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

                                    FORM 10-K

   X     Annual  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
 -----   Exchange Act of 1934 for the fiscal year ended January 3, 1999.

         Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
 -----   Exchange Act of 1934


Commission File Number:  0-26094

                           SOS STAFFING SERVICES, INC.
             (Exact name of Registrant as specified in its charter)

            Utah                                                 87-0295503
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

1415 South Main Street, Salt Lake City, Utah                            84115
  (Address of principal executive offices)                            (Zip Code)

            Registrant's telephone number, including area code:  (801) 484-4400

                  Securities  registered  pursuant to Section  12(b) of the Act:
                                      None

                  Securities  registered  pursuant to Section  12(g) of the Act:

                          Common stock, $0.01 par value
                                (Title of class)

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 [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

The  aggregate  market value of the Common Stock held by  non-affiliates  of the
Registrant,  on March 8, 1999,  based upon the closing sales price of the Common
Stock of $8.75 per share on that  date,  as  reported  on the  NASDAQ/NMS  Stock
Market,  was  approximately  $50,187,856.  Shares of Common  Stock  held by each
officer and director  and by each person who owns 5% or more of the  outstanding
Common  Stock  have  been  excluded  in that  such  persons  may be deemed to be
affiliates.  This  determination  of  affiliate  status  is  not  necessarily  a
conclusive determination for other purposes.

As of March 8, 1999,  Registrant  had  outstanding  12,691,398  shares of Common
Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Annual Report to Shareholders for the fiscal year
ended January 3, 1999 are incorporated by reference into Parts II and IV of this
Report. Portions of the Proxy Statement for the Registrant's 1999 Annual Meeting
of  Shareholders  to be held May 19, 1999 are  incorporated by reference in Part
III of this Report.

<PAGE>

                                     PART I

         This Annual  Report on Form 10-K  contains  forward-looking  statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities  Act") and Section 21E of the  Securities  Exchange Act of 1934,  as
amended (the "Exchange Act"), that involve risks and  uncertainties.  The reader
is cautioned that the actual results of SOS Staffing Services,  Inc. will differ
(and may differ  materially) from the results discussed in such  forward-looking
statements.  Factors that could cause or contribute to such differences  include
those factors  discussed  herein under "Factors That May Affect Future  Results"
and elsewhere in this Report generally.


ITEM 1.  BUSINESS
         --------

General

         SOS  Staffing  Services,  Inc.  ("SOS" or the  "Company")  is a leading
provider of staffing  and  consulting  services  in the  western  states.  As of
January 3, 1999, SOS operated a network of 149 offices located in 17 states. The
Company provides a broad range of commercial staffing and information technology
("IT")  services.   Commercial   staffing  services  include  light  industrial,
clerical,  industrial,  technical, specialty and other professional services. IT
services  consist of  staffing,  consulting  and  outsourcing  services  such as
systems  design,  programming,  network  and  systems  management  and  business
consulting.

         Since the  completion of the  Company's  initial  public  offering (the
"IPO") in 1995, the Company has acquired 46 staffing and  consulting  companies,
representing 73 offices. The Company's network of offices has increased from 42,
at the  time  of the  IPO,  to  149,  as of  January  3,  1999.  Sixteen  of the
acquisitions   completed  since  July  1996  were  IT  staffing  and  consulting
companies,  which have  allowed  the  Company to  diversify  the mix of services
provided to include higher margin services.  Additional  acquisitions have added
other   specialty   services,    including   medical   administrative   support,
professional,   mining,   geology,   hydrology,   high-end   administrative  and
accounting, and environmental services.


Business Strategy

         The Company's  goal is to enhance its  profitability  through a focused
business strategy.  The Company has identified the following key elements of its
strategy, which management believes are critical to the Company's success:

         Targeted  Customers  and  Projects.  Historically,  in  the  commercial
staffing segment,  the Company's  customers have consisted primarily of small to
mid-size  companies.  Sales to these  businesses tend to generate higher margins
than larger national  accounts.  The Company  believes that focusing on small to
mid-sized  customers and smaller projects limits its exposure to margin pressure
associated with large national contracts and volume discounts.

         The Company's IT division  pursues  customers who are generally  larger
than many of the Company's commercial staffing customers.  Many of the Company's
IT customers are Fortune 1000  companies,  government  agencies and  educational
institutions.  The Company focuses on smaller specialty projects at these larger
businesses or as support in larger  projects.  The Company  believes that it has
developed competitive  advantages in serving mid-sized and larger businesses and
projects by tailoring its operations to meet local customer needs, including the
establishment of strong customer  relationships through local marketing efforts,
quality service and community involvement.

         Pursue  Opportunities  in Smaller Markets.  In the commercial  staffing
segment,  SOS has  focused on opening  hub  offices  in key  metropolitan  areas
followed by  establishing  offices in surrounding  markets.  This  decentralized
office  management  strategy  locates  multiple  offices in close  proximity  to



                                       2
<PAGE>

customers and staffing employees. The Company believes this strategy has allowed
it to rapidly gain market share with low entry costs. Once a hub office has been
established,  the Company  focuses on leveraging hub office  resources to market
and deliver  services to  surrounding  smaller  markets and to cross-sell IT and
other specialty staffing services.  In these markets,  which are often too small
to attract substantial competition from national staffing companies, the Company
has  frequently  achieved  significant  penetration  and has  often  become  the
dominant provider of staffing services.

