Castaway Entertainment, composed of ex-Diablo developers, has halted operations as the studio faces financial woes.

Michael Scandizzo, President of Castaway Entertainment, told GameSpot that the studio has resigned itself to suspended operations. Only six of its previous 25 staffers survived a round of layoffs.

The company had been in negotiations with two publishers for two separate projects, yet both leads fell through as one publisher developed the game internally and the second was part of a recent merger.

For Scandizzo, investment or acquisition would be acceptable bailouts. “If somebody came in tomorrow and said, ‘Here’s a whole bunch of money. Can you get back up and running,’ then Monday we could be back up and running,” he explained. “But a couple of weeks from now, as we slowly wind down, there will be a point by which we will not be able to get back up and running.”

Some sort of savior must appear soon or this developer will fall prey to closure. Scandazzio solemnly stated, “It would have to be soon, but if anyone wanted to come in and save us, we’d give the whole kitchen sink to them on the extremely cheap. Otherwise after almost 10 years of this group working together, we’re going to have to dissolve.”

With the company on the rocks and only one title (Xbox LIVE Arcade advergame Yaris), the company has come public with the original property it had been developing.

Castaway Creative Director Stefan Scandizzo divulged, “After five years of secrecy, I’d like to show the public what we were working so hard to develop. Djinn is an action-RPG in the spirit of our former work, but with full 3D [graphics], interactive environments, [non-player character] companions that aided the player and told the story as the game progressed. The video is of a fully playable demo from early in 2005 (so it was developed before the current consoles were available).”

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