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, 2005

                         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 9, 2005.

   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, 2005 (Unaudited)                         3

 Statements of Operations (Unaudited)- Three Months ended               4
    September 30, 2005 and September 30, 2004

  Statements of Cash Flows (Unaudited)- Three Months ended
    September 30, 2005 and September 30, 2004                           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                                        19


PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K                               19

SIGNATURES                                                             20

                                    -2-
<PAGE>


                         PART 1 - FINANCIAL INFORMATION

Item 1 - Financial Statements

                             PORTSMOUTH SQUARE, INC.
                                 BALANCE SHEET
                                  (Unaudited)

As of September 30,                                           2005
                                                          ----------

Assets

  Cash and cash equivalents                             $     76,000
  Investment in marketable securities                      9,353,000
  Other investments                                        1,170,000
  Investment in Justice Investors                            738,000
  Other assets                                               944,000
                                                          ----------
Total assets                                            $ 12,281,000
                                                          ==========

Liabilities and Shareholders' Equity

Liabilities
  Due to securities broker                                 3,813,000
  Obligations for securities sold                          1,342,000
  Accounts payable and other liabilities                     161,000
  Deferred income taxes                                      446,000
                                                          ----------
Total liabilities                                          5,762,000
                                                          ----------
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                                        3,511,000
                                                          ----------

Total shareholders' equity                                 6,519,000
                                                          ----------

Total liabilities and shareholders' equity              $ 12,281,000
                                                          ==========


See accompanying notes to financial statements.

                                    -3-
<PAGE>


                            PORTSMOUTH SQUARE, INC.
                           STATEMENTS OF OPERATIONS
                                  (Unaudited)

For the three months September 30,                   2005           2004
                                                  ----------     ----------
  Equity in net income(loss) of Justice
   Investors                                     $  (724,000)    $  137,000

  General and administrative expenses               (110,000)      (125,000)
                                                  ----------     ----------
                                                    (834,000)        12,000
Non-operating income (expenses):
  Net losses on marketable securities               (198,000)    (1,692,000)
  Dividend and interest income                        96,000         69,000
  Margin interest and trading expenses               (83,000)       (57,000)
  Other income, net                                   13,000         86,000
                                                  ----------     ----------
                                                    (172,000)    (1,594,000)
                                                  ----------     ----------
Loss before income taxes                          (1,006,000)    (1,582,000)

Provision for income tax benefit                     395,000        633,000
                                                  ----------     ----------
Net loss                                        $   (611,000)   $  (949,000)
                                                  ==========     ==========

Basic loss per share                            $      (0.83)   $     (1.29)
                                                  ==========     ==========

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,             2005           2004
                                                  ----------     ----------
Cash flows from operating activities:
  Net loss                                       $  (611,000) $    (949,000)
  Adjustments to reconcile net loss
   to net cash provided by operating activities:
    Equity in net loss(income) of
     Justice Investors                               724,000       (137,000)
    Net unrealized losses on marketable
     securities                                      204,000      1,345,000
    Changes in assets and liabilities:
      Investment in marketable securities         (1,837,000)     4,611,000
      Deferred income taxes and other assets        (386,000)        82,000
      Accounts payable and other liabilities          92,000       (620,000)
      Due to securities broker                     1,763,000     (2,441,000)
      Obligations for securities sold                107,000     (1,594,000)
                                                  ----------     ----------
  Net cash provided by operating activities           56,000        297,000
                                                  ----------     ----------
Cash flows from investing activities:
  Cash distributions from Justice Investors                -              -
                                                  ----------     ----------
  Net cash provided by investing activities                -              -
                                                  ----------     ----------

Cash flows from financing activities:
  Dividends paid                                           -              -
                                                  ----------     ----------
  Net cash provided from financing activities              -              -
                                                  ----------     ----------
Net increase in cash and cash equivalents             56,000        297,000

Cash and cash equivalents at the beginning
  of the period                                       20,000        112,000
                                                  ----------     ----------
Cash and cash equivalents at the end of the
 period                                          $    76,000    $   213,000
                                                  ==========     ==========


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 for a fair statement of the financial
position, cash flow and results of operations as of and for the periods
indicated.

