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

                               FORM 10-QSB


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

    For the quarterly period ended December 31, 2007

                         OR

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

    For the transition period from _______ to ________


    Commission File Number 0-4057

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

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


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

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

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

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

     State the number of shares outstanding of each of the issuer's classes of
Common equity, as of the latest practicable date: 734,183 shares of issuer's No
Par Value Common Stock were outstanding as of February 8, 2008.

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

<PAGE>




                                     INDEX

                             PORTSMOUTH SQUARE, INC.


PART I. FINANCIAL INFORMATION                                            PAGE

Item 1. Condensed Consolidated Financial Statements

 Condensed Consolidated Balance Sheet (Unaudited)
   As of December 31, 2007                                                 3

 Condensed Consolidated Statements of Operations (Unaudited)
   For the Three Months ended December 31, 2007 and 2006                   4

 Condensed Consolidated Statements of Operations (Unaudited)
   For the Six Months ended December 31, 2007 and 2006                     5

 Condensed Consolidated Statements of Cash Flows (Unaudited)
   For the Six Months ended December 31, 2007 and 2006                     6

  Notes to Condensed Consolidated Financial Statements (Unaudited)         7

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                               14

Item 3. Controls and Procedures                                           22


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds       23

Item 6. Exhibits                                                          25

SIGNATURES                                                                26

                                    -2-
<PAGE>


                        PART 1 - FINANCIAL INFORMATION

Item 1 - Condensed Consolidated Financial Statements

                             PORTSMOUTH SQUARE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                  (UNAUDITED)
As of December 31,                                           2007
                                                          ----------
Assets
  Investment in hotel, net                              $ 40,847,000
  Investment in real estate                                  973,000
  Investment in marketable securities                      6,803,000
  Other investments                                        2,575,000
  Cash and cash equivalents                                  156,000
  Accounts receivable, net                                 1,213,000
  Other assets                                             1,740,000
  Deferred tax asset                                       2,655,000
  Minority interest of Justice Investors                   6,301,000
                                                          ----------
Total assets                                            $ 63,263,000
                                                          ==========
Liabilities and Shareholders' Equity

Liabilities
  Accounts payable and other liabilities                $  9,331,000
  Due to securities broker                                 2,555,000
  Obligations for securities sold                            151,000
  Mortgage notes payable                                  47,830,000
                                                          ----------
Total liabilities                                         59,867,000
                                                          ----------
Commitments and contingencies

Shareholders' equity:
  Common stock, no par value; 750,000 authorized shares;
   734,183 shares issued and outstanding                   2,092,000
  Additional paid-in capital                                 916,000
  Retained earnings                                          388,000
                                                          ----------

Total shareholders' equity                                 3,396,000
                                                          ----------

Total liabilities and shareholders' equity              $ 63,263,000
                                                          ==========

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,              2007           2006
                                                                (As Restated)
                                                   ----------     ----------
Hotel operations:
 Hotel and garage revenue                       $  9,619,000    $ 8,116,000
 Operating expenses                               (8,176,000)    (7,100,000)
 Real estate taxes                                  (177,000)      (202,000)
 Interest expense                                   (703,000)      (686,000)
 Depreciation and amortization                    (1,118,000)    (1,040,000)
                                                  ----------     ----------
Loss from hotel operations                          (555,000)      (912,000)
                                                  ----------     ----------
Investment transactions:
 Net gains on marketable securities                  597,000        712,000
 Dividend and interest income                         27,000         41,000
 Margin interest and trading expense                 (66,000)       (92,000)
                                                  ----------     ----------
Income from investment transactions                  558,000        661,000
                                                  ----------     ----------

General and administrative expense                  (147,000)      (114,000)
                                                  ----------     ----------

Loss before income taxes and minority interest      (144,000)      (365,000)

Minority interest                                    257,000        462,000
                                                  ----------     ----------
Income before income taxes                           113,000         97,000

Provision for income tax expense                     (41,000)       (22,000)
                                                  ----------     ----------
Net income                                       $    72,000    $    75,000
                                                  ==========     ==========

Basic net income per share                       $      0.10    $      0.10
                                                  ==========     ==========
Weighted average number of 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,                2007           2006
                                                                (As Restated)
                                                  ----------     ----------
Hotel operations:
 Hotel and garage revenue                       $ 19,405,000    $15,708,000
 Operating expenses                              (16,508,000)   (13,457,000)
 Real estate taxes                                  (354,000)      (382,000)
 Interest expense                                 (1,405,000)    (1,435,000)
 Depreciation and amortization                    (2,201,000)    (2,074,000)
                                                  ----------     ----------
Loss from hotel operations                        (1,063,000)    (1,640,000)
                                                  ----------     ----------
Investment transactions:
 Net (losses) gains on marketable securities         (75,000)       315,000
 Impairment loss on other investments                (65,000)             -
 Dividend and interest income                         51,000         66,000
 Margin interest and trading expense                (159,000)      (199,000)
                                                  ----------     ----------
Income(loss) from investment transactions           (248,000)       182,000
                                                  ----------     ----------

General and administrative expense                  (297,000)      (244,000)
                                                  ----------     ----------

Loss before income taxes and minority interest    (1,608,000)    (1,702,000)

Minority interest                                    535,000        835,000
                                                  ----------     ----------
Loss before income taxes                          (1,073,000)      (867,000)

Provision for income tax benefit                     437,000        357,000
                                                  ----------     ----------

Net loss                                         $  (636,000)   $  (510,000)
                                                  ==========     ==========

