The first time you're reading the line without processing it in the while loop, then you're reading it again but this time you're processing it. readLine() method reads a line and displaces the reader-pointer to the next line in the file. Hence, every time you use this method, the pointer will be incremented by one pointing to the next line.

This:

 while ((newLine = br.readLine()) != null) {
        newLine = br.readLine();
        System.out.println(newLine);
        lines.add(newLine);
    }

Should be changed to this:

 while ((newLine = br.readLine()) != null) {
        System.out.println(newLine);
        lines.add(newLine);
    }

Hence reading a line and processing it, without reading another line and then processing.

The following code will read only the first 100 lines of the file and extract the values into a list.

java.nio.file.Path path = java.nio.file.Paths.get(str);
try {
    java.util.List<String> values = java.nio.file.Files.lines(path)
                                                       .limit(100)
                                                       .filter(line -> line.matches("\\$\\$[A-Z]+\\$\\$ [0-9A-Z]*$"))
                                                       .map(line -> {
                                                           String[] words = line.split(" ");
                                                           return words.length == 2 ? words[1] : "";
                                                       })
                                                       .collect(java.util.stream.Collectors.toList());
    System.out.println(values);
}
catch (java.io.IOException xIo) {
    xIo.printStackTrace();
}

According to the sample file in your question, the above code will create the following list.

[JOHN, CA, SF, XYZ, , 25, CATEGORY, ]

If you want a Map instead of a List where the Map key is the value between the double $ characters and the Map value is the part after the space, then

Function<String, String> keyMapper = line -> {
    String[] parts = line.split(" ");
    return parts[0].substring(2, parts[0].length() - 2);
};
Function<String, String> valueMapper = line -> {
    String[] parts = line.split(" ");
    if (parts.length > 1) {
        return parts[1];
    }
    else {
        return "";
    }
};
Path path = Paths.get(str);
try {
    Map<String, String> map = Files.lines(path)
                                   .limit(100)
                                   .filter(line -> line.matches("\\$\\$[A-Z]+\\$\\$ [0-9A-Z]*$"))
                                   .collect(Collectors.toMap(keyMapper, valueMapper));
    System.out.println(map);
}
catch (IOException xIo) {
    xIo.printStackTrace();
}

This will create the following Map

{GROUP=CATEGORY, WEATHER=, CITY=SF, STATE=CA, TIME=, NAME=JOHN, REGION=XYZ, AGE=25}