         Deliver Higher Margin Services.  The Company's  operating results since
1991 have been  significantly  enhanced  by its  strategy of  delivering  higher
margin  services.  Over the past  several  years,  the  Company  has focused its
efforts on expanding its range of services to include  higher  margin  specialty
services such as IT staffing and consulting, permanent placement, administrative
staffing  support  services  for  medical   facilities  and  other  professional
services. The Company has de-emphasized  marketing to accounts where competitive
pricing makes margins  unacceptable  or to accounts where workers'  compensation
costs adversely affect profitability.

         Offer a Broad  Range  of  Services.  The  Company's  strategy  includes
offering  its  customers  a broad range of staffing  services,  including  light
industrial, clerical, IT, industrial, technical and other professional services,
as well as a range of consulting services (including telephony,  IT, and general
business consulting,  as well as strategic planning).  The Company also provides
related services to its customers, including payrolling, skill and drug testing,
risk management  consulting and other professional  staffing services. In larger
markets,  the Company offers these services  through  several  separate  offices
operating  under  established  names.  The  Company  also  provides  outsourcing
services to  customers  whereby the Company  contracts  to perform a  particular
business  function  for an agreed  price,  which  includes  providing  staffing,
equipment and supplies.  The Company is also expanding its on-site services,  in
which SOS locates an on-site manager at the customer's facility to manage all of
the customer's employee staffing requirements.

         Provide Centralized Support and Encourage  Entrepreneurial  Management.
The Company's commercial staffing offices are supported by centralized functions
at corporate  headquarters  that  include  marketing,  recruiting,  training and
retention  programs,  as well  as  workers'  compensation  and  other  insurance
services,  accounts  payable,   purchasing,   credit,  legal  review  and  other
administrative support services.  Generally,  each staffing office has access to
the Company's central management information system and its proprietary software
that  provides  information  on  customer  requirements,  available  applicants,
staffing  employees  on  assignment  and  other  information  which  facilitates
efficient response to customer job orders.

         The  Company  has   consolidated   its  IT  staffing,   consulting  and
outsourcing operations into Inteliant Corporation,  a wholly-owned subsidiary of
the Company  ("Inteliant")  and has developed a support  system  tailored to the
specific  needs of IT customers.  Inteliant has  responsibility  for  accounting
(including accounts payable,  accounts receivable,  and purchasing),  marketing,
recruiting,  and training.  Other  functions such as workers'  compensation  and
other insurance services and legal review have been centralized at the Company's
corporate headquarters.

         To  encourage  an  entrepreneurial  approach to field  management,  the
Company has established financial targets and performance  standards,  which are
utilized at all offices. A substantial portion of the Company's field management
compensation is  incentive-driven  and based upon meeting  financial targets and
quality  standards.  Managers are also given  considerable  discretion  to price
services and to respond to specific customer requirements.

         Emphasize  Service and Value. The Company focuses on providing  service
and value to its customers.  The Company's staff employees seek to establish and
maintain long-term  relationships with its customers by developing  knowledge of
customers' businesses, responding promptly to customer orders and monitoring job
performance and customer  satisfaction.  The Company targets  customer  accounts
where  service  and  quality  are  perceived  to be as  important  as pricing of
services.  This  allows  the  Company  to  be  more  selective  and  to  provide
higher-quality services while maintaining desired margins.



                                       3
<PAGE>

Growth Strategy

         Management believes the Company has substantial opportunities to expand
its office network and the range of services it offers to its  customers.  Since
completing  its IPO in June 1995,  the  Company has added a total of 107 offices
through  internal  growth  and  acquisitions.   The  Company  intends,  for  the
foreseeable  future, to concentrate on strengthening its internal office network
by focusing on internal growth.

         Focus on Internal  Growth.  During the last five years, the Company has
maintained a strong internal revenue growth rate. The Company's  internal growth
strategy consists of the following:

           o  Increase  Penetration of Existing Markets. The Company continually
              seeks to add new customers and offices in the  geographic  markets
              it currently serves.  In many instances,  the Company pursues such
              penetration  by  establishing  a "hub"  office  from  which it can
              develop  additional  offices within a metropolitan  area. SOS also
              intends  to  introduce  complementary  or  specialty  services  in
              existing  markets  and  provide  incentives  to  field  and  local
              managers to focus on business development within existing offices.

           o  Enter New  Markets.  The  Company  plans to open new  branches  in
              markets not currently served by existing offices.  Frequently, the
              Company enters new markets by  establishing a "hub" office located
              in a central  location.  The  Company  then  opens new  offices in
              surrounding markets which benefit from the administrative  support
              and  resources  of the hub office.  This  strategy has enabled the
              Company to enter many smaller markets cost effectively.

           o  Expand  Service  Offerings.  The  Company is  actively  seeking to
              expand  the range of IT  services  it offers to its  customers  to
              include   electronic   commerce    solutions,    Internet/intranet
              consulting,  off-site  application  development,  web  enablement,
              telecommunications  systems  solutions  and  expanded  outsourcing
              capabilities in the areas of help-desk  management and data-center
              monitoring.  The Company  intends to expand its vendor  on-premise
              business,  pursuant  to which SOS  manages  all of the  customer's
              staffing requirements on-site.  Additionally, the Company plans to
              expand its offering of high-end administrative services as well as
              accounting  and  financial  services.  The Company also intends to
              further  develop  partnering  relationships  under which SOS works
              with other  staffing  providers  to meet the  customer's  staffing
              requirements.

           o  Cross-sell  Services.  The Company  actively  seeks to  cross-sell
              commercial  staffing  and IT staffing and  consulting  services to
              existing customers.  Through incentive compensation  arrangements,
              the  Company  actively  encourages   referrals  and  cross-selling
              between and within its commercial and IT operations.