Basic net loss per share                         $     (0.87)   $     (0.69)
                                                  ==========     ==========
Weighted average number of 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)

For the six months ended December 31,                2007           2006
                                                                (As Restated)
                                                  ----------     ----------
Cash flows from operating activities:
  Net loss                                       $  (636,000)   $  (510,000)
  Adjustments to reconcile net loss
   to net cash provided by operating activities:
    Net unrealized losses on marketable securities    90,000        338,000
    Impairment loss on other investments              65,000              -
    Depreciation and amortization                  2,201,000      2,074,000
    Minority interest                               (535,000)      (835,000)
    Changes in assets and liabilities:
      Investment in marketable securities          2,821,000      2,626,000
      Other investments and other assets            (759,000)    (1,636,000)
      Accounts payable and other liabilities         932,000        319,000
      Due to securities broker                    (1,483,000)    (1,296,000)
      Obligations for securities sold               (630,000)      (643,000)
      Deferred tax asset                            (437,000)      (357,000)
                                                  ----------     ----------
  Net cash provided by operating activities        1,629,000         80,000
                                                  ----------     ----------

Cash flows from investing activities:
  Capital expenditures for furniture, equipment
   and building improvements                      (1,958,000)      (701,000)
  Investment in real estate                         (973,000)             -
  Restricted cash                                  1,500,000              -
                                                  ----------     ----------
  Net cash used in investing activities           (1,431,000)      (701,000)
                                                  ----------     ----------
Cash flows from financing activities:

  Principal payments on mortgage note payable       (338,000)      (169,000)
  Distributions to minority partners                (500,000)             -
                                                  ----------     ----------
  Net cash used in financing activities             (838,000)      (169,000)
                                                  ----------     ----------
Net decrease in cash and cash equivalents           (640,000)      (790,000)

Cash and cash equivalents at the beginning
 of the period                                       796,000      2,460,000
                                                  ----------     ----------
Cash and cash equivalents at the end of the
 period                                          $   156,000    $ 1,670,000
                                                  ==========     ==========

Supplemental information:

Margin interest paid                             $    62,000    $   117,000
Mortgage interest paid                           $ 1,405,000    $ 1,435,000


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.

The Company has a 50.0% interest in Justice Investors ("Justice" or the
"Hotel"), a California limited partnership in which Portsmouth serves as both a
general and limited partner. The other general partner, Evon Corporation
("Evon"), serves as the managing general partner of Justice. In accordance with
guidance set forth in the Financial Accounting Standards Board directed Staff
Position (FSP) SOP 78-9-1, Portsmouth has applied the principles of accounting
applicable for investments in subsidiaries due to its "kick out rights" and
"substantive participating rights" arising from its limited partnership and
general partnership interest and has consolidated the financial statements of
Justice with those of the Company, effective with the first reporting period of
its fiscal year beginning July 1, 2006.

Portsmouth is a 68.8%-owned subsidiary of Santa Fe Financial Corporation
("Santa Fe"), which is also a public company.  Santa Fe is an approximately
75.4%-owned subsidiary of The InterGroup Corporation ("InterGroup"), a public
company.  InterGroup also directly owns approximately 11% of the common stock
of Portsmouth.

Minority interest on the consolidated balance sheet represents the 50% interest
in Justice Investors not owned by the Company.  Minority interest on the
statements of operations represents the minority owners share of income(loss).
As of December 31, 2007, the Company had a minority interest asset balance on
the balance sheet as the result of the accumulated deficit at Justice
Investors.  Management believes the accumulated deficit is considered temporary
as the Hotel was temporarily closed to undergo major renovations from May 2005
to January 2006.  The Company expects the Hotel to be profitable, thereby
reversing the accumulated deficit in the future.

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

It is suggested that these financial statements be read in conjunction with the
audited financial statements and the notes therein included in the Company's
Form 10-KSB for the year ended June 30, 2007.

The results of operations for the three and six months ended December 31, 2007
are not necessarily indicative of results to be expected for the full fiscal
year ending June 30, 2008.

                                    -7-
<PAGE>

In July 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"), Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109,
which clarifies the accounting for uncertainty in tax positions. FIN 48
requires that the Company recognize the impact of a tax position in the
Company's financial statements if that position is more likely than not of
being sustained on audit, based on the technical merits of the position. The
provisions of FIN 48 are effective as of the beginning of the Company's 2008
fiscal year, with the cumulative effect of the change in accounting principle
recorded as an adjustment to opening retained earnings. The adoption of FIN 48
did not to have a material impact on the Company's consolidated financial
statements. The Company recognizes interest and penalties related to uncertain
income tax positions in income tax expense.  There were no interest and
penalties related to uncertain income tax positions that were accrued as of
December 31, 2007 and during the period there were no changes in individual or
aggregate unrecognized tax positions.  The Company's income tax returns for the
years ended June 30, 2004 up to present are subject to examination by taxing
authorities.

In September 2006, the FASB issued SFAS 157, "Fair Value Measurements", which
defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements.  SFAS 157 is effective for
as of the beginning of the Company's 2009 fiscal year.  In February 2007, the
FASB issued Statement of Financial Accounting Standards No. 159, "The Fair
Value Option for Financial Assets and Financial Liabilities - Including an
amendment of FASB Statement No. 115" ("SFAS 159"), which permits entities to
choose to measure many financial instruments and certain other items at fair
value.  SFAS 159 is effective as of the beginning of the Company's 2009 fiscal
year.  The Company is still evaluating the impact of SFAS 157 and 159 on the
Company's consolidated financial statements.

