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 December 31, 2009

 [ ]   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.)


    10940 Wilshire Blvd., Suite 2150, Los Angeles, California       90024
    ---------------------------------------------------------     --------
          (Address of principal executive offices)               (Zip Code)


                                 (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 December 31, 2009 and June 30, 2009 (Unaudited)                    3

 Condensed Consolidated Statements of Operations (Unaudited)
  For the Three Months ended December 31, 2009 and 2008                    4

 Condensed Consolidated Statements of Operations (Unaudited)
  For the Six Months ended December 31, 2009 and 2008                      5

 Condensed Consolidated Statements of Cash Flows (Unaudited)
  For the Six Months ended December 31, 2009 and 2008                      6

 Notes to Condensed Consolidated Financial Statements (Unaudited)          7

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                               18

Item 4T. Controls and Procedures                                          28


PART II. OTHER INFORMATION

Item 6. Exhibits                                                          28


SIGNATURES                                                                29

                                    -2-
<PAGE>

                                    PART 1
                              FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

<TABLE>

                               PORTSMOUTH SQUARE, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS

                                                    December 31, 2009     June 30, 2009
                                                    -----------------     -------------
<S>                                                     <C>                <C>
Assets
  Investment in hotel, net                              $ 35,637,000       $ 36,342,000
  Investment in real estate                                  973,000            973,000
  Investment in marketable securities                      2,704,000          5,987,000
  Other investments, net                                   2,460,000          2,409,000
  Cash and cash equivalents                                1,337,000            209,000
  Accounts receivable, net                                 1,338,000          1,271,000
  Other assets, net                                        2,070,000          1,684,000
  Deferred tax asset                                       4,320,000          3,709,000
                                                        ------------       ------------
Total assets                                            $ 50,839,000       $ 52,584,000
                                                        ============       ============

Liabilities and Shareholders' Equity (Deficit)

Liabilities
  Accounts payable and other liabilities                $  9,372,000       $  8,531,000
  Due to securities broker                                         -          1,514,000
  Obligations for securities sold                            441,000            699,000
  Line of Credit                                           2,500,000          1,811,000
  Mortgage notes payable                                  46,379,000         46,757,000
                                                        ------------       ------------
Total liabilities                                         58,692,000         59,312,000
                                                        ------------       ------------
Commitments and contingencies

Shareholders' equity (deficit):
  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                                     (2,040,000)        (1,140,000)
                                                        ------------       ------------
Total Portsmouth shareholders' equity                        968,000          1,868,000
Noncontrolling interest                                   (8,821,000)        (8,596,000)
                                                        ------------       ------------
Total shareholders' deficit                               (7,853,000)        (6,728,000)
                                                        ------------       ------------
Total liabilities and shareholders' equity (deficit)    $ 50,839,000       $ 52,584,000
                                                        ============       ============
</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 December 31,              2009           2008
                                                  ----------     ----------

Revenue - hotel                                  $ 8,368,000    $ 8,644,000
                                                  ----------     ----------
Costs and operating expenses
 Hotel operating expenses                         (6,543,000)    (7,277,000)
 Depreciation and amortization expense            (1,199,000)    (1,120,000)
 Loss on termination of garage lease                       -       (684,000)
 General and administrative expense                 (150,000)      (162,000)
                                                  ----------     ----------
Total costs and operating expenses                (7,892,000)    (9,243,000)
                                                  ----------     ----------

Income(loss) from operations                         476,000       (599,000)
                                                  ----------     ----------
Other income(expense)
 Interest expense                                   (729,000)      (724,000)
 Net gain(loss) on marketable securities             (18,000)       336,000
 Net unrealized gain on other investments             85,000              -
 Impairment loss on other investments               (334,000)             -
 Dividend and interest income                         20,000         18,000
 Trading and margin interest expense                 (85,000)       (52,000)
                                                  ----------     ----------
Net other expense                                 (1,061,000)      (422,000)
                                                  ----------     ----------

Loss before income taxes                            (585,000)    (1,021,000)
Income tax benefit                                   202,000        170,000
                                                  ----------     ----------
Net loss                                            (383,000)      (851,000)
Less: Net loss attributable to the
 noncontrolling interest                              87,000              -
                                                  ----------     ----------
Net loss attributable to Portsmouth                 (296,000)      (851,000)
                                                  ==========     ==========

Basic and diluted loss per share attributable
 to Portsmouth                                   $     (0.40)   $     (1.16)
                                                  ==========     ==========
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 OPERATIONS
                                 (UNAUDITED)

For the six months ended December 31,                2009           2008
                                                  ----------     ----------

Revenue - hotel                                 $ 16,898,000   $ 17,943,000
                                                  ----------     ----------
Costs and operating expenses
 Hotel operating expenses                        (13,419,000)   (14,519,000)
 Depreciation and amortization expense            (2,331,000)    (2,217,000)
 Loss on termination of garage lease                       -       (684,000)
 General and administrative expense                 (274,000)      (272,000)
                                                  ----------     ----------
Total costs and operating expenses               (16,024,000)   (17,692,000)
                                                  ----------     ----------

Income from operations                               874,000        251,000
                                                  ----------     ----------
Other income(expense)
 Interest expense                                 (1,442,000)    (1,443,000)
 Net gain(loss) on marketable securities            (796,000)       120,000
 Net unrealized gain on other investments             85,000              -
 Impairment loss on other investments               (334,000)      (358,000)
 Dividend and interest income                         51,000         45,000
 Trading and margin interest expense                (173,000)      (107,000)
                                                  ----------     ----------
Net other expense                                 (2,609,000)    (1,743,000)
                                                  ----------     ----------

Loss before income taxes                          (1,735,000)    (1,492,000)
Income tax benefit                                   611,000        397,000
                                                  ----------     ----------
Net loss                                          (1,124,000)    (1,095,000)
Less: Net loss attributable to the
 noncontrolling interest                             224,000              -
                                                  ----------     ----------
Net loss attributable to Portsmouth                 (900,000)    (1,095,000)
                                                  ==========     ==========

Basic and diluted loss per share attributable
 to Portsmouth                                   $     (1.23)  $      (1.49)
                                                  ==========     ==========
Weighted average number of common shares
 Outstanding                                         734,183        734,183
                                                  ==========     ==========

