SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549
                        ----------------------
                             FORM 10-KSB

[x] Annual Report under Section 13 or 15(d) of the Securities
    Exchange Act of 1934

For the fiscal year ended June 30, 2003

[ ] Transition report under Section 13 or 15(d) of the Securities
    Exchange Act of 1934

Commission File Number 0-4057

                              PORTSMOUTH SQUARE, INC.
                              -----------------------
                  (Name of Small Business Issuer in Its Charter)

           California                                 94-1674111
           ----------                                 ----------
   (State or Other Jurisdiction of                   (IRS Employer
    Incorporation or Organization)                 Identification No.)


820 Moraga Drive, Los Angeles, California               90049
-----------------------------------------              --------
(Address of Principal Executive Offices)              (Zip Code)

                               (310) 889-2500
                               --------------
                (Issuer's Telephone Number, Including Area Code)

       Securities registered pursuant to Section 12(b) of the Act: None

       Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, No Par Value
                          --------------------------
                                Title of Class


Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.  Yes [X]   No [ ]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendments to this Form 10-KSB. [X]

The issuer's revenues for the year ended June 30, 2003 were $1,567,714.

The aggregate market value of the common equity held by non-affiliates of
issuer computed by reference to the price at which the stock last sold prior
to September 15, 2003 was $4,416,037.

<PAGE>

The number of shares outstanding of issuer's No Par Value Common Stock, as of
September 15, 2003, was 734,183.

Transitional Small Business Disclosure Format:  Yes [ ]    No [X]


                  DOCUMENTS INCORPORATED BY REFERENCE: None





                            TABLE OF CONTENTS

PART I                                                               PAGE
------                                                               ----
  Item  1.  Description of Business.                                   3

  Item  2.  Description of Property.                                   4

  Item  3.  Legal Proceedings.                                         8

  Item  4.  Submission of Matters to a Vote of Security Holders.       8

PART II
-------
  Item  5.  Market For Common Equity and Related                       8
             Stockholder Matters.

  Item  6.  Management's Discussion and Analysis of Financial          9
             Condition and Results of Operations.

  Item  7.  Financial Statements and Supplementary Data.              14

  Item  8.  Changes in and Disagreements With Accountants on          27
             Accounting and Financial Disclosure.

  Item  8A. Controls and Procedures.                                  28

PART III
--------
  Item  9.  Directors, Executive Officers, Promoters and              29
             Control Persons; Compliance With Section 16(a)
             of the Exchange Act.

  Item 10.  Executive Compensation.                                   31

  Item 11.  Security Ownership of Certain Beneficial Owners and       33
            Management and Related Stockholder Matters.

  Item 12.  Certain Relationships and Related Transactions.           34

  Item 13.  Exhibits, Financial Statement Schedules, and              35
             Reports on Form 8-K.

  Item 14.  Principal Accountant Fees and Services.                   36

  SIGNATURES                                                          37

                                    -2-
<PAGE>
                             PART I

Item 1.  Description of Business.


BUSINESS DEVELOPMENT

Portsmouth Square, Inc. ("Portsmouth" or the "Company") is a California
corporation, incorporated on July 6, 1967, for the purpose of acquiring a
hotel property in San Francisco, California through a California limited
partnership, Justice Investors.  Justice Investors was formed to purchase
certain real property in San Francisco, California and to construct a hotel
thereon.

Portsmouth has a 49.8% limited partnership interest in Justice Investors and
also serves as one of the two general partners.  The other general partner,
Evon Garage Corporation ("Evon"), acts as the managing general partner. As a
general and limited partner, Portsmouth has significant control over the
management and operation of the assets of Justice Investors.  All significant
partnership decisions require the active participation and approval of both
general partners.  The Company and Evon jointly consult and determine the
amount of partnership reserves and the amount of cash to be distributed to the
limited partners.  There are approximately 92 limited partners in Justice
Investors.

Pursuant to the terms of the partnership agreement, voting rights of the
partners are determined according to the partners' entitlement to share in the
net profit and loss of the partnership.  The Company is not entitled to any
additional voting rights by virtue of its position as a general partner.
The partnership agreement also provides that no portion of the partnership
real property can be sold without the written consent of the general and
limited partners entitled to more than 72% of the net profit.


BUSINESS OF ISSUER

The Company's principal business is conducted through its general and limited
partnership interest in Justice Investors.  Justice Investors owns the land,
improvements and leaseholds at 750 Kearny Street, San Francisco, California
commonly known as the Holiday Inn Financial District/Chinatown.  The most
significant income source is a lease between the partnership and Felcor
Lodging Trust, Inc. ("Felcor", NYSE: FCH) for the hotel portion of the
property.  The partnership also derives income from its lease of the garage
portion of the property to Evon.  Effective June 1, 2003 Justice Investors
leased approximately 5,400 square feet on the lobby floor of the hotel to Tru
Spa, LLC for the operation of a health and beauty spa.  As a general partner
Portsmouth takes an active role in monitoring and overseeing the operations of
the hotel, the parking garage and the spa as part of the partnership's efforts
to enforce compliance with the leases and to improve revenues.

The Company also derives income from management fees as a general partner in
Justice Investors and from the investment of its cash and securities assets.
The Company has invested in income-producing instruments, equity and debt
securities and will consider other investments if such investments offer
growth or profit potential.

                                    -3-
<PAGE>


COMPETITION

The hotel is part of Holiday Inn's worldwide reservation system.  It was
designed to Holiday Inn's specifications to serve both business travelers and
tourists and caters to both individuals and tour groups.  It also handles
conferences and business meetings, having meeting and dining facilities for
groups of up to 400 people.

The hotel had traditionally enjoyed a favorable year-round occupancy rate.  In
November 2001, an Omni Hotel opened in the Financial District of San
Francisco.  The Omni is a more upscale facility providing greater amenities to
its guests, especially the business traveler and is more centrally located in
the financial district.  Two other hotels have since opened in San Francisco,
which can be considered competitive to the Financial District Holiday Inn.
The San Francisco hotel market has not yet recovered from the impact of the
terrorist attacks of September 11, 2001 and the downturn in the Bay Area
economy due, in part, to the failure of many internet and technology based
companies.  Increased competition from newer and more upscale properties, such
as the Omni, have resulted in lower room rates as hotel operators struggle to
obtain occupancy.  Management believes that the hotel is now in a very
challenging market, with many competitors better positioned to attract the
business traveler and tourists.  As part of the efforts to meet this increased
competition, a new health and beauty spa was built on the lobby level of the
hotel and new meeting rooms were constructed on the fourth floor during the
fiscal year ended June 30, 2003.  The Company will continue to work with the
managing general partner of Justice Investors to find ways to improve the
physical condition and amenities of the hotel, influence the marketing efforts
of the lessee, and to seek other ways for the property to maintain its
competitive position.


EMPLOYEES

As of June 30, 2003, the Company had two full-time employees.  The employees
are not part of any collective bargaining agreement, and the Company believes
that its employee relations are satisfactory.


Item 2.  Description of Property.


PROPERTIES

The San Francisco, California hotel property owned by Justice Investors is
located near the Financial District, one block from the Transamerica Pyramid.
The Embarcadero Center is within walking distance.  Chinatown is directly
across the bridge that runs from the hotel to Portsmouth Square Park. The
hotel is a 31-story (including parking garage), steel and concrete, A-frame
building, which contains 565 guest rooms situated on 22 floors as well as a
5,400 square foot health and beauty spa on the lobby level.  One floor houses
the Chinese Culture Center pursuant to a long-term, nominal-rent lease, and
three floors are devoted to a registration desk, lobby shops, dining room,
coffee shop, hotel support facilities, a fitness center, a guest business
center, meeting and banquet rooms and offices.  Other features of the Holiday
Inn include a rooftop swimming pool, 5-storied underground garage and
pedestrian bridge across Kearny Street connecting the hotel and the Chinese
Culture Center with Portsmouth Square Park in Chinatown.  The bridge, built
and owned by the partnership, is included in the lease to the Chinese Culture
Center.  In the opinion of management the property is adequately covered by
insurance.

                                    -4-
<PAGE>

On March 15, 1995, an amended and restated lease was entered into by Justice
Investors with an effective date of January 1, 1995.  That lease was assumed
by Felcor, effective July 28, 1998.  The initial term of the new lease is for
a 10-year term expiring on December 31, 2004.  The lessee also has an option
to renew the lease for one additional term of five years, which would extend
the lease to December 31, 2009.  Under the terms of the lease, the lessee has
to notify Justice Investors of its intention to exercise the five-year option
by December 31, 2003.  The lease requires the lessee to pay an annual rent of
the greater of twenty percent (20%) of gross room revenues or $2,500,000 plus
fifty percent (50%) of total revenues from the leased premises less operating
expenses, base rent and capital requirements.  Under the terms of the lease,
the lessee is responsible for all maintenance and repairs to the property,
certain capital improvements, taxes and insurance.  The lessee also has an
obligation to convert the hotel property to a "Holiday Inn Select" and to
maintain the property to those standards, at its own cost and expense. It is
expected that the conversion will be complete by September 30, 2003.

Pursuant to the terms of the hotel lease, a physical inspection of the hotel
was conducted in the later part of fiscal 2003 by Justice Investors.  On July
30, 2003, Justice Investors delivered to Felcor and Holiday Inns a notice
citing certain deficiencies in the physical condition of the hotel property
and in its furniture, fixtures and equipment and requested that those
deficiencies be corrected in accordance with the lessees' obligations under
the lease. Justice Investors also served notice that the lessees were in
default of their obligations with respect to maintenance, repair and
replacements.  The partnership has also served other notices of default
concerning certain other maintenance and code compliance issues.  Justice
Investors is currently waiting for an appropriate response regarding these
issues and is prepared to take all actions necessary to enforce compliance
with the lessees' obligations under the lease.

The garage lease between the partnership and Evon provides for a monthly
rental of sixty percent (60%) of gross parking revenues with a minimum rent of
$21,750 per month.  That lease expires in November 2010.  The lessee is
responsible for insurance, repairs and maintenance, utilities and all taxes
assessed against the improvements to the leased premises. The garage is
operated by Ampco Parking pursuant to a sublease agreement with Evon.

In July 2002, Justice Investors entered into a lease with Tru Spa, LLC, which
was amended effective January 1, 2003.  The lease premises consist of
approximately 5,400 square feet of space on the lobby level of the hotel for
the construction and operation of a health and beauty spa.  The term of the
lease is for ten years commencing with the opening of the spa on June 1, 2003,
with a five year option to extend the term.  The spa lease provides for
minimum monthly rent of $11,925, additional rent of $2,072 (up to a total of
$250,000 to help defray certain relocation construction costs) and other
tenant fees.  Under the terms of the lease, Justice was responsible for up to
$1,497,586 in leasehold improvements, which were paid using the partnership's
line of credit.  It is expected that the spa lease will be essentially revenue
neutral to the partnership, but should help the hotel to be more competitive
in a difficult marketplace by providing greater amenities to its guests.  To
facilitate the lease to Tru Spa, Felcor surrendered to Justice Investors
sufficient space on the lobby level of the hotel for the construction of the
spa.  In addition, the hotel administrative offices were relocated to the
lobby level to accommodate the addition of new meeting rooms on the fourth
floor of the hotel.