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

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, and amendment to Accounting Research
Bulletin (ARB) No. 51," ("SFAS 160"). This standard prescribes the accounting
by a parent company for minority interests held by other parties in a
subsidiary of the parent company. SFAS 160 is effective for fiscal years
beginning after December 15, 2008, which will be effective for the Company's
fiscal year beginning July 1, 2009. The Company is currently assessing the
impact of SFAS 160 on its consolidated financial statements.

                                    -8-
<PAGE>

NOTE 2 - INVESTMENT IN HOTEL, NET

Justice owns a 544 room hotel property located at 750 Kearny Street, San
Francisco, California 94108, known as the "Hilton San Francisco Financial
District" (the "Hotel") and related facilities, including a five level
underground parking garage.  Justice serves as the owner/operator of the Hotel
with the assistance of a third party management company. The Partnership also
derives income from the lease of the garage portion of the property to Evon and
from a lease with Tru Spa for a portion of the lobby level of the Hotel.

Land, property and equipment as of December 31, 2007 consisted of the
following:

                                             Accumulated        Net Book
                               Cost          Depreciation        Value
                          ------------       ------------     ------------
Land                      $  1,124,000       $          -     $  1,124,000
Furniture and equipment     15,937,000         (6,367,000)       9,570,000
Building and improvements   44,714,000        (14,561,000)      30,153,000
                          ------------       ------------     ------------
                          $ 61,775,000       $(20,928,000)    $ 40,847,000
                          ============       ============     ============


NOTE 3 - INVESTMENT IN REAL ESTATE

In August 2007, the Company agreed to acquire a 50% interest in Intergroup
Uluniu, Inc. ("Uluniu"), a Hawaiian corporation and a 100% owned subsidiary of
InterGroup, for $973,000, which represents an amount equal to the costs paid by
InterGroup for the acquisition and carrying costs of approximately 2 acres of
unimproved land located in Maui, Hawaii.  In September 2007, the Company paid
Uluniu $758,000 of the $973,000.  As of December 31, 2007, the Company has a
payable to Uluniu for the remaining balance of $215,000.  As a related party
transaction, the fairness of the financial terms of the transaction were
reviewed and approved by the independent director of the Company.


NOTE 4 - INVESTMENT IN MARKETABLE SECURITIES

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

At December 31, 2007, all of the Company's marketable securities are classified
as trading securities.  In accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," the change in the
unrealized gains and losses on these investments are included in earnings.

                                    -9-
<PAGE>

Trading securities are summarized as follows:

<TABLE>

As of December 31, 2007:
                              Gross            Gross             Net            Market
Investment     Cost       Unrealized Gain  Unrealized Loss  Unrealized Gain     Value
----------  -----------   ---------------  ---------------  ---------------  ------------
<S>         <C>              <C>           <C>                 <C>           <C>
Corporate
Equities    $ 4,344,000      $3,506,000    ($  1,047,000)      $2,459,000    $ 6,803,000

</TABLE>

As of December 31, 2007, the Company had $23,000 of unrealized losses related
to securities held for over one year.

As part of the investment strategies, the Company may assume short positions
against its long positions in marketable securities.  Short sales are used by
the Company to potentially offset normal market risks undertaken in the course
of its investing activities or to provide additional return opportunities.  The
Company has no naked short positions.  As of December 31, 2007, the Company had
obligations for securities sold (equities short) of $151,000.

Net gains on marketable securities on the statement of operations are comprised
of realized and unrealized gains (losses).  Below is the composition of the net
gains(losses) for the three and six months ended December 31, 2007 and 2006,
respectively.

<TABLE>

For the three months ended December 31,                      2007             2006
                                                         -----------      -----------
<S>                                                      <C>              <C>
Realized gains on marketable securities                  $   227,000      $   794,000
Unrealized gains(losses) on marketable securities            370,000          (82,000)
                                                         -----------      -----------
Net gains on marketable securities                       $   597,000      $   712,000
                                                         ===========      ===========

For the six months ended December 31,                        2007             2006
                                                         -----------      -----------
Realized gains on marketable securities                  $    15,000      $   653,000
Unrealized losses on marketable securities                   (90,000)        (338,000)
                                                         -----------      -----------
Net (losses)gains on marketable securities               $   (75,000)     $   315,000
                                                         ===========      ===========

</TABLE>

NOTE 5 - OTHER INVESTMENTS

As a part of its investment strategy, the Company may also invest, with the
approval of the Securities Investment Committee, in unlisted securities, such
as convertible notes, through private placements including private equity
investment funds.  Those investments in non-marketable securities are carried
at cost on the Company's balance sheet as part of other investments and
reviewed for impairment on a periodic basis. As of June 30, 2007, the Company
had other investments of $2,575,000.

                                    -10-
<PAGE>

NOTE 6 - SEGMENT INFORMATION

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

Information below represents reporting segments for the three and six months
ended December 31, 2007 and 2006, respectively.  Operating income (loss) from
Justice Investors consists of the operations of the hotel and garage.
Operating income (loss) for investment transactions consist of net investment
gains (losses) and dividend and interest income.

