Exhibit 99.3

NEW VALLEY CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1998

NEW VALLEY CORPORATION AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Page
----

Item 1. Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheets as of June 30,
1998 and December 31, 1997.................................... 3

Condensed Consolidated Statements of Operations for the
three months and six months ended June 30, 1998 and 4
1997..........................................................

Condensed Consolidated Statement of Changes in
Shareholders' Deficiency for the six months ended
June 30, 1998................................................. 5

Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1998 and 1997............... 6

Notes to the Condensed Quarterly Consolidated Financial
Statements .................................................. 7

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NEW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

June 30, December 31,
---------------- ------------------
1998 1997
---------------- ------------------

ASSETS

Current assets:
Cash and cash equivalents..................................... $ 5,606 $ 11,606
Investment securities available for sale...................... 33,856 51,993
Trading securities owned...................................... 42,701 49,988
Restricted assets............................................. 4,448 232
Receivable from clearing brokers.............................. 1,609 1,205
Other current assets.......................................... 2,302 3,618
--------- ---------
Total current assets..................................... 90,522 118,642
--------- ---------

Investment in real estate, net.................................... 185,916 256,645
Furniture and equipment, net...................................... 11,275 12,194
Restricted assets................................................. 5,640 5,484
Long-term investments, net........................................ 23,725 27,224
Investment in joint venture....................................... 59,682 --
Other assets...................................................... 10,712 21,202
--------- ---------
Total assets............................................. $ 387,472 $ 441,391
========= =========

LIABILITIES AND SHAREHOLDERS' DEFICIENCY

Current liabilities:
Margin loans payable.......................................... $ 12,374 $ 13,012
Current portion of notes payable and other long-term
obligations 668 760
Accounts payable and accrued liabilities...................... 34,929 57,722
Prepetition claims and restructuring accruals................. 12,402 12,611
Income taxes.................................................. 18,736 18,413
Securities sold, not yet purchased............................ 22,826 25,610
--------- ---------
Total current liabilities................................ 101,935 128,128
-------- -------

Notes payable..................................................... 153,557 173,814
Other long-term obligations....................................... 15,852 11,210
Redeemable preferred shares....................................... 285,932 258,638

Commitments and Contingencies..................................... -- --

Shareholders' deficiency:
Cumulative preferred shares; liquidation preference of
$69,769; dividends in arrears, $152,166 and $139,412....... 279 279
Common Shares, $.01 par value; 850,000,000 shares authorized;
9,577,624 shares outstanding............................... 96 96
Additional paid-in capital.................................... 578,238 604,215
Accumulated deficit........................................... (748,266) (742,427)
Unearned compensation on stock options........................ (51) (158)
Accumulated other comprehensive income........................ (100) 7,596
--------- ---------

Total shareholders' deficiency........................... (169,804) (130,399)
--------- ---------

Total liabilities and shareholders' deficiency........... $ 387,472 $ 441,391
========= =========

See accompanying Notes to Condensed Quarterly Consolidated Financial Statements

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NEW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------

Revenues:
Principal transactions, net................................ $ 2,443 $ 3,227 $ 8,336 $ 5,726
Commissions................................................ 7,477 3,431 14,153 6,824
Corporate finance fees..................................... 1,044 3,515 4,282 4,647
Gain on sale of investments, net........................... 2,966 3,358 8,562 7,052
Loss in joint venture...................................... (158) -- (487) --
Real estate leasing........................................ 5,945 6,303 13,721 12,585
Interest and dividends..................................... 2,542 2,582 5,391 4,123
Computer sales and service................................. 46 357 459 3,680
Other income............................................... 2,967 4,322 4,695 5,311
---------- ---------- ---------- ----------

Total revenues......................................... 25,272 27,095 59,112 49,948
---------- ---------- ---------- ----------

Cost and expenses:
Operating, general and administrative...................... 29,257 28,591 59,357 54,537
Interest................................................... 3,452 4,043 7,612 7,905
Provision for loss on long-term investment................. -- -- -- 3,796
---------- ---------- ---------- ----------