Portsmouth is a 68.8%-owned subsidiary of Santa Fe Financial Corporation
("Santa Fe"), which is also a public company.  Santa Fe is a 72.9%-owned
subsidiary of the InterGroup Corporation, a public company.

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, 2005.

The results of operations for the three months ended September 30, 2005 are not
necessarily indicative of results to be expected for the full fiscal year
ending June 30, 2006.


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

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

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.

                                    -6-
<PAGE>


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.

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 and from a lease on the lobby level of the
Hotel to Tru Spa.  The Company also derives revenue from management fees from
Justice for actively managing the hotel as a general partner.

On December 10, 2004, Justice entered into a Franchise License Agreement for
the right to operate the Hotel property as a Hilton brand hotel. Prior to
operating the hotel as a Hilton, the Partnership is required to make
substantial renovations to the hotel to meet Hilton standards in accordance
with a product improvement plan agreed upon by Hilton and the Partnership, as
well as complying with other brand standards.  The Partnership currently
estimates that the cost of the renovation project will be approximately $34
million.  That amount includes approximately $29 million for the actual cost of
the renovations and approximately $5 million for construction interest and
estimated carrying costs of operations during the renovation period.  As of
September 30, 2005, the Partnership has incurred approximately $15,093,000 in
construction costs related to the renovation. Of that amount, $132,000 is
related to capitalized interest.  Additionally, the Partnership incurred
approximately $3,593,000 in carrying costs related to operations.

The Agreement requires that those renovations be complete and the Hotel
commence operations as a Hilton hotel no later than June 1, 2006.  Hilton is
presently accepting reservations for Hotel guest arrivals on January 29, 2006
and beyond.  The Partnership believes that the renovations will be complete and
the Hotel opened by that date.  The term of the Agreement is for a period of 15
years commencing on the opening date, with an option to extend the license term
for another five years, subject to certain conditions.

On March 15, 2005, the Partnership announced its decision to close down its
Hotel operations on or about June 1, 2005 to complete renovations of the Hotel
as required by the Hilton Agreement.  It is anticipated that the Hotel will be
closed for a period of approximately seven to nine months before a contemplated
reopening in the early part of 2006 as the "Hilton San Francisco Financial
District".  The below ground parking garage and Tru Spa located on the lobby
level of the Hotel, both of which are lessees of the Partnership, will remain
open during the renovation work.

                                    -7-
<PAGE>


Condensed financial statements for Justice Investors are as follows:


                            JUSTICE INVESTORS
                         CONDENSED BALANCE SHEET
                              (Unaudited)

As of September 30,                                            2005
                                                            ----------
Assets
Cash                                                      $ 13,382,000
Other current assets                                         1,416,000
Property, plant and equipment, net of
  accumulated depreciation of $13,538,000                    4,870,000
Construction in progress                                    15,093,000
Land                                                         1,124,000
                                                            ----------
    Total assets                                          $ 35,885,000
                                                            ==========

Liabilities and partners' capital
Total current liabilities                                 $  2,471,000
Long-term debt                                              30,965,000
Partners' capital                                            2,449,000
                                                            ----------
    Total liabilities and partners' capital               $ 35,885,000
                                                            ==========


                                JUSTICE INVESTORS
                        CONDENSED STATEMENTS OF OPERATIONS

For the three months ended September 30,       2005            2004
                                            ----------      ----------
Hotel revenue                            $           -     $ 4,354,000
Hotel rent                                           -          45,000
Garage rent                                    157,000         306,000
Other income                                    23,000          14,000
Operating expenses                          (1,640,000)     (4,443,000)
                                            ----------      ----------
Net income (loss)                         $ (1,460,000)    $   276,000
                                            ==========      ==========


                                    -8-
<PAGE>


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.

At September 30, 2005, 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>

As of September 30, 2005:
                              Gross            Gross             Net            Market
Investment     Cost       Unrealized Gain  Unrealized Loss  Unrealized Gain     Value
----------  -----------   ---------------  ---------------  ---------------  ------------
<S>         <C>             <C>             <C>               <C>            <C>
Corporate
Equities    $8,507,000      $1,780,000      ($  934,000)      $ 846,000      $ 9,353,000
</TABLE>

As of September 30, 2005, the Company did not have any unrealized losses
related to securities held for over one year.

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, 2005, the
Company had obligations for securities sold (equities short) of $1,342,000.

