UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D. C. 20549

                                 FORM 10-Q

 [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

 [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _____

Commission File Number: 0-4057


                          PORTSMOUTH SQUARE, INC.
                          -----------------------
           (Exact name of registrant 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)


                                 (310) 889-2500
                          -----------------------------
                         (Registrant's telephone number)


Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act 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.  [x] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.

   Large accelerated filer [ ]                 Accelerated filer [ ]

   Non-accelerated filer   [ ]                 Smaller reporting company [x]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act.)   [ ] Yes [x] No

<PAGE>

                                     INDEX

                             PORTSMOUTH SQUARE, INC.


PART I. FINANCIAL INFORMATION                                            PAGE

Item 1. Condensed Consolidated Financial Statements

 Condensed Consolidated Balance Sheets
   As of September 30, 2008(Unaudited) and June 30, 2008(Audited)          3

 Condensed Consolidated Statements of Operations (Unaudited)
   For the Three Months ended September 30, 2008 and 2007                  4

 Condensed Consolidated Statements of Cash Flows (Unaudited)
   For the Three Months ended September 30, 2008 and 2007                  5

  Notes to Condensed Consolidated Financial Statements (Unaudited)         6

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                               12

Item 4T. Controls and Procedures                                          20


PART II. OTHER INFORMATION

Item 6. Exhibits                                                          20


SIGNATURES                                                                21

                                    -2-
<PAGE>
<TABLE>

                        PART 1 - FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

                             PORTSMOUTH SQUARE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                     September 30, 2008    June 30, 2008
                                                         (Unaudited)         (Audited)
                                                        ------------       ------------
<S>                                                     <C>                <C>
Assets
  Investment in hotel, net                              $ 38,829,000       $ 39,495,000
  Investment in real estate                                  973,000            973,000
  Investment in marketable securities                      1,874,000          2,958,000
  Other investments, net                                   2,366,000          2,489,000
  Cash and cash equivalents                                  398,000            485,000
  Accounts receivable, net                                 1,430,000          1,140,000
  Other assets, net                                        1,481,000          1,754,000
  Deferred tax asset                                       3,744,000          3,517,000
  Minority interest of Justice Investors                   7,122,000          6,793,000
                                                        ------------       ------------
Total assets                                            $ 58,217,000       $ 59,604,000
                                                        ============       ============
Liabilities and Shareholders' Equity

Liabilities
  Accounts payable and other liabilities                $  7,493,000       $  7,466,000
  Due to securities broker                                   148,000          1,032,000
  Line of Credit                                           1,500,000          1,513,000
  Mortgage notes payable                                  47,305,000         47,482,000
                                                        ------------       ------------
Total liabilities                                         56,446,000         57,493,000
                                                        ------------       ------------
Commitments and contingencies

Shareholders' equity:
  Common stock, no par value; 750,000 authorized shares;
   734,183 shares issued and outstanding                   2,092,000          2,092,000
  Additional paid-in capital                                 916,000            916,000
  Accumulated deficit                                     (1,237,000)          (897,000)
                                                        ------------       ------------
Total shareholders' equity                                 1,771,000          2,111,000
                                                        ------------       ------------
Total liabilities and shareholders' equity              $ 58,217,000       $ 59,604,000
                                                        ============       ============

</TABLE>

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

                                    -3-
<PAGE>

                             PORTSMOUTH SQUARE, INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)

For the three months ended September 30,             2008           2007
                                                  ----------     ----------
Hotel operations:
 Hotel and garage revenue                       $  9,299,000    $ 9,786,000
 Operating expenses                               (7,065,000)    (8,335,000)
 Real estate taxes                                  (177,000)      (177,000)
 Interest expense                                   (719,000)      (702,000)
 Depreciation and amortization                    (1,097,000)    (1,080,000)
                                                  ----------     ----------
Income(loss) from hotel operations                   241,000       (508,000)
                                                  ----------     ----------
Investment transactions:
 Net loss on marketable securities                  (216,000)      (672,000)
 Impairment loss on other investments               (358,000)       (65,000)
 Dividend and interest income                         27,000         24,000
 Margin interest and trading expense                 (55,000)       (93,000)
                                                  ----------     ----------
Loss from investment transactions                   (602,000)      (806,000)
                                                  ----------     ----------

General and administrative expense                  (110,000)      (150,000)
                                                  ----------     ----------

Loss before income taxes and minority interest      (471,000)    (1,464,000)

Minority interest - Justice Investors, pre-tax       (96,000)       278,000
                                                  ----------     ----------
Loss before income taxes                            (567,000)    (1,186,000)

Provision for income tax benefit                     227,000        478,000
                                                  ----------     ----------
Net loss                                         $  (340,000)   $  (708,000)
                                                  ==========     ==========

Basic and diluted loss per share                 $     (0.46)   $     (0.96)
                                                  ==========     ==========
Weighted average number of common shares
 Outstanding                                         734,183        734,183
                                                  ==========     ==========

