SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  -------------

                                    FORM 10-Q
         (Mark One)
 X       QUARTERLY  REPORT  PURSUANT  TO SECTION 13  OR 15(d) OF  THE SECURITIES
---      EXCHANGE ACT OF 1934

For the quarter period ended                September 30, 1998
                               -------------------------------------------------

                                       OR

         TRANSITION  REPORT PURSUANT  TO SECTION 13 OR  15(d) OF THE  SECURITIES
---      EXCHANGE ACT OF 1934

For the transition period from ______________________to_________________________


                         Commission file number 0-14360
                                                -------

                        NOONEY INCOME FUND LTD. II, L.P.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

          Missouri                                             43-1357693
-------------------------------                        -------------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)

500 N. Broadway, Suite 1200, St. Louis, MO                      63102-2124
------------------------------------------             -------------------------
 (Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code        (314) 206-4600
                                                   -----------------------------

--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last 
report.

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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. Yes  X  No    .
                                       ---    ---

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by Sections  12, 13, or 15 (d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes ___ No ___

APPLICABLE ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding
of each of the issuer's  classes of common stock,  as of the latest  practicable
date _______.


<PAGE>


PART I
ITEM 1 - Financial Statements:
-----------------------------


                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------

                             (A LIMITED PARTNERSHIP)
                             -----------------------

                                 BALANCE SHEETS
                                 --------------


                                                   September 30,  December 31,
                                                       1998           1997
ASSETS:                                             (Unaudited)
                                                   ------------   ------------

     Cash and cash equivalents                     $  1,032,365   $  1,378,138
     Accounts receivable                                150,588        152,950
     Prepaid expenses and deposits                       54,492         17,052
     Investment property, at cost:
         Land                                         2,618,857      2,618,857
         Buildings and Improvements                  13,588,507     13,517,224
                                                   ------------   ------------
                                                     16,207,364     16,136,081
         Less accumulated depreciation               (4,593,778)    (4,194,255)
                                                   ------------   ------------
                                                     11,613,586     11,941,826
     Investment property-held for sale                2,838,413      2,802,714
                                                   ------------   ------------
                                                     14,451,999     14,744,540

     Prepaid and Deferred expenses - At
        amortized cost                                  278,110        271,024
                                                   ------------   ------------

                                                   $ 15,967,554   $ 16,563,704
                                                   ============   ============


LIABILITIES AND PARTNERS' EQUITY:

Liabilities:
     Accounts payable and accrued expenses         $    102,055   $    480,609
     Accrued real estate taxes                          615,056        556,902
     Refundable tenant deposits                         203,422        148,774
     Mortgage note payable                            7,021,040      7,096,532
                                                   ------------   ------------

                                                      7,941,573      8,282,817

Partners' Equity                                      8,025,981      8,280,887
                                                   ------------   ------------

                                                   $ 15,967,554   $ 16,563,704
                                                   ============   ============



                 SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS


                                       -2-

<PAGE>


<TABLE>
                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------

                             (A LIMITED PARTNERSHIP)
                             -----------------------

                  STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
                  ---------------------------------------------

                                   (UNAUDITED)
                                   -----------
<CAPTION>

                                             Three Months Ended          Nine Months Ended
                                           Sept. 30,    Sept. 30,     Sept. 30,     Sept. 30,
                                             1998         1997          1998          1997
                                         -----------   -----------   -----------   -----------
<S>                                      <C>           <C>           <C>           <C>
REVENUES:
     Rental and other income             $   892,677   $   817,791   $ 2,667,034   $ 2,589,785
     Interest                                      0           585             0         1,509
                                         -----------   -----------   -----------   -----------

                                             892,677       818,376     2,667,034     2,591,294
EXPENSES:
     Interest expense                        149,553       151,324       444,079       446,064
     Depreciation and amortization           189,415       118,812       568,159       495,035
     Real estate taxes                       151,095       168,892       458,583       441,708
     Property management fees paid to
         Nooney, Inc.                         53,170        49,261       157,829       156,839
     Reimbursement to Nooney, Inc. 
         for partnership management
         services and indirect expenses       10,000        10,000        30,000        30,000
     Repairs and maintenance                  89,124        59,632       199,756       146,108
     Professional services                    27,070        27,892        71,897       150,031
     Utilities                                42,150        35,019       114,392       104,578
     Payroll                                  26,590        23,302        73,312        74,771
     Cleaning                                 40,871        34,800       123,821       114,015
     Insurance                                17,307        15,768        51,353        47,294
     Parking lot / landscaping expenses       23,027        36,253        70,062        77,814
     Other operating expenses                 32,057        40,753       176,257       147,943
                                         -----------   -----------   -----------   -----------

