Revenue for the first quarter dropped 64% to 14.8bn Taiwanese dollars ($456m; Â£315m), while the net loss was 2.6bn Taiwanese dollars, compared with a profit the year before.
The firm has been struggling to compete with the likes of Apple and Samsung.
It is pinning hopes on its new HTC 10 phone to revive fortunes as well as its virtual reality headset Vive.
"The media and consumer buzz around HTC, including for the keenly-awaited launches of the flagship smartphone and Vive virtual reality system, clearly demonstrate our leadership in innovation and have provided a great boost to the HTC brand," said Cher Wang, chairwoman and chief executive of HTC in a statement.
Chief financial officer Chialin Chang added the company was hoping that the smartphone business would break even in the third quarter.
The HTC 10, which comes with an "ultraselfie" front camera designed to reduce the risk of blurry shots, and the Vive headset were both only launched in April and so are not reflected in this current quarter.
The success of those two products will dictate the success of the company, said analyst Ben Wood from CCS Insight.
"The next quarter will be critical because we'll start to see the effect of Vive and the HTC 10 phone. The company has really got to work hard to show signs of progress," he said.
"The combination of Apple's incredible success and Samsung's determination to outspend all its rivals on marketing puts HTC in a precarious position."
Five years ago, HTC was the world's fourth bestselling smartphone maker with a market share of about 9%.
But in 2015, it fell to 17th place with a share of about 1%, according to research firm IDC.

Taylor, 25, joined County in May from Macclesfield, but has yet to start in the league.
The move has left Newport with only one goalkeeper in Joe Day, but manager John Sheridan is confident he will quickly fill the vacancy.
"Rhys is too good a goalkeeper to be kept on the bench and not playing football," said Sheridan.
"Financially it might enable me to bring someone else in, to try and fill in a different area."
On Saturday Newport host fourth-placed Northampton Town hoping to win their third game in a row for the first time since last December, 2014.
The Exiles are also seeking their first home win since March.
Taylor's move means County are currently without a second goalkeeper.
Sheridan added: "Rhys' move to Wrexham happened quickly... but we'll definitely have a keeper by the middle of next week.
"It's only one game. I'm not really worried."
Sheridan also confirmed that defender Janoi Donacien has extended his loan spell from Aston Villa until January.
Donacien has featured in all four games since the Irishman replaced Terry Butcher as manager at the beginning of October.
Meanwhile Newport have no injury concerns ahead of Saturday's game.
A sharp plunge in sales has pushed the Taiwanese phonemaker HTC into a loss for the three months to March.
[NEXT_CONCEPT]
Newport County goalkeeper Rhys Taylor has joined Wrexham on loan until January.