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

                                    -4-
<PAGE>

                           PORTSMOUTH SQUARE, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

For the three months ended September 30,             2008           2007
                                                  ----------     ----------
Cash flows from operating activities:
  Net loss                                       $  (340,000)   $  (708,000)
  Adjustments to reconcile net loss
   to net cash provided by operating activities:
    Net unrealized loss(gain) on marketable
     securities                                      (67,000)       460,000
    Impairment loss on other investments             358,000         65,000
    Depreciation and amortization                  1,097,000      1,080,000
    Minority interest                                 96,000       (278,000)
    Changes in assets and liabilities:
      Investment in marketable securities          1,151,000      4,591,000
      Other investments                             (235,000)       (65,000)
      Accounts receivable                           (290,000)      (123,000)
      Other assets                                   273,000        321,000
      Accounts payable and other liabilities          27,000      1,192,000
      Due to securities broker                      (884,000)    (2,907,000)
      Obligations for securities sold                      -       (623,000)
      Deferred tax asset                            (227,000)      (478,000)
                                                  ----------     ----------
  Net cash provided by operating activities          959,000      2,527,000
                                                  ----------     ----------

Cash flows from investing activities:
  Capital expenditures for furniture, equipment
   and building improvements                        (431,000)    (1,345,000)
  Investment in real estate                                -       (973,000)
                                                  ----------     ----------
  Net cash used in investing activities             (431,000)    (2,318,000)
                                                  ----------     ----------
Cash flows from financing activities:

  Paydown of line of credit                          (13,000)             -
  Principal payments on mortgage note payable       (177,000)      (168,000)
  Distributions to minority partner                 (425,000)             -
                                                  ----------     ----------
  Net cash used in financing activities             (615,000)      (168,000)
                                                  ----------     ----------
Net (decrease)increase in cash and cash
  equivalents                                        (87,000)        41,000

Cash and cash equivalents at the beginning
 of the period                                       485,000        796,000
                                                  ----------     ----------
Cash and cash equivalents at the end of the
 period                                          $   398,000    $   837,000
                                                  ==========     ==========

Supplemental information:

Interest paid                                    $   727,000    $   747,000
                                                  ==========     ==========


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

                                    -5-
<PAGE>

                      PORTSMOUTH SQUARE, INC.
      NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                          (Unaudited)

NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The consolidated 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
the consolidated 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 consolidated financial statements reflect, in the opinion of management,
all adjustments (which included only normal recurring adjustments) necessary
for a fair statement of the financial position, cash flows and results of
operations as of and for the periods indicated.

As of September 30, 2008, Santa Fe Financial Corporation ("Santa Fe"), a public
company, owns approximately 68.8% of the outstanding common shares of
Portsmouth Square, Inc. ("Portsmouth" or the "Company"). Santa Fe is a 75.9%-
owned subsidiary of The InterGroup Corporation ("InterGroup"), a public
company. InterGroup also directly owns approximately 11.7% of the common stock
of Portsmouth.

Portsmouth's primary business is conducted through its general and limited
partnership interest in Justice Investors, a California limited partnership
("Justice" or the "Partnership"). Portsmouth has a 50.0% limited partnership
interest in Justice and serves as one of the two general partners. The other
general partner, Evon Corporation ("Evon"), serves as the managing general
partner. The financial statements of Justice are consolidated with those of the
Company.

Justice owns a 544 room hotel property located at 750 Kearny Street, San
Francisco, California, known as the "Hilton San Francisco Financial District"
(the "Hotel") and related facilities, including a five level parking garage.
The Hotel was temporarily closed for major renovations from May 2005 to January
2006. The total construction costs related to the renovation project was
approximately $37 million.

The Hotel is operated by the Partnership as a full service Hilton brand hotel
pursuant to a Franchise License Agreement with Hilton Hotels Corporation.
Justice also has a Management Agreement with Prism Hospitality L.P. ("Prism")
to perform the day-to-day management functions of the Hotel. The Partnership
also derives income from the lease of the parking garage to Evon and a lease of
a portion of the lobby level of the Hotel to a day spa operator.  Portsmouth
also receives management fees as a general partner of Justice for its services
in overseeing and managing the Partnership's assets. Those fees are eliminated
in consolidation.

Minority interests in the net assets and earnings or losses of consolidated
subsidiaries are reflected in the caption "Minority interest" in the Company's
condensed consolidated balance sheet and condensed consolidated statements of
operations. Minority interest adjusts the Company's consolidated results of
operations to reflect only the Company's share of the earnings or losses of the

                                    -6-
<PAGE>

consolidated subsidiaries. As of September 30, 2008 and June 30, 2008, the
Company reported the minority interest of Justice Investors as an asset in the
condensed consolidated balance sheet as the result of the accumulated deficit at
Justice Investors.  Management believes the accumulated deficit is considered
temporary as the Hotel was temporarily closed to undergo major renovations from
May 2005 to January 2006.  The Company expects the Hotel to be profitable,
thereby reversing the accumulated deficit in the future.

