Andolshek calls Waterford Financial a "guerilla finance company" because its niche business is start-up companies that have been "beaten up" by commercial lenders. "None of the businesses that seek our help have too much money," he says. "Most have been turned down multiple times, & some may be in trouble because they have been unable to secure needed financing. Companies that fit such a profile aren't necessarily a problem for us, as long as they have the potential to grow rapidly & generate multiple returns for investors."

One such company Waterford is assisting is Vallon Inc., a Web developer specializing in low-cost, assembly-line-style sites. It launched a new service in conjunction with IBM in early 1999. Small businesses that approach Big Blue about an Internet presence will be offered all of IBM's support & will be hosted on IBM's servers, with Vallon building the actual site. Vallon's Web clients currently include, among others, the Professional Golfing Association (PGA).

Another company that Waterford took under its wing is White Castle de Mexico, S.A. de C.V., whose parent company is Food Services of the Americas, Inc. It has opened a total of 13 stores in the country. Waterford is positioning the Latin American business for an IPO, probably in the second quarter of 2000.

Net Selector, which developed software that allows objectionable on-line Internet content to be blocked, was a former client. Waterford was instrumental in helping the company formulate an exit strategy on behalf of its investors -- it was acquired by Apple Computer.

At any given time, Waterford is working with five or six companies. Andolshek said he encounters a lot of innovative people looking to start their own businesses. Unfortunately, they don't have a clue how to run & stage a start-up company, & of course the difficulty in obtaining seed capital makes the challenge that much more difficult, he said.

"I don't know where you can learn to run a start-up company other than at Asphalt U.," he said. "The problem with a lot of the MBAs entering the market is that their experience is too removed from the hard knocks of the real world. Often, you learn more from business failures than successes. At Waterford Financial, we like to deal with people who have tasted disappointment."

[Editor's Note: Tony Velocci is a senior editor at McGraw Hill. He writes for numerous business, financial, & general interest publications, including Fortune, Institutional Investor, Nation's Business, Conservative Speculator, & The Robb Report. He is a recognized authority on the aerospace & air transport industries.]

Sneak Previews

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Once a Sneak, a company becomes a candidate for the "Situation of the Month" coverage in a future issue. Our decision concerning which to cover in a more detailed way is based on what we find in continuing investigation. I may give special attention to a Sneak I did a year ago, or one from the last issue; do not attach significance to timing.

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Codes: At the end of each Sneak Preview & Update, there are three codes. They have a rating from 1 to 10. Those numbers reflect my personal opinion. Please -- do not take action based on my opinion alone. Do four things before taking action: (1) Read my original writeup to get an overall feel; (2) Get the latest 10-Q, 10-K, corporate profile, & news releases; you can access them at www.WallStreetCorner.com by using "Financial Navigator;" (3) Study them; & (4) Call a key member of management to get a final impression. If anything bothers you regarding that call, pass. There are lots of situations. Do not invest unless everything about a situation feels good to you.

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