                                             851,429       771,708     2,539,500     2,432,200
                                         -----------   -----------   -----------   -----------

NET INCOME                               $    41,248   $    46,668   $   127,534   $   159,094
                                         ===========   ===========   ===========   ===========
NET INCOME PER LIMITED
     PARTNERSHIP UNIT                    $      2.12   $      2.40   $      6.57   $      8.19
                                         ===========   ===========   ===========   ===========

PARTNERS' EQUITY:
     Beginning of Period                 $ 8,112,216   $ 8,457,209   $ 8,280,887   $ 8,472,267
     Net Income                               41,248        46,668       127,534       159,094
     Cash Distribution to Partners          (127,484)     (127,484)     (382,440)     (254,968)
                                         -----------   -----------   -----------   -----------

     End of Period                       $ 8,025,981   $ 8,376,393   $ 8,025,981   $ 8,376,393
                                         ===========   ===========   ===========   ===========

<FN>


                 SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
</FN>
</TABLE>
                                       -3-

<PAGE>



                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------

                             (A LIMITED PARTNERSHIP)
                             -----------------------

                            STATEMENTS OF CASH FLOWS
                            ------------------------

                                   (UNAUDITED)
                                   -----------

                                                           Nine Months Ended
                                                        Sept. 30,     Sept. 30,
                                                          1998          1997
                                                      -----------   -----------

CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                       $   127,534   $   159,094
     Adjustments to reconcile net income (loss)
         to net cash provided by operating
         activities:
             Depreciation and amortization                568,159       495,035

     Changes in assets and liabilities:
         Decrease in accounts receivable                    2,362        51,974
         Increase in prepaid expenses                     (37,440)      (21,665)
         Increase in deferred assets                      (94,333)      (73,809)
         Decrease in accounts payable                    (378,554)      (49,221)
         Increase (Decrease) in accrued real estate
             taxes                                         58,154      (143,349)
         Increase in refundable tenant deposits            54,648        10,402
                                                      -----------   -----------

             Total Adjustments                            172,996       269,367
                                                      -----------   -----------

             Net cash provided by operating
               activities                                 300,530       428,461
                                                      -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES -
         Additions to investment property                (188,371)     (165,174)
                                                      -----------   -----------

         Net cash from investing activities              (188,371)     (165,174)

CASH FLOWS FROM FINANCING ACTIVITIES -
     Cash distributions to partners                      (382,440)     (254,968)
     Payments on mortgage notes payable                   (75,492)      (70,101)
                                                      -----------   -----------

         Net cash from financing activities              (457,932)     (325,069)
                                                      -----------   -----------

NET DECREASE IN CASH
AND CASH EQUIVALENTS                                     (345,773)      (61,782)

CASH AND CASH EQUIVALENTS, beginning of period          1,378,138     1,323,026
                                                      -----------   -----------

CASH AND CASH EQUIVALENTS, end of period              $ 1,032,365   $ 1,261,244
                                                      ===========   ===========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Cash paid during year for interest      $   444,079   $   446,064
                                                      ===========   ===========



                 SEE NOTES TO THE UNAUDITED FINANCIAL STATEMENTS


                                       -4-

<PAGE>






                        NOONEY INCOME FUND LTD. II, L.P.
                        --------------------------------
                             (A LIMITED PARTNERSHIP)
                             -----------------------
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                     ---------------------------------------
             THREE AND NINE MONTHS ENDED September 30, 1998 AND 1997
             -------------------------------------------------------


NOTE A:

Refer to the Registrant's  financial  statements for the year ended December 31,
1997, which are contained in the Registrant's  Annual Report on Form 10-K, for a
description of the accounting policies which have been continued without change.
Also, refer to the footnotes to those  statements for additional  details of the
Registrant's  financial  condition.  The details in those notes have not changed
except as a result of normal transactions in the interim or as noted below.