Certain prior period balances have been reclassified to conform with the
current period presentation.

Basic loss per share is calculated based upon the weighted average number of
common shares outstanding during each fiscal year.  During the three months
ended September 30, 2008 and 2007, the Company did not have any potentially
dilutive securities outstanding; and therefore, does not report diluted
earnings per share.

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, 2008.

The results of operations for the three ended September 30, 2008 are not
necessarily indicative of results to be expected for the full fiscal year
ending June 30, 2009.

In May 2008, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 162(SFAS No. 162), The Hierarchy of
Generally Accepted Accounting Principles. This new standard is intended to
improve financial reporting by identifying a consistent framework, or
hierarchy, for selecting accounting principles to be used in preparing
financial statements that are presented in conformity with GAAP for
nongovernmental entities. SFAS No. 162 is effective on November 15, 2008.  The
Company does not believe SFAS No. 162 will have a significant impact on its
financial statements.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, and amendment to Accounting Research
Bulletin (ARB) No. 51," (SFAS No. 160). This standard prescribes the accounting
by a parent company for minority interests held by other parties in a
subsidiary of the parent company. SFAS No. 160 is effective for the Company for
fiscal year ending June 30, 2010. The Company is currently assessing the impact
of SFAS No. 160 on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("SFAS 141R"), which replaces SFAS No. 141. SFAS 141R establishes
principles and requirements for how an acquirer in a business combination
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any controlling interest; recognizes and
measures the goodwill acquired in the business combination or a gain from a
bargain purchase; and determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the
business combination. SFAS 141R is to be applied prospectively to business
combinations for which the acquisition date is on or after an entity's fiscal
year that begins after December 15, 2008.  The provisions of SFAS 141R are
effective for the Company for the fiscal year ending June 30, 2010.  The
Company is currently assessing the impact of SFAS 141R on its financial
statements.

                                    -7-
<PAGE>

NOTE 2 - INVESTMENT IN HOTEL, NET

Property and equipment as of September 30, 2008 consisted of the following:

                                             Accumulated        Net Book
As of September 30, 2008      Cost           Depreciation         Value
                          ------------       ------------     ------------
Land                      $  1,124,000       $          -     $  1,124,000
Furniture and equipment     16,461,000         (8,805,000)       7,656,000
Building and improvements   45,345,000        (15,296,000)      30,049,000
                          ------------       ------------     ------------
                          $ 62,930,000       $(24,101,000)    $ 38,829,000
                          ============       ============     ============

                                             Accumulated        Net Book
As of June 30, 2008           Cost           Depreciation         Value
                          ------------       ------------     ------------
Land                      $  1,124,000       $          -     $  1,124,000
Furniture and equipment     16,279,000         (8,005,000)       8,274,000
Building and improvements   45,123,000        (15,026,000)      30,097,000
                          ------------       ------------     ------------
                          $ 62,526,000       $(23,031,000)    $ 39,495,000
                          ============       ============     ============


NOTE 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 and REITs, where financial benefit could inure to its shareholders
through income and/or capital gain.

At September 30, 2008, 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 in earnings.

Trading securities are summarized as follows:

<TABLE>
                              Gross            Gross             Net            Fair
Investment     Cost       Unrealized Gain  Unrealized Loss  Unrealized Gain     Value
----------  -----------   ---------------  ---------------  ---------------  ------------

As of September 30, 2008
<S>         <C>            <C>             <C>                <C>            <C>
Corporate
Equities    $ 1,136,000    $  971,000      ($ 233,000)        $ 738,000      $ 1,874,000

As of June 30, 2008
Corporate
Equities    $ 2,286,000    $  877,000      ($ 205,000)        $ 672,000      $ 2,958,000

</TABLE>

As of September 30, 2008 and June 30, 2008, the Company had unrealized losses
of $6,000 and $58,000, respectively, related to securities held for over one
year.

                                    -8-
<PAGE>

Net gain(loss) on marketable securities on the statement of operations is
comprised of realized and unrealized gains(losses).  Below is the composition
of the net gain(loss) for the three months ended September 30, 2008 and 2007,
respectively.

<TABLE>

For the three months ended September 30,                     2008             2007
                                                         -----------      -----------
<S>                                                      <C>              <C>
Realized losses on marketable securities                 $  (283,000)     $  (212,000)
Unrealized gains(losses) on marketable securities             67,000         (460,000)
                                                         -----------      -----------
Net loss on marketable securities                        $  (216,000)      $ (672,000)
                                                         ===========      ===========
</TABLE>

NOTE 4 - OTHER INVESTMENTS, NET

The Company may also invest, with the approval of the Securities Investment
Committee, in private investment equity funds and other unlisted securities,
such as convertible notes through private placements. Those investments in non-
marketable securities are carried at cost on the Company's balance sheet as
part of other investments net of other than temporary impairment losses.