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 $198,000 for the three
months ended September 30, 2005 are net unrealized losses of $204,000 and net
realized gains of $6,000. 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.

                                    -9-
<PAGE>


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, 2005 and 2004.  Operating income from Justice Investors consists
of the operations of the hotel and garage, which are included in the equity in
net income of Justice Investors.  Operating income (loss) for investment
transactions consist of net investment gains (losses) and dividend and interest
income.

<TABLE>

Three months ended             Justice    Investment
September 30, 2005            Investors  Transactions      Other          Total
                            -----------  ------------   -----------   ------------
<S>                         <C>           <C>           <C>          <C>
Operating loss              $  (724,000)  $  (102,000)  $         -  $    (826,000)
Operating expenses                    -       (83,000)            -        (83,000)
                            -----------   -----------   -----------   ------------
Net operating loss             (724,000)     (185,000)            -       (909,000)

General and admin. exp.               -             -      (110,000)      (110,000)
Other income                          -             -        13,000         13,000
Income tax benefit                    -             -       395,000        395,000
                            -----------   -----------   -----------   ------------
Net income (loss)           $  (724,000)  $  (185,000)  $   298,000  $    (611,000)
                            ===========   ===========   ===========   ============
Total Assets                $   738,000   $10,523,000   $ 1,020,000  $  12,281,000
                            ===========   ===========   ===========   ============
</TABLE>
<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 admin. exp.               -             -      (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>

                                    -10-
<PAGE>


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, 2005
and 2004, these expenses were approximately $20,000 and $21,000, respectively.
Four of the Company's Directors serve as directors of InterGroup and three of
the Company's Directors serve on the Board of Santa Fe.

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.


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, the ability of the Partnership to obtain hotel financing for
renovations at favorable interest rates and terms, 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, 2005, 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.

                                    -11-
<PAGE>


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, formerly known as the Holiday Inn
Select Downtown & Spa (the "Hotel"). Historically, Justice's most significant
income source was derived from 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 Corporation ("Evon") and from a lease with Tru Spa for a
portion of the lobby level of the Hotel.  The Company also receives management
fees from Justice for actively managing the hotel as a general partner.

On December 10, 2004, Justice entered into a Franchise License Agreement for
the right to operate the Hotel property as a Hilton brand hotel. Prior to
operating the hotel as a Hilton, the Partnership is required to make
substantial renovations to the hotel to meet Hilton standards in accordance
with a product improvement plan agreed upon by Hilton and the Partnership, as
well as complying with other brand standards.  The Partnership currently
estimates that the cost of the renovation project will be approximately $34
million.  That amount includes approximately $29 million for the actual cost of
the renovations and approximately $5 million for construction interest and
estimated carrying costs of operations during the renovation period. As of
September 30, 2005, the Partnership has incurred approximately $15,093,000 in
construction costs related to the renovation. Of this amount, $132,000 is
related to capitalized interest. Additionally, the Partnership incurred
approximately $3,593,000 in carrying costs related to operations.  The
Agreement requires that those renovations be complete and the Hotel commence
operations as a Hilton hotel no later than June 1, 2006.  Hilton is presently
accepting reservations for Hotel guest arrivals on January 29, 2006 and beyond.
The Partnership believes that the renovations will be complete and the Hotel
opened by that date.  The Agreement requires that those renovations be complete
and the Hotel commence operations as a Hilton hotel no later than June 1, 2006.
The term of the Agreement is for a period of 15 years commencing on the opening
date, with an option to extend the license term for another five years, subject
to certain conditions.

Effective May 31, 2005, the Partnership elected to close down its Hotel
operations to complete renovations of the Hotel as required by the Hilton
Agreement.  It is anticipated that the Hotel will be closed for a period of
approximately seven to nine months before a contemplated reopening in the early
part of 2006 as the "Hilton San Francisco Financial District".  The below
ground parking garage and Tru Spa located on the lobby level of the Hotel, both
of which are lessees of the Partnership, have remained open during the
renovation work.

On July 27, 2005, Justice entered into a first mortgage loan (the "Prudential
Loan") with The Prudential Insurance Company of America in a principal amount
of $30,000,000.  The term of the Loan is for 120 months at a fixed interest

                                    -12-
<PAGE>


rate of 5.22% per annum. The Loan calls for monthly installments of principal
and interest in the amount of approximately $165,100, calculated on a 360 month
amortization schedule. The 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 Loan is without recourse to the limited and general partners of Justice.