                                    -5-
<PAGE>

INVESTMENT POLICIES

The most significant real estate operation of the Company has been through its
ownership in Justice Investors.  The Company will continue to explore ways to
increase the value of Justice Investors and to improve operations of the
hotel.

The Company may also look for new real estate investment opportunities in
hotels, apartments, office buildings and shopping centers.  The acquisition of
any new real estate investments will depend on the Company's ability to find
suitable investment opportunities and the availability of sufficient financing
to acquire such investments.  To help fund any such acquisition, the Company
plans to borrow funds to leverage its investment capital.  The amount of this
debt will depend on a number of factors including, but not limited to, the
availability of financing and the sufficiency of the project's projected cash
flows to support the operations and debt service.

The Company also invests from time to time in income producing instruments,
corporate debt and equity securities, mortgage backed securities, securities
issued by REIT's and other companies which invest primarily in real estate,
where financial benefit could inure to its shareholders through income and/or
capital gain.

The Company's securities investments are made under the supervision of a
Securities Investment Committee of the Board of Directors. The Committee
currently has three members and is chaired by the Company's Chairman of the
Board and President, John V. Winfield.  The Committee has delegated authority
to manage the portfolio to the Company's Chairman and President together with
such assistants and management committees he may engage.  The Committee has
established investment guidelines for the Company's investments.  These
guidelines presently include: (i) corporate equity securities should be listed
on the New York or American Stock Exchanges or the Nasdaq NMS Market; (ii)
securities should be priced above $5.00 per share; and (iii) investment in a
particular issuer should not exceed 5% of the market value of the total
portfolio. The investment policies do not require the Company to divest itself
of investments, which initially meet these guidelines but subsequently fail to
meet one or more of the investment criteria.  Non-conforming investments
require the approval of the Securities Investment Committee.  The Committee
has in the past approved non-conforming investments and may in the future
approve non-conforming investments.  The Securities Investment Committee may
modify these guidelines from time to time.

The Company's investment portfolio is diversified with 102 different equity
positions.  Only two individual equity securities comprise more than 5% of the
equity value of the portfolio, with the largest being 5.6%. The amount of the
Company's investment in any particular issuer may increase or decrease, and
additions or deletions to its securities portfolio may occur, at any time.
While it is the internal policy of the Company to limit its initial investment
in any single equity to less than 5% of its total portfolio value, that
investment could eventually exceed 5% as a result of equity appreciation or
reduction of other positions.  Marketable securities are stated at market
value as determined by the most recently traded price of each security at the
balance sheet date.  As of June 30, 2003, the market value of the Company's
marketable securities was $14,792,901.


                                    -6-
<PAGE>

The Company may also invest, with the approval of the Securities Investment
Committee, in unlisted companies, through private placements.  Those
investments in non-marketable securities are carried at the lower of cost or
estimated fair value on the Company's balance sheet as part of other
investments and reviewed for impairment on a periodic basis.

The Company may also use exchange traded funds, options and futures to hedge
against certain stock positions and index futures to hedge against market risk
and enhance the performance of the Company's portfolio while reducing the
overall portfolio's risk and volatility.  As part of its investment
strategies, the Company may assume short positions in marketable securities.
Short sales are used by the Company to potentially offset normal market risks
undertaken in the course of its investing activities or to provide additional
return opportunities.  The Company has no naked short positions.  As of June
30, 2003, the Company had obligations for securities sold (equities short) of
$5,758,002.

The Company may utilize margin for its marketable securities purchases through
the use of standard margin agreements with national brokerage firms.  The use
of available leverage is guided by the business judgment of management and is
subject to any internal investment guidelines, which may be imposed by the
Securities Investment Committee.  The margin used by the Company may fluctuate
depending on market conditions.  The use of leverage could be viewed as risky
and the market values of the portfolio may be subject to large fluctuations.
As of June 30, 2003, the Company had a margin balance of $3,391,781 and
incurred $53,377 and $118,173 in margin interest during the fiscal years ended
June 30, 2003 and June 30, 2002, respectively.

As Chairman of the Securities Investment Committee, the Company's President
and Chief Executive Officer, John V. Winfield, directs the investment activity
of the Company in public and private markets pursuant to authority granted by
the Board of Directors.  Mr. Winfield also serves as Chief Executive Officer
and Chairman of Santa Fe and InterGroup and oversees the investment activity
of those companies.  Depending on certain market conditions and various risk
factors, the Chief Executive Officer, his family, Santa Fe and InterGroup may,
at times, invest in the same companies in which the Company invests.  The
Company encourages such investments because it places personal resources of
the Chief Executive Officer and his family members, and the resources of Santa
Fe and InterGroup, at risk in connection with investment decisions made on
behalf of the Company.

                                    -7-
<PAGE>



Item 3.  LEGAL PROCEEDINGS

None.


Item 4.  Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.


                             PART II

Item 5.  Market For Common Equity and Related Stockholder Matters

MARKET INFORMATION

Portsmouth's common stock is traded over-the-counter.  Quotes for its stock
are printed in the Pink Sheets OTC Market Reports. The Company's trading
symbol is PRSI.OB.

The following table sets forth the range of high and low sale prices for
Portsmouth's common stock for each full quarterly period for the fiscal years
ended June 30, 2003 and June 30, 2002.


         Fiscal 2003                                 High          Low
         -----------                                 ----          ---
      First Quarter (7/1 to 9/30)                  $ 24.75      $ 20.50
      Second Quarter (10/1 to 12/31)               $ 23.25      $ 21.15
      Third Quarter (1/1 to 3/31)                  $ 21.21      $ 18.50
      Fourth Quarter (4/1 to 6/30)                 $ 21.00      $ 18.50

         Fiscal 2002                                 High          Low
         -----------                                 ----          ---
      First Quarter (7/1 to 9/30)                  $ 21.50      $ 21.10
      Second Quarter (10/1 to 12/31)               $ 22.00      $ 22.00
      Third Quarter (1/1 to 3/31)                  $ 25.50      $ 22.00
      Fourth Quarter (4/1 to 6/30)                 $ 25.00      $ 21.00


HOLDERS

As of September 15, 2003, the approximate number of holders of record of the
Company's Common Stock was 227.  Such number of owners was determined from the
Company's shareholders records and does not include beneficial owners of the
Company's Common Stock whose shares are held in the names of various brokers,
clearing agencies or other nominees.  There are approximately 355 beneficial
shareholders of the Company's Common Stock.

DIVIDENDS

On January 13, 1982, the Board of Directors established a regular semi-annual
dividend of $0.25 per share payable on March 1 and September 1 to shareholders
on record at February 1 and August 1, respectively.  These regular semi-annual
dividends have been declared and paid at the established intervals since
September 1, 1982.  The Company will review and modify its dividend policy as
needed to meet such strategic and investment objectives as may be determined
by the Board of Directors.

                                    -8-
<PAGE>

On July 18, 2003, the Board of Directors declared a special dividend in the
amount of $0.25 per share payable on September 2, 2003 to shareholders of
record as of August 1, 2003. The declaration of that special dividend was
attributable to the success of the Company's securities investment portfolio
for the fiscal year ended June 30, 2003.  Based on the Company's financial
results for the fiscal year then ended, its future capital and corporate needs
and other factors, the Board will consider in each July the declaration of
such future special dividends, if any, in such amount as it may deem
appropriate.


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Portsmouth has no securities authorized for issuance under equity compensation
plans.


Item 6. Management's Discussion and Analysis of Financial
        Condition and Results of Operations


FORWARD-LOOKING STATEMENTS AND PROJECTIONS

The Company may from time to time make forward-looking statements and
projections concerning future expectations.  When used in this discussion, the
words "estimate," "project," "anticipate" and similar expressions, are
intended to identify forward-looking statements.  Such statements are subject
to certain risks and uncertainties, such as the impact of terrorism and war on
the national and international economies, including tourism and securities
markets, general economic conditions and increased competition in the hotel
industry in the San Francisco area, partnership distributions, securities
markets, litigation and other factors, including natural disasters, and those
discussed below, that could cause actual results to differ materially from
those projected.  Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as to the date hereof.  The
Company undertakes no obligation to publicly release the results of any
revisions to those forward-looking statements, which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.


RESULTS OF OPERATIONS

The Company's principal source of revenue continues to be derived from its
49.8% ownership interest in the Justice Investors limited partnership, in
which Portsmouth serves as one of the general partners.  The Company also
received income from the investment of its cash and securities assets.  The
partnership derives most of its income from a lease of its hotel property to
Felcor and from a lease with Evon Garage Corporation.


Fiscal Year Ended June 30, 2003 Compared to Fiscal Year Ended June 30, 2002

The Company had net income of $1,453,348 for the fiscal year ended June 30,
2003 as compared to a net loss of $1,863,679 for the fiscal year ended June
30, 2002.  This change was primarily attributable to the Company's net gains
from marketable securities in fiscal 2003 compared to net losses in fiscal
2002 as well as an impairment loss taken in fiscal 2002 related to other

                                    -9-
<PAGE>

investments.  This increase was partially offset by the decrease in equity in
net income of Justice Investors and an increase in margin interest and trading
expenses.

The decrease in equity in net income of Justice Investors to $1,567,714 in
fiscal 2003 from $2,159,887 in fiscal 2002 was primarily attributable to the
inclusion of approximately $300,000 from an arbitration settlement payment
from the hotel lessee in fiscal 2002 and a decline in hotel revenues of
approximately 13.3%.  Average daily room rates declined to approximately $90
in fiscal 2003 from approximately $115 in fiscal 2002.  Although average
monthly occupancy rates increased modestly to approximately 67% from 62% in
fiscal 2002, the increase was not sufficient to offset the decline in average
daily room rates.  A combination of factors continued to impact the hotel
operations.  First, the San Francisco Bay Area has been very slow to recover
from the devastating impact that the terrorist attacks of September 11, 2001
had on tourism and the hospitality industry.  Second, the weak economy in the
Bay Area, as result of the failure of numerous internet and technology
companies, coupled with corporate relocations, has decreased business travel.
Third, the hotel has faced increased competition from new properties and from
higher end properties that have cut room rates in an effort to capture a share
of a declining market.  Based on industry reports, management is expecting a
slow recovery in the San Francisco hotel marketplace.

Net gains/losses on marketable securities changed to net gains of $1,691,219
for the year ended June 30, 2003 from net losses of $4,325,517 for the year
ended June 30, 2002.  This was due to the significant appreciation in the
market value of the Company's investment portfolio during the year.  For the
year ended June 30, 2003, the Company had net unrealized gains of $3,173,308
and net realized losses of $1,482,089.  For the fiscal year ended June 30,
2002, the Company had net unrealized losses of $1,515,189 and realized losses
of $2,810,328.  In the fourth quarter of 2002, the Company recorded an
impairment loss of $250,000 in other investments. No impairment loss was
recorded in 2003. Gains and losses on marketable securities and other
investments may fluctuate significantly from period to period in the future
and could have a significant impact on the Company's net income.  However, the
amount of gain or loss on marketable securities and other investments for any
given period may have no predictive value and variations in amount from period
to period may have no analytical value.  For a more detailed description of
the composition of the Company's marketable securities please see the
Marketable Securities section below.

Dividend and interest income increased to $104,627 from $63,352 as a result of
the Company investing in more income yielding securities.

Margin interest and trading expenses increased to $534,536 from $228,373
primarily due to the $411,355 performance bonus granted to the Company's CEO
based on the results of the Company's investment portfolio for the fiscal year
ended June 30, 2003.  The increase was offset by the decrease in margin
interest expense to $53,377 from $118,173.  The decrease in margin interest
expense was due to the maintenance of lower average daily margin balances in
2003.