As of September 30, 2008 and June 30, 2008, the Company had net other
investments of $2,366,000 and $2,489,000, respectively, which consist of the
following:


            Type                      September 30, 2008     June 30, 2008
   ---------------------------        ------------------  ----------------
   Private equity hedge fund           $       2,266,000  $      2,325,000
   Corporate debt instruments                          -            64,000
   Other                                         100,000           100,000
                                       -----------------  ----------------
                                       $       2,366,000  $      2,489,000
                                       =================  ================


In accordance with Emerging Issues Task Force No. 03-01, "The Meaning of Other-
Than-Temporary Impairment and Its Application to Certain Investments", the
Company recorded impairment losses $358,000 and $65,000, respectively, during
the three months ended September 30, 2008 and 2007.

In June 2008, the Company, Santa Fe and InterGroup ("the Companies") entered
into an agreement to make additional investments in corporate debt instruments
in the aggregate amount of $1,250,000. Those investments will be allocated
$500,000 to the Company, $250,000 to Santa Fe and $500,000 to Intergroup.  In
addition, the Company's chairman agreed to invest in a like amount and on the
same terms as the Companies.  As of September 30, 2008, a total of $1,000,000
of the investment was made by the Companies, of which Portsmouth paid $400,000,
leaving an aggregate remaining commitment from the Companies of $250,000. In
October 2008, the remaining investment of $250,000 was made by the Companies.


NOTE  5 - FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"), which defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements.

                                    -9-
<PAGE>

SFAS No. 157 is effective as of the beginning of the Company's 2009 fiscal
year.  In February 2008, the FASB deferred the effective date of SFAS No. 157
for non-financial assets and liabilities that are recognized or disclosed at
fair value on a nonrecurring basis until the beginning of fiscal year 2010. The
Company adopted SFAS No. 157 with respect to financial assets and liabilities
on July 1, 2008.  There was no material effect on the financial statements upon
adoption of this new accounting pronouncement. The impact on the financial
statements from adoption of SFAS No. 157 as it pertains to non-financial assets
and liabilities has not yet been determined.

SFAS No. 157 discusses valuation techniques, such as the market approach
(comparable market prices), the income approach (present value of future income
or cash flow), and the cost approach (cost to replace the service capacity of
an asset or replacement cost). The statement utilizes a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value
into three broad levels:

Level 1:  Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities.

Level 2: Inputs, other than quoted prices, that are observable for the asset or
liability, either directly or indirectly. These include quoted prices for
similar assets or liabilities in active markets and quoted prices for identical
or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the reporting entity's own
assumptions

The assets measured at fair value on a recurring basis as of September 30, 2008
are as follows:

<TABLE>

Assets:                                 Level 1      Level 2         Level 3     September 30, 2008
-----------                            ---------    ---------      ---------     ------------------
<S>                                   <C>                  <C>            <C>        <C>
Cash                                  $  398,000           -              -          $  398,000
Investment in marketable securities    1,874,000           -              -           1,874,000
                                       ---------    ---------      ---------          ---------
                                      $2,272,000           -              -          $2,272,000
                                       =========    =========      =========          =========
</TABLE>

The fair values of investments in marketable securities are determined by the
most recently traded price of each security at the balance sheet date.

Financial assets that are measured at fair value on a non-recurring basis and
are not included in the tables above include "Other investments in non-
marketable securities," that were initially measured at cost and have been
written down to fair value as a result of an impairment. The following table
shows the fair value hierarchy for these assets measured at fair value on a
non-recurring basis as of September 30, 2008:

<TABLE>
                                                                                             Loss for the
                                                                                          Three months ended
Assets:                           Level 1    Level 2      Level 3    September 30, 2008   September 30, 2008
-----------                      ---------  ---------    ---------   ------------------   ------------------
<S>                                     <C>        <C>  <C>            <C>                  <C>
Other non-marketable investments        -          -    $2,366,000     $2,366,000           $(358,000)

</TABLE>

Other investments in non-marketable securities are carried at cost net of any
impairment loss.  The Company has no significant influence or control over the
entities that issue these investments.  These investments are reviewed on a

                                    -10-
<PAGE>

periodic basis for other-than-temporary impairment. The Company reviews several
factors to determine whether a loss is other-than-temporary. These factors
include but are not limited to: (i) the length of time an investment is in an
unrealized loss position, (ii) the extent to which fair value is less than
cost, (iii) the financial condition and near term prospects of the issuer and
(iv) our ability to hold the investment for a period of time sufficient to
allow for any anticipated recovery in fair value.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-Including an Amendment of FASB
Statement No. 115."  SFAS No. 159 provides entities with an irrevocable option
to report selected financial assets and financial liabilities at fair value. It
also establishes presentation and disclosure requirements that are designed to
facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities.  The Company adopted
SFAS No. 159 on July 1, 2008 and chose not to elect the fair value option for
its financial assets and liabilities that had not been previously carried at
fair value. Therefore, material financial assets and liabilities not carried at
fair value, such as other assets, accounts payable, line of credit, and
mortgage payables are reported at their carrying values.