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

                                    -5-
<PAGE>

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

For the six months ended December 31,                2009           2008
                                                  ----------     ----------
<S>                                              <C>            <C>
Cash flows from operating activities:
  Net loss                                       $(1,124,000)   $(1,095,000)
  Adjustments to reconcile net loss
   to net cash provided by operating activities:
    Net unrealized loss(gain) on marketable
     securities                                    2,826,000       (481,000)
    Net unrealized (gain) on other investments       (85,000)             -
    Impairment loss on other investments             334,000        358,000
    Depreciation and amortization                  2,331,000      2,217,000
    Loss on termination of garage lease                    -        684,000
    Changes in assets and liabilities:
      Investment in marketable securities            457,000        630,000
      Accounts receivable                            (67,000)      (160,000)
      Other assets                                  (386,000)      (222,000)
      Deferred tax asset                            (611,000)      (397,000)
      Accounts payable and other liabilities          341,000         (1,000)
      Due to securities broker                    (1,514,000)      (271,000)
      Obligations for securities sold               (258,000)              -
                                                  ----------     ----------
  Net cash provided by operating activities        2,244,000      1,262,000
                                                  ----------     ----------

Cash flows from investing activities:
  Capital expenditures for furniture, equipment
   and building improvements                        (926,000)      (657,000)
  Other investments                                 (300,000)      (435,000)
                                                  ----------     ----------
  Net cash used in investing activities           (1,226,000)    (1,092,000)
                                                  ----------     ----------

Cash flows from financing activities:

  Draw on line of credit                             689,000        243,000
  Principal payments on mortgage note payable       (378,000)      (358,000)
  Payment on other notes payable                    (201,000)             -
  Distributions to noncontrolling interest                 -       (425,000)
                                                  ----------     ----------
  Net cash provided by (used in)
       financing activities                          110,000       (540,000)
                                                  ----------     ----------
Net increase(decrease) in cash and cash
 equivalents                                       1,128,000       (370,000)

Cash and cash equivalents at the beginning
 of the period                                       209,000        485,000
                                                  ----------     ----------
Cash and cash equivalents at the end of the
 period                                          $ 1,337,000    $   115,000
                                                  ==========     ==========
Supplemental information:

Interest paid                                    $ 1,529,000     $ 1,452,000
                                                  ==========     ==========
Non cash investing and financing activities:
  Note payable on termination of garage lease    $         -    $  (727,000)
                                                  ==========     ==========
  Fixed assets acquired, net of liabilities,
   upon termination of garage lease              $         -    $    43,000
                                                  ==========     ==========
  Assets acquired through capital lease          $   700,000    $         -
                                                  ==========     ==========
</TABLE>

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

                                    -6-
<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 December 31, 2009, 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 76%-
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") served as the managing general
partner until December 1, 2008. The Limited Partnership Agreement was amended,
effective December 1, 2008, to provide for a change in the respective roles of
the general partners. Pursuant to that amendment, Portsmouth became the
Managing General Partner of Justice while Evon assumed the role of Co-General
Partner of Justice. 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, now known as the Hilton San Francisco Financial District
(the Hotel) and related facilities including a five level underground parking
garage. 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.

Justice leased the parking garage to Evon through September 30, 2008.
Effective October 1, 2008, Justice and Evon entered into an Installment Sale
Agreement whereby Justice purchased all of Evon's right, title, and interest in
the remaining term of its lease of the parking garage, which was to expire on
November 30, 2010, and other related assets.  Justice also agreed to assume
Evon's contract with Ace Parking Management, Inc. ("Ace Parking") for the

                                    -7-
<PAGE>

management of the garage and any other liabilities related to the operation of
the garage commencing October 1, 2008.  The Partnership also leases a day spa
on the lobby level to Tru Spa. 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.

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 and six
months ended December 31, 2009 and 2008, the Company did not have any
potentially dilutive securities outstanding.

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-K for the year ended June 30, 2009.

The results of operations for the three and six months ended December 31, 2009
are not necessarily indicative of results to be expected for the full fiscal
year ending June 30, 2010.

In June 2009, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles,
which was primarily codified into Accounting Standards Codification (ASC) Topic
105. This standard will become the single source of authoritative
nongovernmental U.S. generally accepted accounting principles (GAAP). The
Codification was effective for interim or annual financial periods ended after
September 15, 2009. The Company adopted ASC 105 beginning the quarter ended
September 30, 2009. The adoption of ASC 105 did not have a material impact on
our consolidated financial position, results of operations and cash flows.
Additionally, the FASB now uses Accounting Standards Updates (ASU) to amend
ASC.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation
No. 46(R) (SFAS 167), which has not yet been codified in the ASC. This guidance
is a revision to pre-existing guidance pertaining to the consolidation and
disclosures of variable interest entities. Specifically, it changes how a
reporting entity determines when an entity that is insufficiently capitalized
or is not controlled through voting (or similar rights) should be consolidated.
The determination of whether a reporting entity is required to consolidate
another entity is based on, among other things, the other entity's purpose and
design and the reporting entity's ability to direct the activities of the other
entity that most significantly impact the other entity's economic performance.
This guidance will require a reporting entity to provide additional disclosures
about its involvement with variable interest entities and any significant
changes in risk exposure due to that involvement. A reporting entity will be
required to disclose how its involvement with a variable interest entity
affects the reporting entity's financial statements. This guidance will be
effective at the start of a reporting entity's first fiscal year beginning
after November 15, 2009. Early application is not permitted. The Company is
currently evaluating the impact on our financial statements, if any, upon
adoption.