Income taxes changed to tax expense of $917,076 from tax benefit of $1,211,910
due to income generated in the current year.

                                    -10-
<PAGE>

MARKETABLE SECURITIES

As of June 30, 2003, the Company had investments in marketable equity
securities of $14,792,901.  The following table shows the composition of the
Company's marketable securities portfolio by selected industry groups as of
June 30, 2003.

                                                             % of Total
                                                              Investment
   Industry Group                      Market Value           Securities
   --------------                      ------------           ----------
   Electric, pipelines, oil and gas    $ 5,006,146               33.7%
   Semiconductor, software, internet,
    and computer                         2,732,364               18.5%
   Telecommunications                    2,130,707               14.4%
   Airlines and defense                  1,134,451                7.7%
   Chemicals, materials, metals,
    and mining                             822,582                5.6%
   Apparel, food and consumer goods        750,430                5.1%
   Insurance                               704,213                4.8%
   REITs, lodging, home builders
    and hotels                             624,169                4.2%
   Other                                   887,839                6.0%
                                        ----------              ------
                                       $14,792,901              100.0%
                                        ==========              ======


The Company's investment portfolio is diversified with 102 different equity
positions.  Only two individual equity securities comprise more than 5% of the
equity value of the portfolio, with the largest being 5.6%. The amount of the
Company's investment in any particular issuer may increase or decrease, and
additions or deletions to its securities portfolio may occur, at any time.
While it is the internal policy of the Company to limit its initial investment
in any single equity to less than 5% of its total portfolio value, that
investment could eventually exceed 5% as a result of equity appreciation or
reduction of other positions.  Marketable securities are stated at market
value as determined by the most recently traded price of each security at the
balance sheet date.


LIQUIDITY AND SOURCES OF CAPITAL

The Company's cash flows are primarily generated through its general and
limited partnership interest in the Justice Investors limited partnership,
which derives its income from its lease with Felcor and a lease with Evon. In
addition to its monthly limited partnership distributions from Justice
Investors, the Company also receives monthly management fees as a general
partner.  The Company also derives revenue from the investment of its cash and
securities assets.

As a result of the significant decline in partnership revenues due to the
slowdown in the San Francisco area economy, increased competition and the
continuing impact that the terrorist attacks of September 11, 2001, and the
uncertain geopolitical situation, have had on tourism and the hospitality
industry, Justice Investors cut partnership distributions by 20% in May of

                                    -11-
<PAGE>


2002 and eliminated its special year-end partnership distribution in December
2002. Effective March 2003, a further reduction of 5% in partnership
distributions was made, which decreased Portsmouth's monthly distribution to
$158,962.  As a result, cash distributions received from Justice Investors
decreased to $1,974,470 in 2003 from $3,262,896 in 2002.  The limited partners
were advised that, if hotel revenues do not meet budget projections, further
reductions in the monthly distributions would have to be made in the future.

The general partners of Justice Investors continue to review and analyze the
operations of the hotel on a monthly basis to determine an appropriate monthly
distribution.  In August 2003, Justice Investors determined that a further
reduction in partnership distributions was appropriate due to the continuing
poor performance of the hotel operation, costs advanced for the construction
of the spa, new meeting rooms, the relocation of the hotels administrative
offices and other anticipated expenses.  Effective with the September 2003
distribution through December 2003, monthly partnership distributions will be
cut an additional 50% reducing Portsmouth's monthly distribution amount to
$79,480.  Justice Investors also determined that it would not borrow against
its line of credit to support partnership distributions.  The general partners
will continue to closely monitor the operating results and partnership
expenses and will make appropriate adjustments to partnership distributions as
required.

Portsmouth does not consider Felcor and Evon, the two significant lessees of
the hotel property, to be a credit risk.  Evon has been the garage lessee
since the property became operational and has never missed a rent payment in
over thirty years of operations. The garage is subleased by Evon to Ampco
Parking, a major parking garage operating company.  Felcor Lodging Trust, Inc.
is a public company listed on the New York Stock Exchange (NYSE: FCH) and is
one of the largest real estate investment trusts in the United States.
Portsmouth monitors Felcor's public filings on a regular basis.  The hotel
lease provides for significant minimum annual rent of $2,500,000.  There is no
indication that Felcor will not be able to meet its rental obligations in the
future.  As a general partner in Justice Investors, Portsmouth also works with
the managing general partner in overseeing Felcor's compliance with the other
provisions of its lease.

In July 2002, Justice Investors entered into a lease with Tru Spa, LLC, which
was amended effective January 1, 2003.  The lease premises consist of
approximately 5,400 square feet of space on the lobby level of the hotel for
the construction and operation of a health and beauty spa.  The term of the
lease is for ten years commencing with the opening of the spa on June 1, 2003,
with a five year option to extend the term.  The spa lease provides for
minimum monthly rent of $11,925, additional rent of $2,072 (up to a total of
$250,000 to help defray certain relocation construction costs) and other
tenant fees.  Under the terms of the spa lease, Justice was responsible for up
to $1,497,586 in leasehold improvements, which were paid using the
partnership's line of credit.  As of June 30, 2003, the outstanding balance on
the partnership's line of credit was $3,687,000.  It is expected that the spa
lease will be essentially revenue neutral to the partnership, but should help
the hotel to be more competitive in a difficult marketplace by providing
greater amenities to its guests.

                                    -12-
<PAGE>



The Company has invested in short-term, income-producing instruments and in
equity and debt securities when deemed appropriate.  The Company's marketable
securities are classified as trading with unrealized gains and losses recorded
through the statement of operations.

The hotel industry in San Francisco was particularly hard hit by the impact
that the terrorist attacks had on tourism and the hospitality industry in
general.  The impact of those attacks, coupled with the uncertain geopolitical
situation, the slow down in the Bay Area economy and increased competition
have made for a very challenging environment.  Because of this, the economic
recovery in the Bay Area has lagged behind that of many other cities.
Although the Company has suffered a significant decline in revenues and
partnership distributions as a result of those events, management believes
that the net cash flow generated from future operating activities and its
capital resources will be adequate to meet its current and future obligations.

The Company has no off balance sheet arrangements.  The Company also does not
have any material contractual obligations or commercial commitments.


IMPACT OF INFLATION

Hotel room rates are typically impacted by supply and demand factors, not
inflation, since rental of a hotel room is usually for a limited number of
nights.  Room rates can be, and usually are, adjusted to account for
inflationary cost increases.  To the extent that the hotel lessee is able to
adjust room rates, there should be minimal impact on partnership revenues due
to inflation.  Partnership revenues are also subject to interest rate risks,
which may be influenced by inflation.  For the two most recent fiscal years,
the impact of inflation on the Company's income is not viewed by management as
material.


CRITICAL ACCOUNTING POLICIES

The Company reviews its long-lived assets and other investments for impairment
when circumstances indicate that a potential loss in carrying value may have
occurred.  For the Company's investment in Justice, to the extent that
projected future undiscounted cash flows from the operation of the Company's
hotel property are less than the carrying value of the asset, the investment
would be considered impaired and the carrying value of the asset would be
reduced to its fair value.  For other investments, the Company reviews the
investment's operating results, financial position and other relevant factors
to determine whether the estimated fair value of the asset is less than the
carrying value of the asset.

Marketable securities are stated at market value as determined by the most
recently traded price of each security at the balance sheet date.  Marketable
securities are classified as trading with net unrealized gains or losses
included in earnings.

                                    -13-
<PAGE>




Item 7. Financial Statements


INDEX TO FINANCIAL STATEMENTS                                    PAGE

Report of Independent Auditors                                    15

Balance Sheet - June 30, 2003                                     16

Statements of Operations - For
  Year Ended June 30, 2003 and
  Year Ended June 30, 2002                                        17

Statements of Shareholders' Equity - For
  Year Ended June 30, 2003 and
  Year Ended June 30, 2002                                        18

Statements of Cash Flows - For
  Year Ended June 30, 2003 and
  Year Ended June 30, 2002                                        19

Notes to the Financial Statements                                 20


                                    -14-
<PAGE>









REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of
Portsmouth Square, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
statements of income, shareholders' equity and cash flows present fairly, in
all material respects, the financial position of Portsmouth Square Inc. at
June 30, 2003, and the results of its operations and its cash flows for the
years ended June 30, 2003 and 2002, in conformity with accounting principles
generally accepted in the United States of America.  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.  We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.



/s/ PricewaterhouseCoopers LLP


Los Angeles, California
September 26, 2003


                                    -15-
<PAGE>



                          PORTSMOUTH SQUARE, INC.
                               BALANCE SHEET


As of June 30,                                                  2003
                                                             ----------

ASSETS

  Cash and cash equivalents                                $    123,502
  Investment in marketable securities                        14,792,901
  Investment in Justice Investors                             1,079,466
  Other investments                                             200,000
  Other assets                                                  958,637
                                                             ----------
    Total assets                                           $ 17,154,506
                                                             ==========


LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
  Accounts payable and accrued expenses                    $    545,767
  Due to securities broker                                    3,391,781
  Obligations for securities sold                             5,758,002
                                                             ----------
    Total liabilities                                         9,695,550
                                                             ----------

Commitments and contingencies

Shareholders' equity
  Common stock, no par value:
    Authorized shares - 750,000
    Issued and outstanding shares - 734,183                   2,092,300
  Additional paid-in-capital                                    915,676
  Retained earnings                                           4,450,980
                                                             ----------
    Total shareholders' equity                                7,458,956
                                                             ----------
    Total liabilities and shareholders' equity             $ 17,154,506
                                                             ==========


See accompanying notes to financial statements.

                                    -16-
<PAGE>


                            PORTSMOUTH SQUARE, INC.

                           STATEMENTS OF OPERATIONS


For the year ended June 30,                           2003           2002
                                                  ----------     ----------
  Equity in net income of Justice Investors      $ 1,567,714    $ 2,159,887
  General and administrative expense                (498,743)      (543,052)
                                                  ----------     ----------
                                                   1,068,971      1,616,835
                                                  ----------     ----------
Non-operating income (expenses):
  Net gains (losses) on marketable securities      1,691,219     (4,325,517)
  Provision for loss on other investments                  -       (250,000)
  Dividend and interest income                       104,627         63,352
  Margin interest and trading expenses              (534,536)      (228,373)
  Other income                                        40,143         48,114
                                                  ----------     ----------
                                                   1,301,453     (4,692,424)
                                                  ----------     ----------

Income (loss) before income taxes                  2,370,424     (3,075,589)

Provision for income tax (expense) benefit          (917,076)     1,211,910
                                                  ----------     ----------
Net income (loss)                                $ 1,453,348    $(1,863,679)
                                                  ==========     ==========

Basic income (loss) per share                    $      1.98    $     (2.54)
                                                  ==========     ==========

Weighted average number of
  shares outstanding                                 734,183        734,183
                                                  ==========     ==========


See accompanying notes to financial statements.

                                    -17-
<PAGE>



                             PORTSMOUTH SQUARE, INC.
                        Statements of Shareholders' Equity


                   Common Stock       Additional
                --------------------   Paid-In       Retained
                Shares      Amount     Capital       Earnings      Total
                -------   ----------   ----------   ----------   ----------
Balance at
June 30, 2001   734,183   $2,092,300   $  915,676  $5,595,493   $8,603,469

Net loss                                           (1,863,679)  (1,863,679)

Dividends paid                                       (367,091)    (367,091)
                -------   ----------   ----------   ----------   ----------
Balance at
June 30, 2002   734,183   $2,092,300   $  915,676  $3,364,723   $6,372,699


Net income                                          1,453,348    1,453,348

Dividends paid                                       (367,091)    (367,091)
                -------   ----------   ----------   ----------   ----------
Balance at
June 30, 2003   734,183   $2,092,300   $  915,676  $4,450,980   $7,458,956
                =======    =========    =========   =========    ==========

See accompanying notes to financial statements

                                    -18-
<PAGE>



                            PORTSMOUTH SQUARE, INC.
                           STATEMENTS OF CASH FLOWS


For the year ended June 30,                          2003           2002
                                                  ----------     ----------
Cash flows from operating activities:
  Net income (loss)                              $ 1,453,348    $(1,863,679)
  Adjustments to reconcile net income (loss)
   to net cash used in operating activities:
    Equity in net income of Justice Investors     (1,567,714)    (2,159,887)
    Net unrealized (gains) losses on
     marketable securities                        (3,173,308)     1,515,189
    Reserve for losses on other investments                -        250,000
    Changes in assets and liabilities:
      Investment in marketable securities         (9,280,877)     4,945,123
      Other assets                                   108,006       (942,757)
      Accounts payable and accrued expenses          468,974     (1,116,512)
      Due to securities broker                     3,391,781       (438,043)
      Obligations for securities sold              5,635,642     (1,463,838)
                                                  ----------     ----------
  Net cash used in operating activities           (2,964,148)    (1,274,404)
                                                  ----------     ----------

Cash flows from investing activities:
  Cash distributions from Justice Investors        1,974,470      3,262,896
  Other investments                                        -       (250,000)
                                                  ----------     ----------
  Net cash provided by investing activities        1,974,470      3,012,896
                                                  ----------     ----------

Cash flows from financing activities:
  Dividends paid                                    (367,091)      (367,091)
                                                  ----------     ----------
  Net cash used in financing activities             (367,091)      (367,091)
                                                  ----------     ----------
Net (decrease) increase in cash and
 cash equivalents                                 (1,356,769)     1,371,401

Cash and cash equivalents at the beginning
 of the period                                     1,480,271        108,870
                                                  ----------     ----------
Cash and cash equivalents at the end of the
 period                                          $   123,502    $ 1,480,271
                                                  ==========     ==========

Supplemental information:
  Income taxes paid, net of refunds              $   776,618    $   500,000
                                                  ==========     ==========

  Margin interest paid                           $    53,377    $   118,173
                                                  ==========     ==========


See accompanying notes to financial statements.

                                    -19-
<PAGE>



                            PORTSMOUTH SQUARE, INC.

                       NOTES TO THE FINANCIAL STATEMENTS


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Description of Business

As of June 30, 2003, Santa Fe Financial Corporation ("Santa Fe") owns
approximately 68.8% of the outstanding common shares of Portsmouth Square,
Inc. ("Portsmouth" or the "Company").  Portsmouth's primary source of revenue
is from its 49.8% interest in Justice Investors, a California limited
partnership in which Portsmouth serves as both a general and limited partner.
Justice Investors owns the land, improvements and leaseholds at 750 Kearny
Street, San Francisco, California, commonly known as the Holiday Inn Financial
District/Chinatown.  Justice Investor's most significant income source is a
lease between the partnership and Felcor Lodging Trust, Inc. for the hotel
portion of the property.  In addition, the partnership derives income from the
lease of the garage portion of the property to Evon Garage Corporation.  The
Company also derives revenue from management for actively managing the hotel
as a general partner and from the investment of its cash and securities
assets.

Cash Equivalents

The Company considers all investments purchased with an original maturity of
three months or less to be cash equivalents.

Investment in Marketable Securities

Marketable securities are stated at market value as determined by the most
recently traded price of each security at the balance sheet date.  Marketable
securities are classified as trading securities with all unrealized gains and
losses on the Company's investment portfolio recorded through the income
statement.

Due to Securities Broker

Various securities brokers have advanced funds to the Company for the purchase
of marketable securities under standard margin agreements.

Obligations for Securities Sold

Obligations for securities sold represents the fair market value of shares
sold with the promise to deliver that security at some future date and the
fair market value of shares underlying the written call options with the
obligation to deliver that security when and if the option is exercised.  The
obligation may be satisfied with current holdings of the same security or by
subsequent purchases of that security.  Unrealized gains and losses from
changes in the obligation are included in the income statement.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, marketable securities,
amounts due to securities broker and obligations for securities sold
approximates fair value.

                                    -20-
<PAGE>


Revenue Recognition

The Company's primary source of revenue is from its 49.8% interest in Justice
Investors, a limited partnership which owns and leases a hotel in San
Francisco, California, in which the Company is both a general and a limited
partner.  The Company accounts for its investment in Justice Investors under
the equity method.


Basic Earnings per Share

Basic earnings per share are calculated based upon the weighted average number
of common shares outstanding during each fiscal year.  As of June 30, 2003 and
June 30, 2002, the Company did not have any potentially dilutive securities
outstanding; and therefore, does not report diluted earnings per share.


Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.


Income Taxes

Deferred income taxes are determined using the liability method.  A deferred
tax asset or liability is determined based on the difference between the
financial statement and tax basis of assets and liabilities as measured by the
enacted tax rates.  Deferred tax expense is the result of changes in the
amount of deferred income taxes during the period.


Recently Issued Accounting Standards

In November 2002, The Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure
requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others (FIN 45), which requires elaborating on the disclosures that must be
made by a guarantor in its financial statements about its obligations under
certain guarantees. It also requires that a guarantor recognize, at the
inception of certain types of guarantees, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The disclosure
requirements of FIN 45 were required at December 31, 2002 and the recognition
requirements of FIN 45 are applicable for guarantees issued or modified after
December 31, 2002.  The application of FIN 45 did not have a material impact
on the Company.

In January 2003, The Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51." FIN 46 requires certain variable
interest entities to be consolidated by the primary beneficiary of the entity

                                    -21-
<PAGE>

if the equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for
the entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 is effective for all new variable interest
entities created or acquired after January 31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN
46 must be applied for the first interim or annual period beginning after June
15, 2003.  FIN 46 defines variable interest entities as a corporation,
partnership, trusts, or any other legal structure used for business purposes
that either (a) does not have equity investors with voting rights or (b) has
equity investors that do not provide sufficient financial resources for the
entity to support its activities. A variable interest entity often holds
financial assets, including loans or receivables, real estate or other
property. A variable interest entity may be essentially passive or it may
engage in research and development or other activities on behalf of another
company.  The application of FIN 46 did not have a material impact on the
Company.

In April 2003, The Financial Accounting Standards Board (FASB) issued FASB
Statement No. 149, Amendment of Statement 133 on Derivative Instruments and
Hedging Activities (FAS 149).  FAS 149 amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities under FAS 133. The new guidance
amends FAS 133 for decisions made: (a) as part of the Derivatives
Implementation Group process that effectively required amendments to FAS 133,
(b) in connection with other Board projects dealing with financial
instruments, and (c) regarding implementation issues raised in relation to the
application of the definition of a derivative, particularly regarding the
meaning of an "underlying" and the characteristics of a derivative that
contains financing components. The amendments set forth in FAS 149 improve
financial reporting by requiring that contracts with comparable
characteristics be accounted for similarly. FAS 149 is generally effective for
contracts entered into or modified after June 30, 2003 (with a few exceptions)
and for hedging relationships designated after June 30, 2003. The guidance is
to be applied prospectively.  FAS 149 did not have a material impact on the
Company's financial statements.

Statement of Financial Standards No. 150, Accounting for Certain Financial
Instruments with characteristics of both Liabilities and Equity, which
establishes standards for how an issuer is to classify and measure certain
financial instruments with characteristics of both liabilities and equity.
It requires that an issuer classify certain financial instruments that would
previously have been classified as equity as liabilities (or as assets in
some circumstances). Specifically, FAS 150 requires that financial instruments
issued in the form of shares that are mandatorily redeemable; financial
instruments that embody an obligation to repurchase the issuer's equity shares
or are indexed to such an obligation; or financial instruments that embody an
unconditional obligation or a conditional obligation that can be settled in
certain ways be classified as liabilities. This statement is effective for
financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 25, 2003. Management has evaluated the impact of this statement and
has determined that there will be no material effect on the Company's
financial position or results of operation.

                                    -22-
<PAGE>



NOTE 2 - INVESTMENT IN JUSTICE INVESTORS

The Company's principal source of revenue is derived from its 49.8% interest
in Justice Investors, a California limited partnership ("Justice Investors"),
in which the Company serves as one of the two general partners.  The other
general partner, Evon Garage Corporation ("Evon"), serves as the managing
general partner.  As a general and limited partner, Portsmouth has significant
control over the management and operation of the assets of Justice Investors.
All significant partnership decisions require the active participation and
approval of both general partners.  The Company and Evon jointly consult and
determine the amount of partnership reserves and the amount of cash to be
distributed to the limited partners.

The partnership derives most of its income from a lease of its San Francisco,
California hotel property to Felcor Lodging Trust, Inc. ("Felcor") and from a
lease of the garage portion of the property to Evon.  As a general partner,
the Company is active in monitoring and overseeing the operations of the hotel
and parking garage.  The Company also derives revenue from management fees for
actively managing the hotel.  Investment in Justice Investors is recorded on
the equity basis.

Pursuant to the terms of the partnership agreement, voting rights of the
partners are determined according to the partners' entitlement to share in the
net profit and loss of the partnership.  The Company is not entitled to any
additional voting rights by virtue of its position as a general partner.
The partnership agreement also provides that no portion of the partnership
real property can be sold without the written consent of the general and
limited partners entitled to more than 72% of the net profit.

The compensation agreement for the general partners of Justice Investors
provides that the general partners are entitled to receive compensation equal
to 3% of the annual gross rents of the partnership.  From the first $150,000
of compensation payable to the general partners, $120,000 is payable to Evon
Garage Corporation and $30,000 is payable to Portsmouth as the other general
partner.  Any compensation in excess of the $150,000 is to be split 50/50
between the general partners.  The partnership makes monthly advances of
$10,000 to Evon and $2,500 to Portsmouth with any balance adjusted at the end
of the year based on annual gross revenues.  For the twelve months ended June
30, 2003 and 2002, the Company received $30,000 in management fees from
Justice Investors.

The Company amortizes the difference between the cost basis of its investment
in Justice Investors and its share of net assets in Justice Investors over 40
years.

For the Company's investment in Justice, to the extent that
projected future undiscounted cash flows from the operation of the Company's
hotel property are less than the carrying value of the asset, the investment
would be considered permanently impaired and the carrying value of the asset
would be reduced to its fair value.

                                    -23-
<PAGE>



Condensed financial statements for Justice Investors are as follows:


                            JUSTICE INVESTORS
                         CONDENSED BALANCE SHEET

As of June 30,                                                 2003
                                                            ----------
Assets
Total current assets                                       $   126,360
Property, plant and equipment, net of
  accumulated depreciation of $12,589,362                    5,622,698
Land                                                         1,124,128
Loan fees and deferred lease costs,
  net of accumulated amortization of $256,918                   53,570
                                                            ----------
    Total assets                                           $ 6,926,756
                                                            ==========

Liabilities and partners' capital
Total current liabilities                                  $    49,419
Long term debt                                               3,687,312
Partners' capital                                            3,190,025
                                                            ----------
    Total liabilities and partners' capital                $ 6,926,756
                                                            ==========


                                JUSTICE INVESTORS
                        CONDENSED STATEMENTS OF OPERATIONS

For the twelve months ended June 30,           2003            2002
                                            ----------      ----------
Revenues                                   $ 3,970,868     $ 5,180,311
Costs and expenses                            (873,097)       (843,187)
                                            ----------      ----------
Net income                                 $ 3,097,771     $ 4,337,124
                                            ==========      ==========


NOTE 3 - INVESTMENT IN MARKETABLE SECURITIES AND OTHER INVESTMENTS

The Company's investment in marketable securities consists primarily of
corporate equities. The Company has also invested in corporate bonds and
income producing securities, which may include interests in real estate based
companies, where financial benefit could inure to its shareholders through
income and/or capital gain.

The Company also invests, with the approval of the Securities Investment
Committee, in unlisted companies, through private placements.  These
investments in non-marketable securities are carried at cost on the Company's
balance sheet as part of other investments and are reviewed for impairment on
a periodic basis. As of June 30, 2003, the Company had investments in unlisted
companies (other investments) of $300,000 with a reserve for loss on other
investments totaling $100,000.  The investment is presented net of the reserve
and is disclosed on the balance sheet as other investments.

                                    -24-
<PAGE>

For other investments, the Company reviews the investment's operating results,
financial position and other relevant factors to determine whether there has
been a permanent impairment in the carrying value of other investments.  If an
impairment is determined to exist, the carrying value or the investment is
reduced to its estimated fair value.


As of June 30, 2003, the Company had investments in marketable equity
securities of $14,792,901.  The following table shows the composition of the
Company's marketable securities portfolio by selected industry groups as of
June 30, 2003.

                                                             % of Total
                                                              Investment
   Industry Group                      Market Value           Securities
   --------------                      ------------           ----------
   Electric, pipelines, oil and gas    $ 5,006,146               33.7%
   Semiconductor, software, internet,
    and computer                         2,732,364               18.5%
   Telecommunications                    2,130,707               14.4%
   Airlines and defense                  1,134,451                7.7%
   Chemicals, materials, metals,
    and mining                             822,582                5.6%
   Apparel, food and consumer goods        750,430                5.1%
   Insurance                               704,213                4.8%
   REITs, lodging, home builders
    and hotels                             624,169                4.2%
   Other                                   887,839                6.0%
                                        ----------              ------
                                       $14,792,901              100.0%
                                        ==========              ======

As part of the investment strategies, the Company may assume short positions
against its long positions in marketable securities.  Short sales are used by
the Company to potentially offset normal market risks undertaken in the course
of its investing activities and/or to provide additional return opportunities.
The Company has no naked short positions.  As of June 30, 2003, the Company
had obligations for securities sold (equities short) of $5,758,002.

Marketable securities are stated at market value as determined by the most
recently traded price of each security at the balance sheet date.  Marketable
securities are classified as trading with net unrealized gains or losses
included in earnings.

Included in the net gains on marketable securities of $1,691,219 for the
twelve months ended June 30, 2003 are net unrealized gains of $3,173,308 and
net realized losses of $1,482,089. Included in the net losses on marketable
securities of $4,325,517 for the twelve months ended June 30, 2002 are net
unrealized losses of $1,515,189 and net realized losses of $2,810,328.

                                    -25-
<PAGE>



NOTE 4 - INCOME TAXES

The provision for income taxes benefit (expense) consists of the following:

For the year ended June 30,             2003           2002
                                     ----------     ----------
  Federal
    Current                         $   (84,799)   $    29,941
    Deferred                           (623,914)     1,158,891
                                     ----------     ----------
                                       (708,713)     1,188,832
                                     ----------     ----------

  State
    Current                            (119,464)       (37,922)
    Deferred                            (88,899)        61,000
                                     ----------     ----------
                                       (208,363)        23,078
                                     ----------     ----------
                                    $  (917,706)   $ 1,211,910
                                     ==========     ==========


A reconciliation of the statutory federal income tax rate to the effective tax
rate is as follows:

For the year ended June 30,               2003           2002
                                         ------         ------
  Statutory federal tax rate               34.0%          34.0%
  State income taxes, net of
   federal tax benefit                      5.8            6.0
  Other                                    (0.9)          (0.6)
                                         ------         ------
                                           38.9%          39.4%
                                         ======         ======


The components of the Company's deferred tax assets and (liabilities) as of
June 30, 2003 are as follows:

  Capital loss carryforward                        $ 1,379,663
  Unrealized gains on marketable securities         (1,094,687)
  State taxes                                          (48,900)
                                                     ---------
  Net deferred tax asset                           $   236,076
                                                     =========

As of June 30, 2003, the Company had net capital losses available for
carryforward for income tax purposes totaling approximately $3,278,344. The
carryforward expires in varying amounts through 2006.


NOTE 5 - SEGMENT INFORMATION

The Company operates in two reportable segments, the operation of Justice
Investors and the investment of its cash and securities assets. These two
operating segments, as presented in the financial statements, reflect how
management internally reviews each segment's performance.  Management also
makes operational and strategic decisions based on this same information.

                                    -26-
<PAGE>

Information below represents reported segments for the years ended June 30,
2003 and 2002.  Operating income from Justice Investors consists of the
operations of the hotel and garage included in the equity in net income of
Justice Investors.  Operating income (losses) for investment transactions
consist of net investment gains (losses) and dividend and interest income.

<TABLE>
Year ended                    Justice      Investment
June 30, 2003                Investors    Transactions     Other          Total
                            -----------   -----------   -----------   ----------
--
<S>                         <C>           <C>          <C>            <C>
Operating income            $ 1,567,714   $ 1,795,846  $          -   $
3,363,560
Operating expenses                    -      (534,536)            -
(534,536)
                            -----------   -----------   -----------   ----------
--
Net operating
 Income                       1,567,714     1,261,310            -
2,829,024

General and administrative
  expenses                            -             -      (498,743)
(498,743)
Other income                          -             -        40,143
40,143
Income tax expense                    -             -      (917,076)
(917,076)
                            -----------   -----------   -----------   ----------
--
Net income(loss)            $ 1,567,714   $ 1,261,310   $(1,375,676)  $
1,453,348
                            ===========   ===========   ===========
============
Total Assets                $ 1,079,466   $14,992,901   $ 1,082,139   $
17,154,506
                            ===========   ===========   ===========
============
</TABLE>
<TABLE>
Year ended                    Justice      Investment
June 30, 2002                Investors    Transactions     Other          Total
                            -----------   -----------   -----------   ----------
--
<S>                         <C>           <C>           <C>           <C>
Operating income (loss)     $ 2,159,887   $(4,512,165)  $         -   $
(2,352,278)
Operating expenses                    -      (228,373)            -
(228,373)
                            -----------   -----------   -----------   ----------
--
Net operating income(loss)    2,159,887    (4,740,538)            -
(2,580,651)

General and administrative
  expenses                            -             -      (543,052)
(543,052)
Other income                          -             -        48,114
48,114
Income tax benefit                    -             -     1,211,910
1,211,910
                            -----------   -----------   -----------   ----------
--
Net income (loss)           $ 2,159,887   $(4,740,538)  $   716,972   $
(1,863,679)
                            ===========   ===========   ===========
============
Total Assets                $ 1,486,222   $ 2,538,716   $ 2,546,914   $
6,571,852
                            ===========   ===========   ===========
============
</TABLE>

NOTE 6 - RELATED PARTY TRANSACTIONS

Certain shared costs and expenses, primarily administrative salaries, rent and
insurance are allocated among the Company, the Company's parent, Santa Fe
Financial Corporation ("Santa Fe"), and The InterGroup Corporation
("InterGroup"), parent of Santa Fe, based on management's estimate of the pro
rata utilization of resources.  For the years ended June 30, 2003 and 2002,
these expenses were approximately $85,328 and $126,450, respectively.  Four of
the Company's Directors serve as directors of InterGroup and three of the
Company's Directors serve on the Board of Santa Fe.

As Chairman of the Securities Investment Committee, the Company's President
and Chief Executive Officer, John V. Winfield, directs the investment activity
of the Company in public and private markets pursuant to authority granted by
the Board of Directors.  Mr. Winfield also serves as Chief Executive Officer

                                    -27-
<PAGE>

and Chairman of Santa Fe and InterGroup and oversees the investment activity
of those companies.  Depending on certain market conditions and various risk
factors, the Chief Executive Officer, his family, Santa Fe and InterGroup may,
at times, invest in the same companies in which the Company invests.  The
Company encourages such investments because it places personal resources of
the Chief Executive Officer and his family members, and the resources of Santa
Fe and InterGroup, at risk in connection with investment decisions made on
behalf of the Company.



Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.


Item 8A. Controls and Procedures.

(a) Disclosure Controls and Procedures.

The Company's management, with the participation of the Company's Chief
Executive Officer and the Chief Financial Officer, has evaluated the
effectiveness of the Company's disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the
fiscal period covered by this Annual Report on Form 10-KSB.  Based upon such
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, the Company's disclosure
controls and procedures are effective in ensuring that information required to
be disclosed in this filing is accumulated and communicated to management and
is recorded, processed, summarized and reported in a timely manner and in
accordance with Securities and Exchange Commission rules and regulations.

(b) Internal Control Over Financial Reporting.

There have been no changes in the Company's internal control over financial
reporting during the last quarterly period covered by this Annual Report on
Form 10-KSB that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.


                                    -28-
<PAGE>




                              PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company as of June 30, 2003:

<TABLE>
                                 Present
                                 Position           Director
     Name             Age     With the Company        Since      Term to Expire
--------------------------------------------------------------------------------
----
<S>                   <C>     <C>                     <C>        <C>
John V. Winfield      56      Chairman, President     1996       2003 Annual
Meeting
                              and Chief Executive
                              Officer (1)

Jerold R. Babin       71      Director                1996       2003 Annual
Meeting

Josef A. Grunwald     55      Director                1996       2003 Annual
Meeting

John C. Love          63      Director (1)(2)         1998       2003 Annual
Meeting

William J. Nance      59      Director (1)(2)         1996       2003 Annual
Meeting

Michael G. Zybala     51      Vice President,
                              Secretary, and
                              General Counsel         N/A        N/A

David T. Nguyen       30      Treasurer and           N/A        N/A
                              Controller
</TABLE>
-----------------------------------------------
(1)  Member of Securities Investment Committee
(2)  Member of Audit Committee


BUSINESS EXPERIENCE:

The principal occupation and business experience during the last five years
for each of the Directors and Executive Officers of the Company are as
follows:

John V. Winfield - Mr. Winfield was first elected to the Board in May of 1996
and currently serves as the Company's Chairman of the Board, President and
Chief Executive Officer.  Mr. Winfield is also Chairman of the Board,
President and Chief Executive Officer of Portsmouth's parent company Santa Fe
Financial Corporation ("Santa Fe"), a public company, having held those
positions since April 1996.  Mr. Winfield is also Chairman of the Board,
President and Chief Executive Officer of The InterGroup Corporation
("InterGroup"), a public company, and has held those positions since 1987.

Jerold R. Babin - Mr. Babin was appointed as a Director of the Company on
February 1996.  Mr. Babin has been a retail securities broker for the past 37
years.  From 1989 to present, he has worked for Prudential Securities (now a
division of Wachovia Securities) where he currently holds the title of First
Vice-President.

                                    -29-
<PAGE>



Josef A. Grunwald - Mr. Grunwald was elected as a Director of the Company in
May 1996. Mr. Grunwald is an industrial, commercial and residential real
estate developer.  He serves as Chairman of PDG N.V. (Belgium), a hotel
management company, and President of I.B.E. Services S.A. (Belgium), an
international trading company.  Mr. Grunwald is also a Director of InterGroup,
having held that position since 1987.

John C. Love - Mr. Love was appointed a Director of the Company on March 5,
1998. Mr. Love is an international hospitality and tourism consultant based in
Orinda, California.  He was formerly a partner in the national CPA and
consulting firm of Pannel Kerr and Forster.  Mr. Love has extensive experience
in hotel development, acquisition and development.  He is Chairman Emeritus of
Golden Gate University in San Francisco.  Mr. Love is also a Director of Santa
Fe, having first been appointed on March 2, 1999 and a Director of InterGroup,
having first been appointed in January 1998.

William J. Nance - Mr. Nance was first elected to the Board in May 1996. Mr.
Nance is also a Director of Santa Fe.  He is the President and CEO of Century
Plaza Printers, Inc., a company he founded in 1979.  He has also served as a
consultant in the acquisition and disposition of multi-family and commercial
real estate.  Mr. Nance is a Certified Public Accountant and, from 1970 to
1976, was employed by Kenneth Leventhol & Company where he was a Senior
Accountant specializing in the area of REITS and restructuring of real estate
companies, mergers and acquisitions, and all phases of real estate development
and financing.  Mr. Nance is a Director of InterGroup and has held such
positions since 1984.

Michael G. Zybala - Mr. Zybala was appointed as Vice President and Secretary
of the Company on February 20, 1998 and was appointed Treasurer on May 16,
2000, which was a position he held until February 27, 2003.  He is also Vice
President, Secretary and General Counsel of Santa Fe.  Mr. Zybala has served
as the Company's General Counsel since 1995 and has represented the Company as
its corporate counsel since 1978.  Mr. Zybala also serves as Assistant
Secretary and counsel to InterGroup and served as its Vice President
Operations from January 1999 to July 15, 2002.

David T. Nguyen - Mr. Nguyen was appointed as Treasurer of the Company on
February 27, 2003.  Mr. Nguyen also serves as Treasurer of InterGroup and
Santa Fe, having been appointed to those positions on February 26, 2003 and
February 27, 2003, respectively.  Mr. Nguyen is a Certified Public Accountant
and, from 1995 to 1998, was employed by PricewaterhouseCoopers where he was a
Senior Accountant specializing in real estate.  Mr. Nguyen has also served as
the Company's Controller from 1998 to December 2001 and from December 2002 to
present.



Family Relationships:  There are no family relationships among directors,
executive officers, or persons nominated or chosen by the Company to become
directors or executive officers.


Involvement in Certain Legal Proceedings:  No director or executive officer,
or person nominated or chosen to become a director or executive officer, was
involved in any legal proceeding requiring disclosure.

                                    -30-
<PAGE>



Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and each beneficial owner of more than ten percent of
the Common Stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission.  Officers, directors
and greater than ten-percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons that no
Forms 5 were required for those persons, the Company believes that during
fiscal 2003 all filing requirements applicable to its officers, directors, and
greater than ten-percent beneficial owners were complied with.


Item 10.   Executive Compensation.

The following table provides certain summary information concerning
compensation awarded to, earned by, or paid to the Chief Executive Officer and
any other qualifying Executive Officers and employees who earned more than
$100,000 for all services rendered to the Company during the three most recent
fiscal years.


                           SUMMARY COMPENSATION TABLE

                                         Annual Compensation
                              --------------------------------------------
                                                             Other Annual
Name and Principal Position    Year    Salary      Bonus   Compensation (2)
---------------------------    ----    ------     --------  ---------------

John V. Winfield               2003    $76,500    $411,355(1)   $6,000
Chairman, President and        2002    $88,125    $      0      $6,000
Chief Executive Officer        2001    $90,000    $      0      $6,000

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

(1) Amounts shown reflect a performance bonus, approved by the disinterested
members of the Board of Directors, based on the results of Mr. Winfield's
management of the Company's securities portfolio for the fiscal year ended
June 30, 2003.

(2) Amounts shown reflect regular Directors fees.  During fiscal years 2003,
2002 and 2001, the Company also paid annual premiums of $17,000 for a split
dollar whole life insurance policy, owned by, and the beneficiary of which is,
a trust for the benefit of Mr. Winfield's family.  The Company has a secured
right to receive, from any proceeds of the policy, reimbursement of all
premiums paid prior to any payments to the beneficiary.


As a small business issuer, Portsmouth has no compensation committee.
Executive Officer compensation is set by disinterested members of the Board of
Directors.  Portsmouth has no stock option plan or stock appreciation rights
for its executive officers.  The Company has no pension or long-term incentive
plans.  There are no employment contracts between Portsmouth and any executive
officer, nor are there any termination-of-employment or change-in-control
arrangements.

                                    -31-
<PAGE>

On July 18, 2003, the disinterested members of the Board of Directors
established a performance compensation program for the Company's CEO, John V.
Winfield, to keep and retain his services as a direct and active manager of
the Company's securities portfolio.  The Company's previous experience and
results with outside money managers was not acceptable.  Pursuant to the
criteria established by the Board, Mr. Winfield will be entitled to
performance compensation for his management of the Company's securities
portfolio equal to 20% of all net investment gains generated in excess of the
performance of the S&P 500 Index.  Compensation amounts will be calculated and
paid quarterly based on the results of the Company's investment portfolio for
that quarter.  Should the Company have a net investment loss during any
quarter, Mr. Winfield would not be entitled to any further performance-based
compensation until any such investment losses are recouped by the Company.
The compensation program will be administered so that total amount of
compensation paid to Mr. Winfield in any tax year will not exceed $1 million.
This performance compensation program may be modified or terminated at the
discretion of the Board.


Internal Revenue Code Limitations
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that, in the case of a publicly held corporation, the corporation is
not generally allowed to deduct remuneration paid to its chief executive
officer and certain other highly compensated officers to the extent that such
remuneration exceeds $1,000,000 for the taxable year. Certain remuneration,
however, is not subject to disallowance, including compensation paid on a
commission basis and, if certain requirements prescribed by the Code are
satisfied, other performance based compensation.  No compensation paid by the
Company to its CEO or other executive officers was subject the deduction
disallowance prescribed by Section 162(m) of the Code.


                           DIRECTOR COMPENSATION

The bylaws of Portsmouth permit directors to be paid a fixed sum for
attendance at each meeting of the Board or a stated salary as director.  Each
director is paid a fee of $1,500 per quarter for a total annual compensation
of $6,000.  This policy has been in effect since July 1, 1985. Members of the
Company's Audit Committee also receive a fee of $500 per quarter.


                                    -32-
<PAGE>



Item 11.    Security Ownership of Certain Beneficial Owners and Management
            And Related Stockholder Matters

The following table sets forth, as of September 15, 2003, certain information
with respect to the beneficial ownership of Common Stock owned by (i) those
persons or groups known by the Company to own more than five percent of the
outstanding shares of Common Stock, (ii) each Director and Executive Officer,
and (iii) all Directors and Executive Officers as a group.

Name and Address of                 Amount and Nature            Percent of
Beneficial Owner                   of Beneficial Owner(1)         Class (2)
-------------------                -------------------           ----------

John V. Winfield                              0                        *
820 Moraga Drive
Los Angeles, CA 90049

Jerold R. Babin                          48,345(3)                  6.6%
4 Embarcadero Center
Suite 2400
San Francisco, CA 94111

Josef A. Grunwald                             0                        *
820 Moraga Drive
Los Angeles, CA 90049

John C. Love                                  0                        *
820 Moraga Drive
Los Angeles, CA 90049

William J. Nance                              0                        *
820 Moraga Drive
Los Angeles, CA 90049

Michael G. Zybala                             0                        *
820 Moraga Drive
Los Angeles, CA 90049

David T. Nguyen
820 Moraga Drive
Los Angeles, CA                               0                        *

Santa Fe Financial Corporation          507,772(4)                  69.2%
820 Moraga Drive
Los Angeles, CA 90049

All of the above as a group             556,117                     75.7%
---------------------------

* Ownership does not exceed 1%

 (1) Unless otherwise indicated, and subject to applicable community property
    laws, each person has sole voting and investment power with respect to the
    shares beneficially owned.

(2) Percentages are calculated based of 734,183 shares of Common Stock issued
    and outstanding as of September 15, 2003.

(3) Jerold R. Babin claims sole voting power over the 48,345 shares identified
    herein, of which he has sole dispositive power over 9,667 held in his
    retirement account.  He claims shared dispositive power with his wife over
    the 38,478 shares which they hold as trustees of a family trust.

                                    -33-
<PAGE>

(4) Santa Fe Financial Corporation is the record and beneficial owner of
    505,272 shares of the Common Shares of Portsmouth and 2,500 shares are
    owned by Santa Fe's parent company, The InterGroup Corporation.  As
    directors of Santa Fe and InterGroup, Messrs. Winfield, Nance and Love
    have the power to direct the vote of the shares of Portsmouth owned by
    Santa Fe and InterGroup.


Security Ownership of Management in Parent Corporation.

As of September 15, 2003, John V. Winfield is the beneficial owner of 49,400
shares of the common stock of Portsmouth's parent corporation, Santa Fe.  The
InterGroup Corporation is the beneficial owner of 740,796 shares of common
stock and 63,600 shares of convertible, voting preferred stock of Santa Fe.
Pursuant to a Voting Trust Agreement dated June 30, 1998, InterGroup also has
the power to vote the 49,400 shares of common stock owned by Mr. Winfield
giving it a total of 853,796 voting shares, which represents 68.8% of the
voting power of Santa Fe.  As President, Chairman of the Board and a 58.6%
shareholder of InterGroup, Mr. Winfield has voting and dispositive power over
the shares owned of record and beneficially by InterGroup.  No other director
or executive officer of Portsmouth has a beneficial interest in Santa Fe's
shares.

Changes in Control Arrangements.

There are no arrangements that may result in a change in control of
Portsmouth.

Securities Authorized for Issuance Under Equity Compensation Plans.

Portsmouth has no securities authorized for issuance under any equity
compensation plans.


Item 12. Certain Relationships and Related Transactions

As of September 15, 2003, Santa Fe and InterGroup owned 69.2% of the common
stock of Portsmouth, and InterGroup and John V. Winfield, in the aggregate,
owned approximately 68.8% of the voting stock of Santa Fe.  Certain costs and
expenses, primarily salaries, rent and insurance, are allocated between the
Company, Santa Fe, and InterGroup based on management's estimate of the
utilization of resources.  Effective June 30, 1998, certain accounting and
administrative functions of the Company and its subsidiaries, were transferred
to the Los Angeles, California offices of InterGroup. During the fiscal years
ended June 30, 2003 and 2002, the Company made payments to InterGroup in the
total amount of approximately $85,000 and $126,000, respectively, for
administrative costs and reimbursement of direct and indirect costs associated
with the management of the Company and its investments, including the
partnership asset.  During fiscal 2003 and 2002, the Company also paid annual
consulting fees to an officer of InterGroup in the amount of $62,004 and
$86,400, respectively.

As Chairman of the Securities Investment Committee, the Company's President
and Chief Executive officer, John V. Winfield, oversees the investment
activity of the Company in public and private markets pursuant to authority
granted by the Board of Directors.   Mr. Winfield also serves as Chief
Executive Officer of Santa Fe and InterGroup and oversees the investment

                                    -35-
<PAGE>

activity of those companies.  Depending on certain market conditions and
various risk factors, the Chief Executive Officer, his family, Santa Fe and
InterGroup may, at times, invest in the same companies in which the Company
invests.  The Company encourages such investments because it places personal
resources of the Chief Executive Officer and his family members, and the
resources of Santa Fe and InterGroup, at risk in connection with investment
decisions made on behalf of the Company.

In December 1998, the Board of Directors authorized the Company to obtain
whole life insurance and split dollar insurance policies covering the
Company's President and Chief Executive Officer, Mr. Winfield.  During fiscal
2003 and 2002, the Company paid annual premiums of $17,000 for the split
dollar whole life insurance policy, owned by, and the beneficiary of which is,
a trust for the benefit of Mr. Winfield's family.  The Company has a secured
right to receive, from any proceeds of the policy, reimbursement of all
premiums paid prior to any payments to the beneficiary.

There are no other relationships or related transactions between the Company
and any of its officers, directors, five-percent security holders or their
families that require disclosure.


Item 13.  Exhibits and Reports on Form 8-K

(a) Listing of Exhibits by Table Number
    -----------------------------------

Set forth below is an index of applicable exhibits filed with this report
according to exhibit table number.

     Exhibit                                                    Page
     -------                                                    ----

     3.(i)  Articles of Incorporation                             *
       (ii) Bylaws (amended February 16, 2000)                    **

     4.     Instruments defining the rights of Security           *
            Holders, including indentures (see Articles
            of Incorporation and Bylaws)


     31.1   Certification of Chief Executive Officer of Periodic Report
            Pursuant to Rule 13a-14(a) and Rule 15d-14(a).

     31.2   Certification of Chief Financial Officer of Periodic Report
            Pursuant to Rule 13a-14(a) and Rule 15d-14(a).

     32.1   Certification of Chief Executive Officer Pursuant to 18
            U.S.C. Section 1350.

     32.2   Certification of Chief Financial Officer Pursuant to 18
            U.S.C. Section 1350.

* All exhibits marked by an asterisk have been previously filed with other
documents, including Registrant's Form 10 filed on October 27, 1967, and
subsequent filings on Forms 8-K, 10-K, 10-KSB, 10-Q and 10-QSB, which are
incorporated herein by reference.

** Amendment to Bylaws are incorporated herein by reference to the Company's
Form 10-KSB filed with the Commission March 29, 2000.

                                    -35-
<PAGE>

(b) Reports on Form 8-K
    -------------------

Registrant filed no reports on Form 8-K during the last quarter of the period
covered by this Report.


(c) Financial Statements and Schedules Required by Regulation S-X

The following financial statements of Justice Investors are included in
Item 13:
                                                              PAGE
                                                              ----

Independent Auditor's Report                                   F-1

Balance Sheets -- December 31, 2002 and 2001                   F-2

Statements of Income and Partners' Capital - Years             F-3
  Ended December 31, 2002 and 2001

Statements of Cash Flows -- Years Ended                        F-4
  December 31, 2002 and 2001

Notes to Financial Statements -- December 31, 2002 and 2001    F-5

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and therefore have been omitted.


Item 14.  Principal Accountant Fees and Services.

Audit Fees - The aggregate fees billed for each of the last two fiscal years
ended June 30, 2003 and 2002 for professional services rendered by
PricewaterhouseCoopers LLP, the principal accountant for the audit of the
Company's annual financial statements and review of financial statements
included in the Company's Form 10-QSB or services normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years, were as follows:

                        Fiscal 2003 - $32,500
                        Fiscal 2002 - $27,405

There were no fees paid to PricewaterhouseCoopers LLP for "Audit Related
Fees", "Tax Fees" or for "Other Fees" as defined in Item 9(e) of Schedule 14A.

All of the services and fees described above were approved by the Company's
Audit Committee.  It is the Audit Committee's policy to approve all services
to be performed by the Company's principal accountant prior to the rendering
of those services.

All hours expended on the principal accountant's engagement to audit the
Company's financial statements for the most recent fiscal year were attributed
to work performed by persons that were the full time, permanent employees of
PricewaterhouseCoopers LLP.

                                    -36-
<PAGE>



                                SIGNATURES
                                ----------

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                                  PORTSMOUTH SQUARE, INC.
                                                        (Registrant)

Date: September 26, 2003                      by /s/ John V. Winfield
      ------------------                         ---------------------------
                                                 John V. Winfield, President,
                                                 Chairman of the Board and
                                                 Chief Executive Officer

Date: September 26, 2003                      by /s/ Michael G. Zybala
      ------------------                         ---------------------------
                                                 Michael G. Zybala,
                                                 Vice President and Secretary

Date: September 26, 2003                      by /s/ David T. Nguyen
      ------------------                         ---------------------------
                                                 David T. Nguyen, Treasurer
                                                 and Controller
                                                 (Principal Financial Officer)


   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


Date: September 26, 2003              /s/ John V. Winfield
      ------------------              ---------------------------------------
                                      John V. Winfield, Chairman of the Board

Date: September 26, 2003              /s/ Jerold R. Babin
      ------------------              ---------------------------------------
                                      Jerold R. Babin,
                                      Director

Date: September 26, 2003              /s/ Josef A. Grunwald
      ------------------              ---------------------------------------
                                      Josef A. Grunwald,
                                      Director

Date: September 26, 2003              /s/ John C. Love
      ------------------              ---------------------------------------
                                      John C. Love
                                      Director

Date: September 26, 2003             /s/ William J. Nance
      ------------------              ---------------------------------------
                                      William J. Nance,
                                      Director


                                    -38-
<PAGE>



                        Independent Auditors' Report
                        ----------------------------

To the Partners
Justice Investors
San Francisco, California

We have audited the accompanying balance sheets of Justice Investors (a
limited partnership) as of December 31, 2002 and 2001, and the related
statements of income and partners' capital and cash flows for the years then
ended.  These financial statements are the responsibility of the Partnership's
management.  Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audit 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
audit provides 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 Justice Investors (a limited
partnership) as of December 31, 2002 and 2001, and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.



/s/ Burr, Pilger & Mayer LLP


San Francisco, California
January 24, 2003



                                    F-1
<PAGE>



                           JUSTICE INVESTORS
                        (a limited partnership)
                             BALANCE SHEETS
                       December 31, 2002 and 2001
                       --------------------------

                                ASSETS                  2002         2001
                                ------                  ----         ----
Current assets:
  Cash                                              $    5,469     $  245,797
  Rents receivable:
   Hotel                                               110,687      1,188,656
   Garage-related party                                113,395        115,356
   Other                                                   200              -
  Due from partner                                         961              -
  Prepaid expenses                                      10,000          1,869
                                                     ---------      ---------
       Total current assets                            240,712      1,551,678
                                                     ---------      ---------
Property and equipment:
  Office equipment (net of accumulated
    depreciation of $5,553 in 2002 and 2001)                 -              -
  Building and improvements on operating
    leases (net of accumulated depreciation of
    $12,434,823 in 2002 and $12,096,271
    in 2001)                                         3,011,179      3,349,731
  Construction in progress                             481,403              -
  Land                                               1,124,128      1,124,128
                                                     ---------      ---------
       Total property and equipment                  4,616,710      4,473,859
                                                     ---------      ---------
Other assets:
 Loan fees (net of accumulated amortization
   of $229,135 in 2002 and $195,570 in 2001)            59,122         88,687
 Deferred lease costs (net of accumulated
   amortization of $12,185 in 2002 and
   $10,708 in 2001)                                      9,970         11,447
                                                     ---------      ---------
       Total other assets                               69,092        100,134
                                                     ---------      ---------
                                                    $4,926,514     $6,125,671
                                                     =========      =========

                    LIABILITIES AND PARTNERS' CAPITAL
                    ---------------------------------

Current liabilities:
  Trade accounts payable and accrued expenses       $   25,049     $   48,521
  Rents received in advance                                  -        206,250
  Accrued interest                                       3,895          2,349
  Due to partner                                           100         15,971
                                                     ---------      ---------
       Total current liabilities                        29,044        273,091
Long-term debt                                       1,137,767      1,000,000
                                                     ---------      ---------
       Total liabilities                             1,166,811      1,273,091
                                                     ---------      ---------
Partners' capital                                    3,759,703      4,852,580
                                                     ---------      ---------
                                                    $4,926,514     $6,125,671
                                                     =========      =========


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

                                     F-2
<PAGE>

                           JUSTICE INVESTORS
                         (a limited partnership)

                STATEMENTS OF INCOME AND PARTNERS' CAPITAL
                for the years ended December 31, 2002 and 2001
                ----------------------------------------------

                                                       2002           2001
                                                       ----           ----
Rental income:
  Hotel - base rent                                $ 2,500,000   $ 2,500,000
  Hotel - additional rent                              136,961     2,706,656
  Garage - related party                             1,410,698     1,385,425
  Other                                                  2,400         2,400
                                                     ---------     ---------
      Total rental income                            4,050,059     6,594,481
                                                     ---------     ---------

Operating expenses:
  Interest                                              25,613        20,268
  Depreciation and amortization                        369,594       386,970
  Lease commission                                      26,370        52,066
  Property taxes                                        43,286        42,493
  General and administrative:
    Administrative fees - general partners             150,000       197,762
    Accounting fees                                      2,225         2,200
    Audit and tax preparation                           39,161        41,159
    Bank charges                                        12,455         9,985
    Consultants                                         30,313        28,065
    Franchise taxes                                        971           800
    Insurance expense                                   48,619        44,910
    Legal fees                                          14,401        80,614
    Repairs and maintenance                              8,353         5,218
    Miscellaneous                                        3,710         2,356
                                                     ---------     ---------
      Total operating expenses                         775,071       914,866
                                                     ---------     ---------

Other income:
  Interest income                                          135        10,682
  Miscellaneous income                                       -       629,406
                                                     ---------     ---------
      Total other income                                   135       640,088
                                                     ---------     ---------
      Net Income                                     3,275,123     6,319,703

Partners' capital at beginning of period             4,852,580     5,252,877

Less distributions to partners                      (4,368,000)   (6,720,000)
                                                     ---------     ---------
Partners' capital at end of period                 $ 3,759,703   $ 4,852,580
                                                     =========     =========

The accompanying notes are in integral part of these financial statements.


                                     F-3
<PAGE>


                                JUSTICE INVESTORS
                              (a limited partnership)
                              -----------------------

                             Statements of Cash Flows
                  for the years ended December 31, 2002 and 2001
                  ----------------------------------------------



                                                        2001          2000
                                                        ----          ----
Cash flows from operating activities:
  Net income                                        $ 3,275,123   $ 6,319,703
  Adjustments to reconcile net income to
     net cash provided by operating
     activities-depreciation and amortization           369,594       386,970
  Changes in operating assets and liabilities:
   Decrease in rents receivable and due from
     partner                                          1,078,769     1,500,580
   (Increase) decrease in prepaid expenses               (8,131)        3,237
   Decrease in trade accounts payable
     and accrued expenses                               (23,472)      (55,872)
   Decrease increase in rents received in advance      (206,250)      206,250
   (Decrease) increase in due partner                   (15,971)       15,971
    Decrease (increase) in accrued interest               1,546       (11,042)
                                                      ---------     ---------
      Net cash provided by operating activities       4,471,308     8,365,797
                                                      ---------     ---------
Cash flows from investing activities:
  Purchase of property and equipment -
     Construction in progress                          (481,403)            -
                                                      ---------     ---------
Cash flows from financing activities:
  Distributions to partners                          (4,368,000)   (6,720,000)
  Net proceeds (payments) on long-term debt             137,767    (1,400,000)
                                                      ---------     ---------

      Net cash used in financing activities          (4,230,233)   (8,120,000)

      Net (decrease) increase in cash
        and cash equivalents                           (240,328)      245,797

Cash and cash equivalents at beginning of year          245,797             -
                                                      ---------     ---------

Cash and cash equivalents at end of year            $     5,469   $   245,797
                                                      =========     =========

Supplemental disclosures of cash flows
   information-cash paid during the year for

  Interest                                          $   24,067    $    31,310
                                                      ========      =========
  Franchise taxes                                   $      971    $       800
                                                      ========      =========


The accompanying notes are in integral part of these financial statements.

                                     F-4
<PAGE>


                            JUSTICE INVESTORS
                             (a limited partnership

                          Notes to Financial Statements
                          -----------------------------

1.  Organization
    ------------

Justice Investors, a Limited Partnership (the Partnership), was formed in 1967
to acquire real property in San Francisco, California, for the development and
lease of hotel and related facilities.  The leases became effective during
1970 upon completion of the hotel and parking garage.  The Partnership leases
the hotel to Felcor Lodging Trust, Inc. (Felcor) and is operated under the
name Holiday Inn.  The hotel lease provides for the Partnership to receive
certain percentages of hotel revenue, as defined, to December 31, 2004, with a
five-year renewal option.  The Partnership leases the parking garage to Evon
Garage Corporation (Evon), a general partner.  The parking garage lease
provides for payments of certain percentages of parking receipts to November
30, 2010. See Note 4-Leasing Arrangements.

The Partnership operates in one business segment, the development and lease of
hotel and related facilities.


2.  Summary of Significant Accounting Policies
    ------------------------------------------

Rents Receivable
----------------
Management believes that all rents receivable are fully collectible.
Therefore, no allowance for doubtful accounts was recorded as of December 31,
2002.

Property and Equipment
----------------------
Property and equipment are stated at cost.  Depreciation on the hotel
facilities is computed using the straight line method over a useful life of 40
years.  Building improvements are being depreciated on a straight line basis
over their useful lives ranging from 5 to 39 years.  Office equipment is being
depreciated using the 150% declining balance method with a useful life of 5
years.

Construction in Progress
------------------------
Construction in progress at December 31, 2002 consisted of accumulated
incurred costs through December 31, 2002 for a spa and new meeting rooms that
will substantially be complete in 2003, at which time the aggregate costs of
construction in progress will be transferred to property and equipment and
depreciation will commence upon transfer.

Loan Fees and Deferred Lease Costs
----------------------------------
Loan fees are stated at cost and amortized using the straight line method over
10 years.  Deferred lease costs are stated at cost and amortized using the
straight line method over 15 years.

Trade Accounts Payable
----------------------
The Partnership's banking system provides for the daily replenishment of bank
accounts from the line of credit as checks are presented.  Accordingly,
included in trade accounts payable at December 31, 2002 and 2001 is $20,970
and $59,254, respectively, representing the excess of outstanding checks over
cash on deposit at the bank upon which the checks were drawn.

                                 Continued

                                    F-5
<PAGE>

                              JUSTICE INVESTORS
                            (a limited partnership

                     Notes to Financial Statements, Continued
                     ----------------------------------------

2. Summary of Significant Accounting Policies, continued
--------------------------------------------------------

Long-Lived Assets
-----------------
In accordance with the provisions of SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, the Partnership evaluates the
potential impairment of long-lived assets when events or changes in
circumstances indicate that the carrying amount of a long-lived asset may not
be recoverable. If it is determined that the carrying value of a long-lived
asset may not be recoverable based upon the relevant facts and circumstances,
the Partnership estimates the future undiscounted cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of
the expected undiscounted future cash flows is less then the carrying value of
the asset, the Partnership will recognize an impairment loss for the
difference between the carrying value of the asset and its fair value.

Revenue Recognition
-------------------
The Partnership recognizes rental income over the lease term as it becomes
receivable according to the provisions of the leases.  The leases contain
provisions for a base rent plus a percentage of the lessees' revenues. See
Note 4-Leasing Arrangements.

Income Tax
----------
No income taxes have been provided in the accompanying financial statements
since the Partnership profits and losses are reportable by the partners on
their individual income tax returns.

Statement of Cash Flows
-----------------------
For purposes of the statement of cash flows, cash equivalents include time
deposits, certificates of deposit, and all highly liquid debt instruments with
original maturities of three months or less.

Fair value of Financial Instruments
-----------------------------------
The Partnership's financial instruments are cash, accounts receivable,
accounts payable, and long-term debt. The recorded values of cash, accounts
receivable, and accounts payable approximate their fair values based on their
short-term nature.  The recorded value of long term debt approximates the fair
value, as interest approximates market rates.

Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses.  Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts.

                                 Continued

                                    F-6
<PAGE>

                             JUSTICE INVESTORS
                             (a limited partnership)

                    Notes to Financial Statements, Continued
                    ----------------------------------------

3.  Long-Term Debt
    --------------

The Partnership has a revolving reducing line of credit agreement with a bank
that is collateralized by the first deed of trust on the hotel land and
property and the Partnership's interest in the hotel and garage leases.
Balances accrue interest at either prime rate per annum or at LIBOR plus 2%
per annum to a capped rate of 9.5% on balances up to $4,000,000.  The
outstanding balances under the agreement at December 31, 2002 and 2001 were
$1,137,767 and $1,000,000, respectively.  The balances were accruing interest
at 3.5% and 4.25% at December 31, 2002.  The line of credit matures on
December 31, 2004.

Under the terms of the agreement, the line of credit is subject to a declining
maximum credit limit as follows:

                     2003                    $4,970,590
                     2004                    $4,470,275


4.  Leasing Arrangements
    --------------------

The Partnership leases the hotel and parking garage facilities under
noncancelable operating leases.

The hotel lease with Felcor provides for minimum monthly payments of $208,333
plus an additional percentage rent. The percentage rent is based on the
greater of a) 20% of the gross room revenue of the lessee or b) $2,500,000
plus 50% of the lessee's cash available. Cash available is defined as the
gross room revenue plus other revenue less operating expenses of the lessee
less the base rent of $2,500,000 less $1,250,000.  Rents due under the 20% of
gross room revenue provision are payable monthly and are calculated based on
cumulative gross room revenues on a calendar basis. Rents due on the 50% of
cash available provision are payable annually in December. Additional hotel
percentage rent received during 2002 and 2001 was $136,961 and $2,706,656,
respectively.

The parking garage lease with Evon provides for minimum monthly payments of
$19,764 plus an additional percentage rent. The percentage rent is based on
60% of the gross parking revenues and is due monthly. Additional garage
percentage rent received during 2002 and 2001 was $1,173,530 and $1,148,257,
respectively.

Minimum future rentals to be received under non-cancelable leases as of
December 31, 2002 for each of the next five years and in the aggregate are:

                                  Hotel          Garage        Total
                                  -----          ------        -----
    2003                       $ 2,500,000   $   237,168    $ 2,737,168
    2004                         2,500,000       237,168      2,737,168
    2005                                 -       237,168        237,168
    2006                                 -       237,168        237,168
    2007                                 -       237,168        237,168
    Thereafter                           -       691,740        691,740
                                ----------     ---------     ----------
                               $ 5,000,000   $ 1,877,580    $ 6,877,580
                                ==========     =========     ==========

                                 Continued

                                    F-7
<PAGE>

                            JUSTICE INVESTORS
                             (a limited partnership)

                    Notes to Financial Statements, Continued
                    ----------------------------------------

5.  Commitments
    -----------

Administrative Fees-General Partners
------------------------------------
The Partnership has an arrangement with its two general partners, Evon amd
Portsmouth Square, Inc. (Portsmouth), under which it pays three percent of the
first $10,000,000 of gross rents to the general partners. Of the first
$150,000 payable, eighty percent is due Evon and twenty percent is due to
Portsmouth.  Any compensation in excess of $150,000 is split equally between
Evon and Portsmouth.

Administrative fees paid to Evon and Portsmouth for 2002 and 2001 are as
follows:

                                      2002          2001
                                      ----          ----

                 Evon               $120,000      $143,881
                 Portsmouth           30,000        53,881
                                     -------       -------
                                    $150,000      $197,762
                                     =======       =======

As of December 31, 2002, the Partnership had prepaid $10,000 of administrative
fees to Evon. As of December 31, 2001, the Partnership had administrative fees
payable to the general partners of $47,762, which is included in accounts
payable in the accompanying balance sheet.

Lease Commission
----------------

The Partnership is obligated to pay a lease commission of 1% of rentals
received to December 31, 2004 plus Holiday Inn lease extension, if any, to
December 31, 2009.


6.  Related Party Transactions
    --------------------------
During 2002 and 2001, the Partnership incurred expenses for legal services of
$14,401 and $80,384, respectively, which were rendered by a limited partner.

The garage lessee, Evon, is the Partnership's managing general partner. Evon
paid the Partnership $1,410,698 and $1,385,425 during 2002 and 2001,
respectively, under the terms of the lease agreement, see Note 4-Leasing
Arrangements.  Rents receivable from Evon at December 31, 2002 and 2001 were
$113,395 and $115,356, respectively.

                                  Continued

                                     F-8
<PAGE>

                            JUSTICE INVESTORS
                             (a limited partnership)

                    Notes to Financial Statements, Continued
                    ----------------------------------------


7.  Concentration of Credit Risk
    ----------------------------

Revenue and Receivables
-----------------------
The Partnership earns rental revenues under two operating leases, see Note 4-
Leasing Arrangements.  The Partnership received 100% of its revenue related to
the hotel from Felcor and 100% of its revenue related to the parking garage
from Evon.  Rents receivable at December 31, 2002 and 2001 consist of the
amounts due under the leases as follows:

                                                       2002           2001
                                                       ----           ----

         Hotel receivable-Felcor                  $  110,687      $1,188,656
         Garage receivable-Evon                      113,395         115,356
         Other                                           200               -
                                                   ---------       ---------
                                                  $  224,282      $1,304,012
                                                   =========       =========

Felcor is a public company that is subject to the periodic reporting
requirements of the Securities and Exchange Act of 1934.


8.  Arbitration Settlement
    ----------------------

During 2001, the Partnership settled a dispute with Felcor, the hotel lessee,
related to the computation of the percentage rent due for calendar years 1998,
1999, and 2000 under the lease between the Partnership and Felcor.  The
Partnership received a settlement payment of $600,000 which is included in
miscellaneous income in the accompanying income statement.


                                    F-9