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                                    Exhibit 3

                          Audited Financial Statements
                          June 30, 1997, 1996 and 1995


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<PAGE>


                     Desert Springs Acquisition Corporation

                               ( a Stage Company)

                              Financial Statements

                             June 30, 1997 and 1996


                                      -1-
<PAGE>

                                C O N T E N T S


Accountants' Report .............................................     3

Balance Sheets ..................................................     4

Statements of Operations ........................................     5

Statements of Stockholders' Equity ..............................     6

Statements of Cash Flows ........................................     7

Notes to the Financial Statements ...............................     8

                                      -2-
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders
Desert Springs Acquisition Corporation

        We have  audited  the  accompanying  balance  sheets of  Desert  Springs
Acquisition  Corporation (a  development  stage company) as of June 30, 1997 and
1996 and the related  statements of  operations,  stockholders'  equity and cash
flows for the years ended June 30, 1997, 1996 and 1995 and from inception of the
development  stage on July 1,  1991  through  June  30,  1997.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.  The financial  statement for the period October 3, 1986 (inception)
through June 30, 1989 were audited by other accountants, who gave an unqualified
opinion on their report dated September 25, 1989.

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

        In our  opinion,  the  financial  statements  referred to above  present
fairly,  in all material  respects,  the  financial  position of Desert  Springs
Acquisition  Corporation (a  development  stage company) as of June 30, 1997 and
1996 and the results of its  operations  and cash flows for the years ended June
30, 1997, 1996 and 1995 and from inception of the  development  stage on July 1,
1991 through June 30, 1997 in  conformity  with  generally  accepted  accounting
principles.


Salt Lake City, Utah
November 6, 1997

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<PAGE>

                     Desert Springs Acquisition Corporation
                          (A Development Stage Company)
                                 Balance Sheets


                                     ASSETS

                                                                June 30
                                                        -----------------------
                                                           1997          1996
                                                        ---------     ---------

ASSETS                                                  $    --       $    --
                                                        ---------     ---------
   TOTAL Assets                                         $    --       $    --
                                                        =========     =========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                      $  27,301     $   5,925
  Accounts payable - related party (Note 6)                 7,551         6,693
                                                        ---------     ---------
     Total Liabilities                                     34,852        12,618
                                                        ---------     ---------

STOCKHOLDERS' EQUITY
  Common stock, $.0001 par value;
    500,000,000 shares authorized;
    1,942,500 and 1,942,500 shares
    issued and outstanding respectively                       194           194
  Additional paid-in capital                              420,041       420,041

  Retained Deficit                                       (455,087)     (432,853)
                                                        ---------     ---------
     Total Stockholders' Equity                           (34,852)      (12,618)
                                                        ---------     ---------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $    --       $    --
                                                        =========     =========


   The accompanying notes are an integral part of these financial statements


                                      -4-
<PAGE>

                     Desert Springs Acquisition Corporation
                          (A Development Stage Company)
                            Statements of Operations

<TABLE>
<CAPTION>
                                                                                          From
                                                                                   Inception of the
                                                                                   Development Stage
                                               For the Years Ended                  on July 1, 1991
                                                     June 30                           Through
                                -----------------------------------------------        June 30,
                                    1997              1996              1995             1997
                                -----------       -----------       -----------       -----------
<S>                             <C>               <C>               <C>               <C>      
REVENUES                        $      --         $      --         $      --         $      --
                                -----------       -----------       -----------       -----------

EXPENSES
  GENERAL & ADMINISTRATIVE           22,234            25,034             1,314            50,454
                                -----------       -----------       -----------       -----------

NET LOSS FROM OPERATIONS            (22,234)          (25,034)           (1,314)          (50,454)

NET LOSS FROM
 DISCONTINUED OPERATIONS               --                --                --            (404,633)
                                -----------       -----------       -----------       -----------


NET LOSS                        $   (22,234)      $   (25,034)      $    (1,314)      $  (455,087)
                                ===========       ===========       ===========       ===========

LOSS PER SHARE                  $     (0.01)      $     (0.02)      $     (0.00)      $     (0.43)
                                ===========       ===========       ===========       ===========

WEIGHTED AVERAGE
  SHARES OUTSTANDING              1,942,500         1,673,000           690,500         1,061,929
                                ===========       ===========       ===========       ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      -5-
<PAGE>

                     Desert Springs Acquisition Corporation
                          (A Development Stage Company)
                       Statements of Stockholders' Equity
             From Inception, of the Development Stage On July 1,1991
                              through June 30, 1997