         Through  integration of existing processes,  consolidating  operations,
and providing  resources to existing  offices,  the Company  anticipates that it
will be in a better position to exploit  potential  services that complement the
Company's  operations.  Additionally,  the  Company  believes it will be able to
respond  more  efficiently  to the  demands  of  its  existing  customers  while
expanding its offerings to new customers.


Operations

         Services  Offered.  The  Company  offers a broad  range  of  commercial
staffing and IT staffing,  consulting, and outsourcing services.  Generally, the
commercial segment provides light industrial,  clerical and industrial  services
through SOS Staffing Services,  Skill Staff,  Industrial  Specialists,  TOPS and
Century Personnel offices.  The commercial segment also offers other specialized
services  provided  by  offices  such  as  SOS  Technical  Services  (engineers,
chemists, geologists,  designers, drafters,  illustrators,  artists, writers and
other technical personnel),  AccountStaff (accountants,  bookkeepers,  auditors,
data entry  personnel and  financial  analysts),  PAMS  (medical  administrative



                                       4
<PAGE>

services),  National Collex (collection services and project billing for medical
facilities),  Devon & Devon  and Truex  (high-end  administrative  staffing  and
permanent   placement),   CGS  Personnel   (mining,   mineral   exploration  and
environmental   staffing)  and  Mortgage   Staffing  (loan  servicing  and  loan
productions professionals).

         The Company's  commercial  staffing services also include  professional
employer services such as payrolling,  outsourcing,  on-site and  administrative
professional   services.   Payrolling  typically  involves  the  transfer  of  a
customer's short-term seasonal or special use employees to the Company's payroll
for a designated period. Outsourcing represents a growing trend among businesses
to  contract  with third  parties to provide a  particular  function or business
department  for an agreed  price  over a  designated  period.  On-site  services
involve  locating a regular SOS employee at the customer's  place of business to
manage all of the customer's  temporary  staffing  requirements.  Administrative
professional  services offer SOS customers skills testing, drug testing and risk
management  services.   Skills  testing  available  to  SOS  customers  includes
cognitive,  personality and psychological evaluations.  Drug tests are confirmed
through an independent  certified  laboratory.  Risk management services include
on-site safety  inspection and consulting  services.  As of January 3, 1999, the
Company also provided  professional  employer organization services on a limited
basis, which offers to SOS customers the benefits of employee leasing.

         Historically,  the Company has  provided IT  staffing,  consulting  and
outsourcing  services  under the business  names of acquired IT business  units;
however,  in 1998, the Company  combined all of its IT services into  Inteliant.
The Company's IT services  consist of IT staffing,  consulting  and  outsourcing
services.  The  Company's IT staffing  services  include  computer  programming,
system design,  analysis and administration,  network and systems management and
software and documentation development. IT staffing services are similar in many
respects to commercial staffing services; however, IT services generally require
increased  specialization and technical skill, carry significantly higher hourly
rates and  involve  substantially  longer  job  assignments.  The  Company's  IT
consulting  services are focused on providing  business  solutions and typically
include managing application  development,  enterprise resource planning systems
implementation,   e-commerce  enablement,   telecommunications   consulting  and
operations  engineering.  Company consultants provide innovative ideas,  insight
and  experience  to address  the  customer's  business  needs then work with the
customer to implement strategic solutions.  IT consulting  engagements typically
last six months to one year and may require the services of several  specialized
consultants  or teams.  The Company  also  delivers IT  outsourcing  services to
customers who turn over to Inteliant  personnel the  management  and staffing of
specific IT functions.

         Branch  Offices.  The Company  provides  commercial  staffing  services
through a network of 127 offices  located in 15 states.  The  Company  currently
operates at least one office in every  market in the mountain  states  (Arizona,
Colorado,  Idaho,  Montana,  New  Mexico,  Nevada,  Utah,  and  Wyoming)  with a
population  base in excess of 100,000  people.  In larger  markets,  the Company
generally  provides light industrial and clerical personnel through SOS Staffing
Services  offices,  while  service-specific  specialty offices provide specialty
services.  In smaller markets, SOS offices offer a broader variety of commercial
staffing  services  including  specialty  services.   Through  acquisitions  and
internal  development,  the  Company  also has  commercial  staffing  offices in
California, Hawaii, Kansas, Missouri, Oregon, Texas, and Washington.

         The Company  provides IT staffing and  consulting  services  from 22 IT
offices  located  throughout the western states and mid-west plus  Massachusetts
and North Dakota.  The Company's IT staffing and  consulting  offices  generally
serve larger geographic areas than SOS commercial staffing offices,  principally
due to the increased  specialization  associated with IT services. The Company's
strategy of  integrating  and expanding its existing IT staffing and  consulting
office  network  will  include  efforts to  position  IT  offices  in  strategic
locations throughout the United States, rather than the "hub and spoke" approach
used by the Company to expand its network of commercial staffing offices.

         The Company  estimates  the capital cost of  establishing  a new office
ranges from $15,000 to $50,000,  exclusive of working capital requirements.  The
Company's  new offices have  historically  achieved  profitability  in six to 12
months,  while  offices  created by division  of an existing  office are usually
profitable from inception.



