<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 quarterly period ended                 March 31, 1999
                              -------------------------------------------------

                                       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              0-4748           
                      --------------------------------

                              Data Dimensions, Inc.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           Delaware                                         06-0852458
--------------------------------------------------------------------------------
(NAME OR OTHER JURISDICTION OF                (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)                

One Bellevue Center, 411 - 108th Avenue NE, Suite 2100, Bellevue, WA 98004
--------------------------------------------------------------------------------
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                 (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE        (425) 688-1000
                                                  -----------------------------

Indicate by check 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 [ ].

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date 

Common Stock: 13,641,463 shares as of April 30, 1999
--------------------------------------------------------------------------------


                                  Page 1 of 10
<PAGE>   2
                              DATA DIMENSIONS, INC.
                                      Index


<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                Number
                                                                                                ------
<S>                                                                                             <C>

PART I - FINANCIAL INFORMATION.

     Item 1.  Financial Statements

         Consolidated Balance Sheets at March 31, 1999 (unaudited) and December 31, 1998.            3

         Consolidated Statements of Operations for the three month
            periods ended March 31, 1999 and 1998 (unaudited).                                       4

         Consolidated Statements of Comprehensive Income for the three month
            periods ended March 31, 1999 and 1998 (unaudited).                                       4

         Consolidated Statements of Cash Flows for the three month
            periods ended March 31, 1999 and 1998 (unaudited).                                       5

         Notes to Consolidated Financial Statements.                                                 6

     Item 2.  Management's Discussion and Analysis of Financial Condition
                 and Results of Operations.                                                          7

     Item 3.  Quantitative and Qualitative Disclosure About Market Risk                              9

PART II - OTHER INFORMATION.

     Item 6.  Exhibits and Reports on Form 8-K.                                                      9


SIGNATURES                                                                                          10
</TABLE>


                                     Page 2
<PAGE>   3
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                              DATA DIMENSIONS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                   March 31,        December 31,
                                                                     1999               1998
                                                                 ------------       ------------
<S>                                                              <C>                <C>         
                                                                  (unaudited)
Current assets:
   Cash and cash equivalents                                     $        105       $        776
   Accounts receivable, net                                            34,941             36,876
   Prepaid and other current assets                                     2,499              2,850
   Deferred income taxes                                                1,260              1,140
                                                                 ------------       ------------
        Total current assets                                           38,805             41,642

Equipment and furniture, net                                            8,205              8,467
Investment in product development, net                                    806              1,016
Other assets                                                              788                812
                                                                 ------------       ------------
        Total assets                                             $     48,604       $     51,937
                                                                 ============       ============

Current liabilities:
   Current debt                                                  $        800       $       --
   Accounts payable                                                     4,389              4,571
   Advance billings                                                       196                300
   Accrued compensation and commissions                                 6,167              6,157
   Other accrued liabilities                                            3,101              3,067
   Dividends payable                                                     --                  229
   Current portion of capital lease obligations                         1,263              1,161
   Income taxes payable                                                   891              5,997
   Deferred income taxes                                                  797                797
                                                                 ------------       ------------
        Total current liabilities                                      17,604             22,279

Capital lease obligations, net of current portion                       1,778              1,976
Other long term liabilities                                               183                180
                                                                 ------------       ------------
Total liabilities                                                      19,565             24,435
                                                                 ------------       ------------

Commitments and contingencies (Note 2 )

Stockholders' equity:
   Common stock, $.001 par value; 20,000 shares
       authorized; 13,532 and 13,521 outstanding                           13                 13
   Additional paid in capital                                          24,579             24,539
   Treasury stock, at cost, 112 shares in 1999 and 1998                (3,034)            (3,034)
   Retained earnings                                                    7,646              6,104
   Cumulative comprehensive loss                                         (165)              (120)
                                                                 ------------       ------------
        Total stockholders' equity                                     29,039             27,502
                                                                 ------------       ------------
    Total liabilities and stockholders' equity                   $     48,604       $     51,937
                                                                 ============       ============
</TABLE>