<TABLE>
<CAPTION>
                                              Common Stock           Additional
                                        ------------------------       Paid-in     Accumulated
                                          Shares        Amount         Capital       Deficit
                                        ---------      ---------      ---------      ---------
<S>                                     <C>            <C>            <C>            <C>       
Balance on June 30, 1991                  690,500      $      69      $ 404,564      $(404,633)

Contributions from
 shareholders                                --             --              624           --

Net loss for the year
 ended June 30, 1992                         --             --             --             (624)

Contributions from
 shareholders                                --             --              624           --

Net loss for the year
 ended June 30, 1993                         --             --             --             (624)
                                        ---------      ---------      ---------      ---------
Balance on June 30, 1993                  690,500             69        405,812       (405,881)

Contributions from
 shareholders                                --             --              624           --

Net loss for the year
 ended June 30, 1994                         --             --             --             (624)
                                        ---------      ---------      ---------      ---------
Balance on June 30, 1994                  690,500             69        406,436       (406,505)

Contributions from
 shareholders                                --             --            1,210           --

Net loss for the year
 ended June 30,1995                          --             --             --           (1,314)
                                        ---------      ---------      ---------      ---------
Balance on June 30, 1995                  690,500             69        407,646       (407,819)

Stock issued for services (Note 3)      1,252,000            125         12,395           --

Net loss for the year ended
 June 30, 1996                               --             --             --          (25,034)
                                        ---------      ---------      ---------      ---------
Balance on June 30, 1996                1,942,500            194        420,041       (432,853)

Net loss for the year ended
 June 30, 1997                               --             --             --          (22,234)
                                        ---------      ---------      ---------      ---------
Balance on June 30, 1997                1,942,500      $     194      $ 420,041      $(455,087)
                                        =========      =========      =========      =========
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      -6-
<PAGE>

                     Desert Springs Acquisition Corporation
                          (A Development Stage Company)
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                         From
                                                                                   Inception of the
                                                    For the Years Ended            development stage
                                                           June 30                  on July 1, 1991
                                            -------------------------------------       Through
                                              1997          1996           1995      June 30, 1997
                                            --------      --------       --------       --------
<S>                                         <C>           <C>            <C>            <C>      
Cash Flows From Operating Activities
  Net lncome/ (loss)                        $(22,234)     $(25,034)      $ (1,314)      $(50,454)
  Less non-cash items:

   Stock issued for services                    --          12,520           --           12,520
   Increase in accounts payable               22,234        12,514            104         34,852
                                            --------      --------       --------       --------
     Net Cash Provided (Used) by
      Operating Activities                      --            --           (1,210)        (3,082)
                                            --------      --------       --------       --------
Cash Flows from Investing Activities
     Net Cash Provided (Used) by
      Investing Activities                      --            --             --             --
                                            --------      --------       --------       --------
  Cash Flows from Financing Activities

    Contributions by Shareholders               --            --            1,210          3,082
                                            --------      --------       --------       --------
     Net Cash Provided (Used) by
      Financing Activities                      --            --            1,210          3,082
                                            --------      --------       --------       --------
     Net Change in Cash                         --            --             --             --
                                            --------      --------       --------       --------
Cash and Cash Equivalents at
 Beginning of Period                            --            --             --             --
                                            --------      --------       --------       --------
Cash and Cash Equivalents at
 End of Period                              $   --        $   --         $   --         $   --
                                            ========      ========       ========       ========

Supplemental Cashflow Information:
  Cash Paid For:
   Interest                                 $   --        $   --         $   --         $   --
                                            ========      ========       ========       ========

   Income Taxes                             $   --        $   --         $   --         $   --
                                            ========      ========       ========       ========
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      -7-
<PAGE>

                     Desert Springs Acquisition Corporation
                          (A Development Stage Company)
                        Notes to the Financial Statements
                             June 30, 1997 and 1996


NOTE 1 - Summary Of Significant Accounting Policies

     a.   Organization

          Desert Springs  Acquisition  Corporation (the Company),  is a Colorado
     Corporation  organized  October 3, 1986,  as  successor  to WTS III Capital
     Corporation  (WTS).  WTS was  organized  as a  "Blank  Check"  company  and
     conducted a public  offering of its  securities  pursuant to a Registration
     statement  on Form  S-18  filed  with the  Denver  Regional  Office  of the
     Securities and Exchange  Commission which was effective on August 11, 1987.
     The offering closed after receipt of the maximum proceeds of $300,000.