                                       5
<PAGE>

         Sales and  Marketing.  SOS generally  markets its  commercial  staffing
services  through  its  network  of offices  whose  managers,  supported  by the
Company's marketing staff, make regular personal sales visits to larger accounts
and prospects.  The Company emphasizes long-term personal relationships with its
customers and develops these  relationships  through regular  contact,  periodic
assessment  of  customer   requirements  and  regular   monitoring  of  employee
performance.   New   customers   are  obtained   through   customer   referrals,
telemarketing,  cold calls and  advertising  in a variety of local and  regional
media,  including  television,  radio,  direct mail,  Yellow Pages,  newspapers,
magazines and trade publications. The Company is also a sponsor of job fairs and
other community  events.  In addition,  the Company uses the Internet to support
its marketing efforts.

         The Company's IT sales and marketing efforts may include the activities
described  above,  but are  generally  more  focused to address IT staffing  and
consulting needs which are typical of specific customers.  Many of the Company's
existing and prospective IT customers routinely outsource IT functions,  such as
programming, help desk and data-center monitoring. The Company's IT staffing and
consulting  personnel  seek to identify IT  requirements  of its  customers  and
promote IT services designed to meet those requirements. In addition to personal
sales visits,  targeted mailings and telephone  solicitations,  the Company's IT
personnel  actively  promote  the  Company's   services  through   cross-selling
complementary  IT services to existing  customers  and  participate  in industry
trade associations.

         Recruiting.  The  Company  believes  a key  element  of its  growth and
profitability  has been its  ability to recruit  and retain  qualified  staffing
personnel.  In an effort to attract commercial staffing  personnel,  the Company
employs recruiters who regularly visit schools and professional associations and
present career development programs to various  organizations.  In addition, the
Company  obtains  applicants  from referrals by its staffing  employees and from
advertising  on radio,  television,  in the Yellow Pages and through other print
media.  The  Company  has  recently  begun to utilize  the  Internet  to recruit
professional,  IT  and  technical  staffing  employees.  Each  applicant  for  a
commercial   staffing  position  is  interviewed  with  emphasis  on  past  work
experience, personal characteristics and individual skills. The Company utilizes
the Dictionary of  Occupational  Titles  published by the Department of Labor to
evaluate and assign staffing employees. The Company maintains  software-training
programs at its  offices for  applicants  and  employees  who may be trained and
tested at no cost to the applicant, employee or Company customer.

         The Company's  efforts to recruit IT staffing and consulting  personnel
frequently  include  some or all of the  recruiting  activities  employed by the
Company's  commercial  staffing  offices,  but  typically  rely more  heavily on
identifying potential employees who possess specialized  education,  training or
work experience.  The Company follows a rigorous screening and interview process
before referring qualified  candidates to customers for on-site interviews.  The
Company's  IT  recruiting  efforts also rely  heavily  upon  industry  contacts,
personal networks and referrals from existing and former IT personnel.

         To promote  loyalty and  retention  among its staffing  employees,  the
Company  provides  its  staffing   employees  with  certain  employee  benefits,
including access to a Section 401(k) defined  contribution  plan, a credit union
and health insurance programs. In addition, the Company has the ability to issue
paychecks to commercial staffing employees on a daily basis for work performed.

         Customers.  Historically,  commercial staffing customers have consisted
primarily of small to mid-size  customers.  Management  believes  there  remains
significant  opportunities to deliver profitable commercial staffing services to
small and mid-size  customers who are less likely to require  substantial volume
discounts than larger,  nationwide companies. As the Company expands its network
into larger cities in the western states,  the Company  anticipates that it will
provide  commercial  staffing  services to larger  customers  who focus on value
rather  than cost,  but will  continue to focus its  efforts on  attracting  and
providing  quality  services  to small and  mid-size  companies  located in such
larger cities.

         The  Company's  IT  customer  base,  which  consists  primarily  of  IT
customers  served  by  companies  acquired  by SOS  since  July  1996,  includes
customers  who  are  generally  larger  than  many of the  Company's  commercial
staffing  customers.  Many  of the  Company's  IT  customers  are  Fortune  1000
companies,  government  agencies  and  educational  institutions.  Many  of  the
projects are smaller in scope than those performed by larger national consulting



                                       6
<PAGE>

companies.  On larger  projects,  the Company  frequently  provides service in a
supporting  role to the  project  manager.  The  Company  anticipates  that  its
increased  focus on IT  staffing  and  consulting,  national  branding  with the
"Inteliant  Corporation" name, as well as its expansion into larger metropolitan
areas, will lead to additional  opportunities to provide IT services to mid-size
and larger customers.

         No  customer  accounted  for more  than two  percent  of the  Company's
consolidated  net service revenues during the 1998 fiscal year and the Company's
top ten  customers  accounted  for less than eight  percent of service  revenues
during the same period.  Approximately  14% of the  Company's  service  revenues
generated in the IT segment  during the 1998 fiscal year were  obtained from two
national  customers  within  the  telecommunications  industry,  and the top ten
customers  in that  segment  account  for  approximately  20% of  total  segment
revenues.  Management believes, however, that these customers do not represent a
substantial  credit or  business  risk and feel that the  segment  has  adequate
diversification and resources to be protected in the event of the loss of any of
these customers.

         Risk Management  Program.  SOS is responsible for all  employee-related
expenses for its staff and temporary employees including workers'  compensation,
unemployment  insurance,  social security taxes, state and local taxes and other
general  payroll  expenses.  The Company has  implemented a deductible  workers'
compensation  program through CIGNA Property and Casualty  ("CIGNA") with a loss
cap of $250,000 per  incident.  Employees in Nevada,  Washington,  Wyoming,  and
North Dakota are insured  through those states'  insurance funds because private
insurance is not  permitted  in those  states.  The Company  employs a full-time
professional  risk manager and staff who work closely with the insurance carrier
to manage claims and establish appropriate reserves.