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


                                     Page 3
<PAGE>   4
                              DATA DIMENSIONS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                      Three Month Periods Ended March 31, 
                                                      ------------------------------------
                                                         1999                      1998
                                                      ----------                ----------
<S>                                                   <C>                       <C>       
Revenue                                                                     
  Field consulting                                    $   24,087                $   15,126
  Outsourcing services                                     4,226                     1,930
  Test centers                                             3,163                     3,315
  Other                                                      742                       859
                                                      ----------                ----------
              Total revenue                               32,218                    21,230
                                                                            
Direct costs                                              19,512                    11,847
                                                      ----------                ----------
                                                                            
Gross margin                                              12,706                     9,383
                                                                            
General, administrative and selling expenses              10,100                     7,856
                                                      ----------                ----------
                                                                            
Income from operations                                     2,606                     1,527
                                                                            
Other income (expense)                                       (78)                      (29)
                                                      ----------                ----------
                                                                            
Income before income tax                                   2,528                     1,498
                                                                            
Income tax provision                                         986                       625
                                                      ----------                ----------
                                                                            
Net income                                            $    1,542                $      873
                                                      ==========                ==========
                                                                            
Earnings per share-basic                              $     0.11                $     0.07
                                                      ==========                ==========
Earnings per share-diluted                            $     0.11                $     0.07
                                                      ==========                ==========
                                                                            
Weighted average shares outstanding-basic                 13,530                    13,170
                                                      ==========                ==========
Weighted average shares outstanding-diluted               13,557                    13,408
                                                      ==========                ==========
</TABLE>


                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<S>                                                  <C>                       <C>       
Net Income                                           $    1,542                   $      873
Other comprehensive income (loss) - foreign
       currency translation adjustments                     (45)                         102
                                                     ----------                   ----------

Comprehensive income                                 $    1,497                   $      975
                                                     ==========                   ==========
</TABLE>


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


                                     Page 4
<PAGE>   5
                              DATA DIMENSIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                    Three Month Periods Ended March 31,
                                                                    ------------------------------------
                                                                        1999                    1998      
                                                                    ------------            ------------
<S>                                                                 <C>                     <C>         
CASH FLOWS FROM OPERATING ACTIVITIES                                                    
Net income                                                          $      1,542            $        873
Adjustments to reconcile net income to net cash provided                                
  (used) by operating activities:                                                       
       Depreciation and amortization                                       1,478                     887
       Deferred income tax provision (benefit)                              (120)                    625
       Other non cash items                                                   24                    --
       Changes in certain operating assets and liabilities                              
         Decrease in accounts receivable                                   1,935                     816
         Decrease in prepaid and other assets                                 96                      20
         Decrease in accounts payable                                       (182)                   (650)
         Decrease in advanced billings                                      (104)                 (1,199)
         Increase (decrease) in accrued compensation and                                
               commissions                                                    10                    (383)
         Decrease in income taxes payable                                 (5,106)                   --
       Other                                                                 252                    (122)
                                                                    ------------            ------------
Net cash provided (used) by operating activities                            (175)                    867
                                                                    ------------            ------------
                                                                                        
CASH FLOWS FROM INVESTING ACTIVITIES                                                    
Maturities and sales of investments                                         --                       986
Purchases of equipment and furniture                                        (802)                 (1,037)
Investment in product development                                           --                       (26)
                                                                    ------------            ------------
Net cash used by investing activities                                       (802)                    (77)
                                                                    ------------            ------------
                                                                                        
CASH FLOWS FROM FINANCING ACTIVITIES                                                    
Proceeds from short term debt                                                800                     247
Payment of capital lease obligations                                        (281)                    (70)
Distribution to shareholder                                                 (229)                   --
Repayment of note payable                                                   --                       (44)
Proceeds from issuance of common stock                                        16                     241
                                                                    ------------            ------------
Net cash provided by financing activities                                    306                     374
                                                                    ------------            ------------
                                                                                        
Net increase (decrease) in cash and cash equivalents                        (671)                  1,164
                                                                                        
Cash and cash equivalents, beginning of period                               776                   4,733
                                                                    ------------            ------------
                                                                                        
