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                                                                    Exhibit 99.4






                            NEW VALLEY HOLDINGS, INC.

                              FINANCIAL STATEMENTS


                                 MARCH 31, 1997


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                            NEW VALLEY HOLDINGS, INC.

                              FINANCIAL STATEMENTS


                                TABLE OF CONTENTS
                                -----------------





<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----


<S>                                                                                                          <C>
   Balance Sheets as of March 31, 1997 and December 31, 1996..........................................        2

   Statements of Operations for the three months ended March 31, 1997 and
        March 31, 1996.................................................................................       3

   Statement of Stockholder's Equity (Deficit) for the three months ended March 31, 1997..............        4

   Statements of Cash Flows for the three months ended March 31, 1997 and
        March 31, 1996................................................................................        5

   Notes to Financial Statements......................................................................        6


</TABLE>



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

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

<TABLE>
<CAPTION>
                                                                        March 31,    December 31,
                                                                           1997          1996
                                                                        ---------    ------------
<S>                                                                    <C>            <C>     
ASSETS
  Cash and cash equivalents .....................................      $     10       $      1

  Investment in New Valley:
    Redeemable preferred stock ..................................        70,489         72,962
    Common stock ................................................       (70,489)       (72,962)
                                                                       --------       --------
    Total investment in New Valley ..............................
                                                                       --------       --------

  Total assets ..................................................      $     10       $      1
                                                                       ========       ========


LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

  Payable to parent .............................................      $     28       $      4
  Accrued expenses ..............................................             8              7
  Current income taxes payable to parent ........................         6,305          6,312
                                                                       --------       --------

  Total liabilities .............................................         6,341          6,323
                                                                       --------       --------

  Commitments and contingencies .................................

  Common stock, $0.01 par value, 100 shares authorized, issued
    and outstanding .............................................
  Additional paid-in capital ....................................         7,633          7,633
  Retained earnings (deficit) ...................................        (8,890)          (727)
  Other .........................................................        (5,074)       (13,228)
                                                                       --------       --------

  Total stockholder's equity (deficit) ..........................        (6,331)        (6,322)
                                                                       --------       --------

  Total liabilities and stockholder's equity (deficit) ..........      $     10       $      1
                                                                       ========       ========

</TABLE>

                  The accompanying notes are an integral part
                   of the consolidated 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,
                                                                          1997         1996
                                                                        ---------    ---------
<S>                                                                    <C>           <C>     
Equity in loss of New Valley ....................................      $(8,514)      $(1,495)

Interest income .................................................            6             7

General and administrative expenses .............................          (23)           (2)
                                                                       -------       -------

Loss from continuing operations before income taxes .............       (8,531)       (1,490)
                                                                       -------       -------

(Benefit) provision for income taxes:
   Current ......................................................           (7)          435
   Deferred .....................................................                     (2,688)
                                                                       -------       -------

Income tax benefit ..............................................           (7)       (2,253)
                                                                       -------       -------

(Loss) income from continuing operations ........................       (8,524)          763

Income from discontinued operations of New Valley
     net of taxes of $0 and $0 in 1997 and 1996, respectively ...          361
                                                                       -------       -------

Net (loss) income ...............................................      $(8,163)      $   763
                                                                       =======       =======


</TABLE>

                  The accompanying notes are an integral part
                   of the consolidated 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>
                                                         Common Stock         Additional    Retained
                                                     --------------------      Paid-In      Earnings
                                                     Shares        Amount      Capital      (Deficit)       Other         Total
                                                     ------        ------     ----------    ---------       -----         -----
<S>                                                    <C>       <C>           <C>           <C>           <C>            <C>     
Balance, December 31, 1996 .......................     100       $             $ 7,633       $  (727)      $(13,228)      $(6,322)

Proportionate share of New Valley's
    capital transactions .........................                                                             (658)         (658)

Unrealized holding gain on
    investment in New Valley .....................                                                            8,812         8,812

Net loss .........................................                                            (8,163)                      (8,163)
                                                    ------       -------       -------       -------       --------       -------

Balance, March 31, 1997 ..........................     100       $             $ 7,633       $(8,890)      $ (5,074)      $(6,331)
                                                    ======       =======       =======       =======       ========       =======

</TABLE>


                  The accompanying notes are an integral part
                   of the consolidated 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,
                                                               1997         1996
                                                             ---------    ---------
<S>                                                          <C>           <C>   
Net cash provided by operating activities .............      $     9       $    4
                                                             -------       ------

Cash flows from investing activities:
  Dividends received from New Valley ..................                     6,183
                                                             -------       ------
Net cash provided by investing activities .............                     6,183
                                                             -------       ------

Cash flows from financing activities:
  Distributions paid to parent ........................                    (2,851)
                                                             -------       ------
Net cash used in financing activities .................                    (2,851)
                                                             -------       ------

Net increase in cash and cash equivalents .............            9        3,336

Cash and cash equivalents at beginning of period ......            1          738
                                                             -------       ------

Cash and cash equivalents at end of period ............      $    10       $4,074
                                                             =======       ======

</TABLE>

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

                                       5

<PAGE>   7


                            NEW VALLEY HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


1.    PRINCIPLES OF REPORTING

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

      The interim financial statements of the Company are unaudited and, in the
      opinion of management, reflect all adjustments necessary (which are normal
      and recurring) to present fairly the Company's financial position, results
      of operations and cash flows. These financial statements should be read in
      conjunction with the financial statements and the notes thereto included
      in BGLS' Annual Report on Form 10-K, as amended, for the year ended
      December 31, 1996, as filed with the Securities and Exchange Commission.
      The results of operations for interim periods should not be regarded as
      necessarily indicative of the results that may be expected for the entire
      year.