On July 27, 2005, Justice also obtained a $10,000,000 Revolving Line of Credit
("LOC") from United Commercial Bank. The term of the LOC is for 60 months at an
annual interest rate based on the index selected by Justice at the time of
the request for each advance. The interest rate will either be a variable rate
equal to The Wall Street Journal Prime Rate or the Libor Rate plus 2%, fixed
for the period selected by the Partnership. The LOC is collateralized by a
second deed of trust on the Hotel property. Interest only is payable monthly
with principal and accrued interest due at maturity.

From the proceeds of the Prudential Loan, the Partnership retired its existing
line of credit in the approximate amount of $7,436,000, including accrued
interest, and paid off a short term uncollateralized line of credit from United
Commercial Bank in the amount of $2,007,000, including accrued interest.


Three Months Ended September 30, 2005 Compared to Three Months
Ended September 30, 2004

The Company had a net loss of $611,000 for the three months ended September 30,
2005 compared to a net loss of $949,000 for the three months ended September
30, 2004.  As discussed below, the reduction in the net loss was primarily due
to the significantly lower net losses suffered on the Company's marketable
securities portfolio, partially offset the significant change in the equity in
net income(loss) of Justice Investors.

The Company had a loss in equity in net income(loss) of Justice Investors of
$724,000 for the three months ended September 30, 2005, compared to net income
of $137,000 for the three months ended September 30, 2004. Effective, May 31,
2005, the Partnership elected to close down its Hotel operations to complete
the renovations of the Hotel as required by the Hilton Franchise Agreement.
Thus, Partnership net income for the three months ended September 30, 2005 did
not have any operating income from the Hotel, while the three months ended
September 30, 2004 included the direct operating results of the Hotel. Net
operating income from the Hotel for the three months ended September 30, 2004,
was approximately $305,000. The overall decrease in Partnership net income was
also attributable to a decrease in garage rent to approximately $167,000 from
approximately $306,000 related to the closing of the Hotel, and increased costs
in the current quarter related to higher interest expenses, insurance costs,
professional fees and other costs for the repositioning of the Hotel.

While the Hotel had traditionally enjoyed a favorable year-round occupancy
rate, but both occupancy and average daily room rates have suffered since
fiscal year ended June 30, 2001.  Newer and more upscale properties have opened
in or near the Financial District, which provide greater amenities to their
guests, making it difficult for the Hotel to compete.  These competitors are
now better positioned to attract both the business traveler and tourists and to
achieve higher occupancy and room rates.

                                    -13-
<PAGE>


Management believes that the Hotel could not continue to be competitive under
the conditions it operated under while a Holiday Inn Select brand hotel. By
terminating the Hotel Lease with Felcor, and taking over the operations of the
Hotel, the Partnership now has greater ability to direct the future of the
Hotel.  The Hotel is now approximately 25 years old, with no major renovations
having been made to the property during that time.  The Partnership is
committed to make substantial improvements to almost every area of the Hotel
before it reopens in the early part of 2006 as the Hilton San Francisco
Financial District. The newly renovated Hotel will feature among other
amenities: 552 remodeled guest rooms and suites; a new concierge lounge and
common areas; modern and expanded meeting rooms; a new ballroom; a new
restaurant and bar; a new fitness center; and the existing Tru Spa.  The
Partnership believes that this renovation project, coupled with the strength of
the Hilton brand and reservation system, along with the hotel management
expertise of Dow, will allow the Hotel to directly compete with all hotels in
the Financial District.

General and administrative expenses decreased to $110,000 for three months
ended September 30, 2005 from $125,000 for the three months ended September 30,
2004.  This decrease is the result of management's cost cutting efforts.

Net losses on marketable securities decreased to $198,000 for the three months
ended September 30, 2005 from $1,692,000 for the three months ended September
30, 2004.  For the three months ended September 30, 2005, the Company had net
unrealized losses of $204,000 and net realized gains of $6,000.  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.  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.

Dividend and interest income increased to $96,000 from $69,000 as a result of
the increased investment in dividend yielding securities.

Margin interest and trading expenses increased to $83,000 from $57,000
primarily due to the increase in trading related expenses. Margin interest
expense was consistent with the prior comparable quarter.