                                    -8-
<PAGE>

In May 2009, the FASB issued SFAS No. 165, Subsequent Events, which was
primarily codified into ASC Topic 855. The Company adopted ASC Topic 855 which
requires an entity to recognize in the financial statements the effects of all
subsequent events that provide additional evidence about conditions that
existed at the date of the balance sheet. For non-recognized subsequent events
that must be disclosed to keep the financial statements from being misleading,
an entity will be required to disclose the nature of the event as well as an
estimate of its financial effect, or a statement that such an estimate cannot
be made. In addition, ASC Topic 855 requires an entity to disclose the date
through which subsequent events have been evaluated. ASC Topic 855 is
consistent with current practice and did not have any impact on the Company's
consolidated financial statements. Subsequent events were evaluated through the
date the condensed and consolidated financial statements were issued, which was
February 12, 2010.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in
Consolidated Financial Statements-an amendment of ARB No. 51" which was
primarily codified into ASC Topic 810, "Consolidation."  ASC Topic 810 states
that accounting and reporting for minority interests will be recharacterized as
noncontrolling interests and classified as a component of equity. This standard
also establishes reporting requirements that provide disclosures that identify
and distinguish between the interests of the parent and the interests of the
noncontrolling owners. ASC Topic 810 required retrospective adoption of the
presentation and disclosure requirements for previously existing minority
interests. All other requirements are to be applied prospectively.   This
standard is effective for fiscal years beginning after December 15, 2008.  The
Company adopted the provisions beginning July 1, 2009. Prior to adopting this
standard, the Company absorbed 100% of the net loss and accumulated deficit of
Justice Investors as of June 30, 2009.  Effective July 1, 2009 under ASC Topic
810, losses attributable to the parent and the noncontrolling interest in a
subsidiary shall be attributed to those respective interests.  That is, the
noncontrolling interest shall continue to be attributed its share of losses
even if that attribution results in a deficit noncontrolling interest balance.
As a result, upon adoption, the Company recalculated the accumulated deficit
pertaining to noncontrolling interest totaling $8,596,000 as of June 30, 2009
and reclassified such amount as a separate component of the shareholders'
equity (deficit). However, the losses attributed to the noncontrolling interest
were not adjusted in the consolidated statement of operations the three and six
months ended December 31, 2008. See Note 10.

In February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities"
which was primarily codified into ASC Topic 825, "Financial Instruments." ASC
Topic 825 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 ASC Topic 825 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.

                                    -9-
<PAGE>

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations",
which was primarily codified into ASC Topic 805, "Business Combinations".  It
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. This standard 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
Company adopted this standard beginning July 1, 2009 and adoption of this
standard had no material impact on the Company's consolidated financial
statements.


NOTE 2 - INVESTMENT IN HOTEL, NET

Property and equipment consisted of the following:

                                             Accumulated        Net Book
As of December 31, 2009     Cost            Depreciation         Value
                          ------------       ------------     ------------
Land                      $  1,124,000       $          -     $  1,124,000
Furniture and equipment     18,071,000        (12,915,000)       5,156,000
Building and improvements   46,278,000        (16,921,000)      29,357,000
                          ------------       ------------     ------------
                          $ 65,473,000       $(29,836,000)    $ 35,637,000
                          ============       ============     ============

                                             Accumulated        Net Book
As of June 30, 2009           Cost           Depreciation         Value
                          ------------       ------------     ------------
Land                      $  1,124,000       $          -     $  1,124,000
Furniture and equipment     16,939,000        (11,262,000)       5,677,000
Building and improvements   45,693,000        (16,152,000)      29,541,000
                          ------------       ------------     ------------
                          $ 63,756,000       $(27,414,000)    $ 36,342,000
                          ============       ============     ============


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 insure to its shareholders
through income and/or capital gain.

At December 31, 2009, all of the Company's marketable securities are classified
as trading securities.  The change in the unrealized gains and losses on these
investments are included in earnings.

                                    -10-
<PAGE>

Trading securities are summarized as follows:

<TABLE>

                              Gross            Gross             Net            Fair
Investment     Cost       Unrealized Gain  Unrealized Loss  Unrealized Gain     Value
----------  -----------   ---------------  ---------------  ---------------  ------------
<S>                        <C>             <C>                <C>           <C>
As of December 31, 2009

Corporate
Equities    $ 2,377,000    $  584,000      ($ 257,000)        $ 327,000     $ 2,704,000


As of June 30, 2009

Corporate
Equities    $ 2,896,000    $  3,442,000    ($ 351,000)        $ 3,091,000    $ 5,987,000

</TABLE>

As of December 31, 2009 and June 30, 2009, the Company had unrealized losses of
$251,000 and $137,000, respectively, related to securities held for over one
year.

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 and six months ended December 31, 2009 and
2008, respectively.

<TABLE>

For the three months ended December 31,                     2009             2008
                                                         -----------      -----------
<S>                                                      <C>              <C>
Realized gain(loss) on marketable securities             $ 2,107,000      $   (78,000)
Unrealized gain(loss) on marketable securities            (2,125,000)         414,000
                                                         -----------      -----------
Net gain(loss) on marketable securities                  $   (18,000)     $   336,000
                                                         ===========      ===========


For the six months ended December 31,                        2009             2008
                                                         -----------      -----------

Realized gain(loss) on marketable securities             $ 2,114,000      $  (361,000)
Unrealized gain(loss) on marketable securities            (2,910,000)         481,000
                                                         -----------      -----------
Net gain(loss) on marketable securities                  $  (796,000)     $   120,000
                                                         ===========      ===========

</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.

                                    -11-
<PAGE>

As of December 31, 2009 and June 30, 2009, the Company had net other
investments of $2,460,000 and $2,409,000, respectively, which consist of the
following:

            Type                      December 31, 2009     June 30, 2009
   ---------------------------        ------------------  ----------------
   Private equity hedge fund           $       1,675,000  $      2,009,000
   Corporate debt instruments                    634,000           400,000
   Warrants                                      151,000                 -
                                       -----------------  ----------------
                                       $       2,460,000  $      2,409,000
                                       =================  ================

During the three months ended December 31, 2009 and 2008, the Company recorded
impairment losses on other investments of $334,000 and $0, respectively.
During the six months ended December 31, 2009 and 2008, the Company recorded
impairment losses on other investments of $334,000 and $358,000, respectively.

As of December 31, 2009, the Company had investments in corporate debt and
equity instruments which had attached warrants that were considered derivative
instruments.  These warrants have an allocated cost basis of $66,000 and a fair
market value of $151,000.  The unrealized gain of $85,000 related to these
warrants was included in the Company's consolidated statement of operations.

