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OSSIC, the headphone company known for its massively successful 3D headphone crowdfunding campaigns, is shutting down due to lack of capital. The company says in an update announcing its closure that the OSSIC X 3D headphones required “significantly more capital to ramp to full mass production,” which effectively leaves tens of thousands of pre-orders unfulfilled.

OSSIC received over $2.7 million through its successful Kickstarter campaign, and $3.2 million through Indiegogo. The company is said to have raised seed investment from other sources, which accounted for about half of its total funding.

“We were not able to secure additional funding, and are out of money,” OSSIC says. “It would take more than 2 million additional dollars to complete mass production of the remaining backlog.”

At time of its closure, the company completed a mere 250 units, delivering a fraction of those to the 80 Kickstarter backers who pledged $1,000 for the Innovator Edition reward. Over 23,000 pre-orders were placed via Kickstarter and Indiegogo.

OSSIC X was touted for integrating specialized components including various inertial-measurement units (IMUs) and 32-core processor which allowed users to hear and interact with audio in a 360-degree environment, including different heights and depths. In the realm of VR, the headset was said to provide “accurate 3D sound” that could “direct your attention to elements outside your field of view for a more immersive experience.”

“Initial investment traction was strong,” the company explains, “but the slower than expected adoption of VR and the failure of several high-profile crowdfunded hardware companies made it challenging for us to raise subsequent financing.”

As a new class of device targeting audiophiles and VR users alike, the OSSIC X was decidedly an ambitious undertaking. Headphones don’t typically require any special software to run, and OSSIC was tasked with bringing support for their 3D headphones to a variety of operating systems and devices.

“What made this project so exciting, and ultimately ended up being its Achilles heel, was the complexity and scope.”

Here’s OSSIC’s full statement to backers below: