UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                          ----------------------

                               FORM 10-QSB


    [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

    For the quarterly period ended September 30, 2004

                         OR

    [ ]  Transition Report Pursuant to Section 13 or 15(d) of the Exchange Act

    For the transition period from _______ to ________


    Commission File Number 0-4057

                              PORTSMOUTH SQUARE, INC.
                              -----------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)

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


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

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

   Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has
been subject to such filing requirements for the past 90 days. Yes (x)  No ( )

   State the number of shares outstanding of each of the issuer's classes of
Common equity, as of the latest practicable date: 734,183 shares of issuer's No
Par Value Common Stock were outstanding as of November 10, 2004.

   Transitional Small Business Disclosure Format (check one): Yes ( ) No (X)

<PAGE>


                                     INDEX

                             PORTSMOUTH SQUARE, INC.


PART I. FINANCIAL INFORMATION                                         PAGE
                                                                      ----
Item 1. Financial Statements

  Balance Sheet - September 30, 2004 (Unaudited)                        3

  Statements of Operations (Unaudited)- Three Months ended              4
    September 30, 2004 and September 30, 2003

  Statements of Cash Flows (Unaudited)- Three Months ended
    September 30, 2004 and September 30, 2003                           5

  Notes to Financial Statements                                         6

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                            11

Item 3. Controls and Procedures                                        17


PART II. OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K                               17

SIGNATURES                                                             18

                                    -2-
<PAGE>




                         PART 1 - FINANCIAL INFORMATION

Item 1 - Financial Statements

                             PORTSMOUTH SQUARE, INC.
                                 BALANCE SHEET
                                  (Unaudited)

As of September 30,                                           2004
                                                          ----------

Assets

  Cash and cash equivalents                              $   409,000
  Investment in marketable securities                     13,395,000
  Investment in Justice Investors                          3,691,000
  Other investments                                          100,000
  Other assets                                               116,000
                                                          ----------
Total assets                                             $17,711,000
                                                          ==========

Liabilities and Shareholders' Equity

Liabilities
  Due to securities broker                                 4,309,000
  Obligations for securities sold                          3,304,000
  Accounts payable and other liabilities                     912,000
                                                          ----------
Total liabilities                                          8,525,000
                                                          ----------
Commitments and contingencies

Shareholders' equity:
  Common stock, no par value:
    Authorized shares - 750,000
    Issued and outstanding shares - 734,183                2,092,000
  Additional paid-in capital                                 916,000
  Retained earnings                                        6,178,000
                                                          ----------

Total shareholders' equity                                 9,186,000
                                                          ----------

Total liabilities and shareholders' equity               $17,711,000
                                                          ==========


See accompanying notes to financial statements.

                                    -3-
<PAGE>



                            PORTSMOUTH SQUARE, INC.
                           STATEMENTS OF OPERATIONS
                                  (Unaudited)


For the three months ended September 30,              2004           2003
                                                  ----------     ----------
  Equity in net income of Justice
   Investors                                      $  137,000     $  271,000

  General and administrative expenses               (125,000)      (110,000)
                                                  ----------     ----------
                                                      12,000        161,000
Non-operating income (expenses):
  Net (losses)gains on marketable securities      (1,692,000)       405,000
  Dividend and interest income                        69,000         52,000
  Margin interest and trading expenses               (57,000)       (62,000)
  Other income, net                                   86,000          6,000
                                                  ----------     ----------
                                                  (1,594,000)       401,000
                                                  ----------     ----------
(Loss)income before income taxes                  (1,582,000)       562,000

Provision for income tax benefit(expense)            633,000       (225,000)
                                                  ----------     ----------
Net (loss)income                                 $  (949,000)   $   337,000
                                                  ==========     ==========

Basic (loss)income per share                     $     (1.29)   $      0.46
                                                  ==========     ==========

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


See accompanying notes to financial statements.

                                    -4-
<PAGE>




                            PORTSMOUTH SQUARE, INC.
                           STATEMENTS OF CASH FLOWS
                                 (Unaudited)


For the three months ended September 30,             2004           2003
                                                  ----------     ----------
Cash flows from operating activities:
  Net (loss)income                               $  (949,000)  $    337,000
  Adjustments to reconcile net (loss)income
   to net cash used in operating activities:
    Equity in net income of Justice Investors       (137,000)      (271,000)
    Net unrealized losses(gains) on
     marketable securities                         1,345,000       (465,000)
    Changes in assets and liabilities:
      Investment in marketable securities          4,611,000     (1,701,000)
      Deferred income taxes and other assets          82,000        100,000
      Accounts payable and other liabilities        (620,000)      (340,000)
      Due to securities broker                    (2,441,000)      (543,000)
      Obligations for securities sold             (1,594,000)     2,812,000
                                                  ----------     ----------
  Net cash provided by(used in)
   operating activities                              297,000        (71,000)
                                                  ----------     ----------
Cash flows from investing activities:
  Cash distributions from Justice Investors                -        397,000
                                                  ----------     ----------
  Net cash provided by investing activities                -        397,000
                                                  ----------     ----------

Cash flows from financing activities:
  Dividends paid                                           -      (367,000)
                                                  ----------     ----------
  Net cash used in financing activities                    -      (367,000)
                                                  ----------     ----------
Net increase (decrease) in cash and
  cash equivalents                                   297,000       (41,000)

Cash and cash equivalents at the beginning
  of the period                                      112,000        124,000
                                                  ----------     ----------
Cash and cash equivalents at the end of the
 period                                          $   409,000    $    83,000
                                                  ==========     ==========


See accompanying notes to financial statements.

                                    -5-

<PAGE>


                      PORTSMOUTH SQUARE, INC.

                   NOTES TO FINANCIAL STATEMENTS

1.  Basis of Presentation and Significant Accounting Policies
    ---------------------------------------------------------

The financial statements included herein have been prepared by Portsmouth
Square, Inc. ("Portsmouth" or the "Company"), without audit, according to the
rules and regulations of the Securities and Exchange Commission.  Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes the disclosures that are made are adequate to make the
information presented not misleading.  Further, the financial statements
reflect, in the opinion of management, all adjustments (which included only
normal recurring adjustments) necessary to state fairly the financial position
and results of operations as of and for the periods indicated.

It is suggested that these financial statements be read in conjunction with the
audited financial statements and the notes therein included in the Company's
Form 10-KSB for the year ended June 30, 2004.

The results of operations for the three months ended September 30, 2004 are not
necessarily indicative of results to be expected for the full fiscal year
ending June 30, 2005.


2.  Investment in Justice Investors
    -------------------------------

The Company has a 49.8% interest in Justice Investors, a California limited
partnership ("Justice" or the "Partnership") in which Portsmouth serves as both
a general and limited partner.  The other general partner, Evon Garage
Corporation, which changed its name to "Evon Corporation" ("Evon"), serves as
the managing general partner.  Justice owns the land, improvements and
leaseholds at 750 Kearny Street, San Francisco, California, commonly known as
the Holiday Inn Select Downtown & Spa (the "Hotel"). The Company's investment
in Justice is recorded on the equity basis.

Historically, Justice's most significant income source was a lease between the
Partnership and Felcor Lodging Trust, Inc. ("Felcor") for the hotel portion of
the property.  Pursuant to a Settlement Agreement entered into on May 3, 2004,
Felcor agreed to terminate its lease and surrender possession of the Hotel to
Justice, on June 30, 2004.  Effective July 1, 2004, Justice became the owner-
operator of the Hotel, with the assistance of a Management Agreement with Dow
Hotel Company, LLC. ("Dow") to perform the day-to day management functions of
the Hotel. The Partnership also derives income from the lease of the garage
portion of the property to Evon.  The Company also derives revenue from
management fees from Justice for actively managing the hotel as a general
partner.

                                    -6-
<PAGE>



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.

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.

On July 16, 2004, Justice entered into a new General Partner Compensation
Agreement (the "Compensation Agreement"), with an effective date of May 31,
2004. The new agreement provides that the general partners will receive annual
base compensation of 1.5% of gross revenues, with a minimum annual base
compensation of $262,500, adjusted for inflation. From the minimum annual base
compensation, 80% will be paid to Evon for its services as the managing general
partner and 20% will be paid to Portsmouth as the other general partner. Base
annual compensation in excess of the minimum will be payable in equal amounts
to Evon and Portsmouth. The maximum base annual compensation that can be earned
by the general partners is 1.5% of $40,000,000 of gross revenues.  The
Compensation Agreement also provides for incentive compensation to the general
partners in a sum equal to the 5.0% of the annual net operating income of
Justice, as defined in the Dow Management Agreement that is in excess of
$7,000,000. Incentive compensation shall be payable in equal amounts to Evon
and Portsmouth. In addition, the Compensation Agreement provides that the
general partners be paid a fee for their work in repositioning the Hotel in the
aggregate amount of $276,000, to be paid in equal amounts to Evon and
Portsmouth in two installments.  The first installment of $69,000 to each of
Evon and Portsmouth was paid within 10 days of the execution of the
Compensation Agreement with the second installment to be paid upon the
substantial completion of the renovation of the Hotel.

In May of 2004, a $5,000,000 settlement payment was made to Justice from the
hotel lessee to resolve disputes regarding certain obligations of Felcor and
others under the terms of the Hotel Lease.  That settlement payment is being
held in a separate partnership account and will be applied towards the costs of
capital repairs, replacements and improvements necessary to place the hotel in
the condition required by the Hotel Lease at the end of its term.  The
Partnership expects to utilize all of the settlement proceeds for such costs by
its December 31, 2004 year end, which may impact the Company's equity in net
income of Justice Investors for fiscal 2005.

To the extent that projected future undiscounted cash flows from the operation
of the 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.

                                    -7-
<PAGE>



Condensed financial statements for Justice Investors are as follows:


                            JUSTICE INVESTORS
                         CONDENSED BALANCE SHEET

As of September 30,                                             2004
                                                            ----------
Assets
Total current assets                                       $ 4,456,000
Loan fees and deferred lease costs,
  net of accumulated amortization of $6,000                    266,000
Property, plant and equipment, net of
  accumulated depreciation of $13,339,000                    6,871,000
Construction in progress                                       234,000
Land                                                         1,124,000
                                                            ----------
    Total assets                                           $12,951,000
                                                            ==========

Liabilities and partners' capital
Total current liabilities                                  $    77,000
Long-term debt                                               4,321,000
Other long-term debt                                           173,000
Partners' capital                                            8,380,000
                                                            ----------
    Total liabilities and partners' capital                $12,951,000
                                                            ==========


                                JUSTICE INVESTORS
                        CONDENSED STATEMENTS OF OPERATIONS

For the three months ended September 30,       2004            2003
                                            ----------      ----------
Revenues                                   $ 4,719,000     $ 1,012,000
Costs and expenses                          (4,443,000)       (474,000)
                                            ----------      ----------
Net income                                 $   276,000     $   538,000
                                            ==========      ==========


3.  Investment in Marketable Securities
    -----------------------------------

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.


                                    -8-
<PAGE>



At September 30, 2004, all of the Company's marketable securities are
classified as trading securities.  In accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," the change in the
unrealized gains and losses on these investments are included earnings.
Trading securities are summarized as follows:

<TABLE>

As of September 30, 2004:
                              Gross           Gross            Net            Market
Investment   Cost        Unrealized Gain Unrealized Loss  Unrealized Gain     Value
---------- -----------   --------------- ---------------  ---------------  ------------
<S>        <C>            <C>              <C>              <C>            <C>
Corporate
Equities   $10,689,000    $ 3,271,000     ($  565,000)      $2,706,000     $13,395,000

</TABLE>
<TABLE>

As of September 30, 2003:
                              Gross           Gross            Net            Market
Investment   Cost        Unrealized Gain Unrealized Loss  Unrealized Gain     Value
---------- -----------   --------------- ---------------  ---------------  ------------
<S>        <C>            <C>              <C>              <C>            <C>
Corporate
Equities   $12,790,000    $ 4,315,000     ($  147,000)      $4,168,000     $16,958,000

</TABLE>

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 September 30, 2004, the
Company had obligations for securities sold (equities short) of $3,304,000.

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 losses on marketable securities of $1,692,000 for the three
months ended September 30, 2004 are net unrealized losses of $1,345,000 and net
realized losses of $347,000. Included in the net gains on marketable securities
of $405,000 for the three months ended September 30, 2003 are net unrealized
gains of $465,000 and net realized losses of $60,000.  There were no gross
unrealized loss positions on any securities held which existed for more than
one year.


4.  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.

Information below represents reporting segments for the three months ended
September 30, 2004 and 2003.  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.


                                    -9-
<PAGE>

<TABLE>

Three months ended             Justice    Investment
September 30, 2004            Investors  Transactions      Other          Total
                            -----------  ------------   -----------   ------------
<S>                         <C>           <C>           <C>          <C>
Operating income            $   137,000   $(1,623,000)            -  $  (1,486,000)
Operating expenses                    -       (57,000)            -        (57,000)
                            -----------   -----------   -----------   ------------
Net operating income(loss)      137,000    (1,680,000)            -     (1,543,000)

General and administrative
  expenses                            -             -      (125,000)      (125,000)
Other income                          -             -        86,000         86,000
Income tax benefit                    -             -       633,000        633,000
                            -----------   -----------   -----------   ------------
Net income (loss)           $   137,000   $(1,680,000)  $   594,000  $    (949,000)
                            ===========   ===========   ===========   ============
Total Assets                $ 3,691,000   $13,495,000   $   525,000   $ 17,711,000
                            ===========   ===========   ===========   ============

</TABLE>
<TABLE>

Three months ended             Justice    Investment
September 30, 2003            Investors  Transactions      Other          Total
                            -----------  ------------   -----------   ------------
<S>                         <C>           <C>           <C>          <C>
Operating income            $   271,000   $   457,000             -  $     728,000
Operating expenses                    -       (62,000)            -        (62,000)
                            -----------   -----------   -----------   ------------
Net operating income            271,000       395,000             -        666,000

General and administrative
  expenses                            -             -      (110,000)      (110,000)
Other income                          -             -         6,000          6,000
Income tax expense                    -             -      (225,000)      (225,000)
                            -----------   -----------   -----------   ------------
Net income(loss)            $   271,000   $   395,000   $  (329,000)  $    337,000
                            ===========   ===========   ===========   ============
Total Assets                $   953,000   $17,158,000   $   942,000   $ 19,053,000
                            ===========   ===========   ===========   ============
</TABLE>


5.  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 three months ended September 30, 2004
and 2003, these expenses were approximately $21,000 for each period. 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.

John V. Winfield serves as Chief Executive Officer and Chairman of the Company,
Santa Fe, and InterGroup.  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.

                                    -10-
<PAGE>


Item 2 - 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, labor relations and labor disruptions, partnership
distributions, securities markets and concentration of risk, litigation and
other factors, including natural disasters, and those discussed below in this
section and in the Company's Form 10-KSB for the fiscal year ended June 30,
2004, 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 has a 49.8% ownership interest in the Justice Investors limited
partnership ("Justice" or the "Partnership"), in which Portsmouth serves as one
of the general partners.  Justice owns the land, improvements and leaseholds at
750 Kearny Street, San Francisco, California, commonly known as the Holiday Inn
Select Downtown & Spa (the "Hotel"). Historically, Justice's most significant
income source was a lease between the Partnership and Felcor Lodging Trust,
Inc. ("Felcor") for the Hotel portion of the property.  Pursuant to a
Settlement Agreement entered into on May 3, 2004, Felcor agreed to terminate
its lease and surrender possession of the Hotel to Justice, effective June 30,
2004. Effective July 1, 2004, Justice became the owner-operator of the Hotel,
with the assistance of a Management Agreement with Dow Hotel Company, LLC.
("Dow") to perform the day-to day management functions of the Hotel. The
Partnership also derives income from the lease of the garage portion of the
property to Evon Garage Corporation ("Evon").  The Company also receives
management fees from Justice for actively managing the hotel as a general
partner.  As discussed more fully in the "Financial Condition and Liquidity"
section herein, since the Partnership will be expending significant amounts of
money to renovate and reposition the Hotel during the next 18 to 24 months, the
Company may have to depend more on the revenues generated from the investment
of its cash and securities assets during that transition period.

                                    -11-
<PAGE>

Three Months Ended September 30, 2004 Compared to Three Months
Ended September 30, 2003

The Company had a net loss of $949,000 for the three months ended September 30,
2004 compared to net income of $337,000 for the three months ended September
30, 2003.  The change was primarily due to net losses on marketable securities
incurred during the current quarter and the decrease in equity in net income of
Justice Investors.   The change was partially offset by the increase in other
income and the increase in dividend.

The equity in net income of Justice Investors decreased to $137,000 from
$271,000.  Effective July 1, 2004, Justice became the owner-operator of the
Hotel rather than a lessor.  Thus, the Partnership net income for the first
quarter of fiscal 2004 includes the direct operating results of the Hotel,
whereas in the prior year Justice received rental income from Felcor pursuant
to a lease.  Net operating income from the Hotel for the three months ended
September 30, 2004 was approximately $305,000, while the Partnership received
approximately $625,000 in rent from the Hotel lease for the three months ended
September 30, 2003.  The overall decrease in Partnership net income was
primarily attributable to the decrease in income from the Hotel and increased
costs in the current quarter related to the repositioning of the Hotel and
additional depreciation and interest costs related to the build-out of the new
spa and meeting rooms in the Hotel and other capital improvements.

Average daily room rates for the Hotel increased to approximately $97 for the
three months ended September 30, 2004, compared to approximately $90 for the
three months ended September 30, 2003, while average monthly occupancy rates
decreased to approximately 75% from approximately 79% in the prior period.
Those results reflect the efforts of the Partnership and its hotel management
company, Dow, to attract higher rated individual business travelers.  Overall,
the hotel business in the San Francisco Bay Area has lagged behind the recovery
seen in other major cities in the United States due to the continued weakness
in the local economy and a decline in international travel.  The Hotel has also
faced more competition from new properties and from higher end properties that
provide greater amenities to its guests, especially for the business traveler.
The Partnership is committed to making the Hotel competitive in its market by
undertaking a significant renovation of the property and seeking a new, more
upscale, brand for the Hotel.

General and administrative expenses increased to $125,000 from $110,000
primarily due to $14,000 in fees paid during the current quarter to members of
a special committee of the Board of Directors established to oversee and direct
the repositioning of the Hotel.  The Company had no such fees in the prior
quarter.

Net gains (losses) on marketable securities changed to net losses of $1,692,000
for the three months ended September 30, 2004 compared to net gains of $405,000
for the three months ended September 30, 2003. For the three months ended
September 30, 2004, the Company had net unrealized losses of $1,345,000 and net
realized losses of $347,000.  For the three months ended September 30, 2003,
the Company had net unrealized gains of $465,000 and net realized losses of
$60,000.  Gains and losses on marketable securities 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 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.

                                    -12-
<PAGE>

Dividend and interest income increased to $69,000 from $52,000 as a result of
the increased investment in dividend yielding securities.

Other income increased to $86,000 from $6,000 primarily due to the receipt of
$69,000 in additional fees from Justice Investors for management's work in the
positioning of the hotel.

The provision for income tax benefit (expense) changed to a tax benefit of
$633,000 for the three months ended September 30, 2004 from a tax expense of
$225,000 for the three months ended September 30, 2003 due to losses incurred
in the current quarter.


MARKETABLE SECURITIES

As of September 30, 2004, the Company had investments in marketable equity
securities of $13,395,000.  The following table shows the composition of the
Company's marketable securities portfolio by selected industry groups as of
September 30, 2004.

                                                              % of Total
                                                              Investment
   Industry Group                      Market Value           Securities
   --------------                      ------------           ----------
   Electric, pipelines, oil and gas    $ 4,384,000               32.7%
   REITs, lodging, home builders
    and hotels                           1,823,000               13.6%
   Telecommunications and media          1,803,000               13.5%
   Pharmaceuticals and medical           1,733,000               12.9%
   Insurance, banks and brokers          1,101,000                8.2%
   Airlines and defense                    979,000                7.3%
   Chemicals, materials, metals,
    and mining                             661,000                4.9%
   Apparel, food and consumer goods        625,000                4.7%
   Other                                   286,000                2.2%
                                        ----------              ------
                                       $13,395,000              100.0%
                                        ==========              ======

The Company's investment portfolio is diversified with 41 different equity
positions.  The portfolio contains four individual equity securities that are
more than 5% of the equity value of the portfolio with the largest security
being 14% of the value of the portfolio.  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.  As of September 30, 2004, the Company had approximately 32.7% of
its marketable securities portfolio invested in the electric, pipelines, oil
and gas industry group.  While such concentration could be considered a risk
factor, that industry grouping includes a wide range of companies, including
utilities, which the Company believes is consistent with its diversification
policies.  Marketable securities are stated at market value as determined by
the most recently traded price of each security at the balance sheet date.

                                    -13-
<PAGE>

FINANCIAL CONDITION AND LIQUIDITY

Historically, the Company's cash flows were primarily generated through its
general and limited partnership interest in the Justice Investors limited
partnership, which derived its income from its lease with Felcor and a lease
with Evon.  The Company also received monthly limited partnership distributions
from Justice Investors as well as monthly management fees as a general partner.
The Company also receives revenues generated from the investment of its cash
and securities assets.

On May 3, 2004, Justice entered into a Settlement Agreement with Felcor to
resolve disputes regarding certain obligations of Felcor and others under the
terms of the Hotel Lease.  Pursuant to the terms of the Settlement Agreement,
Felcor was required to pay to Justice $5,000,000 towards the costs of capital
repairs, replacements and improvements necessary to place the hotel in the
condition required by the Hotel Lease at the end of its term.  That settlement
payment is being held in a separate partnership account and will be applied
towards the costs of capital repairs, replacements and improvements necessary
to place the hotel in the condition required by the Hotel Lease at the end of
its term.  The Partnership expects to utilize all of the settlement proceeds
for such costs by its December 31, 2004 year end, which may impact the
Company's equity in net income of Justice Investors for fiscal 2005.  Felcor
also agreed to transfer to Justice and terminate its leasehold estate and its
option right under the Hotel Lease, effective June 30, 2004.  In addition, the
parties to the Settlement agreed to mutual releases and to cooperate for a
smooth transition of the operations of the Hotel.  That Settlement was fully
effectuated as of June 30, 2004.

On May 19, 2004, Justice entered into a third party Management Agreement with
Dow Hotel Company for the day-to-day management of the Hotel, effective July 1,
2004.  The Partnership has also been actively pursuing a franchise agreement
with a new nationally recognized brand.  Justice is currently in discussions
with other major brands in an effort to move the property up-market and become
more competitive.  During this transition period to a new brand, the Hotel will
continue to operate as a Holiday Inn Select hotel pursuant to a short-term
franchise agreement that will become a month-to-month agreement beginning in
November 2004 with a sixty day cancellation clause.  It will also be necessary
for the Hotel to limit operations and have rooms out of service during part of
the transition period.

To secure a new brand for the Hotel, it will be necessary for the Partnership
to commit substantial time and resources to meet the product improvement plan
("PIP") requirements of the new brand.  The Partnership anticipates that it
will require approximately $12,000,000 to $18,000,000 in capital commitments,
in addition to the $5,000,000 received from Felcor, to renovate and improve the
Hotel to meet new brand standards.  The Partnership believes that there is
significant equity in the Hotel asset to finance those renovations and
improvements through additional borrowings and that the new debt service
requirements can be met from the rental payments received from the garage
lease.  While the Partnership believes that there is sufficient value in the
Hotel to serve as collateral for new lending facilities, there can be no
assurances that such loan facilities will be available, or if available, will
be on terms acceptable to the Partnership.

                                    -14-
<PAGE>

Since the Partnership will not be receiving minimum rent after June 30, 2004,
and will have to commit significant funds to transition the Hotel to a new
brand, Justice determined that its May 2004 monthly limited partnership
distribution would be the last distribution for an indefinite period of time.
Justice estimates that it will take approximately 18 to 24 months to complete
all of the renovations and for the Partnership to begin to realize the benefits
of the improvements and the increase in cash flows that it anticipates from the
new management structure and new hotel brand.  As a result, the Company
received no Partnership distributions during the three months ended September
30, 2004. For the three months ended September 30, 2003, the Company received
partnership distributions of $397,000.