Derivative financial instruments, as defined in ASC 815-10-15-83 Derivatives
and Hedging (pre-Codification FAS No. 133  Accounting for Derivative Financial
Instruments and Hedging Activities ), consist of financial instruments or other
contracts that contain a notional amount and one or more underlying (e.g.
interest rate, security price or other variable), require no initial net
investment and permit net settlement. Derivative financial instruments may be
free-standing or embedded in other financial instruments. Further, derivative
financial instruments are initially, and subsequently, measured at fair value
on the Company's consolidated balance sheet with the related unrealized gain or
loss recorded in the Company's consolidated statement of operations.  The
Company used the Black-Scholes option valuation model to estimate the fair
value these instruments which requires management to make significant
assumptions including trading volatility, estimated terms, and risk free rates.
Estimating fair values of derivative financial instruments requires the
development of significant and subjective estimates that may, and are likely
to, change over the duration of the instrument with related changes in internal
and external market factors. In addition, option-based models are highly
volatile and sensitive to changes in the trading market price of the underlying
common stock, which has a high-historical volatility. Since derivative
financial instruments are initially and subsequently carried at fair values,
the Company's consolidated statement of operations will reflect the volatility
in these estimate and assumption changes.


NOTE 5 - FAIR VALUE MEASUREMENTS

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"), which was primarily codified into ASC Topic 820, which
defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. ASC Topic 820 is effective
as of the beginning of the Company's 2009 fiscal year.  In February 2008, the
FASB deferred the effective date of ASC Topic 820 for non-financial assets and
liabilities that are recognized or disclosed at fair value on a nonrecurring

                                    -12-
<PAGE>

basis until the beginning of fiscal year 2010. The Company adopted ASC Topic
820 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.

ASC Topic 820 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 December 31, 2009
are as follows:

<TABLE>

Assets:                                 Level 1      Level 2        Level 3      December 31, 2009
-----------                            ---------    ---------      ---------     ------------------
<S>                                   <C>          <C>             <C>             <C>
Cash                                  $1,337,000   $       -              -        $  1,337,000
Investment in marketable securities    2,704,000           -              -           2,704,000
Other investments - warrants                         151,000              -             151,000
                                       ---------    ---------      ---------          ---------
                                      $4,041,000   $ 151,000              -        $  4,192,000
                                       =========    =========      =========          =========
</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. The fair
value of the warrants was determined based upon a Black-Scholes option
valuation model.

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 impairment. The following table shows
the fair value hierarchy for these assets measured at fair value on a non-
recurring basis as of December 31, 2009:

<TABLE>

                                                                                          Gain(loss) for the
                                                                                          six months ended
Assets:                           Level 1    Level 2      Level 3    December 31, 2009    December 31, 2009
-----------                      ---------  ---------    ---------   ------------------   ------------------
<S>                                     <C>        <C>   <C>            <C>                    <C>
Other non-marketable investments        -          -     $2,460,000     $2,460,000             $(334,000)

</TABLE>
                                    -13-
<PAGE>

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
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.


NOTE 6 - TERMINATION OF GARAGE LEASE

Effective October 1, 2008, Justice and Evon entered into an Installment Sale
Agreement whereby Justice purchased all of Evon's right title and interest in
the remaining term of its lease of the parking garage, which was to expire on
November 30, 2010, and other related assets. Justice also agreed to assume
Evon's contract with Ace Parking for the management of the garage and any other
liabilities related to the operation of the garage commencing October 1, 2008.
The purchase price for the garage lease and related assets was approximately
$755,000, payable in one down payment of approximately $28,000 and 26 equal
monthly installments of approximately $29,000, which includes interest at the
rate of 2.4% per annum. Future installment payments as of December 31, 2009 are
as follows:

       For the year ending June 30,

                  2010      174,000
                  2011      144,000
                           --------
                   Total   $318,000
                           ========

As of December 31, 2009, the present value of the liability of $318,000 was
included in the accounts payable and other liabilities balance of $9,372,000 on
the Company's condensed consolidated balance sheet.


NOTE 7 - LINE OF CREDIT

The Partnership has a $2,500,000 unsecured revolving line of credit facility
with a bank that was to mature on February 2, 2010. On January 13, 2010, the
Partnership received an extension of the maturity date from the bank to April
30, 2010.   Borrowings under the line of credit bear interest at Prime plus
3.0% per annum or based on the Wall Street Journal Prime Rate (3.25%) plus 3.0%
per annum, floating, (but subject to a minimum floor rate at 5.0% per annum).
The interest rate at December 31, 2009 was 6.25%.  The outstanding balance on
the line of credit was $2,500,000 and $1,811,000 as of December 31, 2009 and
June 30, 2009, respectively.  Borrowings under the line of credit are subject
to certain financial covenants, which are measured annually at June 30th and
December 31st based on the credit arrangement.  The Partnership was not in
compliance with the financial covenants as of December 31, 2009, but is working
with the bank on a waiver of such non-compliance as well as a longer term
extension.

                                    -14-
<PAGE>

NOTE 8 - SEGMENT INFORMATION

The Company operates in two reportable segments, the operation of the hotel
("Hotel Operations") and the investment of its cash in marketable securities
and other investments ("Investment Transactions"). 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 and six months
ended December 31, 2009 and 2008, respectively.  Operating income(loss) from
Hotel operations consists of the operation of the hotel and operation of the
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
December 31, 2009               Operations   Transactions      Other          Total
                                -----------  ------------   -----------   ------------
<S>                             <C>           <C>           <C>           <C>
Revenues                        $ 8,368,000   $         -   $         -   $  8,368,000
Expenses                         (7,742,000)            -      (150,000)    (7,892,000)
                                -----------   -----------   -----------   ------------
Income(loss)from operations         626,000             -      (150,000)       476,000
Interest expense                   (729,000)            -             -       (729,000)
Net loss from investments                 -      (332,000)            -       (332,000)
Income tax benefit                        -             -       202,000        202,000
                                -----------   -----------   -----------   ------------
Net income(loss)                $  (103,000)  $  (332,000)  $    52,000   $   (383,000)
                                ===========   ===========   ===========   ============
Total Assets                    $35,637,000   $ 5,164,000   $10,038,000   $ 50,839,000
                                ===========   ===========   ===========   ============


As of and for the
Three months ended                Hotel       Investment
December 31, 2008               Operations   Transactions      Other          Total
                                -----------  ------------   -----------   ------------