      Certain amounts in the 1996 financial statements have been reclassified to
      conform to the 1997 presentation.

      USE OF 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 and
      disclosure of contingent assets and liabilities and the reported amounts
      of revenues and expenses. Actual results could differ from those
      estimates.

2.    INVESTMENT IN NEW VALLEY CORPORATION

      The Company's investment in New Valley at March 31, 1997 is summarized
      below:

<TABLE>
<CAPTION>
                                                                                             Unrealized
                                              Number of          Fair        Carrying         Holding
                                               Shares            Value         Amount        Gain (Loss)
                                               ------            -----         ------        -----------
<S>                                            <C>             <C>            <C>            <C>      
         Class A Preferred Shares .....        618,326         $ 70,489       $ 70,489       $(19,924)
         Common Shares ................      3,969,962(A)         5,955        (70,489)
                                                               --------       --------       --------
                                                               $ 76,444       $              $(19,924)
                                                               ========       ========       ========
</TABLE>

          
         (A) Gives effect to July 1996 one-for-twenty reverse stock split.


      The $15.00 Class A Increasing Rate Cumulative Senior Preferred Shares
      ($100 Liquidation Value), $.01 par value (the "Class A Preferred Shares"),
      are accounted for as debt securities pursuant to the requirements of
      Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting
      for Certain Investments in Debt and Equity Securities", and are classified
      as available-for-sale. 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. New Valley's Common Shares, $.01 par value
      (the "Common Shares") were accounted for pursuant to APB No. 18, "The
      Equity Method of Accounting for Investments in Common Stock".


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

      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.

      At March 31, 1997, the Company's investment in New Valley consisted of an
      approximate 42% voting interest. The Company's investment is represented
      by 618,326 Class A Preferred Shares (57.7%) and 3,969,962 Common Shares
      (41.5%) after giving effect to a one-for-twenty reverse stock split by New
      Valley in July 1996.

      During the first quarter of 1996, New Valley repurchased 72,104 Class A
      Preferred Shares for a total amount of $10,530. The Company has recorded
      its proportionate interest in the excess of the carrying value of the
      shares over the cost of the shares repurchased as a credit to additional
      paid-in capital in the amount of $1,782 for the three months ended March
      31, 1996. No such repurchases have been made during the quarter ended
      March 31, 1997.

      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. On March 27, 1996, New Valley paid a cash dividend on the Class A
      Preferred Shares of $10.00 per share. The Company received $6,183 in the
      distribution. At March 31, 1997, the accrued and unpaid dividends
      arrearage was $127,779 ($119.26 per share).


3.    NEW VALLEY CORPORATION

      Summarized financial information for New Valley as of March 31, 1997 and
      December 31, 1996 and for the three months ended March 31, 1997 and 1996
      follows:

<TABLE>
<CAPTION>
                                                                 March 31,       December 31,
                                                                   1997             1996
                                                                 ---------       ------------
<S>                                                              <C>             <C>      
         Current assets, primarily cash and marketable
           securities .....................................      $ 149,244       $ 183,720
         Non-current assets ...............................        309,098         222,820
         Current liabilities ..............................        155,091          98,110
         Non-current liabilities ..........................        176,213         170,223
         Redeemable preferred stock .......................        221,753         210,571
         Shareholders' equity (deficit)....................        (94,715)        (72,364)


</TABLE>




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<PAGE>   9

                           NEW VALLEY HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                   March 31,
                                                              -------------------
                                                              1997           1996
                                                              ----           ----
<S>                                                         <C>           <C>    
         Revenues ....................................      $19,753       $31,985
         Costs and expenses ..........................       31,925        38,178
         Loss from continuing operations .............      (11,213)       (5,612)
         Income from discontinued operations .........          872           728
         Net loss applicable to common shares(A) .....      (26,321)      (16,067)
</TABLE>


      (A) Considers all preferred accrued dividends, whether or not declared,
      and the excess of carrying value of redeemable preferred shares over cost
      of shares purchased.

      ACQUISITION OF COMMON SHARES OF BML:

      On January 31, 1997, New Valley acquired substantially all the common
      shares of BrookeMil Ltd., a real estate investment company doing business
      in Russia, from Brooke Overseas Ltd. ("BOL"), for $55,000, $21,500 payable
      in cash and a promissory note of $33,500 payable $21,500 on June 30, 1997
      and $12,000 on December 31, 1997 with interest at 9%.

      RJR NABISCO HOLDINGS CORP.:

      At March 31, 1997, New Valley held 1,062,650 shares of RJR Nabisco
      Holdings Corp. ("RJR Nabisco") common stock with a market value of $34,270
      (cost of $32,574). The unrealized gain on New Valley's investment in RJR
      Nabisco common stock was $1,696 at March 31, 1997. Based on the market
      price of RJR Nabisco common stock at March 31, 1997, no amounts are
      payable by Brooke or New Valley under any of their net profit-sharing
      arrangements with respect to the RJR Nabisco common stock.

      SUBSEQUENT EVENT:

      On April 28, 1997, New Valley paid $3,500 representing a portion of the 
      promissory note payment due to BOL on June 30, 1997, together with
      accrued interest thereon.

4.    FEDERAL INCOME TAX

      At March 31, 1997, 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.

      The provision for taxes for the three month period ended March 31, 1996
      does not bear a customary relationship to the pretax income for the
      Company due principally to the effects of the 80% dividends received
      deduction for Federal taxes. The benefit for income taxes at March 31,
      1997 is based on the current taxable loss.


                                       8

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                           NEW VALLEY HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

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 due
      2001.






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