NOTE B:

The financial statements include only those assets, liabilities,  and results of
operations  of the partners  which relate to the business of Nooney  Income Fund
Ltd. II, L.P. The  statements do not include  assets,  liabilities,  revenues or
expenses attributable to the partners' individual  activities.  No provision has
been  made for  federal  and  state  income  taxes  since  these  taxes  are the
responsibility  of the  individual  partners.  In  the  opinion  of the  general
partners,  all  adjustments  (which include only normal  recurring  adjustments)
necessary to present  fairly the financial  position,  results of operations and
changes in cashflows at September  30, 1998 and for all periods  presented  have
been made.  The results of operations for the three and nine month periods ended
September 30, 1998, are not  necessarily  indicative of the results which may be
expected for the entire year.

NOTE C:

The  Registrant's  properties  are  managed  by  Nooney,  Inc.,  a  wholly-owned
subsidiary of CGS Real Estate Company.  Nooney Income  Investments  Two, Inc., a
general  partner,  is a  75%  owned  subsidiary  of  S-P  Properties,  Inc.  S-P
Properties, Inc. Is a wholly-owned subsidiary of CGS Real Estate Company.

NOTE D:

The  earnings per limited  partnership  unit for the three and nine months ended
September 30, 1998 and 1997 was computed  based on 19,221  units,  the number of
units outstanding during the periods.

NOTE E:

Effective  January  1, 1998,  the  Registrant  adopted  Statement  of  Financial
Accounting   Standards  No.  130,   "Reporting   Comprehensive   Income,"  which
established  standards for the reporting and display of comprehensive income and
its components.  The adoption of this statement did not affect the  Registrant's
financial  statements  for the three and nine month periods ended  September 30,
1998 and 1997.

                                       -5-

<PAGE>




ITEM 7:          MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                 ---------------------------------------------------------
                 AND RESULTS OF OPERATIONS
                 -------------------------

It should  be noted  that this 10-Q  contains  forward-looking  information  (as
defined in the Private  Securities  Litigation Reform Act of 1995) that involves
risk and  uncertainty,  including trends in the real estate  investment  market,
projected  leasing and sales,  and the future  prospects for Registrant.  Actual
results could differ materially from those contemplated by such statements.

Liquidity and Capital Resources
-------------------------------

Cash on hand as of September  30, 1998 is $1,032,365 a decrease of $345,773 when
compared to the year end December 31, 1997.  During the nine month period ending
September 30, 1998, net cash provided by operating activities was $300,530. Cash
was used for  capital  and tenant  improvements  in the amount of  $188,371  and
payment on mortgage notes payable in the amount of $75,492.  Cash  distributions
paid to partners during the nine month period was $382,440. Based on the current
cash balances and the  properties'  ability to provide  operating cash flow, the
Registrant expects the properties to fund anticipated  capital  expenditures for
the remainder of 1998. These anticipated capital expenditures by property are as
follows:

                                               Other       Leasing
                                              Capital      Capital        Total
                                              -------      -------        -----

NorthCreek Office Park                        $      0     $ 48,825     $ 48,825
Tower Industrial Building                            0            0            0
Northeast Commerce Center                            0       72,130       72,130
Countryside Executive Center                    35,799        7,252       43,051
Leawood Fountain Plaza (24%)                     4,416       16,637       21,053
                                              --------     --------     --------
                                              $ 40,215     $144,844     $185,059
                                              ========     ========     ========


Leasing  capital  at  the  Registrant's  properties  include  funds  for  tenant
alterations and lease  commissions for new and renewal leases.  Other capital at
Countryside  Executive  Center is for new property signage and a new heating and
air  conditioning  unit. Other capital at Leawood Fountain Plaza is for sidewalk
and curb replacement and new carpet in building three building hallways.

As previously  disclosed,  the Registrant feels that the market conditions exist
whereby  Countryside  Executive  Center should be sold. As previously  reported,
management is currently working on leasing additional space so that occupancy is
at a higher  level which will  command a higher sale price when the  property is
ultimately  sold.  Occupancy levels continue to increase and the Registrant will
continue to update any progress regarding the sale in future quarters.