Revenues                        $ 8,644,000   $         -   $         -   $  8,644,000
Expenses                         (9,081,000)            -      (162,000)    (9,243,000)
                                -----------   -----------   -----------   ------------
Loss from operations               (437,000)            -     (162,000)       (599,000)
Interest expense                   (724,000)            -            -        (724,000)
Net income from investments               -       302,000            -         302,000
Income tax benefit                        -             -       170,000        170,000
                                -----------   -----------   -----------   ------------
Net income(loss)                $(1,161,000)  $   302,000   $     8,000   $   (851,000)
                                ===========   ===========   ===========   ============
Total Assets                    $41,349,000   $ 5,375,000   $12,179,000   $ 58,903,000
                                ===========   ===========   ===========   ============
</TABLE>

                                    -15-
<PAGE>
<TABLE>

As of and for the
six months ended                  Hotel       Investment
December 31, 2009               Operations   Transactions      Other          Total
                                -----------  ------------   -----------   ------------
<S>                             <C>           <C>           <C>           <C>
Revenues                        $16,898,000   $         -   $         -   $ 16,898,000
Expenses                        (15,750,000)            -      (274,000)   (16,024,000)
                                -----------   -----------   -----------   ------------
Income(loss)from operations       1,148,000             -      (274,000)       874,000
Interest expense                 (1,442,000)            -             -     (1,442,000)
Net loss from investments                 -    (1,167,000)            -     (1,167,000)
Income tax benefit                        -             -       611,000        611,000
                                -----------   -----------   -----------   ------------
Net income(loss)                $  (294,000)  $(1,167,000)  $   337,000   $ (1,124,000)
                                ===========   ===========   ===========   ============
 Total Assets                   $35,637,000   $ 5,164,000   $ 10,038,000   $50,839,000
                                ===========   ===========   ===========   ============


As of and for the
six months ended                  Hotel       Investment
December 31, 2008               Operations   Transactions      Other          Total
                                -----------  ------------   -----------   ------------

Revenues                        $ 17,943,000   $        -  $          -    $17,943,000
Expenses                         (17,420,000)           -      (272,000)   (17,692,000)
                                -----------   -----------   -----------   ------------
Income(loss)from operations         523,000             -      (272,000)       251,000
Interest expense                 (1,443,000)            -             -     (1,443,000)
Net loss from investments                 -      (300,000)            -       (300,000)
Income tax benefit                        -             -       397,000        397,000
                                -----------   -----------   -----------   ------------
Net income(loss)                $  (920,000)   $ (300,000)  $   125,000   $ (1,095,000)
                                ===========   ===========   ===========   ============
 Total Assets                   $41,349,000   $ 5,375,000   $12,179,000   $ 58,903,000
                                ===========   ===========   ===========   ============
</TABLE>

NOTE 9 - 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 December 31, 2009
and 2008, these expenses were approximately $18,000 for each respective period.
For the six months ended December 31, 2009 and 2008, these expenses were
approximately $36,000 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.

Evon, a general partner of Justice, was the lessee of the parking garage until
September 30, 2008. Under the terms of the lease agreement, Evon paid the
Partnership rent of $399,000 for the six months ended December 31, 2008. As
discussed in Note 6, Justice and Evon entered into an installment sale
agreement whereby Justice purchased the remaining term of the lease agreement
and related assets for a total of approximately $755,000.

During the three and six months ended December 31, 2009, the Company received
management fees from Justice Investors totaling $72,000 and $151,000,
respectively.  These amounts were eliminated in consolidation.

                                    -16-
<PAGE>

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.


NOTE 10 - PROFORMA DISCLOSURE UPON ADOPTION OF ASC 810-10 ("CONSOLIDATION")

As discussed in Note 1, the Company adopted ASC Topic No. 810-10,
"Consolidation," effective July 1, 2009, which requires a retrospective
adoption of the presentation and disclosure of previously existing minority
interest.  Prior to the adoption of ASC Topic No. 810-10, the Company absorbed
100% of the net loss and accumulated deficit of Justice Investors as of June
30, 2009.  Hence, the minority interest in Justice as of June 30, 2009 and for
each of the three quarters ended June 30, 2009 were $0.  For purposes of
presentation, the deficit noncontrolling interest was reclassified in the
consolidated balance sheet as of June 30, 2009.  However, the losses attributed
to the noncontrolling interest were not adjusted in the consolidated statement
of operations for the three months ended September 30, 2008, and for the three
and six months ended December 31, 2008.

Below are the pro-forma consolidated net losses of the Company for the three
months ended September 30, 2008, and for the three and six months ended
December 31, 2008, assuming ASC Topic 810-10 had been adopted in those periods.

<TABLE>

                                                      Proforma              Proforma             Proforma
                                                 Three Months Ended    Three Months Ended    Six Months Ended
                                                 September 30, 2008    December 31, 2008     December 31, 2008
                                                 ------------------    -----------------     -----------------
<S>                                               <C>                   <C>                   <C>
Net loss                                          $     (244,000)       $     (851,000)       $   (1,095,000)
Less: net loss (income) attributable to the
noncontrolling interest                                  (96,000)              608,000               512,000
                                                  --------------        --------------        --------------
Net Loss attributable to Portsmouth               $     (340,000)       $     (243,000)       $     (583,000)
                                                  ==============        ==============        ==============

Basic and diluted loss per share
attributable to Portsmouth                        $        (0.46)       $        (0.33)       $        (0.79)
                                                  ==============        ==============        ==============
</TABLE>

Below are the consolidated net losses as reported in the consolidated financial
statements for the three months ended September 30, 2008, and for the three and
six months ended December 31, 2008:

<TABLE>

                                                 Three Months Ended    Three Months Ended    Six Months Ended
                                                 September 30, 2008    December 31, 2008     December 31, 2008
                                                 ------------------    -----------------     -----------------
<S>                                               <C>                   <C>                   <C>
Net loss                                          $     (244,000)       $     (851,000)       $   (1,095,000)
Less: net loss attributable to the
noncontrolling interest                                        -                     -                     -
                                                  --------------        --------------        --------------
Net Loss attributable to Portsmouth               $     (244,000)       $     (851,000)       $   (1,095,000)
                                                  ==============        ==============        ==============

Basic and diluted loss per share
attributable to Portsmouth                        $        (0.33)       $        (1.16)       $        (1.49)
                                                  ==============        ==============        ==============
</TABLE>
                                    -17-
<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, travel and the
lodging industry, 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, actual and threatened pandemics such as swine flu,
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-K for the fiscal year ended June 30, 2009, 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 the managing general partner of Justice. Evon Corporation
("Evon") serves as the other general partner. 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 are 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.

