees into our operations will increase our operating expenses and may
adversely impact our revenues. Moreover, any future acquisitions or investments,
even if successfully completed, may not generate any additional revenue or
provide any benefit to our business.

YOUR ABILITY TO INFLUENCE CORPORATE MATTERS MAY BE LIMITED BECAUSE OUR OFFICERS,
DIRECTORS AND AFFILIATES WILL BE ABLE TO CONTROL, AND FORD WILL BE ABLE TO
INFLUENCE, MATTERS REQUIRING STOCKHOLDER APPROVAL AND MAY HAVE INTERESTS THAT
DIFFER FROM YOURS.

         As of May 10, 2001, our officers, directors and affiliated entities,
including Ford, together beneficially own approximately 41% of the outstanding
shares of our common stock. In addition, Ford beneficially owns approximately
21% of the outstanding shares of our common stock. As the single largest
stockholder of Vastera, Ford may have significant influence over corporate acts
requiring stockholder approval, including a merger or sale of the Company. As
long as Ford holds at least 5% of our common stock, it has the right to appoint
a non-voting observer to our board of directors. Accordingly, these stockholders
collectively will be able to control all matters requiring stockholder approval
and, thereby, our management and affairs. In addition, this concentration of
ownership may delay, deter or prevent acts that would result in a change of
control, which in turn could reduce the market price of our common stock. Our
officers, directors and affiliated entities, including Ford, may have interests
that differ from your interests and their decisions may negatively impact our
future success.

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<PAGE>

OUR MANAGEMENT HAS BROAD DISCRETION OVER HOW TO USE THE PROCEEDS OF OUR INITIAL
PUBLIC OFFERING; WE MAY NOT USE THE PROCEEDS IN WAYS WITH WHICH YOU AGREE OR
THAT HELP ACHIEVE OUR GROWTH STRATEGY AND OUR REVENUES MAY DECLINE.

         The net proceeds from our initial public offering were $86.1 million,
at an offering price of $14.00 per share and after deducting the underwriting
discount and offering expenses. Our management has broad discretion as to how to
apply the net proceeds of this offering. We have used the net proceeds from the
initial public offering for general corporate purposes, principally working
capital for increased domestic and international sales and marketing
expenditures, product development expenditures, expenditures related to the
expansion of our consulting services organization and capital expenditures made
in the ordinary course of business. The net proceeds have been invested in cash
equivalents and short-term investments. If we fail to use these proceeds
effectively, we may not achieve our growth strategy and our revenues may
decline.

OTHER COMPANIES MAY HAVE DIFFICULTY ACQUIRING US, EVEN IF DOING SO WOULD BENEFIT
OUR STOCKHOLDERS, DUE TO PROVISIONS OF OUR CORPORATE CHARTER AND BYLAWS,
DELAWARE LAW AND FORD'S SIGNIFICANT OWNERSHIP POSITION.

         Provisions in our certificate of incorporation, in our bylaws and under
Delaware law could make it more difficult for other companies to acquire us,
even if doing so would benefit our stockholders. Our certificate of
incorporation and bylaws contain the following provisions, among others, which
may inhibit an acquisition of our company by a third party:

         o        a staggered board of directors, where stockholders elect only
                  a minority of the board each year;

         o        advance notification procedures for matters to be brought
                  before stockholder meetings;

         o        a limitation on who may call stockholder meetings; and

         o        a prohibition on stockholder action by written consent.

         We are subject to provisions of Delaware law that prohibit us from
engaging in any business combination with any "interested stockholder," meaning
generally a stockholder who beneficially owns more than 15% of our stock, for a
period of three years from the date this person became an interested
stockholder, unless various conditions are met, such as approval of the
transaction by our board. This could have the effect of delaying or preventing a
change in control. Additionally, in connection with establishing our strategic
relationship with Ford, Ford has acquired approximately a 22% ownership interest
in us. Because of Ford's significant holdings, other companies may be deterred
from acquiring us, even if being acquired would be in the best interest of our
other stockholders.

ITEM 3: QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

         We develop products in the United States and market our products in
North America, and to a lesser extent, Europe and the Asia-Pacific region. As a
result, our financial results could be affected by factors such as changes in
foreign currency exchange rates or weak economic conditions in foreign markets.
As a majority of sales are currently made in U.S. dollars, a strengthening of
the dollar could make our products less competitive in foreign markets. We do
not expect any material adverse effect on our consolidated financial position,
results of operations or cash flows due to movements in any specific foreign
currency.

         We currently do not use financial instruments to hedge operating
expenses of our European, Mexican or Canadian subsidiaries. We intend to assess
the need to utilize financial instruments to hedge currency exposures on an
ongoing basis. Our interest income is sensitive to changes in the general level
of U.S. interest rates,

                                       29

<PAGE>

particularly since the majority of our investments are in short-term
instruments. Due to the short-term nature of our investments, we believe that
there is no material risk exposure. We do not hold or issue derivative
securities, derivative commodity instruments or other financial instruments for
trading purposes. Therefore, no quantitative tabular disclosures are required.


                                       30

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

         We are not a party to any material legal proceedings.

ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS

         We received net offering proceeds from our initial public offering of
approximately $86.1 million. We have used approximately $14.8 million of the net
proceeds from the initial public offering for general corporate purposes,
principally working capital for increased domestic and international sales and
marketing expenditures, product development expenditures, expenditures related
to the expansion of our consulting services organization and capital
expenditures made in the ordinary course of business. The remaining portions of
the net proceeds have been invested in cash, cash equivalents and short-term
investments. We may also use a portion of the remaining net proceeds to expand
internationally and to acquire or invest in additional businesses, products and
technologies that we believe will complement our current or future business. We
issued 1,032,690 shares of common stock in the fiscal quarter ending March 31,
2001 in connection with our acquisition of Speedchain

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 6: EXHIBITS AND REPORTS OF FORM 8-K

The following exhibits are included herein:

         (a) Exhibits

         The exhibits listed on the accompanying exhibit index immediately
         following the signature page hereto filed as part of this Form 10-Q are
         incorporated by reference herein.

         (b) Reports on Form 8-K.

         The Company did not file any reports on Form 8-K during the three
         months ended March 31, 2001.


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<PAGE>

SIGNATURES

         Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized in Dulles, Virginia on May 15, 2001.

                              VASTERA, INC.

                               By: /s/ Philip J. Balsamo
                                   -------------------------------
                                       Philip J. Balsamo
                                       Vice President and Chief Financial
                                       Officer (Principal Financial and
                                       Accounting Officer)





                                      32

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
           Exhibit
           Number                 Description
           ------                 -----------
           <S>             <C>
            10.1           Amended and Restated Loan Agreement, dated May 15, 2001.

</TABLE>