The future  liquidity  of the  Registrant  is  dependent  on its ability to fund
future  capital  expenditures  from  operations  and cash  reserves and maintain
occupancy.  Until such time as the real estate  market  recovers and  profitable
sale of the properties is feasible, the Registrant will continue to manage their
properties to achieve its investment objectives.



                                       -6-

<PAGE>



Results of Operations by Property
---------------------------------

The results of operations for the Registrant's properties for the quarters ended
September  30, 1998 and 1997 are  detailed in the schedule  below.  Revenues and
expenses of the Registrant are excluded.

                                  Tower     Northeast  Countryside   Leawood
                   NorthCreek   Industrial  Commerce    Executive    Fountain
                   Office Park   Building    Center       Center    Plaza (24%)
                   -----------  ----------  ---------  -----------  -----------

1998
----
Revenues            $ 343,094  $  50,206    $ 178,701   $ 235,719   $  78,435
Expenses              297,502     25,732      209,804     253,960      67,886
                    ---------  ---------    ---------   ---------   ---------

Net Income (Loss)   $  45,592  $  24,474    $ (31,103)  $ (18,241)  $  10,549
                    =========  =========    =========   =========   =========

1997
----
Revenues            $ 344,538  $  50,929    $ 175,346   $ 178,449   $  71,804
Expenses              302,749     27,954      175,861     243,115      67,531
                    ---------  ---------    ---------   ---------   ---------

Net Income (Loss)   $  41,789  $  22,975    $    (515)  $ (64,666)  $   4,273
                    =========  =========    =========   =========   =========



At NorthCreek  Office Park net income for the quarter  ended  September 30, 1998
was $45,592 compared to net income of $41,789 in 1997.  Revenues remained stable
with a slight decrease of $1,444.  This decrease can be attributed to a decrease
in escalation income, partially offset by an increase in rental income. Expenses
decreased $5,247 when comparing the two quarters. This decrease can primarily be
attributed to decreases in depreciation and amortization expense.

Operating results at Tower Industrial  Building remained  relatively stable when
comparing  the quarter ended  September 30, 1998 to the quarter ended  September
30, 1997. The increase in net income of $1,499, when comparing the two quarters,
is primarily due to a decrease in repairs and maintenance  expense (1,348).  The
property continues to operate as anticipated.

At Northeast  Commerce  Center the net loss for the quarter ended  September 30,
1998 was  $(31,103)  compared to the net loss of $(515) in 1997.  Revenues  were
$178,701 and $175,346 for the third quarters ended  September 30, 1998 and 1997,
respectively.  The increase in revenues of $3,355 can be attributed to increases
in rental income ($6,222) and miscellaneous income ($3,295), partially offset by
a decrease in  escalation  income  ($6,162).  The  property's  expenses  for the
quarter  ended   September  30,  1998  and  1997,  were  209,804  and  $175,861,
respectively.  The increase in expenses of $33,943 is  attributable to increases
in amortization expense ($11,676),  fire/crime prevention ($2,664),  repairs and
maintenance  ($9,498),  real estate taxes ($4,153),  and  professional  services
($5,695).  The repairs and  maintenance  increase can be attributed to extensive
heating, ventilation, and air-conditioning repairs and replacement.

At Countryside Executive Center the net loss for the quarter ended September 30,
1998 was $(18,241) compared to the net loss of $(64,666) in 1997.  Revenues were
$235,719 for the quarter  ended  September 30, 1998 and $178,449 for the quarter
ended  September 30, 1997. The increase in revenue of $57,270 when comparing the
two periods,  is attributable  to increases in base rental income  ($74,127) and
miscellaneous  income  ($2,576),  partially  offset by an  increase  in bad debt
expense ($19,409). The increase in rental income is due to a 26% increase in the
occupancy level when compared to same period last year. The increase in bad debt


                                       -7-

<PAGE>



expense is due to the write off of old receivable  considered  uncollectible  by
the property manager. Expenses at Countryside Executive Center were $253,960 and
$243,115 for the quarters ended September 30, 1998 and 1997, respectively.  This
increase in expenses of $10,485 can be attributable to increases in amortization
expense  ($18,090),  cleaning  ($2,943),  management fees ($3,439),  repairs and
maintenance  ($21,068),  water ($3,510),  and payroll ($2,734).  These increases
were  partially  offset  by  decreases  in the  upkeep of  tenant  common  areas
($15,415),  parking  lot/landscaping  ($14,598),  and real  estate  tax  expense
($10,897).  The increase in amortization is due to additional tenant alterations
and lease commissions  attributable to occupancy status. The increase in repairs
and  maintenance  is primarily due to extensive  heating,  ventilation,  and air
conditioning  repairs and replacements.  The decreases in common area upkeep and
parking  lot/landscaping  are due to a lower  amount of  replacement  and repair
costs necessary in 1998 as in 1997.

