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The X-COM Genesis Project began soon after the release of the third installment in the series as a forum discussion. Dave Ellis an his team at Microprose (Chapel Hill, North Carolina, USA) felt that the next game should reflect what the fans really wanted, and so started posting questions on the forum's board. The team soon realized that they had a goldmine presented to them, and it didn't take long to find out that the fans knew what they wanted... a game like the first one. And so began the Genesis Project.
The team had almost finished the engine when Microprose has been sold to Hasbro Interactive. On the 7th of December 1999, Hasbro Interactive announced that it would be cutting 2200 jobs, and shutting down the Alameda and Chapel Hill studios (Alameda being the original headquarters of Microprose).
Hasbro Interactive claimed they would continue with the game's development, but nothing has been heard of since. X-COM: Genesis was officially cancelled. Then Infogrames bought Hasbro Interactive, and since then nothing has been heard of the X-COM licence.
More information about the X-COM Chronology here.
In memories of the last hope for a "real" X-COM game, here are some screenshots of the Genesis Project.