As a result of the Partnership discontinuing its monthly distributions, in
April 2004, the Board of Directors of Portsmouth deemed it necessary to
discontinue the Company's regular semi-annual dividend of $.25 per common
share.  It is expected that the Company will not consider a return to a regular
dividend policy until such time that Partnership cash flows and distributions
warrant such consideration.

The Hotel may also be subject to labor disruption as the collective bargaining
agreement with Local 2 of the Hotel Employees and Restaurant Employees Union in
San Francisco expired city-wide on August 14, 2004.  Local 2 has since voted to
authorize a strike but, at this time, has only targeted some of the larger
hotels in San Francisco for work stoppages as negotiations continue.  If the
strike does extend to the Hotel, its operations could be disrupted. Also, since
the other hourly employees of the Hotel are union members, they would most
likely honor any picket lines. It is expected that Partnership's hotel
management company, Dow, will implement contingency plans to minimize any loss
of business should a strike take place.

As the Partnership transitions from a lessor of the hotel to an owner-operator,
cash flows will be dependent on net income from the operations of the hotel and
not from a lease with a guaranteed rent.  That uncertainty increases the amount
of risk for the Company, but also provides an opportunity for a greater share
of the profits in good economic times with the repositioning of the hotel.
Although the Partnership is not expected to see a significant improvement in
cash flows until sometime in 2006, it believes that the renovations to the
Hotel, the new management structure and a new brand will make the Hotel more
competitive in the future.  While there might be some negative impact on the
revenues of the hotel garage during the transition period, the Partnership does
not anticipate that impact will be significant.

The recovery of tourism, the hotel industry and general economy in the San
Francisco Bay Area continues to lag behind that of many cities.  The increase
in competition has also added additional challenges to an already difficult
business environment.  The Partnership anticipates that it will be able to
finance the necessary improvements to reposition the Hotel and to meet any
operating cash flow needs during the transition period from the proceeds of the
settlement with Felcor and through additional borrowings.  Justice believes
that it can service that additional debt from the rentals it receives from the
Hotel garage.  If the Partnership is unable to obtain sufficient financing, it
may have to consider other alternatives such as additional capital
contributions; however, the Partnership considers the necessity for such
alternatives as unlikely.

                                    -15-
<PAGE>

During January 2004, the Partnership refinanced its existing line of credit by
obtaining a new facility that provides for a line of credit of up to
$7,500,000.  The facility is collateralized by a first deed of trust on the
Partnership property and matures on February 1, 2006. Interest only is payable
monthly at an annual rate equal to the 30-Day LIBOR rate plus 2%. There are no
prepayment penalties. As of September 30, 2004, the outstanding principal
balance on the Partnership's line of credit was $4,321,000.

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.

Although the Company has suffered a significant decline in hotel revenues and
may be facing a significant period of time without partnership distributions,
management believes that its cash, securities assets and capital resources and
the cash flows generated from those assets will be adequate to meet the
Company's current and future obligations.

The Company also does not have any material contractual obligations or
commercial commitments.


OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off balance sheet arrangements.


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 Dow 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 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.

                                    -16-
<PAGE>

The Company's other accounting policies are straightforward in their
application.


Item 3. 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 Quarterly Report on Form 10-QSB.  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 Quarterly Report on
Form 10-QSB that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.



                     PART II.    OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K.

(a) Exhibits

    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.

(b) Registrant did not file any reports on Form 8-K during the period
    covered by this report.

                                    -17-
<PAGE>


                                SIGNATURES

Pursuant to the requirements 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: November 12, 2004                    by /s/ John V. Winfield
                                              ---------------------------
                                              John V. Winfield, President,
                                              Chairman of the Board and
                                              Chief Executive Officer


Date: November 12, 2004                    by /s/ Michael G. Zybala
                                              ---------------------------
                                              Michael G. Zybala,
                                              Vice President and Secretary


Date: November 12, 2004                    by /s/ David T. Nguyen
                                              --------------------------
                                              David T. Nguyen, Treasurer
                                             (Principal Accounting Officer)


                                    -18-