Total costs and expenses............................... 32,709 32,634 66,969 66,238
---------- ---------- ---------- ----------

Loss from continuing operations before income taxes
and minority interests..................................... (7,437) (5,539) (7,857) (16,290)

Income tax provision............................................ 15 45 21 95

Minority interests in loss from continuing operations
of consolidated subsidiaries............................... 576 555 1,159 1,015
---------- ---------- ---------- ----------

Loss from continuing operations................................. (6,876) (5,029) (6,719) (15,370)

Discontinued operations:
Gain on disposal of discontinued operations................ 880 880
---------- ---------- ---------- ----------
-- --

Income from discontinued operations........................ 880 880
---------- ---------- ---------- ----------
-- --

Net loss........................................................ (5,996) (5,029) (5,839) (15,370)

Dividend requirements on preferred shares....................... (19,758) (16,750) (38,590) (32,730)
---------- ---------- ---------- ----------

Net loss applicable to Common Shares............................ $ (25,754) $ (21,779) $ (44,429) $ (48,100)
========== ========== ========== ==========

Loss per Common Share (basic and diluted):
Continuing operations...................................... $ (2.78) $ (2.27) $ (4.73) $ (5.02)
Discontinued operations.................................... .09 -- .09 --
---------- ---------- ---------- ----------
Net loss per Common Share.................................. $ (2.69) $ (2.27) $ (4.64) $ (5.02)
========== ========== ========== ==========

Number of shares used in computation............................ 9,578,000 9,578,000 9,578,000 9,578,000
========= ========= ========= =========

See accompanying Notes to Condensed Quarterly Consolidated Financial Statements

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NEW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' DEFICIENCY
(Dollars in thousands, except per share amounts)
(Unaudited)

Unearned Accumulated
Class B Compensation Other
Preferred Common Paid-In Accumulated on Stock Comprehensive
Shares Shares Capital Deficit Options Income
--------- ------ ------- ----------- ------------ -------------

Balance, December 31, 1997.......... $279 $96 $604,215 $(742,427) $ (158) $ 7,596

Net loss......................... (5,839)
Undeclared dividends and
accretion on redeemable
preferred shares............... (25,836)
Unrealized loss on
investment securities.......... (7,696)
Adjustment to unearned
compensation on
stock options.................. (129) 129
Other, net....................... (12)
Compensation expense
on stock option grants......... (22)
---- --- -------- --------- -------- --------

Balance, June 30, 1998.............. $279 $96 $578,238 $(748,266) $ (51) $ (100)
==== === ======== ========= ======== ========

See accompanying Notes to Condensed Quarterly Consolidated Financial Statements

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NEW VALLEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
(Unaudited)

Six Months Ended
June 30,
------------------------------------
1998 1997
------------------------------------

Cash flows from operating activities:
Net loss................................................................ $ (5,839) $ (15,370)

Adjustments to reconcile net loss to net cash used for operating
activities:
Income from discontinued operations................................... (880) --
Loss in joint venture................................................. 487 --
Depreciation and amortization......................................... 3,884 3,945
Provision for loss on long-term investment............................ -- 3,796
Stock based compensation expense...................................... 1,436 1,601
Changes in assets and liabilities, net of effects of dispositions and
acquisitions:
Decrease in receivables and other assets........................ 5,725 16,659
Increase in income taxes........................................ 430 61
Decrease in accounts payable and accrued liabilities............ (11,590) (11,460)
---------- ---------

Net cash used for continuing operations.................................... (6,347) (768)
Net cash provided from discontinued operations............................. 880 --
---------- ---------

Net cash used for operating activities..................................... (5,467) (768)
---------- ---------