Cash and cash equivalents, end of period                            $        105            $      5,897
                                                                    ============            ============
                                                                                        
Cash paid during the period for:                                                        
    Interest                                                        $        105            $        118
    Income taxes                                                    $      6,114            $       --
Non-cash investing and financing activities:                                            
    Equipment acquired under capital lease                          $        185            $       --
</TABLE>


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


                                     Page 5
<PAGE>   6
                              DATA DIMENSIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: Basis of Presentation 

The consolidated financial statements present the consolidated financial
position and results of operations of Data Dimensions, Inc. and its
subsidiaries, ("Data Dimensions" or the "Company") in accordance with the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted in accordance with such rules and regulations.

In August 1998, the Company acquired ST Labs, Inc. in a business combination
accounted for as a pooling of interests. The historical financial statements for
periods prior to consummation of the business combination have been restated as
though the companies had been combined for all periods presented.

The financial information included herein for the three month periods ended
March 31, 1999 and 1998 is unaudited; however, such information reflects all
adjustments consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of the consolidated
financial position, results of operations, comprehensive income and cash flows
for the interim periods. The financial information as of December 31, 1998 is
derived from the Company's audited consolidated financial statements. These
interim consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and related notes thereto, which are
included in the Company's 1998 Annual Report on Form 10-K.

The results of operations for the 1999 interim period presented are not
necessarily indicative of the results to be expected for the year ended December
31, 1999 or any future interim period, and the Company makes no representation
related thereto.

Certain amounts have been reclassified in the prior period financial statements
to conform with the current year presentations.

NOTE 2: Contingencies

The Company is from time to time involved in various claims and legal
proceedings of a nature considered by Company management to be routine and
incidental to its business. In the opinion of Company management, after
consultation with outside legal counsel, the ultimate disposition of such
matters is not expected to have a material adverse effect on the Company's
financial position, results of operations or liquidity.

NOTE 3: Reconciliation of Earnings Per Share

Basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed
using the weighted average number of common shares and dilutive common
equivalent shares outstanding during the period. Dilutive common equivalent
shares consist of common stock issuable upon exercise of stock options using the
treasury stock method. The following provides a reconciliation of the numerators
and denominators of the basic and diluted per share computations:

<TABLE>
<CAPTION>
                                                                        Three Months Ended March 31,
                                                                       -----------------------------
                                                                           1999             1998
                                                                       ------------     ------------
<S>                                                                    <C>              <C>         
Weighted average shares outstanding -- Basic                                 13,530           13,170
Dilutive common stock options using the treasury stock method                    27              238
                                                                       -----------------------------
Weighted average shares outstanding -- Diluted                               13,557           13,408
                                                                       =============================

Net income                                                             $      1,542     $        873
                                                                       =============================

Earnings per share - basic                                             $       0.11     $       0.07
                                                                       =============================
Earnings per share - diluted                                           $       0.11     $       0.07
                                                                       =============================
</TABLE>


                                     Page 6
<PAGE>   7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

This management's discussion and analysis of financial condition and results of
operations should be read in conjunction with the discussion and analysis
presented in the Company's 1998 Annual Report on Form 10-K.

Results of Operations

Revenue of $32.2 million in the quarter ended March 31, 1999 increased 52
percent over the revenue of $21.2 million in the quarter ended March 31, 1998.
In the first quarter of 1999, the Company re-organized its operations to better
align with the market segments that it serves. As a result, revenue is now being
reported in four segments; field consulting, outsourcing services, test centers
and other. Field consulting, which consists of time billed by consultants,
increased 59 percent over the first quarter of 1998 and accounted for 75 percent
of revenue in the first quarter of 1999. Outsourcing services, which consists of
computer hardware and application outsourcing, increased 119 percent and
accounted for 13 percent of revenue. Test centers, which consists of testing
services, quality assurance and training, decreased 5 percent from the first
quarter of 1998 and accounted for 10 percent of revenue. Other includes product
sales and international license royalties, which declined 14 percent from the
quarter ended March 31, 1998. Approximately 80 percent of the revenue in the
quarter ended March 31, 1999 was related to Year 2000 remediation.