At Leawood  Fountain Plaza,  net income for the quarter ended September 30, 1998
and the quarter ended  September 30, 1997 was $10,549 and $4,273,  respectively,
resulting in an increase in net income of $6,276. Revenues for the quarter ended
September  30, 1998 and 1997 were $78,435 and $71,804,  resulting in an increase
of $6,631.  This  increase can  primarily be  attributed  to an increase in base
rental income  ($9,500),  partially  offset by a decrease in  escalation  income
($3,057).  Expenses remained  relatively stable, with a minimal increase of $355
when comparing the two quarters.

The occupancy levels at September 30 are as follows:

                                               Occupancy Levels at September 30,
                                               ---------------------------------
PROPERTY                                         1998        1997        1996
--------                                         ----        ----        ----

NorthCreek Office Park                            96%         92%         98%
Tower Industrial Building                        100%        100%        100%
Northeast Commerce Center                         94%         94%         87%
Countryside Executive Center                      75%         49%         74%
Leawood Fountain Plaza (24%)                      95%         87%         90%

At NorthCreek  Office Park  occupancy  increased  during the quarter from 95% to
96%.  Leasing  activity  consisted  of one new tenant  signing a lease for 2,135
square feet,  five tenants  signing renewal leases who occupy 6,606 square feet,
and one tenant  vacating 639 square  feet.  The Office Park has one major tenant
with two leases that comprise  approximately  26% and 7% of the available space.
These two leases expire December 2003 and December 1998, respectively. The lease
expiring in December 1998 is currently being finalized to renew through December
2003.

The Tower  Industrial  Building is leased to a single tenant whose lease expires
on April 30, 2000.

At Northeast  Commerce  Center,  there was no leasing  activity during the third
quarter and the  property  remains 94%  occupied.  The  property has three major
tenants who occupy 50%,  18%,  and 11% of the  property  with leases that expire
December 1998, October 1999, and June 2001, respectively. The tenant whose lease
expires  December 1998 has notified the Registrant that they will be vacating as
of November 1998 pursuant to an early  cancellation  option they have exercised.
The Registrant is working  closely with the  Cincinnati  brokerage firm hired to
handle the leasing of the  property to market the 50,000  square feet which will
be  vacated.  Effective  October 1, 1998,  the  tenant who  occupied  11% of the
property  expanded  their  suite to include an  additional  5,878  square  feet,
signing a new lease expiring September 2003.


                                       -8-

<PAGE>



Occupancy at Countryside  Executive  Center increased from 71% to 75% during the
third  quarter  1998.  Leasing  activity  during the  quarter  consisted  of the
Registrant  signing two new leases  totaling 6,342 square feet and three tenants
vacating who occupied  2,397 square feet.  The property has one major tenant who
occupies 14% of the available space with a lease that expires February 2005.

During the third quarter of 1998 occupancy at Leawood  Fountain Plaza  increased
from 94% at the  beginning of the quarter to 95% at the quarter's  end.  Leasing
activity  during the quarter  consisted of the Registrant  signing one new lease
for 3,036 square feet, two tenants  renewing their leases for 5,991 square feet,
and two tenants  vacating  their leases which  occupied  2,067 square feet.  The
property  has two major  tenants  who  occupy  approximately  10% and 15% of the
available  space with leases which expire in July 1999 and expired in July 2001,
respectively.

Each quarter,  the General  Partners  assess the properties for  impairment.  If
conclusive evidence of an impairment is found in any particular quarter, further
valuation  procedures would be performed.  Additionally,  as a matter of policy,
the  Registrant  has each of its  properties  appraised on an annual basis by an
independent  appraisal  firm. It is difficult to pinpoint an exact time or event
to which impairment of a real estate investment can be attributed. Reductions in
value are usually  recognized on an annual basis at the time the  appraisals are
completed.