Cash flows from investing activities:
Sale or maturity of investment securities............................. 16,259 24,138
Purchase of investment securities..................................... (8,677) (15,851)
Sale or liquidation of long-term investments.......................... 8,269 2,807
Purchase of long-term investments..................................... (1,714) (8,357)
Purchase of real estate............................................... (17,317) (45)
Sale of other assets.................................................. 1,056 5,561
Purchase of furniture and fixtures.................................... (100) (1,142)
Payment of prepetition claims......................................... (653) --
Return of prepetition claims paid..................................... -- 1,396
(Increase) decrease in restricted assets.............................. (4,372) 2,697
Cash transferred to joint venture..................................... (487) --
Other................................................................. (949) --
--
Payment for acquisitions, net of cash acquired........................ -- (20,014)
---------- ---------

Net cash used for investing activities..................................... (8,685) (8,810)
---------- ---------

Cash flows from financing activities:
Decrease in margin loans payable, net................................. (638) --
Proceeds from participating loan...................................... 9,000 --
Sale of subsidiary's common stock..................................... -- 5,417
Prepayment of notes payable........................................... (210) (21,708)
Repayment of other obligations........................................ -- (9,894)
---------- ---------

Net cash provided from (used for) financing activities..................... 8,152 (26,185)
---------- ---------

Net decrease in cash and cash equivalents.................................. (6,000) (35,763)
Cash and cash equivalents, beginning of period............................. 11,606 57,282
---------- ---------

Cash and cash equivalents, end of period................................... $ 5,606 $ 21,519
========== =========

See accompanying Notes to Condensed Quarterly Consolidated Financial Statements

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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED QUARTERLY CONSOLIDATED
FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

1. Principles of Reporting

The consolidated financial statements include the accounts of New Valley
Corporation and Subsidiaries (the "Company"). The consolidated financial
statements as of June 30, 1998 presented herein have been prepared by the
Company without an audit. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present
fairly the financial position as of June 30, 1998 and the results of
operations and cash flows for all periods presented have been made.
Results for the interim periods are not necessarily indicative of the
results for an entire year.

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 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.

These financial statements should be read in conjunction with the
consolidated financial statements in the Company's Annual Report on Form
10-K, as amended, for the year ended December 31, 1997 as filed with the
Securities and Exchange Commission (Commission File No. 1-2493).

Certain reclassifications have been made to prior interim period financial
information to conform with current year presentation.

New Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS No. 130"). The Statement, which the Company adopted in the first
quarter of 1998, establishes standards for reporting and displaying
comprehensive income and its components in a full set of general-purpose
financial statements. Where applicable, earlier periods have been restated
to conform to the standards established by SFAS No. 130. The adoption of
SFAS 130 did not have a material impact on the Company's financial
statements.

For transactions entered into in fiscal years beginning after December 15,
1997, the Company adopted and is reporting in accordance with SOP 97-2,
"Software Revenue Recognition". The adoption of SOP 97-2 did not have a
material impact on the Company's financial statements.

In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1
provides guidance that the carrying value of software developed or
obtained for internal use is assessed based upon an analysis of estimated
future cash flows on an undiscounted basis and before interest charges.
SOP 98-1 is effective for transactions entered into in fiscal years
beginning after December 15, 1998. The Company believes that adoption of
SOP 98-1 will not have a material impact on the Company's financial
statements.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information", which establishes standards for
the way that public business enterprises report information about
operating segments. SFAS No. 131 is effective for financial statements for
fiscal years beginning after December 15, 1997. The Company is currently
reviewing its operating segment disclosures and will adopt SFAS No. 131 in
the fourth quarter of 1998.

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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED QUARTERLY CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

In June, 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999. SFAS
133 requires that all derivative instruments be recorded on the balance
sheet at fair value. Changes in the fair value of derivatives are recorded
each period in current earnings or other comprehensive income, depending
on whether a derivative is designated as part of a hedge transaction and,
if it is, the type of hedge transaction. The Company has not yet
determined the impact that the adoption of SFAS 133 will have on its
earnings or statement of financial position.