         The Company  has also  developed  workers'  compensation  loss  control
programs that seek to limit claims  through  employee  training and avoidance of
high-risk job assignments such as roofing or logging. Except where prohibited by
law, all  employees  are required to agree in advance to drug testing  following
any work-related accident and all major accidents are investigated. The Company,
in cooperation with its insurer,  monitors all claims and regularly  reviews the
claims with an emphasis on early closure.


Information Systems

         The Company's central  management  information system is linked to most
of the Company's commercial staffing offices. The centralized system is designed
to support  Company-wide  operations  such as payroll,  billing,  accounting and
sales and management reports. The Company has some operations,  obtained through
acquisition, that have their own centralized systems in place. Systems have been
implemented to automate the reporting of these entities to the Company; however,
the Company does not anticipate  immediately  replacing the existing  systems at
these locations.

         The Company has recently upgraded the corporate and commercial staffing
segment's  financial  systems  with  plans  to  upgrade  additional  information
processing  functions  in 1999 and beyond.  The new system  provides for greater
flexibility  in back  office  functions  while  interfacing  well with the front
office  operations  at the branch  level.  All files are backed up routinely and
stored  off-site.  Critical  files are backed up on a daily  basis.  The present
system  has  capacity  to  service  the  Company's  anticipated  growth  without
significant capital expenditures for the foreseeable future

         The Company has developed a central  management  information system for
use by the  Company's IT offices.  All of the Company's 22 IT offices are linked
to a central management  information system. The Company anticipates that its IT
system will be connected to the  Company's  existing  system for certain  common
functions;  however,  the IT system is designed  to  accommodate  the  different
business cycles and processes associated with the IT industry.



                                       7
<PAGE>

Year 2000

         The management of the Company believes that it is adequately addressing
the year 2000  ("Y2K")  problem.  In short,  the Y2K  problem  is a result of IT
equipment and systems being  designed to recognize the year portion of a date as
two rather than four digits, which means that years coded "00" are recognized by
many systems as the year 1900, not the year 2000. As a result,  certain hardware
and software  products may not properly  function or may fail  beginning in year
2000.

         As  part  of  the  Company's  internal  quality  system  based  on  the
principles  of ISO 9002,  the  Company  has  formed an  internal  task  force to
identify,  address, and remedy Y2K issues. The Company's  information system for
its primary commercial staffing operations has been tested and is believed to be
Y2K compliant. Additionally, the Company is currently implementing new financial
system  software that has been  warranted by the developer to be Y2K  compliant.
The Company is also in the  process of  assessing  and  testing the  information
systems of Inteliant  and other  independent  systems  within the  Company.  The
Company  anticipates  that such  assessment  and testing  will be  completed  by
mid-1999.

         The Company has identified  suppliers of critical services and products
and has sent questionnaires to each such supplier concerning Y2K compliance. The
Company will continue to monitor the  compliance  of each such supplier  through
1999 and beyond. New vendors are also required to provide information concerning
Y2K  compliance.  The Company is following a similar  process for  Inteliant and
other independent operations within the Company.

         The Company has also sent questionnaires to each of its major customers
regarding the status of Y2K compliance. The Company will continue to monitor the
compliance  of each such  customer  through  1999 and  beyond.  The  Company has
amended  its  credit  application  required  for  each new  customer  requesting
disclosure  of Y2K  compliance.  The Company is following a similar  process for
Inteliant and other independent operations within the Company.

         The Company is currently  developing an assessment  program for each of
its branch offices to assess imbedded chip  technology for Y2K compliance.  Many
products or systems contain  imbedded  computer chips that may or may not be Y2K
compliant.  Examples of such items include elevators,  alarm systems, HVAC units
and thermostats,  telephone and voicemail systems. The Company believes that its
assessment of imbedded chip technology will be completed by mid-1999.

         Based on current  information,  the Company  does not believe  that its
internal  systems will fail because of the Y2K problem or cause an  interruption
in the delivery of services to its  customers.  In the event such systems  fail,
the Company  believes that it has adequate  manual  systems that would allow for
continued  delivery  of  services  to  customers.  Management  does not  foresee
significant  liability  to third  parties if the  Company's  systems are not Y2K
compliant.  However, the Company faces two major risks related to Y2K that could
have a material  adverse affect on the business of the Company.  The first major
Y2K risk is service disruption from third-party  suppliers of critical services,
such as  telephone,  electrical  and banking  services.  As part of its critical
suppliers'  assessment,  the Company is monitoring and seeking  assurance of Y2K
compliance from such suppliers.  The second major risk is that the operations of
the  customers  of the Company  will be  disrupted  by the Y2K  problem  (either
internally or because of third-party  service providers) which could result in a
decrease in or the cessation of the need for the Company's services.

         The  Company  has not yet  approved a formal  contingency  plan for Y2K
issues.  The Company expects to have a formal  contingency  plan in place during
fiscal 1999.

         The Company estimates that  approximately  $150,000 will be incurred in
verifying  its Y2K  compliance.  The  majority  of  costs  will be  directed  to
independent  sources for testing of the procedures the Company has  implemented.
The costs related to the Company's Y2K compliance  program have not had, and are
not expected to have, a material  impact on the Company's  financial  condition,
results of operations or cash flows.