Year 2000 Issues
----------------

The  Registrant  believes  that the  impact  of the year 2000 will not cause the
Registrant to incur a future expense that will have a material  impact on future
results.  The management  company  employed by the Registrant  utilizes  various
software   packages  as  tools  in  running  its  accounting   operations.   The
Registrant's  properties are  maintained on software  provided by a third party.
The management  company has received  information  from that company  indicating
that the main software program has all its core products already compatible with
2000 dates and that these have been tested in the field for over five  years.  A
few of the add on  products  that are not  crucial to the  management  company's
business  are in the  process  of  being  updated  and the  third  party  vendor
anticipates compliance by the end of 1998.

Results of Consolidated Operations 1998
---------------------------------------

For the quarter ended  September  30, 1998 and  September 30, 1997  consolidated
revenues  were  $892,677  and  $818,376,  respectively.   Consolidated  revenues
increased  $74,301 when comparing  quarter ended  September 30, 1998 to the same
period in the prior year.  This  increase in  revenues  is  primarily  due to an
increase in base rental income  ($111,092)  and a decrease in the amount of rent
concessions  posted  ($10,136).  These positive  income results were offset by a
decrease in  escalation  income  (30,636)  and an  increase in bad debt  expense
($19,409).  The increase in rental income is primarily  due to higher  occupancy
levels at  Countryside  Executive  Center,  Northcreek  Office Park, and Leawood
Fountain Plaza. The decrease in escalation  income is primarily due to decreases
at Northcreek Office Park ($22,583) and Northeast Commerce Center ($6,161).  The
bad debt increase is due to the amount recorded by Countryside  Executive Center
as  mentioned  in the  property  comparisons.  For the nine month  period  ended
September  30,  1998  and  1997,   consolidated  revenues  were  $2,667,034  and
$2,591,294,  respectively.  Consolidated  revenues  for the  nine  month  period
increased  $75,740  when  compared to prior year.  This  increase in revenues is
primarily  due to increases in rental  income at  Coutryside  Executive  Center.
Leawood,  Northcreek,  and Northeast Commerce also had increased rental revenues
when compared to third quarter 1997. In addition, the amount of rent concessions
was less in 1998 due to new lease  negotiations.  These increases were offset by
significant decreases in escalation income at Northeast Commerce and Leawood and
an increase in bad debt expense at Countryside,  as mentioned in the three month
period comparison.

                                       -9-

<PAGE>




Consolidated  expenses  for the  three  months  ended  September  30,  1998  and
September  30,  1997 were  $851,429  and  $771,708,  respectively.  Consolidated
expenses  increases  $79,721 when  comparing  third  quarter of 1998 to the same
period in prior year.  The  increase in expenses  occurred  due to  increases in
depreciation and amortization ($70,603),  management fees ($3,909),  repairs and
maintenance ($29,492),  utilities ($7,131), and cleaning expense ($6,071). These
increases  were  partially  offset by decreases in real estate taxes  ($17,797),
parking lot ($13,226),  and other operating expenses  ($8,696).  The repairs and
maintenance  increase can primarily be attributed to heating,  ventilation,  and
air-conditioning  costs at Northeast  Commerce and Countryside,  as mentioned in
the property comparisons.  Consolidated expenses for the nine month period ended
September  30,  1998 and 1997  were  $2,539,500  and  $2,432,200,  respectively.
Consolidated  expenses  increased  $107,300 when comparing the nine months ended
September  30, 1998 to the similar  period of the prior  year.  The  increase in
consolidated  expenses  was due to increases in  depreciation  and  amortization
($73,124),  real estate  taxes  ($16,875),  repairs and  maintenance  ($53,648),
utilities  ($9,814),  cleaning ($9,806) and other operating expenses  ($28,314).
These  increases were  partially  offset by decreases in  professional  services
($78,134) and parking lot ($7,752).  The increase in repairs and  maintenance is
primarily due to the heating/air-  conditioning costs, as mentioned in the three
month comparison,  and increased exterior building repairs.  The other operating
expense  increase for the nine month period is due to  significant  increases in
fire and  crime  prevention,  promotional,  and  travel  expense.  The  sizeable
decrease in  professional  services can be attributed to the amount of legal and
other professional services rendered in 1998 being less than 1997.