<TABLE>

As of and for the
Three months ended            Hotel       Investment
December 31, 2007           Operations   Transactions      Other          Total
                            -----------  ------------   -----------   ------------
<S>                         <C>           <C>           <C>           <C>
Operating income            $ 9,619,000   $   624,000   $         -   $ 10,243,000
Operating expenses          (10,174,000)      (66,000)            -    (10,240,000)
                            -----------   -----------   -----------   ------------
Net operating income(loss)     (555,000)      558,000             -          3,000

General and administrative
 expense                                                   (147,000)      (147,000)
Income tax expense                    -             -       (41,000)       (41,000)
Minority interest               257,000             -             -        257,000
                            -----------   -----------   -----------   ------------
Net income (loss)           $  (298,000)  $   558,000   $  (188,000)  $     72,000
                            ===========   ===========   ===========   ============
Total Assets                $43,858,000   $ 9,378,000   $10,027,000   $ 63,263,000
                            ===========   ===========   ===========   ============

</TABLE>
<TABLE>

As of and for the
Three months ended             Hotel      Investment
December 31, 2006            Operations  Transactions      Other          Total
(As Restated)               -----------  ------------   -----------   ------------
<S>                         <C>           <C>           <C>          <C>
Operating income            $ 8,116,000   $   753,000   $         -  $   8,869,000
Operating expenses           (9,028,000)      (92,000)            -     (9,120,000)
                            -----------   -----------   -----------   ------------
Net operating income(loss)     (912,000)      661,000             -       (251,000)

General and administrative
 expense                                                   (114,000)      (114,000)
Income tax expense                    -             -       (22,000)       (22,000)
Minority interest               462,000             -             -        462,000
                            -----------   -----------   -----------   ------------
Net income (loss)           $  (450,000)  $   661,000   $  (136,000) $      75,000
                            ===========   ===========   ===========   ============
Total Assets                $46,240,000   $11,879,000   $ 4,631,000   $ 62,750,000
                            ===========   ===========   ===========   ============

</TABLE>
                                    -11-
<PAGE>
<TABLE>

As of and for the
Six months ended              Hotel       Investment
December 31, 2007           Operations   Transactions      Other          Total
                            -----------  ------------   -----------   ------------
<S>                        <C>            <C>           <C>          <C>
Operating income(loss)     $ 19,405,000   $   (89,000)  $         -  $  19,316,000
Operating expenses          (20,468,000)     (159,000)            -    (20,627,000)
                            -----------   -----------   -----------   ------------
Net operating loss           (1,063,000)     (248,000)            -     (1,311,000)

General and administrative
 expense                                                   (297,000)      (297,000)
Income tax benefit                    -             -       437,000        437,000
Minority interest               535,000             -             -        535,000
                            -----------   -----------   -----------   ------------
Net income (loss)          $   (528,000)  $  (248,000)  $   140,000   $   (636,000)
                            ===========   ===========   ===========   ============
Total Assets               $ 43,858,000   $ 9,378,000   $10,027,000   $ 63,263,000
                            ===========   ===========   ===========   ============

</TABLE>
<TABLE>

As of and for the
Six months ended              Hotel       Investment
December 31, 2006           Operations   Transactions      Other          Total
(As Restated)               -----------  ------------   -----------   ------------
<S>                         <C>           <C>           <C>          <C>
Operating income            $15,708,000   $   381,000   $         -  $  16,089,000
Operating expenses          (17,348,000)     (199,000)            -    (17,547,000)
                            -----------   -----------   -----------   ------------
Net operating income(loss)   (1,640,000)      182,000             -     (1,458,000)

General and administrative
 expense                                                   (244,000)      (244,000)
Income tax benefit                    -             -       357,000        357,000
Minority interest               835,000             -             -        835,000
                            -----------   -----------   -----------   ------------
Net income (loss)           $  (805,000)  $   182,000   $   113,000  $    (510,000)
                            ===========   ===========   ===========   ============
 Total Assets               $46,240,000   $11,879,000   $ 4,631,000   $ 62,750,000
                            ===========   ===========   ===========   ============

</TABLE>
                                    -12-
<PAGE>


NOTE 7 - RELATED PARTY TRANSACTIONS

Certain shared costs and expenses, primarily administrative expenses, rent and
insurance are allocated among the Company, the Company's parent, Santa Fe and
InterGroup, the parent of Santa Fe, based on management's estimate of the pro
rata utilization of resources.  For the three months ended December 31, 2007
and 2006, these expenses were approximately $18,000 for each respective period.
For the six months ended December 31, 2007 and 2006, 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.

The garage lessee, Evon, is the Partnership's managing general partner. Under
the terms of the lease agreement, Evon paid the Partnership $421,000 and
$380,000 for the three months ended December 31, 2007 and 2006, respectively.
For the six months ended December 31, 2007 and 2006, Evon paid the Partnership
$836,000 and $811,000, respectively.

During the six months ended December 31, 2007, the Company received management
fees from Justice Investors totaling $90,000.  The amount was eliminated in
consolidation.

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


NOTE 8 - RESTATEMENTS

As disclosed in Item 4.02(a) of the Company's Form 8-K dated February 13, 2008,
as filed with the Securities and Exchange Commission ("SEC") on February 19,
2008, the Company detected an error in the calculation and presentation of the
tax effects on the minority interest related to Justice Investors in the
comparative three and six month periods ended December 31, 2006 as presented in
the Company's previously issued Quarterly Report on Form 10-QSB for the period
ended December 31, 2006. Specifically, the minority interest line item in the
Consolidated Statement of Operations was mistakenly recorded and presented as
"net of tax" instead of pre-tax. The errors resulted in an overstatement of the
tax benefit related to the minority interest for the three and six months ended
December 31, 2006. After further review, the Company determined that similar
errors occurred in the quarterly periods ended September 30, 2006 and March 31,
2007.