Other income decreased to $13,000 from $86,000 primarily as the result of the
receipt of $69,000 in additional fees from Justice Investors for management's
work in the positioning of the hotel during the three months ended September
30, 2004.

The provision for income tax benefit decreased to $395,000 for the three months
ended September 30, 2005 from $633,000 for the three months ended September 30,
2004 due to the lower pre-tax loss incurred during the three months ended
September 30, 2005.

                                    -14-
<PAGE>


MARKETABLE SECURITIES

As of September 30, 2005, the Company had investments in marketable equity
securities of $9,353,000.  The following table shows the composition of the
Company's marketable securities portfolio by selected industry groups as of
September 30, 2005.

                                                              % of Total
                                                              Investment
   Industry Group                      Market Value           Securities
   --------------                      ------------           ----------
   Telecommunications and media         $2,937,000               31.4%
   Paper mills, steel mills and gold     2,564,000               27.4%
   Insurance, banks and brokers          1,418,000               15.2%
   Real estate invest trusts(REITs)      1,357,000               14.5%
   Motor vehicle parts                     421,000                4.5%
   Electric, pipelines, oil and gas        278,000                3.0%
   Consumer goods                          246,000                2.6%
   Other                                   132,000                1.4%
                                        ----------              ------
                                       $ 9,353,000              100.0%
                                        ==========              ======

The Company's investment portfolio is diversified with 30 different equity
positions.  The portfolio contains seven individual equity securities that are
more than 5% of the equity value of the portfolio with the largest security
being 11% 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, 2005, the Company had approximately 31.4% of
its marketable securities portfolio invested in the telecommunications and
media industry group.  While such concentration could be considered a risk
factor, that industry grouping includes telecom and media companies that
operate in different sectors of telecommunications and media industry, 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.


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.  As discussed below, since the Partnership has closed
down the operations of the Hotel and is expending significant amounts of money
to renovate and reposition the Hotel as a Hilton, it will not be paying any
monthly limited partnership distributions until some time after operations
commence under the Hilton brand.  As a result, the Company may have to depend
more on the revenues generated from the investment of its cash and securities
assets during that transition period.

                                    -15-
<PAGE>

On May 3, 2004, Justice entered into a settlement agreement with the hotel
lessee, Felcor, to resolve disputes regarding certain obligations of Felcor and
others under the terms of the hotel lease. Pursuant to the settlement, Felcor
paid the sum of $5,000,000 to Justice towards the costs of capital repairs,
replacements and maintenance necessary to place the hotel into the condition
required at the end of the lease.  Felcor also agreed to terminate its
leasehold estate and surrendered possession of the hotel to the Partnership on
June 30, 2004, at which time Justice assumed the role as owner-operator of the
property.

To assist in the day-to-day operations of the hotel, Justice entered into a
third party management agreement with Dow Hotel Company, effective July 1,
2004.  The termination of the hotel lease also made it possible for the
Partnership to seek a new franchise agreement for the hotel. Those efforts were
successful and culminated with Justice entering into a Franchise License
Agreement (the "Hilton Franchise Agreement"), on December 10, 2004, for the
right to operate the hotel property as a Hilton brand hotel.

Prior to operating the hotel as a Hilton, the Partnership is required to make
substantial renovations to the hotel to meet Hilton standards in accordance
with a product improvement plan agreed upon by Hilton and the Partnership, as
well as complying with other brand standards.  The Partnership currently
estimates that the cost of the renovation project will be approximately $34
million.  That amount includes approximately $29 million for the actual cost of
the renovations and approximately $5 million for construction interest and
estimated carrying costs of operations during the renovation period. The Hilton
Franchise Agreement requires that those renovations be complete and the Hotel
commence operations as a Hilton hotel no later than June 1, 2006.

Effective, May 31, 2005, the Partnership elected to close down its Hotel
operations to complete the renovations of the Hotel as required by the Hilton
Franchise Agreement.  It is anticipated that the Hotel will be closed until the
first part of 2006 before it reopens as the "Hilton San Francisco Financial
District".  The below ground parking garage and Tru Spa located on the lobby
level of the Hotel, both of which are lessees of the Partnership, will remain
open during the renovation work.

