Grin was six months into development of the codenamed Fortress project when Square Enix took the company off the title. Without a working budget, Grin had to close its doors. The good to come of this story is that, according to sources close to both companies, the action-oriented project Fortress is still under development, though no further details about the title have been announced.
Tyler says:
With Bionic Commando: Rearmed, the next-gen Bionic update, Wanted Weapons of Fate and Terminator Salvation all releasing in a two-year window, you'd figure Grin would have more than enough dough to go around (though rated poorly, Terminator Salvation was one of the better-selling games this summer). Then again, every one of those games was a license, meaning portions of the profits were going to the original property holders. Maybe Grin needed its own hot franchise to survive? If it would've ripped off Bionic Commando and made its own version (similar to Shadow Complex's heavy borrowing from Castlevania and Metroid) would Grin be in a better financial situation today?