The errors do not affect the Company's reported revenues, expenses, income
(loss) before income taxes or cash flows, and do not impact the Company's
operations. There were no such errors in the Company's audited financial
statements included in its Annual Report on Form 10-KSB for the fiscal year
ended June 30, 2007, and as such that Annual Report will not be amended.

                                    -13-
<PAGE>

Pending completion of this current filing of the Company's Form 10-QSB for the
three and six months ended December 31, 2007, we will file the following
amended filings:

   *  Form 10-QSB/A for the three and nine months ended March 31, 2007.

   *  Form 10-QSB/A for the three months ended September 30, 2007.

Within the current filing, we are restating the Condensed Consolidated
Statements of Operations for the three and six months ended December 31, 2006.

The table below presents the changes to the Condensed Consolidated Statement of
Operations for the three and six months ended December 31, 2006 and the changes
to the Condensed Consolidated Balance Sheet as of December 31, 2006.

<TABLE>

For the three months ended December 31, 2006        As Reported      As Restated
                                                    -----------      -----------
<S>                                                 <C>              <C>
Income tax benefit(expense)                         $  175,000       $   (22,000)
Net income                                          $  272,000       $    75,000
Net income per share                                $     0.37       $      0.10


For the six months ended December 31, 2006          As Reported      As Restated
                                                    -----------      -----------
Income tax benefit                                  $  701,000       $   357,000
Net loss                                            $ (166,000)      $  (510,000)
Net loss per share                                  $    (0.23)      $     (0.69)

Balance Sheet Line Items as of December 31, 2006    As Reported      As Restated
                                                    -----------      -----------
Other assets                                        $ 2,828,000      $ 2,484,000
Retained earnings                                   $ 2,353,000      $ 2,009,000

</TABLE>
                                    -14-
<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 the impact of terrorism and war on the
national and international economies, including tourism and securities markets,
natural disasters, general economic conditions and competition in the hotel
industry in the San Francisco area, seasonality, labor relations and labor
disruptions, partnership distributions, the ability to obtain financing at
favorable interest rates and terms, securities markets, regulatory factors,
litigation and other factors discussed below in this Report and in the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 2007,
that could cause actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as to the date hereof.  The Company undertakes no
obligation to publicly release the results of any revisions to those forward-
looking statements, which may be made to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.


RESULTS OF OPERATIONS

The Company's principal business is conducted through its general and limited
partnership interest in the Justice Investors limited partnership ("Justice" or
the "Partnership"). The Company has a 50.0% limited partnership interest in
Justice and serves as one of the general partners. Justice owns the land,
improvements and leaseholds at 750 Kearny Street, San Francisco, California,
known as the Hilton San Francisco Financial District (the "Hotel"). The
financial statements of Justice have been consolidated with those of the
Company, effective as of July 1, 2006.  See Note 1 to the Condensed
Consolidated Financial Statements.

The Hotel is operated by the Partnership as a full service Hilton brand hotel
pursuant to a Franchise License Agreement with Hilton Hotels Corporation. The
term of the Agreement is for a period of 15 years commencing on January 12,
2006, with an option to extend the license term for another five years, subject
to certain conditions. Justice also has a Management Agreement with Prism
Hospitality L.P. ("Prism") to perform the day-to-day management functions of
the Hotel.

The Partnership also derives income from the lease of the garage portion of the
property to Evon Corporation ("Evon"), the managing general partner of Justice,
and from a lease with Tru Spa for a portion of the lobby level of the Hotel.
The Company also receives management fees as a general partner of Justice for
its services in overseeing and managing the Partnership's assets. Those fees
are eliminated in consolidation.

                                    -15-
<PAGE>

Recent Developments

On October 1, 2007 and November 23, 2007, Justice paid special distributions to
its limited partners in the total amounts of $400,000 and $600,000,
respectively, of which one half of each such distribution was received by
Portsmouth.  The general partners expect to conduct regular reviews to set the
amount of any future distributions that may be appropriate based on the results
of operations of the Hotel and other factors.


Three Months Ended December 31, 2007 Compared to Three Months
Ended December 31, 2006

The Company had net income of $72,000 for the three months ended December 31,
2007 compared to net income of $75,000 for the three months ended December 31,
2006.  As discussed below, during the current quarter, the Company had a
reduction in the loss from hotel operations and also had a decrease in the net
gains from marketable securities.

The loss from hotel operations was $555,000 for the three months ended December
31, 2007, compared to a loss of $912,000 for the three months ended December
31, 2006. The decrease in the loss was primarily attributable to greater income
generated from the operations of the Hotel during the second quarter. For the
three months ended 	December 31, 2007, the operations of the Hotel on a
standalone basis generated operating income of approximately $1,175,000 on
operating revenues of approximately $9,104,000, compared to operating income of
approximately $822,000 on operating revenues of approximately $7,648,000 for
the three months ended December 31, 2006, primarily due to a higher average
daily room rate and an increase in occupancy percentage.

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, 2007 and 2006.

Three Months Ended        Average           Average
  December 31,           Daily Rate        Occupancy%         RevPar
-----------------        ----------        ----------        ---------
      2007                $170.61            85.1%            $145.77
      2006                $159.79            75.7%            $122.37

Average daily room rates and occupancy have continued to improve since the
Hotel's reopening in January 2006. As a result, the Hotel was able to achieve a
more than $23 increase in RevPar for the three months ended December 31, 2007
compared the three months ended December 31, 2006.  We believe that many of the
new programs implemented to increase revenues and efficiencies at the Hotel, as
well as certain management personnel changes, have helped improve operations.
The Hotel's food and beverage operations remain challenging and management is
expected to explore new concepts in its efforts to improve the operations in
that department. Management will also continue to focus on ways to reduce
operating costs and other expenses in its efforts to increase the net operating
income of the Hotel.

