<PAGE>   1
                                                                  Exhibit 99.5






                            NEW VALLEY HOLDINGS, INC.

                              FINANCIAL STATEMENTS


                                 MARCH 31, 1999

<PAGE>   2

                            NEW VALLEY HOLDINGS, INC.

                              FINANCIAL STATEMENTS


                                TABLE OF CONTENTS





<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ---- 
   <S>                                                                                                        <C>
   Balance Sheets as of March 31, 1999 and December 31, 1998.........................................          2

   Statements of Operations for the three months ended March 31, 1999 and
         March 31, 1998..............................................................................          3

   Statements of Stockholder's Equity (Deficit) for the three months ended
         March 31, 1999..............................................................................          4

   Statements of Cash Flows for the three months ended March 31, 1999 and
         March 31, 1998..............................................................................          5

   Notes to Financial Statements.....................................................................          6
</TABLE>



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<PAGE>   3
                           NEW VALLEY HOLDINGS, INC.
                                 BALANCE SHEETS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

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


<TABLE>
<CAPTION>
                                                                        March 31,         December 31,
                                                                          1999                1998
                                                                        --------          ------------
<S>                                                                     <C>                <C>     
ASSETS

  Cash and cash equivalents ..................................          $     20           $     21

  Investment in New Valley:
    Redeemable preferred stock ...............................            51,939             61,833
    Common stock .............................................           (51,939)           (61,833)
                                                                        --------           --------
    Total investment in New Valley                                            --                 --
                                                                        --------           --------
                                                                      
  Total assets ...............................................          $     20           $     21
                                                                        ========           ========

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

  Current income taxes payable to parent .....................          $  6,324           $  6,324
                                                                        --------           --------

  Total liabilities ..........................................             6,324              6,324
                                                                        --------           --------

  Commitments and contingencies

  Common stock, $0.01 par value, 100 shares authorized, issued
    and outstanding
  Additional paid-in capital .................................             7,633              7,633
  Deficit ....................................................           (57,048)           (51,155)
  Other comprehensive income .................................            43,111             37,219
                                                                        --------           --------

  Total stockholder's equity (deficit) .......................          $ (6,304)          $ (6,303)
                                                                        --------           --------

  Total liabilities and stockholder's equity (deficit) .......          $     20           $     21
                                                                        ========           ========
</TABLE>

                     The accompanying notes are an integral
                        part of the financial statements.


                                       2

<PAGE>   4
                           NEW VALLEY HOLDINGS, INC.
                            STATEMENTS OF OPERATIONS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

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


<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                          ------------------------------
                                                           March 31,           March 31,
                                                             1999               1998
                                                           --------            --------
<S>                                                       <C>                 <C>     
Equity in loss of New Valley .....................          $(7,599)          $(4,166)

Interest income ..................................                                  9

General and administrative expenses ..............               (2)               (7)
                                                            -------           -------

Loss from continuing operations before
     income taxes ................................           (7,601)           (4,164)
                                                            -------           -------

Benefit for income taxes:
   Deferred ......................................             (598)               --
                                                            -------           -------   
                                                                                                                               

Income tax benefit ...............................             (598)               --
                                                            --------          -------

Loss from continuing operations ..................           (7,003)           (4,164)
                                                            -------           -------

Income from discontinued operations of New Valley,
     net of taxes of $598 in 1998 ................            1,110                --
                                                            -------           -------
Net loss .........................................          $(5,893)          $(4,164)
                                                            =======           =======
</TABLE>


                     The accompanying notes are an integral
                        part of the financial statements.

                                      - 3 -
<PAGE>   5
                           NEW VALLEY HOLDINGS, INC.
                  STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
                                                                             Additional                  Other
                                                             Common Stock      Paid-In                Comprehensive
                                                           Shares   Amount     Capital     Deficit       Income       Total
                                                           ------   ------   ----------    -------    -------------   -----
<S>                                                        <C>      <C>        <C>       <C>          <C>           <C>      
Balance, December 31, 1998..............................    100                 $7,633    $(51,155)      $37,219    $ (6,303)

Net loss................................................                                    (5,893)                   (5,893)
  Unrealized holding gain on investment in New Valley...                                                   5,892       5,892
                                                                                                                    --------
    Total other comprehensive income....................                                                               5,892
                                                                                                                    --------
  Total comprehensive loss..............................                                                                  (1)
                                                          -----     ------      ------    --------       -------    --------

Balance, December 31, 1998..............................    100                 $7,633    $(57,048)      $43,111    $ (6,304)
                                                          =====     ======      ======    ========       =======    ========
</TABLE>


                     The accompanying notes are an integral
                        part of the financial statements.



