The results followed last year's management shake-up and pressure from shareholder STG, an investment firm that holds about one-third of its shares, for MDA to merge or buy a rival.
MDA made the accumulated loss, on a worldwide turnover of £16.3m, for the 15 months to 30 September 2000.
In a letter to shareholders last month, chairman Simon Metcalf said the firm's financial position became critical last March.
He said: "During the quarter to March, levels of working capital and borrowings continued to climb to levels that demanded urgent and vigorous remedial measures." This led to the movement of the firm's headquarters from central London to Croydon last June and the sale of its Australian arm to a management team.
Metcalf said premature profit recognition, overvaluation of work in progress and poor credit control had all hit the firm's UK performance. He added that the group's Hong Kong and German operations had performed poorly.
Working capital and borrowings rose to levels that demanded urgent remedial measures
Simon Metcalf, MDA
In the letter, Metcalf proposed to reduce the share capital by £2.5m to cover accumulated losses.
He also proposed to widen the share option scheme and asked existing shareholders to waive their rights to have first refusal on new shares.
"I urge you to vote for these resolutions; they are vital if the potential of MDA is to be realised," he said to shareholders.
One source close to the firm said the figures were worrying. "Based on their fixed costs and declining workload I'm not sure whether they will be able to make a profit this year," he said.
However, another source said the practice had taken a big hit from the latest results so as to start afresh this year.