                                    -16-
<PAGE>

Absent a downturn in the economy, we expect that the operating results of the
Hotel will continue to improve over fiscal 2007 as the Hotel approaches full
stabilization and gets further penetration into the Financial District hotel
market.  We anticipate a reduction in Partnership general and administrative
expenses for legal and consulting fees in fiscal 2008, as many of those
expenses were attributable to certain nonrecurring legal matters that
originated in fiscal 2007 and which we expect to be resolved in fiscal 2008. If
cash flows from the Hotel operations continue to improve, the Partnership could
make additional distributions to its limited partners in fiscal 2008.

Net gains on marketable securities decreased to $597,000 for the three months
ended December 31, 2007 from $712,000 for the three months ended December 31,
2006. For the three months ended December 31, 2007, the Company had net
realized gains of $227,000 and net unrealized gains of $370,000.  For the three
months ended December 31, 2006, the Company had net realized gains of $794,000
and net unrealized losses of $82,000.  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.

Margin interest and trading expense decreased to $66,000 for the three months
ended December 31, 2007 from $92,000 for the three months ended December 31,
2006.  The decrease is the result of the decrease in margin interest expense
due to the decrease in the average margin balance.

For the three months ended December 31, 2007, general and administrative
expenses increased to $147,000 from $114,000 for the three months ended
December 31, 2006.  The increase was primarily as the result of the increase in
accounting related fees.

Minority interest related to Justice Investors decreased to $257,000 for the
three months ended December 31, 2007 from $462,000 for the three months ended
December 31, 2006.  The decrease is due to the reduced loss from the hotel
operations to $555,000 from $912,000.


Six Months Ended December 31, 2007 Compared to Six Months
Ended December 31, 2006

The Company had a net loss of $636,000 for the six months ended December 31,
2007 compared to a net loss of $510,000 for the six months ended December 31,
2006.  As discussed below, the increase in the net loss was primarily due to
the loss from the Company's investment activities partially offset by the
decrease in the loss from the hotel operations.

The loss from hotel operations was $1,063,000 for the six months ended December
31, 2007, compared to a loss of $1,640,000 for the six months ended December
31, 2006. The decrease in the loss was primarily attributable to greater income
generated from the operations of the Hotel during the current period, partially
offset by higher general and administrative expenses at the Justice level
primarily due to certain nonrecurring legal and consulting fees in the current
period.

                                    -17-
<PAGE>

For the six months ended December 31, 2007, the operations of the Hotel on a
standalone basis generated operating income of approximately $2,612,000 on
operating revenues of approximately $18,454,000, compared to operating income
of approximately $1,526,000 on operating revenues of approximately $14,735,000
for the six months ended December 31, 2006, primarily due to a higher average
daily room rate and an increase in occupancy percentage.

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, 2007 and 2006.

Six Months Ended          Average           Average
  December 31,           Daily Rate        Occupancy%         RevPar
-----------------        ----------        ----------        ---------
      2007                $173.74            87.0%            $151.56
      2006                $155.41            76.3%            $119.53

Average daily room rates and occupancy have continued to improve since the
Hotel's reopening in January 2006. As a result, the Hotel was able to achieve
an approximately $32 increase in RevPar for the six months ended December 31,
2007 compared the six months ended December 31, 2006.  We believe that many of
the new programs implemented to increase revenues and efficiencies at the
Hotel, as well as certain management personnel changes, have helped improve
operations. The Hotel's food and beverage operations remain challenging and
management is expected to explore new concepts in its efforts to improve the
operations in that department. Management will also continue to focus on ways
to reduce operating costs and other expenses in its efforts to increase the net
operating income of the Hotel.

Absent a downturn in the economy, we expect that the operating results of the
Hotel will continue to improve over fiscal 2007 as the Hotel approaches full
stabilization and gets further penetration into the Financial District hotel
market.  We anticipate a reduction in Partnership general and administrative
expenses for legal and consulting fees in fiscal 2008, as many of those
expenses were attributable to certain nonrecurring legal matters that
originated in fiscal 2007 and which we expect to be resolved in fiscal 2008. If
cash flows from the Hotel operations continue to improve, the Partnership could
make additional distributions to its limited partners in fiscal 2008.

Net gains(losses) on marketable securities changed to net losses of $75,000 for
the six months ended December 31, 2007 from net gains of $315,000 for the six
months ended December 31, 2006.  For the six months ended December 31, 2007,
the Company had net realized gains of $15,000 and net unrealized losses of
$90,000.  For the six months ended December 31, 2006, the Company had net
realized gains of $653,000 and net unrealized losses of $338,000.  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.

                                    -18-
<PAGE>

During the six months ended December 31, 2007, the Company performed an
impairment analysis of its other investments and determined that one of its
investments had an other than temporary impairment and recorded an impairment
loss on other investments of $65,000. There was no impairment loss recorded for
the six months ended December 31, 2006.

Margin interest and trading expense decreased to $159,000 for the six months
ended December 31, 2007 from $199,000 for the six months ended December 31,
2006.  The decrease is the result of the decrease in margin interest expense
due to the decrease in the average margin balance.

For the six months ended December 31, 2007, general and administrative expenses
increased to $297,000 from $244,000 for the six months ended December 31, 2006.
The increase was primarily as the result of the increase in accounting related
fees.