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 an improvement in cash flows
until the Hotel reopens in the first part of 2006, it believes that the
renovations to the Hotel, the new management structure and the new Hilton brand
will make the Hotel more competitive in the future.  There will be a negative
impact on the revenues from the hotel garage during the transition period due
to the shut down of the Hotel operations. Evon has entered into a management
agreement with a new garage operator, effective September 1, 2005, and it is
expected that the new operator will take affirmative steps to help minimize the
loss of garage revenues during the transition period.

As discussed above, the Partnership will be expending significant amounts of
money to renovate and reposition the Hotel as Hilton.  During that transition
period, the Hotel will be shut down and revenues to the Partnership will be

                                    -16-
<PAGE>

limited to rentals received from the parking garage and Tru Spa. Thus, it is
expected that the Partnership will continue to incur losses during that time.
To meet its substantial financial commitments for the renovation project,
Justice will have to rely on additional borrowings to meet its obligations.

On July 27, 2005, Justice entered into a first mortgage loan (the "Prudential
Loan") with The Prudential Insurance Company of America in a principal amount
of $30,000,000. The term of the Loan is for 120 months at a fixed interest rate
of 5.22% per annum. The Loan calls for monthly installments of principal and
interest in the amount of approximately $165,100, calculated on a 360 month
amortization schedule. The 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 Loan is without recourse to the limited and general partners of Justice.

On July 27, 2005, Justice also obtained a $10,000,000 Revolving Line of Credit
("LOC") from United Commercial Bank. The term of the LOC is for 60 months at an
annual interest rate based on the index selected by Justice at the time of the
request for each advance. The interest rate will either be a variable rate
equal to The Wall Street Journal Prime Rate or the Libor Rate plus 2%, fixed
for the period selected by the Partnership. The LOC is collateralized by a
second deed of trust on the Hotel property. Interest only is payable monthly
with principal and accrued interest due at maturity. As of September 30, 2005,
$1,000,000 of the LOC was utilized by the Partnership.

From the proceeds of the Prudential Loan, the Partnership retired its existing
line of credit in the approximate amount of $7,436,000, including accrued
interest, and paid off a short term uncollateralized line of credit from United
Commercial Bank in the amount of $2,007,000, including accrued interest.
Justice believes that the Prudential Loan and the LOC will provide sufficient
financial resources for the Partnership to complete the substantial renovations
to the Hotel required by its Franchise License Agreement with Hilton and to
meet its debt service requirements and operating capital needs through the
reopening of the Hotel in the early part of 2006.  The Partnership believes
that, after the reopening of the Hotel, the revenues expected to be generated
from the Hotel operations will be sufficient to meet all of its current and
future obligations and financial requirements.

That additional amount of leverage related to the Prudential Loan and the
utilization of the LOC and the associated debt service will create additional
risk for the Partnership and its ability to generate cash flows in the future
since the Hotel asset has been virtually debt free for many years. The
Partnership does not anticipate paying any partnership distributions until some
time after operations commence under the Hilton brand and net income and
capital requirements warrant such distributions.  As a result, the Company may
have to depend more on the revenues generated from the investment of its cash
and securities assets during that transition period.

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.

                                    -17-
<PAGE>


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 the cash flows
generated from those assets, will be adequate to meet the Company's current and
future obligations.


MATERIAL CONTRACTUAL 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 the 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.

                                    -18-
<PAGE>


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.


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 filed the following report on Form 8-K during the quarter
covered by this Report:


  Date of Report      Item Number                Events Reported
-----------------     ------------    -----------------------------------------
  July 27, 2005       Item 8.01       Justice Investors obtaining a $30,000,000
                      Other Events    loan from Prudential Insurance and a
                                      $10,000,000 line of credit from United
                                      Commercial Bank

                                    -19-
<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 10, 2005                    by /s/ John V. Winfield
                                              ---------------------------
                                              John V. Winfield, President,
                                              Chairman of the Board and
                                              Chief Executive Officer


Date: November 10, 2005                    by /s/ Michael G. Zybala
                                              ---------------------------
                                              Michael G. Zybala,
                                              Vice President and Secretary


Date: November 10, 2005                    by /s/ David T. Nguyen
                                              --------------------------
                                              David T. Nguyen, Treasurer
                                             (Principal Accounting Officer)

                                    -20-