NOTE 6 - SEGMENT INFORMATION

The Company operates in two reportable segments, the operation of the hotel and
the investment of its cash in marketable securities and other investments.
These two operating segments, as presented in the consolidated 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, 2008 and 2007, respectively.  Operating income(loss) from Hotel
operations consists of the operations of the hotel and garage.  Operating
income(loss) for investment transactions consist of net investment gain (loss)
and dividend and interest income.

<TABLE>

As of and for the
Three months ended            Hotel       Investment
September 30, 2008          Operations   Transactions      Other          Total
                            -----------  ------------   -----------   ------------
<S>                         <C>           <C>           <C>           <C>
Operating income(loss)      $ 9,299,000   $  (547,000)  $         -   $  8,752,000
Operating expenses           (9,058,000)      (55,000)            -     (9,113,000)
                            -----------   -----------   -----------   ------------
Net operating income(loss)      241,000      (602,000)            -       (361,000)

General and administrative
 expense                                                   (110,000)      (110,000)
Income tax benefit                    -             -       227,000        227,000
Minority interest               (96,000)            -             -        (96,000)
                            -----------   -----------   -----------   ------------
Net income(loss)            $   145,000   $  (602,000)  $   117,000   $   (340,000)
                            ===========   ===========   ===========   ============
Total Assets                $41,665,000   $ 4,240,000   $12,312,000   $ 58,217,000
                            ===========   ===========   ===========   ============

</TABLE>

                                    -11-
<PAGE>
<TABLE>

As of and for the
Three months ended             Hotel       Investment
September 30, 2007           Operations   Transactions      Other          Total
                            -----------  ------------   -----------   ------------
<S>                         <C>           <C>           <C>          <C>
Operating income            $ 9,786,000   $  (713,000)  $         -  $   9,073,000
Operating expenses          (10,294,000)      (93,000)            -    (10,387,000)
                            -----------   -----------   -----------   ------------
Net operating loss             (508,000)     (806,000)            -     (1,314,000)

General and administrative
 expense                                                   (150,000)      (150,000)
Income tax benefit                    -             -       478,000        478,000
Minority interest               278,000             -             -        278,000
                            -----------   -----------   -----------   ------------
Net income (loss)           $  (230,000)  $  (806,000)  $   328,000   $   (708,000)
                            ===========   ===========   ===========   ============
Total Assets                $51,625,000   $ 7,088,000   $ 3,491,000   $ 62,204,000
                            ===========   ===========   ===========   ============

</TABLE>

NOTE 7 - RELATED PARTY TRANSACTIONS

Certain shared costs and expenses, primarily administrative expenses, rent and
insurance are allocated among the Company, the Company's parent, Santa Fe and
InterGroup, the parent of Santa Fe, based on management's estimate of the pro
rata utilization of resources.  For the three months ended September 30, 2008
and 2007, these expenses were approximately $18,000 for each respective period.

Four of the Company's Directors serve as directors of InterGroup and three of
the Company's Directors serve as directors of Santa Fe.

The garage lessee, Evon, is the Partnership's managing general partner. Under
the terms of the lease agreement, Evon paid the Partnership $399,000 and
$415,000 for the three months ended September 30, 2008 and 2007, respectively.

During the three months ended September 30, 2008, the Company received
management fees from Justice Investors totaling $45,000.  This amount was
eliminated in consolidation.

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.

                                    -12-
<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 "anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," "may," "could," "might" and similar expressions, are intended to
identify forward-looking statements.  These statements are subject to certain
risks and uncertainties, such as national and worldwide economic conditions,
including the impact of recessionary conditions on tourism and travel, the
impact of terrorism and war on the national and international economies,
including tourism and securities markets, energy and fuel costs, natural
disasters, general economic conditions and competition in the hotel industry in
the San Francisco area, seasonality, labor relations and labor disruptions,
partnership distributions, the ability to obtain financing at favorable
interest rates and terms, securities markets, regulatory factors, litigation
and other factors discussed below in this Report and in the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 2008, 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 business is conducted through its general and limited
partnership interest in the Justice Investors limited partnership ("Justice" or
the "Partnership"). The Company has a 50.0% limited partnership interest in
Justice and serves as one of the general partners. Justice owns the land,
improvements and leaseholds at 750 Kearny Street, San Francisco, California,
known as the Hilton San Francisco Financial District (the "Hotel"). The
financial statements of Justice have been consolidated with those of the
Company.

The Hotel is operated by the Partnership as a full service Hilton brand hotel
pursuant to a Franchise License Agreement with Hilton Hotels Corporation. The
term of the Agreement is for a period of 15 years commencing on January 12,
2006, with an option to extend the license term for another five years, subject
to certain conditions. Justice also has a Management Agreement with Prism
Hospitality L.P. ("Prism") 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 Corporation ("Evon"), the managing general partner of Justice,
and from a lease with Tru Spa for a portion of the lobby level of the Hotel.
The Company also receives management fees as a general partner of Justice for
its services in overseeing and managing the Partnership's assets. Those fees
are eliminated in consolidation.