Direct costs increased 65 percent in the quarter ended March 31, 1999 over the
quarter ended March 31, 1998. This resulted in gross margin, as a percent of
revenue, decreasing from 44 percent in the quarter ended March 31, 1998 to 39
percent in the quarter ended March 31, 1999. The increase in direct costs was
related to growth in outsourcing services where the gross margin is typically
lower than the other areas. In addition, in 1999, subcontractors, which
typically generate lower gross margins than employees of the Company, were used
significantly more than in 1998 to support the level of field consulting
business. Subcontractors were used to supplement specific skills and to support
projects where permanent employees had not yet been hired.

General, administrative and selling costs increased 29 percent in the quarter
ended March 31, 1999 over the quarter ended March 31, 1998. Some of the reasons
for the increase were higher marketing costs, internal training costs and an
increase in the number of employees. As a percent of revenue, general,
administrative and selling costs decreased from 37 percent to 31 percent
compared to last year. Although the Company continues to invest in the
infrastructure to support the Company's business, it is doing so at a slower
rate than the growth in revenue.

The Company's annual effective tax rate for the quarter ended March 31, 1999 was
39.0 percent compared to 41.7 percent for the quarter ended March 31, 1998. The
improvement in the tax rate is due to the utilization of net operating loss
carryforwards in the current year.

Liquidity and Capital Resources

The Company utilized its line of credit during the quarter to fund a significant
federal income tax payment. The borrowing was paid down to $800,000 at the end
of the quarter. Accounts receivable decreased $1.9 million and the days sales
outstanding (DSO) decreased from 105 days in the fourth quarter of 1998 to 98
days in the first quarter of 1999.

Working capital increased $1.8 million, primarily as a result of paying the
federal tax liability.

The Company anticipates that it will be able to meet its cash requirements
through cash generated by operations and occasional, short term use of its line
of credit.

Year 2000 Compliance

The Year 2000 issue is the result of computer programs that were written using
two digits rather than four to identify the applicable year. Any of the
Company's computer equipment, software and devices with embedded technology that
are time-sensitive may mistakenly identify a date field using "00" as the year
1900, rather than the year 2000.


                                     Page 7
<PAGE>   8
State of Readiness

The Company provides Year 2000 consulting services to Fortune 500 companies and
government agencies and is employing the same methods and processes to complete
its own internal Year 2000 project that it provides to its customers. The
Company has established a Year 2000 task force, comprised of members
representing the different business operations of the Company, to assess and
remediate the impact of the Year 2000 on its IT and non-IT systems, material
third party relationships, and service and product offerings. As identified by
the task force, the Year 2000 issues facing Data Dimensions that may have a
material impact on its ability to continue its business practices as usual
through the change of the century include: internal business systems; internet
and intranet service; telecommunications; power; and the compliance and
readiness of the Company's third party suppliers, vendors, and customers.

The task force has divided the Company's Year 2000 project into three major
phases: (1) assessment and planning; (2) implementation; and (3) verification
and contingency planning. The Company is currently in the implementation phase
of the project. To date, this has not revealed any information which indicates
that the magnitude of the Company's Year 2000 problem is material. During the
implementation phase of the project, the Company will replace obsolete systems
and update (or repair) the hardware, applications and data so they are Year 2000
compliant. During the verification and contingency planning phase of the
project, the Company will perform acceptance testing and review the results to
determine that the updated applications are ready to return to production as
well as remove any unused and outdated hardware and software, and migrate the
various systems to production status. Based on information compiled to date, the
Company expects to substantially complete its compliance project, as outlined
above, by mid-1999.

In addition to its own compliance efforts, the Company is conducting an
assessment of the third parties with which it has material relationships to
determine if they are Year 2000 compliant. The Company has contacted its key
vendors and suppliers by the distribution of questionnaires. A majority of the
vendors and suppliers have responded to the questionnaire with assurance that
they will be Year 2000 compliant. The Company is in the process of developing
contingency plans for those vendors and suppliers that will not be fully Year
2000 compliant.