Until September 30, 2008, the Partnership also derived income from the lease of
the parking garage to Evon.  Effective October 1, 2008, Justice entered into an
installment sale agreement with Evon to purchase the remaining term of the
garage lease and related garage assets, and assumed the contract with Ace
Parking for the operations of the garage. Justice also leases 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.

                                    -18-
<PAGE>

Three Months Ended December 31, 2009 Compared to Three Months
Ended December 31, 2008

The Company had a net loss of $383,000 for the three months ended December 31,
2009 compared to a net loss of $851,000 for the three months ended December 31,
2008.  The decrease in the net loss is primarily attributable to the decrease
in the net loss from hotel operations partially offset by the loss from
investing activities.

During the three months ended December 31, 2009, the Company had a loss on
hotel operations of $103,000 compared to a loss of $1,161,000 for the three
months ended December 31, 2008.  The significant reduction in that loss was
primarily attributable to a reduction in hotel operating expenses as a
percentage of hotel revenues in the current period and a one-time loss related
to the termination of the hotel garage lease in the amount of $684,000 which
was incurred in the three months ended December 31, 2008.

The following table sets forth a more detailed presentation of Hotel operations
for the three months ended December 31, 2009 and 2008.

<TABLE>

For the three months ended December 31,                         2009            2008
                                                             ----------      ----------
<S>                                                         <C>            <C>
Hotel revenues:
 Hotel rooms                                                $ 6,474,000    $  6,612,000
 Food and beverage                                            1,118,000       1,268,000
 Garage                                                         598,000         571,000
 Other                                                          178,000         193,000
                                                             ----------      ----------
  Total hotel revenues                                        8,368,000       8,644,000

Operating expenses, excluding loss on termination of
 garage lease, interest, depreciation and amortization       (6,543,000)     (7,277,000)
                                                             ----------      ----------
Operating income before loss on termination of garage lease,
  interest, depreciation and amortization                     1,825,000       1,367,000
Loss on termination of garage lease                                   -        (684,000)
Interest expense                                               (729,000)       (724,000)
Depreciation and amortization expense                        (1,199,000)     (1,120,000)
                                                             ----------      ----------
Loss from hotel operations                                  $  (103,000)    $(1,161,000)
                                                             ==========      ==========
</TABLE>

For the three months ended December 31, 2009, the Hotel generated operating
income of approximately $1,825,000, before interest, depreciation and
amortization, on operating revenues of approximately $8,368,000 compared to
operating income of approximately $1,367,000 before the loss on termination of
garage lease, interest, depreciation and amortization, on operating revenues of
approximately $8,644,000 for the three months ended December 31, 2008. The
increase in Hotel operating income is primarily attributable to a significant
decline in operating expenses and an increase in garage revenues, partially
offset by a decrease in room and food and beverage revenues.

Room revenues decreased by approximately $138,000 for the three months ended
December 31, 2009 when compared to the three months ended December 31, 2008 and
food and beverage revenues decreased by approximately $150,000 for the same
period. The decrease in room revenues was primarily attributable to a decline
in average daily room rates as hotels in the San Francisco market continue to

                                    -19-
<PAGE>

reduce room rates in an effort to maintain occupancy levels in a very
competitive market as economic conditions continue to be very challenging. Many
hotels have been forced to adopt this strategy due to a severe reduction in
higher rated corporate and group business travel, which has been replaced by
discounted business from Internet channels. The decrease in food and beverage
revenues is primarily attributable to decline in banquet and catering business
as companies continue with cuts in business travel, corporate meetings and
events.

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 December 31, 2009 and 2008.

Three Months Ended         Average           Average
  December 31,            Daily Rate        Occupancy%         RevPar
-----------------         ----------        ---------         --------
      2009                   $149              87%              $129
      2008                   $167              79%              $132

The operations of the Hotel continued to be impacted by the significant
downturn in the domestic and international economies and markets.  The Hotel's
average daily room rate was approximately $18 lower for the three months ended
December 31, 2009 compared to the three months ended December 31, 2008.
However, due to increased sales and marketing efforts in the face of difficult
economic conditions and greater competition, the Hotel was able to boost
occupancy rates by approximately 10% over the comparable period.  As a result,
the Hotel was able to achieve a RevPar number that was near the top of its
competitive set.

Management has also 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, operating expenses
excluding loss on termination of garage lease, interest, depreciation and
amortization for the three months ended December 31, 2009 decreased by
approximately $734,000 from the three months ended December 31, 2008, despite
the Hotel maintaining higher occupancy levels. Management will continue to
explore new and innovative ways to improve operations and enhance the guest
experience.

The Company had a net loss on marketable securities of $18,000 for the three
months ended December 31, 2009 compared to a net gain on marketable securities
of $336,000 for the three months ended December 31, 2008. For the three months
ended December 31, 2009, the Company had a net realized gain of $2,107,000 and
a net unrealized loss of $2,125,000.  For the three months ended December 31,
2008, the Company had a net realized loss of $78,000 and a net unrealized gain
of $414,000.  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.

                                    -20-
<PAGE>

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
December 31, 2009, the Company had net other investments of $2,460,000.
Included in other investments are investments in corporate debt and equity
instruments which had attached warrants that were considered derivative
instruments.  The Company recorded an unrealized gain of $85,000 related to
these warrants during the three months ended December 31, 2009.  During the
three months ended December 31, 2009 and 2008, 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 $334,000 and $0, respectively.

Margin interest and trading expenses increased to $85,000 for the three months
ended December 31, 2009 from $52,000 for the three months ended December 31,
2008 primarily as the result of the increase in margin interest expense related
to the increase in the use of margin.

The provision for income tax benefit as a percentage of the loss before taxes
was significantly lower for the three months ended December 31, 2008 as
compared to the three months ended December 31, 2009 primarily as the result of
the Company having to recognize 100% of the net loss from the hotel operations
for financial statement purposes for the three months ended December 31, 2008,
however, for tax purposes, the Company is only allowed to record an income tax
benefit related to 50%(the Company's ownership percentage) of the net loss from
hotel operations.