                                       4

<PAGE>   6

                            NEW VALLEY HOLDINGS, INC.
                            STATEMENTS OF CASH FLOWS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

==============================================================================
<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                   ------------------------------
                                                                    March 31,           March 31,
                                                                      1999                 1998
                                                                   ----------           ---------
<S>                                                                <C>                 <C>   
Net cash (used in) provided by operating activities.............     $ (1)               $1,025
                                                                     ----                ------

Net (decrease) increase in cash and cash equivalents............       (1)                1,025

Cash and cash equivalents at beginning of period................       21                     6
                                                                     ----                ------

Cash and cash equivalents at end of period......................     $ 20                $1,031
                                                                     ====                ======
</TABLE>






                     The accompanying notes are an integral
                        part of the financial statements.



                                       5






<PAGE>   7
                            NEW VALLEY HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



1.    BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

      Organization. New Valley Holdings, Inc. (the "Company") was formed on
      September 9, 1994, pursuant to the laws of Delaware, by BGLS Inc. ("BGLS")
      to act as a holding company for certain stock investments in New Valley
      Corporation ("New Valley"). BGLS, which owns 100% of the authorized,
      issued and outstanding common stock of the Company, is a wholly-owned
      subsidiary of Brooke Group Ltd. ("Brooke"), a Delaware corporation whose
      stock is traded on the New York Stock Exchange.

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

      Cash and Cash Equivalents. For purposes of statements of cash flows, cash
      includes cash on deposit in banks and cash equivalents, comprised of
      short-term investments which have an original maturity of 90 days or less.
      Interest on short-term investments is recognized when earned.

      Comprehensive Income. Comprehensive income is a component of stockholders'
      equity and includes the Company's net income and other comprehensive
      income such as the proportionate interest in New Valley's capital
      transactions, unrealized gains and losses on investment securities and
      minimum pension liability adjustments. For the three months ended March
      31, 1999, total comprehensive loss was $1; for the three months ended
      March 31, 1998, total comprehensive income was $6.


2.    INVESTMENT IN NEW VALLEY CORPORATION

      At March 31, 1999, the Company's investment in New Valley consisted of a
      41.5% voting interest. At March 31, 1999 and 1998, the Company owned 57.7%
      of the outstanding $15.00 Class A Increasing Rate Cumulative Senior
      Preferred Shares ($100 Liquidation Value), $.01 par value ("Class A
      Preferred Shares"), and 41.5% of New Valley's common shares, $.01 par
      value (the "Common Shares").

      The Class A Preferred Shares are accounted for as debt and equity
      securities pursuant to the requirements of SFAS No. 115, "Accounting for
      Certain Investments in Debt and Equity Securities", and are classified as
      available-for-sale. The Common Shares are accounted for pursuant to
      Accounting Principles Board Opinion No. 18, "The Equity Method of
      Accounting for Investments in Common Stock".

      The Company determines the fair value of the Class A Preferred Shares
      based on the quoted market price. Through September 1996, earnings on the
      Class A Preferred Shares were comprised of dividends accrued during the
      period and the accretion of the difference between the Company's basis and
      their mandatory redemption price. During the quarter ended September 30,
      1996, the decline in the market value of the Class A Preferred Shares, the
      dividend received on the Class A Preferred Shares and the Company's equity
      in losses incurred by New Valley caused the carrying value of the
      Company's investment in New Valley to be reduced to zero. Beginning in the
      fourth quarter of 1996, the Company suspended the recording of its
      earnings on the dividends accrued and the accretion of the difference
      between the Company's basis in the Class A Preferred Shares and their
      mandatory redemption price. 


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<PAGE>   8
                            NEW VALLEY HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) - (CONTINUED)


      The Company's investment in New Valley at March 31, 1999 is summarized
      below:

<TABLE>
<CAPTION>

                                          Number of           Fair         Carrying
1998                                       Shares             Value         Amount
----                                      ---------         ---------      --------
<S>                                       <C>               <C>            <C>     
   Class A Preferred Shares.......           618,326        $51,939        $ 51,939
   Common Shares..................         3,969,962          1,613         (51,939)
                                                            -------        --------
                                                            $53,552        $      0
                                                            =======        ========
</TABLE>

      In November 1994, New Valley's First Amended Joint Chapter 11 Plan of
      Reorganization, as amended ("Joint Plan"), was confirmed by order of the
      United States Bankruptcy Court for the District of New Jersey and on
      January 18, 1995, New Valley emerged from bankruptcy reorganization
      proceedings and completed substantially all distributions to creditors
      under the Joint Plan. Pursuant to the Joint Plan, among other things, the
      Class A Preferred Shares, the Class B Preferred Shares, the Common Shares
      and other equity interests were reinstated and retained all of their
      legal, equitable and contractual rights.