                                       8
<PAGE>

Competition

         The  Company's  competitors  consist of  national,  regional  and local
companies  operating offices  throughout the nation,  making the industry highly
competitive and highly  fragmented,  with limited barriers to entry. The Company
faces intense  competition from large national and international  companies with
substantially  greater  financial  and  marketing  resources  than  those of the
Company, as well as strong local and regional staffing companies.

         The Company  competes for qualified  staffing and consulting  employees
and for  customers  who require the services of such  employees.  The  principal
competitive factors in attracting and retaining qualified staffing employees are
competitive  salaries and  benefits,  quality and frequency of  assignments  and
responsiveness  to employee  needs.  The Company  believes that many persons who
seek  temporary  employment  are also seeking  regular  employment  and that the
availability of assignments which may lead to regular employment is an important
factor in its ability to attract qualified staffing employees.

         The principal  competitive  factors in obtaining customers are a strong
sales and marketing program,  having qualified staffing and consulting employees
to assign in a timely manner,  matching of customer  requirements with available
resources,  competitive  pricing and satisfactory  work production.  The Company
believes its strong emphasis on providing service and value to its customers and
employees are important competitive advantages.


Seasonality

         The Company's  business  follows the seasonal  trends of its customers'
businesses.  Historically,  the Company has  experienced  lower  revenues in the
first  quarter due to the seasonal  trends of its  customers  and lower  overall
economic activity.


 Trade Names

         The  Company  uses a variety of  trademarks  and trade  names which are
generally descriptive of the temporary staffing services offered,  including SOS
Staffing  Services,  Century  Personnel,  Centech,  Devon & Devon,  Skill Staff,
AccountStaff, TSI, Industrial Specialists, SOS Technical Services, ServCom, PAMS
Employment  Services,  National Collex, CGS Personnel,  Mortgage Staffing,  TOPS
Staffing  Services,  Truex,  Inteliant,  and other trade names.  The Company has
registered or reserved the majority of these names in the appropriate states.


Staff Employees

         At  January  3,  1999,  the  Company  had  approximately   1,400  staff
employees,  of which,  approximately  650 are billable.  The Company's  training
department  provides  general and job specific  training to all staff employees,
including  continuing  training  with  experienced  counterparts.  None  of  the
Company's staff employees is covered by collective  bargaining  agreements.  The
Company considers its relationship with its staff employees to be good.


Factors that May Affect Future Results

         The  statements  contained in this Annual  Report on Form 10-K that are
not purely  historical are  "forward-looking  statements"  within the meaning of
Section  27A of the  Securities  Act and Section 21E of the  Exchange  Act.  All
forward-looking    statements   involve   various   risks   and   uncertainties.
Forward-looking statements contained in this Report include statements regarding
the Company's acquisition plans and opportunities, existing and proposed service
offerings,  market  opportunities,   expectations,  goals,  revenues,  financial
performance,  strategies,  intentions for the future and any other statements to



                                       9
<PAGE>

the  effect  that  the  Company  or  its   management   "believes",   "expects",
"anticipates",  "plans"  or  other  similar  expressions.  Such  forward-looking
statements are included under Item 1. "Business", Item 2. "Properties",  Item 3.
"Legal  Proceedings"  and  Item 7.  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations." All  forward-looking  statements
included in this  Report are made as of the date  hereof,  based on  information
available to the Company as of such date, and the Company  assumes no obligation
to update any  forward-looking  statements.  It is  important  to note that such
statements may not prove to be accurate,  and that the Company's  actual results
and  future  events  could  differ  materially  from those  anticipated  in such
statements.  Many factors could cause actual results to differ  materially  from
the  Company's  expectations,   including,   without  limitation,   the  factors
identified below.

         The Company's  future results will be impacted by, among other factors,
the  Company's  ability to implement  its growth  strategy,  which,  in turn, is
dependent  upon a number of  factors,  including  the  availability  of  working
capital to support such  growth,  plans to  integrate  and expand the  Company's
offering of IT services,  the Company's  ability to integrate the  operations of
acquired businesses,  management's ability and resources to implement the growth
strategy and the successful  hiring,  training and retention of qualified  field
management.  Future  results will also be affected by other  factors  associated
with the operation of the Company's  business,  including the Company's response
to existing and emerging competition, demand for the Company's services, effects
associated with the recent  transition  within the Company's senior  management,
the  Company's  ability  to  maintain  profit  margins  in the  face of  pricing
pressures,  the Company's  efforts to develop and maintain customer and employee
relationships, economic fluctuations and employee-related risks and expenses.

         All subsequent written and oral forward-looking statements attributable
to the Company or persons acting on its behalf are expressly  qualified in their
entirety by this section and other  factors  included  elsewhere in this Report.
You also  should  consult  other  factors  identified  from  time to time in the
Company's periodic reports to the Securities and Exchange Commission.


ITEM 2.  PROPERTIES
         ----------

         As of  January 3, 1999,  the  Company  provided  services  through  149
offices in 17 states.  These offices  typically consist of 1,200 to 5,000 square
feet and are  generally  leased by the Company for terms of three to five years.
Offices in larger or smaller  markets may vary in size from the typical  office.
The Company does not expect that  maintaining or finding suitable lease space at
reasonable  rates in its  markets  or in areas  where the  Company  contemplates
expansion will be difficult.

         The Company's executive and administrative  offices are located in Salt
Lake City, Utah. The premises  consist of  approximately  15,600 square feet and
are leased  from a related  party for a term ending on March 31,  2005,  with an
option to renew for 10 additional  years (see "Certain  Relationship and Related
Transactions"). The Company believes that the terms of the lease are at least as
favorable as could be obtained from any unrelated third party.