                                    -13-
<PAGE>

Three Months Ended September 30, 2008 Compared to Three Months
Ended September 30, 2007

The Company had a net loss of $340,000 for the three months ended September 30,
2008 compared to a net loss $708,000 for the three months ended September 30,
2007. As discussed below, the decrease in the net loss is primarily due to
income from Hotel operations of $241,000 for the three months ended September
30, 2008 compared to a loss of $508,000 for the three months ended September
30, 2007, and the reduction in losses from investment transactions.

The following table sets forth a more detailed presentation of Hotel operations
for the three months ended September 30, 2008 and 2007.

<TABLE>

For the three months ended September 30,                        2008            2007
                                                             ----------      ----------
<S>                                                         <C>            <C>
Hotel revenues:
 Hotel rooms                                                $ 7,588,000    $  7,915,000
 Food and beverage                                            1,259,000       1,289,000
 Garage                                                         399,000         415,000
 Other operating departments                                     53,000         167,000
                                                             ----------      ----------
  Total hotel revenues                                        9,299,000       9,786,000
                                                             ----------      ----------
Operating expenses excluding interest, depreciation
  and amortization                                           (7,242,000)     (8,512,000)
                                                             ----------      ----------
Operating income                                              2,057,000       1,274,000

Interest expense                                               (719,000)       (702,000)
Depreciation and amortization expense                        (1,097,000)     (1,080,000)
                                                             ----------      ----------
Income (loss) from hotel operations                         $   241,000     $  (508,000)
                                                             ==========      ==========
</TABLE>

For the three months ended September 30, 2008, the Hotel generated operating
income of approximately $2,057,000, before interest, depreciation and
amortization, on operating revenues of approximately $9,299,000 compared to
operating income of approximately $1,274,000 before interest, depreciation and
amortization, on operating revenues of approximately $9,786,000 for the three
months ended September 30, 2007. The increase in Hotel operating income is
primarily due to a significant decrease in operating expenses of approximately
$1,270,000, offset by a decrease in operating revenues of approximately
$487,000. The decrease in operating expenses is primarily attributable to
certain nonrecurring legal and consulting fees incurred in the prior period
related to construction litigation that was settled as of June 30, 2008 and for
zoning issues. Operating expenses also decreased due to a decline in hotel
occupancy during the current quarter and managements efforts to reduce costs.
That decline in occupancy was also the primary reason for the decrease in
operating revenues compared to the prior period.

The following table sets forth the average daily room rate, average occupancy
percentage and room revenue per available room ("RevPar") of the Hotel for the
three months ended September 30, 2008 and 2007.

Three Months Ended         Average           Average
  September 30,           Daily Rate        Occupancy%         RevPar
-----------------         ----------        ---------         --------
      2008                   $187              81%              $152
      2007                   $177              89%              $158

                                    -14-
<PAGE>

While the Hotel was able to achieve an increase of approximately $10 in its
average daily room rates for the three months ended September 30, 2008 compared
to the three months ended September 30, 2007, average occupancy percentage
declined approximately 8%, and Rev Par decreased by approximately $6, from the
comparable period. The operations of the Hotel began to feel the impact of the
dramatic downturn in the domestic and international economies and markets
during the first quarter and that impact is expected to continue through fiscal
2009. If that remains true, we expect Hotel operating revenues to be less than
fiscal 2008.

Facing the prospect of a recession and a decline in business, group and leisure
travel, both domestic and international, management has continued to focus on
ways to improve efficiencies and reduce operating costs and other expenses in
its efforts to stabilize and maintain operating income of the Hotel. As a
result of those efforts, we have seen further reductions in operating costs of
the Hotel as a percentage of Hotel revenues for the three months ended
September 30, 2008. Management will also increase its sales and marketing
efforts in what is expected to become an even more competitive hotel market in
San Francisco.  Management will also continue to explore new and innovative
ways to improve operations and enhance the guest experience. One new concept
that Management has recently initiated is the opening of a new wine bar "Flyte"
in the lobby of the Hotel in August 2008.

The Company had a net loss on marketable securities of $216,000 for the three
months ended September 30, 2008 compared to net loss on marketable securities
of $672,000 for the three months ended September 30, 2007. For the three months
ended September 30, 2008, the Company had a net realized loss of $283,000 and a
net unrealized gain of $67,000.  For the three months ended September 30, 2007,
the Company had a net realized loss of $212,000 and a net unrealized loss of
$460,000.  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 results of operations.  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 see the Marketable Securities section below.

The Company may also invest, with the approval of the Securities Investment
Committee, in private investment equity funds and other unlisted securities,
such as convertible notes through private placements. Those investments in non-
marketable securities are carried at cost on the Company's balance sheet as
part of other investments, net of other than temporary impairment losses. As of
September 30, 2008, the Company had net other investments of $2,366,000. During
the three months ended September 30, 2008 and 2007, the Company performed an
impairment analysis of its other investments and determined that its
investments had other than temporary impairments and recorded impairment losses
of $358,000 and $65,000, respectively.