Results of Consolidated Operations 1997
---------------------------------------

For the quarter ended  September  30, 1997 and September 30, 1996,  consolidated
revenues  were  $818,376  and  $868,743,  respectively.   Consolidated  revenues
decreased  $50,367 when comparing  quarter ended  September 30, 1997 to the same
period in the prior  year.  This  decrease  in  revenues is due to a decrease in
rental income ($68,081) at Countryside Executive Center.


For the nine month  period  ended  September  30,  1997 and  September  30, 1996
consolidated revenues were $2,591,294 and $2,525,121, respectively. Consolidated
revenues for the nine months ended  September  30, 1997  increased  $66,171 when
compared to the prior year.  This increase in revenues for the nine month period
ended is due primarily to the major tenant at Countryside  who occupied space on
a holdover lease paying double rent from January  through June 30 of 1997.  This
tenant paid $177,700  during 1997 compared to $126,686 for the nine months ended
September 30, 1996.

Consolidated  expenses  for the  three  months  ended  September  30,  1997  and
September  30,  1996 were  $771,708  and  $894,289,  respectively.  Consolidated
expenses  decreased $122,581 when comparing the quarter ended September 30, 1997
to the same period in the prior year.  The decrease in expenses  occurred due to
decreases in depreciation and amortization  ($50,361),  parking  lot/landscaping
expenses ($16,033), and other operating expenses ($127,634), partially offset by
increases in real estate taxes ($60,015) and professional services ($17,221).

Consolidated expenses for the nine months ended September 30, 1997 and September
30, 1996 were $2,433,200 and  $2,607,401,  respectively.  Consolidated  expenses
decreased  $175,201 when  comparing the nine months ended  September 30, 1997 to
the similar period of the prior year. The decrease in consolidated  expenses was
due to a decrease in interest expense  ($17,694),  utilities  ($9,817),  parking
lot/landscaping  expenses  ($15,471),  and other operating expenses  ($174,796),
partially offset by an increase in professional services ($34,794). The decrease
in other  operating  expenses  is due to the fact that in 1996 a real estate tax
consultant's fee was paid for an appeal of the real estate taxes.  This fee only


                                      -10-

<PAGE>




occurs once every  three years at the  tri-annual  assessment.  The  decrease in
interest  expense  is due to the pay down of the debt  during  the  year.  Other
operating  expenses  decreased  primarily  due  to  the  1996  real  estate  tax
consultant  fee of  $130,267  discussed  above and a decrease  of  ($25,000)  in
vacancy  related  expenses  because in 1996  there was a larger  volume of costs
incurred to ready vacant units for leasing.

Inflation
---------

The effects of inflation  did not have a material  impact upon the  Registrant's
operations.


PART II.  OTHER INFORMATION

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

     (a) Exhibits

              See Exhibit Index

     (b) Reports on Form 8-K

              None

                                   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.


                                             NOONEY INCOME FUND LTD. II, L.P.

Dated: November 13, 1998                     Nooney Income Investments Two, Inc.
      -------------------
                                             General Partner

                                             By: /s/ Gregory J. Nooney, Jr.
                                             ------------------------------
                                             Gregory J. Nooney, Jr.-Director
                                             Chairman of the Board and
                                             Chief Executive Officer

                                             By: /s/ Patricia A. Nooney
                                             --------------------------
                                             Patricia A. Nooney-Director
                                             Senior Vice President and Secretary

                                             BEING A MAJORITY OF THE DIRECTORS


                                      -11-

<PAGE>





                                  EXHIBIT INDEX

Exhibit Number                Description
--------------                -----------

3                             Amended and Restated  Agreement and Certificate of
                              Limited  Partnership,  dated  February 3, 1986, is
                              incorporated  by  reference  to  the  Registrant's
                              Annual  Report  on Form 10-K for the  fiscal  year
                              ended October 31, 1986, as filed  pursuant to Rule
                              13-a1 of the Securities Exchange Act of 1934 (File
                              No. 0-14360)

27                            Financial   Data   Schedule   (provided   for  the
                              information  of the U.S.  Securities  and Exchange
                              Commission only)



                                      -12-