ITEM 3.  LEGAL PROCEEDINGS
         -----------------

         In the ordinary  course of its  business,  the Company is  periodically
threatened  with or named as a defendant in various  lawsuits or  administrative
proceedings.  The  Company  maintains  insurance  in such  amounts and with such
coverage and  deductibles  as management  believes to be reasonable and prudent.
The principal risks covered by insurance include workers' compensation, personal
injury, bodily injury,  property damage, errors and omissions,  fidelity losses,
employer practices liability and general liability.

         There is no pending  litigation that the Company currently  anticipates
will have a material  adverse  effect on the  Company's  financial  condition or
results of operations.



                                       10
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the 53 weeks ended January 3, 1999.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
         ---------------------------------------------------------------------

         The  information  required by this Item is incorporated by reference to
page 37 of the Company's 1998 Annual Report to Shareholders.


ITEM 6.  SELECTED FINANCIAL DATA
         -----------------------

         The  information  required by this Item is incorporated by reference to
page 1 of the Company's 1998 Annual Report to Shareholders.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         -----------------------------------------------------------------------
         OF OPERATIONS
         -------------

         The  information  required by this item in incorporated by reference to
pages 9 through 16 of the Company's 1998 Annual Report to Shareholders.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         ----------------------------------------------------------

         The Company is exposed to interest  rate changes  primarily in relation
to its 1998  Amended  Credit  Facility  and its 1998 Senior Debt  Placement.  At
January 3, 1999,  the Company's  outstanding  borrowings on the Credit  Facility
were $4.9 million while outstanding borrowings on the Senior Debt Placement were
$35.0 million. The Company's interest rate risk management objective is to limit
the impact of interest  rate changes on earnings and cash flows and to lower its
overall  borrowing  costs. To achieve this objective the Company borrows against
its credit  facility at  variable  interest  rates.  The  Company's  senior debt
placement bears interest at a fixed interest rate. For fixed rate debt, interest
rate changes  generally  affect the fair value of the debt, but not the earnings
or cash flows of the  Company.  Changes in the fair  market  value of fixed rate
debt  generally  will not have a  significant  impact on the Company  unless the
Company is required to  refinance  such debt.  At January 3, 1999,  the carrying
value of the senior debt placement approximated its fair value.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
         ------------------------------------------

         The  information  required by this item is incorporated by reference to
pages 17 through 35 of the Company's 1998 Annual Report to Shareholders.


ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         -----------------------------------------------------------------------
         FINANCIAL DISCLOSURE
         --------------------

         None



                                       11
<PAGE>

                                    PART III

         The  information  required by this Part III is omitted from this Report
in that the Company  will file with the  Securities  and  Exchange  Commission a
definitive proxy statement for the Annual Meeting of Shareholders of the Company
to be held on May 19,  1999 (the  "Proxy  Statement"),  not later  that 120 days
after January 3, 1999, and certain information  included therein is incorporated
herein by reference.  Only those  sections of the Proxy  Statement  specifically
identified  below which address the items set forth herein are  incorporated  by
reference.


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
         --------------------------------------------------

         The  information  required by this Item is incorporated by reference to
the sections  entitled  "Election of Directors" and "Executive  Officers" in the
Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION
         ----------------------

         The  information  required by this Item is incorporated by reference to
the  sections  entitled  "Election  of   Directors-Director   Compensation"  and
"Executive Officers-Executive Compensation" in the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------

         The  information  required by this Item is incorporated by reference to
the  section  entitled  "Principal  Holders of Voting  Securities"  in the Proxy
Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

         The  information  required by this item is incorporated by reference to
the section entitled  "Certain  Relationships  and Related  Transactions" in the
Proxy Statement.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
         ---------------------------------------------------------------

(a)      The following documents are filed as part of this Report:

 1.      Consolidated Financial Statements: The following Consolidated Financial
         Statements of the Company and Report of Independent Public Accountants,
         are  incorporated  by reference to pages 17 through 23 of the Company's
         1998 Annual Report to Shareholders:

         Consolidated  Balance  Sheets--As  of January 3, 1999 and  December 28,
         1997

         Consolidated  Statements of Income--For  the Fiscal Years Ended January
         3, 1999, December 28, 1997 and December 29, 1996.

         Consolidated  Statements of Shareholders'  Equity--For the Fiscal Years
         Ended January 3, 1999, December 28, 1997 and December 29, 1996.

         Consolidated  Statements  of Cash  Flows--For  the Fiscal  Years  Ended
         January 3, 1999, December 28, 1997 and December 29, 1996.



                                       12
<PAGE>

         Notes to Consolidated Financial Statements

         Report of Independent Public Accountants

2.       Financial Statement Schedules
         -----------------------------

         No schedules submitted




(c)      Exhibits:

<TABLE>
<CAPTION>
   Exhibit                                                              Incorporated by     Filed Herewith
     No.                               Exhibit                             Reference
--------------- ------------------------------------------------------ ------------------- -----------------
<S>  <C>        <C>                                                           <C>
     3.1        Amended and Restated Articles of Incorporation of             (1)
                the Company

     3.2        Amended and Restated Bylaws of the Company                    (1)


     4.2        Amended and Restated Articles of Incorporation of             (1)
                the Company

     4.3        Amended and Restated Bylaws of the Company                    (1)

     10.1       SOS Staffing Services, Inc. Stock Incentive Plan              (3)
                dated May 4, 1995, as amended

     10.2       Form of Employment Agreement entered into by the              (1)
                Company and each of Messrs. Richard D. Reinhold,
                Howard W. Scott, Jr. and Richard J. Tripp