Minority interest related to Justice Investors decreased to $535,000 for the
six months ended December 31, 2007 from $835,000 for the six months ended
December 31, 2006.  The decrease is due to the reduced loss from the hotel
operations to $1,069,000 from $1,646,000.

The provision for the income tax benefit increased to $437,000 for the six
months ended December 31, 2007 from $357,000 for the three months ended
December 31, 2006 as primarily the result of the increase in the pre-tax loss
to $1,073,000 from $867,000, respectively.


MARKETABLE SECURITIES

As of December 31, 2007, the Company had investments in marketable equity
securities of $6,803,000.  The following table shows the composition of the
Company's marketable securities portfolio by selected industry groups as of
December 31, 2007.

                                                              % of Total
                                                              Investment
   Industry Group                      Market Value           Securities
   --------------                      ------------           ----------

   Technology                          $ 1,707,000               25.1%
   Services                              1,091,000               16.0%
   Dairy products                          712,000               10.5%
   Insurance, banks and brokers            691,000               10.2%
   Holding companies                       529,000                7.8%
   Telecommunications and media            447,000                6.6%
   REITs and builders                      435,000                6.4%
   Other                                 1,191,000               17.4%
                                       ------------           ----------
                                       $ 6,803,000              100.0%
                                       ============           ==========

The Company's investment portfolio is diversified with 31 different equity
positions.  The portfolio contains six individual equity securities that are
more than 5% of the equity value of the portfolio with the largest security
being 21.3% 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

                                    -19-
<PAGE>

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.

LIQUIDITY AND SOURCES OF CAPITAL

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

The Hotel started to generate cash flows from its operations in June 2006,
which have continued to improve since that time.  As a result, Justice was able
to pay a special limited partnership distribution in a total amount of
$1,000,000 on March 28, 2007, of which Portsmouth received $500,000. The
general partners believed that operations of the Hotel had stabilized under the
Hilton brand and new management, and that cash flows were sufficient to warrant
that special distribution, especially with financings in place to meet any
additional capital needs. On October 1, 2007, Justice paid a second special
limited partnership distribution in the amount of $400,000 and an additional
special limited partnership distribution in the amount of $600,000 on November
23, 2007, of which Portsmouth received $200,000 and $300,000 respectively. The
general partners expect to conduct regular reviews to set the amount of any
future distributions that may be appropriate based on the results of operations
of the Hotel and other factors. If cash flows from the Hotel operations
continue to improve, the Partnership could be in a position to make regular
distributions to its limited partners in fiscal 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 The Prudential Insurance Company of America in a principal amount of
$30,000,000 (the "Prudential Loan"). The term of the Prudential Loan is for 120
months at a fixed interest rate of 5.22% per annum. The Prudential Loan calls
for monthly installments of principal and interest in the amount of
approximately $165,000, calculated on a 30 year amortization schedule. The
Prudential Loan is collateralized by a first deed of trust on the Partnership's
Hotel property, including all improvements and personal property thereon and an
assignment of all present and future leases and rents. The Prudential Loan is
without recourse to the limited and general partners of Justice. As of December
31, 2007, the Prudential Loan balance was approximately $28,972,000.

On March 27, 2007, Justice entered into a second mortgage loan with Prudential
(the "Second Prudential Loan") in the principal amount of $19,000,000. The term
of the Second Prudential Loan is for approximately 100 months and matures on
August 5, 2015, the same date as the first Prudential Loan. The Second
Prudential Loan is at a fixed interest rate of 6.42% per annum and calls for
monthly installments of principal and interest in the amount of approximately
$119,000, calculated on a 30-year amortization schedule. The Second Prudential
Loan is collateralized by a second deed of trust on the Partnership's Hotel
property, including all improvements and personal property thereon and an

                                    -20-
<PAGE>

assignment of all present and future leases and rents. The Second Prudential
Loan is without recourse to the limited and general partners of Justice. As of
December 31, 2007, the Second Prudential Loan balance was approximately
$18,858,000.

From the proceeds of the Second Prudential Loan, Justice retired its existing
line of credit facility with United Commercial Bank ("UCB") paying off the
outstanding balance of principal and interest of approximately $16,403,000 on
March 27, 2007. The Partnership also obtained a new unsecured $3,000,000
revolving line of credit facility from UCB to be utilized by the Partnership to
meet any emergency or extraordinary cash flow needs arising from any disruption
of business due to labor issues, natural causes affecting tourism or other
unexpected events. The term of the new line of credit facility is for 60 months
at an annual interest rate, based on an index selected by Justice at the time
of advance, equal to the Wall Street Journal Prime Rate or the Libor Rate plus
two percent. As of December 31, 2007, there were no amounts borrowed by Justice
under the new line of credit; however, $1,750,000 of that line was utilized in
the form of a standby letter of credit related to the Allied Litigation. The
annual fee for the letter of credit is one and one half percent of $1,750,000,
which fee is to be paid in quarterly installments for the periods in which the
letter of credit is in effect.

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

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

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

MATERIAL CONTRACTUAL OBLIGATIONS

The Company does not have any material contractual obligations or commercial
commitments other than Justice's mortgage loans with Prudential.

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

                                    -21-
<PAGE>

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 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.