2. Western Realty

On January 31, 1997, the Company entered into a stock purchase agreement
with Brooke (Overseas) Ltd. ("Brooke (Overseas)"), a wholly-owned
subsidiary of Brooke Group Ltd. ("Brooke"), an affiliate of the Company,
pursuant to which the Company acquired 10,483 shares (the "BML Shares") of
the common stock of BrookeMil Ltd. ("BML") from Brooke (Overseas) for a
purchase price of $55,000, consisting of $21,500 in cash and a $33,500 9%
promissory note of the Company (the "Note"). The BML Shares comprise 99.1%
of the outstanding shares of BML, a real estate development company in
Russia. The Note, which was collateralized by the BML Shares, was paid
during 1997.

Western Realty Development LLC

In February 1998, the Company 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, the Company 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 and Apollo agreed
to contribute up to $58,750, including the investment in Western Realty
Repin discussed below. Through June 30, 1998, Apollo had funded $27,900 of
its investment in Western Realty Ducat.

The ownership and voting interests in Western Realty Ducat will be held
equally by Apollo and the Company. 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 the
Company will then be entitled to a return of $10,000 of BML-related
expenses incurred by the Company since March 1, 1997, together with a 15%
annual rate of return; subsequent distributions will be made 70% to the
Company 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 the Company. All material corporate transactions by Western
Realty Ducat will generally require the unanimous consent of the Board of
Managers. Accordingly, the Company has accounted for its non-controlling
interest in Western Realty Ducat using the equity method of accounting.

The Company recorded its basis in the investment in the joint venture 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 the Company's proportionate interest in the
underlying value of net assets of the joint venture.

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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED QUARTERLY CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

Western Realty Ducat will seek to make additional real estate and other
investments in Russia. Western Realty Ducat has made a $20,000
participating loan to, and payable out of a 30% profits interest in, a
company organized by Brooke (Overseas) which, among other things, owns an
industrial site and manufacturing facility being constructed on the
outskirts of Moscow by a subsidiary of Brooke (Overseas).

Western Realty Repin LLC

In June 1998, the Company 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 92.8% of one site and 52% of the other site at June
30, 1998. 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 the Company 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 the
Company 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 the Company. All material corporate transactions by Western
Realty Repin will generally require the unanimous consent of the Board of
Managers.

On June 18, 1998, Western Realty Repin made a $9,000 first advance (funded
by Apollo) under the Repin Loan to BML, which is classified in other
long-term obligations on the condensed consolidated balance sheet at June
30, 1998. 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 subordinate
to the rights of all other creditors of BML. Apollo funded an additional
advance of $5,300 under the Repin Loan on July 2, 1998. BML used the
proceeds to repay the Company 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 the Company's
shares of BML.

As of June 30, 1998, BML had invested $14,423 in the Kremlin Sites and
held $4,165, in cash, which was restricted for future investment. In
connection with the acquisition of its interest in one of the Kremlin
Sites, BML has agreed with the City of Moscow to invest an additional
$6,000 in 1998 and $22,000 in 1999 in the development of the property.

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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED QUARTERLY CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

3. Investment Securities Available For Sale

Investment securities classified as available for sale are carried at fair
value, with net unrealized gains included as a separate component of
shareholders' deficiency. The Company had realized gains on sales of
investment securities available for sale of $946 and $5,534 for the three
and six months ended June 30, 1998, respectively.

The components of investment securities available for sale at June 30,
1998 are as follows:

Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
---- ---------- ---------- -----

Short-term investments......................... $ 91 $ -- $ -- $ 91
Marketable equity securities................... 30,180 506 5,060 25,626
Marketable warrants............................ -- 6,488 -- 6,488
Marketable debt securities .................... 3,684 500 2,534 1,651
------- -------- -------- -------

Investment securities.......................... $33,955 $ 7,494 $ 7,594 $33,856
======= ======== ======== =======

4. Long-Term Investments

At June 30, 1998, long-term investments consisted primarily of investments
in limited partnerships of $23,725. The Company is required under certain
limited partnership agreements to make additional investments of up to an
aggregate of $7,900 at June 30, 1998. The Company believes the fair value
of the limited partnerships exceeds its carrying amount by approximately
$6,500 based on the indicated market values of the underlying investment
portfolio provided by the partnerships. The Company recognized gains of
$2,020 and $3,228 on liquidations of investments of certain limited
partnerships for the three and six months ended June 30, 1998,
respectively. The Company's investments in limited partnerships are
illiquid and the ultimate realizations of these investments are subject to
the performance of the underlying partnership and its management by the
general partners. The Company may sell or liquidate certain limited
partnership interests in the future. Any sale of such interests would be
subject to the approval of the general partner.