     10.3       Form of Consulting Agreement  between the Company             (2)
                and Ms. JoAnn W. Wagner, effective as of July 1, 1995

     10.4       Lease Agreement between the Company and Reed F.
                Reinhold, Rand F. Reinhold, Rena R. Qualls and Robb           (1)
                F. Reinhold, dated April 1, 1995, covering the
                Company's Corporate office building

     10.5       Credit Agreement dated as of July 11, 1996 by and             (4)
                among the Company, First Security Bank, N.A. and NBD
                Bank, together with Security Agreement and Revolving
                Credit Notes

     10.6       Stock Purchase Agreement between the Company, Wolfe           (5)
                & Associates, Inc. and certain shareholders of Wolfe
                & Associates, Inc. dated November 5, 1996
</TABLE>



                                       13
<PAGE>

<TABLE>
<CAPTION>
   Exhibit                                                              Incorporated by     Filed Herewith
     No.                               Exhibit                             Reference
--------------- ------------------------------------------------------ ------------------- -----------------
<S>  <C>        <C>                                                           <C>
     10.7       Asset Purchase Agreement between the Company,                 (6)
                Execusoft, Inc. and the principals of Execusoft,
                Inc., effective as of August 27, 1997

     10.8       Asset Purchase Agreement between Wolfe & Associates,          (7)
                Inc., the Company, JesCo Technical Services, Inc.,
                and John E. Shaffer, effective September 28, 1997

     10.9       Asset Purchase Agreement between the Company,                 (8)
                Century Personnel, Inc., M.A. Jones Enterprises,
                Inc. and Michael A. Jones, effective October 27, 1997

    10.10       Asset Purchase Agreement between the Company, Aquas,          (9)
                Inc. and Abacab Software, Inc. effective August 19,
                1998

    10.11       Note Purchase Agreement dated September 1, 1999.                                 (10)

    10.12       Amended Credit Agreement dated July 27, 1998 by and                              (10)
                among the Company, The First National Bank of
                Chicago and First Security Bank, N.A., together with
                Security Agreement and Revolving Credit Notes

      13        Annual Report to Shareholders for the year ended                                 (10)
                January 3, 1999, incorporated by reference into
                Items 5 through 8 of this Annual Report on Form 10-K
                and, except as so incorporated by reference, the
                Annual Report to Shareholders is not deemed to be
                filed as part of this Report.

      21        Subsidiaries of the Company                                                      (10)

     23.2       Consent of Independent Public Accountants                                        (10)

      27        Financial Data Schedule                                                          (10)
</TABLE>

(1)      Incorporated  by reference to the exhibits to a Registration  Statement
         on Form S-1 filed by the  Company  on May 17,  1995,  Registration  No.
         33-92268.

(2)      Incorporated  by  reference  to the  exhibits to  Amendment  No. 1 to a
         Registration Statement on Form S-1 filed on June 22, 1995, Registration
         No. 33-92268.

(3)      Incorporated  by  reference  to the  exhibits to the  Company's  Annual
         Report of Form 10-K for the year ended  December  31, 1995 filed by the
         Company on March 29, 1996.

(4)      Incorporated by reference to the exhibits to a Quarterly Report on Form
         10-Q for the quarter  ended  September 26, 1996 filed by the Company on
         November 14, 1996.

(5)      Incorporated  by reference to the exhibits to a Current  Report on Form
         8-K filed by the Company on November 14, 1996.



                                       14
<PAGE>

(6)      Incorporated  by reference to the exhibits to a Current  Report on Form
         8-K filed by the Company on September 3, 1997.

(7)      Incorporated  by reference to the exhibits to a Current  Report on Form
         8-K filed by the Company on September 18, 1997.

(8)      Incorporated  by  reference  to the exhibits to an Amendment to Current
         Report on Form 8-K/A filed by the Company on October 15, 1997.

(9)      Incorporated  by  reference  to the exhibits to an Amendment to Current
         Report on Form 8-K/A filed by the Company on August 19, 1998.

(10)     Filed herewith and attached to this Report following page 13 hereof.


(d)      Financial Statement Schedules:
         ------------------------------

         No schedules submitted.


<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereto duly authorized.

                                             SOS STAFFING SERVICES, INC.

Date:  March 31, 1999                             By: /s/ Gary B. Crook
                                                     -----------------------
                                                     Gary B. Crook
                                                     Executive Vice President,
                                                     Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

Name                       Title                                      Date
----                       -----                                      ----

/s/ JoAnn W. Wagner        Chairman of the Board and              March 31, 1999
 ------------------
JoAnn W. Wagner            Chief Executive Officer
                           (principal executive officer)

/s/ Gary B. Crook          Executive Vice President and Chief     March 31, 1999
-----------------
Gary B. Crook              Financial Officer
                           (principal accounting officer)

/s/ Michael A. Jones       Director and                           March 31, 1999
--------------------
Michael A. Jones           Executive Vice President

/s/ Richard J. Tripp       Director and                           March 31, 1999
--------------------
Richard J. Tripp           Senior Vice President

/s/ Stanley R. deWaal      Director                               March 31, 1999
---------------------
Stanley R. deWaal

/s/ Samuel C. Freitag      Director                               March 31, 1999
 --------------------
Samuel Freitag

/s/ R. Thayne Robson       Director                               March 31, 1999
--------------------
R. Thayne Robson

/s/ Randolph K. Rolf       Director                               March 31, 1999
--------------------
Randolph K. Rolf



                                       16