      The Class A Preferred Shares of New Valley are required to be redeemed on
      January 1, 2003 for $100.00 per share plus dividends accrued to the
      redemption date. The shares are redeemable, at any time, at the option of
      New Valley, at $100.00 per share plus accrued dividends. The holders of
      Class A Preferred Shares are entitled to receive a quarterly dividend, as
      declared by the Board of Directors, payable at the rate of $19.00 per
      annum. At March 31, 1999, the accrued and unpaid dividends arrearage was
      $234,581($218.94 per share).


3.    NEW VALLEY CORPORATION

      Summarized financial information for New Valley as of March 31, 1999 and
      December 31, 1998 and for the three months ended March 31, 1999 and 1998
      follows:

<TABLE>
<CAPTION>
                                                           March 31,          December 31,
                                                             1999                1998
                                                         -----------          -----------
<S>                                                      <C>                  <C>       
Current assets, primarily cash and marketable
   securities...................................         $   70,851           $   91,451
Non-current assets..............................            183,787              181,271
Current liabilities.............................             66,975               83,581
Non-current liabilities.........................             83,001               78,251
Redeemable preferred stock......................            332,198              316,202
Shareholders' deficit...........................           (227,536)            (205,312)

<CAPTION>

                                                               Three Months Ended
                                                      -----------------------------------
                                                          March 31,             March 31,
                                                            1999                 1998
                                                      --------------          -----------
<S>                                                   <C>                     <C>       
Revenues   ....................................          $   22,770           $   33,840
Costs and expenses..............................             28,917               34,260
(Loss) income from continuing operations........             (5,682)                 157
Gain from discontinued operations...............              4,100
Net loss applicable to common shares(A).........            (23,801)             (18,675)
</TABLE>

------------------

(A) Considers all preferred accrued dividends, whether or not declared.


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<PAGE>   9
                            NEW VALLEY HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) - (CONTINUED)


      In February 1998, New Valley and Apollo Real Estate Investment Fund III,
      L.P. ("Apollo") organized Western Realty Development LLC ("Western Realty
      Ducat") to make real estate and other investments in Russia. In connection
      with the formation of Western Realty Ducat, New Valley agreed, among other
      things, to contribute the real estate assets of BML, including Ducat Place
      II and the site for Ducat Place III, to Western Realty Ducat and Apollo
      agreed to contribute up to $58,750 including the investment in Western
      Realty Repin discussed below. Through March 31, 1999, Apollo had funded
      $36,529 of its investment in Western Realty Ducat.

      The ownership and voting interests in Western Realty Ducat are held
      equally by Apollo and New Valley. Apollo will be entitled to a preference
      on distributions of cash from Western Realty Ducat to the extent of its
      investment ($40,000), together with a 15% annual rate of return, and New
      Valley will then be entitled to a return of $20,000 of BML-related
      expenses incurred and cash invested by New Valley since March 1, 1997,
      together with a 15% annual rate of return; subsequent distributions will
      be made 70% to New Valley and 30% to Apollo. Western Realty Ducat will be
      managed by a Board of Managers consisting of an equal number of
      representatives chosen by Apollo and New Valley. All material corporate
      transactions by Western Realty Ducat generally require the unanimous
      consent of the Board of Managers. Accordingly, New Valley has accounted
      for its non-controlling interest in Western Realty Ducat using the equity
      method of accounting.

      New Valley recorded its basis in the investment in Western Realty Ducat in
      the amount of $60,169 based on the carrying value of assets less
      liabilities transferred. There was no difference between the carrying
      value of the investment and New Valley's proportionate interest in the
      underlying value of net assets of Western Realty Ducat. New Valley
      recognizes losses incurred by Western Realty Ducat to the extent that
      cumulative earnings of Western Realty Ducat are not sufficient to satisfy
      Apollo's preferred return.

      Western Realty Ducat will seek to make additional real estate and other
      investments in Russia. Western Realty Ducat has made a $30,000
      participating loan to, and payable out of a 30% profits interest in, a
      company organized by BOL which, among other things, holds BOL's interest
      in Liggett-Ducat Ltd. and the new factory being constructed by
      Liggett-Ducat on the outskirts of Moscow.

