Reporting on its performance in 2014, the company said the year was characterised by increased investment in the business to open up growth opportunities.
The company's flagship Cloud-based Forscene video platform was upgraded, while "eva" - the firm's video social network - entered beta testing.
Despite the heavy investment, the debt-free company ended the year with liquid funds of £4.36mln, down from £7.84mln at the end of 2013.
Sales in 2014 fell 11% to £689,222 from £772,180 the year before, with almost all of the shortfall due to a change in revenue from a single North American client.
Administrative expenses rose to £4.21mln from £1.49mln in 2013, reflecting three significant investments in the year, each made with the intention of leading to increased growth in the years ahead.
The three areas were: developing a new user interface for the Forscene brand and a Media Asset Management system; a significant increase - subsequently reversed - in sales & marketing presence in the USA; and the development of eva, the video social network.
The company has made organisational changes that will produce a total reduction of £1mln in annual costs across research & development (R&D), USA, business development and other administrative areas, and will ensure a continued positive cash balance at the 2015 year-end, said company chairman Vic Steel.
As a result of the heavy investment, loss before tax deepened to £3.63mln in 2014 from £702,778 the year before.
Reflecting the importance of research & development to a cutting edge software firm, chief executive officer Stephen Streater has chosen to lead R&D directly.
"The pace of change has accelerated," Streater asserted.
"The conservative Broadcast market is being transformed by the march of IT in production; the revolution in web and mobile distribution has created new opportunities for Forscene in Sports; the mobile market is ripe for consumer video offerings; and the web-based editing market has moved beyond a specialist niche into a multi-million user market," he added.
"Forbidden's technical agility has, with the new management team, been extended across the professional sales, marketing and consumer sides of the business. The investment in the platform over the years, including the record investment in 2014, makes this coming year an attractive challenge," Streater said.