Prior to the start of the Company's Year 2000 project, implementation of a new
enterprise-wide integrated accounting package to provide for the financial needs
of the organization was completed. This software has been warranted by the
vendor to be Year 2000 compliant. Similarly, the operating system used by Data
Dimensions Information Services, Inc., the Company's subsidiary which outsources
mainframe computer processing services, also has been warranted by the vendor to
be Year 2000 compliant. Finally, the Company has replaced its phone and
voicemail systems with new, Year 2000-compliant systems to better provide for
the expanding communication needs of the organization.

Costs to Address Year 2000 Issues

The total estimated cost of the project is approximately $1.5 million. These
costs consist primarily of the cost of labor needed to complete the Company's
readiness and compliance project. The approximate labor cost during 1998 was
$450,000 with the remainder to be incurred in 1999. The decision by the Company
to acquire new accounting and phone software and equipment, and the timing
thereof, arose in the ordinary course of the growth of the Company, and is not
considered a cost associated with the Year 2000 issue.

Risks of Year 2000 Issues

The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. If such failures occur, the Company's results of operations,
liquidity, and financial condition could be materially and adversely affected
and the Company may be required to incur unanticipated expenses to remedy any
problems not addressed by the Company's compliance efforts. Additionally, if any
of the Company's material suppliers or vendors are not fully Year 2000
compliant, it is possible that a system failure or miscalculations causing
disruptions in the Company's operations or potential problems with its product
and service offerings could result.


                                     Page 8
<PAGE>   9
Contingency Plans

Part of the Company's Year 2000 project includes the preparation of contingency
plans. The Company anticipates completion of its contingency plans by mid-1999.

Forward-Looking Statements and Associated Risks

The foregoing and the discussion and analysis presented in the Company's 1998
Annual Report in Form 10-K contains certain forward-looking statements,
including, among others (i) the potential extent of the millennium problem and
the anticipated growth in the millennium consulting market; (ii) anticipated
trends in the Company's financial condition and results of operations (including
expected changes in the Company's gross margin and general, administrative and
selling expenses); (iii) the Company's business strategies for expanding its
presence in the computer services industry and positioning itself for
non-millennium and post-2000 markets; and (iv) the Company's ability to
distinguish itself from its current and future competitors.

These forward-looking statements are based largely on the Company's current
expectations and are subject to a number of risks and uncertainties, some of
which are described in the Issues and Uncertainties section of the discussion
and analysis included in the Company's 1998 Annual Report on Form 10-K. The
Company does not provide forecasts of future financial performances. While
Company management is optimistic about the Company's long-term prospects, these
issues and uncertainties, among others, should be considered. Actual results
could differ materially from these forward-looking statements. Important factors
to consider in evaluating such forward-looking statements include (i) the
shortage of reliable market data regarding the millennium consulting market;
(ii) changes in external competitive market conditions that might impact trends
in the Company's results of operations; (iii) unanticipated working capital or
other cash requirements; (iv) the Company's ability to profitably market and
sell its Knowledge Transfer products; (v) changes in the Company's business
strategies or an inability to execute its strategies due to unanticipated
changes in the millennium consulting market; and (vi) various competitive
factors that may prevent the Company from competing successfully in the
marketplace. In view of these risks and uncertainties, there can be no assurance
that the forward-looking statements contained in this Quarterly Report on Form
10-Q and the Company's Annual Report on Form 10-K will, in fact, transpire.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

       Not Applicable.

PART II - OTHER INFORMATION

Item 6. Exhibits and reports on Form 8-K

       (a) The following exhibits are filed as a part of this report, and this
       list is intended to constitute the exhibit index:

       Exhibit No.

           27.    Financial Data Schedule

       (b) There were no reports on Form 8-K filed during the quarter ended
       March 31, 1999.


                                     Page 9
<PAGE>   10
                                    SIGNATURE


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.






                           Data Dimensions, Inc.
                           (Registrant)


       May 13, 1999          /s/ Gordon A. Gardiner
       ------------        ----------------------------------------------------
       Date                      Gordon A. Gardiner, Executive Vice President,
                           Chief Financial Officer and Secretary (Principal
                           Financial and Accounting Officer.)


                                    Page 10