      In June 1998, New Valley and Apollo organized Western Realty Repin LLC
      ("Western Realty Repin") to make a $25,000 participating loan (the "Repin
      Loan") to BML. The proceeds of the loan will be used by BML for the
      acquisition and preliminary development of two adjoining sites totaling
      10.25 acres (the "Kremlin Sites") located in Moscow across the Moscow
      River from the Kremlin. BML, which is planning the development of a 1.1
      million sq. ft. hotel, office, retail and residential complex on the
      Kremlin Sites, owned 95.29% of one site and 52% of the other site at March
      31, 1999. Apollo will be entitled to a preference on distributions of cash
      from Western Realty Repin to the extent of its investment ($18,750)
      together with a 20% annual rate of return, and New Valley will then be
      entitled to a return of its investment ($6,250), together with a 20%
      annual rate of return; subsequent distributions will be made 50% to New
      Valley and 50% to Apollo. Western Realty Repin will be managed by a Board
      of Managers consisting of an equal number of representatives chosen by
      Apollo and New Valley. All material corporate transactions by Western
      Realty Repin will generally require the unanimous consent of the Board of
      Managers.

      Through March 31, 1999, Western Realty Repin has advanced $25,000 (of
      which $18,773 was funded by Apollo) under the Repin Loan to BML. The Repin
      Loan, which bears no fixed interest, is payable only out of 100% of the
      distributions, if made, by the entities owning the Kremlin Sites to BML.
      Such distributions shall be applied first to pay the principal of the
      Repin Loan and then as contingent participating interest on the Repin
      Loan. Any rights of payment on the Repin Loan are


                                      -8-
<PAGE>   10
                            NEW VALLEY HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) - (CONTINUED)


      subordinate to the rights of all other creditors of BML. BML used a
      portion of the proceeds to repay New Valley for certain expenditures on
      the Kremlin Sites previously incurred. The Repin Loan is due and payable
      upon the dissolution of BML and is collateralized by a pledge of New
      Valley's shares of BML.

      As of March 31, 1999, BML had invested $19,621 in the Kremlin sites and
      held $3,525, in cash, which was restricted for future investment. In
      connection with the acquisition of its interest in one of the Kremlin
      Sites, BML agreed with the City of Moscow to invest an additional $6,000
      in 1999 (which has been funded) and $22,000 in 2000 in the development of
      the property.

      The development of Ducat Place III and the Kremlin Sites will require
      significant amounts of debt and other financing. New Valley is actively
      pursuing various financing alternatives on behalf of Western Realty Ducat
      and BML. However, in light of the recent economic turmoil in Russia, no
      assurance can be given that such financing will be available on acceptable
      terms. Failure to obtain sufficient capital for the projects would force
      Western Realty Ducat and BML to curtail or delay the planned development
      of Ducat Place III and the Kremlin Sites.

      Subsequent Event - Recapitalization Plan:

      New Valley has submitted for approval of its shareholders at its 1999
      annual meeting, which will be held on May 21, 1999, a proposed
      recapitalization of its capital stock (the "Recapitalization Plan"). Under
      the Recapitalization Plan, each of New Valley's outstanding Class A
      Preferred Shares would be reclassified and changed into 20 Common Shares
      and one Warrant to purchase Common Shares (the "Warrants"). Each of the
      Class B Preferred Shares would be reclassified and changed into one-third
      of a Common Share and five Warrants. The existing Common Shares would be
      reclassified and changed into one-tenth of a Common Share and three-tenths
      of a Warrant. The number of authorized Common Shares would be reduced from
      850,000,000 to 100,000,000. The Warrants to be issued as part of the
      Recapitalization Plan would have an exercise price of $12.50 per share
      subject to adjustment in certain circumstances and be exercisable for five
      years following the effective date of New Valley's Registration Statement
      covering the underlying Common Shares. The Warrants would not be callable
      by New Valley for a three-year period. Upon completion of the
      Recapitalization Plan, New Valley will apply for listing of the Common
      Shares and Warrants on NASDAQ. Completion of the Recapitalization Plan
      would be subject to, among other things, approval by the required holders
      of the various classes of New Valley's shares.

      Brooke has agreed to vote all of its shares in New Valley in favor of the
      Recapitalization Plan. As a result of the Recapitalization Plan and
      assuming no warrant holder exercises its warrants, Brooke will increase
      its ownership of the outstanding Common Shares of New Valley from 42.3% to
      55.1% and its total voting power from 42.3% to 55.1%.


4.    FEDERAL INCOME TAX

      At March 31, 1999, the Company had $8,400 of unrecognized net deferred tax
      assets, comprised primarily of future deductible temporary differences. A
      valuation allowance has been provided against this deferred tax asset as
      it is presently deemed more likely than not that the benefit of the tax
      asset will not be utilized. The Company continues to evaluate the
      realizability of its deferred tax assets and its estimate is subject to
      change.


                                      -9-

<PAGE>   11
                            NEW VALLEY HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) - (CONTINUED)


5.    CONTINGENCIES

      BGLS has pledged its ownership interest in the Company's common stock and
      the Company's investments in the New Valley securities as collateral in
      connection with the issuance of BGLS' 15.75% Senior Secured Notes ("BGLS
      Notes") due 2001.



                                      -10-