Six Months Ended December 31, 2009 Compared to Six Months
Ended December 31, 2008

The Company had a net loss of $1,124,000 for the six months ended December 31,
2009 compared to a net loss of $1,095,000 for the six months ended December 31,
2008. The increase in the net loss is primarily attributable to the increase
the loss from investing activities partially offset by the significant decrease
in the net loss from hotel operations.

During the six months ended December 31, 2009, the Company had a loss on hotel
operations of $294,000 compared to a loss of $920,000 for the six months ended
December 31, 2008. The reduction in that loss was primarily attributable to a
one-time loss related to the termination of the hotel garage lease in the
amount of $684,000 was incurred in the three months ended December 31, 2008.

The following table sets forth a more detailed presentation of Hotel operations
for the six months ended December 31, 2009 and 2008.

                                    -21-
<PAGE>
<TABLE>

For the six months ended December 31,                           2009            2008
                                                             ----------      ----------
<S>                                                        <C>             <C>
Hotel revenues:
 Hotel rooms                                               $ 13,206,000    $ 14,200,000
 Food and beverage                                            2,069,000       2,527,000
 Garage                                                       1,266,000         970,000
 Other                                                          357,000         246,000
                                                             ----------      ----------
  Total hotel revenues                                       16,898,000      17,943,000

Operating expenses, excluding loss on termination of
 garage lease, interest, depreciation and amortization      (13,419,000)    (14,519,000)
                                                             ----------      ----------
Operating income before loss on termination of garage lease,
  interest, depreciation and amortization                     3,479,000       3,424,000
Loss on termination of garage lease                                   -        (684,000)
Interest expense                                             (1,442,000)     (1,443,000)
Depreciation and amortization expense                        (2,331,000)     (2,217,000)
                                                             ----------      ----------
Loss from hotel operations                                  $  (294,000)    $  (920,000)
                                                             ==========      ==========
</TABLE>

For the six months ended December 31, 2009, the Hotel generated operating
income of approximately $3,479,000 before interest, depreciation and
amortization, on operating revenues of approximately $16,898,000 compared to
operating income of approximately $3,424,000 before the loss on termination of
garage lease, interest, depreciation and amortization, on operating revenues of
approximately $17,943,000 for the six months ended December 31, 2008. The
increase in Hotel operating income is primarily attributable to a significant
decline in operating expenses and an increase in garage revenues resulting from
the termination of the garage lease in October 2008 and integration of those
operations into those of the Hotel, partially offset by a decrease in room and
food and beverage revenues.

Room revenues decreased by approximately $994,000 for the six months ended
December 31, 2009 when compared to the six months ended December 31, 2008 and
food and beverage revenues decreased by approximately $458,000 for the same
period. The decrease in room revenues was primarily attributable to a decline
in average daily room rates as hotels in the San Francisco market continue to
reduce room rates in an effort to maintain occupancy levels in a very
competitive market as economic conditions continue to be very challenging. Many
hotels have been forced to adopt this strategy due to a severe reduction in
higher rated corporate and group business travel, which has been replaced by
discounted business from Internet channels. The decrease in food and beverage
revenues is primarily attributable to decline in banquet and catering business
as companies continue with cuts in business travel, corporate meetings and
events.

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
six months ended December 31, 2009 and 2008.

 Six Months Ended          Average           Average
   December 31,           Daily Rate        Occupancy%         RevPar
-----------------         ----------        ---------         --------
      2009                   $148              89%              $132
      2008                   $177              80%              $142

                                    -22-
<PAGE>

The operations of the Hotel continued to be impacted by the significant
downturn in the domestic and international economies and markets.  Room rates
continue to be the toughest challenge as the Hotel's average daily room rate
was approximately $29 lower for the six months ended December 31, 2009 compared
to the six months ended December 31, 2008. However, due to increased sales and
marketing efforts in the face of difficult economic conditions and greater
competition, the Hotel was able to boost occupancy rates by approximately 10%
over the comparable period.  As a result, the Hotel was able to achieve a
RevPar number that was near the top of its competitive set.

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, operating expenses excluding loss
on termination of garage lease, interest, depreciation and amortization for the
six months ended December 31, 2009 decreased by approximately $1,100,000 from
the six months ended December 31, 2008, despite the Hotel maintaining higher
occupancy levels. Management will continue to explore new and innovative ways
to improve operations and enhance the guest experience.

The Company had a net loss on marketable securities of $796,000 for the six
months ended December 31, 2009 compared to a net gain on marketable securities
of $120,000 for the six months ended December 31, 2008. For the six months
ended December 31, 2009, the Company had a net realized gain of $2,114,000 and
a net unrealized loss of $2,910,000.  For the six months ended December 31,
2008, the Company had a net realized loss of $361,000 and a net unrealized gain
of $481,000.  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
December 31, 2009, the Company had net other investments of $2,309,000.
Included in other investments are investments in corporate debt and equity
instruments which had attached warrants that were considered derivative
instruments.  The Company recorded an unrealized gain of $85,000 related to
these warrants during the six months ended December 31, 2009.  During the six
months ended December 31, 2009 and 2008, 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 $334,000 and
$358,000, respectively.

Margin interest and trading expenses increased to $173,000 for the six months
ended December 31, 2009 from $107,000 for the six months ended December 31,
2008 primarily as the result of the increase in margin interest expense related
to the increase in the use of margin.

                                    -23-
<PAGE>

The provision for income tax benefit as a percentage of the loss before taxes
was significantly lower for the six months ended December 31, 2008 as compared
to the six months ended December 31, 2009 primarily as the result of the
Company having to recognize 100% of the net loss from the hotel operations for
financial statement purposes for the six months ended December 31, 2008,
however, for tax purposes, the Company is only allowed to record an income tax
benefit related to 50%(the Company's ownership percentage) of the net loss from
hotel operations.


MARKETABLE SECURITIES AND OTHER INVESTMENTS

As of December 31, 2009 and June 30, 2008, the Company had investments in
marketable equity securities of $2,704,000 and $5,987,000, respectively.  The
following table shows the composition of the Company's marketable securities
portfolio by selected industry groups as December 31, 2009 and June 30, 2009.

   As of December 31, 2009:
                                                             % of Total
                                                              Investment
   Industry Group                      Fair Value             Securities
   --------------                      ------------           ----------
   REITs                                    949,000               35.1%
   Investment funds                         605,000               22.4%
   Financial services                       435,000               16.1%
   Technology and telecom                   136,000                5.0%
   Other                                    579,000               21.4%
                                       ------------           ----------
                                       $  2,704,000              100.0%
                                       ============           ==========

   As of June 30, 2009:
                                                             % of Total
                                                              Investment
   Industry Group                      Fair Value             Securities
   --------------                      ------------           ----------
   Dairy products                      $  2,935,000               49.0%
   REITs and financial                    1,294,000               21.6%
   Basic materials and energy               563,000                9.4%
   Electronic traded funds(ETFs)            498,000                8.3%
   Services                                 241,000                4.0%
   Other                                    456,000                7.7%
                                         ----------              ------
                                       $  5,987,000              100.0%
                                         ==========              ======

As of December 31, 2009, the Company's investment portfolio is diversified with
30 different equity positions.  The portfolio contains four individual equity
securities that are more than 5% of the equity value of the portfolio with the
largest security being 19.6% 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.

                                    -24-
<PAGE>

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 December 31, 2009 and June 30, 2009, the Company had net other
investments of $2,460,000 and $2,409,000, respectively.  As of December 31,
2009, the Company had a net other investment in a public company in a basic
materials sector totaling $433,000.  As of December 31, 2009, the Company holds
notes and convertible notes of this company totaling approximately $3,673,000
which includes $2,618,000 of principal and $1,055,000 of accrued interest and
penalties.


LIQUIDITY AND SOURCES OF CAPITAL

The Company's cash flows are primarily generated from its Hotel operations and
general partner fees from Justice. 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. For
the six months ended September 30, 2008, Justice paid a total of $850,000 in
limited partnership distributions, of which the Company received $425,000.
Following the payment of those distributions, the San Francisco hotel market
began to feel the full impact of the significant downturn in domestic and
international economies that continued throughout fiscal 2009 and into fiscal
2010. As a result, no partnership distributions were paid for the six months
ended December 31, 2009. Since no significant improvement in economic
conditions is expected in the lodging industry until sometime during the second
half of calendar 2010, no limited partnership distributions are anticipated in
the foreseeable future. The general partners will continue to monitor and
review the operations and financial results of the Hotel and to set the amount
of any future distributions that may be appropriate based on operating results,
cash flows and other factors, including establishment of reasonable reserves
for debt payments and operating contingencies.

The new Justice Compensation Agreement that became effective on December 1,
2008, when Portsmouth assumed the role of managing general partner of Justice,
has provided additional cash flows to the Company. Under the new Compensation
Agreement, Portsmouth is now entitled to 80% of the minimum base fee to be paid
to the general partners of $285,000, while under the prior agreement,
Portsmouth was entitled to receive only 20% of the minimum base fee. As a
result, total general partner fees paid to Portsmouth for the three months
ended December 31, 2009 increased to $151,000, compared to $97,000 for the
three months ended December 31, 2008.

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

                                    -25-
<PAGE>

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 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. The principal balance
of the Prudential Loan was $27,986,000 as of December 31, 2009.

On March 27, 2007, Justice entered into a second mortgage loan with Prudential
(the "Second Prudential Loan") in a 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 also without recourse to the limited and general partners of Justice.
The principal balance of the Second Prudential Loan was $18,393,000 as of
December 31, 2009.

Justice also has a $2,500,000 unsecured revolving line of credit facility from
EastWest Bank (formerly United Commercial Bank) that can be used for short term
business requirements. The line of credit was to mature on February 2, 2010,
but the Partnership received an extension of the maturity date to April 30,
2010. Borrowings bear interest at an annual interest rate based on the Wall
Street Journal Prime Rate plus 3%, floating, with an interest rate floor of 5%.
As of December 31, 2009, there was a balance of approximately $2,500,000 drawn
by Justice under the line of credit facility, with an annual interest rate of
6.25% (Prime at 3.25% as of December 31, 2009, plus 3%). The Partnership was
not in compliance with the financial covenants of its line of credit as of
December 31, 2009, but is working with the bank on a waiver of such non-
compliance as well as a longer term extension.

Despite the downturns in the economy, the Hotel has continued to generate
positive cash flows. While the debt service requirements related to the two
Prudential loans, as well as the utilization of its 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 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.

                                    -26-
<PAGE>

MATERIAL CONTRACTUAL OBLIGATIONS

The following table provides a summary of the Company's material financial
obligations.

<TABLE>

                                    Total        Year 1       Year 2       Year 3       Year 4       Year 5      Thereafter
                                 -----------   ----------   ----------   ----------   ----------   ----------   -----------
<S>                              <C>           <C>          <C>          <C>          <C>          <C>          <C>
Mortgage notes payable           $46,379,000   $  389,000   $  811,000   $  858,000   $  907,000   $  959,000   $42,455,000
Line of credit                     2,500,000    2,500,000            -            -            -            -             -
Other notes payable                  383,000      204,000      179,000            -            -            -             -
Leases                               999,000      216,000      430,000      201,000      126,000       26,000             -
                                  ----------    ---------    ---------    ---------    ---------    ---------    ----------
Total                            $50,261,000   $3,309,000   $1,420,000   $1,059,000   $1,033,000   $  985,000   $42,455,000
                                  ----------    ---------    ---------    ---------    ---------    ---------    ----------
</TABLE>

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.

                                    -27-
<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.

                                    -28-
<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:  February 12, 2010                   by /s/ John V. Winfield
                                              ---------------------------
                                              John V. Winfield, President,
                                              Chairman of the Board and
                                              Chief Executive Officer


Date:  February 12, 2010                   by /s/ Michael G. Zybala
                                              ---------------------------
                                              Michael G. Zybala,
                                              Vice President and Secretary


Date:  February 12, 2010                   by /s/ David T. Nguyen
                                              --------------------------
                                              David Nguyen, Treasurer
                                             (Principal Financial Officer)

                                     -29-