In the first quarter of 1997, the Company determined that an other than
temporary impairment in the value of its investment in a joint venture had
occurred and wrote down this investment to zero with a charge to
operations of $3,796 for the three month period. The Company's estimates
of the fair value of its long-term investments are subject to judgment and
are not necessarily indicative of the amounts that could be realized in
the current market.

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NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED QUARTERLY CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

5. Real Estate

The Company is currently engaged in negotiations to sell its four office
buildings in the third quarter of 1998. At June 30, 1998, the buildings
had a carrying value of $106,012 and are encumbered by mortgage notes
totaling $99,106. The Company may seek to dispose of other U.S. real
estate holdings in the future.

6. Redeemable Preferred Shares

At June 30, 1998, the Company had authorized and outstanding 2,000,000 and
1,071,462, respectively, of its Class A Senior Preferred Shares. At June
30, 1998 and December 31, 1997, respectively, the carrying value of such
shares amounted to $285,932 and $258,638, including undeclared dividends
of $189,729 and $163,302 or $177.07 and $152.41 per share. As of June 30,
1998, the unamortized discount on the Class A Senior Preferred Shares was
$7,319.

For the three and six months ended June 30, 1998, the Company recorded
$745 and $1,458 in compensation expense, respectively, related to certain
Class A Senior Preferred Shares awarded to an officer of the Company in
1996. At June 30, 1998, the balance of the deferred compensation and the
unamortized discount related to these award shares was $3,624 and $2,697,
respectively.

7. Preferred Shares Not Subject to Redemption Requirements

The undeclared dividends, as adjusted for conversions of Class B Preferred
Shares into Common Shares, cumulatively amounted to $152,166 and $139,412
at June 30, 1998 and December 31, 1997, respectively. These undeclared
dividends represent $54.52 and $49.95 per share as of the end of each
period. No accrual was recorded for such undeclared dividends as the Class
B Preferred Shares are not mandatorily redeemable.

8. Contingencies

Litigation

On or about March 13, 1997, a shareholder derivative suit was filed
against the Company, as a nominal defendant, its directors and Brooke in
the Delaware Chancery Court, by a shareholder of the Company. The suit
alleges that the Company's purchase of the BML Shares constituted a
self-dealing transaction which involved the payment of excessive
consideration by the Company. The plaintiff seeks (i) a declaration that
the Company's directors breached their fiduciary duties, Brooke aided and
abetted such breaches and such parties are therefore liable to the
Company, and (ii) unspecified damages to be awarded to the Company. The
Company's time to respond to the complaint has not yet expired. The
Company believes that the allegations were without merit. Although there
can be no assurances, management is of the opinion, after consultation
with counsel, that the ultimate resolution of this matter will not have a
material adverse effect on the Company's consolidated financial position,
results of operations or cash flows.

The Company is a defendant in various lawsuits and may be subject to
unasserted claims primarily in connection with its activities as a
securities broker-dealer and participation in public underwritings. These
lawsuits involve claims for substantial or indeterminate amounts and are
in varying stages of legal proceedings. In the opinion of management,
after consultation with counsel,

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12
NEW VALLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED QUARTERLY CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)

the ultimate resolution of these matters will not have a material adverse
effect on the Company's consolidated financial position, results of
operations or cash flows.

Prepetition Claims Under Chapter 11 and Restructuring Accruals

The prepetition claims remaining as of June 30, 1998 of $12,402 may be
subject to future adjustments depending on pending discussions with the
various parties and the decisions of the Bankruptcy Court.

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