Margin interest and trading expenses decreased to $55,000 for the three months
ended September 30, 2008 from $93,000 for the three months ended September 30,
2007 primarily as the result of the decrease in margin interest expense to
$8,000 from $45,000.  The decrease in the margin interest expense is due to the
maintenance of lower margin balances.

For the three months ended September 30, 2008, general and administrative
expenses decreased to $110,000 from $150,000 for the three months ended
September 30, 2007.  The decrease is primarily attributable to the decrease in
accounting related expenses.

                                    -15-
<PAGE>

Minority interest related to Justice Investors changed to a minority interest
expense of $96,000 for the three months ended September 30, 2008 compared to a
minority interest benefit $278,000 for the three months ended September 30,
2007.  The change is due to the income generated from hotel operations of
$241,000 for the three months ended September 30, 2008 compared to a loss
incurred from hotel operations of $508,000 for the three months ended September
30, 2007.

The provision for income tax benefit decreased to $227,000 for the three months
ended September 30, 2008 from $478,000 for the three months end September 30,
2007 primarily as the result of the lower pre-tax loss incurred during the
three months ended September 30, 2008.


MARKETABLE SECURITIES AND OTHER INVESTMENTS

As of September 30, 2008 and June 30, 2008, the Company had investments in
marketable equity securities of $1,874,000 and $2,958,000, respectively.  The
following table shows the composition of the Company's marketable securities
portfolio by selected industry groups as of September 30, 2008 and June 30,
2008.


   As of September 30, 2008:
                                                             % of Total
                                                              Investment
   Industry Group                      Fair Value             Securities
   --------------                      ------------           ----------

   Dairy products                       $   967,000               51.6%
   Basic materials                          368,000               19.7%
   Insurance, brokers and banks             222,000               11.8%
   Pharmaceuticals                          217,000               11.6%
   Other                                    100,000                5.3%
                                       ------------           ----------
                                       $  1,874,000              100.0%
                                       ============           ==========

   As of June 30, 2008:

                                                             % of Total
                                                              Investment
   Industry Group                      Fair Value             Securities
   --------------                      ------------           ----------
   Diary products                      $    729,000               24.6%
   Communications                           494,000               16.7%
   Financial                                459,000               15.5%
   Transportation                           285,000                9.6%
   Basic materials                          212,000                7.2%
   Other                                    779,000               26.4%
                                         ----------              ------
                                       $  2,958,000              100.0%
                                         ==========              ======

                                    -16-
<PAGE>

As of September 30, 2008, the Company's investment portfolio is diversified
with 9 different equity positions.  The portfolio contains three individual
equity securities that are more than 5% of the equity value of the portfolio
with the largest security being 51.6% 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.

The Company may also invest, with the approval of the Securities Investment
Committee, in private investment equity funds and other unlisted securities,
such as convertible notes through private placements. Those investments in non-
marketable securities are carried at cost on the Company's balance sheet as
part of other investments, net of other than temporary impairment losses.

As of September 30, 2008 and June 30, 2008, the Company had net other
investments of $2,366,000 and $2,489,000, respectively.  During the three
months ended September 30, 2008 and 2007, the Company made investments in
corporate debt instruments of a public company in the basic materials sector
totaling $300,000 and $65,000, respectively.

During the three months ended September 30, 2008 and 2007, the Company received
common stock issued upon conversion or as payment of interest and penalties on
convertible notes in this company.  Through sales of this common stock, the
Company was able to recover approximately $65,000 and $15,000 of its
investments during the three ended September 30, 2008 and 2007, respectively.
As of September 30, 2008, Portsmouth had $125,000 of this company's common
stock included in its investment in marketable securities balance of
$1,874,000.


LIQUIDITY AND SOURCES OF CAPITAL

The Company's cash flows are primarily generated from its Hotel operations. The
Company also receives revenues generated from the investment of its cash and
marketable securities and other investments. Since the operations of the Hotel
were temporarily suspended on May 31, 2005, and significant amounts of money
were expended to renovate and reposition the Hotel as a Hilton, Justice did not
pay any partnership distributions until the end of March 2007. As a result, the
Company had to depend more on the revenues generated from the investment of its
cash and marketable securities during that transition period.

The Hotel started to generate cash flows from its operations in June 2006,
which have continued to improve since that time.  For the three months ended
September 30, 2008, Justice paid a total of $850,000 in limited partnership
distributions, of which the Company received $425,000. No limited partnership
distributions were paid in three months ended September 30, 2007.  The general
partners expect to conduct regular reviews to set the amount of any future
distributions that may be appropriate based on the results of operations of the
Hotel and other factors, including establishment of reasonable reserves for
debt payments and operating contingencies. The recent dramatic downturn in
domestic and international economies and markets, and the prospect of a
prolonged recession, are expected to have a negative impact on the operating
results of the Hotel in fiscal 2009, which could reduce amounts available for
limited partnership distributions.