Item 3. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

The Company's management, with the participation of the Company's Chief
Executive Officer and the 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
fiscal period covered by this Quarterly Report on Form 10-QSB.  In connection
with the restatement described in Note 8, to our Condensed Consolidated
Financial Statements, management determined that there were material weaknesses
in our internal control over financial reporting in the areas of accounting for
minority interest and tax provisions related to the consolidation of a
partnership entity in prior comparative periods. In light of these material
weaknesses, the Company performed additional analyses and other review
procedures to ensure the Company's Condensed Consolidated Financial Statements
are prepared in accordance with generally accepted accounting principles.
Accordingly, management believes that the financial statements included in this
report fairly represent in all material respects the Company's financial
condition, results of operations and cash flows for the periods presented.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a control deficiency, or combination of control
deficiencies, that result in a more than remote likelihood that a material
misstatement of the annual or interim financial statements will not be
prevented or detected. As of December 31, 2007, we did not maintain effective
controls over the accuracy for our accounting for the minority interest and tax
provisions related to our consolidated partnership entity. These control
deficiencies resulted in the restatement of our consolidated financial

                                    -22-
<PAGE>

statements for the comparative quarterly periods ended December 31, 2006. In
addition, due to these control deficiencies, restatements of our consolidated
financial statements for our quarterly periods ended September 30, 2006 and
March 31, 2007 will also be necessary.

(b) 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-QSB that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.

Remediation of Material Weakness

As noted above, management determined that there were material weaknesses in
our internal controls over financial reporting in the areas of accounting for
the minority interest and tax provisions related to the consolidation of a
partnership entity. In connection with the material weaknesses in internal
controls over financial reporting the Company intends to take the following
steps to alleviate the material weaknesses in these areas:

       *  An additional layer of review of the Company's tax provisions and
          consolidation processes will be performed at the corporate level;

       *  The Company will engage tax consultants to review the Company's tax
          provisions on a quarterly and annual basis; and

       *  The Company will review staffing levels, job assignments, and
          processes to identify other process weaknesses, if any, in order
          to mitigate the risk of reporting errors within the tax process for
          future periods.

Management will continue to monitor internal control over financial reporting
and will modify or implement if necessary, any additional controls or
procedures that may be required to ensure the continued integrity of our
financial statements.

                                    -23-
<PAGE>

                               PART II.

                          OTHER INFORMATION

Item 1.  Legal Proceedings

Bacon Plumbing Co., Inc. and Golden Electric Company v. Allied Construction, et
al., San Francisco County Superior Court, Case No. 06-455401 (the "Allied
Litigation").

This is to update matters previously reported in the Company's Form 10-KSB for
its fiscal year ended June 30, 2007 and its Form 10-QSB for the quarter ended
September 30, 2007, regarding the litigation and lien claims filed by Allied
Construction Management, Inc. ("Allied") and eight subcontractors arising out
of the renovation work performed on the San Francisco hotel property. All of
those claims were consolidated into the above entitled action.  On October 23,
2007, the Superior Court entered an order approving settlements reached by
Justice Investor with all of the subcontractors that filed liens against the
hotel property. The aggregate amount of those settlements was approximately
$1,580,000 and the total amount of the liens filed by the subcontractors was
approximately $1,756,000. The settlement amounts were paid by Justice on
November 2, 2007 and the subcontractor liens were released. The Court also
reduced the lien claim of Allied from $2,061,544 to $1,166,649.

In December 2007, Justice entered into a settlement agreement in the amount of
$65,000 with another subcontractor engaged by Allied, which amount was paid by
Justice Investors on January 31, 2008. Although that subcontractor did not file
an independent lien, the $236,000 allegedly due that subcontractor was part of
Allied claim and will serve as a further reduction in the amount allegedly due
Allied. With the settlement of all claims relating to the subcontractors
complete, a motion brought by Allied to stay the lawsuit and have the remaining
dispute between Allied and Justice determined by arbitration was granted by the
court. No date for has been selected for the arbitration. Justice, Evon and
Portsmouth dispute the amounts alleged to be owed to Allied and intend to
vigorously defend the balance of this action.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) Not Applicable.

(c) Purchases of Equity Securities

Portsmouth did not repurchase any of its own securities during the last quarter
ending December 31, 2007 and does not have any publicly announced repurchase
program. The following table reflects purchases of Portsmouth's common stock
made by The InterGroup Corporation, for its own account, during the second
quarter of fiscal 2008. InterGroup can be considered an affiliated purchaser.

                                    -24-
<PAGE>
<TABLE>

              SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

                                            (c)Total Number         (d)Maximum Number
             (a)Total         (b)           of Shares Purchased     of Shares that May
Fiscal       Number of      Average         as Part of Publicly     Yet Be Purchased
 2008         Shares        Price Paid       Announced Plans         Under the Plans
Period       Purchased      Per Share         or Programs             or Programs
--------------------------------------------------------------------------------------
<S>             <C>          <C>                    <C>                  <C>
Month #1
(October 1-       -               -                 -                    N/A
October 31)
--------------------------------------------------------------------------------------
Month #2
(November 1-      -               -                 -                    N/A
November 30)
--------------------------------------------------------------------------------------
Month #3
(December 1-    800          $34.50                 -                    N/A
December 31)
--------------------------------------------------------------------------------------
Total           800          $34.50                 -                    N/A
--------------------------------------------------------------------------------------

</TABLE>

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.

                                    -25-
<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 19, 2008                   by /s/ John V. Winfield
                                              ---------------------------
                                              John V. Winfield, President,
                                              Chairman of the Board and
                                              Chief Executive Officer


Date:  February 19, 2008                   by /s/ Michael G. Zybala
                                              ---------------------------
                                              Michael G. Zybala,
                                              Vice President and Secretary


Date:  February 19, 2008                   by /s/ David Nguyen
                                              --------------------------
                                              David Nguyen, Treasurer
                                             (Principal Financial Officer)

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