          On October 7, 1987 WTS acquired 100% of Bartel Financial  Group,  Inc.
     (BFG, Utah), a Utah corporation in a reverse acquisition.

          The  Company  and  its  wholly-owned  subsidiary  BFG  (Utah),  had no
     employees and conducted  business  solely through BFG  Publishers,  Inc., a
     Utah  corporation,  which is the  wholly-owned  subsidiary  of BFG  (Utah).
     Through BFG  Publishers,  Inc.,  the Company was engaged in publishing  and
     distributing   investment  advisory  newsletters  to  approximately  15,000
     subscribers.  During the fiscal year June 30, 1991 the subsidiary companies
     discontinued their operations and eventually were dissolved by the State of
     Utah. The Company,  therefore began the development  stage on July 1, 1991.
     On July 11, 1995, the Board of Directors changed the name of the Company to
     Desert Springs Acquisition  Corporation and is currently seeking a business
     opportunity or merger candidate.


     b.   Fiscal Year End

          The Company has elected a fiscal year closing of June 30.


     c.   Recognition of Revenue

          The Company  recognizes  income and  expense on the  accrual  basis of
     accounting.


     d.   Earnings (Loss) Per Share

          The computation of earnings per share of common stock is


                                      -8-
<PAGE>

                     Desert Springs Acquisition Corporation
                          (A Development Stage Company)
                        Notes to the Financial Statements
                             June 30, 1997 and 1996


NOTE 1 - Summary of Significant Accounting Policies (Continued)

     based on the weighted  average number of shares  outstanding at the date of
     the financial statements.


     e.   Provision for Income Taxes

          No provision  for income taxes have been recorded due to net operating
     loss carryforwards  totaling  approximately  $1,097,234 that will be offset
     against future taxable income.  These NOL carryforwards  begin to expire in
     the year 1999. No tax benefit has been reported in the financial statements
     because  the  Company  believes  there  is a  50%  or  greater  chance  the
     carryforward  will expire unused.  Accordingly,  Per FASB 109 the potential
     tax benefits of the loss  carryforward  are offset by the  valuation of the
     same amount.


     f.   Cash and Cash Equivalents

          The company considers all highly liquid investments with maturities of
     three months or less to be cash equivalents.


NOTE 2 - Going Concern

          The accompanying financial statements have been prepared assuming that
     the Company will continue as a going concern. The Company has no assets and
     has had  recurring  operating  losses  for the past  several  years  and is
     dependent upon financing to continue  operations.  Management's  plan is to
     find a viable business to merge with in order to provide working capital as
     needed. The financial  statements do not include any adjustments that might
     result from the outcome of this uncertainty.


NOTE 3 - Stockholders' Equity

          Beginning  in  1992,  the  stock  transfer  fees  have  been  paid  by
     shareholders.  The shareholders do not expect repayment,  and thereby, they
     have contributed the amounts to the Company.

          On July 11, 1995, the Board  authorized a reverse stock split of 1 for
     200. These financial statements have been retroactively restated to reflect
     the split.

          On  September  18,  1995,  the  Company  entered a  financial  service
     agreement with Traders Exchange, Inc., James Bartel and Polyandrous Trading
     Group, Inc. whereby these consultants will


                                      -9-
<PAGE>

                     Desert Springs Acquisition Corporation
                          (A Development Stage Company)
                        Notes to the Financial Statements
                             June 30, 1997 and 1996


NOTE 3 - Stockholders' Equity (Continued)

     provide various  services for stock at a rate of $.01 per share.  1,252,000
     shares were issued during 1996 valued at $12,520.


NOTE 4 - Development Stage Company

          The Company is a  development  stage  company as defined in  Financial
     Accounting   Standards   Board   Statement  No.  7.  It  is   concentrating
     substantially  all of its efforts in raising  capital and  searching  for a
     business  operation  with which to merge or assets to acquire,  in order to
     generate significant operations.


NOTE 5 - Related Party Transactions

          James Bartel, an officer of the Company, has paid for various expenses
     of the Company in the amount of $7,551.  A payable  currently exists to Mr.
     Bartel in the same amount.

          As described in Note 3, James Bartel, an officer and major shareholder
     has entered into a financial  service  agreement  with the Company.  During
     1996, Mr. Bartel  received  400,000 shares for the services  provided under
     this agreement.

                                      -10-