                                    -17-
<PAGE>

To meet its substantial financial commitments for the renovation and transition
of the Hotel to a Hilton, Justice had to rely on borrowings to meet its
obligations. On July 27, 2005, Justice entered into a first mortgage loan
with The Prudential Insurance Company of America in a principal amount of
$30,000,000 (the "Prudential Loan"). The term of the Prudential Loan is for 120
months at a fixed interest rate of 5.22% per annum. The Prudential Loan calls
for monthly installments of principal and interest in the amount of
approximately $165,000, calculated on a 30-year amortization schedule. The
Prudential Loan is collateralized by a first deed of trust on the Partnership's
Hotel property, including all improvements and personal property thereon and an
assignment of all present and future leases and rents. The Prudential Loan is
without recourse to the limited and general partners of Justice. As of
September 30, 2008 the Prudential Loan balance was approximately $28,614,000.

On March 27, 2007, Justice entered into a second mortgage loan with Prudential
(the "Second Prudential Loan") in the principal amount of $19,000,000. The term
of the Second Prudential Loan is for approximately 100 months and matures on
August 5, 2015, the same date as the first Prudential Loan. The Second
Prudential Loan is at a fixed interest rate of 6.42% per annum and calls for
monthly installments of principal and interest in the amount of approximately
$119,000, calculated on a 30-year amortization schedule. The Second Prudential
Loan is collateralized by a second deed of trust on the Partnership's Hotel
property, including all improvements and personal property thereon and an
assignment of all present and future leases and rents. The Second Prudential
Loan is without recourse to the limited and general partners of Justice. As of
September 30, 2008, the Second Prudential Loan balance was approximately
$18,691,000.

The Partnership also obtained a new unsecured $3,000,000 revolving line of
credit facility from UCB to be utilized by the Partnership to meet any
emergency or extraordinary cash flow needs. The new line of credit facility
matures on February 2, 2009 and the annual interest rate is based on an index
selected by Justice at the time of advance, equal to the Wall Street Journal
Prime Rate less 0.5%, or the LIBOR Rate plus 2%. As of September 30, 2008,
there was a balance of $1,500,000 drawn by Justice under the new line of
credit, with an annual interest rate at Prime less 0.5% (4.00% as of September
30, 2008). It is expected that the Partnership will attempt to renew or extend
its line of credit facility with UCB or to obtain a replacement facility with
another lending institution in the near future.

While the debt service requirements related to the two Prudential loans, as
well as the utilization of the UCB line of credit, may create some additional
risk for the Company and its ability to generate cash flows in the future since
the Partnership's assets had been virtually debt free for an number of years,
management believes that cash flows from the operations of the Hotel and the
garage lease will continue to be sufficient to meet all of the Partnership's
current and future obligations and financial requirements. Management also
believes that there is sufficient equity in the Hotel assets to support future
borrowings, if necessary, to fund any new capital improvements and other
requirements.

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 consolidated statements of operations.

                                    -18-
<PAGE>

Management believes that its cash, marketable securities, and the cash flows
generated from those assets and from partnership distributions and management
fees, will be adequate to meet the Company's current and future obligations.


MATERIAL CONTRACTUAL OBLIGATIONS

The Company does not have any material contractual obligations or commercial
commitments other than Justice's mortgage loans with Prudential and its
revolving line of credit facility with UCB.


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.  Since Prism has the power and ability under the
terms of its management agreement to adjust hotel room rates on an ongoing
basis, 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

Critical accounting policies are those that are most significant to the
portrayal of our financial position and results of operations and require
judgments by management in order to make estimates about the effect of matters
that are inherently uncertain. The preparation of these condensed financial
statements requires us to make estimates and judgments that affect the reported
amounts in our consolidated financial statements. We evaluate our estimates on
an on-going basis, including those related to the consolidation of our
subsidiaries, to our revenues, allowances for bad debts, accruals, asset
impairments, other investments, income taxes and commitments and contingencies.
We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities. The actual results may differ from these estimates or our
estimates may be affected by different assumptions or conditions.

                                    -19-
<PAGE>

Item 4T. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company's management, with the participation of the Company's Chief
Executive Officer and Principal 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
quarterly period covered by this Quarterly Report on Form 10-Q.  Based upon
such evaluation, the Chief Executive Officer and Principal 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 within the time periods
specified in the Securities and Exchange Commission rules and forms.

CHANGES IN 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-Q 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.

    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 Principal 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 Principal Financial Officer Pursuant to 18
            U.S.C. Section 1350.

                                    -20-
<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 11, 2008                   by /s/ John V. Winfield
                                              ---------------------------
                                              John V. Winfield, President,
                                              Chairman of the Board and
                                              Chief Executive Officer


Date:  November 11, 2008                   by /s/ Michael G. Zybala
                                              ---------------------------
                                              Michael G. Zybala,
                                              Vice President and Secretary


Date:  November 11, 2008                   by /s/ David Nguyen
                                              --------------------------
                                              David Nguyen, Treasurer
                                             (Principal Financial Officer)

                                    -21-